Exemption from customs duty on import of raw materials, components etc. for manufacture of vehicles, equipment and machinery etc.

GOVERNMENT OF PAKISTAN MINISTRY OF FINANCE, ECONOMIC AFFAIRS, STATISTICS AND REVENUE (REVENUE DIVISION) *** Islamabad, the 12 th June, 2004 NOTIFICATION CUSTOMS S.R.O. 453(I)/2004.- In exercise of the powers conferred by section 19 of the Customs Act, 1969 (IV of 1969), and in supersession of its Notification No. S.R.O. 436 (I)/ 2001 date the 18th June, 2001, the Federal Government is pleased to exempt raw materials, sub-components, sub-assemblies, components and assemblies as are not manufactured locally, imported for the progressive manufacture of vehicles, equipment and machinery as specified in Table-I and sub- components, sub-assemblies, components, and assemblies as specified in Table-II below from so much of customs-duties leviable under the First Schedule to the said Act as are in excess of the rates specified in Table-I and Schedule to the Table- II thereto, subject to the following conditions, namely: - (i) the importer-cum-manufacturer has suitable in-house facilities and registration with the Sales Tax Department for manufacture of such goods or the importer-cum-manufacturer is in possession of a firm contract for the manufacture of specified goods with any other manufacturer having suitable in-house facilities and registered with Sales Tax Department for the manufacture of such goods; (ii) the manufacturer-cum-importer shall submit a complete list of items he intends to import each year in the prescribed format for the manufacture of goods mentioned in Table-I and Table-II as per indigenisation programme for the approval of the same by Indigenisation Committee of EDB; (iii) the manufacturer-cum-importer, at the time of import of approved items, shall make a written declaration on the bill of entry or customs declaration to the effect that the items have been imported in accordance with his entitlement and in the form or knock down condition as approved by EDB or its relevant Committee for the manufacture or assembly of specified items. The manufacturer shall also declare that the imported items shall be consumed for the purpose of manufacture or assembly of the permissible products within a period of one 1[year]; (iv) the input output ratios of items to be manufactured and total annual requirement of raw materials, sub-components, sub-assemblies and components shall be defined and determined by EDB or by any other organization authorized by EDB and CBR; (v) the clearance of inputs is allowed 2[one port or dry port]; 2[(va) the authorized officer of Engineering Development Board shall furnish all relevant information online to Customs Computerized System (PACCS) as per form `A’ (appended to this notification) against a specific user ID and password obtained under section 155D of the Customs Act, 1969;the manufacturer-cum-importer shall maintain records of the inputs and the goods manufactured from imported items in such form as may be prescribed by the Central Board of Revenue or required under any other law enforced by the CBR; (vb) the Chief Executive Officer shall furnish all relevant information online to Customs Computerized System as per form `B’ appended to this notification against a specific user I.D and password obtained under section 155D of Customs Act, 1969; and (vc) in other Collectorates or customs stations where PACCS is not yet operational, the Project Director or any other authorized officer shall feed the requisite data in PACCS on daily basis or on weekly basis, from the information obtained from the customs stations, which have not yet been computerized;”;] (vi) the manufacturer cum importer shall communicate to the concerned Collector of Customs in writing about the consumption of imported items within sixty days of consumption of goods. In case of non-consumption within one year from the date of import, the importer shall pay the customs-duty and other taxes involved or obtain extension from the Collector of Customs giving plausible reasons for a reasonable period; (vii) in case the manufacturer-cum-importer does not provide information regarding consumption or otherwise of the imported goods within a period of one 1[year] of import or such extended period as allowed by the Collector or if otherwise deemed necessary, the records of importer-cum-manufacturer shall be audited by the Duty Suspension Audit Organization (DSAO) or by any other person duly appointed by the Collector. If upon the audit, consumption of goods is not found satisfactory, the Collector of Customs shall initiate proceedings for the recovery of leviable customs-duty and other taxes besides penal action under the relevant provisions of the laws in force; (viii) The manufacturer-cum-assembler of automotive vehicles enumerated at Serial No. 5 of Table-I shall sell the said vehicles to an NTN holder only and the record of the same shall be furnished to CBR or to any other designated person on monthly basis; (ix) the imported CKD kits of importer-cum-manufacturers and vendors must strictly comply with the list approved by Indigenisation Committee. Any extra items imported in the CKD kit shall attract CBU rates of duty applicable to relevant vehicles; (x) in case of any default in achieving the indigenisation targets for any year the items imported in violation of the indigenisation program in that year shall attract statutory duty and taxes chargeable on the relevant CBU vehicles. The amount payable on account of default shall be determined for each year on the basis of the shortfall in the indigenisation targets as determined by the Technical Audit Team of EDB or any other organization authorized by EDB and CBR and confirmed by the Indigenisation Committee; and (xi) the continued availability of the exemption under this notification shall be contingent upon, the achievement of progressive annual indigenisation targets and payment of customs duty and other taxes, ascertained by the Central Board of Revenue; Exclusions.