Text of (CUSOTMS) SRO 448(I)/2004.
MINISTRY OF FINANCE, ECONOMIC AFFAIRS,
STATISTICS AND REVENUE
(REVENUE DIVISION)
Islamabad, the 12th June, 2004
NOTIFICATION
( CUSTOMS/SALES TAX)
SRO 448(I)/2004.- In exercise of the powers conferred by section 19 of the Customs Act,1969 (IV of 1969), and clause (a) of sub-section (2) of section 3 of the Sales Tax Act, 1990, and in supersession of its Notification No SRO 367(I)/94, dated the 9th May, 1994, the Federal Government is pleased to exempt,-
(1) machinery and equipment, as are not manufactured locally, imported by companies other than Exploration and Production Companies, from custom duty in excess of five per cent ad valorem leviable under the First Schedule to the Customs Act, 1969 (IV of 1969), subject to the conditions specified under the caption "CONDITIONS WITH REFERENCE TO Sr. No. (1) AND (2)";
(3) goods as mentioned in Sr. No. (1) and (2) above, as are manufactured locally, imported by Exploration and Production, other petroleum and public sector companies as is in excess of ten per cent ad valorem leviable under the First Schedule to the Customs Act, 1969 (IV of 1969), except X-mass trees, well-head and components and parts thereof which shall be exempted from so much of the customs-duty as is in excess of fifteen per cent ad valorem; provided that goods imported by public sector companies shall be subject to provisions of Notification No. SRO 827(I)/2001, dated the 3rd December, 2001, issued by the Ministry of Commerce, except for projects wherein an investor or multinational company has a blocking vote; and
(4) raw materials and components, as are not manufactured locally, and are imported for use in the manufacture of goods specified in paras (1) and (2), from whole of customs duty leviable under the First Schedule to the Customs Act, 1969 (IV of 1969), subject to the conditions specified under the caption "CONDITIONS WITH REFERENCE TO Sr. No. (4).
CONDITIONS WITH REFERENCE TO Sr. No. (1) AND (2)
(i) Only such goods shall be entitled to the exemption under this notification as have been certified, for Sr. No. (1), by an E&P Company, and for Sr. No. (2), by a company other than an E&P company, for its own use or its contractors, sub -contractors and service companies for its projects of oil exploration and production, refinery, oil and gas pipeline, liquefied petroleum gas (LPG), compressed natural gas (CNG), petroleum terminals, energy conservation, environment and safety controls;
(ii) the exemption available to E&P companies shall be admissible only to such E&P companies who hold permits, licences, leases and who enter into supplemental agreements with Government of Pakistan;
(iii) the importers shall maintain an account of all imports alongwith the relevant record as prescribed by the Customs Rule, 2001 and Sales Tax Act, 1990;
(iv) in the event a dispute arises whether any item is entitled to exemption under this notification, the item will be immediately released by the Customs Department against a corporate guarantee. A certificate from the relevant Regulatory Authority to be furnished within a period of six months that the item is covered under this notification and shall be given due consideration by the Customs Department towards finally resolving the dispute. Disputes regarding the local manufacturing or otherwise shall be resolved through the Engineering Development Board;
(v) items imported at concessionary rates which become surplus, scrap, junk, obsolete or otherwise shall be disposed of in the following manner, namely:-
(a) in the event an item other than vehicles, is sold to another company in the petroleum sector no import duties shall be levied or charged. Otherwise, it shall be sold through a public tender and duties shall be recovered at the rate of ten per cent ad valorem of the sale proceeds;
(b) for vehicles there would be a minimum retention period of five years after which the vehicles may be disposed of in the manner provided in (a) above except that the full rate of import duties, net of any import duties already paid, shall be charged subject to an adjustment of depreciation at the rate of two per cent per month up to a maximum of twenty-four months;
(c) vehicles can be surrendered at any time to the Government of Pakistan without payment of any import duties under intimation to the Central Board of Revenue; and
(a) items imported by E&P Companies which have been rendered scrap, with change in their physical status, composition or condition and PCT classification, will be dealt with as scrap and shall be chargeable to customs-duties and sales tax accordingly, at standard rates;
(vi) all petroleum sector companies, corporations and organisations including their contractors and sub-contractors shall be entitled to import machinery and equipment for the purpose of construction and erection of petroleum projects on an import-cum-export basis against a corporate guarantee equal to the value of import duties and taxes exempted. Should the goods etc, not be exported on the conclusion of the project or transferred with the approval of the relevant regulatory authority to another petroleum project then the company, their contractors and sub-contractors and service companies shall be liable to pay duties and taxes chargeable at the time of import; and
(vii) each importer or E&P company shall develop a software and shall establish an online connection with the customs authorities for regulating the imports made under this notification.
CONDITIONS WITH REFERENCE TO Sr. No. (4) ABOVE
(i) The goods shall be imported only on certification of need and quantity by the petroleum sector companies which shall be mentioned on the face of bill of entry or goods declaration;
(ii) the petroleum sector company shall certify that the goods imported by manufacturer as per their certification of need and quantity have been consumed by the manufacturer and goods manufactured therefrom have been received by them. The manufacturer shall also communicate to the concerned Collector of Customs in writing about the consumption of imported raw materials and components within ninety days of consumption of goods and shall also furnish a certificate from the incharge of the concerned project to the effect that machinery has been supplied to them and duly installed. In case of non-consumption within one year, the importer shall pay the duty and taxes involved or shall give reasons to the satisfaction of Collector of Customs in an application to get extension for a reasonable period not exceeding six months; and
(iii) in case the manufacturer does not provide information regarding consumption or otherwise of the imported raw materials within the prescribed period of one year, or if otherwise deemed necessary, the Duty Suspension Audit Organisation (DSAO) constituted by the Central Board of Revenue shall carry out audit of the manufacturing unit. If the audit team is not satisfied regarding the consumption of raw materials, they shall report their finding to the concerned Collector of Customs who shall initiate proceedings for the recovery of leviable duty and penal action under the relevant provisions of the law.
Explanation.-- The expression "not manufactured locally" shall mean the goods, which are not included in the list of locally manufactured goods, specified in the General Order, issued by the Central Board of Revenue
[C.No.1/6/Mach./2004]
(Muhammad Ramzan)
Additional Secretary
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