NEW DELHI: The Union finance ministry has refused a request by the Indian Railways to waive customs duties on a Rs440-crore signalling project between Ghaziabad and Kanpur, one of the busiest routes in the nation.
This means that the railways will have to pay Rs133 crore as duty as the ministry has turned down waiver of duties on signalling equipment to be imported from Germany.
The equipment was to be imported by the Ansaldo Signal Consortium, which has won a tender to modernize signalling between the two cities. Because of the heavy traffic on this route, the railways ministry decided to opt for international expertise in improving the signalling system.
The consortium is expected to introduce automatic block-signalling technology on this stretch. In this system, automated signals indicate whether or not a train may enter a particular stretch or “the block” after it receives inputs from the circuits on the track.
The contract between the railways and the consortium last year says the burden of duties and taxes, if any, would fall on the railways. The project is financed by the KfW Development Bank of Germany.
The railways had earlier written to the finance ministry seeking exemption of duty by declaring it as deemed exports. Deemed exports refer to those transactions in which the goods supplied do not leave the country and the payment for such supplies is received either in Indian rupees or in free foreign exchange.
The railways has also highlighted the fact that the project leader of the consortium, Union Switch & Signal Pvt. Ltd, was an India-based company.
“We had sought an exemption on the ground that the work was being undertaken under the leadership of a company here,” said a railway official. According to V. Shanker, additional member (signal) of the Indian Railways, the finance ministry’s stance has not changed, despite repeated requests from the railways.
“We had asked for an exemption as it was a developmental project. But they seem to have taken a broader view and have decided against giving any exemption,” he said.