LAHORE - Increasing influx of smuggled and under-invoiced tiles from Iran are not only hurting the Pakistani industry but also causing a loss of billions of rupees every year to the government in form of duty evasion.

According to an estimate, around 1.2 to 1.3 million square meter tiles per month are being smuggled from Iran whereas a mere 10,000 square meter tiles per month are being officially imported from Iran on lower tariff valuation, damaging the local industry.

A news report mentioned that the Customs found many discrepancies in the import of tiles from Iran sometime back which included incorrect application of customs values as contained in the valuation ruling vis-à-vis sizes of tiles as the values were assessed on impugned tiles on lower slabs instead of applicable slabs in respect of area(s) of tile(s).

Moreover, instead of applying the 5 percent discount on import of tiles imported through land routes as notified vide Valuation Ruling 874/2016 dated 22.06.2016 issued by Director, Directorate General of Customs Valuation, Customs House, Karachi, 11 percent discount was accorded to the tiles imported from Iran by the land routes into various parts of the province of Balochistan.

“The local tile industry is facing a big challenge due to smuggling and under-invoiced imports from Iran,” said a source. “There is heavy evasion of duties/taxes on the import of tiles from Iran and in one incident the loss was reportedly up to Rs1.873 billion over a span of just 18 months,” he claimed.

“This single example shows the magnitude of the damage being done to the local industry and the government through this import of tiles from Iran with lower valuation,” said the source, adding that this practice is continuing to hurt the local industry.

The source added that the cost of production is rapidly rising around the world, especially in China and Iran, with increase in minimum wages and energy costs, yet the ITPs of these tiles are low which is creating serious harm to the local manufacturers.

“The local manufacturers demanded the government to take measures to stop smuggling from Iran and also adopt transparent fixation of ITPs based on reliable data available through technology directly on the official websites of exporting countries,” said the source, adding that it is strange that import price is low on items that are already being manufactured in the country from local raw material.

The local industry is the largest buyer of the mined tiles raw material, the source added, and this huge injury to tile industry would hurt the mining industry of Pakistan as well.