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Minutes of Meeting
  1. September 30, 2015

  2. October 15, 2015

  3. November 25, 2015

  4. February 16, 2016

 

 

No.PSRMA/3-B/3107                                                                                                                                                                                                                   May 13, 2016

ALL MEMBERS

                                                                 

MINUTES
OF
THE MEETING OF GENERAL BODY OF THE PAKISTAN STEEL RE-ROLLING MILLS ASSOCIATION
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 Lahore Circle

3.         Mr. Akhtar Saeed                                  Vice-Chairman Karachi Circle

4.         Mr. Asmat Pervaiz Malik                        Member Executive Committee

5.         Mian Muhammad Ashraf                        Member Executive Committee

6.         Mian Ahmad Hassan                              Member Executive Committee

7.         Mr. Javed Mughal                                  Member Executive Committee   

8.         Hafiz Muhammad Akbar                         Patron-in-Chief PSRMA

 

The following  also attended the meeting:

 

1.         Mian Muhammad Saeed                        M/s Madina Steel Industry, Kasur.

2.         Ch.  Aziz Ahmad                                    M/s Aziz Industries

3.         Mian  Hammad Azhar                             M/s AFCO Steel Industries

4.         Mian Murad Ashraf                                Aryan Steel Industries(Pvt)Ltd.

5.         Sufi Muhammad Azeem                         Sufi Steel Industries (Pvt) Ltd.   

6.         Mr. Shahid Iqbal                                    Naimat Ullah Steel Works(Pvt)Ltd.

7.         Mr. Tahir Mahmood                               Amir Asim Steel R/R Mills(Pvt)Ltd.

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 & Company

12.        Mr. Ahsan Sohail                                   A.S. Steel Re-Rolling Mills(Pvt) Ltd.

13.        Mian Muhammad Saeed                        M/s Nazir Steel Mills     

14.        Malik Amer                                            M/s Madina Steel Industries, Lahore.     

15.        Mr. Ejaz Ghani Awan                              (Jamal Steel Re-Rolling Mills(Pvt)Ltd.

(Kamal Steel Re-Rolling Mills(Pvt)Ltd.

16.        Haji Muhammad Shabbir                        M/s Shabbir Steel Re-Rolling Mills

17.        Mr.  M. Kamran                                     M/s Amer Steel Re-Rolling Mills                                                                                

18.        Mr. M. Iqbal Tariq                                  Chairman Pakistan Steel Melters Association PSMA      

 

 The following business was transacted:

 

1,   Confirmation of minutes of the previous meeting  dt 14-11-15 & 16-02-16.

            2.     To discuss Budget Proposal 2016-17.

            3.     Any other point with the permission of the Chair.

 

 

MR. KHALID JAVAID
CHAIRMAN PSRMA
PRESIDED

                 

Recitation:        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.

 

DUA-E-MUGHFARAT was offered for the following:-

 

(i)             Mian Matloob Hussain Father of Mian Iftikhar Hussain of Ishtiaq Steel Industry.

(ii)            Elder Sister of Mian Ahmad Hassan of Tayyab Brothers(Pvt) Ltd

(iii)           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.

(iv)          Elder Brother of Mr. Muhammad Asghar of Azad Steel Re-Rolling Mills.

(v)            Haji Muhammad Hameed Uncle of Haji Habib Ullah of Habib Steel Re-Rolling Mills

(vii)       Mr. Haroon  Brother in law of Mian Muhammad Aslam (Late) Former Chairman PSRMA.

 

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 1 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 and recommended.

 

1.     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.

 

2.         Reduction 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%.

3          Reduction 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.

 

5.         Final 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 present.

 

6.         Threat of Smuggling.

 

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  Sales Tax

 

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.

 

Closure.

 

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

                                                                         ASSOCIATION

                                                                                                                         

                                         

                                                          S. MAZHAR HUSSAIN NAQVI,

                                                                        Secretary General

 

 
 
Minutes of Meeting
  1. September 30, 2015

  2. October 15, 2015

  3. November 25, 2015

  4. February 16, 2016

 

 

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