KARACHI, May 17: The government's decision to include black tea in the Afghan Transit Trade (ATT) list two months back has started making an impact as 345 containers of Kenyan black tea weighing 5.17 million kgs find way into Pakistani market via Bara in April.

The element of duty and tax evasion on the arrival of 345 containers is estimated at Rs250 million, the Pakistan Tea Association (PTA) informed the CBR chairman and the commerce minister recently.

The PTA had already cautioned the government in March this year that the decision would be misused as all the black tea, destined for Afghanistan, would find way into Pakistan. On April 27, it informed the government about the arrival of 200 containers from Mombassa to Pakistan under the ATT.

PTA Chairman Saeed Ahmed Khawaja told Dawn on Monday that 54 more containers of black tea had found way into Pakistan in the first week of May also under SRO 151 CI/2004 for the ATT.

He said that this was the beginning and if the import duty was not abolished, the national exchequer would suffer a colossal loss of Rs3 billion per year.

"The PTA strongly feels that black tea should immediately be excluded from the ATT, and if this is not possible then the import duty on tea should be reduced to zero so that a level-playing field for all players could be developed," Mr Khawaja said, adding the association had also provided a list of 345 containers to the government.

At present the landed price of tea through legal channels comes to Rs180 per kg as against Rs125-145 per kg being dumped by the smugglers in the markets. He claimed that a duty cut on tea imports would not result in revenue shortfall as a five per cent cut in import duty in the last budget had flared up legal tea imports and revenues and discouraged illegal arrivals.

The tea imports during July-April 2003-04 stood at 101,506 tons ($168 million) as compared to 94,134 tons ($150 million) in the same period last fiscal, up by eight and 12 per cent in quantity and value, respectively, figures compiled by the Federal Bureau of Statistics revealed.

The association feels that trade agreements with the tea producing countries can greatly help in reducing the volume of tea smuggling at a time when other measures to check illegal trade has failed, he said.

Mr Khawaja said that there was a need to enter into a free trade agreement with Kenya, which accounts for 65 per cent of Pakistan's total tea imports from various destinations.

He said that around eight million kgs of tea had arrived from Bangladesh and one million kgs from Nepal under the free trade agreement in the last one year. The association in its proposals for the trade policy 2004-05 states that there should be preferential rate of tariff for Saarc countries with whom Pakistan enjoys favourable balance of trade.