The Federal Board of Revenue (FBR) has agreed to certain budget recommendations of Engineering Development Board (EDB) for protection of the local industry and manufacturing activities in the country. Sources told Business Recorder here on Saturday that the EDB has proposed tariff rationalization, changes in the existing customs related SROs, amendments in customs rules and changes in duty structure for different industries including auto sector. The FBR has agreed to certain recommendations of the EDB for development of the local sectors and industries.
FBR Recommendation: Concessions are based on sovereign guarantees provided by government. These concessions shall be withdrawn gradually.
EDB recommendation: Agreed with the Recommendation of FBR. However SRO may be suitably amended to allow exemption of customs duty and sales tax to the local manufacturers of plant, machinery & equipment for use by LNG developers or LNG TO/O, as specified under Clause (2a) of SRO 678(I)/2004 on the import of their inputs.
Proposal: SRO 809(I)/2009
Relates to import by Textile Sector, if not manufactured locally. SRO has been extended due to revised textile policy 2014-19.
EDB Recommendation: Recommended as EDB has to issue NOC for the import of machinery & equipment, not manufactured locally.
Proposal: SRO 655 (I)/2006
Amendment as per ADO (2016-21)
EDB Proposal:As approved in the ADP (2016-21)
i) Zero-rated tariff slab has been replaced with 1%.
ii) Duty on raw materials for the manufacture of automotive parts of any category of vehicles have been rationalised from 0% to 1%.
iii) Customs Duty on import of sub-components have been revised to bring it at par with the CD on import of components ie 1 0% from existing 5% to eliminate misdeclaration among sub-components and components.
Proposal: Export of automotive components & assemblies
EDB Proposal: To encourage the export of automotive parts SRO 655 be amended
subject to similar conditions/limitations, as specified under SRO 656(1)/2006.
Proposal: SRO 656(i)/2006
Amendment as per ADP (2016-21)
EDB Proposal: As approved in the ADP (2016-21):
i) Zero-rated tariff slab has been replaced with 1% (Tractors, Prime-movers above 280 HP.)
ii) Rationalization of CD on import of Non-localised CKD of following vehicles:
a) Prime-movers below 280 HP from existing 10% to 5%.
b) Prime-movers of 280 HP and above from existing 0% to 5%.
c) Cars from existing 32.5% to 30%.
d) Auto Rickshaw and Cargo 3-Wheeler Loader from existing 20% to 15%.
iii) CD on import direct materials has been rationalised from 0% to 1%.
iv) Ensuring installation of immobilisers in cars by ORMs.
v) Compliance of other Consumer Welfare measures.
Proposal: Compulsory installation of immobilisers in cars by OEMS.
EDB Proposal: As approved in ADP following new condition under SRO 656(1)2006 after condition (iii) be added to ensure installation of Immobilisers in the cars: (iiia) the list of importable components shall must contain immobilizer. The OEMs shall also confirm compulsory installation in the cars produced at their facilities. EDB shall ensure the compliance of all the consumer welfare measures approved in the ADP 2016-21.
Proposal: Correction in SRO 656, Customs Duty on import of tyres for vehicles of heading 87.01 under HS code 4011.2090 to 5% from existing 20%.
EDB Proposal: Under SRO 656 (I)/2006 rate of duty on import of Tyres for the vehicles falling under heading 87.01 (other than Agricultural Tractors) is 20%, whereas, in Customs Tariff these are importable @ 5%.
SRO 656(I)/2006 be amended to correct the duty on vehicle (Other than Agricultural Tractors) to 5% from existing 20%.
Proposal: Local manufacturing of special purpose vehicles falling under HS Code 87.05.
EDB Proposal: To facilitate the local manufacturing of such vehicles, it is proposed to incorporate these vehicles in the table of SRO 656(I)/2006. it is added that previously these vehicles were part of CKD operations under SRO 502(I)/94 dated 9th June 1994.
Crane lorries, 8705-1000
Mobile drilling derricks, 8705-2000
Fire Fighting vehicles, 8705-3000
Concrete mixer lorries, 8705-4000
Other, 8705-9000
Proposal: Mandatory installation of air bags and antilock braking system in passenger cars.
EDB Proposal: These are in line with the recommendations of National Assembly standing Committee.
Proposal: Provision of onsite Assembly of MEGA machinery or high tonnage dumper.
