Export Facilitation Scheme 2021 - SRO 957(I)/2021

GOVERNMENT OF PAKISTAN

REVENUE DIVISION

FEDERAL BOARD OF REVENUE

***

Islamabad, the 30th July, 2021.

NOTIFICATION

S.R.0.152/2021.- 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), the Federal

Board of Revenue is pleased to direct that the following further amendments shall be made in the

Customs Rules, 2001, which, as required under sub-section (3A) of the said section 219, were

previously published vide Notification No.S.R.O. 902(1)/2021, dated the 9th July 2021, namely:-

In the aforesaid Rules, after Chapter XXXIX, the following new Chapter shall be added

1h

from the 14 August 2021, namely:-

"Chapter XL

Export Facilitation Scheme 2021

1. 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 Export House and users of export schemes under SRO 450(1) 2001

dated 18.06.2001 Chapter )(V, 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

Engineering Development Board (EDB):

Provided that acquisition of banned or restricted items shall be subject to prior

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,

1

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

these goods;

"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 the Customs Act, 1969 or as approved by the 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;

(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 Export House or from the licensees of S.R.0 450(1)/2001,

dated the 18th June, 2001, Chapter XV, DTRE or S.R.0 327(1)/2008, dated the 29th

March, 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 Pakistan Credit

Rating Agency rating of "AA";

"international toll manufacturing" means an arrangement wherein a foreign

principal provides input goods to an exporter to produce finished goods for

subsequent export;

"large export enterprise" means an export unit having export quantum above five

million US dollars per annum;

2

"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;

"Pakistan Single Window (PSW)" means a facility as defined under clause (m)

of section 2 of the Pakistan Single Window Act, 2021;

"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 783;

"user" means a person authorized to utilize this scheme; and

"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.

1. 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

as indirect exporters;

manufacturers including manufacturers of engineering goods who intend to supply

against international tenders; and

(1) Common Export House:

3

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.

1. 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.

1. Categorization of exporters. - (1) For the purpose of this chapter exporters shall

be treated as per the f011owing 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-cum-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.

(2) All existing users of any of export schemes issued under S.R.0 450(1)2001, dated

18.06.2001, Chapter XV, DTRE, S.R.0 327(1)2008, dated 29.03.2008, before issuance of these

rules shall be eligible to be classified under the respective category, as the case may be, provided

they have a good compliance record.

4

(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 percentage

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 % 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.

1. Application for authorization.- Any applicant covered under rule 872 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;

5

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.

1. 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

manufacturers with self-owned manufacturing facility and Revolving Insurance

Guarantee for manufacturers with rented production facility and commercial

exporters, covering their annual requirement; and

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.

6

1. 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.

Subject to rule 898 (2), in case the applicant is the existing user of any of the

previous export schemes like S.R.0 450(1)2001, dated 18.06.2001, Chapter XV, DTRE and

S.R.0 327(1)2008, dated 29.03.2008, and intends to shift to Export Facilitation Scheme, 2021,

he may be considered for authorization by the Regulatory Collector under these rules subject to

his satisfaction and satisfactory compliance history under previous schemes. If the applicant has

stocks of input goods imported under any of the previous schemes, he shall declare description,

PCT, quantity and value of the stocks, at the time of application and the Regulatory Collector

shall upload the same in Web0C or PSW against the authorization of the applicant.

Subject to rule 898 (2), the online application along with approved Analysis

Certificate, of all existing users of export promotion schemes under SRO 450(1)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 or 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

database and are acceptable to the applicant. In case the input goods or output goods are not

7

covered in any Analysis Certificate issued previously, he shall refer the case to IOCO 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

or 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 and 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.

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

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