MCC Exports seeks authority to conduct audit of units operating in EPZ

KARACHI: MCC Exports (Port Qasim) has proposed that it should be mandatory for the manufacturers/investors operating in the Export Processing Zone (EPZ) maintain and submit a monthly statement to the respective Assistant or Deputy Collector of Customs and a copy of the same should be submitted before the 10th day of the following month.

Moreover, the investors operating in EPZ, upon inquiry by Customs or Authority, shall provide record of payments against imports and realization of foreign exchange against exports.

MCC Exports (Port Qasim) has proposed that the manufacturers operating in a Zone shall be allowed to undertake subcontracting for units of the tariff area. The subcontracting shall be allowed only for partial processing, embellishment, decoration or further manufacturing.

The manufacturers shall apply to the respective Assistant or Deputy Collector of Customs. The duty and taxes shall be paid by the units of tariff area to the extent of duty and taxes free goods used.

Moreover, if sales tax chargeable on value addition shall be levied on the value of supply with the prior permission of the Collector of Customs on such conditions, restrictions and limitations as may be prescribed by the Collector.

The manufacturers operating in the tariff area shall be allowed to undertake subcontracting for units of the Zone with the prior permission of the concerned Collector of Customs on such conditions, restrictions and limitations as the Collector may by order in writing impose or as otherwise provided.

The facility shall be extended to the manufacturers operating in the tariff area on submission of copy of contract and after verification of the manufacturing facility of the unit operating in the tariff area through inspection and determination of production capacity by physical survey.

The duty and taxes involved in the outgoing goods for subcontracting purposes shall be secured through post dated cheque and indemnity bond. The samples of both the outgoing and incoming goods shall be retained. The PDC may be released after completion of the subcontracting activity.

It is proposed for the EPZ Rules that Assistant/Deputy Collector of Customs shall conduct annual audit of the units established in Zone. The officer will examine maintenance of records, input/output ratios actually consumed for the manufacturers of finished goods, opening stock of the year, import from abroad and tariff area of the input goods, finished goods produced and exported and wastages.

MCC Exports (Port Qasim) has also proposed amendments in SRO 450(I)/2001. It is suggested that definition of “input goods”  should be changed to all goods, required for the manufacture of goods meant for export, such as raw materials, accessories, sub components, sub-assemblies, assemblies and includes unrecorded media for development of software and recorded software used as tools for development of software as approved by the Collector and  subsequently confirmed in the  Analysis Certificate”.

It will streamline the legal position in line with the practice. As per current legal position, investor is allowed to import all sorts of inputs whether those inputs pertain to their industry or not.

It is suggested that the liability of the licensee to pay duty and taxes under a security instrument furnished shall not be discharged unless post-exportation audit is carried out and completed to the satisfaction of the collector.

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