The government is likely to grant exemption in duties to Crescent Industrial Chemicals Limited (CICL), Karachi, which was earlier deprived of committed incentives given to other investors in Special Industrial Zone (SIZ), Windher (Balochistan), official sources told Business Recorder.
They said that though the government had withdrawn the scheme due to commitments with international financial institutions in 1994, the investors who opened Letters of Credit (L/Cs) for import of machinery up to January 31, 1996, were allowed to avail fiscal incentives/concessions, subject to the condition that their projects would commence commercial production by June 30, 1999.
However, the matter relating to extension of date for commercial production and availing of concession and duty exemption by Crescent Industrial Chemicals Limited (CICL), Karachi, remained sub judice in Lahore High Court (LHC), Rawalpindi, bench in a petition filed by Dewan Salman Fibre, claiming similar concessions for its acrylic fibre project at Industrial Estate, Hattar (NWFP), as the incentives package under discussion was available to the project located in Special Industrial Zones, while Hattar was not Special Industrial Zone.
On November 11, 1999, LHC decided that "the respondents (GoP) while considering the extension in the above said exemption (to be availed by CICL) must not place the petitioner (Dewan Salman Fiber) in disadvantageous position and following the principle of equal treatment should decide the matter of exemption".
Subsequently, CICL, at Special Industrial zone, Windher, Balochistan filed a petition in the High Court of Balochistan, taking the plea that non-availability of infrastructure facilities ie gas, water, electricity etc, had delayed its operations and that it was unable to start commercial production by the target date.
The BHC did not accept the argument and dismissed the Case on July 1, 2003. However, the party approached the Supreme Court, which directed the government to consider the request.
In compliance with the order of the Supreme Court, meetings in question were held on April 25 and July 8 last in which it was decided that it was not possible to revive concessions of SIZ for CICL, Karachi, "at this stagez", as it would set a wrong precedent for others throughout the country. However, in order to facilitate and help CICL it was asked to submit fresh proposals/suggestions, other than the incentives in the SIZ. CICL submitted the following proposals, which are supported by both BoI and CBR.
(i) The water treatment plant along with its auxiliaries and accessories worth $2 million approximately may be allowed complete exemption of customs duty, which is presently 5 percent.
(ii) In order to meet the need of electricity at most competitive prices they would require coal fired electricity and steam generation with complete accessories and its auxiliaries costing $14 million. The federal government may allow complete exemption of duties and taxes on the import of this equipment, and.
(iii) The laboratory instrumentation's equipment testing and essential components, valuing $1 million approximately may also be allowed complete exemption from customs duty and taxes for enabling them to meet the quality standards of their finished products.
Sources said that CBR has recommended to ECC to consider and approve the proposal, as Advisor to the Prime Minister has already cleared it.