Customs authorities have linked the value of steel scrap with the London Metal Bulletin in a bid to avoid confusion at the time of goods clearance at ports.
The Customs Valuation, Karachi Directorate-General issued valuation ruling number 1,517 that linked the value of steel scrap with the London Metal Bulletin.
The notification said the decision was made to resolve the problems importers face at the clearance stage because the international market fluctuated according to demand and supply and prices of scrap were also published in the London Metal Bulletin for Pakistani importers.
According to the notice, this will ensure transparency, fairness and uniformity in the assessment of goods value.
“This will help the government in controlling under-invoicing of imports,” said Topline Securities’ Deputy Research Head Shankar Talreja.
“Currently, manufacturers of rebars and billets are paying duties at a fixed rate of $301 per ton or market rate, whichever is higher,” he said, adding, “Now permanently, Customs authorities have linked it to the London Metal Bulletin, which shows market prices.”
In a statement, the Pakistan Association of Large Steel Producers (PALSP) expressed satisfaction and appreciated the decision.
There are two systems for the valuation of imported goods under Section 25 of the Customs Act. One is ITP (import trade price) system, in which a minimum price is fixed and goods are assessed based on the ITP or declared price in the invoice/ LC (letter of credit, whichever is higher.
The second is LMB system, which shows the value of goods as per the London Metal Bulletin on the date of opening the LC or based on the value declared in LC, whichever is higher.
“This change will make the valuation system transparent, which will be good for both the industry and the Federal Board of Revenue (FBR),” said PALSP Secretary-General Syed Wajid Bukhari.
Bukhari pointed out that in the previous ruling the price difference between the re-rollable and re-meltable scrap was $100 per ton but in the current ruling the difference was reduced to only $65, which was not justifiable for Pakistan’s industry. “The industry requests to maintain a difference of around $150 between the re-rollable and re-meltable scrap,” he said.
“The price will, however, increase further as LMB prices are not actual prices at which trading is done,” said Karachi Iron and Steel Merchants Association President Shamoon Bakir Ali while speaking to The Express Tribune.
