The federal cabinet is likely to extend warehousing period of already warehoused goods of over 1500 consignments till March 25 on the recommendations of Federal Board of Revenue (FBR) which is already on the hit list of Prime Minister Imran Khan. The goods imported and stored in the bonded warehouses can remain in such premises for a maximum period of six months as stipulated in section 98 of the Customs Act, 1969. The overstayed consignment beyond six months attract penal surcharge on clearance @ 1 percent per month on duties/taxes involved. In many cases importers are unable to ex-bond their consignments due to a number of reasons including recession in the market, fluctuating exchange rate and financial constraints. This has led to a situation where large quantities of warehoused goods have piled up due to incurring of heavy penal surcharge as no general concession for waiver of penal surcharge has been extended by the federal government for the past five years. Moreover, substantial amount of revenue is stuck-up in these consignments.
The sources said, Federation of Pakistan Chambers of Commerce and Industry (FPCCI) in its letter of Dec 19, 2018 had stated that the importers of raw material are facing problems due to their consignments lying in bonded warehouses beyond the period stipulated under section 98 of the Customs Act, 1969. FPCCI has requested FBR to consider grant of waiver of penal surcharge on overstayed consignments for a period of ten days in order to alleviate the problems of the importers due to fluctuation of exchange rate. Similar requests regarding waiver of penal surcharge on overstayed goods have also been received from Pakistan Iron and Steel Merchants Association and other exporters/ importers.
According to FBR, this matter has been examined and it is assumed that due to fluctuation in exchange rate, coupled with other economic reasons, the importers are indecisive about clearing the bonded goods within the statutory time limitation. The data analysis shows that around 1536 consignments involving duty/taxes of Rs 6.855 billion are overstayed in bonds and the penal surcharge involved would be around Rs 700 million. Therefore, overstayed bonded goods on clearance would attract additional financial cost in the shape of penal surcharge over and above the leviable duty and taxes.
FBR argues that in similar circumstances in the past waiver of penal surcharge has been granted to alleviate the problems of business community, suggesting that the government in the present circumstances may favourably consider the waiver of penal surcharge so as to mitigate hardships of importers. For this to materialize, the federal government under section 98(2) of the Customs Act, 1969 is empowered to remit the whole or part of the surcharge in case of any goods or category of goods subject to such conditions or restrictions as it may deem fit to impose, through a gazette notification.
Earlier a summary for the Cabinet on this specific issue was moved for consideration of the Cabinet in its special meeting held on Jan 23, 2019. However, the summary was deferred.
FBR has recommended that warehousing period in respect of goods already warehoused may be extended up to March 25 and the penal surcharge leviable on these goods may be remitted only in respect of the goods, which are cleared from the warehouses within the period from March 4 to March 25, 2019.
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