May 13, 2016
THE MEETING OF GENERAL BODY OF THE PAKISTAN STEEL RE-ROLLING MILLS
HELD ON SATURDAY APRIL 16, 2016 AT 11.00 A.M.
AT REGISTERED OFFICE, LAHORE
The following members of
the Executive Committee were present:-
1. Mr. Khalid Javaid Chairman
2. Mian Arif Mehmood Vice-Chairman
3. Mr. Akhtar Saeed Vice-Chairman
4. Mr. Asmat Pervaiz Malik
Member Executive Committee
5. Mian Muhammad Ashraf Member Executive
6. Mian Ahmad Hassan Member Executive
7. Mr. Javed Mughal Member
8. Hafiz Muhammad Akbar Patron-in-Chief
The following also
attended the meeting:
1. Mian Muhammad Saeed M/s Madina Steel
2. Ch. Aziz Ahmad M/s Aziz
3. Mian Hammad Azhar M/s AFCO Steel
4. Mian Murad Ashraf Aryan Steel
5. Sufi Muhammad Azeem Sufi Steel Industries
6. Mr. Shahid Iqbal Naimat Ullah
7. Mr. Tahir Mahmood Amir Asim Steel
8. Sh. Muhammad Hanif M/s S.H. Steel Mill
9. Haji Habib Ullah M/s Habib
Steel Re-Rollng Mills
10. Mian Muhammad Touseef Touqeer Brothers Steel
Mills (Pvt) Ltd
11. Khawaja Javed Iqbal M/s Mehmood &
12. Mr. Ahsan Sohail A.S. Steel
Re-Rolling Mills(Pvt) Ltd.
13. Mian Muhammad Saeed M/s Nazir Steel
14. Malik Amer M/s Madina
Steel Industries, Lahore.
15. Mr. Ejaz Ghani Awan (Jamal Steel
(Kamal Steel Re-Rolling Mills(Pvt)Ltd.
16. Haji Muhammad Shabbir M/s Shabbir Steel
17. Mr. M. Kamran M/s Amer Steel
18. Mr. M. Iqbal Tariq Chairman
Pakistan Steel Melters Association PSMA
The following business
1, Confirmation of minutes of the previous meeting dt 14-11-15 &
To discuss Budget Proposal 2016-17.
Any other point with the permission of the Chair.
MR. KHALID JAVAID
The meeting was started with recitation of verses from the
Holy Quran by Hafiz Muhammad Akbar Patron in Chief PSRMA followed by its
translation into urdu.
was offered for the following:-
Mian Matloob Hussain Father of Mian Iftikhar Hussain of Ishtiaq Steel
Elder Sister of Mian Ahmad Hassan of Tayyab Brothers(Pvt) Ltd
Elder Sister of Mian Muhammad Jamil of Mughal Shaheen Steel Re-Rolling Mills
who was the wife of Mian Abdul Jabbar Brother of Hafiz Muhammad Akbar
Patron in Chief PSRMA.
(iv) Wife of Brother in law (Mian Ehsan ul Haq of Pak Fan Gujrat)
of Mian Muhammad Arshad of City Steel (Pvt) Ltd.
Elder Brother of Mr. Muhammad Asghar of Azad Steel Re-Rolling Mills.
Haji Muhammad Hameed Uncle of Haji Habib Ullah of Habib Steel Re-Rolling
(vii) Mr. Haroon Brother in law of Mian Muhammad Aslam (Late) Former
Budget Proposal 2016-17.
Mr. Khalid Javaid Chairman PSRMA briefed the house about the efforts made in
imposition of addl RD @ 15% on import of MS products. He thanks to Patron
in Chief for providing necessary guidance in every issue relavent to
re-rolling Industry. The Chairman briefed about the meeting dated
14-4-2016 with Mr. Haroon Akhtar Special Advisor for Revenue to the Prime
Minister of Pakistan who has ordered formation of three Committees one for
the Budget Proposed 2nd to resolve the issue of reheating of
Furnaces other than electricity and the 3rd Committee to resolve
the issue of ship breakers.
