Parallel liquefied petroleum gas (LPG) marketing firms, through a representation by the Indian LPG Industry Association (ILPGIA), have asked the Central Board of Excise and Customs for a waiver in interest charges for storage of LPG beyond one month at the customs bonded warehouses. Further, the ILPGIA is seeking a 15 per cent reduction in taxes and levies on LPG from around 27 per cent currently to 12 per cent.
The ILPGIA is pursuing for exemption of LPG from Section 106 of the Finance Act, 2001, as per which it is mandatory to pay interest on warehoused goods, if they are not cleared within one month from the customs bonded warehouses. The parallel players, which are already understood to be incurring losses, called the levy of interest "an unsustainable additional burden".
In a letter to the board, S K Hazra, president of ILPGIA said, "The LPG parallel marketing companies import large parcels which are stored at bonded warehouses and, depending upon the requirement, the product is de-bonded on a continuous basis for onward movement to bottling plants or direct sales. As large parcels are imported, the retention time is normally 2-3 months."
"Considering the nature of LPG (a hazardous product), it is moved from the import terminal (bonded warehouse) to bottling plants or end users, and it is not possible to create intermittent storage," Hazra added.
Further, the ILPGIA is in talks with the government to reduce the amount of sales tax and countervailing duties on LPG imports, in order to lower the cost of LPG to the customer. Currently, LPG attracts 10 per cent import duty, and eight per cent countervailing duty, in addition to sales tax, totalling about 27 per cent.
The ILPGIA represents six private LPG marketing companies -- Bharat Shell, Caltex SPIC India, Elf Gas India, Hindustan Aegis LPG Bottling Co, Mobil Peeves Co and SHV Energy India -- have so far invested about Rs 650 crore. However, they have frozen further investment plans till the time of creation of level playing field with the oil public sector firms.
