KARACHI: The Customs Appraisement has proposed that the customs duty on steel sheets/rolls under PCT chapter 72 should be rationalized to avoid chances of misdeclaration and duty evasion.
It may be mentioned here that presently hot roll coils (HRC) and cold roll coils (CRC) and galvanized sheets have two duty structures. The secondary quality of these products is assessed at 20 percent customs duty while tther prime quality flat rolled products are chargeable to 10percent duty and there are chances of misdeclaration. It may be mentioned here that customs duty on alloy sheet is 5.0 percent while the duty on silicon sheets is zero percent.
Sources said that this difference in the duty structure was largely being misused as many importers were declaring their secondary quality products as prime quality and thus evading ten percent duty. In many cases, these importers in connivance with the clearing agents and Customs officials were declaring these products as alloy or silicon sheet to cause even bigger loss to the national exchequer.
Sources said that both the qualities of HRC and CRC were easily identifiable as the packing of primary was quite different and these were higher as well as uniform, whereas the secondary quality could not maintain the uniformity in weight and every coil was different in size and weight. Mostly the under-invoicing and misdeclaration was done on containerized cargo.
Sources said that last year the exchequer loss of billions of rupees because of a particular lobby in the Customs having key and sensitive positions such as deputy collector appraisement and a principal appraiser, which colluded with importers and clearing agents to cause loss to the nation and filling their own pockets.
Grain Oriented Silicon Electrical steel sheet is of very high value around 1.7US$/kg to 2.25US$/kg and is used in transformers industry.
Non-grain oriented is cheap and has no use in Pakistan. It is just used to hoodwink Custom authorities as it resembles CRC so much so it is not possible to differentiate through naked eye. Thus CD on non-grain oriented silicon steel should be raised to 10% to bring it at par with Prime Quality CRC.
The samples of HRC, CRC and other products are sent to the AQ Khan laboratory to ascertain the claims of the importers. Sources said that the samples were changed during the transit of the same to the laboratory and consignments were cleared on the basis of laboratory results so received. The proposed rationalization of the duty structure would eliminate misdeclaration.
There are several godowns in SITE Karachi where a large quantity of secondary quantity HRC and CRC could be found which was imported and cleared as prime quality HRC and CRC or alloy.
Sources said that the problem started with the shuffling of product/chapter specific expert officers to different products and chapter. for instance, the officers who had gained expertise in machinery were moved to grocery and so on. The elimination of the role of MSA from WeBOC system also encouraged mis-declaration.