KARACHI: Pakistan has set aside an 18 percent sales tax on imported methyl bromide, removing a bottleneck that had halted fumigation of incoming cotton and left around 600 containers stranded at Karachi ports for more than a week, a textile industry official told Arab News on Friday.

Imported cotton must undergo fumigation before it can be cleared from the port, but a customs decision in May subjected methyl bromide used for the treatment to an 18 percent sales tax, holding up supplies of the chemical and, in turn, the release of cotton shipments.

The Federal Board of Revenue’s Customs Wing set aside that classification this week and sent the matter back for a fresh decision within 30 days, effectively restoring the previous tax treatment while the issue is reconsidered.

“They [the customs] are withdrawing 18 percent tax,” All Pakistan Textile Mills Association (APTMA) Chairman Kamran Arshad said, adding that the decision would allow the methyl bromide consignment to be cleared and fumigation operations to begin.

The disruption had created a growing backlog of imported cotton at Karachi ports and threatened supplies to textile mills, which rely heavily on the raw material to meet export orders.

APTMA Secretary General Raza Baqir said the problem began after a classification committee changed the customs treatment of methyl bromide in May, making imports of the fumigant liable to 18 percent sales tax after they had previously been exempt.

An order issued by the Customs Wing on Sept. 3 set aside the May 19 notice “ab-initio” and directed the classification committee to reconsider the matter within 30 days.

Former APTMA chairman Asif Inam said clearance of cotton containers had resumed following the decision.

“Ports will remain open on Sunday to speed up the clearance of the container backlog,” he told Arab News.

In a letter to Minister of State for Finance Bilal Azhar Kayani before the issue was resolved, Arshad said the dispute had brought cotton fumigation operations to a halt and initially stranded around 400 to 500 containers before the backlog increased further.

“The above classification dispute has virtually not only stopped clearance of methyl bromide but has also stopped clearance of imported cotton creating extremely critical situation for textile industry and textile exports from Pakistan,” he wrote.

“The industry is now incurring demurrage and related losses exceeding Rs10 million [$36,000] per day,” he added.

Arshad said prolonged delays risked creating raw material shortages, disrupting export orders and hurting Pakistan’s export earnings.

Pakistan’s textile sector is the country’s largest export-earning industry, accounting for more than half of total exports.

Textile exports stood at about $17.9 billion in the last fiscal year.

The Ministry of Maritime Affairs referred questions about the backlog to port authorities, while a Karachi Port spokesperson said customs officials were better placed to comment on the clearance issue.