ISLAMABAD: Finance Minister Shaukat Tarin has reportedly "blocked" a proposal of Federal Board of Revenue (FBR) regarding waiver of billions of rupees in penalties on imported goods to a few companies, sources close to Chairman FBR told Business Recorder.
They said on August 24, 2021, Revenue Division briefed the Cabinet that the goods imported and stored in bonded warehouses (duties & taxes paid at the time of clearance from these bonded warehouses) can remain in such premises for a maximum period of six months as stipulated in section 98 of the Customs Act, 1969.
The overstayed consignments beyond six months attract penal surcharge on clearance @ 10 per cent per month on duties/ taxes involved. At times, importers were unable to ex-bond their consignments due to a number of reasons including fluctuating exchange rates, recession in the market, financial constraints and most importantly the ongoing covid-19 pandemic.
According to the FBR, this led to a situation where large quantities of warehoused goods would attract penal surcharge with a substantial amount of revenue stuck in these consignments.
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Accordingly, various bodies including Lahore and Sheikhupura Chambers of Commerce and Industry had requested the FBR to consider grant of waiver of penal charges on consignments in bonded warehouses to alleviate the problems of importers. Similar requests regarding waiver of overstayed goods had also been received from Pakistan Steel Line Pipe Industry Association, Pakistan Pulp Paper & Board Mills Association Lahore, M/s Naimat Ullah Steel Works (Pvt) Lahore and M/s Flying Cement Company Limited Lahore.
The sources said data analysis showed that consignments approximately worth Rs.9.6 billion involving duty and taxes of Rs.5.6 billion overstayed in all the bonded warehouses, involving penal surcharge to the tune of approximately Rs.1.6 billion.
FBR, in its summary, maintained that Federal Government in the past, in similar circumstances granted waiver of penal surcharge, and suggested that the Government may; therefore, in the prevailing situation consider the waiver of penal surcharge in respect of the overstayed goods. For this to materialize, the Federal Government, under section 98 (2) of the Customs Act, 1969, is empowered to remit the whole or part of the surcharge in case of any goods or category of goods subject to such conditions or restrictions as it may deem fit to impose, through a gazette notification.
After explaining the case, FBR proposed that: (a) warehousing period in respect of goods already warehoused may be extended up to September 30, 2021; and (b) the penal surcharge leviable on these goods may be remitted only in respect of the goods which are cleared from the warehouses within the period from the date of issuance of the notification to September 30, 2021.
The Cabinet, in its meeting held on August 24, 2021, discussed the proposal but deferred decision on the request of Federal Minister for Finance & Revenue.
Copyright Business Recorder, 2021