To remove the hurdles faced by steel importers during customs valuation, the Central Board of Revenue (CBR) has decided to review the formula for accurate determination of customs duty on the import of stainless steel sheets and allied products, sources told Business Recorder here on Sunday.
In this regard, the CBR is consulting collectors of customs for taking revised prices of imported steel products for the assessment of the customs duty.
The agreed value of steel sheets between CBR and steel industry in US dollars will help in smooth clearance of imported steel reducing daily demurrage charges to be paid by the importers in case of valuation disputes.
Generally, customs wants to take higher value of imported steel for charging more duty, whereas importers press for lower valuation for paying less duty.
For valuation purposes, customs authorities use the rates given in various international magazines, like London Metal Exchange (LME) and Metal Bulletin Research (MBR), for calculation of import duty of stainless steel sheets etc.
However, the prices and values given in these magazines were of superior quality products. The local industry import secondary quality steel sheets on which duty could not be ascertained on the basis of prices specified in LME/MBR.
Sources said that the Collectorate of Customs, Appraisement, Karachi and All Pakistan Stainless Steel Importers and Traders Association, Gujranwala recently convened a meeting to resolve the valuation disputes of stainless steel sheets (magnetic/non-magnetic) and to review the existing agreed values.
On the issue of valuation of non-magnetic stainless steel sheet/coil AISI 304 (secondary quality), sources said the average prices reported in the MBR for October-December 2003 shall be taken as the base price for the assessment irrespective of their sizes/thickness, while 30 percent discount therefrom shall be given to secondary quality material. Freight charges at the rate of US dollar 45/MT shall be added in both cases.
For calculation of import duty, the collectorate and the association have worked out the prices of these stainless steel sheets imported from Taiwan, South Korea, Japan and Europe taking into account LME and MBR.
Sources said in case no specific LME price for any zone or particular months is available, the average prices of the nearest origin and prices of the previous or advance month may be taken as the relevant for the assessment.
For example, currently no LME price for these goods of USA origin is available. Therefore, prices of goods of European origin may be taken as relevant for the assessment purposes.
Regarding valuation of magnetic stainless sheet/coils of AISI-400 series of secondary quality, sources said that since prices of these quality products are neither appearing in LME nor reported by MBR, therefore, in order to keep the rational / nexus of valuation between magnetic and non-magnetic, it was agreed upon by the association that the existing practice of keeping a difference of US dollar 325/MT between agreed values of magnetic and non-magnetic shall be continued, resulting thereby an increase in the price of magnetic stainless steel from US dollar 825/MT to US dollar 900/MT.
On the issue of stainless steel/coils/circles of AISI 200 series of secondary quality, the Collectorate Appraisement said that the Ministry of Commerce had allowed import of 'AISI 200 series' during the current financial year.
So far the assessment of this product has been made at par with the prices of AISI 300 series.
The association pleaded that AISI 200 has low nickel percentage (1-2 per cent) as compared to 8-10 per cent in AISI 300 series, which is the prime factor for pricing.
Therefore, the price of this item should be fixed at the rate of US $1000 per tonne (PMT).
The second issue is that the Re-Rolling Mills Association has been complaining that the steel circles should be assessed on higher value to the extent of 10 percent to 20 percent from base material as they are manufactured from complete sheets.
The importers confronted that these circles are made from leftover material. Presently, these circles are being assessed at par with prices of stainless steel sheets in continuation of years long past practice.
The Collectorate Appraisement pointed out that the chemical composition of AISI 200 and 300 (stainless steel/coils/circles of AISI 200 series of secondary quality) shows that in AISI 200, percentage of nickel is one per cent to 1.75 per cent, meaning thereby that approximately 17.50 Kg of nickel is used in one tonne of stainless steel while in AISI 304, this percentage is between 8.00 to 10.50, meaning thereby that in one tonne of AISE 304, around 80 kg of Nickel is used.
Presently, nickel price as per LME is around US dollar 12000/MT meaning thereby that in AISI 200 nickel valuing US dollar 240 is used whereas in AISI 304, nickel valuing US dollar 960 is used in the manufacturing of one tonne of stainless steel.
This shows a huge difference of value i.e. around 75 per cent. In this scenario, the demand of association for 20 percent discount for AISI 200 from AISI 304 seems justified.
The Collectorate, however, opined that a discount of 15 percent should be considered reasonable for accurate valuation of these steel items.
On the other hand, All Pakistan Steel Re-Rolling Mills Association opposed the idea of applying average formula and contended that each gauge ie 0.4 to 2 mm should be assessed individually and that difference between prices of AISI 200 and AISI 300 should not be more than US dollar 150 PMT.
Collectorate, Appraisement stated that restoration of gauge-wise assessment would lead to an un-ending dispute, particularly when the goods are being imported as a bunch of secondary lot carrying various sizes.
Therefore, the Collectorate is satisfied with the formula of assessing at the rate of 20 per cent loading on price of 2 mm size (the only size reported in LME Metal Bulletin), which will cater for average of prices of all the lighter sizes.
Furthermore, it will not only resolve the valuation dispute but would be helpful for smooth clearance, both at examination and processing stages.
It may also be added that prices of AISI 200 series are not published in the Metal Bulletin, hence for assessment, reliance has to be made on the prices of 304 series with reasonable discount on the basis of nickel percentage-difference, the Collectorate of Appraisement added.