Despite large scale tariff rationalisation, customs duty contributed around 20.2 percent and 12.2 percent of indirect taxes in total federal tax receipts during 2009-10. The FBR issued a detailed analysis of customs duty collection on Saturday, showing import duty as an important source of collection despite massive tariff rationalisation during 2009-10.
The gross and net collections grew by 7.2 percent and 8.8 percent, respectively during 2009-10. The difference between the growth of gross and net collections was the lesser payments of refunds/rebates by around Rs 1.9 billion. The target of customs duty was Rs 164.9 billion against which collection of Rs 161.5 billion was realised. The shortfall was mainly due to decline of 0.3 percent in the dutiable imports.
There was a higher degree of vulnerability of collection as only four items ie petroleum products, automobiles, edible oils, iron & steel and machinery constituted 41.4 percent of the total collection during 2009-10. Similarly, 70.6 percent of the total collection was realised from 15 PCT Chapters.
Automobile (Ch: 87) was the top revenue spinner of customs which constituted 15.1 percent of the customs duty during 2009-10. The collection of automobile grew substantially, by 43.7 percent, during 2009-10 due to sizeable growth of 48 percent in the value of dutiable imports.
Due to extremely low prices of imported HSD in first 4 months of the fiscal year, collection of customs duty declined by 1.8 percent against a low growth of 1.7 percent in the dutiable imports. The main reason for this performance was lower prices of HSD resulting in lower overall collection of petroleum products. Resultantly, the share of petroleum products dropped from 12.4 percent in 2008-09 to 11.4 percent in 2009-10.
As far as edible oils were concerned, a reduction of 9.5 percent in the collection of customs duty was recorded in 2009-10 as compared to FY 2008-09. Palm oils are the major revenue generating source of edible oils. Since palm oils are subject to specific duty rates, the collection of customs dropped due to decline in the imported quantity of crude palm oil and RBD palm oil by 24 percent and 39 percent respectively.
The collection of mechanical machinery (Ch:84) dropped by 24.1 percent mainly due to 27.8 percent decline in the dutiable imports during 2009-10. Major decline was recorded due to lesser imports of mechanical appliances, laboratory equipment, pumps and engines. The collection of duty from electrical machinery decreased by 29.2 percent due to decline in its imports by 26 percent. Around 52 percent decline was witnessed in the collection of telephone equipment's.
Similarly, 36 percent reduction in dutiable imports was recorded in electrical generating sets and rotary converters; resultantly, the collection from these items dropped by 39 percent. On the other hand, collection on iron and steel (Ch: 72) grew by 6.1 percent against 15.3 percent growth in the dutiable imports. As far as articles of iron and steel (Ch: 73) were concerned, the collection dropped by 12 percent due to decline of 23.8 percent in dutiable imports.