Import at concessional duty under China FTA: FBR corrects six tin/lead plate PCT headings

The Federal Board of Revenue (FBR) has corrected six Pakistan Customs Tariff (PCT) headings relating to tin and lead plates imported from China at concessional rate of customs duty under the Pak-China Free Trade Agreement (FTA). In this connection, the FBR amended the Pak-China FTA notification through SRO 14(I)/2011 on Monday.
The importers of tin and lead plates from China, at reduced rate of customs duty, would now be in a position to avail tariff concessions, after correction of PCT headings. Sources told Business Recorder here on Monday that the FBR has not revised the duty structure on import of certain lead plate and tin plate under the Pak-China FTA.
The FBR had received the recommendations of the Engineering Development Board (EDB) on the correction of the PCT headings of some items mentioned in SRO 659(I)/2007, which is related to the Pak China FTA, applicable from July 2007. Resultantly, the FBR has amended SRO 659(I)/2007 through a notification.
Now, the PCT headings of the specified items have been corrected to ensure smooth imports under the Pak-China FTA. The benefit of the Pak-China FTA is applicable on only those headings specified in the notification. The computer system of the customs clearance gives tariff concessions based on the PCT heading of the notification. In case of wrong tariff classification, the customs clearance system may give benefit of duty concession to some other item, as the customs system only reads tariff classification for the purpose of duty concession.
As a result of wrong tariff headings, the benefit of duty concession, available on the import of a specific good from China, is not available to the same product otherwise. In the said case, the item classified for duty concession under the Pak-China FTA cannot avail concession following wrong tariff classification. In principle, the concession of customs duty on the import of a specific item should be available based on the tariff heading of the PCT.
Sources said that when the Pak-China FTA came into force in July 2007, the rate of customs duty on the import of goods from China was also notified for fiscal years July 1, 2007; January 1, 2008; January 1 2009; January 1 2010; January 1 2011 and January 1 2012. The year-wise reduction in customs duty was already determined for these periods at the time of issuance of notification. This systematic reduction in customs duty could not be changed as per agreed year-wise tariff reduction under the Pak-China FTA. It was agreed to gradually reduce the import duty on the items specified in SRO 659(I)/2007 with the passage of time. Therefore, the scheduled reduction in the rate of customs duty on import of goods from China under the FTA cannot be changed by the FBR on its own.
According to sources, if statutory rate of customs duty is less than the concessionary rate of duty under the Pak-China FTA, the importer has the option to import Chinese goods at the statutory rate of duty. On the other hand, if the concessionary rate of duty under the FTA is less than the statutory rate of duty, the importer could import Chinese goods under the FTA. It depends on the comparison of the statutory rate of duty on a specific item with the concessionary rate of duty under the Pak-China FTA.
It is important to mention that the federal government had exempted, with effect from July 1, 2007, the import into Pakistan from China of the goods falling under the Heading and sub-Heading numbers of the First Schedule of the Customs Act from so much of the customs duty specified in the First Schedule as on 1st July, 2006 as is in excess of the specified rates with effect from the corresponding date.
Provided that the goods are manufactured or produced and imported in conformity with the Rules of Determination of Origin of Goods and the operational certification procedures for the Rules of Origin notified by the Ministry of Commerce vide SRO 1286(I)/2005, dated the 24th December, 2005 and read with the Import Policy Order and its amendments notified by the Ministry of Commerce, from time to time.
Sources added that SRO 659(1)/2007 provides concession/exemption to imports from China under Pak-China Free Trade Agreement (FTA). Under the arrangement of this FTA, SRO 497(I)/2009 of June 13, 2009 was issued to care for the requirement of "No concession List" whereby total duty on these items would not be charged above the specified rates therein, provided the imports are made from China as per provisions of notification issued under PakChina Free Trade Agreement.