EDB Proposal: To facilitate the investment it is proposed to create a provision under SRO 656 to accommodate import of mega machinery or High tonnage dumper in SKD form for the onsite assembly for mining purpose only. This is in context to the MOU signed in b/w Government of Pakistan and Belarus on 29th May 2015 for co-operation in the field of industry between Ministry of Industries and Production of Pakistan and Belarusian Ministry of Industry.
Proposal: SRO 693(i)/2006.
Amendment as per ADP (2016-21)
EDB Proposal: As approved in the ADP (2016-21)
Rationalization of CD on import of localised CKD of following vehicles:
i) Tractors & CNG Dedicated Buses from existing 35% to 34%.
ii) Prime-movers below 280 HP from existing 25% to 30%.
iii) Prime-movers of 280 HP and above from existing 35% to 30%.
iv) Cars from existing 17.5% to 15%.
v) LCVs including 3-wheeler cargo loader from existing 30% to 25%.
vi) Motorcycles from 32.5% to 30%
Proposal: Amendment in SRO 693(I)/2006 to make it compatible with Pakistan Customs Tariff.
EDB Proposal: Certain HS Codes and entries related mentioned in the Table of SRO 693 are recommended to be deleted which were missed while transposing over HS Code versions 2007 & 2012.
Proposal: first schedule to the Customs Act 1969.
Amendment as per ADP(2016-21)
EDB Proposal: As approved in the ADP (2016-21):
Rationalization of CD on import of vehicles in CBU form;
i) Prime-movers below 280 HP from existing 30% to 20%.
ii) Prime-movers of 280 HP and above from existing 15% to 20%.
iii) HEVs CBU Buses (New PCT)1%.
iv) HEVs CBU Trucks (New PCT) 1%.
v) CBU Trucks (above 2-axles), g.v.w. exceeding 5 PCT) 20%.
vi) 3-Wheeler Cargo Loader from existing 60% to 50%.
vii) Motorcycles from existing 65% to 50%
viii) Motorbike Rickshaw from 65% to 50%.
Proposal: Rationalizing Tariff for pneumatic tyres of rubber.
EDB Proposal: CD on pneumatic tyres of rubber falling under HS codes 4011.1000 & 4011.2010 may be raised to 20% from existing 15%.
ii). CD on Bus and Truck tyres under HS Code 4011.2090 may also be raised to 20% from existing 5% as the same are manufactured locally.
Proposal: Removing anomaly on unit of measurement and valuation of auto parts.
EDB Proposal: UOM in respect of tariff headings related to auto sector and other machinery & equipment falling under Chapter 84 & 85 of Customs Tariff may be substituted with "Nos. ",instead of "KGS".
ii) Valuation of auto parts imported by OEMs and Commercial importer should be rationalised and made equivalent. This will create a level playing field, encourage localization and will increase FBR revenues.
Proposal: Rationalization of duty structure on locally manufactured finished pinions/gears of locomotives and their inputs.
EDB Proposal: In order to encourage the local manufacturing of trailers duty on import of trailers may be raised from 15% to 20%. This is in line with the duty on prime-movers approved under ADP-2106-21.
Proposal: Rationalization of duty structure on locally manufactured finished pinions/ gears of locomotives and their inputs.
EDB Proposal: In order to provide working spread amid encourage locally manufactured Loco Pinions is and Gears duty on steel forgings of gears over 150Kg weight (7326.1930) may be reduced to 0% from existing 5% because the duty on finished Loco Pinions and Gears is @ 5%.
Proposal: Enhancement in duty on CTP plates & PS Plates.
EDB Proposal: CTP (computer to print) plates (3701.3020) are importable @ 10% rate of duty under Normal Tariff and @ 5% rate of duty under China Pak
Proposal: Plates
EDB Proposal: FTA, whereas their raw materials ie Aluminium sheet (7606.1100) and Aluminium Foil (7607.1100) are importable @ 10% & 20% rate of duties, respectively.
In view of above it is proposed to raise duty on CTP Plates (3701.3020,) and P.S. plates (3701.3030) on 20% and eliminate the same from FTA/PTA.
Proposal: Import duty bushings for power transformers.
