The Hindu Business Line : Customs waiver sought on oil field equipment

THE Petroleum Ministry has written to the Finance Ministry seeking waiver of customs duty on a retrospective basis on equipment imported for developing oil and gas fields at a few places such as Panna, Mukta, Tapti, Hazira and Ravva.

The amount in question is around Rs 185 crore and the period of import is between 1994-96 while the developers of the projects include major players such as Oil and Natural Gas Corporation (ONGC), Reliance and Videocon.

These fields are being developed by a class of consortium that was not given permission to import equipment on a duty-free basis to develop the fields, although the general policy of the day allowed it.

According to officials, the notification, through which the policy is operationalised, allowed duty-free status only in those cases where the consortium comprises a state oil company (ONGC) and a domestic private company or the national oil company and a foreign company. It did not apply to cases where the consortium comprises a state oil company, a foreign company and an Indian private company.

Such companies imported equipment duty free between 1994-96 by furnishing a bond that was liable to be invoked in case the notification was not issued. Over the years, the companies have sought deferment and hence avoided invoking of the bond.

The Customs Department is now learnt to have applied pressure on the companies to invoke the bond since there is no sight of a notification allowing for the duty waiver.

The Panna Mukta Tapti field is being developed by a consortium comprising ONGC, British Gas and Reliance. In the case of the Ravva field, the promoters are Videocon and Marubeni, while in the case of Hazira, the developers are the Gujarat State Petroleum Corporation (GSPC) and Cairn Energy.

Although the Finance Ministry is empowered to issue a notification allowing for retrospective nod for duty-free imports, it has referred the matter to the Law Ministry for an opinion.

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