Exemption notifications: entries transposed to relevant Schedules of Customs Act: FBR

The Federal Board of Revenue has conveyed to the customs authorities that the Finance Bill (2014-15) has transposed existing entries from exemption notifications of customs to the relevant Schedules of Customs Act without any change in descriptive provisions/Pakistan Customs Tariff (PCT) of imported commodities. In this regard, the FBR has issued instructions to certain Model Customs Collectorates in Karachi here on Wednesday to explain the impact of transposing existing entries from exemption notifications to the Customs Act through Finance Bill (2014-15).
The FBR has specifically pointed out that no change or modification was made in the descriptive provisions/PCTs in order to avoid the possibility of widening or narrowing of scope of exemption through Finance Bill (2014-15). According to the FBR, the requirement for accurate PCT Codes for proper implementation of computerised clearance systems cannot be disputed. But it may be appreciated that in the present exercise of budget (2014-15), only the already existing entries were transposed from notifications to Schedules, in accordance with decisions of the competent authority conveyed to budget makers. No change or modification was made in the descriptive provisions/PCTs in order to avoid the possibility of widening or narrowing of scope of exemption. It is further noted that the Collectorate itself has not made any specific suggestions in this regard. It is therefore, suggested that the specific changes deemed necessary may be proposed by the Collectorate, so that these may be sent for approval of the competent authority before incorporation in the Schedules of the Customs Act.
The remarks that perhaps an older version of SRO 575(1)/2006 dated 05.06.2006 was used, and that deleted entries/sub-entries have been incorporated, seem to be based on misapprehension. The Collectorate is requested to specifically identify the deleted entries/sub-entries of SRO 575(l)/2006 allegedly incorporated in Table-3 of the Sixth Schedule and Table-2 of the Eighth Schedule, the FBR maintained.
The entries transposed from SRO 575(I)/2006 dated 05.06.2006 to the aforesaid Tables are based wholly on the decisions of the competent authority as conveyed vide FBR's Custom Budget Section's and the exact same conditions as existing in SRO 575(l)/2006 were transposed. No change whatsoever was made by FBR Inland Revenue Wing. The Collectorate has perhaps overlooked the fact that the preamble to SRO 575(1)/2006 already excludes Sr. No 1, 5, 5A, 21, 22, 23, 28, 28A, 29 and 36 of the Table from sales tax exemption (these entries are appearing in the Collectorate's proposed drafts). Further, as per Custom Budget Sections U.O. mentioned above, the concession on Sr. No 8, 16, 17, 24, 25, 32, 33, 37 and 38 were required to be withdrawn. If there is still any variance, after taking the said legal position into consideration, the same may be specifically pointed out for rectification, the FBR instructions added.
Sources said that in budget (2014-15), the Board has withdrawn duty concessions under SRO.567(I)/2006, SRO.567(I)/2006 and SRO.565(I)/2006. The FBR has introduced major changes in SRO.567(I)/2006 and concessions to 7 sectors having import value below Rs 30 million annually, and to sectors categorised as non-essential, are proposed to be withdrawn by shifting to normal tariff rates. Under SRO.567(I)/2006, the concessions to 95 items having import value below 30 million annually have been withdrawn. Concessions to 24 items considered non-essential have been withdrawn by bringing them under normal tariff rates. Concessions to 43 items considered essential are recommended to be retained on proposed rates by shifting to Fifth Schedule to the Act. The revenue impact of the measure is Rs 9 billion.
Under SRO.565(I)/2006, the concessions to inputs of 89 products having import value below 30 million annually have been withdrawn. The extent of concessions on inputs to 62 products has been reduced. However, these concessions shall be subject to the condition that the inputs are not manufactured locally. Concessions to inputs of 6 products have been continued. The revenue impact is Rs 11 billion, sources added.