Khyber Pakhtunkhwa, Balochistan ghee makers: IHC suspends implementation of DTRE

The Islamabad High Court has suspended implementation of Duty and Tax Remission for Exports (DTRE), which was being given only to exporters of ghee/cooking oil of Khyber Pakhtunkhawa (KP), excluding Hattar and Hub. Qamar Afzal, Advocate, appeared on behalf of Hafeez Iqbal and Ghee Industries (Pvt) Limited, whereas Commerce Ministry was represented by Ghafi Muhammad Chandio, Deputy Attorney General (DAG).
According to the judgement, the Deputy Attorney General requested for a short judgment to file comments and make submission regarding the same. The counsel for petitioners contended that under Section 16 of Customs Act, read with Section 3 of Export Control Act, 1950 only federal government has the authority to prohibit or restrict import and export of goods into or from Pakistan under section 249 of Customs Act, the Federal Board of Revenue (FBR) has the authority to frame rules, but these rules cannot go beyond the scope of the Act.
He further contended that in the DTRE case, FBR in exercise of powers conferred by Section 219 of the Customs Act, has issued SRO No 113 (1), 2010. By virtue of said SRO the duty and tax remission for export facility has been given, but this facility has been extended to the province of Khyber Pakhtunkhawa (KP), except Hattar and Hub.
In such way the manufacturers of cooking oil/ghee ,situated in Hattar (KP) and Hub (Balochistan) have not only been discriminated against, but have been practically stopped from exporting ghee to Afghanistan. According to the counsel for petitioner, the impugned SRO is against Section 6 16 of Customs Act and also a violation of article 18 and 25 of Constitution of Pakistan.
After hearing arguments, IHC Justice Riaz Ahmad Khan suspended the impugned SRO and fixed next hearing date of January 20, 2011. The ECC, in its meeting on December 7, 2010 had approved the DTRE scheme, called 'fiscal relief to rehabilitate economic life in Khyber Pakhtunkhawa (KP)', FATA and PATA. However, insiders argue 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 had been submitting and pleading at all fora for its resumption, but inexplicably the facility has been resumed only for these two provinces ie KP and Balochistan, but 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, depriving 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 Minister. According to the ECC, Hattar and Hub are peaceful areas near Karachi and Rawlpindi. Hence, these areas do not need 'special treatment'.