The recent slash of basic customs duty on crude oil will cost Gujarat customs department more than Rs 7,000 cr due to loss of revenue. In a bid to lift burden on state-owned oil marketing companies, the finance ministry had last month reduced the customs duty from 5 percent to zero.

With three major crude oil refineries in the state, crude oil is a major revenue earner for Gujarat customs department. Last financial year, Gujarat customs department collected Rs 20,819 cr revenue out of which Rs 6,835 cr came from crude oil imports.

"Revenue from crude oil has seen manifold increase in recent years. In 2009-10, revenue from crude oil imports in Gujarat was Rs 905.67 cr which saw a 654 per cent growth in 2010-11. In fact, only during the first quarter of this financial year we have collected Rs 2,433 cr duty from crude oil imports which was Rs 1754 cr in the same period last fiscal," said a senior customs official.

With revenue target for Gujarat customs department revised to Rs 23,380 cr for 2011-12, the department is mulling over ways to achieve the target in absence of customs duties on crude oil.

"Crude oil was the top most revenue earner for the customs department in Gujarat last year followed by gold, expensive metals and refined petroleum oil products. Along with crude oil, the cut on customs duty of diesel and petroleum from 7.5 percent to 2.5 percent and excise duty on diesel from 4.6 rupees per litre to 2 rupees per litre will reflect heavily on the collection figures of both the customs and excise departments in the state," said a customs official. It is estimated that the slash of customs duties and excise tax will cost Indian government Rs 490 billion.