Steel traders have asked the Federal Board of Revenue (FBR) to properly examine the imports of steel products to stop misuse of exemptions. They said that some steel importers, particularly industrial units, are misusing exemptions through various SROs leading to huge leakages in duty, sales tax and income tax.
The All Pakistan Iron and Steel Traders Action Committee has approached the FBR chairman for necessary action to end misuse of exemptions under different SROs. According a letter sent by the action committee to FBR Chairman, steel pipe manufacturers are importing hot rolled coils (HRC) without paying duty, sales tax, income tax, etc, at import stage, taking cover of SRO 450 555 and DTRE.
Since there is no check regarding the use of exempted raw material, the pipe manufacturers are selling the material in domestic market and making windfall profits at the cost of national exchequer, the letter said.
It is important to note that FIA started investigation in the pipe industries regarding misuse of SROs, and the customs authorities issued over 30 recovery notices to the pipe manufacturers for exemptions they claimed in the years 2008-2010 under SRO No.565 (1) 2006.
The customs department was quick in issuing recovery notices as they feared that the ongoing inquiry by FIA would also include the customs officials, the letter said. The action committee has asked for an urgent inquiry as to why in the first place exemption was allowed to the industries, and if exemptions given were as per policy then why recovery notices have been issued despite exemption to the industries.
"Till the above inquiry is complete, you are requested to immediately stop giving exemptions to vessel 'Free Goddess' IGM No. 1153 containing consignments of prime hot rolled coils (HRC) imported with a quantity of 15,470 tons by the industries," the action committee said.
It added that it is the responsibility of the appraiser and examiner to properly check the consignment. If they act carelessly and if the current consignment of HRC would be released without checking there would be revenue loss of about Rs 417,709,170 to the national exchequer.
"We suggest that industrial importers should first pay duties, sales tax and then claim refund after submission of documents under the relevant SROs," it suggested.
"Last, we may remind that due to the misuse of SROs, Pakistan Steel Mills Corp Ltd is the biggest sufferer as they were forced to sell their material much below than their cost to compete with the cheap exempted imported material resulting into billions of rupees losses," the letter concluded.
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