EDB Proposal: Bushings for Power Transformers up to 132 kV and Low Voltage Bushings for Transformers are being manufactured locally, whereas the same are allowed under PCT Heading 8504.9020 at 5% rate of duty without mentioning any capacity.
It is recommended that current description against HS Code 8504.9020 may be amended tinder customs tariff from existing" Bushings for Power Transformers to "Bushings for 132 kV and above transformers"
Proposal: Reduction in duty on ferrite core transformers and inductors:
EDB Proposal: Ferrite Core Transformers, falling under PCT Head 8504.3100 and inductors falling under PCT Head 8504.5000 are since not being manufactured locally and are essential part for all types of switching power supplies, LED lighting drivers, home inverters, adopters and chargers. It is proposed to reduce the duty to 5% from existing 20%, by creating New PCT Headings.
Proposal: Description change (9032.1010)
EDB Proposal: Thermostats "of a kind used in refrigerators and air-conditioners are importable under PCT Head 9032.1010 whereas, Thermostats used in Deep-Freezers are same as are in refrigerators and air-conditioners and are since not manufactured locally, it is proposed that existing description may be amended to read as "of a kind used in refrigerators, deep-freezers and air-conditioners".
Proposal: reduction in duty on copper tube imported in LW coils
EDB Proposal: Presently entire copper tube imports are classified under HS Code7411.1090. The local manufacturers of evaporators and condensers import copper tube in LW Coils weighing more than 300 Kgs. It is proposed to create New PCT for Copper tube in L W Coils of 300 k and above wit/i duty at 5%.
Proposal: Classification of terminal block
EDB Proposal: There is no specific US Code for Terminal Block - In SRO 565 was allotted HS Code of Parts of the respective product ie, In case of air conditioners 8415.9099 refrigerators & deep freezers 8418.9990 & washing machines 8450.9000. It is proposed that create a new PCT for terminal block with duty at 5%, being not manufactured in the country.
Proposal: Parts for fully automatic washing machines:
EDB Proposal: There is no HS Code for the parts Automatic Washing Machine. It is proposed that a new PCT Heading for parts of fully automatic washing machines, with rate of at 10%, may kindly be created to encourage local assembly of fully automatic washing machines.
Proposal: CFC free gas R-410 (A) HS Code 3824.7800
EDB Proposal: R-410(a) is new refrigerant gas being used in air conditioners in place of HCFC R-22 on which quota restrictions imposed under Montreal Protocol Agreement are applicable. No such restrictions are applicable on R-460(a) as contains neither CFC nor HCFC and is freely importable. The major hurdle to switch over to R-410(a) is both its cost as compared R-22 as well as Rate of duty at 15% as against 5% (China FTA 0%) on R-22. In order to encourage switch over to R-410(a) it is proposed to reduce its rate of duty to zero percent. This will besides helping the industry for quicker switch over will also go a long way in meeting our international obligations towards CFC phase out under Montreal Protocol Agreement.
Proposal: Revision in import duty / tariff structure of polystyrene
EDB Proposal: In order to protect the local industry it is proposed to impose a uniform customs duty of 15% on all the PCT codes that are used to import polystyrene as tabulated above.
Proposal: Reclassification of air and fuel filters to cover all types of locally manufactured filters
EDB Proposal: Present tariff classification does not cover all types of Air & Fuel Filters that are being manufactured locally and hence not only leads to misdeclaration and loss of revenue but is also hurting the local industry. Accordingly, amendments are proposed in the First Schedule to the Customs Act, 1969 to provide appropriate classification of all types of Air & Fuel Filters, as are manufactured locally.
Proposal: Rationalization of customs duty / regulatory duty on import of welded steel pipes:
EDB Proposal: Due to imposition of RD on HRC the local line pipe manufacturers are facing multiple problems from the import of raw material to its production and supply to end users. Therefore, in order to ensure the competitiveness and efficiency it is proposed to provide spread of at least 10% in the finished pipes and raw materials by enhancing the duty on finished pipes or imposing regulatory duty on finished pipes.
Proposal: Transformer industry (i) Silicon-electrical steel (Grain Oriented):
EDB Proposal: Customs duty on import of Silicon-electrical steel (Grain Orieizted) PCT No 7225.1100 & 7226.1100, may be reduced from 10% to 0% by creating separate tariff heading for transformer manufacturers. It is energy efficient material amid attracts RD also.