- Mild steel bars, mild steel rods and mild steel wire rods shall not be entitled for exemption under this notification. Explanation 1.- For the purposes of this notification, the expression "not manufactured locally" shall mean the goods which are not included in the list of locally manufactured items in the indigenisation program approved by the Indigenisation Committee comprising members from the Central Board of Revenue and the Ministry of Industries. Explanation 2.- For the purpose of manufacture of goods in terms of Table-II, items mentioned in approved deletion programmes for manufacture of components/parts and sub-assemblies to be supplied for the manufacture of vehicles of Table-I shall be categorized and treated as sub-components. Explanation 3.- Bicycle chain strips cut to size imported under this notification shall be treated as raw materials liable to customs duty @ 5%. TABLE-I S. No. | Description of vehicles. | Rate of duty (1) | (2) | (3) 1. | Agricultural tractors falling under PCT heading 87.01. | 0 % 3 [2. | (i) Road tractors for semi-trailers and trailers (prime movers) of 280 HP and above falling under PCT heading 87.01 | 0% (ii) Other tractors | 10%] 3. | Vehicles falling under PCT heading 87.02 (Non-CNG) | 2 [5 %] 4. | Fully CNG dedicated vehicles falling under PCT heading 87.02 | 2 [0 %] 5. | Vehicles falling under PCT heading 8703. | 35 % 3 [6 | (i) Vehicles of g.v.w not exceeding 5 tons falling under PCT heading 87.04 | 20% (ii) Vehicles of g.v.w exceeding 5 tons falling under PCT heading 87.04 | 10% 7. | Motorcycles falling under PCT heading 87.11 | 30 % 8. | Bicycles falling under PCT heading 8712. | 2 [15 %] 9. | Bulldozers falling under PCT heading 84.29 | 0 % 10. | Combined Harvesters falling under PCT heading 8433.5100. | 0 % 11. | Assembly kits of all the above, categories corresponding to the number of their exported units subject to the following conditions, namely:- (i)no duty drawback was claimed at the time of export; (ii)the imported kits relate to the vehicle of same engine capacity as was exported; and (iii)the importer makes a declaration in the bill of entry or customs declaration at the time of import that he intends to avail this facility and produces the evidence of export, namely:- (a) copy of the bill of export or customs declaration bearing examination report of customs; (b) bill of lading; and (c) foreign exchange repatriation certificate. | 0 % TABLE II Description of goods 1[Sub-components, sub-assemblies, components and assemblies of automotive vehicles, automotive climate control equipment, automotive batteries and bicycles meant for in-house use, or supply to OEMs and assemblers, or sale. SCHEDULE S.No. | Category | Rate of duty on raw materials | Rate of duty on sub-components | Rate of duty on sub-assemblies | Rate of duty on components / assemblies approved under DP (1) | (2) | (3) | (4) | (5) | (6) 1 | For tractors | 0 % | 0 % | 0 % | CKD rates of Table-I 2 | For vehicle of PCT 87.03 | 5 % | 10 % | 20 % | -do- 3 | For Motor cycles | 5 % | 10 % | 20 % | -do- 4 | For bicycles | 5 % | 10 % | 15 % | -do- 5 | For vehicles falling under PCT heading 87.02 & 87.04 (Non-CNG) | 5 % | 10 % | 15 % | -do- 6 | For fully CNG-dedicated vehicles of PCT heading 87.02 | 0 % | 0 % | 0 % | -do- 7 | Other vehicles | 0 % | 0 % | 10 % | 15 % 2[FORM-A [See condition (va)] (To be filled in by the authorized officer of Engineering Development Board) Header information Name of importer | NTN/FTN of importer | Approval No. Details of input goods (to be filled by the authorized officer of Engineering Development Board HS Code | Description | Specs | Quantity | UOM | Custom Duty rate (applicable) (1) | (2) | (3) | (4) | (5) | (6) CERTIFICATE. Before certifying the above, the authorized officer of the Engineering Development Board shall ensure that the goods are not manufactured locally. Signature __________________________ Designation __________________________ NOTE.- In case of clearance through Customs Computerized System (PACCS), the above information shall be furnished on line against a specific user I.D. and password obtained under section 155D of the Customs Act, 1969. FORM-B [See condition (vb)] (To be filled in by the Chief Executive of the importing company) Name & address of the Importer | NTN/FTN | Bill of Lading No. Port of clearance | IGM No. & Date, Index No. | Customs Agent Name/No. S.No. | H.S. Code | Description | Specifications of imported inputs | Applicable rate of duty | Quantity | Unit Value | Unit of measure | Total value in Pak Rupees (1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) | (9) CERTIFICATE. It is certified that the description and quantity mentioned above are commensurate with the inputs requirement and that the same are not manufactured locally. It is further certified that the above items shall not be used for any other purpose. Signature of Chief Executive Name of Chief Executive ___________________ N.I.C No. _______________________________ NOTE.- In case of clearance through Customs Computerized System (PACCS), the above information shall be furnished on line against a specific user I.D. and password obtained under section 155D of the Customs Act, 1969. Explanation.- Chief Executive means - (a) | owner of the firm, in case of sole proprietorship; (b) | partner of firm having major share, in case of partnership firm; (c) | Chief Executive Officer or the Managing Director in case of limited company or multinational organization; or (d) | Principal Officer in case of a foreign company.”.] [C.No1/6 Mach/ 2004-Pt.II] (MUHAMMAD RAMZAN) ADDITIONAL SECRETARY As amended: 1. S.R.O.733(I)/2004 - DATED 28.08.2004 2. S.R.O.576(I)/2005 - DATED 06.06.2005 3. S.R.O.___(I)/2006 - DATED 19.06.2006