The government is likely to reduce customs duty from existing 15 percent to 10 percent on secondary quality Tin Mill Black Plate (TMBP) aimed at protecting local industry manufacturing electronic tinplate. Official sources told Business Recorder, Siddiqsons Tin Plate Limited (STPL) (single manufacturer), approached National Tariff Commission (NTC) to provide tariff protection to the domestic industry manufacturing prime and secondary quality Tinplate.
The same is used in making of cans/containers for packaging of foodstuff, oils, paints and many others. The applicant requested NTC to reduce customs duty from 15 percent to 0-5 percent on import of secondary quality Tin Mill Black Plate (TMBP) to protect the domestic industry. TMBP is the major raw material for secondary tin plate which is imported at 15 percent concessionary rate of Customs duty, while the finished good, ie secondary quality tinplate is imported @ 20 percent statutory rate of customs duty. The protection margin of 5 percent is not sufficient to protect the ETP. The applicant contended that the industry was not competitive against import in domestic market.
NTC conducted a public hearing with all relevant stakeholders as per NTC's procedure and concluded as under in its report placed at Annex-I: The present capacity utilisation of domestic industry is around 30 percent whereas major domestic demand of secondary quality tinplate is met by the imported ETP because of high under invoicing.
The domestic market comprises both prime quality and secondary quality tinplate. But secondary quality tinplate market is overwhelmingly dominated by imported product and domestic industry share in the secondary quality tinplate is decreasing over a period of time due to uncompetitive cost; the domestic industry, in case of secondary quality tinplate is at disadvantage at assessed value as well as at declared price against imports.
According to NTC, apparently the declared price of imported tinplate is under-invoiced, as there is a huge difference in the declared price and assessed value. The assessed value can protect the local industry better by a margin of 6 percent to 10 percent but still cannot provide a level-playing field to domestic industry. On the other hand the assessed value system is purely temporary; hence, the protection needs to be provided in the tariff.
On the basis of findings, NTC has submitted following recommendations; (i) rate of customs duty on secondary quality Tin Mill Black Plate (TMBP) may be reduced from existing 15 percent to 10 percent for industrial users of the electrolytic tinplate; (ii) anomaly in the sales tax on input and output may be removed. The final product sales tax is levied @ 16 percent while on its raw material TMBP, the sales tax is levied @ 19.5 percent. The Sales Tax may be brought at par to remove the anomaly. It is pertinent to mention here that, during the year 2009-10, NTC conducted a detailed study on the request of the same applicant and recommended reduction of customs duty from 20 percent to 10 percent on import of secondary quality TMBP. However, the NTC recommendations were only partially implemented by reduction of customs duty to 15 percent by the federal government in Budget 2010-11.
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