The Central Board of Revenue (CBR) will suffer a huge loss of Rs 6 billion following exemption of customs duty on the duty-free import of 3000-4000 CNG buses under the new ''Green Punjab Transport Scheme''.
Official sources told Business Recorder on Sunday that the CBR received a request of chief secretary Punjab to give exemption of customs duty on the import of diesel-free 3000-4000 buses to gradually phase out diesel buses by introducing CNG buses in the next three years. These buses would be imported under CBU condition and presently liable to 20 percent customs duty, 15 percent sales tax and six percent withholding tax under the Pakistan Customs Tariff (PCT) 2005-2006.
They said that India had not given any exemption of customs duty on the import of CNG buses when the Delhi City Government Project was launched three years back. Indian importers were given other subsidies, but no tariff concession was offered to them. ''Green Punjab Transport Scheme'' appeared to be the same programme to introduce environment-friendly buses.
A study conducted by CBR revealed that importers usually prefer imported diesel buses as compared to the CNG buses because the landed cost of the latter is 30 percent more. The increased landed cost force the importers to prefer diesel buses, whose cost is comparatively less. The duty structure on the import of CNG and diesel buses is equivalent, but the landed cost is more due to many reasons. The demand of CNG buses is less in the global market as compared to diesel buses. Presently, China is one of the biggest manufacturers of such buses and ready to sell buses to Pakistani importers.
In Pakistan, all the assemblers have the capacity to manufacture 6,000 chassis and engine-fitted buses on an annual basis.
However, CBR has given certain incentives to the assemblers and manufacturers of buses in budget 2005-2006. This included import of raw materials and sub-components and components of buses at concessional rate of customs duty. The more local assembling of buses ultimately increase revenue collection. For example, 15 percent sales tax is collected on the local supply of these assembled buses, which could not be generated on the import of buses in CBU condition.
Officials said that the CBR is not ready to give special or exemptions as far as import of duty-free CNG buses is concerned. The CBR favours government policy of giving maximum incentives to the local assemblers. Secondly, Punjab government is not the direct importer of these buses. They wanted to import buses through the provincial government and later they would finalise the names of importers intended to enjoy duty free import facility.
Instead of outrightly rejecting the viewpoint of the Punjab government, the CBR has decided to convene a meeting of local assemblers, importers, Ministry of Industries and Ministry of Communication to ascertain whether the proposed exemption would hurt the local industry or not. In case the CBR gives permission, the CNG buses would be replaced with the locally assembled diesel buses. This would definitely have negative implications on the local industry.