The nominal growth in customs duty during the first quarter (July-September) of 2006-07 was due to the massive tariff rationalisation on imports of raw materials/inputs announced in the budget, sources said on Wednesday.
Commenting on short collection of customs duty of Rs 28.9 billion in July-September 2006-07 against Rs 28.6 billion, sources said that the government would suffer revenue loss of Rs 6.7 billion due to change in customs duty structure. The revenue impact due to these relief measures was evident from duty collection figures in the first quarter of current financial year.
Moreover, the Board is not collecting customs duty on certain items on which sales tax is being collected at import stage. For example, the Board is collecting reasonable amount of sales tax on import of POL products, fertilisers and sugar.
Sources said that the restriction of five years on import of vehicles under gift, personal baggage and transfer of residence schemes is one of the major factors, which resulted in less amount of duty collection from vehicles. Prior to the restriction, a large number of over five years old vehicles were imported. As a result of this change, the duty collection drastically came down during the quarter.
Under tariff rationalisation, the customs duty was reduced on 200 raw materials and parts/components, 100 different types of equipment of broadcasting sector, 95 machinery/equipment, 89 types of electrical appliances, 54 items of telecommunication-related equipment, 49 industrial inputs and duty was reduced on import of 43 organic/inorganic chemicals in the budget.
Duty on 80 items belonging to construction and steel sectors was reduced. It included duty reduction on secondary quality flat rolled steel products from 25 percent to 20 percent.
The duty rate on trucks of five tons and above capacity was reduced to 40 percent and that on their CKD kits to 10 percent. Dump trucks and trailers for prime movers were placed in the same duty slab. Customs duty on import of prime movers was slashed to 15 percent and was exempted on CKD kits to the extent of non-indigenised parts. Duty on CNG buses in CBU condition was brought down from 20 percent to 15 percent.
Duty has been either abolished or reduced on over 200 raw materials, parts and components used in the sectors like aluminium, condensers manufacturers, electric fans, shoes/footwear, gas appliances, horticulture, master batches, screw manufacturing, seamless pipes industry, steel, foundry, casting and forging sector, telecom, PVC industry and stationery manufacturers.
Duty was reduced from 25 to 20 percent and 10 to 5 percent on 12 types of cutting tools of artisans, skilled and semi-skilled workers, whereas 14 chemicals of the textile processing industry were exempted from customs duty. Duty on 16 machine tools has been brought down from 25 to 20 percent and 10 to 5 percent.
Duty on import of 11 different types of raw materials used by the plastic industry has also been reduced. Moreover, seven inputs of leather industry were exempted from customs duty.
Duty on entire tariff heading 8471, for computers, except CRT monitors in second-hand condition, has been exempted. Computer parts and accessories falling under HS headings 8473.3010 to 8473.5000 have also been exempted from customs duty.
The import of bicycle chain parts and components was exempted from customs duty, while duty on bicycle chain and free wheels was slashed from 20-25 percent to 15 percent.
Therefore, all these factors resulted in decrease in customs duty during the first three months of the current fiscal year, sources said.