Pipeline project machinery import: Revenue Board proposes amendments to SRO for duty and sales tax r

ISLAMABAD (January 17 2003) : The Central Board of Revenue has proposed amendments in the SRO regarding exemptions of customs duty and sales tax on imports of machinery and equipment for white oil pipeline project, sources told.

The CBR has stated that there is some error in the SRO issued in this regard and asked the ECC of the Cabinet to allow necessary amendments in this respect.

The CBR, giving the brief of the proposal, stated that the machinery, equipment, materials, accessories, spares, chemicals and consumables, as were not manufactured locally, whether imported on permanent basis or temporarily for the oil pipeline projects, were exempted from whole of the customs duty and sales tax vide SRO 236(I)/98 dated 4th April 1998.

The said SRO was issued as consequence of the ECC's decision on 27.1.1998 on a summary moved by the Ministry of Petroleum and Natural Resources.

This exemption was given in order to reduce the up-front capital cost of the projects and to give benefit to GOP in getting quotation of lower tariff which otherwise would have been adjusted by the investors to recover the increased capital cost.

In view of the government's commitment to reduce the number of concessionary SROs, an exercise was carried out during the budget 2002-03 to combine the concessions available to all petroleum sector projects under various notifications into a single SRO.

As a consequence, SRO 236(I)/98 was merged into SRO 367(I)/94, dated 9.5.1994, it further stated.

The CBR said, while merging the SROs, “permanent imports” of machinery, and equipment etc, for pipe-line projects covered under SRO 236(I)/98 escaped attention and therefore did not find place in the existing SRO 367(I)/94 whereas “temporary imports” were included in the said SRO.

The CBR is of the view that the aforesaid inadvertent omission, concessions available to permanent imports of machinery and equipment etc, for white oil pipeline project being executed by M/s Pak Arab Pipeline Company were adversely impacted.

In order to undo this error, it is proposed that the exemptions previously available to “permanent imports” under SRO 236(I)/98 may be restored by making necessary amendments in SRO 367(I)/94 dated 9.5.94.

Sources said that the Ministry of Petroleum and Natural Resources and Ministry of Finance have also agreed to the proposal.

The ECC of the Cabinet would consider the proposal in its meeting likely to be held in the last week of the current month.

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