Duty-free import of $50 million new plant machinery allowed

The Federal Board of Revenue (FBR) has allowed investors to import duty-free plant, machinery, equipment and capital goods, whether locally manufactured or not, (worth $50 million) for setting up of new industrial projects.
Through SRO 554(I)/2008, any machinery and equipment worth $50 million or more being imported for new industrial project has been de-linked from the local manufacturing condition. This will help in curtailing the discretionary powers of the administrative authorities for providing hassle-free investment environment.
According to SRO.554, there is a condition to claim concessionary rate of customs duty that the imported goods are not listed in the locally manufactured items, notified through a Customs General Order from time to time or, as the case may be, certified by the Engineering Development Board (EDB).
This condition shall, however, not be applicable on such machinery, equipment and other capital goods imported as plant for setting up of a new industrial units, provided the import is made against a valid contract or an irrevocable letter of credit for a minimum cost and freight (C&F) value of $50 million.
Details show that the existing tariff regime allows an industrial undertaking to import plant and machinery at a reduced rate of 5 percent customs duty provided that is not manufactured locally. Items being manufactured locally are determined by EDB and subsequently notified by the FBR.
The list so notified is neither exhaustive nor free of disputes. Complete plants obviously consist of numerous machines, components, accessories etc, which are mostly not imported in one go. Partial shipments of plants and machinery therefore remain vulnerable to administrative and classification hiccups with reference to their local manufacture or otherwise.
These types of petty issues discourage the investments. The FBR proposes that any plant, machinery, equipment and capital goods which is worth $50 million (C&F) or more and being imported for setting up of new industrial project may be de-linked from the local manufacturing clause.