ISLAMABAD: The Federal Cabinet has deferred the decision on reduction of Additional Customs Duty (ACD) on light commercial vehicles and cars in CBU condition and removal/reduction of Regulatory Duty on import of vehicles in CBU condition and hybrid vehicles, sources in the Commerce Ministry told Business Recorder.
On July 6, 2021, the Commerce Division briefed the Cabinet that the National Tariff Policy 2019-24 (NTP) stipulated that all proposals for levy, amendment or removal of tariffs will be examined at the Tariff Policy Centre and after approval by the Tariff Policy Board (TPB),will be submitted to the Cabinet or Parliament, as the case may be, for consideration.
The TPB in its 29th meeting decided that proposals approved by the TPB, during the course of budgetary exercise for the Financial Year 2021-22, would be forwarded to the Federal Board of Revenue (FBR) so that these could be incorporated in the Finance Bill, 2021-22. Resultantly, decisions taken by the TPB regarding tariff rationalisation of various sectors, had been incorporated in the Finance Bill, 2021-22 to the extent of amendments that would be made in the 1st and 5th Schedules of the Customs Act, 1969, after taking approval from the Parliament. However, decisions regarding removal and imposition of Regulatory Duties (RDs) and Additional Customs Duties (ACDs), as approved by the Federal Cabinet on the summary moved by the FBR, would be implemented through relevant SROs after June 30, 2021.
Subsequently, decisions taken by the TPB during the budget exercise for the Financial Year 2021-22 were discussed at various fora including the Senate Standing Committee on Finance and Revenue. During deliberations, certain anomalies were identified by the concerned stakeholders. In order to address those anomalies, the 31st meeting of the TPB was held on June 21 - 22, 2021. After extensive discussions, it was decided that certain changes in the earlier decisions of the TPB regarding Customs Duties, Additional Customs Duties and Regulatory Duties were desired.
On the proposal of the Ministry of Industries and Production (MoI&P), the TPB, in its 30th meeting, rationalised tariff structure of the auto sector. The remaining items/issues of the auto sector remained undecided due to deliberations amongst all stakeholders. After completion of consultations, the Ministry of Industries and Production placed the proposals before the TPB in its 32nd meeting held on June 24, 2021. The representative of the Ministry of Industries and Production (MoI&P) informed the Board that in order to rationalise the tariff structure of the auto sector, series of consultative meetings were held with all the stakeholders including Finance Division, Federal Board of Revenue (FBR). They noted that proposals of auto sector tariff rationalization had been prepared on the basis of the feedback received from the stakeholders and to create a win-win situation for all.
According to sources, in order to give effect to the decisions of the Tariff Policy Board, it was proposed that changes regarding removal/imposition of RDs and ACDs on selected HS Codes, in line with the decisions of the TPB taken in its 31st and 32nd meeting may be approved by the Federal Cabinet so that tariff rationalisation exercise for the Financial Year 2021-22 could be completed. FBR had already given its concurrence.
During discussion, Minister for Industries & Production requested that they need more consultation regarding three proposals of auto sector i.e. reduction of ACD on light commercial vehicles and cars in CBU conditions, removal/reduction of Regulatory Duty on import of vehicles in CVU conditions and removal /reduction of Regulatory Duty on hybrid vehicles. And recommended that reduction/removal of ACD on CKD be approved as the sales of auto industry had been affected in anticipation of downward revision of prices. Adviser to the Prime Minister on Commerce and Investment endorsed the request of Minister for Industries & Production but opined that deferment should be time bound as it will increase the already available protection to the local assemblers.
Special Assistant to the Prime Minister on Finance & Revenue conveyed the request of Minister for Finance & Revenue to defer the agenda item as he didn't get the opportunity to study the proposals in detail.
After detailed discussion, the Cabinet did approve proposals regarding reduction of ACD on light commercial vehicles and cars in CBU condition, removal and reduction of Regulatory Duty on import of vehicles in CBU condition and removal/reduction of Regulatory Duty on hybrid vehicles. The Cabinet directed Industries& Production Division to re-examine the three deferred proposals and submit final version within one month.
Copyright Business Recorder, 2021
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