CBR orders recovery of duties from oil exploration companies

ISLAMABAD (May 10 2004): The Central Board of Revenue (CBR) has ordered recovery of duties and taxes on the disputed import of machinery/equipment by the oil exploration and production companies, contractors, sub-contractors and service-providers using corporate guarantee.

The CBR has given May 14 deadline to collectors of customs for completion of recovery from these companies. It expects to recover billions of rupees, which would add to revenue collection in the remaining two months of the current fiscal.

Sources told Business Recorder that exploration and production companies are entitled to exemption of duties/taxes on the import of machinery/ equipment, materials, specialised vehicles, accessories, spares, chemical and consumables (not manufactured locally) for the projects specified in the SRO.367(I)/94 of May 9, 1994.

However, under Clause 6 of the Notification, in case a dispute arises on exemption of any item, the customs will immediately release machinery/equipment against the submission of corporate guarantee.

Since 1994, the dispute whether the imported machinery is manufactured locally or not has yet not been resolved in certain cases as per SRO.367(I)/94. The pending cases regarding import of disputed machinery/equipment involve huge amount of revenue, sources added.

The CBR on Sunday issued instructions to collectors of customs to direct these companies to immediately pay the outstanding liabilities by May 14, 2004. In case, the defaulters failed to deposit the amount after expiry of due date (May 14), the customs would stop the clearance of disputed consignments imported by these companies.

In this connection, the CBR has sought help of the Director-General, Petroleum Concessions, Ministry of Petroleum, for prompt recovery of outstanding dues.

As per recovery procedure, each collectorate of customs would constitute committees headed by an additional collector to compile the total liability of 'E&P' companies/ contractors/ sub-contractors, including service companies. The importers would be given full opportunity to reconcile the figures with the collectorates.

The CBR has also directed the collectors to personally oversee the entire exercise and make all out efforts to ensure recovery from these companies.

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