''Dying'' carpet sector ignored by ministry

Ministry of Commerce (MoC) has issued a Statutory Regulatory Order (SRO) for drawback of local taxes and levies on non textile sectors but ignored the "dying" carpet sector weeks after the announcement of Rs 180 billion export incentives package by the Prime Minister Nawaz Sharif for export oriented sectors. According to sources, the main reason behind the delay in the issuance of SRO was discrepancies in the previous SRO issued in 2015 by the Commerce Ministry.
The Prime Minister had announced a 6 percent drawback for the carpet sector. However, it is still unclear whether the Commerce Ministry deliberately ignored the carpet sector or it was an oversight. Commerce Ministry, sources said, has also not mentioned some HS codes of leather tanned in the SRO which fall in the category of leather products. The leather industry had approached Finance Minister Senator Ishaq Dar, Commerce Minister Engineer Khurram Dastgir Khan and Prime Minister''s Special Assistant on Revenue, Haroon Akhtar Kham to include the following HS codes in the notification so that all types of leather goods are included in the notification: articles of apparel and clothing accessories of leather ( 4203 code) in the notification of March 2, 2015 issued by the Commerce Ministry "leather garments" word is used in description. The Finance Minister was requested to mention "articles of apparel and clothing accessories of leather" because in HS code 4203 some leather goods like leather belts are also included.
Other leather manufacturers should include - HS codes 420.0000, 4202.1120, 4202.2100, 4202.3100 and 4202.9100. Some exporters are exporting furniture with 100 per cent leather. Finance Minister was asked to include HS codes 9401.7100 and 9401.7900 provided furniture is upholstered with 100 per cent finished leather.
The sources said, only chapter 64 with description leather footwear is mentioned in the Commerce Ministry''s notification of March 2, 2015. Chapter 64 also covers footwear made from other than leather. According to the SRO issued on February 2, 2017, gloves of different categories will enjoy 7 per cent drawbacks, footballs and other sports goods, 7 per cent, leather garments including articles of leather and manufacturers thereof 7 per cent, other leather manufacturers, 7 per cent, footwear 7 per cent, leather tanned 5 per cent, surgical goods/ medical instruments 5 per cent and cutlery 5 per cent.
The drawbacks under this SRO will be allowed for the shipment made from January 16, 2017 to June 30, 2017. The same incentive will also be allowed for shipments made from July 1, 2017 to June 30, 2018 if the exporter achieves an increase of 10 per cent in exports as compared to corresponding period of the year before. The procedure for claims of shipments made during 2017-18 will be notified later.
The units availing the drawback will be a registered sole proprietor, partnership or a company, having valid NTN number and will be a member of respective Association or Chamber with the Directorate of Trade Organisations, Ministry of Commerce. The unit will furnish data and any other information related to its operations, domestic sales, accounts and exports as and when required by the Commerce Ministry.
The exporters of sports goods including gloves and footballs, leather tanned, leather manufacturers including garments, footwear, surgical goods and cutlery availing facility under this scheme will not be eligible to claim facility under SRO 582 (1) 2016, for shipments sent from January 1, 2017 to June 30, 2018.
The unit will file claims for the drawback within 90 days for the date of realisation of export proceeds to the field offices or the State Bank of Pakistan- Banking Services Corporations (SBP-BSC) through a nominated authorised bank.
When contacted, Patron-in Chief of Pakistan Leather Garments Manufacturers and Exporters Association (PLGMEA), Fawad Ijaz Khan appreciated the government for issuing much -awaited notification.