SRO 367(I)/1994

GOVERNMENT OF PAKISTAN MINISTRY OF FINANCE, REVENUE AND ECONOMIC AFFAIRS (REVENUE DIVISION) NOTIFICATION Islamabad ,the 9th May,1994. CUSTOMS S.R.O.367(I)/94.- In exercise of the powers conferred by section 19 of the Customs Act,1969 (IV of 1969), the Federal Government is pleased to exempt the machinery, equipment, materials, specialized vehicles, accessories, spares, chemical and consumables, as are not manufactured locally, if imported for the projects mentioned in column (2) of the table below for the phases and by the importers mentioned in columns (3) and (4) respectively of that table, the Exploration and Production (E&P) Companies specified in column (4), against serial No. 1, in column (1), of the table below, from the whole of customs-duties and others from so much of the custom-duty as is in excess of 10% leviable under the First Schedule to the Customs Act, 1969 (IV of 1969), subject to the following conditions, namely :-- (1) Only such machinery, equipment, materials, specialized vehicles, accessories, spares, chemicals and consumable shall be entitled to the exemption under this notification, as are certified by the relevant Regulatory Authority from time to time in terms of Annexure VI to the Petroleum Policy,1994. The relevant Regulatory Authority shall take such measures as it deems necessary to ensure that the concerned companies, corporations and organizations entitled to avail exemption under this notification import only machinery, equipment, materials, specialized vehicles, accessories, spares, chemicals and consumables as is approved by the said Regulatory Authority in view of their actual project requirements; (2) exemption available to E & P companies sector, S.No.1 of the table, shall be admissible only to such E & P companies who hold permits, licences, leases and who enter into supplemental agreements with Government of Pakistan in terms of the said Petroleum Policy or those who sign new petroleum concession agreements on or after 1st January,1994. Exemption under rest of the S.Nos. of the table shall be available to E & P companies without any such conditions; (3) in respect of goods imported under S.No.1(i) of the table, after the first Commercial Discovery has been made in the concession area, the respective Operator shall pay to the Collector of Customs on an annual deferred basis a consolidated fee equal to 3% of the total invoice value of the equipment, materials, specialized vehicles , accessories, spares, chemicals and consumables imported by it, its contractors and sub-contractors after the first Commercial Discovery of all activities in the area including but not limited to exploration activities in that particular concession area during the year. Goods imported under S.No.2 to S.No.8 of the said table shall not be subjected to such consolidated fee. Items imported free of import duties under S.No.1(ii) of the table if sold to E & P companies as part of their services will be included in the total invoice value for calculation of the fee payable by the Operator. The value to be taken for the service company items for inclusion in the total invoice value shall be their invoice value at the time of import. The Operator shall submit an account of all import invoices to the Regualtory Authority and the Collector of Customs for confirmation with their record at the time of annual payment. This provision will also apply to OGDC and other local E & P companies who hold mining, development and production leases and have not been required to enter into any agreement with the Government of Pakistan; (4) The Petroleum sector companies or importers shall furnish to the Collector of Customs an Indemnity Bond in the form set out in the Annexure below to th extent of customs-duties exempted under this Notification on the import of items of the value specified in the import authorization issued by the Ministry of Commerce. The Indemnity Bond shall be valid for a period of five years for the amount of customs-duties payable and exempted on import of item covered under the above referred import authorization. The Bond shall be discharged on production of a certificate set out in the Annex-I duly countersigned by the Regulatory Authority or its authorized representative to the effect that items imported under the specified import authorization have been duly installed or consumed or used or have been scrapped in the prescribed manner. The Bond shall be extended for a further period of one year if the relevant Regulatory Authority recommends such extension for any reason or shall direct for substitution of such Bond for outstanding amount of customs-duty on any item transferred to another Petroleum sector company entitled to import of such items under this Notification; Provided that the transferred company furnishes a similar Indemnity Bond in the form set out in the Annexure below; (5) in the event of non-production of such certificate as aforesaid by the importer, the Collector of Customs shall enforce the indemnity bond and proceed to recover Government dues under section 202 of the Customs Act, 1969 (IV of 1969), and the rules made thereunder; (6) in the event a dispute arises whether any item is entitled to the exemption under this notification, the item will be immediately released by the Customs Department against a corporate guarantee. A subsequent certificate from the relevant Regulatory Authority that the item is covered under this notification shall be given due consideration by the Customs Department towards finally resolving the dispute; (7) in the event that an emergency condition occurs in connection with