PAAPAM demands FBR chairman to withdraw regulatory duty on steel products for auto sector’s betterment as the duty also violates FBR’s principle of ‘cascading structure of duties’ besides burdening the sector
In a meeting with Federal Board of Revenue (FBR) Chairman Tariq Bajwa, a delegation of Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM), led by its Senior Vice Chairman (SVC) Mumshad Ali at FBR Head Office in the federal capital, has demanded the board withdraws regulatory duty (RD) on steel products for the betterment of automobile sector.
The FBR chairman assured the delegation, comprising former chairman Munir K Bana, Shariq Suhail, Ashraf Shaikh and Aamir Allawala, that due consideration will be given to the case of RD with reference to PAAPAM.
PAAPAM SVC Mumshad Ali protested against 15 percent RD on the imports of tubes, pipes and hollow profiles of cast iron, steel, flat rolled products of iron and alloy steel billets and bars. He said the duty on various steel materials mainly used by PAAPAM members negates the claim of government to protect the local industry while the large re-rolling steel mills and other sectors like fan and other electrical goods industries have been totally exempted from RD within the same SRO.
Ali said that imposition of RD on auto parts manufacturers was “totally unfair and unjustified”, negates the cascading principal of SRO 655 while in certain cases it was in violation of free trade agreement (FTA) with China. In the case of hardening steels, the 15 percent RD was in addition to 5 percent import duty and 15 percent protection duty, and amounted to double taxation, he said.
“These items are imported by auto parts manufacturers under SRO 655(I)/2006, as these are not manufactured in Pakistan, and in case of alloy steels produced in Pakistan this duty is on top of existing slabs making the total impact on price by 30 percent,” said the PAAPAM SVC.
The PAAPAM delegation, quoting FBR’s own data, said that an RD of Rs 1 billion had been collected so far, out of which APMs’ share was a just Rs 70 million; which is less than 1 percent of total RD collection. Therefore, PAAPAM argued that, on the one hand, the government revenue of Rs 70 million was not significant, and on the other, the effect of this levy will snuff out the industry, as it will be rendered uncompetitive against imported parts, due to a drastic reduction in tariff differential in violation of the cascading principle.
Former chairman Munir Bana pleaded that as the PCT codes of raw materials manufactured by PSM were common for auto grade material, the auto parts industry has been burdened by this duty on their imports of raw materials. As a result, FBR’s own principle of ‘cascading structure of duties’ has also been inadvertently violated by the levy of RD on auto raw materials, which are not manufactured locally.
PAAPAM delegation stated that the local manufactures will result in increase in cost of doing business for the local APMs, and making local auto part manufacturing uncompetitive by making the input costs higher.
The delegation urged the FBR chairman to avoid frequent policy changes and give industry a level playing field to grow and contribute to the national exchequer.
