Export Facilitation Scheme 2021 - Draft of certain further amendments in Customs Rules, 2001
GOVERNMENT OF PAKISTAN
REVENUE DIVISION
FEDERAL BOARD OF REVENUE
***
th
Islamabad, the 9 July, 2021.
NOTIFICATION
S.R.O. 102(I)/2021.- The following draft of certain further amendments in the Customs Rules,
2001, which the Federal Board of Revenue proposes to make in exercise of the powers conferred
by section 219 of the Customs Act, 1969 (IV of 1969), section 50 of the Sales Tax Act, 1990,
section 40 of the Federal Excise Act, 2005 and section 237 of the Income Tax Ordinance, 2001
(XLIX of 2001), is hereby published for information of all persons likely to be affected thereby
and, as required under sub-section (3A) of section 219 of the Customs Act, 1969 (IV of 1969),
notice is hereby given that objections or suggestions thereon, if any, may for consideration of the
Board be sent within fifteen days of publication of the draft amendments in the official Gazette.
Any objections or suggestions which may be received from any person, before the expiry of the
aforesaid period, shall be taken into consideration by the Federal Board of Revenue, namely:-
DRAFT AMENDMENTS
On the aforesaid Rules, after Chapter XXXI, the following new Chapter shall be added,
namely:-
Chapter XXXII
Export Facilitation Scheme 2021
- Definitions.- In this chapter, unless there is anything repugnant in the subject or
context,-
(a) "acquisition" means import or purchase of foreign origin goods from authorized
user, common bonded warehouse, common export house and users of export
schemes under SRO 4500) 2001 dated 18.06.2001 Chapter XV, DTRE, SRO
327(1)2008 dated 29.03.2008, including banned or restricted items or
procurement of locally manufactured goods and taxable or excisable services
covered under this Chapter, including energy sources such as coal, coke of coal,
carbon blocks, diesel, furnace oil or gas etc. for in house energy production or
use in the manufacturing process and also includes Engineering Goods as
classified under chapter 72 to 96 or as approved by EDB:
Provided that acquisition of banned or restricted items shall be subject to prior
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permission from the Ministry of Commerce;
"Act" means the Customs Acts, 1969 (IV of 1969), the Federal Excise Act, 2005,
the Sales Tax Act, 1990 and the Income Tax Ordinance 2001(XLIX of 2001)
"analysis certificate" means a certificate issued by the Regulatory Collector or
the Director Input Output Co-efficient Organization (I0C0) as the case may be,
either manually or electronically, showing input and output ratios of input goods
vis—a—vis finished goods along with wastages, as per Appendix II under these rules
"appendix" means an Appendix to this Chapter;
"applicant" means a person who files an application in the form set out in
Appendix I for grant of authorization under this chapter;
"commercial exporter" means a person engaged in purchase and export of goods
in the same state from the domestic market or from an indirect exporter and export
the goods either after packing or otherwise;
"Common Export House" means a warehouse authorized by the Collector under
this chapter, for import, warehouse and supply of input goods without payment of
Customs duty, Sales tax, Federal excise duty and Withholding tax, to the Small
and Medium export Enterprises, Direct or Indirect exporters or Commercial
exporters.
