Duties & taxes at import stage: Customs officials propose some changes in budgetary measures

Customs officials in the Model Customs Collectorate have proposed some changes with regard to budgetary measures announced through Finance Bill 2015 to avoid disputes in collection of customs duty, sales tax, withholding tax and Federal Excise Duty (FED) at the import stage. Sources told Business Recorder here on Thursday that the proposed bill has been passed by the Parliament, but some of the changes proposed by field officers have not been incorporated in the amended Finance Bill.
According to the Collector of Customs Model Customs Collectorate (MCC) Appraisement (West) Muhammad Saleem, budgetary proposals introduced vide Finance Bill 2015 have been examined in detail for effective implementation at import stage. Some fiscal laws require amendments to ensure proper collection of duties and taxes at the import stage. First, the proposed insertion of the words "including recovery" after the word "enforcement" in sub-section (1) of the section 6 of Sales Tax Act, 1990 may also be suitably replicated in section 3(2) of Federal Excise Act 2005, to remove any conceivable ambiguity in respect of short-levied/non-levied amount of excise duty at import stage.
Secondly, High Court of Sindh in a writ petition filed by M/s Lucky Cement Limited v/s Federation of Pakistan and others (CP. No D-216/2013) vide judgement dated 26.12.2013 has held that the customs authorities lack jurisdiction in matters relating to assessment of advance income tax collected at import stage and cases of mis-declaration thereof due to absence of deeming provision of treating the said tax as if there is a duty of customs payable under the Customs Act, 1969. Criminal proceedings initiated in that case were also quashed for the foregoing reason. The aforesaid judgement has also been relied upon another decision of the High Court of Sindh in CP No D-3830 of 2014. The Collectorate has filed CPLC before the honourable Supreme Court of Pakistan against the said judgement but no stay has been granted. The Board is requested to make appropriate amendments in the provisions of section 148 of the Income Tax Ordinance, 2001 to address such legal shortcomings hampering effective enforcement, recovery and cognisance of mis-declarations pertaining to advance income tax being collected at import stage.
Thirdly, the PCT Code 1005.1000 of maize (corn) seed may also be omitted from column 3 against serial number 19 of table-I of the Sixth Schedule to the Sales Tax Act, 1990, and may be inserted in column 3 against serial No 20 of the aforesaid Table and Schedule to remove ambiguity in grant of exemption from payment of sales tax on the aforesaid item.
Fourthly, Serial No 14 of the Table-2 (for local supplies only) of the Sixth Schedule to the Sales Tax Act, 1990 pertaining to Waste Paper of respective headings has been proposed to be omitted. However, the corresponding entry proposed to be inserted (serial number 19) in Table-I of the Eight Schedule of Sales Tax Act, 1990 do not qualify that the reduced rate of five percent shall only be leviable on local supplies of Waste Paper (47.07). The above may be rectified or clarified as per policy of the Board.
Fifthly, the exemption from payment of sales tax on import of Solar PV panels, PV modules and related components, including inverters, charge controllers and batteries is presently available vide serial number 110 of Table I of the Sixth Schedule to the Sale Tax Act, 1990 (subject to certification by AEDB, but without the restriction of not being listed in the locally manufactured items notified through a (CGO) and serial number 14 and 15 (requiring certification by AEDB that the invertors, change controllers and batteries being imported are in quantities which commensurate with the PV modules being imported) of Table 3 of the Sixth Schedule to the Sales Tax Act, 1990. The regime of the exemption from payment of customs duty on import of the above items is, however, different from that as cited above. This causes hardships for the importers and is also prone to be misused at the assessment stage. In order to bring uniformity, it is proposed that serial number 110 of the Sixth Schedule to the Sales Tax Act, 1990 may be omitted. In column 2 against serial number 14 of Table-3, the words "with dedicated use" may be substituted with the words "for promotion". This will help in avoiding disputes at import stage.