SRO 186(I)/2001

GOVERNMENT OF PAKISTAN (REVENUE DIVISION) CENTRAL BOARD OF REVENUE **** Islamabad, the 21st March, 2001 N O T I F I C A T I O N (CUSTOMS) S.R.O. 186(I)/2001: - In exercise of the powers conferred by section 219 of the Customs Act, 1969 (IV of 1969), read with section 3,4,5,21 and 37 thereof, the Central Board Of Revenue is leased to make the rules, namely :- 1. Short title, application and commencement :- (1) These rules shall be called the Determination of Imported Materials and Fixation of Rates for Repayment or Duty Drawback Rules 2001. (2). They shall,- - (a) apply to determine the imported input materials of a class or description used in the manufacture of products on which repayment or drawback of customs-duties is allowed, the calculations of input to output ratio and the fixation of rates for the purposes of repayment or drawback thereon; (b) in general, apply to all such goods of a class or description used as input materials in the manufacture of products of a class or description on which the repayment of customs- duties is authorized under clause (c) of section 21 of the Act or draw-back of customs-duties under section 37 thereof; and (c) in particular, apply to all products of a class or description other than those specified in Schedule I on the imported goods or input materials of a class or description which shall be identified and determined under these rules and to the extent of the whole of customs-duties thereon to be fixed in the manner as more fully described in these rules. (3). They shall come into force at once. 2. Definitions :- In these rules, unless there is anything repugnant in the subject or context,- (a) “Act” means the Customs Act, 1969 (IV of 1969); (b) “Association” means a representative trade body of persons engaged in manufacture, production or commercial export of goods of a class or description on which repayment or drawback of customs-duties is allowed, and duly registered under the law in force relating to registration of such Association; (c) “Board” means the Central Board of Revenue; (d) “CC&I” means the respective Chambers of Commerce and Industry recognized and affiliated with the FPCCI; (e) “Director” means the officer holding the charge as the Director of the IOCO and duly notified by the Board in this regard; (f) “FPCCI” means the Federation of Pakistan Chambers of Commerce and Industry; (g) “Individual Notification” means a Notification relating to the determination of input goods and fixation of rates in relation to all goods other than those specified in Schedule II and which are applicable in case of a specific

(h) “input materials” means all such imported goods or materials used in the manufacture of goods or products specified in schedule I as are identified and determined as such under these rules; (i) “IOCO” means the input output Co-efficient Organization established by the Central Board of Revenue for the purposes of these rules; (j) “manufacture” means any process incidental or ancillary to the completion of such finished goods as are not specified in Schedule I; (k) “manufacture” means a person engaged in any process incidental or ancillary to the completion of such finished goods as are not specified in Schedule I; (l) “Products” means all such finished goods manufactured in Pakistan meant for export or exported outside other than those specified in Schedule I, from time to time; (m) “Schedule” means the schedule to these Rules; (n) “Sector Specialist” means a qualified person having the required professional expertise in various sectors and appointed as sector specialist in the IOCO; and (o) “Standard Notification” means a Notification relating to the standard determination of imported input materials and fixation of rates in case of goods of a class or description which is not limited or restricted to an individual manufacturer but is applicable in general cases. 3. Powers and functions of IOCO :- (1) For the purposes of these rules, the Board shall establish the IOCO which shall be headed by the Director who shall be an officer not below in rank than a collector of Customs. (2) The board shall ensure that the Director is assisted by as many officers of customs including the Sector specialists who in the opinion of the Director may, from time to time, be required for the purposes of these rules. (3) The Director and other officers including the Sector Specialists shall all be the officers of customs in terms of section 3 of the Act. (4) All officers including the Sector specialists appointed or holding a post in the IOCO shall exercise the powers and discharge duties conferred or imposed under the Act throughout Pakistan and in such other areas where the Act has been applied. (5) The head office of the IOCO shall be located at Karachi or Islamabad, as the Board may determine, and it shall have, as many regional offices at other places in Pakistan as in the opinion of the Board may, from time to time, be necessary. (6) Subject to such limitations, conditions or restrictions as specified in these rules, the IOCO shall determine the input material on which repayment or drawback of customs-duties is allowed which are used in the manufacture of all products other than those specified in Schedule I and the quantities thereof. After determining the input to output ratio, the Director shall, by notification in the official Gazette, fix the rate of the amount of drawback to be paid thereon. Notifications issued under this rule shall always include the underlying data in support of the rate fixed. (7) In the absence of the Director, the Notification shall be issued under the seal and signatures of such other officer as may be authorized by the Board in this behalf. (8) The officers including the Sector Specialist, subject to such limitations, conditions or restrictions or restrictions specified in these rules, shall be authorized to take all such steps or actions as may be necessary for achieving the purposes of these rules and which shall amongst others include

