Customs duty levy on power equipment may figure in budget proposals

The proposal to impose customs duty on import of power equipment with more than 1,000 MW capacity may be included in the union budget proposals, even as it was withdrawn from the cabinet on yesterday.

The budget is scheduled to be presented on 16 March and while opinions differ on the exact reason for withdrawal of the proposal, according to official sources, there were differences over the quantum of duty.

While the power ministry is believed to have recommended 19 per cent import duty on equipment for large projects, the commerce ministry is said to favour a 24 per cent duty. The power ministry's proposal was supported by the finance ministry.

The cabinet was to consider a proposal for levy of 19 per cent duty on power generation equipment for projects with capacity of 1,000 MW and above.

According to sources the discussion for inclusion of the proposal in the budget would start soon, though a formal decision would have to be taken by the finance minister. The sources say the proposal for duty hike may come with provision for set off against the countervailing duty (CVD).

A CVD is levied on imported goods in lieu of excise duty, if, the same product manufactured in the country is levied excise duty. This is a protective measure favouring domestic industry. The proposal is to levy 10 per cent CVD and since electricity is an exempted item, there would be no set-off available.