The Federal Board of Revenue (FBR) has taken away the powers from Collectors of Customs for determining annual requirement/quantitative entitlement of exempted inputs/raw materials to be consumed by importers-cum-manufacturers for manufacturing goods and empowered Input Output Co-efficient Organisation (IOCO) to handle the entire issues under S.R.O.565 (I)/2006.
In this regard the FBR has amended S.R.O. 565 (I)/2006 through an S.R.O.565 (I)/2014 issued here on Thursday. When contacted, tax experts said that the now onwards only two offices of IOCO ie IOCO (South) Karachi having jurisdiction of Sindh and Balochistan and IOCO (North) Lahore covering jurisdiction of Punjab, KP, Gilgit and federal capital territory would deal with all issues of SRO.565 instead of Model Customs Collectorates operating across the country. It is yet to be seen whether the two IOCO offices would be able to handle importers-cum-manufacturers across the country. Earlier, the Collectors of Customs were empowered to handle issues of S.R.O. 565 (I)/2006.
Under the notification, the government has exempted raw materials, sub-components, components, sub-assemblies and assemblies, [as are not manufactured locally, imported for the manufacture of goods. An importer-cum-manufacturer having suitable in-house facilities and registered with the Sales Tax Department as manufacturer shall submit a complete list in the prescribed format [appended as Form-I] of his annual requirement of permissible items (inputs) he intends to import for the manufacture of goods mentioned in column (2) of the table to the IOCO having jurisdiction or to any other organisation or person as authorised by the FBR.
The importer-cum-manufacturer shall file a request containing a declaration of input-output ratios to the Director of IOCO or the person duly authorized by him. The Director or the authorised person may accept the declaration of input-output ratio as declared by the applicant and determine the annual requirement of inputs. In case the Director or authorized person is not satisfied with declared input-output ratios of the items to be manufactured because of their being prima-facie not in accordance with the prevalent average of the relevant industry or for any other reason, he may, after allowing a reasonable provisional quantity, verify input output-ratios or through Sector Specialist of IOCO or make a reference to any other recognised authority for determination thereof. The Director or authorised person shall then determine the final annual quantitative entitlement of inputs and the applicant shall proceed to consume imported inputs in accordance with the input-output ratios and quantities so determined, it said.
The clearance of inputs shall be allowed through one port or dry port only, however, for the liquid bulk cargo imported at Karachi, the facility of clearance from either port ie Port Qasim and Karachi Port shall be allowed subject to maintenance of centralised record of quota debiting at the port for which the Provisional or Final Certificate is issued;
As per notification, the authorised officer of Director IOCO having jurisdiction shall furnish all relevant information online to Customs Computerised System as per Form-II appended to this notification against a specific user ID and password obtained under section 155D of the Customs Act, 1969. In Collectorate/Customs stations where the [Customs Computerised System] is not yet operational, the Project Director or any other authorised person shall feed the requisite information obtained from the Director IOCO in Customs Computerised System on daily and weekly basis.
The importer-cum-manufacturer shall file Goods Declaration on the prescribed format and manner with complete details of authorisation of imported inputs for clearance. The Collector of Customs on satisfaction of correct declaration shall allow clearance of imported inputs after obtaining post dated cheque for the differential amount of statutory duty/and concessionary duties.
The importer-cum-manufacturer shall in writing communicate to the concerned Director of IOCO about the consumption of imported items within sixty days of consumption of goods. After carrying out reconciliation by the concerned Directorate of IOCO, the clearance certificate shall be issued by the Director of IOCO or his authorised person on the basis of which the post dated cheque shall be released or cancelled by the Collector of Customs of concerned import Collectorate. In case of non-consumption of imported goods within one year from the date of import, the importer shall pay the customs-duty and other taxes involved or obtain extension for further period from the concerned Director of IOCO after giving plausible reasons for seeking extension in utilisation period;
Director of IOCO may, whenever deemed necessary get the records of the importer-cum-manufacturer audited and may also get the stocks verified. In case it is found that the inputs have not been properly accounted for or consumed for the manufacture and supply of goods as prescribed, Director of IOCO shall communicate the audit findings to the concerned Collector of Customs of the import Collectorate who shall initiate proceedings for the recovery of leviable customs-duty and other taxes besides penal action under the relevant provisions of the laws in force.
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