15 commodity groups contribute 80 percent of gross duty collection

Around 15 major commodity groups contributed 80 percent of gross customs duty collection in first half of 2007-2008.
The FBR analysis on customs duty during July-December (2007-2008) showed major revenue spinners are vehicles, edible oil, POL products, electrical/mechanical machinery, plastic resins, iron and steel, paper and paper board, organic chemicals, articles of iron/steel, dyes/paints, rubber and articles, coffee/tea, chemical products and man made filament.
These commodity groups constitute around 80 percent of gross duty collection during first half of 2007-2008. The major contribution continues to come from the automobile sector with a share of 18.4 percent in gross customs duty collection. However, the collection from this source has declined by 13.1 percent due to reduced demand for the automobiles.
The demand for car financing, which was previously available at low rates has reduced significantly due to rising cost of borrowing and the harassment met out by the borrowers at the hands of recovery agents.
A detailed analysis of the automobile sector reveals that the import of parts and accessories has increased by 30 percent, which has spurred the growth of the sector enabling 18.4 percent in customs duty collection. The import of motor cars and jeeps, transport vehicles, and tractors, on the other hand has declined by 14 percent, thereby reducing the customs duty collection compared to the corresponding period of last year.
Edible oil has been the second major revenue spinner of customs duty during the period under review. Notwithstanding the sharp increase in international prices that has raised the import value of edible oil by 57.1 percent, the collection of customs duty has observed a nominal decline of 0.5 percent.
On the other hand, while the import value of POL products has recorded a sharp increase of 20.2 percent, its dutiable component has declined by 3.3 percent. As a result, the growth in duty has been 3.4 percent, which is consistent with the growth in base. As far as electrical machinery is concerned, the collection has improved by 11.1 percent even though the dutiable import value has declined by 3.3 percent.
The iron and steel sector has displayed an interesting feature. In response to a remarkable growth of 31.7 percent in terms of value of imports, the duty collection has increased by 8.1 percent only.
The details revealed that the maximum growth of 113.5 percent has been observed in import of ferrous waste and scrap, which has been zero-rated for the purpose of customs duty. This pattern clearly confirms that scrap was previously smuggled into the country. With zero-rating, its import through regular channels has been encouraged. The second favourable implication of this policy intervention has been the fact that the import of iron and steel products (PCT Chapter 73) have declined by over 10 percent, indicating a move towards value addition within the country, the FBR added.