Tatsat Chronicle Magazine

Govt Imposes Cess of Rs 23,250 per Tonne on Export of Petrol And Diesel  

July 1, 2022
Export of Petrol And Diesel

The government today slapped an export tax on petrol, diesel and jet fuel (ATF) shipped overseas by both private companies and imposed a windfall tax on crude oil produced locally by both private and state-owned companies.

Special additional excise duty/cess has been imposed on exports of petrol and diesel at the rate of ₹6 per litre on petrol and ₹13 per litre on diesel,” the government said. Crude prices have risen sharply in recent months and domestic crude producers sell crude to domestic refineries at international parity prices. As a result, domestic crude producers are making windfall gains.

Taking this into account, a cess of ₹23250 per tonne has been imposed on crude. Import of crude would not be subject to this cess, the government said. Crude is sold by domestic producers at international parity price. This cess will have no adverse impact, whatsoever, on domestic petroleum products or fuel prices, the government said.

Further, small producers, whose annual production of crude in the preceding financial year is less than two million barrels will be exempt from this cess. Also, to incentivise an additional production over the preceding year, no cess will be imposed on such quantity of crude that is produced in excess of last year’s production by a crude producer.

The move comes as companies have been making a killing in exporting fuel to deficit regions such as Europe and the US in the aftermath of Russia’s invasion of Ukraine. The refiners are said to have processed Russian crude oil available at a discount after it was shunned by the west, and exported fuel produced from it to Europe and the US.

The government further said that while crude prices have increased sharply in recent months, the prices of HSD and Petrol have shown a sharper increase. The refiners export these products at globally prevailing prices, which are very high. As exports are becoming highly remunerative, it has been seen that certain refiners are drying out their pumps in the domestic market, particularly in Gujarat, Madhya Pradesh and Rajasthan.

“In view of this, cesses equal to ₹ 6 per litre on petrol and ₹ 13 per litre on diesel have been imposed on their exports. These cesses would apply to any export of diesel and Petrol from the country,” an official statement said.

The government has also imposed an “export policy” under which the exporters would be required to declare at the time of exports that 50% of the quantity mentioned in the shipping bill has been and will be supplied in the domestic market during the current financial year, (FY).

These measures will ensure the domestic availability of petroleum products, the government said. A special additional excise duty (SAED) of Rs six per litre has also been imposed on exports of Aviation Turbine Fuel.

Girja Shankar Kaura

The writer is a Delhi-based freelance journalist, who has reported and written on a wide range of subjects in an extensive career.