Grain consignments stored in 'silos': Provisional release allowed against bank guarantees
The Federal Board of Revenue has allowed provisional release of certain consignments of grain stored in 'silos' against bank guarantees for providing space to poultry, livestock, grain handling and storage sectors to facilitate investment in the country.
Copyright Business Recorder, 2012
Sources told Business Recorder here on Monday that the FBR is likely to extend exemption of customs duty and sales tax on the import of grain storage 'silos' for poultry, livestock, grain handling and storage sectors.
Detail of the issue revealed that over the last year the import of silos by various industrial sectors has become problematic due to some technicalities and legal interpretation of law. Presently, grain storage silos imported by poultry and livestock sectors are exempt from customs duty under Sr. No I of SRO 575(l)/2006, dated Jun 5, 2006 and for sales tax exemption these sectors utilised SRO 727(1)/2011 which covers machinery and equipment.
On the other hand, machinery and equipment for development of grain handling and storage facilities are exempt from whole of customs duty and sales tax under Sr. No 2 of SRO 575(I)/2006. The problem arises because silos are classifiable under Pakistan Customs Tariff (PCT) heading 94.06 with 25 percent customs duty and 16 percent sales tax but the term machinery and equipment applies only to the items listed in Chapter 84 & 85 of PCT, however being a bona fide requirement field formations of the FBR allowed the benefit of said SRO to 'silos' as an equipment used for 'storage'. This practice, however, was discontinued after budget 2011-12 due to a more strict interpretation of the term 'machinery and equipment' under SRO 575(I)/2006 and SRO 727(I)/2011.
After the concession available to grain handling and storage facilities was eliminated, many representations were received in the Board, from The Federation of Pakistan Chambers of Commerce & Industry, M/s Rice exporters Association of Pakistan, M/s Pakistan Flour Mills Association and M/s Pakistan Poultry Association seeking continued clearance of grain storage silos free of duty and sales tax under Sr. No 2 of said SRO.
In a few cases, the Board has recently allowed provisional release of consignments against bank guarantee to mitigate the hardship faced by importers, sources added.