The Central Board of Revenue (CBR) is likely to move a summary to the Economic Co-ordination Committee (ECC) of the Cabinet seeking protection for the Polyester Staple Fiber (PSF) chain to benefit the textile industry.
Sources told Business Recorder on Friday that the tax authorities had given a presentation to the Adviser to the Prime Minister on Finance Dr Salman Shah on March 7, 2007, to discuss issues pertaining to the PSF chain. The presentation mainly focused on four areas encompassing possibility of inclusion of PSF under the Duty and Tax Remission for Export (DTRE) scheme; import trends of synthetic textile during current fiscal; local PSF textile industry and import of synthetic fiber under the DTRE scheme.
Sources said that some decisions were also taken during the presentation to facilitate the PSF chain. In this connection, the board would prepare a summary for the Adviser to the PM on Finance for approval. Subsequently, it would be placed before the ECC.Sources said that the complete PSF chain starts from local procurement or import of pure terephathalic acid (PTA) till preparation of yarn etc. The incidence of tax on the import of PSF and that procured from local market has also been analysed.
Similarly, another aspect is to maintain balance between the import of PSF and that procured from the local industry. The international price fluctuation of PSF has also impacted its import value. In the same manner, detailed analysis was done on PSF chain.
The CBR has also received a demand of the textile sector to include PSF in the DTRE scheme, which was earlier excluded in last budget. Prior to budget 2006-2007, PSF import was liable to duty @ 6.5 percent. In case of export no drawback was permissible. On the other hand, PSF was importable duty free under DTRE scheme.
This had created an uneven atmosphere for the industry. The importers of the PSF fiber under DTRE are reportedly dumping the product in the market, which has created difficult situation for the local manufacturing industry. PSF was excluded from the DTRE scheme because there was sufficient local manufacturing capacity of this item and the industry needed protection against these types of manipulations. Sources said that presentation made to Dr Salman Shah also examined that whether PSF be included into the DTRE scheme.