"corporate export enterprise" means an export unit registered with the SECP;
"direct exporter" means a manufacturer cum exporter who is exporting the goods
under the name of his firm or company;
"engineering goods" includes goods classified under Chapter 72 to Chapter 96 of
the First Schedule of Customs Act, 1969 or as approved by the Engineering
Development Board (EDB);
"export" includes supply of goods,—
by an indirect exporter to a direct exporter;
against international tenders either for local supply or supply abroad;
to projects or sectors entitled to import or purchase such goods free of duties
and taxes; and
to Export processing zones, and Gwadar free zone
ti\ (1) "indirect exporter" means a person who has a firm contract or export purchase
order from a direct exporter or commercial exporter for the manufacture and
supply of goods to such exporter;
"input goods" means goods whether imported or procured locally and includes
services eligible for acquisition. Such "import" includes the purchase of input
goods from a common bonded warehouse or from the licensees of SRO 450,
chapter XV, DTRE or SRO 327(1)2008, used in the manufacture of output goods,
as approved in the analysis certificate;
"insurance guarantee" means a guarantee issued by an insurance company
registered with the Ministry of Commerce and has a minimum PACRA rating of
2
,o
"international toll manufacturing" means an arrangement wherein a foreign
principal provides input goods to an exporter to produce finished goods for
subsequent export against a prescribed fee/service charges;
"large export enterprise" means an export unit having export quantum above five
Million US dollars per annum;
"manufacture" includes any process incidental, or ancillary undertaken in the
manufacturing of output goods under this Chapter;
"manufacturer" includes any person engaged in the process of manufacture and
duly authorized to do so under these rules, duly registered as manufacturer under
the Sales Tax Act, 1990;
"manufacturer-cum-exporter" means any person or firm registered under the
Sales Tax Act, 1990 as a manufacturer-cum-exporter;
"regulatory authority" means Additional Collector of Customs duly authorized
by the Collector to act on his behalf under these Rules;
"regulatory collector" means the Collector of Customs in whose jurisdiction the
place of business or manufacturing unit of the applicant, duly registered under the
Sales Tax Act, 1990, is located. In case an applicant has multiple manufacturing
facilities in different jurisdictions, the Collector in whose Jurisdiction, the head
office of the applicant is located shall act as the Regulatory Collector;
"small and medium export enterprise" means an export unit having export
quantum up to five million US dollars per annum;
"utilization period" means the period commencing from the date of import or
local purchase of the input goods to the—date of export of the output goods as
specified in rule 752;
"user" means a person authorized to utilize this scheme;
"vendor" means a person who is registered under the Sales Tax Act, 1990; and to
whom goods are provided by the authorized exporter under this chapter for further
processing towards the manufacture of output goods;
- Scope of the Scheme.— (1) This scheme shall be available to the following persons
subject to authorization of import, warehouse and purchase of input goods under these rules and
registration in the WeBOC or PSW:
persons registered under the Sales Tax Act, 1990, as manufacturer cum exporter,
who make value-addition in the manufacture and export of goods, which shall not
be less than ten per cent;
manufacturers who act or intend to act as contracted vendors of foreign principal
as toll manufacturers;
Commercial exporters;
persons registered under the Sales Tax Act, 1990, as manufacturer and operating
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as indirect exporters;
Manufacturers including manufacturers of engineering goods who intend to supply
against international tenders; and
Common Export House:
Provided that this scheme shall be allowed for the export of goods authorized under the
export policy order. In case of export of goods restricted or prohibited under the export policy
order, specific permission from the Ministry of Commerce shall be required.
- Authorization for acquisition of input goods. — (1) Acquisition of input goods
without payment of duty and taxes under these rules shall be granted based on:
export performance for last two financial years; and
firm contract of export.
The applicant can apply for authorization based on both performance and contract
basis simultaneously
An applicant having multiple contracts of export may apply for consolidated approval
for all such contracts
- Categorization of exporters: (1) For the purpose of this chapter exporters shall be
treated as per the following categories:
(i) Category A: Manufacturers cum exporters with 60% or above exports of their
total annual production in last two years.
(ii) Category B: Manufacturers/exporters with less than 60% total annual production
being exported, this category shall be further subcategorized as under
Category Bl: Manufacturers-cum-Exporters having more than 3 years of
export history.
Category B-2: Manufacturers-cum-Exporters having less than 3 years
export history.
(iii) Category C: Indirect exporter, Commercial exporters, and International Toll
manufacturers
Category Cl: Manufacturers having more than 3 years history of supplying
to direct exporters or export as commercial exporter or International Toll
manufacturing;
Category C2: Manufacturers having less than 3 years history of supplying
to direct exporters or export as commercial exporter or International Toll
manufacturing
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(2) All existing users of any of export schemes issued under SRO 4500) 2001 dated
18.06.2001 Chapter XV, DTRE, SRO 327(1)2008 dated 29.03.2008, before issuance of these
rules shall be eligible to be classified under Category A and Cl as they case may be, provided
they have a good compliance record.
(3) Category A and B shall include all Corporate, Non-corporate large and small, and
medium manufacturer cum exporters as the case may be.
