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ISLAMABAD: The customs classification committee of the Federal Board of Revenue (FBR) has declared that the imported hybrid steam boiler would be subjected to 11 per cent customs duty and not zero per cent duty as wrongly claimed by the importer.

The decision has been issued by the FBR’s customs classification committee through the issuance of a ruling.

According to the customs classification committee, the Committee is of the view that the imported “Hybrid steam boiler Model No. ZLI-SS-1500.12” is classifiable under PCT heading 8402.1990.

The Collectorate of Customs Appraisement Port Muhammad Bin Qasim has forwarded a reference for the classification of a “hybrid boiler” under specific PCT Code 8402.1990 or as a part of Plant under Residual PCT 8477.8000, being part of 300 TPD Bottle and Film Grade PET Scan Line Plant.

Brief facts as reported by the referring Collectorate are that importer M/s Ismail Resin (Private) Limited, Karachi imported hybrid boiler vide goods declaration as partial shipment of 300 TPD Bottle and Film Grade PET Scan Line Plant for release thereof under PCT heading 8477.8000, “being integral part of plant for manufacturing of resins” in terms of the Customs General Order 12 of 2002 dated 15.06.2002.

However, referring Collectorate is of the view that heading 84.77 is meant for residual machinery for manufacture of products from rubber or plastics not specified elsewhere in the Chapter 84 of the tariff while subheading 8477.8000 deals with “other machinery”.

The Collectorate contends that the instant imported “boiler” has separately defined function of production of steam which is distinct from the function of plant, i.e. production of resin. In other words, the end product of imported boiler (steam) may not necessarily be used only as part of the instant plant and may be utilized in multiple settings.

The Collectorate further asserts that this logic is further supported by long standing practice of classification of “sorting”, “packaging” and other ancillary production lines which, though form part of plant, but are classified separately under their respective heading being specified, therein, in view of the above referred COO and general rules of interpretation.

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The representatives of importer contended that the imported boiler would function in conjunction with other machineries to manufacturer end products (resin), hence should be treated as integral part of “Plant for manufacturing of resins” and classified under heading 8477.8000 in view of Section Note 4 and 5 of Section XVI and in line with the Para 1(xi)(i) of the Customs General Order(CGO) 12 of 2002 (Classification of machinery).

On the other hand, the representative of Collectorate of Port Muhammad Bin Qasim asserted the imported “Hybrid Steam Boiler” has separately defined function of production of steam as its end product which can be used for multiple purposes and is not restricted to be used specifically for the manufacturing of “Resin” as its end product.

Therefore, the imported boiler having individual function is specifically classifiable under PCT heading 8402.1990. The representative of Collectorate of Port Muhammad Bin Qasim further contended that the issue of classification in a similar case has already been settled vide Public Notice No.4/1989 wherein the classification committee had ruled in case of “10 Mega Watt Complete Power Plant based on Steam” which consisted of water treatment section (water softener), boiler, steam turbine and generator, and ruled to classify each component in their respective PCT headings in the light of WCO classification opinion.

The committee also observed that in another similar matter, a public notice No 4 of 2006 was issued with respect to classification of “Complete Continuous Sugar Dissolving System and Syrup Room Designed for Beverage Filing Line”.

The imported system consisted of plate heat exchangers, cooling tower, chiller, hot water tank, mixing tank etc. The classification committee ruled to classify all these machines separately and independently under their respective PCT headings.

The classification committee has gone through the arguments and documents put forth by the two sides and also considered the relevant provisions of law dealing with the HS classification. Classification of any imported goods under Pakistan Customs Tariff is determined under the General Rules for the Interpretation (GIR) of First Schedule to the Customs Act, 1969.

As per GIR 1, the classification shall be determined according to the terms of the headings and any relative section or chapter notes provided such headings or notes do not otherwise require.

The classification committee observed that the heading as well as contents of this specific sub-para clearly deal with the classification of machinery imported in disassembled form. Such disassembled machines may be imported in the form of components in partial shipments and when all these components are assembled together at destination site, they assume the shape of machinery having some specific function.

As per sub para (i) (b), such partial shipments brought in partially are to be classified under the one heading appropriate to that assembled machinery. Similarly, sub para (i) (a) and (ii) (b) also speak of some specific machines not for the whole plant.

Further description, scope and types of such machines is available in respective Explanatory Notes to that heading which clearly excludes those machinery which is specified and included elsewhere in the chapter.

Since boilers are specifically included in HS 84.02 the same cannot be classified under any other heading like 84.77. If importer’s stance to classify machines having specific headings duly determined in accordance with GIR under any other heading for any reason is accepted, the whole structure of classification determination will come down crumbling.

Furthermore, the First Schedule to the Customs Act, 1969, being an Act of the Legislature cannot be ignored and brushed aside on any pretext, including any confusion of understanding on account of the said CGO.

Needless to mention that during the meeting, the representative of Port Qasim Collectorate confirmed that the subject boiler is imported in complete assembled form and this position has not been rebutted by the importer’s representative.

The committee also observed that vide Public Notice No 4/1989 and Public Notice No 4 of 2006, it was ruled to classify all machines separately and independently under their respective PCT headings. Therefore, the importer’s claim for invoking para 1(ix) of CGO 12 of 2002 is unfounded and irrelevant, the committee added.

Copyright Business Recorder, 2022

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