Refiners seek excise duty exemption, inclusion of oil in necessities list

The Gujarat Oil Refiners' Association said edible oil refining industries are on the verge of closure due to heavy excise duty.

The association has requested the Union finance minister P Chidambaram to exempt the edible oil refining industry from excise duty.

A delegation of edible oil refiners from Gujarat, led by president Bharat Patel, is at present in Delhi. They are meeting officials of the finance and revenue departments.

Gujarat plays a leading role in edible oil refining with a share of over 50 per cent of the country's edible oil refining business.

Patel said the industry, already reeling under heavy excise duty, received another blow when the central government removed the differential custom duty between imported crude oil and imported refined oil.

Until last year, import duty on crude palm oil was 65 per cent and that on refined palm oil was 92.4 per cent. The difference between the two was removed and both are now taxed at 70 per cent.

As a consequence, traders prefer to import refined oil, which directly impacts the refining industries in India, Patel said.

In fact, after the differential custom duty was done away with, 80 per cent of imports of oil have been refined oil, thus hitting Indian refiners hard.

The association, in its representation to the finance minister, said in India, groundnut oil and rapeseed oil are consumed without refining after being produced in huge quantities.

On the other hand, refined oils, which are far better for health and contain nourishment, attract excise duty.

"People have a tendency to buy non-refined oils as they are cheaper because they do not attract excise duty. Besides demanding a complete removal of excise duty on refined oils, the association has also asked the finance minister to restore a difference of at least 25 per cent import duty on crude oil and refined oil. This difference will ensure import of only essential oils and will also revive the edible oil refining industry in the country," the president said.

The association has also recommended that oil be placed in the list of basic necessities like wheat, maize and other grains, so that it will be exempted from the value added tax as soon as the new tax regime is implemented.

Patel said immediate implementation of value added tax and placing of oil in the list of necessary items will ensure that people got refined oil at cheaper prices.

The Oil Refiners' association is also stated to have asked officials of the finance and revenue departments to have a clear Exim policy to promote edible oil crop by discouraging imports through a differential imports duty structure and removal of excise duty.