While Pakistan’s Ministry of Commerce has extended facilities to the leather industry, on the other hand, the Ministry of Finance is cutting their export rebates. The duty drawback on finished leather, including goat or sheep or kangaroo, reduces from 1.72% of the fob value to 0.75%; cow or buffalo or camel hide, 3.09% to 2.88% of the fob value and duty drawback on the export of buffalo hide in finished form for furniture or upholstery leather (2.5mm up to 5mm) has been reduced from 4.92% to 4.55%.

The duty drawback on the export of leather articles has been reduced from 3% of the fob value to 2.75% and on leather garments from 5.56% to 5.33%. Moreover, the duty drawback on the export of cut leather components for shoes, garments, gloves and upholstery, leather patchwork sheets, aprons and other protective clothing braces, bandoleers and wrists strap has been reduced from 2.5% to 2.29%.

The duty drawback has also been reduced on the export of finished leather where imported wet-blue hides and skins under manufacturing bond have been used. Goat or sheep or kangaroo skins have been reduced from 1.28% to 1.17%; cow or buffalo or camel from 1.88% to 1.78% and rates have been slashed on the export of buffalo hide in finished form for furniture or upholstery leather (2.5mm up to 5mm) from 3.39% to 3.16%.

Chairman of the Pakistan Tanners Association (PTA), S M Naseem told Leather International that he was shocked to learn that the Central Board of Revenue (CBR) had reduced the duty drawback on finished leather and other leather products/goods with effect from July 29, 2004, without prior consultation with the PTA.

Naseem added that the move is highly detrimental to the leather industry which with a huge effort has just started picking itself up. The government has on one hand allowed some incentives through its budget and, on the other hand, withdrawn the beneficial effects through a downward revision of the duty drawback rates.

In the past, whenever duty drawback rates were reduced, at least a reasonable time of three months was provided to allow exporters to adjust.