Even as the move to raise equalise import duty on different varieties of thermal coal may raise the average cost of power generation, importers of higher grade of coal may benefit from it.
Before the duty equalisation, steam coal was exempt from customs duty but attracted a concessional CVD of 1 percent. Bituminous coal attracted a duty of 5 percent and CVD of 6 percent.
Higher quality coal is imported by companies like Adnai, JSW and a host of other coastal players. These players had to pay an import duty of 6 percent while those importing low quality coal were paying only a countervailing duty of 1 percent.
Since both kinds of coal are used in thermal power stations, there is rampant misclassification. Therefore, the union budget proposed to equalise the duties on both kinds of coal and levy 2 percent customs duty and 2 percent CVD.
Thus, the move may benefit importers of higher quality of coal. Following the clarification, taxes on both variety of coal has been equalized and it will help the nation import higher quality of coal at an uniform rate, A Khurana Director General of the Association of Power Producers (APP) told.
Earlier, the APP made a representation to the government over the confusion in levying duty by customs officials because it was not possible to ensure end use by them. The move to equalize is a welcome move, the association said.
Coal with a gross calorific value below 5,500 was facing a countervailing duty of 1 percent while those importing coal of 5,600 GCV were being forced to pay customs of 5 percent. Both kind of importers will now pay the same rates.
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