Customs collectors seek Revenue Board clarification in Duty and Tax Remission for Export rules

ISLAMABAD (July 30 2003) : The collectors of customs have raised ambiguities in the amended Duty and Tax Remission for Export (DTRE) rules hindering the collectorates from responding to exporters' queries.

Official sources told Business Recorder here on Tuesday that the collectors were unable to answer certain queries raised by exporters due to conflicting interpretations of DTRE scheme.

The custom officials have persistently claimed that the scheme would attract exporters, particularly commercial exporters, to switch over from standard duty drawback SROs to DTRE scheme.

On the other hand, collectorates of customs are confused while interpreting the rules and sought clarification from the CBR to resolve the matter.

The issue relates to the duty drawback rates applicable on utilisation of locally procured raw materials, overlapping of rules including other objections raised by exporters.

Sources said that CBR has started a countrywide exercise to ascertain whether all collectorates of customs are facing the same problems pertaining to the amended scheme.

Following ambiguities were raised by tax collectors in the DTRE scheme:

There are some issues in amended DTRE Rules on which conflicting interpretations have arisen which need clarification by the Board.

i. In rule 297-A(5)(b) the words “apportioned rate of duty drawback” have been used.

The Collectorate's interpretation is that the “apportioned rate of duty drawback” is the further percentage of standard rate of duty drawback on any item, equivalent to percentage of locally procured imported inputs utilised in an export item.

For example, rate of duty drawback on foot balls is 6.93 percent of the FOB; if 10 percent of the total inputs (duty paid) material has been procured from local market then according to this Collectorate, the apportioned rate of duty drawback in this case will be 0.693 percent of the FOB.

The Board is requested to confirm Collectorate's interpretation or otherwise.

ii. In rule 297-A(6), it has been mentioned that duty drawback on the input goods specified in Appendix-I (A) shall be admissible only after an exporter has fully discharged his liability as accepted under Rule 297.

The collectorate suggests that rule 298 should be mentioned herein instead of Rule 297 because liability of the exporter vis-…-vis goods imported under DTRE Rules has been determined in Rule 298.

iii. In rule 298, it has been laid down that if goods are not re-exported within 18 months, further extension of time period could be obtained on payment of 1 percent per month of the FOB, value of unutilised input goods.

It has further been mentioned that inputs whether imported or locally purchased not consumed within 18 moths shall be subjected to payment at the rate of 2 percent per month of the value of unutilised input goods.

The Collectorate is of the view that at first instance the word “FOB” should be replaced with the word “C.I.F”.

Secondly, collectorate's view is that contradiction exists in Rule 298 due to mentioning of two different rates ie 1 percent and 2 percent per month.

The CBR should clarify whether payment at the rate of 2 percent will be in addition to payment of 1 percent per month for the purpose of extension.

The Board is requested to guide the collectorates on these issues so that queries of the exporters could be answered properly, collectors added.

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