ISLAMABAD: With the aim to curbing mis-declaration, the Federal Board of Revenue (FBR) has announced the imposition of 10 percent customs duty on Silicon and Alloy steel.
As per reports, the FBR notified the duty under the First Schedule of the Customs Act, 1969 which will be effective from July 1, 2014.
I view of the growing complaints from the domestic steel industry, Pakistan Customs Karachi Enforcement in May last proposed to the FBR 10 percent duty on commercial import of Silicon Steel and Alloy Steel to curtail mis-declaration and enhance revenue collection.
Accordingly, the FBR under First Schedule of the Customs Act, 1969 has notified imposition of 10 percent custom duty on two flat steel products; Silicon Steel and Alloy Steel, as remaining flat products including Hot Rolled Coil (HRC), Cold Rolled Coil (CRC) and Galvanised Steel were being imported in the guise of Silicon and Alloy Steel, which currently has zero duty compared to 10 percent on HRC, CRC and galvanised steels.
With imposition of 10 percent customs duty on Silicon and Alloy Steel, all flat products will have equal duty slab. According to customs data, the import of silicon steel jumped by 330 percent to a monthly average of more than 7,600 metric tonnes during January 2013 to February 2014 as compared to monthly average of 2,300 metric tonnes during 18 months period (from July 2011 till December 2012).
Similarly, the mis-declaration by some importers is resulting in loss of billions of rupees every year to the national exchequer, besides hurting the domestic steel industry. Therefore, to discourage unlawful activities and enhance revenue collection, the FBR has proposed a customs duty of 10 percent on all Silicon and Alloy Steel imports in the next fiscal year 2014-15 budget.
As the next fiscal year budget is not yet approved by the National Assembly, therefore, FBR has not yet issued amendments to SRO659 (i) 2007, which allows zero-rated import of Silicon and Alloy steel. Last year, Supreme Court of Pakistan ruled that mere announcement of budget does not mean approval of new tariff regime as approval means approval from the National Assembly.
In light of this ruling, FBR has not issued amendment to SRO659 to increase the tariff on these two flat products.
