The Finance Ministry has notified a new duty structure that
prescribes an effective duty of over 22%, including education cess on imported
equipment of all categories of Power generation projects.
The duty includes a Custom Duty @5%, Countervailing Duty
(CVD) @ 12% (as applicable and equal to excise duty on domestic industry from
time to time) & Special Additional Duty (SAD) @ 4% to be uniformly
applicable viz., Mega Power Projects (including UMPPs) and non-Mega Power
Projects with effect from 19th July 2012.
However those projects which have already been granted final
mega/provisional mega certificates during the 12th Plan will be exempted from
the duties. Thus, it will not affect the tariff structure for projects coming
up during the 12th Plan.
According to Power producers, “Govt. is very late in
implementing the duties. Moreover, the net positive impact of the duty will be very
less as Indian producers will have to import critical components, which are
not, produced in the country.”
50% of additional coal-based capacities coming up are said
to be dependent on imported equipments. So, added Customs duties is expected to curb the
import of superior technology that is already high priced and it may hinder the
advancement of the sector not immediately but in future.
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