The Pakistan Polypropylene Woven Sacks Manufacturers Association (PPWSMA) has demanded of the government to impose ban on import of polypropylene woven sacks under the SRO 410.
The association said the country is over capacity in polypropylene woven sacks production and in such situation its import was adversely hitting the local industry.
In a letter to the Central Board of Revenue (CBR), the PPWSMA said SRO 410 was being misused grossly and importers were indulged in misdeclaration of quantity by showing extraordinary requirement of polypropylene woven sacks.
It is interesting to note that there is no customs duty and sales tax on the export of PP bags manufactured by Pakistani polypropylene industry, still exporters import finished PP sacks.
This is only on account of extremely high customs duty on the basic raw material of polypropylene woven sacks, ie, polypropylene granules H.S. Code 3902-1000, ie, 20 percent.
On the pretext of re-export, the imported polypropylene woven sacks under SRO 410 are sold with huge tax-free profits in the local markets of Karachi and Faisalabad.
The local industry is, thus, facing closure and unemployment as the inclusion of polypropylene woven sacks under SRO 410 is creating employment in exporting countries such as India and China.
Furthermore, SRO 410 has benefited the manufacturers of polypropylene bags in the Export Processing Zone (EPZ), wherein they are exploiting the levy of high customs duty on the imports in Pakistan.
Polypropylene units in the EPZ supply their entire production in Pakistan, and do not export their production which is in complete violation of rules and regulations governing the constitution of the EPZ, ie, 20 percent to be sold in local market and 80 percent in the foreign market.
The EPZ polypropylene manufacturers in collusion with the staff of the EPZ indulge in massive tax evasion by selling polypropylene woven sacks and the imported polypropylene granules H.S. Code 3902-1000 at zero-rated customs duty in the local markets.
There is only one PP unit in the EPZ, which only prints the imported PP sacks and supply them in the market.
The association maintained that several presentations were made but to no avail and this has encouraged massive tax evasion by the EPZ polypropylene units.
The association has requested the CBR to protect the local polypropylene industry which is under threat from the availability of polypropylene granules imported for Afghanistan as the government of Pakistan has allowed the transit facility for PP granules for Afghanistan.
The PP units in Fata, paying no sales tax, customs duty and electricity charges, are also the main beneficiaries of high customs duty on PP granules in Pakistan.