The Pakistan Vanaspati Manufacturers Association (PVMA) has criticised the Economic Co-ordination Committee (ECC) of the Cabinet for not extending Duty Tax Remission for Exports (DTRE) scheme across Pakistan, official sources told Business Recorder.
The ECC, presided over by Finance Minister Dr Abdul Hafeez Shaikh, in its meeting on December 7, 2010 approved the DTRE scheme, called 'fiscal relief to rehabilitate economic life in Khyber Pakhtunkhawa (KP)', FATA and PATA. However, insiders are of the view that this scheme is meant only for one family of KP, as Hattar and Hub have been excluded from the scheme. Currently, PVMA comprises of 94 units, which are manufacturing vegetable ghee and cooking oil in the organised sector. The member units of PVMA contribute more than Rs 40 billion to the national exchequer in the form of duties and taxes.
According to the PVMA, significant disparity has cropped up after issuance of SRO (1) 2010 of December 13, 2010 by the FBR. Under this SRO, the DTRE facility has been extended to the ghee manufacturers and exporters of KP and Balochistan, excluding Hattar and Hub.
Initially, DTRE provision was applicable to the entire country, but was withdrawn under SRO No 176(1) 2004 on March 22, 2004. Since the discontinuation of the DTRE, PVMA has been submitting and pleading at all the concerned fora for its resumption, but inexplicably the facility has been resumed only for these two provinces ie KP and Balochistan, axing Hub and Hattar.
"The decision to restore DTRE only for specific areas is quite discriminatory and unjustified, which will result in extending favourable conditions to only a few members of the PVMA and depriving the majority of ghee manufacturing units, especially those situated in Hattar," said Zafar Hameed Hashmi, Secretary General, PVMA, in a letter to the Commerce and Industries Ministers.
According to the PVMA, if the facility has been given to KP and Balochistan, then it must cover the entire territories of these provinces.
A PVMA delegation, headed by its Chairman, Muhammad Ikram, is also trying to contact different Ministers to seek time for review of the controversial decision of the ECC.
According to official documents available with this scribe, meetings of the Ministry of Commerce, FBR and stakeholders were held to discuss the proposal of the Finance Division, duly approved by the Prime Minister for allowing edible oil imports under DTRE. In these meetings prospects of extending the same benefit for Balochistan was also discussed and it was observed that terrorism had also adversely affected the province. In this context, the decision of the Senate standing committee on commerce, headed by Ilyas Bilour, is also relevant which had desired that necessary steps be taken to allow refund of 2 percent income tax out of 3 percent and 100 percent excise duty to the exporters of ghee from KP and Balochistan.
After detailed deliberations, the ECC took the following decisions: (i) DTRE may be allowed for manufacture and export of ghee only; (ii) DTRE facility be subjected to provision of average export made by the manufacturers-cum-exporters during the last four years plus enhancement up to 20 percent and the facility be provided on the basis of industries' track record and performance; (iii) time limit will be 90 days for utilising the imported palm oil under DTRE scheme. This period will be counted from the date of Import General Manifest (IGM) to export date of the consignment; and (iv) export will be allowed in foreign exchange only.
The ECC argued that Hattar and Hub are peaceful areas near Karachi and Rawlpindi. Hence, these areas do not need 'special treatment'.