PESHAWAR (March 24 2004): The markets of Peshawar are flooded with the smuggled cooking oil and ghee, being sold out in open market without any check from the law-enforcement agencies, said sources in business circles on Tuesday.

Talking to Business Recorder on condition of anonymity, a wholesale dealer of the edible oil and ghee at New Rampura Gate said that cooking oil of United States and Malaysian ghee are on sale in open market, adding the demand for these smuggled commodities is very high as compared to the locally manufactured products.

"Although the quality of the Malaysian ghee is not up to the locally-made ghee, but still its demand is high due to the cheap price", said Ayub, a shopkeeper in the busiest bazaar of the city.

Regarding the provision of cooking oil from US, he said it has been distributed among the Afghans under the rehabilitation programme, but it also smuggled out to the markets of Peshawar through tribal area bordering Afghanistan.

The wholesale dealers and suppliers said both the police and the customs officials are involved in promotion of this illegal business in Peshawar, who have closed their eyes on this illegal activities continue unabated in the city markets.

In this connection, when Business Recorder contacted Haji Muhammad Akhtar, a local ghee manufacturer, who said ghee and cooking oil industry in the province facing multiple problems, adding they are facing the problem of difference of prices of the product produced in settled areas with the units situated in both federally and provincially-administered tribal areas of the province.

He said that ghee manufacturing units in Fata/Pata have been totally exempted from both the sales tax and the income tax adding: "Ghee produced in Fata/Pata is cheap by at least Rs 11 per kg than the product manufactured in the settled areas.

He said due to these problems most of the ghee units in the province have already been closed down.

Haji Muhammad Akhtar said the decision of the deletion of ghee and cooking oil from the negative list of the Afghan Transit Trade (ATT) was a sheer injustice with the local industry, adding during last one month about 5,000 to 6,000 tonnes ghee has reached Peshawar dry port in the name of ATT, whose ultimate market would be Peshawar.

He said they have demanded of the government and Central Board of Revenue (CBR) to either re-include the items in the negative list or allow the local manufacturers to export ghee to Afghanistan under DTRE scheme.

The Pakistan Vanaspati Mills Association (PVMA) has also protested the exclusion of ghee and cooking oil from the negative list of ATT that in the prevailing circumstances it will only encourage smuggling of vegetable ghee imported from Malaysia and Singapore to Pakistan, saying the situation will obviously stop export of vegetable ghee from Pakistan to Afghanistan depriving the government of huge foreign exchange.

Similarly, according to PVMA, the excluding import of edible oil from DTRE scheme, the vegetable ghee industry, in fact, has been singled out which is a clear discrimination.

It has requested the authorities concerned that import of edible oil under DTRE scheme should be restored immediately to provide level playing field for the vanaspati ghee industry vis-...-vis other sectors of the economy.

The Duty and Tax Remission for Export (DTRE) scheme has been introduced by the government under SRO 450(1) 2001 on June 8, 2001 for export only.

Under this scheme exporters are entitled for import of raw material without payment of customs duty, withholding tax and sales tax, etc, which is subsequently adjusted against their actual exports.

However, under this scheme, the exporter is required to obtain approval for import of raw material under the DTRE scheme from the collectorate concerned on an application to be filed with him.

Based on the actual exports of last six months, the collectorate concerned accords approval specifying imported inputs, local inputs and the quantity of the commodity, in case of PVMA vegetable ghee/cooking oil to be exported.

The exports are normally allowed on the basis of six months actual exports by the applicant.

However, in case an applicant has not been exporting, the collectorate concerned considers approval on the basis of a contract.

The government, however, in the last week of February 2004 decided to exclude import of edible oil under the DTRE scheme.

This exclusion will have negative financial consequences on manufacturer-cum-exporters of vegetable ghee/cooking oil as a lot of cash flow will be unnecessary stuck up, which, in the past, when the main raw material ie edible oil was imported under DTRE where free of customs levies ie customs duty, sales tax, and withholding tax.

Courtesy Business Recorder