commercial records or other documents and conduct any other verification check whatsoever as the officer or Sector Specialist may deem fit. (9) The Sector Specialist shall be an appropriate officer for requisitioning in writing information or documents, in terms of section 26of the Act, for the purposes of these rules but subject to the limitations and conditions on the exercise of such powers and discharge of such duties specified in the rules. 4. Standard rate for purposes of Standard Notification :- (1) The Association shall apply to the Director through an application in the form asset out in Schedule II for the purposes of these rules. (2) The Director may call for any further information or make any addition to the particulars of an application as he may deem fit. (3) At the time of submitting an application the Association shall specify the complete calculations in accordance with the method of calculation as the Board may notify separately and shall also furnish therewith the worksheets. However, whose the new product is of such a nature that in respect of it the agreed method of calculations is not applicable, the Association shall declare the details of the method of calculations on which the working is based. All applications made under this sub-rule shall be accompanied by separate work-sheets in case of the individual manufacturers or producers selected by the Association as the representative manufactures or producers for the purposes of these rules. The manufacturers or producers or their duly authorized representative shall duly sign all such individual work sheets. (4) The Director shall, immediately on receipt of an application, send the same to the concerned Sector Specialist. (5) If the Sector Specialist, after making such inquiry as he thinks fit, is satisfied with the method of calculation and other particulars contained in an application, he shall accordingly inform the Director within fifteen days from the date of submission of the application. (6) The Director after receiving report of the Sector Specialist, if satisfied with the findings mentioned therein shall inform the Association, in writing, specifying therein the proposed rates of repayment or drawback of customs-duties, the input materials and the date fixed for meeting so as to afford an opportunity of hearing. (7) In case the Association has no objection regarding the determination of the input materials, the calculation of input to output ratio, and the proposed rates of drawback of customs-duties, the Director shall, within fifteen days from the date fixed for the meeting, issue a Notification in the official Gazette fixing the rates and providing supporting input output data for the rates so fixed. However, in case of a dispute, the Director shall, after hearing the Association and after recording the reason in writing which shall be communicated to the Association, determine the input materials and issue a notification in the official Gazette fixing the rates and providing supporting input output data for the rates so fixed. (8) In case the Sector Specialist, after receiving an application in the manner described in sub-rule (4) where the method of calculation is not the agreed method, and in consequence of making such inquiry as he thinks fit, is not satisfied with the method of calculation proposed by the Association, he shall inform the Director in writing recording his reasons with regard thereto. (9) On receiving the report of the sector Specialist, the Director shall fix a date for a meeting and inform the association in writing communicating therein the reasons recorded by the sector specialist. (10) After hearing the Association on the day fixed for the meeting, the Director in consultation with the Sector Specialists shall decide the method of calculation wherefore in accordance with the procedure provided in sub-rule (7), the Director shall proceed to determine the input materials

