New Delhi, Sept 28: Petroleum Ministry has suggested an increase in customs and excise duty on kerosene sold in parallel market (not sold through public distribution system) to curb its adulteration in high speed diesel. The ministry has suggested to the Finance Ministry that customs duty be increased to 25 per cent and a specific excise duty of Rs 1.50 per litre be introduced on kerosene so that the price differential between diesel and parallel kerosene is reduced, thereby becoming a disincentive for adulteration, highly placed sources said.
Kerosene presently attracts 10 per cent import duty.
A rise in excise duty would result in an increase in countervailing duty on private kerosene imports allowed for sale in open market.
The Finance Ministry is likely to accept the proposal, as it will bring additional revenue while taking care of the adulteration.
Sources said the move has come about following a sudden spurt in the import of kerosene this year. Estimates are that imports would touch 2.0 million tonnes compared to 679,000 tonnes last fiscal year.
The jump has been mostly in April and May because of the sudden price rise (and therefore the price differential) in diesel because of the US-led attack on Iraq.
A similar situation last year prompted the government to raise the excise duty on light diesel oil (LDO) by Rs 1.50 per litre in this fiscal budget with the abolition of Modvat benefit on the product, they added.
Bureau Report