New Delhi: The government’s export duties on diesel and aviation turbine fuel (ATF) will not apply to Reliance Industries’ special economic zone (SEZ) refinery in Jamnagar, even as levies have been imposed on similar exports from domestic tariff area (DTA) units. “As per judicial pronouncements on this issue, the special additional excise duty (SAED) and additional excise duty (AED) are not applicable on SEZ refineries,” CBIC Joint Secretary Jainendra Singh Kandhari said.
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Reliance operates two refineries at Jamnagar, Gujarat — a 33-million-tonnes per year domestic tariff area refinery and a 35.2-million-tonnes per year SEZ unit that is meant only for exports. Reliance’s SEZ complex is one of the biggest contributors to India’s refined fuel exports. The exemption means that Reliance can continue to export jet fuel and diesel from its SEZ refinery without paying any windfall gains tax, a levy which will be otherwise borne by all the three state-run Oil Marketing Companies (OMCs), like Indian Oil, Hindustan Petroelum Corporation Limited (HPCL) and Bharat Petroleum Corporation Limited (BPCL).
The legal reason is structural, not accidental. Under the Special Economic Zones Act, 2005, “Domestic Tariff Area” (DTA) means the whole of India but does not include SEZs, and the Act separately provides exemption for goods exported from SEZ units. That is why export-oriented SEZ units are treated differently from refineries in the domestic tariff area.
In practical terms, the windfall levy is aimed at domestic refiners exporting fuel from India’s regular tax territory, while SEZ units sit in a separate statutory framework with their own fiscal treatment. That distinction is what keeps the Jamnagar SEZ refinery outside the levy net.
The government imposed export duties of Rs 21.5 per litre on diesel and Rs 29.5 per litre on ATF amid a sharp surge in global fuel prices and tightening supplies.
“At a time when international diesel prices have surged sharply, the levy is designed to disincentivise exports and ensure that refinery output is directed first towards meeting domestic demand. Keeping Indian pumps fully supplied takes precedence over export opportunities, however commercially attractive those may be at current global prices,” the Petroleum Ministry had said on March 27.
The government has indicated that these export duty rates will be reviewed every fortnight in line with movements in global fuel prices. Internal estimates suggest the levies could yield around Rs 1,500 crore in revenue per fortnight, according to CBIC Chairman Vivek Chaturvedi. However, this is only a fraction of the roughly Rs 7,000 crore revenue loss the government is expected to incur over the same period due to the Rs 10-per-litre excise duty cut on petrol and diesel announced alongside the export duties.
The excise reduction was aimed at keeping retail fuel prices stable and easing pressure on public sector oil marketing companies, which have held pump prices despite the global surge and are absorbing significant losses.
This is not the first time SEZ refineries have been spared. When India first imposed windfall levies in July 2022 after Russia’s invasion of Ukraine pushed up oil prices, the government explicitly exempted petroleum products exported from SEZ units.
The current clarification follows the same logic: SEZ exports are outside the scope of the levy, while exports from non-SEZ refining capacity are not.
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The exemption comes at a time when state-run oil marketing companies are under heavy pressure. The petroleum ministry said PSU OMCs are facing under-recoveries of Rs 24.40/litre on petrol and Rs 104.99/litre on diesel at the retail selling price level. On LPG, it said under-recovery is Rs 380 per cylinder. OMCs are also incurring losses on ATF after only a partial 8.6 percent increase was passed on to domestic airlines despite a much sharper rise in global jet fuel prices.
The contrast is stark: while export-oriented SEZ refining capacity remains insulated from windfall levies, domestic fuel retailers continue to shoulder the financial burden of shielding consumers from volatile global markets.