ISLAMABAD (January 24 2004): On the recommendations of different collectorates, the Central Board of Revenue (CBR) has announced new incentives under the Duty and Tax Remission of Export (DTRE) Rules, removing some problems faced by exporters during transactions on daily basis.
Sources told this corespondent here on Friday that the Collector of Customs (Exports), Karachi, and other collectorates have raised certain DTRE-related issues impeding day to day operations under the scheme.
The CBR discussed the bottlenecks with the Collector (Exports), Karachi; Collector of Customs, Lahore and Director, Input Output Coefficient Organisation (IOCO), Karachi, and has issued clarification on the same.
One issue raised by Collector, Export, Karachi, was that certain manufacturing units had requested to clarify if goods like generators, engines, electronic equipment which can be used as accessories in the finished products to be exported but they can also be utilised as individual entities can be cleared as input goods under DTRE rules.
The CBR has directed all collectors that release of generators, engines, electronic equipment and similar items as input goods may be allowed where such goods are integral part of the finished products intended to be exported under the DTRE scheme.
The collectors pointed out that CBR has authorised collectors to give approval for DTRE registration through an amendment in Customs General Order (CGO) 12/2002.
Earlier, collectors were the reviewing authority in case DTRE application was rejected. However, presently it is not clear as to who is going to review a DTRE application rejected by the collector.
The CBR issued instruction to collectors that applicants should be given reasonable opportunity of hearing before issuing a final speaking order for rejection of the request for DTRE approval.
The applicant could file an appeal against the order of collector. Applicant may also apply to CBR for redressal if application is rejected without cogent reasons.
The collectors questioned that in most of the cases the persons operating under DTRE scheme requested for clearance of consignments which had arrived at ports and bill of entry thereof had been filed machine numbered prior to issuance of approval to operate under the scheme.
The CBR informed collectors that goods may be allowed clearance if application for DTRE has been received before filing of bill of entry and benefit is claimed with reference to application for DTRE, provided the DTRE approval is produced before the release of goods from Customs.
The collector raised question that under rule 296 (f) and 297(1) (I) input goods under DTRE scheme can only be procured for manufacture of goods only.
Many exporters requested to opt for DTRE for local procurement of raw cotton to be exported after its packing in 'hessian' cloth.
The CBR opined that packing and re-packing are included in the definition of 'manufacture' under both sales tax and central excise laws. However, the applicant has to have such in-house facility.
The collectors further asked the authorities that DTRE approvals granted for import of packing material/finished cartons for food items etc involve very low value-addition.
In the past, DSAO had raised objections on low value-addition in DTRE approvals.
On this issue, the CBR was of the view that value-addition should be reasonable and in line with the average value-addition of the relevant industry.
The collectors sought clarification on the issue whether goods can be exported to tariff area from Export Processing Zone (EPZ) under DTRE approvals.
The CBR clarified that procurement of input goods from EPZ is admissible under DTRE scheme provided Ministry of Commerce grants NOC.
Raising an ambiguity in the DTRE scheme, the collectors said that rule 45 (5) of customs general order (CGO) 12/2002 provides, “The designated Additional Collector should be notified to all collectors along with a specimen of his signature and stamp”. However, rule 45 (7) of the same CGO provides that notification of DTRE approvals to be circulated to all collectors of customs and sales tax shall be signed by Assistant/Deputy Collector. Thus, there is a clear contradiction in rules.
The CBR clarified that CGO 12 of 2003 has streamlined the position regarding circulation of names of newly DTRE registered persons to the collectors. DTRE applications are to be examined by the designated Assistant/Deputy Collector who shall submit his findings to the Collector through the concerned Additional Collector, who may add his views, if any.
The final decision taken by the Collector shall be conveyed to the applicant by the said Assistant/Deputy Collector who shall sign the DTRE approval in the prescribed manner. Therefore, his specimen signatures need to be circulated to all Collectors.
The collectors raised another question whether remission of sales tax alone under rule 297-B is available on imported goods.
The CBR answered that remission of sales tax alone can be claimed under rule 297-B of the DTRE rules on the procurement of input goods and the DTRE approved persons shall be entitled to full duty drawback under the relevant duty drawback notification on his duty paid inputs provided the conditions laid down in the aforesaid rules are met.
According to collectors, manufacturers are allowed clearance of goods against 'I.B'. or 'P.D.C' under rule 297 (2). This criterion should not be fixed and the approving authority may be authorised to ask either of the two depending upon profile of the exporter.
The CBR clarified that the Collector, in exercise of his discretion based on cogent reasons, may ask for any one of the security instruments prescribed in rule 297 of DTRE scheme.