The Federal Board of Revenue (FBR) has withdrawn its earlier two clarifications on the zero-rating regime and finally decided that the benefit of zero-rating under SRO 509(1)/2007 is not admissible to 'Acryl amide'. In this connection, the FBR has issued instructions to the Collectors of Customs Model Customs Collectorates (MCCs) here on Friday to follow this interpretation of law on the zero-rated regime.
According to the FBR's directive, the FBR has referred to the letter of the Model Customs Collectorate (Appraisement), Karachi. The issue has been re-examined in the FBR. The Board, in super session of its earlier letters of February 17, 2010, and September 30, 2010, has agreed with the viewpoint of Model Customs Collectorate Appraisement Customs House, Karachi that 'Acryl amide' is not listed as a dye intermediate in the colour index Third Edition published by the Society of Dyers and Colourist, England.
The Volume-4 of the said index lists all dye intermediates including those which are not even manufactured. As 'Acryl amide' does not appear in the said volume, hence it cannot be termed as an intermediate. It is, therefore, clarified that the benefit of zero-rating under SRO 509(1)/2007 dated 09.06.2007 is not admissible to 'Acryl amide'.
The FBR has further informed the field formations that no maladministration has been found in the subject case on part of FBR or MCC as both the offices examined and gave their views as per their understandings. The classification of goods is a complex ongoing process where everyday something new is highlighted on the basis of some new research. In the instant case, two different views were taken by the FBR and the field formations but with this letter the matter has been settled and this may not be treated as maladministration, FBR's instructions added.
Following is the text of the FBR's earlier clarification of September 30, 2010, which has now been superseded by the Board: The FBR said that "I am directed to refer to Directorate General of Post Clearance Audit's letter and subsequent correspondence relating to the matter of "Zero-Rating to 'Acryl amide' and to say that the matter has been re-examined in the Board. Accordingly it has been determined that in view of the existing language of SRO509(I)/2007 dated 09.06.2007 there is no need to change Board's earlier clarification issued vide even number dated February 17, 2010 and the same is reiterated", FBR added.
Following is the text of the FBR's earlier clarification of February 17, 2010, which has now been superseded by the Board: I am directed to refer to your letter dated 26.10.2009 on the subject noted above. The issue has been examined. It is confirmed that the Acryl amide is entitled to zero rating as it falls within the ambit of "dyes intermediaries" mentioned under Sr. No 47 of SRO 509(I)/2007 dated June 09, 2009.