Re-meltable iron, steel scrap: six ST rates take effect from June 4, 2014: FBR

The six sales tax rates of Sales Tax Special Procedure Rules, 2007 would be applicable on the imports made by commercial importers of re-meltable iron and steel scrap from June 4, 2014. The FBR has amended the Sales Tax Special Procedure Rules, 2007 through an SRO.1028(I)/2014 issued here on Wednesday.
The FBR has issued the amendments to the Sales Tax Special Procedure Rules, 2007 to be applicable retrospectively on commercial importers of re-meltable iron and steel scrap from June 4, 2014. The FBR has removed an ambiguity in collection of sales tax on the imports made by commercial importers of re-meltable iron and steel scrap. Instead of collecting 17 Sales Tax, the FBR would collect six sales tax rates under Sales Tax Special Procedure Rules, 2007 on the imports made by commercial importers of re-meltable iron and steel scrap.
Under rule 58F, the provisions of the Chapter shall apply to all steel melting, steel re-rolling, ship breaking units and to Pakistan Steel Mills, Heavy Mechanical Complex and Peoples Steel Mills, wherever applicable. Following is the text of the notification issued here on Wednesday: SRO.1028(I)/2014: In exercise of the powers conferred by sub-section (1) of section 71 of Saks lax Act, 1990 read with clauses (9) and (46) of section 2, sections 3 and 4, sub-section (2) of section 6, section 7, section 7A, clause (b) of sub-section (1) of section 8, clause (a) of sub-section (2) of section 13, sub-sections (2A) and, (3) of section 22, sections 23 and 60 thereof, the Federal. Government is pleased to direct that the following further amendments shall be made in the Sales Tax Special Procedure Rules, 2007, namely:
In the aforesaid Rules, in rule 58F, after clause (a), the following new clause shall be inserted, namely: "(aa) commercial importers of re-meltable iron and steel scrap;". This notification shall be deemed to have taken effect from June 4, 2014. The FBR had assured the steel industry that it would review duties and taxes on the import of steel products - steel billets, wire rods, and steel bars - to curb the rising misdeclaration, sources said. Industry sources said that on the request of Pakistan Steel Melters Association and Pakistan Ship Breakers' Association, a meeting of the FBR and industry stakeholders was held last week in Islamabad to discuss the issues related to domestic steel industry. The meeting was presided by Tariq Bajwa, Chairman FBR and Members Muhammad Ashraf Khan and Nisar Muhammad.
Representatives of all the associations, including Pakistan Steel Melters Association, Pakistan Ship Breakers' Association and Pakistan Re-Rolling Mills Association, gave their inputs to the FBR chairman and demanded levying up to 40 percent regulatory duty or special cess on the import of alloy and non-alloy steel products, ie, steel billets, wire rods, and steel to protect the domestic industry, which is facing losses due to illegal import of steel items.
After listening to the industry's point of view, the FBR chairman and Members Customs agreed that duties and taxes need to be reviewed on the import of steel billets, wire rods, and steel bars, sources said. According to steel industry representatives, presently a huge quantity of non-alloy products is being imported under the garb of alloy steel (including steel billets, steel bars and wire rod) from China at lower duty. Although there is some 5 percent custom duty on the import of these items, but it is zero when imported under the Free Trade Agreement (FTA) with neighbouring country.
During the meeting, the FBR chairman also asked all the associations/representatives to submit their cost sheets and workings, etc, after which the government will take a decision which, he assured, will be in the larger interests of the industry as well as the country. The industry representatives informed the meeting that several countries including Turkey, EU, USA, Philippines, Vietnam, Malaysia, affected by Chinese exports, have levied special duties/cess up to 40 percent of the value in order to protect their jobs and industries. While, some of the countries have also put NTBs (Non-Tariff Barriers) to protect their steel industry, they added.
In addition, some governments are also asking their Chinese counterparts to address these issues in the light of Bilateral Trade Treaties which allow imposition of special duties/cess unilaterally to protect the domestic industry. Sources further said that it had also been pointed out in Islamabad meeting that if the federal government didn't take a swift action, Pakistan Steel Mills' revival would be stalled and the government's revival packages amounting to Rs 18.5 billion go down the drain. The country's largest state owned steel producing entity was also being affected seriously due to massive cheap steel imports from China.