In his Budget proposals, the finance minister had announced an introductory duty of 5 per cent on import of rough diamonds, raw pearls, raw cultured pearls, rubies, emeralds and sapphires, while for gems and jewellery industry, the duty was reduced for cut and polished stones to 15 per cent from 35 per cent.

Currently, rough diamonds are primarily being imported duty free by jewellery exporters under replenishment advance and other licences and the importers have to meet the export obligations. Under World Trade Organisation (WTO), this was considered to be import restrictions which wanted India to remove this restrictions and put rough diamond imports under open general licence (OGL).

In order to remove the import restrictions, the finance minister has opened up another channel by putting the same under OGL thereby allowing anyone (not necessarily connected with the jewellery industry) to import roughs by payment of five per cent import duty.

Gold import is already under OGL and anyone intending to import gold is allowed to do so by payment of now reduced import duty of Rs 250 per 10 gms.Thus, the new duty on import of rough diamonds was not for the jewellery exporting community who are allowed to import roughs (raw material for re-export after value addition) duty free.

Finance ministers' silence on this technical aspect during the Budget presentation, has raised the hopes of customs department of earning a hefty revenue of Rs 1,000 crore.

The Mumbai Customs department therefore, hopes to earn a revenue of Rs 1,000 crore during the next fiscal through the levy of 5 per cent duty on imports of rough diamonds.

Wanting the jewellery exporters to pay the 5 per cent import duty on their rough diamond consignment, the customs department has already refused to clear consignment worth around Rs 500 crore.

Addressing newspersons on Saturday, Chief Commissioner of Customs, Mumbai, DK Acharyya said: "On an annual basis, rough diamonds worth about Rs 20,000 crore are imported here and if the same inflow sustains, the department will get a revenue of Rs 1,000 crore with the imposition of this duty."

The Gems & Jewellery Export Promotion Council (GJEPC) has already said that as per the pre-budget discussion with the finance ministry officials and the finance minister himself, the 5 per cent duty was aimed at those importers who are not connected with the diamonds and jewellery exporting activities.The move of levying the import duty is just to put the import of rough diamonds under open general licence (OGL) and free its imports from the export obligations/requirements of various import licences through which the roughs are currently imported.

The GJEPC chairman and top office bearers have already met the customs department immediately after the budget was announced to clarify the issue."We have appealed to the finance minister to clarify on this issue and are awaiting clarification from the government on this tangled issue," said GJEPC chairman Sanjay Kothari.