CBR and vanaspati makers reach understanding on value addition for imported palm olien

ISLAMABAD (August 20 2004): The Central Board of Revenue (CBR) and Pakistan Vanaspati Manufacturers Association (PVMA) on Thursday agreed on a new formula for value addition for imported palm olien after long negotiations.

According to the new formula, the CBR would allow 15 percent value addition to the ghee industrialists on taxable purchases and make it a base to calculate their refunds.

Chairman Abdullah Yousuf, assisted by Member Audit Pervez Amjad, led the CBR team during the talks that lasted for over two hours. PVMA delegation was led by its Chairman Shaikh Ikram and comprised Haji Akhtar, Mian Amjad Rashid and Malik Azaz Elahi and Secretary General Dr Samdani.

The CBR would conduct desk audit of all the PVMA member units on the basis of the new formula and workout their refunds for the last two years.

The new formula would be applicable for 2002-03, 2003-04. It is a period when the CBR and ghee industry could not reach any understanding on the ratio of value addition to workout actual refund.

The CBR wanted 22 percent value addition on taxable imports of palm olien which the industrialists rejected out-rightly saying it is very high percentage and hence, impracticable. In ghee industrialists' view 10 to 12 percent ratio could be reasonable to access refund.

The two parties stood on their stance for the last three years and it left them in shallow waters to reach any understanding on this thorny issue. Since CBR was lacking any value addition formula it could not workout refund for the industry for the last three years.

During this period many committees were also formed by the CBR to look into the possibilities to reach any understanding for workable formula for value addition but the entire exercise proved futile.

Delay of refund for the last two years had added to the ghee units' problems and some of them were really running out of their working capital. As the matter took turn for the worst, the PVMA raised the issue with the CBR on July this year and conveyed to the authorities that further delay was bound to affect almost 70 percent of ghee units.

This warning worked to the PVMA expectations, when the CBR Chairman Abdullah Yousuf moved in to take the issue to logical conclusion.

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