64 percent of customs collection comes from 10 major commodities: FBR quarterly review

Around 64 percent of the total collection of customs was contributed by 10 major commodities during first half of 2010-11. The FBR quarterly review issued on Thursday revealed that like sales tax on imports bulk of the collection of customs emanated from 10 major commodities. In fact, around 64 percent of the collection of customs has been contributed by 10 major commodities/chapters.
Automobile, the leading revenue generator of customs duty, has improved its collection by 28.2 percent during first half of 2010-11 due to 32.2 percent growth in the dutiable imports and its share in customs duty has also gone up from 13.6 percent during July-December, 2009-10 to 15.2 percent during first half of 2010-2011.
Edible oils (CH:15) is the second major revenue generation source of customs duty during this period. Its collection grew by 19.6 percent as compared to 72.8 percent growth in the dutiable imports. The reason for this conspicuous mismatch is that specific rates of customs duty are applied to edible oils. So any increase in the prices of imported edible oil can not affect the collection of customs duty. On the contrary, collection from edible oils has been negatively affected by 84 percent decline in the imported quantity of R.B.D palm oil. Another reason behind less collection from edible oil is the reduction of customs duty rate for Crude Palm Oil from Rs 9000/MT in 2009-10 to 8000/MT in 2010-11.
The collection from petroleum product (CH:27) is the third productive revenue generating source of customs duty. The collection of customs from petroleum has dropped by 8.8 percent during first half of 2010-2011 due to 9 percent decline in its dutiable imports. Moreover, the share of POL products has also come down from 11.5 percent in first half of 09-10 to only 9.1 percent in first half of 2010-11. Now the question arises why the collection of sales tax from petroleum products grew by more than 20 percent, while customs duty has declined by 9 percent during July-December, 2010-11? It can be clarified that imports like furnace oil, motor spirit and JP-1 are exempt from customs duty, while these items are subjected to sales tax and contributes substantially in sales tax collection. Similarly, High Speed Diesel (HSD) is the most significant source of customs duty and sales tax. The tariff differential is also one of the reasons of high collection from HSD under sales tax and low in customs duty. Customs duty is charged @ 7.5 percent on HSD and sales tax is levied @ 17 percent.
The collection from mechanical machinery (CH:84) has recorded 7.1 percent growth during H1:2010-11 as compared to previous year while the collection from electrical machinery (CH:85) declined by 0.6 percent. The remaining chapters/commodity groups improved their collections due to growth in the dutiable imports during July-December, 2010-11, the report added.