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“Withdraw CVD and additional CVD on planes”: CII

“Withdraw CVD and additional CVD on planes”: CII
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First Published: Tue, Mar 27 2007. 06 06 PM IST
Updated: Tue, Mar 27 2007. 06 06 PM IST
New Delhi: In its Post-Budget Memorandum, CII has asked for the withdrawal of CVD and additional CVD on aeroplanes, helicopters and parts thereof when imported by non-scheduled operators.
In a post-budget interaction with the Finance Minister earlier this month, CII Members raised the issue of levying 3% basic, 16% CVD and 4% additional CVD as against NIL earlier.
The Finance Minister responded by saying that 16% CVD and 4% special CVD are cenvatable against excise and service tax. Given that, the additional tax burden would have been only 3%.
According to a press note issued by the Confederation, “affected operators of aeroplanes and helicopters cannot avail CENVAT credit for the CVD and additional CVD paid as the non-schedued operators do not have a levy to set off against. Also, aircrafts are not included in the definition of permissible capital goods as per CENVAT Credit Rules.”
Understandably, this puts the incidence of total duty of about 25% completely on the aircraft operating companies.
Aeroplanes and helicopters operated for non-scheduled purposes are mainly rented out on chartered routes for tourism and other purposes providing an alternative mode for fast movement.
Propeller driven aircrafts are also used for movement of drilling experts and managerial staff from metro cities to remote locations of Oil and Gas Industry.
Helicopters are used for offshore support for petroleum operations, medical emergency evacuation, natural disasters and remote area operation.
The sudden imposition of such a heavy duty would make such companies unviable as the total cost of operations are made without considering the duty as per earlier provisions.
The non-scheduled airline operators have not been distinguished from the importers of aircraft for personal use. These are concerns that need to be addressed.
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First Published: Tue, Mar 27 2007. 06 06 PM IST