According to sources, ECC was informed on April 30, 2015 that prices of petroleum products had been witnessing a persistent decline during the current fiscal year, causing an adverse effect on the revenue collection.
Petroleum Ministry, sources said, had also forecast the erosion of around Rs 400 billion in taxable based POL products, resulting in shortfall of Rs 68 billion in sales tax alone. It was also argued that presently petroleum crude oil was enjoying concessionary regime of zero percent customs duty against MFN rate of 1 per cent customs duty whereas HSD was enjoying concessionary regime of 7.5 per cent customs duty against 10 per cent MFN rate of customs duty.
In order to recoup some of the revenue loss, the ECC approved 2 per cent RD on petroleum crude oil (PCT 2709), Motor Spirit Oil (PCT 2710.1210) furnace oil and 2.5 per cent RD on High Speed Diesel (PCT 2710.1931). OCAC maintains that the government imposed RD on POL products but did not increase the price of POL products from May 1, 2014 due to which their margin was affected substantially, thus their business is not viable now.
"OCAC has written two to three letters to the Petroleum Ministry and Finance Ministry besides holding meetings at the top level to convince the Ministry that the anomaly is going to hurt the oil industry unless it is resolved on urgent basis," said one the office holders of the Association.