Surging global crude oil prices failed to shore up Customs revenue substantially as India Inc resorted to advance licence scheme, which allows duty-free imports for value-added exports.

"Increase in Customs collections is not because of (crude) oil imports. We got only Rs 300 crore (Rs 3 billion) additional revenue from crude oil. The reason (for lower mop up from oil imports) is the advanced licence scheme," a senior finance ministry official said on Monday.

Under the advanced licence scheme, companies are allowed to import goods at zero duty if it is meant for exports after value-addition. Many oil and petrochemical companies have fully utilised this scheme for duty-free crude imports, the official said.

Since two-thirds of the Customs collections come from petroleum products, the continuous rise in petroleum prices in the global arena should have pushed up indirect tax mop up significantly.

However, imports under advance licence and duty cuts on petroleum and other items to check inflation retarded the growth in customs and excise collections and cost the exchequer Rs 5,075 crore (Rs 50.75 billion).

Government has little elbowroom for further duty cuts as it would now affect the tax collections and widen the revenue deficit further. Even International Monetary Fund has warned against duty cuts saying it was an "unsustainable strategy" to arrest inflation as it could widen the country's fiscal deficit.

If duties were not slashed to stem inflation, customs collections could have been much higher than Rs 25,148 crore (Rs 251.48 billion) mopped up in the first six months of 2004-05, the ministry official said.

Indirect taxes had fallen short of double-digit growth mainly due to 8.5 per cent growth in customs at Rs 25,148 crore in first six months of 2004-05, as compared to Rs 23,167 crore (Rs 231.67 billion) in the same period the previous year.

Excise mop up was at Rs 44,463 crore (Rs 444.63 billion) till September this fiscal, which is 10.3 per cent higher than Rs 40,409 crore (Rs 404.09 billion) in the same period the previous year, he said.

Indirect tax collections were at Rs 69,611 crore (Rs 696.11 billion) during April-September, 9.5 per cent higher than Rs 63,576 crore (Rs 635.76 billion) in the same period last fiscal.