The Federal Board of Revenue (FBR) has revised regulatory duty (RD) on dozens of imported items on the proposal of different sectors. It includes 5 percent RD on the import of sacks and bags of polymers of ethylene by registered units for in-house use for packaging food and dairy products. The FBR has amended SRO1035(I)/2017 through an SRO 06(I)/2018 here on Thursday.
Under the revised regulatory duty regime, the regulatory duty shall not be levied on imports, under PCT codes 1202.4200 and 1517.9000, by registered manufacturers of food and confectionary industry; imports, under PCT codes 1901.9020,1901.9090,1905.9000 and 2103.9000, by units certified to be vertically integrated poultry processing units engaged in production of value added chicken products; imports of sliver cans and lollipop sticks, (PCT code 3926.9099); parts (PCT codes 3926.9099 and 4016.9990) if imported by vendors of automotive OEM sector; imports of rubber apron cots (PCT code 4016.9990); import of vehicles (CBU) by new entrants, as enumerated vide Sr. 1, Table-III of SRO 656(1)/2006, in terms of Auto Development Policy and regulatory duty shall not be levied on imports of parts of air conditioners (PCT codes 8415.9012, 8415.9021 and 8415.9091), if imported by vendors of automotive OEM sector.
According to the notification, the RD has been reduced on the import of cocoa powder, not containing added sugar or other sweetening matter from 40 percent to 20 percent; sulphonic acid (soft), other, other than in retail packing, non-ionic, cocoamidopropyl betaine (CAPB), 20 percent to 10 percent; preparations put up for retail sale, other, 35 percent to 25 percent; sacks and bags of polymers ethylene if imported by registered units for in-house use for packaging food and dairy products 5 percent; spools, cops, bobbins and similar supports (zero percent RD); parts of footwear (including uppers whether or not attached to soles other than outer soles) removable in soles, heel cushions and similar articles gaiters, leggings and similar articles, and parts thereof, 25 percent to 15 percent; enamelled and coated for antirust purposes except imported by registered units of air conditioner manufacturers, 20 percent RD; enamelled and coated for antirust purposes (if imported by registered units of Air conditioner manufacturers) 10 percent RD; other (if imported by registered units of Air conditioner manufacturers) 10 percent RD; other (if imported by registered units of air conditioner manufacturers) 10 percent RD; covers for inner body if imported by registered units of air conditioner manufacturers 10 percent RD; other (if imported by registered units of air conditioner manufacturers) 10 percent RD and light fittings with fixed/fitted and LED/SMD lights have been subjected to 30 percent RD.
The regulatory duty imposed on home appliances such as air conditioners, deep freezers, refrigerators, washing machines, microwave oven PDP/LCD/LED TVs, electro-mechanical domestic appliances, electric instantaneous or storage water heaters is leviable on CBU units thereof by virtue of description provided. It will not be leviable upon CKD kits thereof, despite the classification under the PCT codes of CBU units due to application of GIR 2(a), the SRO added.
Background of the issue revealed that in order to improve balance of payment position by reversing the trend of widening trade deficit, the ECC in its meeting held on October 6, 2017 approved the proposal for increase/levy of RD ranging from 10% to 30% on a number of non-essential/luxury/locally produced items. Consequently, the FBR issued SRO 1035(1)/2017 on October 16, 2017 in terms of section 18(3) of the Customs Act, 1969, resulting in the levy of RD on 27 new items (137 tariff lines) and increase in RD on 31 existing items (219 tariff lines).
The sources said a large number of representations were received against levy/increase of the RD from different stakeholders. Simultaneously local manufacturers of various items also approached the FBR with proposals for levy/increase of RD on certain locally produced goods to encourage import substitution. Some trade associations also approached Standing Committees on Finance of both the National Assembly and the Senate. The latter, after conducting several hearings recommended forming a committee and considering all the representations regarding RD filed by different stakeholders during meeting held on November 16, 2017.
Resultantly an inter-ministerial committee, comprising representatives from FBR, Ministry of Commerce and Ministry of Finance was constituted which held several meetings and also consulted the Textile Division, Engineering Development Board and National Tariff Commission.
According to sources, a total of 53 representations were received from different stakeholders. In 41 representations, the importers and local manufacturers sought removal/reduction or partial exemption from RD claiming that the same are input goods for their industry.
In 12 representations, the local manufacturers sought protection against cheaper imported goods through the imposition/ enhancement of RD. Certain anomalies in the existing duty structure were also identified in some representations with a request for rationalization. The committee examined all the representations regarding removal, rationalization and imposition of RD and made recommendations.
Keeping in view the recommendations made by the committee and to rectify tariff anomalies, the FBR proposed revision of RD on certain items. The FBR is of the view that the impact of these measures during the remaining 06 months (January to June) is expected to be revenue neutral. The ECC was informed that in terms of section 18(3) of the Customs Act 1969, the Board with approval of federal minister-in-charge is empowered to levy RD. However, this power has been challenged by various petitioners in the High Courts of Sindh and Punjab.
