The Hindu Business Line : Budget proposal on pvt aircraft import levy opposed

New Delhi April 6 The Finance Ministry is under pressure to review the Budget proposal to levy customs, countervailing duty and special additional customs duty on all private import of aircraft, including helicopters.

It is not only the Civil Aviation Ministry but also the aircraft suppliers that are lobbying the Government for a review of these duties.

With the Budget proposal already coming into effect, the latest proposal has imposed an additional financial burden of about 25 per cent on private importers.

Having tasted some success in postponing, for almost two years, the levy of withholding tax on aircraft lease rentals, the Civil Aviation Ministry has again approached the Finance Ministry on the private aircraft import duties issue.

"We have received a reference from the Civil Aviation Minister. Although no decision has yet been taken, the issue is being examined," a Finance Ministry official confirmed.

Ministry stance

The Civil Aviation Ministry is particularly aggrieved over the 16 per cent Countervailing Duty (CVD) and taken a position that it was unreasonable, especially at a time when more private imports are taking place.

"The main purpose of imposing CVD is to give a level-playing field to domestic industry. But India does not produce small jets and therefore the question of imposing CVD should not arise," officials said.

They also pointed out that these aircraft were now considered essential for conducting business globally and were no longer toys of the rich.

"The Government could actually lose monies by implementing this policy. To overcome the additional financial burden, private importers may look at registering their aircraft abroad. Already some people who have private aircraft have registered them abroad," said an official connected with sale of aircraft in India.

The Finance Minister, Mr P. Chidambaram, had, in Budget 2007-08, announced levy of import duty of 3 per cent, which is the WTO bound rate, on all private import of aircraft, including helicopters. Such imports also attract countervailing duty and SAD. Import of aircraft, including helicopters, by Government and scheduled airlines continues to be exempt from all duties.

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