The Chairman Mr. Khalid Javaid assured Mr. Akhtar Saeed the Chairman PSRMA
Karachi Circle that reheating of furnaces other than electricity is not
only the issue of re-rolling mills at Karachi but in fact it is the issue
of whole re-rolling industry of Pakistan and we are taking it on all
Pakistan basis. He said that on this issue the first meeting was in Jan
2016 and now on 14-4-2016 in the FBR with Mr. Haroon Akhtar Special Advisor
for Revenue to the Prime Minister of Pakistan. He said that in the meeting
dated 14-4-2016 all the stake holders i.e. Steel Melters, Re-Rollers and
Ship Breakers participated and expressed their views for rationalization
of Special Procedure of Sales tax 2007 in order to making it align with
the actual business realities and also to ensure due payment of tax.
The Chairman informed that FBR is considering reduction in bench mark which
is at present 800 electricity units for melters and 130 for re-rollers for
one matric ton production.
Haji Muhammad Shabbir of Shabbir Industries said that we are experiencing
more than 150 units in production of 1½ or 2 suttar Iron bar.
Sh. Muhammad Hanif of S.H. Steel Mill stated that around 167 units for
production of one matric ton iron bar of 3 suttar have been noticed.
Mian Muhammad Saeed of Madina Steel Industry said that in addition to
production we are also paying sales tax on usage of electric fans, cranes
and Gasifier etc as such reduction in bench mark is not justified.
Hafiz Muhammad Akbar Patron in Chief said that bench mark was fixed at the
time of formation of Special Procedure of Sales Tax taking into
consideration. No. of mills their sizes and capacity as such 800 units for
melters and 130 units for re-rollers for one matric ton production are the
averages units. Whoever claims lesser units he may pay sales tax
accordingly. In addition the following budget proposals 2016 was discussion
Regulatory Duty On Mild Steel Finished Products.
PSRMA is of the views that
whatever of standard quality is manufactured in the country needs not to be
imported and if imported due to one reason or another then it must be
subject to regulatory duty. Accordingly 15% regulatory duty was imposed on
all import of MS finished products and vide SRO 236(I)/2016 dated 21-03-2016
additional regulatory duty of 15% has further been imposed but the above
said notification is effective till 30-06-2016. PSRMA is of the views that
30% regulatory duty on all all MS finished products should be made a part of
the budget 2016-17. It is further submitted if any steel industry in
Pakistan involved in manufacturing of Mild Steel Products import finished
steel products, then it should be treated as commercial importer.
in Rate of Turn Over Tax.
The Turn over tax imposed @ 1% is on higher side due to high turn over and
low profit margin in the Steel Industry. The present turn over tax @ 1%
comes to Rs.700/- approximately which is at a very high side in view of
profit in few hundred rupees. Taking average profit Rs.500/- per matric ton
and applying max slab, income tax liability would come to Rs.175/- per MT.
As such the rate of turn over tax for steel industry may be at the reduced
rates around @ 0.25%.
in Rate of Sales Tax.
Steel Industry which is under Special Procedure of Sales Tax is charged
Sales Tax @ Rs. 9/- per unit of electricity through monthly electricity
bills which was Rs.4/- per unit of electricity two years back. In view of
high cost of production, market slump and import of M.S. Finished Products
from China at cheaper rate. PSRMA suggests that sales tax rate may be
reduced to Rs.4/- per unit of electricity consumed.
4. No Change
in Duty Structure of Imported Billet
Imported billet which is the raw material of re-rolling industry is at
present subject to 15% regulatory duty. PSRMA suggests no change in duty
structure of imported billet.
Taxation of Income Tax.
