The Johannesburg World Summit for Sustainable Development (WSSD) set a deadline of year 2015 for giving all the people in the world access to clean drinking water and sanitation. Our finance ministry has quickly acted to see this vision turn into reality.
Firstly, the revenue department has exempted excise duty on all items of machinery, including instruments, apparatus and appliances, auxiliary equipment and their components/ parts required for setting up of water treatment plants. Pipes needed for delivery of water from its source to the plant and from there to the storage facility have also been exempted.
The explanation to the excise exemption notification clarifies that 'water treatment plant' includes desalination, demineralisation or purification of water or for carrying out any similar process or processes intended to make the water fit for human or animal consumption. It does not include a plant supplying water for industrial purposes.
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Secondly, the government has exempted customs duties on imports of all items of machinery, including instruments, apparatus and appliances, auxiliary equipment and their components/ parts required for the initial setting up of a project for 'drinking water supply projects' for supply of water for human or animal consumption' as well as for substantial expansion of any such project, regardless of whether the full plant is imported or only some machinery/equipment is imported (including when it is imported in CKD/ SKD or only in components). The exemption is available under 'project import regulations' under customs tariff heading 98.01.
Here again, the explanation to the exemption notification clarifies that 'drinking water supply project' includes a plant for desalination, demineralisation or purification of water or for carrying out any similar process or processes intended to make the water fit for human or animal consumption.
For claiming the excise or customs exemption, certificate issued by the collector/ district magistrate /deputy commissioner of the district in which the plant is located, regarding the intended end use, has to be produced.
Important point is that the 'nil' duty benefit would be available only to water treatment plants intended to supply potable drinking water for human or animal consumption and not to water treatment plants supplying water for industrial purposes. Pipes required to supply the treated water from its storage place to the place of consumption will not also be eligible for the benefit.
WSSD placed and equal emphasis on water and sanitation for all. Non-potable water is very much essential for sanitation and personal hygiene. Moreover, it is not merely the availability of water in storage tanks but the actual availability in the taps of the consumer that is relevant.
So, it is not clear as to why the 'nil' duty benefits are restricted to water treatment plants or drinking water supply projects that are intended to provide potable water only and that too only up to the storage stage and not up to the stage of consumption.
Anyway, this is perhaps for the first time that the government has acted so promptly after an international event. The quick response of the finance ministry to WSSD declaration bears the stamp of Jaswant Singh, who is always alert to whatever is happening around the world. The restrictions of the benefits, however, bear the stamp of our bureaucracy that is cautious about extending any benefits, if not reluctant.