At present, a duty of up to 15 per cent is levied on export of most of the long steel products even if these are manufactured from raw materials imported under the Advance Licence Scheme (ALS).

The ALS envisages certain export commitment from steel producers in lieu of availing duty-free import of inputs for steel making.

In-principle nod

According to sources, the revenue department has approved the steel ministry’s proposal of introducing a scheme of duty free export of steel products made from raw materials imported under ALS.

“The revenue department has in-principle approved the proposal, which we had mooted during the meeting of the Committee of Secretaries to review essential commodity prices on May 30,” a senior official in the steel ministry said.

Though the revenue department has worked out the modalities for operationalising such an exemption, it wants certain criteria to be fulfilled by exporters seeking such benefits.

For one, it has said that “prior import condition needs to be prescribed for exports under ALS, which would entitle such consignments to exemption from export duty.”

Separate accounts

The revenue department also wants steel exporters to maintain separate accounts for their receipt, issue and utilisation of raw materials imported under ALS for manufacturing of products on which exemption from export duty is claimed.

In a letter to the steel ministry, the department has said manufacturers and exporters would have to give an undertaking that the steel products meant for overseas shipments from India have been manufactured only from inputs imported under the ALS.

Of around 4.5 million tonnes of India’s annual steel exports, the contribution of long products is about 1 million tons. The steel ministry has been of the opinion that imposing export duty on overseas shipments of steel made out of duty free raw materials was impractical.