August 24, 2007	Friday	Sha’aban 10, 1428

ISLAMABAD, Aug 23: The collection of customs duty declined by 1.3 per cent to Rs15.743 billion from edible oils during 2006-07 as against Rs15.011 billion last year owing to specific rate of duty.

Official figures released here on Thursday showed that other reasons for decline include switchover from RBD palm oil to crude palm oil.

The rate of duty on crude palm oil is less than RBD palm oil. Thus, despite a seven per cent growth in import of palm olien, a decline of 1.3 per cent has been registered.

Nonetheless, loss in revenue is not so significant due to substantial increase in import of crude oil; therefore, duty on crude to a larger extent has compensated the loss incurred on account of palm olien.

An in-depth sectoral analysis has been carried out for 15 major commodity groups that constitute around 75 per cent of the customs duty. The significance of these items can be judged from the fact that they cover 75 per cent of total import value and 84 per cent of dutiable import value.

Traditionally, the automobile sector is the largest contributor in revenue generation but during 2006-07, the collection declined by 25.2 per cent due to some policy changes.

As far as collection of POL products is concerned, most of the items listed in PCT Chapter 99 under are exempt from

customs duty. These include crude oil, motor spirit, aviation spirit, spirit type jet fuel, JPI, furnace oil and MTBE. However, of all these items, import of crude petroleum and furnace oil is quite significant.

In view of this exemption, modest growth in customs duty collection originates from the following two reasons. Firstly, dutiable POL products recorded a low growth of only five per cent during fiscal year 2006-07.

Secondly, collection from coal also declined during the year as it was zero-rated at the time of announcement of the federal budget 2006-07. It appears that loss of revenue on account of this policy initiative has been quite instrumental in changing the overall complexion of growth from POL products.

Under the machinery group, electrical machinery and parts exhibited a robust growth of 22 and 27 per cent in imports and dutiable imports leading to a similar growth of 25 per cent in customs duty during July-June FY 2006-07.

The main items that generated this growth were transmission apparatus of line telephony and generating sets and rotary converters with exceptional growth of 30 and 70 per cent, respectively. On the other hand, import of mechanical machinery and parts was adversely impacted by decline in imports. The collection of customs duty declined by 12.6 per cent.

A deeper analysis confirmed that major machinery items belonged to textile sector, construction and consumer goods which experienced a drop in customs duty by 43, 26 and 13 per cent, respectively.

Moreover, exemption of computers from custom duty during budget 2006-07 also affected collection during 2006-07.