ISLAMABAD, March 20: The government is likely to withdraw Central Excise Duty (CED) on ship plates from the financial year 2002-03.

Well-placed sources told Dawn on Wednesday that the duty was levied on the ship plates to protect Pakistan Steel from financial losses occurred due to low selling of billets, a raw material manufactured by the PS and mostly used in the manufacturing of M.S bar.

The government had levied CED at a rate of Rs500 per ton on the import of ship plates and at domestic level on plates, sheets, slabs, rods, bars and other waste and scrap obtained through any process of dismantling or breaking of a vessel or any other floating structure.

The imported ship plates was also used as raw material in the manufacturing of M.S bar.

However, sources said in the international market, the price of ship plates came down due to which it was available on low prices in the domestic market to the manufacturers of M.S bar as compared to that of billets manufactured by Pakistan Steel. This resulted in financial losses to PS, sources said.

On the other hand, the price of re-milting scrap, which was also used as raw material in the manufacturing of M.S bar was comparatively low, which according to sources, was also creating problems for PS.

Sources said that to give protection to PS, and to bring the prices of all the three raw materials at par, the government was left with no option, but to levy CED on ship plates at a rate of Rs500 per ton besides increasing the rate of sales tax from 15 per cent to 20 per cent.

Sources also said that due to levy of CED on ship plates, the ship-breakers have stopped clearance of their stock, which resulted into financial losses to them.

Moreover, due to the prevailing tension in the region and particularly the military build-up at the border, the consumption of the M.S bar has also virtually slowed down as people are reluctant to carry out any construction.

Similarly, the demand of M.S bar also decreased drastically as the government was also not carrying out any construction projects in the country.