KARACHI: Pakistan Steel Mills (PSM) is unable to gain benefit from the slight increase in its production due to arrival of steel products from various illegal channels.

Though Blast Furnace no. 2 became operational earlier this week after 15 months of inactivity, the mill is facing serious problems as the steel market is swamped with untaxed, smuggled and under invoiced imported steel products.

Due to such activities, the price of imported items is lower than the prices of PSM products which is great disadvantage to the state-run organisation.

When contacted, PSM spokesman Shazim Akhtar said the importers of steel items ‘influenced policy making’ due to which various SROs had been issued ensuring that PSM products will continue to remain expensive than imported steel items.

For example, vide SRO 421 dated June 4, 2014 the government had imposed 17 per cent sales tax on all local iron and steel remittable scrap while the same type of imported scrap pays a fixed sales tax of Rs5,600 per tonne, resulting in a price differential of Rs2,000 per tonne in favour of imported scrap.

Similarly, vide SRO no.565, the manufacturers are given 5pc concession in custom duty on Hot Rolled (HR) and Cold Rolled (CR) products.

“On the face of it, the manufacturers are supposed to increase its value by value addition measures. However, some manufacturers sell it directly without any value addition at a lower price because they can afford to do so due to the concessional price at which they obtained these items,” the spokesman said.

He said SRO no.450 gives duty and tax concession on the products which are purchased for some other countries like Afghanistan, etc. But much of this imported stuff is disposed off in the local market at a lower price.

Akhtar said Pakistan Steel has sought abolition of these SROs, adding, “The custom duty for manufacturers should be equal to the duty paid by traders. Moreover, the sales tax levied on local scrap and imported scrap should be identical, so that the products of Pakistan Steel can compete on an even price level with imported products.”

Published in Dawn December 21th , 2014