(4) A manufacturer cum exporter with no export history, applying for authorization
under these rules with a firm contract of export shall be classified as per the claimed %tage of
production to be exported i.e., Category A or B, which shall be subject to review by the
Regulatory Collector after one year.
(5) An applicant showing a poor compliance profile, i.e., having one or more
contravention cases adjudged against him or having pending recovery cases or pending criminal
proceedings during the last three years, at the time of application, shall be downgraded for a
period of one year, as under
Table
Sr. No. Category as per %age of Category Allocation due to poor
export or export history profile for a period of one year.
(1) (2) (3)
1 Category A Category B1
2 Category B1 Category Cl
3 Category B2 Category C2
4 Category Cl Category C2
5 Category C2 No Authorization
(6) All exporters whose category has been downgraded under sub-rule (5), their
performance shall be reviewed by the Regulatory Collector after one year and in case good
compliance record during the year, the original category shall be restored. In case the
compliance record of the user at the time of review is again ascertained to be poor, the
authorization granted shall be suspended immediately and the Regulatory Collector may initiate
proceedings for cancellation of the authorization:
Provided that contravention cases involving procedural issues or individually or
collectively involving revenue less than Rupees five million, shall not affect the categorization
of the exporter.
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- Application for authorization.- Any applicant covered under Rule 741 of this
chapter and desirous of utilizing this facility may apply online to the Regulatory Collector, in the
WeBOC or PSW system, as per the prescribed format given in Appendix Ito this chapter.
(2) The application shall be supported by the following documents:
ISO certification if available
ownership documents in case of self-owned manufacturing facility;
in case of rented premises lease agreement of the manufacturing facility
covering the entire utilization period;
ownership or lease agreement covering the entire utilization period of the
office OR business premises in case of Commercial exporters;
copy of contract/contracts or supply order, in case of contract-based
application and Toll Manufacturing, if applicable;
bank Statement for last two years or from the date of
incorporation of the entity;
export performance supported by a summary of foreign exchange realized
through E forms if applicable;
list of the installed plant and machinery in case of Manufacturer-cum
exporter, indirect exporter and toll manufacturer etc;
approximate value of the input goods;
input-output ratio for the manufacture of one unit of output good; and
recommendation of respective Chamber of Commerce and Industry,
respective trade association or Small and Medium Enterprise Development
Authority (SMEDA) in case of small and medium exporters.
- Security Instrument for Authorization.- (1) The applicant shall submit a
security instrument equal to the duty and taxes being deferred OR remitted, on the approximate
value of input goods, during the authorization period along with the application as detailed
below:
Category A: Indemnity bond as set out in Appendix-III and PDC;
Category Bl: Indemnity bond as set out in Appendix-III and PDC for
manufacturer cum exporters with a self-owned manufacturing facility and
Revolving Insurance Guarantee covering their annual requirement, for
Manufacturer cum exporters with a rented production facility;
Category B2: Revolving Insurance Guarantee for manufacturers with self-owned
manufacturing facility covering their annual requirement, Revolving Bank
Guarantee for Manufacturers with rented production facility covering their annual
requirement till three years benchmark is crossed and graduating to B1 category;
Category Cl: Indemnity Bond as set out in Appendix-III and PDC for
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7.%
manufacturers with self-owned manufacturing facility and Revolving Insurance
Guarantee for Manufacturers with rented production facility and commercial
exporters, covering their annual requirement; and
(e) Category C2: Revolving Insurance Guarantee for manufacturers with a self-
owned manufacturing facility and Revolving Bank Guarantee for Manufacturers
with rented production facility and commercial exporters, covering their annual
requirement till three years benchmark is crossed and graduating to Cl category.
- Processing of Application for Authorization to use the scheme.- (1) The
application for authorization to operate under this scheme shall be submitted online to the
Regulatory Collector. The WeBOC or PSW system shall assign a unique identification number
to each application for authorization. In the case of goods other than same-state goods, the input-
output ratios and wastages under this chapter shall be declared by the applicant in the
application.
