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The Federal Board of Revenue has introduced an enabling provision in the Customs Act 1969 to collect transit fee for which rate and method of collection has yet to be finalised. This was stated by FBR Member Customs Mumtaz Haider Rizvi during the technical briefing on salient features of budget (2011-12) at the FBR headquarters here on Friday.

FBR Member Customs said that the grant of transit facility has increased Customs facilitation and allied operations manifold. In order to provide self sustaining infrastructure and services at customs stations and en-route, an enabling provision for collection of transit fee is being provided by adding a new section namely 129A in the Customs Act, 1969.

Under the new transit trade agreement, the Afghan importers would submit the insurance guarantee instead of bank guarantees as financial security for the transit goods, he added. FBR Member Customs said the FBR has not imposed new customs duty on any item or increased the rate of customs duty on the import of any good. The FBR has provided relief to the tune of Rs 2.1 billion through tariff rationalisation in budget (2011-12).

The customs budget revealed that on the recommendations of Ministry of Health 22 more active pharmaceutical ingredients (API) are being included in concessionary regime by amending SRO 567(1)/2006. The regulatory duty (RD) was imposed on 397 items through SRO 482 (1)/2009 dated 13.6.2009. This duty is being removed on all items except betel nuts, cigarettes, luxury tiles & bathroom fittings, luxury vehicles (1800 CC & above except electric hybrids) and arms & ammunition by amending SRO 482(1)/2009.

According to customs budget, the change in rate of customs duty would be applicable from June 4, 2011. Sabutol falling under PCT code 3814.0000 @ 20% duty is a major raw material for production of Butyl Acetate, which is used in paint industry. In order to support local manufacturing of Butyl Acetate, customs duty on Sabutol is being reduced to 5% through SRO 565/2006.

In order to support Glass industry, two of its major raw materials namely 'mirror backing paint" (PCT code 3208.1010) and 'cullet & other waste/scrap of glass" (PCT code 7001 .0000) are being allowed concessionary rates of 10% and 5% duty in place of current rates of 20% and 10% duty, respectively, by amending SRO 565(1)/2006.

The import of 10 items used in the manufacturing of CNG compressors are currently allowed at 0% duty. On the recommendation of Engineering Development Board (EDB), the existing list is being substituted with 15 new items at the same rate of 0% duty by amending SRO 565(1)/2006.

The customs budget further revealed that the wellhead, X-mass tree & their integral components / parts are importable at the concessionary rate of 15 percent duty under SRO 678(1)/2004. Considering the importance of these items in the oil exploration process, concessionary rate of 10 percent duty is being allowed under the said SRO.

At present, a concessionary rate of 10% duty is available to magnetic tape in jumbo rolls (PCTs code 8523.2920) for manufacturing of videocassettes. The same concession is being allowed on import of magnetic tapes in jumbo rolls (PCT code 8523 .2990) for manufacturing of audiocassettes.

Currently, concessionary rate of 10% duty is available to Cassette Mechanism Assembly for Car Audio System. The same concession is being allowed to mechanism assemblies of CD I MP3 I MP4 under SRO 565(1)/2006 for manufacturing of Car Audio Systems.

Under the tariff rationalisation done in budget 2011-2012, the rates of customs duty on Bars, Rods and Profiles of Copper alloy (PCI codes 7407.2100 and 7407.2900) are 10% and 5%, respectively. In order to rationalise their tariff structure, tariff rate on PCT code 7407.2100 is being reduced to 5% to avoid delays on account of disputes at the time of clearance. Similarly, rates of customs duty on Bars and Rods of refined copper (PCT codes 7407.1010 and 7407.1020) are l0% and 5%, respectively. Tariff rate on PCT code 7407.1010 is being reduced to 5% to rationalise their tariff structure.

Under PCT code 9918, duty is charged to the extent of cost of any alterations, renovations, additions or repairs of the goods (outside Pakistan), if re-imported by industrial concerns. In this provision the words "goods" and "machinery" have been used interchangeably creating ambiguity and delay in clearances. To rectify this discrepancy, the word "goods", wherever occurring under this heading, is being substituted with the word "machinery".

Under PCT headings 2923.9010 and 2930.9060 incorrect descriptions of "Betain" and "O.O.Duethyl" are being substituted with "Betaine" and "O.O.Diethyl", respectively.

Brass is alloy of Copper and Zinc. Presently Brass Scrap is not specified in the tariff and classified under PCT code of copper waste and scrap @ 0%. A new PCT code 7404.0010 is being created @ 0% for Brass Scrap in the Tariff. Similarly, armoured cash carrying vehicles are being classified under PCT code 8710.0000 @ 20%, which covers tanks and other armoured vehicles. A new PCT code 8710.0010 is being created @ 20% in the Tariff for armoured cash carrying vehicles.

The tariff rationalisation for 2011-2012 further revealed that the raw materials, components and sub-components of 156 different industrial sectors are allowed concessions/exemptions from customs duty under SRO 565(1)/2006 dated June 5, 2006. In order to remove some errors of classifications and descriptions, rectifications are being made. Through Finance Bill (2011-2012), the FBR has introduced the following legal changes have been made in the Customs Act, 1969:

The section 15 of the Act deals with serious offences relating to import and export prohibitions. While section 32 deals only with misdeclarations. To remove arbitrage and eliminate the possibility of any miscarriage of justice, reference to section 32 is being deleted from section 15 of the Act.

In order to provide incentives to local manufacturers and suppliers of domestic goods against international tenders, section 21(c) is being amended to treat these supplies as exports. This would entitle goods supplied against international tenders to customs duty draw back (rebate). In order to remove superfluity in the specified ranks of designated officers in sections 22, 34 & 96 of the Customs Act 1969, the words 'or Deputy Collector", are being deleted.

The automation of customs operations and resultant decrease in physical controls has enhanced the importance of audit. The limitation period under section 32 of the Act is extended upto five years for taking cognisance of offences relating to short-paid duty and taxes in cases unearthed during audit.

In order to mitigate hardships of persons who have wrongfully deposited duty, the limitation period for refund under section 33 of the Act will be from the date of finalisation of the case (order/decision/judgement), Customs Budgetary measures for 2011-2012 added.

Copyright Business Recorder, 2011

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