Power ministry for rationalisation duties

NEW DELHI: The ministry of power has called for rationalisation of duties in the power sector. It has suggested reducing excise and countervailing duties from the present rate of 16% to 8%. On the customs duty front, it has asked for a rationalisation of six different duty structures to two-one for mega power projects and the other for non-mega power projects.

The ministry of power has argued that neither cenvat nor modvate can be levied on electricity as it is not a good on which excise can be levied. Hence the excise duty should be reduced from the present level of 16% to 6% and countervailing duties should be aligned accordingly.

On rationalising customs duty, the ministry has argued that while mega power projects attract 0% customs and countervailing duties, transmission projects associated with these projects are levied a 10% customs duty and a 16% CVD. The ministry would like the concessional zero customs duty regime to be extended to transmission projects associated with the mega power projects. This will also include the ultra mega power projects, as the mega power project tax structure applies to these projects as well.

For projects other than the mega power projects, the ministry has suggested that imports required for initial setting up or expansion of projects, renovation & modernisation, capital goods for generation, spares, transmission, sub-transmission and distribution should attract a customs duty of 5% and countervailing duties 8%.

At present, spares are levied a customs duty of 12.5% and 16% CVD, while transmission, sub-transmission and distribution attracts a custom duty of 10% and CVD of 16%. Imports for renovation & modernisation, capital goods for generation and spares also attract a special CVD of 4%.

The ministry proposal to the finance ministry suggests doing away with the special CVD. A list of equipment and accessories that deserve concessional 0% duty and CVD has also been drawn up by the ministry of power.