A reduction in the Customs duty on crude oil and petroleum products, a specific excise duty on petroleum products, and a duty waiver on capital goods needed for refinery expansion and upgradation are among the Budget proposals finalised at a meeting between Petroleum Minister Ram Naik and Petroleum Secretary BK Chaturvedi in New Delhi on Thursday.

The Budget proposals, which will be forwarded to the finance ministry next week, also include a demand for a minimum 10 per cent difference between import duties on crude and petroleum products to protect domestic refineries, according to official sources.

The proposals, which are almost similar to the ones forwarded by the ministry last year, include infrastructure status for liquefied natural gas terminals and exploration and production activities, a Customs duty waiver on LNG imports and a uniform sales tax on LNG.

The ministry has argued that an excise duty cut on petroleum products is necessary to check the adverse impact of volatile international crude prices on domestic prices.

Once again, the ministry has demanded that excise duty on domestic liquefied petroleum gas and kerosene sold through the public distribution system be slashed to zero.

At present, these two products attract an excise duty of 16 per cent. The ministry said Customs revenue from oil imports had gone up substantially after the hike in crude prices and a duty cut would not impact its revenue targets.

The ministry also sought a lowering of the cess on crude, which was doubled to Rs 1,800 per tonne for public sector oil firms in the Budget for 2002-03, and indexing it to crude prices.

While the Kelkar committee report on indirect taxes had favoured a specific excise duty regime, it had recommended that the Customs duty on crude be brought down to 8 per cent and that on products to 15 per cent in the first phase.