The steel re-rolling industry is willing to pay income tax as a full and
final discharges of income tax on the analogy of sales tax being paid under
Special Procedure i.e. a specific rate per unit of electricity consumed
through electricity bills on monthly basis covering turn over tax, with
holding tax on purchase/sale. This proposal remained under detail
discussion in the Special Committee meetings constituted by the Federal
Finance Minister in Nov 2013. The matter was near completion but could not
be finalized due to one reason or other. Had this proposal was considered
to the Govt. may be in receipt of more revenue which is being obtained at
6. Threat of
The smuggling material got way mostly from IRAN border without paying duties
and taxes whatsoever, causing a considerable amount of damages to the market
as well as loss to national exchequer.To protect local steel industry the
Government should also take concrete measures in unsettled areas like FATA,
PATA,Darghai and by restraining smuggling from sust boarder (China)
generating a considerable amount of revenue in form of custom, sales tax
and income tax.
7. Re-Heatng of Furnaces through Gas
It is submitted that bench mark of 130 units for production of one matric
ton mild steel product by re-rolling mills fixed in the Special Procedure of
Sales Tax are average units needed to drive the re-rolling machinery for
the production in view of mills having different sizes available throughout
the Country. As regards reheating of billet/ingots the furnaces are being
operated through gas or alternative source of energy other than electricity.
It is the industrial practice and even available in 2007 at the time of
framing the Special Procedure of Sales Tax for payment by melters,
re-rollers and ship breakers.
It is submitted that the above said process of reheating does not increase
the volume of production in any case but is simply a logical process through
which the raw material of re-rolling mill (billet/ingot) has to pass making
it workable. It is submitted that melting industry use only and only
electricity i.e. 800 units of electricity for production of one matric ton
billet or ingot whereas for re-rolling re-heating is not possible with
electricity in any case but with gas, furnace oil, coal etc. It is merely a
pre production process known to the FBR since 1947 even exactly the same as
it was in 2007.
It is submitted that for gas heated furnace 1200 degree centigrade
temperature is required which is not possible with electricity as the
billet/ingot of the same shape and appearance is needed for re-rolling
purpose. There is not a single mill having re-heated furnace in our industry
run through electric means.
In view of above it is concluded that re-heating of furnace other than
electricity is the industrial practice since 1947 throughout the Country and
this process does not increase the volume or additional production as such
evasion of tax is not involved so the above submission may kindly be
considered and proceeding, if any, initiated against re-rolling mills at
Karachi may be filed.
Special Procedure of
It is also conveyed in connection with Special Procedure of Sales Tax
applicable vide SRO.678(I)/2007 dated 06-07-2007 for payment of sales tax by
Steel Melters, Re-Rollers and Ship Breakers it was formed to tackle the
numerous hurdles faced in the revenue collection specially the non
availability of documented invoices in steel sector as 50% is to be
purchased from the undocumented sector i.e. steel scrap dealers who have not
a single invoice and are still out of tax net but we have to purchase due to
sacracity of raw material in the Country.
The purpose of Special Procedure of Sales Tax was to estimate and control
the production and value addition of re-rolling mills/melting units so that
collection of revenue be made on some sound footings. For this purpose 800
units were estimated for production of one matric ton billet/ingot and 130
units for manufacturing of one matric ton mild steel products by re-rolling
units. This procedure is the out come of mutual consultation/efforts of all
stake holders and FBR. Resultantly this procedure has given many fold
increase on account of sales tax i.e. from Four billion rupees to Fifteen
billion pere annum. This procedure is successfully in operation and the
Industry is paying sales tax on production according to consumption of
electricity but sorry to say the deptt i.e. FBR is creating hurdles in its
way. The above said problems are an example of the same.
It is also submitted that Steel Industry is at option either to adopt
Special Procedure or normal sales tax regime. Under the special procedure
the Govt is immediately in receipt of revenue. on production basis, through
electricity bills in a crystal manner on monthly basis and no input is
admissible whereas GST scheme based, on sales, is a complex system with
respect to revenue generation as the figures are available at the close of
fiscal year after so many inputs/adjustments and there is every possibility
of fake invoices as well.
It was suggested that FBR may be asked to look into the matter and address
the above said genuine problems otherwise Steel Industry shall have no
option except to opt normal sales tax regime and the FBR shall be
responsible in case of short fall of revenue.
There being no other point to be discussed the meeting ended with a votes of
thanks to the Chair.
For THE PAKISTAN STEEL RE-ROLLING MILLS
S. MAZHAR HUSSAIN