The online application along with approved Analysis Certificate, of all existing
users of export promotion schemes under SRO 4500) 2001 dated 18.06.2001 Chapter XV,
DTRE, SRO 327(1)2008 dated 29.03.2008, shall be processed by the Regulatory Collector by
uploading the approved value of the input goods along with the details of the security
instrument as applicable in the WeBOC/PSW system and IOCO database after satisfying himself
regarding the compliance profile of the applicant and the value of the input goods being
commensurate with performance and production capacity of the applicant, within seven days of
its receipt.
In case the application has new input goods or output goods, or the applicant
claims that there is change in the Input out ratio already determined due to any change in
technology, the Regulatory Collector shall refer the case to the Directorate General of IOCO or
the EDB as the case may be immediately after receipt of the application, for determination of the
Input-Output ratios within thirty days of the receipt of the application, showing the actual
quantity of input goods used and wastages occurred in the manufacture of one unit of output
goods. A new Analysis Certificate shall be issued and uploaded in the WeBOC OR PSW system
by the Director IOCO:
Provided that the exporters falling under "category A" can apply to the Regulatory
Collector, within seven days of the import of the goods or sixty days before the first export of
the output goods, for issuance of analysis certificate if not issued already, showing the input and
output ratio of input goods vis—a—vis finished goods along with wastages in the prescribed
format.
In case of an application by an exporter who was not using any of the export
promotion schemes prior to issuance of these rules, the Regulatory Collector shall in case of a
new application upload the authorization if the input output ratios already exist in the IOCO
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database and are acceptable to the applicant. In case the input goods or output goods are not
covered in any Analysis Certificate issued previously, he shall refer the case to 1000 for
determination of input out ratios and production capacity of the unit after satisfying himself
regarding the compliance profile of the applicant, within seven days of its receipt.
The IOCO shall commence processing of the case immediately. The Director
IOCO shall complete the exercise within thirty days of the date of the application. In case the
Regulatory Collector or the IOCO fails to process the application within thirty days, the
WeBOC/PSW system shall automatically allow acquisition against 100% of the value of input
goods involved as declared by the applicant provisionally, based on the declared input output
ratios. The provisional permission shall be subject to modification once the IOCO finalizes its
assessment of the input out ratios, the Director IOCO shall upload the authorized value in the
WeBOC OR PSW System
The IOCO after determining the Input/output ratios and production capacity of
the exporter will issue an "Analysis certificate" showing quantities of input goods required for
the manufacture of the one unit of output goods and the ratio of wastages.
The Director IOCO shall upload the value of input goods to be acquired by the
user. The Director IOCO may reduce the demanded authorization according to the production
capacity of the exporter.
Director IOCO may determine the production capacity through designating a
team comprising of at least two officials of IOCO, by visiting the manufacturing premises of the
applicant. Director IOCO may also acquire services of any third party including accredited
Chartered accountant firm or any other body recognized by the government of Pakistan to handle
industrial affairs for determination of production capacity, input-output ratios and wastages
including the Engineering Development Board
Tags and printed materials supplied by a foreign supplier without the involvement
of foreign exchange from Pakistan shall be allowed to be imported without any quantitative
restriction for the purpose of this Chapter.
(10) The IOCO shall establish a central database of all determination of input or output
ratios and wastages by it, as well as by EDB on a sectoral basis. The Regulatory Collector shall
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also upload all authorizations granted by him in the database without referring the case to IOCO.
No application shall be rejected without affording an opportunity of being heard
to the applicant. In case of rejection or disagreement with the input-output ratios, production
capacity or wastages determined by the Director IOCO, the applicant shall have the right to file a
review before the DG IOCO and in case of processing of application by the Regulatory
Collector, to the Chief Collector of Customs, which shall be decided within fifteen days.
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In the case of Contract based application where the applicant so demands, 50% of
the value of input goods demanded shall be allowed provisionally by the system at the time of
submission of application which shall be subject to final determination of input-output ratios and
production capacity of the applicant by the Director IOCO or the Regulatory Collector as the
case may be.
where the applicant claims that the contract is urgent and input goods are being
imported through air cargo exclusively, the system shall allow 100% of the value demanded
based on input output ratio claimed by the applicant, which shall be subject to modification once
Director IOCO or the Regulatory Collector may finalize the Analy