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ISLAMABAD: Pakistan Association of Large Steel Producers (PALSP) has requested the government to address anomalies regarding steel sector in federal budget 2020-21.

According to the Association, in budget 2020-21 government has granted permission to wire rod manufacturers to import billets by massively reducing duties and taxes that will likely to be misused as many re-rolling mills not having wire rod manufacturing capacity will also be importing billets for rolling construction bars.

In Pakistan there are only three to four manufacturers having ability to produce wire rod by using billets. The local billet manufacturers have enough capacity to meet the demand of wire rod manufacturers. If this anomaly is not amended, it will turn into following; (i) it will not only hurt the existing construction bars manufacturers, but will shut down the steel billets manufacturing in Pakistan; (ii) it will also reduce local revenue of the government by tens of billions of rupees; (iii) it will also erode and negatively impact the precious foreign exchange of the country and; (iv) this also negates Pakistan government's make in Pakistan policy.

The Association is of the view that the melting industry heavily relies on imported heavy meltable scrap along with shredded and bundled scrap to produce quality billets and other steel products.

The customs duty on shredded and bundled scrap PCT Code 7204.4100 was brought to zero in the previous budget (2019). In the previous budget due to inadvertent mistake on part of National Tariff Commission, the customs duty on heavy meltable scrap was not brought to zero. In this budget also this mistake has not been rectified.

In order to bring the Steel Industry out of the current crisis and keep revenue generation intact, "PALSP suggested that the following anomalies in recently announced Federal Budget 2020 need to reviewed and addressed: (i) reduction in duties on billets for wire rod manufacturers: Government must withdraw the exemption in custom duty and regulatory duty on steel billets as announced in the budget 2020 for wire rod manufacturers; (ii) Customs Duty on heavy meltable scrap PCT Code 7204.4990: To bring the custom duty on HMS to zero as this is a basic and primary raw material for melting industry; (iii) equate cost of all three materials to produce construction bars: The cost of steel billets manufacturing in the country be equated with the cost of ship plates (vessel for demolition PCT code 8908.0000) and re-rollable material PCT code 7204.4910 by imposing immediately 25 percent RD on both the items. It will give a level playing field to all the three sectors.

PALSP has requested the committee to rectify this anomaly by bringing duties and taxes on ship plates and re-rollable material at least equal to that of billets; (iv) exemption to steel sector from applicability of Section 8b of The Sales Tax Act 1990 and; (v) amendment in Section 27a of the Customs Act must be made in order to discourage mutilation of prime steel products.

PALSP also urge for making amendment in PCT Code 9917 so that local materials and meeting international standards, are allowed to be used in the Gwadar Free Port, SEZs as well as other mega projects related to CPEC as well as nuclear related projects.