MONDAY MARCH 05: Oriental medicines import from India: dispute referred to WCO for accurate duty rate

ISLAMABAD: The Federal Board of Revenue (FBR) has referred a major classification dispute to the World Customs Organisation (WCO) in Brussels for levy of accurate rate of customs duty on the import of Unani, ayuverdic and other oriental medicines/ tablets from India to avoid wrong assessment of Indian items under customs laws.
Sources told the Business Recorder here on Sunday that this important matter had been referred to the WCO Secretariat which would resolve issue of determination of customs duty on the import of Indian tablets/medicines.
They said that the Directorate General of Post Clearance Audit and Classification Centre, Custom House, Karachi were divided over the classification of the Indian medicines/tablets for determining the rate of customs duty on the imported product from India. Interestingly, the relevant customs assessment department ie Classification Centre, Custom House, Karachi had fully endorsed the viewpoint of importer that the items were classified under Pakistan Customs Tariff (PCT) Heading 3004.9010 as 'Medicaments', they explained.
On the other hand, Directorate General of Post Clearance Audit had totally different viewpoint and ruled that the said tablets/medicines were nutritional tablets (digestive aid) classifiable under PCT Heading 2106.9010.
If the WCO Secretariat classified the said item under PCT Heading 3004.9010, the tablet/medicine would be subjected to customs duty at the rate of 10 percent, they further said.
The PCT Heading 3004.9010 is related to the Unani, Ayuverdic and other oriental medicines. If the WCO Secretariat declared the said item under the category of 2106.9010, the same item would be subjected to higher rate of 35 percent customs duty, sources added.
According to the letter of the FBR to Kunio Mikuriya, Secretary General WCO Brussels, M/s. Asian Consumer Care Products (Pvt) Ltd, Karachi, are importers of "Hajmola" Tablets manufactured by Dabur India Ltd., from India and have it cleared/assessed under Pakistan Customs Tariff (PCT) Heading 3004.9010 (H.S) as "Medicaments" (Unani Ayurvedic medicine).
The Directorate General of Post Clearance Audit, on the other hand, had taken the position that in order to classify a product under PCT Heading 3004.9010, the product must have active medicinal ingredients, sufficient to provide a recognisable and clinically proven therapeutic or prophylactic effect. Whereas the aforesaid item, had only nutritional value and was a food digestive aid tablet, without any therapeutic or prophylactic action against any particular disease, hence, was correctly classifiable under PCT Code 2106.9000, it said.
Subsequently, the matter of classification of the subject goods was referred to the Classification Centre, Custom House, Karachi which issued a ruling that the subject goods might be treated as ayurvedic medicine, hence classified under the PCT Heading 3004.9010.
The Directorate General of PCA, however, still held the opinion that the subject goods were nutritional tablets (digestive aid) which should be classified under the Pakistan Customs Tariff Heading 2106.9010, it stated.
Due to the above varying opinions, Pakistan Customs Administration, Government of Pakistan requested the WCO Secretariat that the matter should be examined by its Harmonised System Committee for determination of correct classification, it added.
It is leant that in the past Classification Committee of Karachi, which holds monthly meetings to resolve classification dispute, also gave decision in favour of importer. The Classification Committee of Karachi is the final authority on classification matters for assessment of customs duty on the imported goods. In the light of the ruling of the Classification Committee, the adjudication department has set aside the cases made by Directorate General Intelligence and Investigation Customs.