FBR opposes ban on CNG cylinders, kits

RECORDER REPORT

ISLAMABAD: The Federal Board of Revenue (FBR) has strongly opposed ban on the import of Compressed Natural Gas (CNG) cylinders, compressors and kits used in locally manufactured vehicles and proposed higher rates of duties and taxes on these items.

Sources told Business Recorder here on Wednesday that the FBR has submitted formal comments on the proposal of the Ministry of Petroleum on the imposition of complete restrictions on companies' fitted CNG cylinders/kits in locally manufactured vehicles. According to the FBR viewpoint, it has examined the draft summary of the Ministry of Petroleum and Natural Resources. The Board has opposed ban on the import of the CNG cylinders and kits. Instead of total ban, tax authorities have further proposed enhancement in the rate of duties and taxes on the import of the CNG cylinders and kits. At present, the CNK kits and cylinders are exempted from customs duty under SRO.575 (I)/2006. As a substitute, the FBR has proposed to impose statutory rate of customs duty on the import of CNG kits and cylinders.

Under SRO.575 (I)/2006, concessionary rate of duty or exemption is available on the items imported by the local assemblers of vehicles and companies having CNG licenses. This is subject to the condition that only approved models or brands as mentioned in chapter VII of the Customs General Order No 12 of 2002 dated 15th June 2002 shall be entitled to this exemption. The importer will also furnish quality certificate of the original manufacturer duly witnessed by the designated third party inspectors mentioned in chapter VII of the above stated Customs General Order regarding safety standards as laid down in Pakistan CNG Rules, 1992. As per Ministry of Petroleum and Natural Resources, it has been observed that despite imposition of ban on new CNG licenses, gas consumption in the sector continued to expand at annual cumulative growth rate of 35 per cent during last ten years. This growth in demand is mainly due to price differential between CNG station and petrol tempting unchecked conversion of vehicles to CNG.