One percent surcharge only on unutilised raw material

Extending a major tax concession on the export of goods under 'Temporary Importation Scheme' (SRO 410(I)/2001), the government has decided to charge one percent surcharge on the balance of raw material not utilised in production of finished export goods instead of levying surcharge on whole duty- free import consignment.
Under SRO 410(I)/2001, duty free raw material used in the manufacturing of finished products should be exported within 12 months. After expiry of deadline, one percent surcharge on monthly basis was imposed in case of six months extension in utilising time period.
Official sources told Business Recorder here on Thursday that CBR has received several representations to clarify the position pertaining to condition (2) of SRO 410(I)/2001 that in case of further 6 months extension after 1 year, monthly surcharge at the rate of 1 percent of C&F value of temporarily imported input materials is payable on the whole quantity of such materials or it is payable only on their balance (unutilised) quantity.
Earlier, this issue was examined in CBR and clarification was issued on April 14, 2003 which said that 1 percent surcharge shall be paid on the entire C&F value of such imported input materials.
CBR has again examined the issue and subsequently revised its earlier decision. Under new ruling, the time period of one year given in SRO 410(I)/2001 is linked with the re-exportation of goods, while, on the other hand, the expression 'utilisation period' has been used barring the extension thereof beyond 18 months.
Utilisation generally means consumption but in the context of the said condition it means 'consumption-cum-re-export'.
Therefore surcharge can not be demanded in respect of input materials, which have been utilised and re-exported within 12 months (original utilisation period).
This clarification has superseded CBR's earlier directive of April 14, 2003. It is, however, reiterated that in no case utilisation period shall be extended by the collectors beyond eighteen months and that too after physical verification that temporarily imported goods are actually lying in stock and there is no apprehension of loss of revenue because of deterioration etc.
The CBR has directed collectors of customs that all such cases shall also be thoroughly audited in order to ensure that all temporarily imported goods according to input-output ratios calculated by Input Output Coefficient Organisation (IOCO).