for the rates so fixed. 5 Specific rate in case of Individual Notification :- (1) Where in case of a product not included in a standard Notification and in respect of which it is not practicable for the purposes of these rules to determine the input raw materials and fix the rates relating thereto by a Standard Notification, the IOCO on an application made by an individual manufacturer in this behalf, may fix the rates by an individual notification relating to such an individual manufacturer. The application of such an individual manufacturer or producer shall be dealt with and processed in the manner as provided in sub- rules (4) to (10) of rule 4 except that wherever the word “ Association” appears therein, it shall be read as “ individual applicant”. Provided that at any time if the Director is of opinion that there has been a change in the circumtances which requires a standard rate to be fixed he shall inform the respective Association, if any, and all the concerned individual manufacturers or producers, and thereafter may fix, in the manner provided in rule 4, the standard rate through a Standard Notification which shall be notified in the official Gazette. (2) Notwithstanding anything contained in these rules, if at any time, in the opinion of any individual manufacturer or producer, the standard rates fixed under these rules are to him disadvantage, or adversely effect him, to the extent of twenty per cent or more, such a manufacturer or producer may apply to the Director for the determination of input materials and fixation of rates to the extent of such an individul manufacturer or producer. The application of such an individual manufacturer or producer shall be dealt with and processed in the manner as provided in sub-rules (4) to (10) of rule , except that wherever the word “ Association” appears therein, it shall be read as “individual applicant”. 6. Revision :- (1) The revision of rates in case of all products other than those specified in Schedule I notified by the Board prior to the date of commencement of these rules, shall be made in the following manner, namely :- (a) after the commencement of the rules, the Director shall inform the respective Association of the method of calculation adopted for determining the Custom-duty repayment or drawback rates for their comments and active participation before finalization of the process: Provided that in case any Association which in the opinion of the Director was required to have been consulted and which was not so consulted regarding the method of calculation, he shall after the date of commencement of these rules, as soon as may be possible, consult such Association in this regard: Provided further that if the respective Associations do not co-operate in providing timely and verifiable data or information, or agreement to the Director, he may, in consultation with the Sector Specialists, decide the method of calculation and proceed to determine the input materials and revise the rates of repayment or drawback of customs-duties thereon by Notification in the official Gazette; and (b) once action under this sub-rule informing the Associations of the method of calculation has been completed, the said method of calculation shall be separately notified in the official Gazette and shall be deemed to be an integral part of these rules. (2) The IOCO shall generally review all the rates notified under these rules in the last month of each calendar year and complete the exercise by the thirteenth day of January in the following year. It shall be the responsibility of all Associations and individuals, as the case may be, for whom duty repayment or drawback notifications have been issued to supply by the thirtieth of November every year to the director details of any change to the input - output worksheets on which the current rates are calculated, in particular, changes in material used, their quantities and values. In case no change has occurred in such data, the Association or individual, as the case may be, shall inform the Director that no change has occurred in the work sheet particulars. The Director shall on the basis of the method of

review the rates so notified: Provided that if at any time the Director has reasons to believe that there has been a material change affecting the notified rates to the extent of fifteen per cent or more whether upwards or downwards, he shall immediately communicate the reasons thereof to the concerned Association or the individual manufacturer or producer, as the case may be, and after affording a reasonable opportunity of hearing issue a notification in the official Gazette fixing the rates and providing supporting input-output data for the rates so fixed: Provided further that if at any time it comes to the notice, in case of a Standard Notification to the Association or any of its member, and in case of an Individual Notification to an individual manufacturer or producer, that any change has taken place in any factor whatsoever which affects the notified rates to the extent of fifteen per cent or more whether upwards or downward, the Association, member or the individual manufacturer or producer, as the case may be, shall immediately inform the Director in this regard. The failure to inform in this regard shall be treated as a violation of these rules: Provided also that if at any time the Director has reasons to believe that the notified method of calculation has become inapplicable or invalid on account of a material change in any factor having an effect thereon he shall communicate the reasons to the Association. After affording the Association an opportunity of hearing the Director shall review the existing rates based thereon. (3) In consequence of the review if the Sector Specialist is of the opinion that the rates require revision, he shall, after recording the reasons in writing, inform the Director. (4) The Director, if satisfies with the findings of the Sector Specialist, shall inform the Association or the individual manufacturer or producer, as the case may be , in writing regarding the reasons for the proposed revision and specify a date for the purposes of affording a hearing. (5) The Director shall, within fifteen days from the date fixed for the meeting, decide the revised rates and record the reasons in writing which shall be duly communicated to the Association or the individual manufacturers or producer, as the case may be. The Director shall then issue a notification in the official Gazette fixing the rates and providing supporting input output data for the rates so fixed. (6) Notwithstanding anything contained in these rules, the Association or the individual manufacturer or producer, as the case may be, for reasons to be specified, may apply to the Director for the revision of the existing notified rates. All such application shall be dealt with in accordance with the procedure laid down in sub-rules (1) to (4). 7. Miscellaneous:- (1) All applications for the purposes of these rules in respect of the standard rates shall be entertained through the respective Association. However, in case there are more than one association claiming to represent the manufacturers or producers of any goods of a class or description, the Director shall decide either to consult any or all such Associations. If the Director decides not to entertain or consult a particular Association, he shall record the reasons thereof in writing Furthermore, the director may also consult any of the CC&I or the FPCCI in this regard. (2) I any Association having an interest in a Standard Notification, or an individual manufacturer in case of an Individual Notification, is aggrieved by any decision or order passed by the Director under these rules, it may apply to the Board within thirty days from the date of communication of such decision or order specifying therein the grounds thereof. The member of Board authorized in this behalf after giving an opportunity of hearing pass such order as he may deem fit. (3) The IOCO may consult the manufacturing Associations of locally produced input materials used in products meant for export. (4) All application received by the IOCO under these rules shall be finally decided and disposed of within ninety days from the date of the receipt thereof. (5) The application or any other document whatsoever made or signed or caused to be made

