The Federal Board of Revenue (FBR) has directed the Model Customs Collectorates (MCCs) of Karachi to clear consignments of monofilament yarn in line with the amended SRO.1125(I)/2011 so as to reap the benefit of extended sales tax zero-rating facility.
Sources told Business Recorder here on Saturday that the FBR has received representations on allowing sales tax zero-rating facility under SRO.1125(I)/2011 which has been amended through the SRO 593(1)2012. The FBR is of the view that the issue has been examined and in the current budget, SRO1125(1)/2011 dated December 31, 2011 has been amended vide SRO 593(1)/2012 dated June 1, 2012 to exclude "monofilament of more than 67 decitex" from the purview of SRO 1125(1)/2011. The FBR has advised the customs officials that the provisionally released consignments may be finalised in accordance with SRO 1125(1)/2011 as amended vide SRO 593(1)2012.
One of the representations made to the FBR revealed that unit has imported a Nylon Yarn of 20 Deniers consisting of snide filament and filed the Goods Declaration (GD) for the clearance of the goods. After examination it has been confirmed by the shed staff as well as Custom laboratory that the goods comprises Nylon Yarn of monofilament, but the concern Customs Collectorate was not extending the benefit of SRO.1125(1)/2011. The importer has approached the Board for the clarification of this issue and the FBR had directed to the collectorate concerned vide letter No C.No 3(2)ST-L&P/2011(Pt)/51600-R dated April 9, 2012 to release the goods provisionally till final decision by the board.
The Appraisement Collectorate Karachi has also examined the issue and submitted their report to FBR. Now the Board has also amended the SRO 1125(I)/2011 vide SRO.593(I)/2012 dated June 1, 2012 ie monofilament of more than 67 Decitex are only not having the benefit of SRO.1125(I)/2012 but the effective date of amendment is June 2, 2012 & our provisionally released GD is still pending for finalisation.
The unit has requested the FBR to direct the concerned collectorate to finalise the case by extending the benefit of said SRO and release the company's security. The unit has referred to a past clarification of the FBR issued in April 2007 on the issue of sales tax zero-rating facility. The past clarification said that the issue under reference has been examined in the Board.
The Board opposed the Collectorate's view that the benefit of Table in SRO525(I)/2006 dated June 5, 2006 (or superseded SRO 621(I)/2005 dated June 17, 2005) can only be allowed to articles of textile which fall in the specified heading. Articles such as fishing nets, tyre cord, nylon or polypropylene ropes, or web slings are neither textiles nor articles thereof.
Although these items are classified XI of Pakistan Custom Tariff which is titled as Textile and Textile Articles but the first rule for interpretation of PCT clearly states that section and chapter titles are for case of reference only. For legal purpose classification is to be made according to terms of headings and notes. Accordingly, the aforesaid items are not entitled to the benefit of SRO525(I)/2006, the FBR clarification added.