The Federal Board of Revenue (FBR) has detected massive misuse of a concessionary customs duty notification by top pharmaceutical companies allegedly involved in clearance of imported "pharmaceutical grade sugar" without payment of duty under SRO 567(I)/2006.
A customs official from Karachi told Business Recorder on Saturday that some pharmaceutical companies seemed to have cleared "pharmaceutical grade sugar" at zero percent customs duty instead of concessionary rate of 5 percent duty, causing revenue loss to the national kitty. The pharmaceutical companies imported these consignments from Malaysia and Australia with the declaration of refined sugar as pharmaceutical raw material. The import data from July-February (2008-09) showed that the importers were mostly leading pharmaceutical companies, which cleared the consignments on payment of zero percent duty against the applicable 5 percent duty under the terms and conditions of the relevant notification.
The Appraisement Collector and Model Customs Collectorate (MCC) Collector, Pakistan Customs Computerised System (PACCS), Customs House Karachi have received instructionsfrom the FBR to probe the matter on top priority basis. The board has asked the relevant collectors to check the possible misuse of exemption available under SRO 567(I)/2006, he added.
Details showed that in terms of S.No.16 of Table III (B) of SRO 567(I)/2006 of June 5, 2006, import of Pharmaceutical Grade Sugar (Pakistan Customs Tariff hading 1701.9910) is allowed to manufacturers of pharmaceutical products at a concessionary rate of 5 percent customs duty. This concession is available in accordance with the quantity determined by Ministry of Health.
The preliminary scrutiny of import data indicated that a number of consignments of Pharmaceutical Grade sugar were cleared by pharmaceutical companies against payment of zero percent customs duty. The FBR has directed collectors PACCS and Appraisement to thoroughly scrutinise complete data of sugar imported under SRO 567(I)/2006 and report/findings should be sent to the Board.
The investigation would focus on total number of cases (consignment-wise) where Pharmaceutical Grade sugar has been cleared by pharmaceutical companies against zero percent instead of 5 percent customs duty and the revenue involved thereof.
The second issue would be to check whether or not the condition of exemption, ("quantity as determined by Ministry of Health") as stipulated in S.No.16 of Table III (B) of SRO 567(I)/2006, being fulfilled for cases where clearance is against 5 percent payment of duty and the status of this conditionality of above mentioned cases cleared under zero percent of customs duty.
The collectors would also specify measures to be taken to stop this misuse of SRO 567(I)/2006. Similarly, Collector, Appraisement, would check and report in the light of above information the status of import of Pharmaceutical Grade Sugar under exemption of SRO 567(I)/2006.
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