ISLAMABAD, Oct 31: National Tariff Commission (NTC) here on Thursday asked the Engineering Development Board to inspect Grapex S.S. Pipe Industry, Lahore, for the quality of its products in connection with the firm’s request for rationalization of customs duty on stainless steel pipes.

The Commission took this decision at a public hearing convened by it in response to a petition from Grapex which stated that the drastic reduction in customs duty on the finished product (stainless steel pipes) from 30 per cent to 5 per cent in three years had confronted them with the question of survival.

While carrying out such drastic cut, the Central Board of Revenue did not reduce the duty rate of 5 per cent on raw materials (sheets and coils), the Commission was informed.

The hearing was presided over by NTC chairman Dr. Faizullah Khilji and attended by Ehsan-ul-Hassan, chief executive of the applicant industry, and representatives of importers and dealers.

Mr Hassan alleged that ever since the reduction in customs duty on finished product, the imports of stainless steel pipes had surged and, moreover, the foreign suppliers had reduced the price of pipes and raised that of the raw materials.

He, therefore, prayed that customs duty on stainless steel pipes falling under PCT heading 7304.4100, 7304.4900 and 7306.4000 be increased to 30 per cent and, further, that 20 per cent regulatory duty be imposed on the import of stainless steel pipes in order to enhance the competitiveness of the domestic industry viz-a-viz the imported product.

Representatives of importers and dealers, however, controverted the contention of Mr Hassan about the quality of his products being at par with that of imported product. Ramzan Khawaja, chief executive, Khawaja Metals, alleged that the local product was much inferior to that of its imported counterpart.

He conceded that the import of pipes had indeed risen but only up to the extent of 33,000 tons from the level (18-20,000 tons) prevailing before the August 2002 reduction in duty. But the quantity in excess of legitimate import against 30 per cent duty was being brought into Pakistan through smuggling or via Afghan Transit Trade.

Other traders said that Grapex Pipe Industry, over the past many years, had charged the same price for the imported product and that produced by their industry and that the profit margin to retailers and dealers was very low even on the imported product.

But one of them asserted that the end-users willingly paid 30 to 40 per cent more price for imported product than for local product. The reason was that the foreign exporters provided certificates and guarantees about quality, while the local producers lacked the necessary laboratory facilities to test their quality.

NTC chairman wondered as to why the traders did not raise the issue of quality when the stainless steel pipes were subject to import duty of 30 per cent. They had come out with their comments only after the producer had applied for relief.

In order to arrive at a decision about validity of the request, Dr. Khilji directed the businessmen to provide proper data about their cost of production, sales etc. He also requested the representative of Ministry of Industries to provide to the Commission data about the relevancy of stainless steel pipe produced in Pakistan to export of engineering goods.