operations by a petroleum sector company which seriously endangers life or property or the operations of the project, the relevant Regulatory Authority shall declare an emergency and the operating company shall be allowed to import any item or items considered necessary by the said company to deal with the emergency under intimation to the Regulatory Authority without fulfilling such formalities as are likely to cause delay and such formalities will be attended to thereafter as soon as practicable; and (8) items imported free of import duties or at concessionary rates which become scrap, junk or obsolete shall be disposed of in the following manner, namely:- (i) in the event an item other than vehicles, is sold to another company in the petroleum sector no import duties shall be levied or charged. If the item is not sold to another petroleum sector company it shall be sold through a public tender and duties shall be recovered at the rate of 10% ad val. of the sale proceeds; (ii) for vehicles there would be a minimum retention period of five years after which the vehicles may be disposed of in the manner provided in (i) above except that the full rate of import duties, net of any import duties already paid, shall be charged subject to an adjustment of depreciation @ 2% per month up to a maximum of twenty-four months. Vehicles can be surrendered at any time to the Government of Pakistan without payment of any import duties under intimation to the Central Board of Revenue; and (iii) any item imported free from import duties or on concessionary rate under this notification may be exported for replacement, repair, modification or renovation and may be re-imported without the payment of additional import duties subject to the production of certificate from the Regulatory Authority that the item needs to be exported for replacement, repair, modification, or renovation and a corporate guarantee for re-import by the exporting company. Explanation.- In this notification,- (i) "exploration and production(E & P) companies" includes the Oil and Gas Development Corporation; (ii) "invoice value" means value as ascertained by the Collector of Customs; and (iii) "Regulatory Authority" means the relevant Regulatory Authority specified in Annexure VI to the Petroleum Policy, 1994. (iv) Exploration and Production Companies and Service Companies can import single or double cabin pickups and vehicles with mounted equipment and other specialized field vehicles without any restriction, keeping in view their work requirement and on the recommendations of a committee headed by Joint Secretary (Admn), Ministry of Petroleum and Natural Resources with a representative each of the concerned Regulatory Authority, PEPPCA and Service Companies as its members. (v) The expression "not manufactured locally" shall mean the goods which are not included in the list of locally manufactured goods, specified in the General Order, issued by the Central Board of Revenue. TABLE S.NO. PROJECT DESCRIPTION PROJECT PHASE CATEGORY OF IMPORT (1) (2) (3) (4) 1. Petroleum projects covered Exploration, development, (i) Exploration and production under petroleum concessions production, compression E&P)companies, their agreements, permits,licences and enhanced recovery. contractors and and leases. sub-contractors. (ii) Companies providing services covering seimsic, drilling, cementation, testing or similar type of services to E & P companies. 2. (a) Refinery projects. Replacement. Existing refineries. (b) Refinery projects. Establishment(initial E & P companies where they installation), expansion, establish a refinery as a part of modernization, and their field development. upgradation. (c) Refinery projects. Establishment(initial Refining companies, corporations, installation), expansion, organizations. modernization and upgradation. S.NO. PROJECT DESCRIPTION PROJECT PHASE CATEGORY OF IMPORT (1) (2) (3) (4) 3. Oil and Gas pipelines Oil transportation and gas (i) E&P companies where they projects. transmission and distribution establish a pipeline. (as determined by the relevant] Regulatory Authority). (ii) Petroleum refining companies. (iii) Petroleum refining companies. (iv) Gas transmission, distribution companies, corporations and organizations. 4. Liquefied petroleum Establishment(initial E & P companies, gas projects. installation), and expansion corporations and organizations, of LPG processing and where they establish LPG extraction plants, LPG facilities. bottling and handling facilities. including floating storge vessels whether self-propolled or otherwise. 5. Compressed natural Establishment of natural gas (i) E&P comapnies where gas projects. compression, re-filling and they establish CNG facilities outlet facilities, the conversion and/or market CNG. of vehicles to CNG and transportation of CNG through (ii) CNG companies. specialized vehicle mounted systems. (iii) Petroleum marketing companies, corporations and organizations. 6. Petroleum terminal Establishment of port terminals (i) E&P companies where they projects. mainly used to handle petroleum establish petroleum terminal items including crude and fuel oil, facilities. petroleum products, LPG and CNG whether for import or export. (ii) Terminal companies, corporations and organisations. 7. Energy conservation, Energy conservation, efficiency E&P companies and other corporation/ environment and safety enhancement, pollution, organizations, where they import control projects. environmental and safety control. conservation, efficiency enhancement, pollution control, environmental and safety equipment. 