Specialists shall be a declaration and document in terms of section 32 of the Act. Where any such document relates to an Association, the liability of the office bearers thereof shall be joint and several for the purposes of section 32 of the Act Furthermore any statement made in answer to any question put to the person giving the statement shall be a statement in terms of section 32 of the Act. (6) If any person in connection with any matter under these rules without any reasonable excuse fails to comply with any requisition made under the Act or to furnish any information as required by or under these rules to be furnished shall be liable to the penalty prescribed under the Act. (7) If at any stage the Sector Specialist or any other officer of the IOCO is satisfied that a survey or audit of any manufacturing premises or any other business premises is required to be conducted for the purposes of or in connection with any matter under these rules he shall inform the Director and after his written approval proceed to conduct the survey or audit. The manufacturer or producer selected for this purpose shall be notified in this regard who shall allow free access to the records relating to the manufacturing process or any such record as in the person conducting the survey or audit is essentially for the purposes of or in connection with these rules. Schedule I [See rules 1(4),2(I) &(k),3(6)and6] Repayment or drawback of duties shall be admissible on all such products which are exported from Pakistan to another country except the following, namely:- The products that are not permissible for export under any relevant Export Policy Order, for the time being in force. Schedule II [See rule 4(1)] Application for a standard repayment or drawback rate by trade association Application shall be made on the respective Association’s headed paper to the Director IOCO. The application shall contain the following information, namely:- Names and addresses of the four or more manufacturers selected by the Association. Description of the export product for which application for a repayment or drawback rate is made and for which the four manufacturers have provided input material quantities per unit of calculation, e.g., one hundred square meters of cloth. Quantity of the product for which repayment or drawback is applied for - exported by each manufacturer over the last six months. In respect of each of the four manufacturers named above, the association should provide the following particulars, namely:- (a) Information solely provided by each manufacturer: (i) Description of the raw materials used: (ii) Quantity of inputs used in the manufacture of the finished product: (iii) FOB value of the product exported (average of the last six months): (b) Information added by association: (i) Currency rate (Interbank at the time of making calculation): (ii) CIF value in Rupees: (iii) HS code of the product: (iv) Custom-duty rate: (v) Custom duty amount of each ingredient and total:

the notified method of calculations. If notified method is inapplicable, provide details of calculations with worksheet and method applied: Application for a specific repayment or drawback rate by an individual manufacturer: Application by an individual manufacturer should provide the same details as for applications for standard rates as set out above, but in respect only of the individual manufacturer. This should be accompanied by a brief description of the manufacturing process and the method of calculation applied. Worksheets showing how the rate of repayment or drawback of customs duties has been calculated must also be supplied. [C. No.1 (1)C(EP)/99] (Dr. Manzoor Ahmed) Member (Customs)