The Central Board of Revenue (CBR) has asked the Ministry of Commerce to reconcile the Harmonised Commodity Description and Coding System (HS Code 2007) with the existing Trade Policy for adoption of new tariff code for imported items in the new policy.
Sources told Business Recorder on Tuesday that the new Trade Policy should ensure changes in the coding system to avoid chances of banning any item, which is actually importable. In this regard, the Trade Policy should incorporate changes as per latest customs tariff announced in budget 2007-08. This would not change the status of importable or banned items under the Trade Policy.
The Board has requested Commerce Ministry to switch over from HS Code 2002 to HS Code 2007 through amendments in the existing Trade Policy. The Ministry has informed the CBR that the exercise would be completed before the announcement of new policy.
Explaining the impact of HS Code 2007 on Trade Policy, sources said that many countries have adopted the new HS Code 2007 system. The CBR had consulted, in January 2007, all stakeholders, including Commerce Ministry, to comment on the new system.
Under the HS code system, if the international trade of an item is $100 million, then a separate identification number is given to this specific item using a unique HS code heading. Around 300 tariff headings were deleted internationally, as their annual global trade was reduced to $100 million. Resultantly, these headings have to be omitted from Pakistan Customs Tariff as well.
Similarly, chemicals used in preparation of weapons, under the Chemical Weapon Convention, were monitored under the coding and description system. Similarly, ozone depleting substances were also controlled and monitored under the HS code system.
The global technological advancements have also resulted in changes in tariff headings of different items. For example, if old and used monitors were covered under the ''computer category'', the item was importable under a specific Pakistan Customs Tariff heading. If the old computers have new features to operate as a television, its basic tariff heading has been transposed with the ''television category''. This shows that the import status of old computers was changed due to technological advances under HS Code 2007.
On the other hand, Trade Policy has specific list of items, which are banned under various tariff headings. In Trade Policy, the old and used computers are not banned, but the heading covering old and used items, where now old computers have been placed, is banned. Due to shifting of some items from one category to the actual place in tariff as per international requirements, the PCT heading of certain items were changed. Under the scheme, similar nature of products has been placed under one major heading of tariff.
Therefore, some importable items become banned in Trade Policy due to adaptation of new HS Code system. In this way, transposition from HS 2002 to HS 2007 version has been hit by provisions of Trade Policy 2006-2007, where earlier importable items have become non-importable.
So far, only one case of old and used computers has been identified where any importable good has become banned under Trade Policy on adoption of new HS Code 2007. Sources said that the CBR had asked the Commerce Ministry to allow import of old and used monitors to deal with the issue. The Ministry had allowed one-time relaxation till changes in the new Trade Policy 2007-08.
The Ministry has started the reconciliation process to incorporate necessary changes in the policy. Trade Policy would have the same codes, which the CBR has adopted from 2007-08. It is important to mention that HS 2007 version has been adopted vide Finance Bill 2007. This adoption has resulted in substantial changes in the existing classification tariff regime. Numerous PCT Codes available under HS 2002 version have either been deleted or those have been shifted elsewhere from their previous locations.
Likewise, numerous new codes have come into being under HS 2007 version. The SROs relating to customs concession regime, like SRO.565(I)2006, SRO.567(I)2006 and SRO. 575(1)/2006, have been synchronised with the new version. However, numerous codes are still required to be aligned in these as well as other SROs with the new HS version.
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