KARACHI: MCC Port Qasim has prepared guidelines to process exemptions and concessions of customs duty, sales tax and income tax to avoid misuse of SROs and facilitate genuine importers.
MCC Port Qasim proposed that the Customs duty exemptions/concessions will only be admissible under SRO 565(I)/2006, SRO 678(I)/2004 and SRO 809(I)/2009 along with Free Trade Agreements (FTA) and Preferential Trade Agreements (PTA).
Survey based exemptions will be allowed under SRO 565(I)/2006 which allowed exemptions on raw materials, sub-components, components, sub-assemblies and assemblies for local assembly.[the_ad id=”31605″]According to the 2nd draft of Import Manual prepared by MCC Port Qasim, the assessing officer will consider/cross check certificate of approval determining the input/output ratio of the imported and manufactured goods issued by the Director IOCO; assessing officer will direct the importer or clearing agent to deposit the security instrument against the concessionary amount of duty and ensure that the security instrument has been deposited in Bank Guarantee section.
The benefit of SRO will be given only to the items which are mentioned in the certificate of approval only. The aspect of local manufacturing will be cross checked with respect to Customs General order before extending the benefit of SRO.
Non-survey based exemption will be admissible under SRO 678(I)/2004 which allows concessions of duty and sales tax for exploration and production companies (E&P), contractor, sub contractor and their service companies on import of machinery, equipment, specialized vehicles, vessels and helicopters etc.
The assessing officer will confirm the status of importer as E&P company, contractor or sub-contractor or service company and local manufacturing aspect will be cross checked with Customs General Order (CGO).
Non-survey based exemption will be also admissible under SRO 809(I)/2009 which allows concessions/exemption of customs duty on import of machinery, equipment by textile industrial units registered with Ministry of Textile & Industry.
The assessing officer will confirm that the import is textile unit registered with ministry; description of the goods must commensurate with the PCTs given in subject SRO and local manufacturing aspect will be cross checked with Customs General Order (CGO).
In case of claimed exemption/concession under FTA or PTA the assessing officer will cross check the FTA certificate, certificate of origin duly verified by FTA cell, origin, description and concessionary rate of duty as per SRO.
As far as Sales Tax exemptions/concessions are concerned, the Assessing Officer shall consider / cross check the relevant conditions/pre-requisites mentioned in each Schedule for the grant of Sales Tax exemption/concession must be adhered to completely.
The exclusions shall be minutely scrutinized to avoid wrong grant of exemption. Locally manufacturing status of the imported plant, machinery and apparatus including capital goods shall be checked while extending the benefit of Sixth schedule to the Sales Tax Act, 1990.
While extending the benefit of Sixth Schedule, certificate will be scanned by the importer, certifying that the imported machinery and plant is the bonafide requirement. While extending the benefit of 8th Schedule status of the importer will be verified through scanned documents in WeBoc System and online taxpayer verification from FBR website to confirm the manufacturing, commercial status or other status.
The benefit of 8th Schedule will be extended to the plant and machinery not locally manufactured, and having no compatible local substitutes, and as is used in the manufacture or production of goods.
While granting the benefit of 8th Schedule security instrument will be released after online submission of Sales Tax return by the registered manufacturer. In case of commercial importer, it will be confirmed that the subsequent supplies of the machinery have been effected to registered manufacturers or industrial users or unregistered persons. Therefore, invoice, status of buyer and sales tax return of supplier and buyer will be checked. In case of supplies to unregistered person, security instrument shall be encashed.
The benefit of SRO 1125 (1)/2011 shall be available only to persons specified in doing business mentioned in SRO.
While extending income tax exemptions/concessions, the assessing officer will confirm the status of the importer as an industrial concern or as a commercial entity through profile of the importer exhibiting within the GD filed in WeBOC system, counter check the status through FBR website and will extend that the relevant rate of tax in line with the status of the importer.
The rate of tax on import of hybrid cars has been reduced to 100 percent concession in hybrid vehicles upto 1200 cc, 50 percent concession on vehicles 1201-1800 cc and 25 percent concession on vehicles 1801-2500 cc.
As per the proposed guidelines, the Assessing Officer must confirm the Engine Capacity through import documents and examination report. The Examining Officer shall also confirm the Engine Capacity in the examination report. The Assessing Officer shall minutely extend the relevant rate of reduction of tax with regard to Engine capacity.
In case of Exemption from Specific Provision, Provisions of sections 148 and 153 shall not be applicable on import and subsequent supply of items with dedicated use of renewable sources of energy like solar and wind etc., even if locally manufactured, which include induction lamps, SMD, LEDs with or without ballast with fittings and fixtures, wind turbines including alternator and mast, solar torches, lanterns and related instruments, PV modules with or without related components including invertors, charge controllers and batteries.
Provisions of section 148 (l) of ITO 2001 do not apply in case of Federal Government , Provincial Government, Local Government, Foreign company and its associations whose majority share capital is held by foreign government; a person who imports plant and machinery for execution of a contract with the Federal Government or a provincial government or a local government; Companies importing high speed diesel oil, light diesel oil, high octane blending component or kerosene oil, crude oil for refining and chemical used in refining thereof and E&P companies.
The Assessing Officer shall thoroughly go through and check the claimed exemption and its amendments passed from time to time. While extending the benefit of any SRO as claimed by importer in WeBOC system, the Assessing Officer shall also get assistance from explanation incorporated in the system.
The Assessing Officer shall also confirm that Serial No. and Tables of various Schedules of Customs and Sales Tax Act have been correctly claimed by the importer. The Assessing Officer must also keep himself abreast of the latest amendments in various SROs in order to avoid any mistake.
Check list for Assessing Officer include Admissibility, Respective description/PCT, Conditions, Exclusions, Status of Importer, Local Manufacturing/quantitative determination/input importability viz-a-viz output ratio, Examination Report viz-a-viz documents/brochures and Online investigation.