Revenue intelligence has refused tax sops to importers, as olive oil ‘doesn’t fall under edible category.’
NEW DELHI: Are you fond of olive oil? Yes? Then be ready to pay more to see it on your dining table. Just when the olive oil importers were preparing to pass on the benefits of tax reduction to the consumers, the directorate of revenue intelligence (DRI) has issued them notice for tax evasion.
DRI’s claim is that crude olive oil does not fall under the “edible” category, hence, importers cannot take the tax benefit.
The DRI’s notice has created panic and confusion among olive oil importers, as the finance ministry had slashed the customs duty on crude edible oil from 45% to 7.5% this April. Accordingly, the price was going to be reduced by 15%. However, DRI’s contention is that Extra Virgin (EV) olive oil which is a form of crude olive oil cannot be termed as “edible” and thus attracts 45% duty. If “edible”, the duty is 7.5% on refined oils and 0% on crude oils.
Olive oil companies across the country have received notices from the DRI to pay arrears of duty from April 1, 2008. The companies that have received notices include RR Oomerbhoy, Olive Tree Trading, Consumer Marketing India, JL Morison, Pantaloon Retail, Dalmia Continental and Amrutanjan Health Care. Companies have been asked to pay very large amounts and Extra Virgin Olive Oil (EV) consignments at ports are held up by Customs on the charges of evading duty. These companies have also received notice by the DRI to face inquiry on duty evasion.
The Indian Olive Association has contested DRI’s claims and has asked the Central Board of Excise and Customs (CBEC) to issue a clarification that EV olive oil is “crude” oil, which falls under the “edible” category and, hence, doesn’t attract any duty.
VN Dalmia, president of the Indian Olive Association, said, “Olive oil was previously categorised as virgin and 45% duty was applicable as there was no separate category for edible oil. But this year, the CBES created a separate category for crude, edible and refined oils.
However, there is still no specific category for virgin so the DRI is making use of the ambiguity but it is contrary to use, practice and common sense.” The olive oil market in India is expanding rapidly. In 2007, India imported 2,300 tonnes of olive oil. It was estimated, before the worldwide recession, that India would import 4,500 tonnes in 2008, 25,000 tonnes in 2010 and 42,000 tonnes in 2012, implying a compounded annual growth rate of approximately 80%. Besides, olive oil is also considered good for heart and weight management.
p_vineeta@dnaindia.net
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