The exchequer is facing a loss of approximately Rs one billion annually on account of duty evasion on boron added alloy wire rod, which is being imported as non-alloy plain carbon wire rod from China. Sources in steel sector told Business Recorder on Tuesday that massive misdeclaration is being made on import of different steel products, including boron added wire rod, directly hurting the domestic steel industry as well as financial loss on account of revenue collection.
“A large quantity of boron wire rod is being imported through misdeclaration to avoid 15 percent duty applicable on import of alloy steel wire rod from China under Free Trade Agreement. The import duty on boron wire rod is 20 percent if imported from countries other than China,” they added. Some of the importers are involved in misdeclaration and alloy wire rod is being imported into Pakistan as non-alloy wire rod by misleading the revenue department. Imported consignments of boron are being cleared by the Customs authorities at 5 percent duty instead of applicable 15 percent on import of alloy steel wire rod from China under FTA. Importers are declaring it non-alloy plain carbon wire rod, which attracts a minimum duty of 5 percent under the FTA.
“Boron added wire rod having description of Grade SAE 1008B is actually an alloy steel wire rod but it is being declared against HS code of non-alloy category,” they added. Importers prefer to import wire rod from China as it sells boron added wire rod, an alloy product, on cheap rates due to government rebate, however there is massive misuse of HS codes by importer of wire rod.
Misclassifying boron added wire rod avoiding about Rs 6,000 per tons duty at import stage, besides hurting the local wire rod industry badly, they added. Sources said that annually about 150,000-160,000 tons of wire rod is being dumped in Pakistan mainly from China, though, importers are declaring that they are importing non-alloy wire rod, but interestingly there is a ban on export of non-alloy wire rod from China and only boron added alloy wire rod is allowed to be exported. They said the cost of wire rod production by local wire rod manufacturing industry is Rs 81,000 per tons and cheap import of alloy wire rod through misdeclaration is directly hurting the domestic industry as illegally imported alloy wire rod is available at Rs 72,000 per ton in the domestic market. This also threatens employment of over 20,000 workers associated with local wire rod industry, which is already acutely affected by ongoing energy crisis in the country.
Therefore, local wire rod industry cannot compete against dumping of imported alloy wire rod in Pakistan. They urged the government to take immediate action against unscrupulous importers who are causing huge revenue loss to the exchequer.
Copyright Business Recorder, 2012