Exporters are demanding refund of taxes on diesel as they fear that subjecting the fuel to global rates would create problems for a power-starved industry, which depends on it for daily operations. Any decision to decontrol diesel prices, even in a phased manner, would affect exporters as they are dependent on diesel due to erratic electricity supply, apex exporters’ body FIEO said.
Allowing Cenvat credit on such essential inputs will be a logical step (to help exporters),” Federation of Indian Export Organisations President A Sakthivel said today.
Petrol prices have been freed from government control, and there are indications that diesel prices would also be decontrolled in a phased manner.
Industry sources said that running factories on generator sets would cost comparatively higher than electricity, thus raising input costs. Indian exporters are facing tough challenges in the price-competitive global markets.
Central Value Added Tax Credit (Cenvat) credit is currently allowed only on fuels such as furnace oil and lubricants. “There is no logic in excluding high-speed diesel and light diesel oil from the purview of Cenvatable input,” Sakthivel added.
Though diesel oil is being used as an input to produce dutiable goods, Cenvat credit is denied to the manufacturer, the FIEO said.
On June 25, the government partially decontrolled oil prices by hiking petrol price by Rs 3.50 a litre and diesel by Rs 2 a litre. It also raised the rate of LPG by Rs 35 a cylinder and kerosene, the poor man’s cooking fuel, by Rs 3 a litre.