Excise duty withdrawal from Fata and Pata: ghee units to face closure, PVMA warns government

The Pakistan Vanaspati Manufacturing Association (PVMA) on Tuesday cautioned the government that withdrawal of excise duty from Federally Administered Tribal Areas (Fata) and Provincially Administered Tribal Areas (Pata) would result in closure of ghee industry in settled areas.
Addressing a press conference here on Tuesday, PVMA Chairman Shaikh Ikram expressed his reservations about the ongoing negotiations between the government and Fata leaders in order to withdraw the decision, but in such a case they would have to close down their units, as they did not have alternative option, he added.
He said that the levying of 15 percent central excise duty irrespective of the area, on the manufacturing stage, was a legitimate decision of government, but the representatives of Fata and Pata were agitating un-necessarily.
Referring to the special anomaly, he said that the vegetable ghee and cooking oil units located in Fata and Pata were being exempted from the payment of sales tax on imported edible oil as well as income tax as compared to the settled areas, where these units had to pay 20 percent sales tax, 3 percent withholding tax, plus 15 percent general sales tax (GST) at the manufacturing stage. Resultantly, the units of settled areas lag behind from Fata and Pata units.
Shaikh Ikram also said that despite imposition of excise duty, Fata/Pata vegetable ghee/cooking oil units were enjoying exemption of 3 percent withholding tax on imported edible oils, 1 percent income tax on the purchase of local edible oils in addition to enjoying total exemption from the payment of sales tax on imported tin plate, chemicals, electricity, gas, etc.
According to PVMA calculations, the units in Fata and Pata enjoy exemption of withholding tax of Rs 1,362 per tonne, sales tax on imported tin plate and others taxable inputs Rs 578 per tonne and Rs 455 per tonne exemption of income tax on local purchase of edible oil, and are enjoying a total exemption of Rs 2,395 per tonne.
He said that any downward change in the excise duty levied by the government in the budget 2004-05 would not only have adverse effect on the vegetable ghee/cooking oil units in the settled areas, but also deprive the government of Rs 1.5 billion revenues.To a question, he said, they were striving hard to provide maximum relief to the consumers and have reduced Rs 60 on the 16kg tin.
To another question about future prices, he said that it depends upon the situation in the international market and they did not have any intention to change the prices.