8. Construction and During all phases listed All petroleum sector companies, erection of petroleum at S.No.1 to S.No.7 above. corporations and organizations projects listed at S.No.1 including their contractors and to S.No. 7 above. sub-contractors for the purpose of construction and erection of petroleum projects on an import-cum export basis against a corporate guarantee equal to the value of import duties and taxes that would have otherwise been payable on import. Should the goods, etc., not be exported on the conclusion of the project or transferred with the approval of the relevant Regulatory Authority to another duty free petroleum project then the company, corporation and organization concerned will be liable to pay duty and taxes chargeable on importation. ANNEXURE [See condition (4) ] (On appropriately stamped non-judicial papaer) INDEMNITY BOND THIS DEED OF INDEMNITY is made on the _________________day of ______________BETWEEN Messers_____________having registered office at ______________(hereinafter called "the importer" which means and includes their successors, administrators, executors and assignees), of the one part, AND the President of Pakistan through the Collector of Customs(hereinafter called "the Collector of Customs"), of the other part; WHEREAS the Government of Pakistan has, by its decision contained in Notification S.R.O.367(I)/94 dated the 9th May,1994 and subject to the conditions given in the said Notification, been pleased to direct that machinery, equipment, materials, specialized vehicles, accessories, spares, chemicals and consumables as are not manufactured locally shall be exempt from so much of the customs-duty as is in excess of 10% if imported for the projects specified in the table of the said Notification. AND WHEREAS M/s __________________________having registered office at __________________have imported the goods mentioned in the Schedule (please specify in the Schedule the description and quantity of goods imported) to this Bond for the purpose of (please specify the particulars of the project and phase of the project). NOW, THEREFORE, in consideration of the relase of the goods on payment of customs-duties as is in excess of 10%, the importers bind themselves to pay on demand to the Government of Pakistan the sum of Rs.________________being the customs duty leviable on the goods, if the importers fail to produce a certificate of vertification form the Regulaotory Authority within such period as it may approve in accordance with condition (4) of this Notification.- (i) to produce a certificate of verification from the concerned Assistant Collector of Customs and Central Excise, within the period as approved by the relevant Regulatory Authority as required under the said Notification; and (ii) to produce such other evidence as the Collector of Customs may require to satisfy himself that the goods have been installed, used, consumed, scrapped, retained in the project inventory or transferred, as the case may be, in accordance with the conditions of the said Notification. The importers further agree and bind themselves that the amount covered by this Bond may be recovered as arrears of customs-duties under section 202 of the Customs Act, 1969 (IV of 1969) and the rules made thereunder. This Bond shall be rendered void when the aforesaid certificate has been produced and the Collector of Customs is satisfied that the importers have fulfilled all the conditions of this Bond and the aforesaid Notification. Signed by the importers on this____________________________day of _______________________19 . ( Authorised Officer ) Name and permanent address Collector of Customs ( on behalf of the President ) Witness___________________________________________ (signature, name, designation and full address). Witness___________________________________________ (signature, name, designation and full address). Note.- The amount of indemnity bond may be reduced by the Collector of Customs, if any company, corporation or organization produces a certificate from the concerned Assistant Collector of Customs and Central Excise to the effect that part of the goods covered under the indemnity bond has been installed, used or consumed, as the case may be, in terms of the said Notification during the validity period of the indemnity bond. ANNEXURE-I CERTIFICATE I, Mr._____________M/s ___________________________________certify that all the items or the items indicated in the enclosed list imported vide Index No.________of an IGM No._________dated__________under Indemnity Bond No._______dated_______have been duly installed or consumed or wed, or have been scrapped in the prescribed manner or transferred to M/s ___________dated ________(copy enclosed) issued by the Ministry of Commerce and indemnity bond furnished by that company is enclosed. It is, therefore, requested that the indemnity bond No.________dated________for the amount of Rs._______may be allowed release or a certificate may be issued for the release of the Indemnity Bond, if misplaced. Name____________________ Designation_______________ Countersigned by Regulatory Authority Name___________________________ Designation ______________________ Officer's Seal ____________________ ___________________________ SCHEDULE _____________________________________________________________________________________________________ [F.No.1(7)-Mach/94-49/94] ( RIAZ HUSAIN NAQVI ) Additional Secretary [As amended] S.R.O.573(I)/94, - dated 09.06.1994 S.R.O.1091(I)/94. - dated 08.11.1994 S.R.O.73(I)/96, - dated 22.01.1996 S.R.O.382(I)/96, - dated 13.06.1996. S.R.O.749(I)/98, - dated 29.06.1998 S.R.O.692(I)/99, - dated 12.06.1999 S.R.O.1082(I)/99, - dated 25.09.1999