The central government on Friday clarified that jet fuel supplied to aircraft flying overseas would continue to be exempt from 11 percent basic excise duty on the fuel.
The clarification, a corrigendum to a finance ministry notification last week, came amid confusion among airlines and fuel retailers over the issue. From Jul 1, the government imposed a 6-rupee-per-litre cess on jet fuel exports by way of special additional excise duty.
An accompanying notification had said that jet fuel meant for export would be exempt from basic excise duty. However, it did not mention anything about fuel supplied for international flights, which enjoyed exemption from basic excise duty.
This reportedly led to confusion, with some fuel retailers taking the view that the earlier duty exemption on jet fuel sales to overseas-bound aircraft had been scrapped as the new notification mentioned only exports as being exempt. The government has now made changes to the notification, clearly saying that jet fuel "supplied as fuel to foreign going aircraft" is exempt from basic excise duty. The aviation industry appealed to the authorities that since July 1 they had been denied an excise exemption by oil firms.
The confirmation from the finance ministry that excise duty won't be applied to domestic airlines for international flights puts them back on level with international airlines for which the fuel is exempt from duty in accordance with the Chicago convention.
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