The Comptroller and Auditor General of India (CAG) has castigated state-owned oil firms for overcharging customers by Rs 26,626 crore in five years by charging notional levies like customs duty on fuel they sold.
CAG in its audit report on ‘Pricing Mechanism of Major Petroleum Products in Central Public Sector Oil Marketing Companies’, said price of petrol, diesel, domestic LPG and kerosene is calculated by adding customs duty, freight, insurance, ocean loss and wharfage charge to prevailing international price of these products.
Oil companies import crude oil which is processed and converted into fuel and not these products. ‘Oil Marketing Companies (OMCs) do not incur bulk of these expenses (like customs duty) as majority of the products are processed in OMC refineries rather being imported,’ CAG said.
Currently, there is no customs duty on crude oil while a 2.5 per cent import duty is charged on inward shipment of petrol and diesel. During post part of the audit period, crude oil attracted a 5 per cent customs duty, while a 7.5 per cent import duty was levied on products.
‘In financial terms, import related elements charged at refinery gate on regulated products produced in refineries over and above the FOB (or import)
price during 2007-12 worked out to Rs 50,513 crore,’ it said in a report tabled in Parliament on Friday.