20000402

D G K Cement

refutes default

allegation by

Customs

RECORDER REPORT

LAHORE: D.G. Khan Cement has strongly refuted the assertion of Custom authorities that the company had defaulted on payment of its taxes. On the other hand, said a spokesman of the company, "while the case is pending in court for the last four years, D. G. Khan has offered CBR to settle the issue out of court as an amicable resolution of the entire dispute with regard to correct assessment of liabilities of the company would result in lawful revenue of Rs 2 billion to the exchequer, besides satisfying the foreign lenders such as the IFC (International Finance Corporation)".

The spokesman said that D.G. Khan had voluntarily proposed to CBR in December last year to form a committee of experts, which must include representatives of CBR, cement manufacturers and independent consultants, to carry out a factual inquiry and ascertain as to whether the disputed portion of machinery was physically manufactured in Pakistan or otherwise, and their report be used as a parameter to decide and settle the disputed liabilities under the relevant SRO 484(I)92 dated 14.5.92 read with SRO 978(I)/95 dated 4.10.95 and SRO 569(I)/95 dated 26.6.95.

Further, he said the denial of exemption was without merit as the only cement plant manufacturer i.e. Heavy Mechanical Complex had admitted that only part of the cement plant was locally fabricated and the rest had to be imported from abroad. The Ministry of Industries had also conceded the fact, the spokesman added.

He said that besides D.G. Khan, six other cement manufacturers had also imported plants from abroad by mobilising foreign equity/loans from foreign and local commercial banks as well as DFIs. They were: Fauji Cement; Lucky Cement; Maple Leaf Cement; Nizampur Cement (AWT); Bestways Cement and Saadi Cement.

The issue is now under litigation by practically all of the above named cement companies for the last four years and is pending before the High Courts of Sindh, Lahore & Peshawar, said the spokesman.

He said D.G. Khan Cement's stance was duly reinforced by the decision of the Peshawar High Court on February 3, 2000 upholding the plea of Lucky Cement that such plants were not manufactured locally, in the case No. WP/583/95 titled "Lucky Cement versus CBR and other ministries."

Although the issue is subjudice before the court, the spokesman claimed, nonetheless D.G. Khan had paid a sum of Rs 213 million and had also offered Rs 33 million of export rebate on clinker towards adjustment. "This is the highest amount voluntarily paid by any of the seven cement companies facing identical customs disputes".

Unfortunately, he said, the custom authorities instead of settling the issue were misrepresenting the facts to the new government and distorting the image of the group which contributed Rs 23 billion in taxes and duties to the exchequer last year, besides earning $210 million in foreign exchange and bagging the President of Pakistan Export Trophy.