Duty structure for steel sector: FCCI urges government to implement CCP's recommendations

President Faisalabad Chamber of Commerce and Industry (FCCI) Muhammad Saeed Sheikh has identified some serious anomalies in duty structure for steel sector and demanded immediate implementation of the recommendations of Competition Commission of Pakistan (CCP) to remove these irregularities.
Commenting over duty structure, he mentioned that there is a unlawful, unconstitutional, unfair and illogical discrimination between composite units of steel melting, furnaces, re-rolling mills and composite units of steel melters and re-rolling mills using captive power generated from indigenously available raw material verses similar steel mills using power from the national grid.
He said that this anomaly has put the steel melters using captive power in a serious fiscal disadvantage. "The steel mills using power from national grid are allowed the option of calculating sale tax liability on the basis of sales tax special procedure that is fixed sale tax calculated or on the basis of number of electricity units consuming or Ad-Valoren basis," he said and added that the option of calculating sale tax liabilities under sale tax special procedure 2007 is denied to steel melting, furnace, steel re-rolling mills or steel melting mills operating on captive power.
He said that this serious anomaly is against governments declared policy to encourage generation of power from indigenously available raw material. He further said that gap between power demand and supply resulting into inevitable loadshedding will also have many adverse effects.
Explaining these effects, he told that steel units operating on captive power generated from the use of bagasse have a fiscal disadvantage of approximately 10 percent as compared to similar steel units operating on power drawn from the national grid.
He further said that the steel units using power generated from the use of bagasse have no option but to shift their operation from captive power to the national grid, which will put a further load on the grid and consequently add to the already acute shortage of electricity.
He said that this matter was taken up with CCP who in its policy note dated 17 June 2016 to the ministry of Finance and FBR have suggested to treat both categories of steel units equally but no action appears to have been taken by the concerned authorities so far to rationalize the levy of sale tax. He has requested that the ministry of finance and FBR to implement the recommendation of CCP in true letter and spirit in order to remove this anomaly.