ISLAMABAD (February 10 2003) : To discourage sale of low-quality filament yarn at inflated rates in the local market, the Central Board of Revenue (CBR) has rightly decided not to ban import of filament yarn under the DTRE scheme, sources told Business Recorder on Sunday.
The exclusion of filament yarn from the DTRE scheme would distort DTRE rules, which were amended with the sole purpose of bringing the entire exporters' community within the scope of 'No Duty No Drawback' regime.
Sources said that the major reason of DTRE scheme failure was placement of polyester staple fibre (PSF) and PTA on the negative list in DTRE rules. This step weakened the DTRE scheme as PSF/PTA are major raw materials of the textile sector.
They said, “It is impossible to effectively implement the scheme without brining PSF/PTA within the purview of DTRE rules. This is single most important factor which compelled the textile sector to get themselves registered with the scheme.”
According to these sources, the Ministry of Finance, CBR and Ministry of Commerce have no objection to include PTA/PSF in the DTRE scheme, but government commitment to give tariff protection to a single multinational company has restricted the authorities not to include PTA/PSF in the DTRE scheme.
Interestingly, the agreement with the single major local manufacturer of PSF/PTA did not particularly specify that these raw materials should not be included in the DTRE scheme.
Out of total exporters, the major chunk of 65 percent is of textile including raw material for the textile industry (PTA/PSF), which were excluded from the DTRE scheme. Of course, if the importers get duty-free PSF/PTA under DTRE, why they should purchase the same from local market.
The Central Board of Revenue fully supports the idea to include PTA/PSF in the DTRE scheme and strongly opposes any move to exclude these items.
Now, sources pointed out, following in the footsteps of local PSF/PTA producers, the local manufacturers of filament yarn are trying to pressurise the government for exclusion of filament yarn from the DTRE scheme.
They said, “If we start excluding all the items one by one from DTRE scheme, it would ruin the purpose of this scheme.”
The exclusion of filament yarn from the DTRE would create monopoly of the local manufacturers, who could sell inferior quality product at high price. The importers were left with no option except to buy locally made filament yarn in case a ban was imposed on its import.
The question arises that why the exporters were reluctant to come under the No Duty No Drawback regime.
Contrary to this, Pakistan Silk and Rayon Mills Association has strongly objected to any move to exclude filament yarn from the DTRE scheme.
The association is of the view that the government should not impose a ban on the import of filament yarn under the DTRE scheme as the yarn manufactured in local market is substandard and was being sold at double price as compared to the international rates.