The Federal Board of Revenue's (FBR) move to reduce the utilisation period of input goods from two to one year under Duties and Taxes Remission for Exports (DTRE) Scheme has negatively impacted exporters. Accusing the FBR of ignoring repeated requests, exporters termed the decision irrational.
Industry sources told Business Recorder on Wednesday that exporters had approached the FBR and the Commence Ministry on the issuance of SRO601(I)/2012 in the budget (2012-13) which considerably reduced utilisation period of input goods under the DTRE scheme. This SRO negatively impacted exports as manufacturers could not comply with reduced timelines for utilisation of raw material to be used in exports.
If the said SRO remained operative, it would have serious implications on all major export industries, sources said. Keeping in view the seriousness of the issue, different export associations tried to make presentations to FBR's Member, Customs, about the decision's negative implications. However, FBR Member Customs is yet to give an appointment.
At present, input goods acquired under the DTRE Scheme would be utilised in the manufacture and export of output goods within 24 months from the date of Approval of DTRE Application, while in last budget 2012-13, through SRO601(I)/2012, the FBR reduced the utilisation period of input goods under the DTRE scheme. Sources explained that exporters were already facing problems such as a lengthy approval process, right from processing to checking of files and physical visits of premises and then grant approval of only 25% of total applications in the first stage, while the remaining 75% after 1-2 month processing.
The FBR has now again reduced the time period of the consumption of the input goods under the DTRE Scheme which may create very serious problem for the exporters to ensure the exports of the finished goods within the curtailed period of One Year. It is practically not possible to complete the whole exercise in one year under the amended procedure laid down in the DTRE Scheme.
At present, the whole process of DTRE Scheme facility has following steps including contract with buyer; opening of L/C; application of DTRE; approval of DTRE up to 25 % of the applied quantity; determination of Input and Output Ratio by Input Output Coefficient Organisation (IOCO/EDB); process of approval of remaining 75% quantity; import of input goods; manufacturing of goods and then export of total quantity within the remaining 7-8 month.
The reduction of utilisation period has direct negative impact on exporters which ultimately reduced important part of the national export/foreign proceeds. Due to unjustified changes, exporters bear further burden in the following shape: The exporters are already bearing delays because of gas and electricity outages and because of this limitation, they are importing important raw materials, accessories, packing materials in short orders which ultimately increase the cost of purchase, delays in preparation of export shipment, shipment sent through air, and some exporter are losing buyers due to these delays, which ultimately suffer huge losses in Exports due to various factors and it also adversely affect the foreign exchange remitted to national exchequer.
Exporters of textiles, sports and food/vegetables are also suffering because of the reduced period under the DTRE scheme. Exporters have repeatedly approached the FBR without any success, sources said. Thus, the FBR should withdraw SRO601(I)/2012 to restore the utilisation period available prior to budget 2012-2013, sources added.
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