RD on various items: FBR seeks ECC nod for execution of Senate panel's proposals

The Federal Board of Revenue (FBR) has sought approval of the Economic Coordination Committee (ECC) of the Cabinet to implement the proposals of inter-ministerial committee of Senate regarding Regulatory Duty (RD). In a summary moved to the ECC of the Cabinet, the board stated that a large number of representations were received against RD, which was levied on 27 new non-essential/luxury/locally produced items (137 tariff lines) and increased on 31 existing items (219 tariff lines) ranging from 10 per cent to 30 per cent through SRO 1035(I) 2017 to improve balance of payment position by reversing the trend of widening trade deficit with the approval of ECC.
The local manufacturers of various items proposed the FBR for levy/increase of RD on certain locally produced goods to encourage import substitution while some trade associations approached standing committees on finance of both the national assembly and the senate. Consequently, the latter after conducting several hearings recommended to form a committee and considers all the representations regarding RD filed by different stakeholders during meeting.
Resultantly, an inter-ministerial committee, comprising representatives from FBR, ministry of commerce and ministry of finance was constituted which held several meetings and also consulted the textile division, engineering development board and national tariff commission.
A total of 53 representations were received from different stakeholders. In 41 representations, the importers and local manufacturers sought removal/reduction or partial exemption from RD claiming, inter alia, the same are input goods for their industry. In 12 representations, the local manufacturers proposed protection against cheaper imported goods through the imposition/ enhancement of RD. certain anomalies in the existing duty structure were also identified in some representations with a request for rationalization. The committee has examined all the representations regarding removal, rationalization, imposition of Rd and made recommendations.
Keeping in view, the recommendations made by the committee and to rectify tariff anomalies, RD on eight items (59 tariff lines) is proposed to be withdrawn while on six items (22 tariff lines), RD is needed to be reduced and on five items (43 tariff lines) RD is proposed to be increased. Similarly RD on 11 items (58 tariff lines) is proposed to be levied at the rates mentioned against each.
The summary stated that the impact of these measures during the remaining six months (January to June) was expected to be revenue neutral; adding that in terms of section 18(3) of the Customs Act 1969, the board with approval of federal minister in-charge was empowered to levy RD. However, this power has been challenged by various petitioners in the Sindh and Punjab high courts. Therefore, the ECC of the Cabinet is requested to grant approval in principle for the implementation of said recommendations.