Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) has approached Chairman Federal Board of Revenue (FBR) for immediate withdrawal of regulatory duty on imports of raw materials - CRC/HRC/Pipes/Tubes by auto parts manufacturers (under SRO. 655).
According to a communication of the PAAPAM received at the FBR here on Tuesday, the imports of Raw materials by PAAPAM members, being Auto Parts Manufacturers (APMs) are governed by SRO 655 of the Auto Policy.
The escalation in material costs has rendered local APMs uncompetitive against import of auto parts by Assemblers & Commercial importers, as RD has not been applied on import of finished auto parts and, thereby, the tariff differential between import of auto parts and raw materials has been drastically reduced. This is against the cascading principle, which is vital for the survival of any basic industry.
The SRO 655 is based on universally accepted cascading principle and all raw materials imports under this SRO are approved & strictly monitored by Engineering Development Board (EDB) and the FBR by issuing IORCs and through WEBOC system.
Prior to granting approval to import Raw Materials under SRO 655, EDB certifies that none of the imported raw materials are being manufactured locally. Further, the import is allowed only for in-house consumption by APMs and annual Consumptions Reports are required to be submitted to EDB and FBR to ensure that there is no misuse of SRO 655
The Regulatory Duty (RD) has been unfairly imposed on import of CRC/HRC/Pipes/Tubes being imported by the APMs under SRO 655, even though none of these "Auto Grade" raw materials are manufactured locally.
The duty has been imposed through amendments made in SRO 568, vide SROs 18 & 246 dated January 14 & March 27, 2015, respectively.
PAAPAM wishes to highlight that the levy of RD is causing irreparable damage to the small and medium sized APMs, who are now at the verge of closure.
To avoid closure of APM plants and large scale loss of jobs in the country, PAAPAM's members strongly request immediate withdrawal of RD on all raw materials, which are imported only by APMs who are registered with EDB under SRO 655.
PAAPAM members are of the opinion that the FBR has taken this unilateral action of arbitrary levy of Regulatory Duty, without understanding the ramifications of this measure on an industry which is providing direct and indirect employment to over 3 million skilled workers. Based on average family size of 5 persons, this industry is providing sustenance to 15 million persons (or over 8% of the country's population).
In light of the above, it is appealed to FBR Chairman to intervene in the matter and direct the withdrawal of Regulatory Duty on raw materials, not manufactured locally & being imported by APMs under SRO 655.
This treatment to APMs would be similar to the exemptions from imposition of RD, granted to manufacturers of CRC & other products, importing raw materials under SRO 565, the association added.
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