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LAHORE: Customs authorities are allegedly denying exemption to the importers of Hybrid Electric Vehicles (HEVs) while creating distinction between fully hybrid and semi- hybrid vehicles, said sources.

The denial is being made on the pretext that notification SRO No. 499(I)/2013 dated 12-6-2013, contending that semi-hybrid vehicles are not allowed under the said notification.

However, the importers are of the view that the notification has only classified HEVs without drawing any distinction with regard to fully, semi, mild hybrid or used or new vehicles or any specification of large batteries. Therefore, the exemption of customs duty, sales tax and withholding tax on import of HEVs could neither be denied nor circumvented under the garb of notification in question.

They said creating any distinction between fully and semi HEVs was illegal, without lawful authority and in conflict with the notification.

According to the importers, the appellate forums have also seconded them by directing the department to refund duty/taxes collected from them under the garb of notification, as they were entitled to port any sort of HEVs under the notification.

It may be noted that in an earlier case, one Assistant Collector of Model Collectorate Customs (MCC) Appraisement West had denied as well as circumvented the benefit to the importers of HEVs out of the notification, restricting the exemption to only those vehicles with larger batteries and motor to drive a vehicle.

The importers had challenged the arbitrary circulars to defeat the benefit of exemptions set out in the FBR notifications for them and secured a verdict in their favour.

According to sources, the Customs authorities even target the individual taxpayers returning from abroad and transporting a hybrid car under the personal baggage scheme. However, the audit wing of the department takes cognizance of the imported vehicle under the controversial circular issued by the Appraisement West, claiming that the notification is only available to fully HEVs and not to the semi hybrid vehicles.

It may be noted that the apex court of the country has repeatedly held that the tax department do not maintain litigation record properly, thus committing the same mistake time and again. In this case again, the customs authorities have taken support from a circular which has already been declared null and void by the apex court, said sources from among the customs law practitioners.

Copyright Business Recorder, 2023

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