Probe into increase in duty drawback rates for textile industry begins

ISLAMABAD (December 17 2002) : Taking prompt action to rectify the irregularities pointed out by Auditor General, the tax authorities have started investigation to ascertain the causes of inadmissible increase in the duty drawback rates for the textile industry and excessive payments of Rs 949 million made to some units.

The Central Board of Revenue (CBR) has contacted the concerned collectors to probe the allegations made in the 'study report on textile rebate' before the next meeting of Public Accounts Committee (PAC).

Particularly, the CBR has laid emphasis on the issue of “excess payment of rebate” and asked the collectors of customs to check the relevant record as per the AG's objections.

The CBR will prepare its comments in the light of the reports given by the collectorates of customs ie Karachi, Lahore, Faisalabad, Peshawar, Rawalpindi and Sambrial.

When this correspondent asked the concerned official to comment on the issue, he said, “It is a routine audit exercise to be completed before the PAC meeting and para-wise comments on the study have been sought from the collectors.”

AG office has pointed out that authorities had issued SRO. 172(I)/99 on March 22, 1999 in violation of the rules wherein rates were enhanced despite the fact that customs duty either remained static or decreasing trend was witnessed since last two years.

Thus, by increasing rates, the department has negated the very spirit of the provisions of law and rebate became a sort of subsidy instead of duty drawback.

While preparing work paper for issuance of SRO. 172(I)/99, customs carried out a long in-house exercise to work out the element of duty on textile items. According to AG, the CBR concluded that the existing rates (prior to the issuance of SRO. 172(I)/99 were on the higher side and proposed reduction.

On the contrary, rates were enhanced by the authorities.

Collectorate of customs Peshawar and Rawalpindi did not agree with the audit observations. They added that the price of raw materials did not remain constant and always fluctuate in the international market, hence enhancement in the rates is nominal.

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