MONDAY JUNE 25: Importers-cum-manufacturers: FBR introduces new regulatory regime

ISLAMABAD: The Federal Board of Revenue (FBR) has introduced a new regulatory regime for the importers-cum-manufacturers by slashing the powers of the Collectors of Sales Tax for processing of documents, consumption of inputs and audit of importers availing exemption of duties/taxes on the import of raw materials/components. Now the Collectors of Customs would perform all such functions under SRO.565(I)/2006.
Sources told Business Recorder here on Sunday that the Collectors of Sales Tax were performing a number of functions to deal with the importers-cum-manufacturers under SRO.565(I)/2006. This notification deals with the exemption of duties and taxes on the import of raw materials, sub-components, components, sub-assemblies and assemblies imported for the manufacture of goods. The importers-cum-manufacturers have to fulfil conditions of the SRO to avail exemption of duties and taxes. By withdrawing the powers of the Collectors of Sales Tax, the Board has introduced a new regulatory mechanism for the importers-cum-manufacturers under SRO.565(I)/2006 amended through SRO573(I)/2012. The Collectors of Sales Tax would not be empowered to determine annual entitlement of inputs by the importers-cum-manufacturers, grant extension in cases of non-consumption of imported goods at concessionary rates of duties/taxes and conduct audit of the record of such manufacturers and now the Collectors of Customs have been given the authority to perform all such duties under SRO.565(I)/2006.
Sources said that the FBR will issue instructions to all Chief Commissioners of Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs) and Collectors of Customs, Model Customs Collectorates on the new regulatory regime for the importers-cum-manufacturers.
The FBR will inform the field formations that the SRO 565(I)/2006 dated June 5, 2006 has been amended vide SRO 573(I)/2012 dated June 1, 2012. The said amendment entails, inter alia, changes in the regulatory mechanism of the SRO: under new dispensation, Collectors of Customs have been empowered to perform additional functions like determination of annual entitlement of inputs, extension in cases of non-consumption within a year and audit of the record of importers-cum- manufacturers. These functions were previously performed by Collectors of Sales Tax and Federal Excise. In order to ensure that no hardship is caused to importers-cum-manufacturers there is a need for a smooth switch-over for which the FBR has decided to issue guidelines for the field formations.
Sources said that all Collectors of Customs shall be the regulatory Collectors in their respective jurisdictions as per SRO 967(1)/2007 dated September 20, 2007 except Karachi where Collector of Customs (PaCCS) shall be regulatory Collector for importers-cum-manufacturers doing businesses throughout Karachi.
An importer-cum-manufacturer who intends to import input goods on concessionary rates as per provisions of SRO 565(1)/2006 shall file an application to the Collector of Customs having jurisdiction along with requirements under conditions of the SRO duly supported by documents such as list of machinery installed along with its catalogues, brochure or drawing, its production capacity and copy of the ownership deed or lease documents of the manufacturing premises.
Under the new regulatory regime, all applications received in this regard by the Collector of Customs or an officer authorised by him shall be allotted progressive serial numbers and duly examined for determination as to whether the importer is entitled to the declared concessions or otherwise.
In cases of importers-cum-manufacturers whose annual entitlements of inputs have been fixed by Collectors of Sales Tax (LTUs/RTOs), concessionary import of inputs shall be allowed as per their entitlement and the same shall be renewed in terms of the said SRO within a period of 120 days. However, in fresh cases, the Collectors of Customs may determine annual entitlement of inputs on the basis of input-output ratios and wastages determined by Engineering Development Board (EDB) and Input Output Coefficient Organization (IOCO) or any other recognised authority.
The Collector of Customs shall ensure that the imported inputs have been consumed in accordance with the determined scale for manufacture of specified goods, through desk audit, and in case discrepancies are discovered, a detailed audit shall be got conducted, sources said.
In case of any default/mis-declaration in respect of input / output goods, entitlement or wastage on part of importer-cum-manufacturer, necessary action under the law shall be initiated by the respective Collector of Customs. The new regulatory regime further stated that the Collector of Customs may, during authorised consumption period, get the stocks of input materials or finished products verified either with advance intimation to the concessionaire or otherwise for reasons recorded in writing ensuring that all such verifications are reported immediately on completion to the concerned Chief Collectors of Customs.
The Director, Directorate of IOCO shall respond urgently to the request of Collector Customs for determination of fresh input-output ratios and wastages, if any, or shall notify to the Collector if such ratios have already been fixed by the Directorate. The Collector of Customs shall release the inputs against post dated cheque. The importer-cum-manufacturer shall undertake before Collector of Customs on their letter head duly attested by customs clearing agent that they will abide by the provisions of SRO and that there shall be no misuse of the concessions available under the SRO, the new regulatory mechanism for importers-cum-manufacturers added.