The Directorate General Federal Audit has accused Engineering Development Board (EDB) of allotting unchecked quota of importable spare parts to the Original Equipment Manufacturers (OEMs) and recommended detailed scrutiny of items imported after availing exemption, sources close to CEO EDB told Business Recorder.
Federal audit has recently completed the audit of EDB has raised dozens of objections on the malpractices in the organisation, a subsidiary of Ministry of Industries and Production functioning without any legal status.
Inter Departmental Technical Committee (IDTC) is responsible for allocation of quota to Original Equipment Manufacturers (OEMs).
According to the Ministry of Finance, Economic Affairs and Revenue SRO 656(1) 2006 states that in exercise of the powers conferred by Section 19 of the Customs Act, 1969(IV of 1969), the Federal Government has exempted the components ( which include sub-components, components, subassemblies and assemblies but exclude consumables) imported in any kit form. And (direct materials) for assembly or manufacturer of vehicles falling under chapter 87 of the first schedule to the said Act from specified in column 4. The importer is an assembler or manufacturer who has suitable in-house facilities as defined in annex-A " to this notification or importer is in possession of a firm contract for manufacturer of specified goods with any other manufacturer having suitable in- house facilities and registered with sales tax department for the manufacture of such goods, to manufacture road worthy vehicles according to the laid down standards and this fact has been 5(certified) by the EDB.
The management of the EDB analysing the information/ statement provided by the OEMs and allotted quota for the current year. The OEMs provided information stating that quota allotted by the EDB and actual imports and production made by the OEMs during the year.
According to sources, difference between imports components and production provides that balance available with OEMs. EDB authorised an officer to get the user/ password from PRAL, an organisation of FBR and uploaded quota along with list of importable components on V Box (Web base one customer). Accordingly, OEMs imports maximum components up to the allotted quota.
Audit has observed the EDB allotted quota to OEMs for each year without any reduction made and observing the balance of previous year available with them.
Audit is of the view that non reduction of closing balance for awarding the quota to OEMs is a defective practices' which sustained loss to the government in shape of exemption available on import of components by the OEMs on previous year.
Audit has recommended that detailed scrutiny of items import after availing exemptions and actual production made by the OEM may be carried out and difference in both figurers known to audit besides allotment of quota in future by deducing the closing balance available, the sources concluded.
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