CNG cylinders and kits: FBR proposes 25-35 percent customs duty

The Federal Board of Revenue has proposed 25-35 percent customs duty on the import of CNG cylinders and conversion kits instead of total ban on the imports of such equipment as proposed by the ministry of petroleum and natural resources.
Sources told Business Recorder on Thursday that the proposal of the ministry of petroleum to impose ban on the import of CNG cylinders and conversion kits would be taken up in the meeting of the Economic Co-ordination Committee (ECC) of the Cabinet to be convened here on Friday (December 9).
According to the FBR viewpoint, the total ban on the import of CNG cylinders and conversion kits would encourage smuggling of these items and higher rate of 25-35 percent duty on the import of CNG cylinders/kits would be appropriate instead of clamping total ban as proposed by the Ministry of Petroleum. The imposition of ban would also result in smuggling of substandard cylinders and kits which would be serious threat to the general public particularly transporters.
Sources said that the summary has been moved by Ministry of Petroleum & Natural Resources (Directorate General Gas) regarding "Ban on import of CNG Cylinders and Conversion Kits". To discourage new conversion of vehicles to CNG, the following has been proposed by the Ministry: Firstly, a complete ban be imposed on company fitted CNG cylinders/kits in focally manufactured vehicles. Secondly, Moratorium on import of CNG cylinders and conversion kits be imposed except where letter of credits have been established and CNG fitted public transport vehicles ie buses/vans may be exempted from this moratorium.
The CNG compressors, cylinders and kits imported by local assemblers of vehicles and companies having CNG licenses, are presently exempt from customs duty in excess of 5 percent and 0 percent, respectively, vide Sr. No 5 of SRO 575(1)/2006, dated 5.6.2006 whereas tariff rate of customs duty on cylinders is 0 percent and on CNG kits is 35 percent, sources maintained.
The issue of imposition of complete ban on import of items in question does not directly relate to the FBR but to ministry of industries, ministry of commerce and the ministry of environment. The FBR, however, thinks that imposition of complete ban will induce smuggling as well as use of old and substandard items causing concern for public safety, as cylinders of lower specs and substandard kits may cause untoward incidents.
Keeping this in view and also to generate additional revenue, it may be proposed that instead of complete ban, the above items may be excluded from the exempt regime and subjected to higher rate of duty, say 25 percent or 35 percent, sources added.