Following is the text of the notification issued here on Thursday: SRO 06 (1)/2018.- In exercise of the powers conferred by sub-section (3) of section 18 of the Customs Act,1969 (IV of 1969), the Board, with approval of the federal minister-in-charge is pleased to direct that the following further amendments shall be made in its Notification No. S.R.O.l035 (1)/2017 dated the 16th October, 2017, namely: -
In the aforesaid notification, -
(a) in the Table, in column (1),
(i) against S No 115, in column (4), for the figure "40", the figure "20", shall be substituted;
(ii) against S No 278 to 284, in column (4), for the figure "20", the figure
"10", shall be substituted;
(iii) against S No 285 and 286, in column (4), for the figure "35", the figure "25", shall be substituted;
(iv) against S No 299, in column (3), for the words "Of polymers of ethylene", the words "Of polymers of ethylene except imported by registered units for in house use for packaging food and dairy products", shall be substituted;
(v) after S No 299, the following new serial number and the entries relating thereto in columns (1), (2), (3) and (4), shall be inserted, namely: -
"299A 3923.2100 Sacks and bags of polymers of 5"; ethylene if imported by registered units for inhouse use for packaging food and dairy products.
(vi) the S No 303, and the entries relating thereto in columns (2), (3) and (4) shall be omitted; (vii) against S No 383, in column (4), for the figure "25", the figure "15", shall be substituted;
(viii) against S No 497, in column (3), for the words "Enamelled and coated for antirust purposes", the words "Enamelled and coated for antirust purposes except imported by registered units of air conditioner manufacturers", shall be substituted;
(ix) after S No 497, the following new serial number and the entries relating thereto in columns (1), (2), (3) and (4), shall be inserted, namely: -
"497A 8415.9011 Enamelled and coated for antirust 10"; purposes (if imported by registered units of Air conditioner manufacturers)
(x) against S No 499, in column (3), after the word "other", the words "except imported by registered units of air conditioner manufacturers", shall be inserted;
(xi) after S No 499, as amended herein above the following new serial number and the entries relating thereto in columns (1), (2), (3) and (4), shall be inserted, namely:-
"499A 8415.9019 other (if imported by registered 10"; units of air conditioner manufacturers).
(xii) against S No 501, in column (3), after the word "other", the words "except imported by registered units of air conditioner manufacturers", shall be inserted;
(xiii) after S No 501, as amended herein above the following new serial number and the entries relating thereto in columns (1), (2), (3) and (4), shall be inserted, namely:-
"501A 8415.9029 other (if imported by registered 10"; units of Air conditioner manufacturers)
(xiv) against S No 502, in column (3), after the word "body.", the words "except imported by registered units of Air conditioner manufacturers", shall be inserted;
(xv) after S No 502, as amended herein above the following new serial number and the entries relating thereto in columns (1), (2), (3) and (4), shall be inserted, namely:-
"502A 8415.9030 covers for inner body (if imported 10"; by registered units of air conditioner manufacturers)
(xvi) against S No 504, in column (3), after the word "other", the words "except imported by registered units of air conditioner manufacturers", shall be inserted;
(xvii) after S No 504, as amended herein above the following new serial number and the entries relating thereto in columns (1), (2), (3) and (4), shall be inserted, namely:-
"504A 8415.9099 other (if imported by registered 10"; units of air conditioner manufacturers)
(xviii) against S No 653, in column (3), after the word "other", the words "except light fittings with fixed/fitted LED/SMD lights", shall be inserted;
(xix) after S No 653, as amended herein above the following new serial number and the entries relating thereto in columns (1), (2), (3) and (4), shall be inserted, namely:-
"653A 9405.1090 light fittings with fixed/fitted 30"; and LED/SMD lights
(b) In paragraph (2),
(i) in clause (1) and (m), the word "and" appearing at the end, shall be omitted; and
(ii) after clause (m), the following new clauses shall be added, namely:-
"(n) imports, under PCT codes 1202.4200 and 1517.9000, by registered manufacturers of food and confectionary industry;
(0) imports, under PCT codes 1901.9020,1901.9090,1905.9000 and 2103.9000, by units certified to be vertically integrated poultry processing units engaged in production of value added chicken products;
(p) imports of sliver cans and lollipop sticks, (PCT code 3926.9099);
(q) parts (PCT codes 3926.9099 and 4016.9990) if imported by vendors of automotive OEM sector;
(r) imports of rubber apron cots (PCT code 4016.9990);
(s) import of vehicles (CBU) by new entrants, as enumerated vide Sr 1, Table-III of SRO 656(1)/2006, in terms of Auto Development Policy; and
(t) parts of air-conditioners (PCT codes 8415.9012, 8415.9021 and 8415.9091), if imported by vendors of automotive OEM sector.; and
(c) after paragraph (3), the following explanation shall be inserted; namely:-
"Explanation: The regulatory duty imposed on home appliances such as air conditioners, deep freezers, refrigerators, washing machines, microwave oven PDP/LCD/LED TVs, electro-mechanical domestic appliances, electric instantaneous or storage water heaters is leviable on CBU units thereof by virtue of description provided. It will not be leviable upon CKD kits thereof, despite the classification under the PCT codes of CBU units due to application of GIR 2(a)."
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