Non-compliant assemblers, makers of motorcycles, rickshaws: FBR asks collectors to identify, recover duties

Federal Board of Revenue (FBR) has asked the collectors of customs to identify non-compliant assemblers and manufacturers of motorcycles and auto rickshaws, who failed to submit complete/reconciled input record to the Engineering Development Board (EDB) under SRO.656(I)/2006.
FBR has also directed the collectors to start recovery of duties and taxes from non-compliant assemblers and manufacturers of motorcycles and auto Rickshaws, where necessary under the law. This notification deals with the concessionary rate of duty/exemption on the import of components (which include sub-components, components, sub-assemblies and assemblies but exclude consumables), in any kit form, and "direct materials" for assembly or manufacture of vehicles falling under Chapter 87 of the First Schedule of the Customs Act. However, assemblers/manufactures have to fulfil laid down conditions for submission/verification of requisite data to the EDB.
Sources told Business Recorder on Saturday that the FBR has issued instructions to the collectors of customs to know about the status of import record of two and three wheeelers companies for 2007-2008. The board has issues instructions on the request of the EDB to check the status of these assemblers and manufactures as per SRO.656(I)/2006.
According to the FBR instructions, keeping in view the facts reported by EDB and the provision of SRO656(I)/2006, collectors should identify the non-complaint assemblers or manufacturers of two/three wheelers availing the benefit of SRO656(I)/2006 and proceed further for recovery of legitimate duty/ taxes as per law. The EDB had informed the FBR that input records of 21 assemblers/ manufacturers of 2-3 wheelers were held back due to rectification/ clarifications required from the respective units. As regular follow-up, 11 companies have provided rectified records/ clarification.
Break-up revealed that input records of two assemblers/manufacturers found complaint to the provisions of SRO 656(I)/2006 have been issued manufacturing certificates upto June 30, 2009. The list of the units along with their input records has been provided to the FBR. Nine assemblers/ manufacturers have procured some of the inputs from the commercial traders or through direct imports but at lesser rate of duties. In order to ensure smooth production activities, the manufacturing certificates of these companies were provisionally revalidated till March 31, 2009. The lists of imports as well as their annual input records are also placed for the FBR. The ten companies, which did not submit the requisite information by the target date have also been provisionally revalidated till March 31 2009.
The EDB added that the further extension in the manufacturing certificates shall be done after determining whether the procurements made were complaint to provisions of the SRO or otherwise. A clarification from FBR in this regard is requested, the EDB added. Under SRO.656(I)/2006, the input output ratio of the items to be manufactured and total annual requirements of materials shall be determined by the EDB. The importer-cum-assembler or manufacturer shall submit hard and soft copy of list of components with parts numbers along with respective PCT headings intended to be imported by him to EDB. The description of components and their parts numbers shall be in accordance with that given in the Service Manual Catalogue of the vehicles.
The EDB shall verify the list of components identified by the importer on the lists and determine the CKD kit of each vehicle.
The customs department will release the consignments of components for assembly or manufacture of vehicles on the basis of lists (Part number and description) verified by EDB. Pending verification of lists by the EDB, the customs department may allow provisional release against "Corporate Guarantee" submitted by the importer-cum-assembler or manufacturer.
The importer-cum-assembler or manufacturer shall directly import the components as per the lists duly approved by the EDB or shall procure them from a sales tax registered local vendor, manufacturer of such components and will maintain records accordingly. The importer-cum-assembler or manufacturer shall maintain records. Such records along with reconciliation account of all inputs used in assembly or manufacture of vehicles shall be submitted to the EDB on an annual basis.
In case, the importer-cum-assembler or manufacturer fails to provide information as per the mentioned conditions to EDB or for any other reason to be recorded in writing, the EDB may get an audit conducted either by themselves or through designated persons or agency for this purpose to see if all the conditions of this notification are met, notification added.