Customs duty collection in fiscal year 2012: only five items made 48.2 percent contribution

Only five items, ie, vehicles, petroleum products, edible oil, mechanical and electrical machinery contributed 48.2 percent to collection of total customs duty during 2011-12. According to the latest customs data of the Federal Board of Revenue released here on Saturday, there is a considerable degree of concentration on collection of customs duty on few items; only five items ie vehicles, petroleum products, edible oils, mechanical machinery and electrical machinery contributed 48.2% of the total collection during 2011-12.
Similarly, 58.2% of the total collection of customs duty has been realised from 10 major commodities groups (Pakistan Customs Tariff chapters). As per FBR data, the automobile (Chapter: 87) is the top revenue spinner of customs duty which constituted 19% of the total customs duty during 2011-12. The collection of duty on automobile grew by 53.4% during 2011-12 due to growth of 37.2% in the value of dutiable imports. The customs duty mainly emanated from motor cars (Chapter: 87.03) which are subject to tariff peaks. Dutiable imports of motor car etc has considerably improved by 51.4% which has vastly improved the collection from Rs.18.4 billion in 2010-11 to Rs. 33.5 billion in 2011-12. The commendable performance of customs duty from automobile sector has improved its share of 14.5% during 2010-11 to 19% in 2011-12.
As per FBR data, the petroleum products have been the second major source of customs duty. Some of the major petroleum items like crude oil, furnace oil, motor spirit, jp-1 etc are exempt from customs duty. Overall imports of petroleum products (CH: 27) grew substantially by 31.1% while dutiable imports have recorded negative growth of 15.3%. The decline in dutiable imports has resulted in drop of customs duty of POL products by 18%. The customs duty from petroleum products mainly depend on the level of contribution by High Speed Diesel Oil (HSD). In fact, the value of imports of HSD has come down considerably by 17.2% and its collection has also recorded decrease by 19%. In fact, the imported quantity of HSD has dropped by 14% which has largely affected its collection. The decline in the collection of HSD has lowered the share of petroleum products from 11% in 2010-11 to around 7% in 2011-12.
Edible oils are the third major source of revenue generation regarding customs duty. Edible oils are subject to specific customs duty rates. During 2011-12, a growth of 6.7% in the collection of customs duty from edible was recorded as compared to FY: 2010-11. The major contribution in the collection of customs duty comes from the import of palm oil. The collection from palm olien has significantly dropped from Rs.9.8 billion during 2010-11 to Rs. 6.3 billion in 2011-12 due to decline in the imported quantity by 35%. This decline has largely compensated by R.B.D palm oil, FBR''s data said.
The dutiable imports of mechanical machinery (CH: 84) has grown modestly by 6.8% while collection of customs duty from this item grew by 6.2%. On the other hand collection of customs duty from electrical machinery has increased by 4.2% while its dutiable imports improved by 12.7%. This mismatch is mainly due to only 2% growth in the collection of import of mobile phones while its value of import grew by 9.9%. Moreover, decline in the collection of motor heaters and board, console, disc etc have also contributed to lesser collection due to decline in dutiable imports, the FBR said.
The collection of plastic items has declined by 0.3% due to low growth of 1.3% in its dutiable imports during 2011-12. As far as iron and steel (Ch: 72) is concerned, the collection recorded a low growth of 3.2% against 11.8% growth in dutiable imports. This conspicuous mismatch mainly caused by higher dutiable imports of flat-rolled products of iron or non alloy (PCT 72.08) by 66.9% during 2011-12 and its collection grew only by 19%. The remaining three major revenue spinners of customs duty have recorded negative growth in 2011-12 as a result of declined in their dutiable imports, the FBR concluded.
The FBR said that the customs duty is levied on dutiable imports and contributing significantly to the national exchequer. In fact, it has contributed around 12% to federal tax receipts during 2011-12. Apart from tariff peaks, there have been 8 slabs of customs duty rates applicable during 2011-12 i.e. 0%, 5%, 10%, 15%, 20%, 25%, 30% and 35%. Apart from these slabs, there are tariff peaks applied on automobile and alcoholic beverages. There is an escalated tariff in Pakistan i.e. 0-5% applied on primary goods, 10-15% on intermediate goods and 20% & above on finished goods. Dutiable imports constitute around 40% of the total imports during 2011-12. This reflects that 60% of the total imports have been duty free during 2011-12 mainly through SROs. This phenomenon can also be viewed in the context of 16% growth in the value of total imports during 2011-12 while dutiable imports grew by only 6%. The gross and net collection of customs duty has been Rs 225.4 billion and Rs 216.9 billion respectively during 2011-12. The difference between the gross and net collection is the refund/rebate payment. In fact, Rs.8.5 billion has been paid back as refunds/rebates during 2011-12 against the same payments in the corresponding period last year. The net collection of customs duty fetched a growth of 17.3%. The target allocated to the customs duty for 2011-12 was Rs 215 billion which was surpassed by 0.9%.
It is encouraging that receipts of customs duty exhibited a double digit monthly growth throughout the year except July, 2012 where lesser dutiable imports of mechanical machinery and petroleum products affected the collection, the FBR stated.