Federal Board of Revenue (FBR) has reportedly opposed registration of automotive vendors with Engineering Development Board (AEDB), saying the organisation does not have the requisite manpower to regulate the entire vendor industry, sources close to CEO EDB told Business Recorder.
According to sources, in order to have a complete data of the local vendors supplying parts to the OEMs, irrespective of their registration, membership with EDB/ PAAPAM, it was proposed and submitted before Auto Industry Development Committee (AIDC) in its 20th meeting that all the vendors supplying parts to any of the OEMs should be registered with and should be made liable to provide status of their manufacturing facilities verified by EDB to ensure the procurement sources.
After exhaustive deliberations, the house (AIDC) agreed that there must be a regulatory mechanism for the vendors. The chair also advised that a proper mechanism for registration of vendors including those who are not availing the benefits of concessionary SRO need to be devised and the efforts should be geared towards what the committee wants to achieve.
The AIDC approved the proposal and suggested that EDB and PAAPAM to devise a mechanism for registration of vendors and present it in next AIDC meeting. In the meantime, FBR has submitted its observations which are as follows: "EDB does not have the requisite manpower to regulate the entire vendor industry, as registration without periodic inspections, audits etc will not yield the desired results. Besides serious legal issues may arise out of AIDC's decision vis-à-vis forced registration of vendors who do not avail the benefit of SRO 655(1)/2006." EDB is of the view that "that appropriate mechanism for ensuring localization of auto parts will be to strictly enforce EDB's oversight powers by penalizing OEMs who purchase imported parts from importers masquerading as manufacturers in place of localized substitutes". The AIDC which is scheduled to meet next week in Islamabad will discuss the proposal of the EDB. The committee will also consider a proposal of EDB regarding withdrawal of new entrant status of M/s Tayyab Motors, Karachi.
The company was granted the new entrant status on a provisional basis for the assembly/ manufacturing of following vehicles during the 16th meeting of AIDC held on August 20, 2013. The company has to manufacture power socon CRC 5020 CLS mini truck (1050cc), power socon CRC 5021 XXY mini passenger (7 seater) vans (1050cc) power socon CRC 5023 XXV cargo van (1050cc) and power socon CRC 5024 (K0711) mini bus (11-seater)-1310cc Accordingly, the manufacturing certificate and a list of importable components were issued on a provisional basis on September 30, 2013 and revised localization was approved by AIDC in its 18th meeting held on February 04, 2014 which was accordingly circulated to FBR and the firm.
As per the approval, first year for localization of parts was completed on September 30, 2014; therefore, an additional duty was imposed on the parts/ components, to be localized during the first year, with effect from October 01, 2014. M/s Tayyaba Motors (Pvt) Limited, in its letter of October 16, 2014, have stated that "with reference to the approval of our facility as new entrant for the four products we would like to inform you that due to low volume, we are unable to complete the localization plan. We request you to kindly shift our case to Tariff-Based System (TBS). The company will pay the difference duty, if any, to avail the concession."
The committee will consider the proposal for withdrawal of new entrant status of M/s Tayyaba Motors (Pvt) Limited and accordingly for the recovery of duties and taxes being allowed since October 01, 2013 on the import of components under the new entrant policy.
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