Duty concession: FBR suggests increasing duty on BOPET films

Domestic manufacturers argue they are now producing more than the demand.

ISLAMABAD:

The Federal Board of Revenue (FBR) has proposed an increase in customs duty on import of Bopet films, which are used by the packaging industry, in an effort to protect the local industry.

The proposal was floated during a meeting of the Economic Coordination Committee (ECC) of the cabinet on November 6.

The FBR informed the ECC that Novatex Limited and Astro Plastics (Private) Limited have made presentations, showing Bopet films classified under HS codes 3920.6200 and 3920.6900 were being produced by them locally as an import substitute. With the setting up of two plants of Bopet films since July 2012, its local production was reported to be around 49,000 tons against total demand for 16,000 to 18,000 tons.

Representatives of the firms pleaded that the concession in import duty on Bopet films (polyester films) should be withdrawn as it was granted when the films were not being produced in the country. Now the concession is hurting the interest of the local manufacturing industry, they said.

Contrary to this, the importers of Bopet films were of the opinion that withdrawal of the duty relief would create a monopolistic environment. They stressed that some varieties of the film have a particular thickness, which were not being produced locally and for which a separate PCT classification would have to be created.

It was, however, argued that this assertion was not justifiable as the present classification of the film was not based on thickness.

The FBR believed that instead of withdrawing the full duty concession on import of Bopet films, the existing concession should be reduced gradually.

The revenue board proposed that the duty classified under HS code 3920.6200 be enhanced to 10% from the existing 5% and under HS code 3920.6900 the duty be increased to 15% from the existing 10%.

The Ministry of Commerce supported the proposal except for enhancement of customs duty on Bopet film used in the manufacture of scratch or magnetic strip. The ministry suggested that the proposed duty should be reviewed in June 2014.

The National Tariff Commission may conduct a detailed study by that time and recommend appropriate customs duty considering the protection and competitiveness of the local industries.

The ECC was informed that on the recommendations of the Engineering Development Board (EDB) all kinds of Bopet films – transparent, chemical-coated and metalised – having thickness of various microns falling under PCT headings 3920.6200 and 3920.6900 have been included in the list of locally manufactured goods.

The ECC noted that the present duty structure for Bopet films has been in place since 2006. Moreover, it should be ensured that the proposed increase in customs duty on import of films is in the interest of the local industry and does not discourage foreign investment.

At the end of the meeting, the ECC decided to constitute a committee to carry out a comprehensive study.

Published in The Express Tribune, December 1^st, 2013.

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