Amendment in Customs Rules, 2001

GOVERNMENT OF PAKISTAN

(REVENUE DIVISION)

FEDERAL BOARD OF REVENUE

*

Islamabad, the 28th June, 2010.

NOTIFICATION

(CUSTOMS)

S.R.O.601(I)/2010.— In exercise of the powers conferred by

section 219 of the Customs Act, 1969 (IV of 1969), the Federal Board of

Revenue is pleased to direct that the following further amendments shall be

made in the Customs Rules, 2001, namely:–

In the aforesaid Rules,––

(a) in rule 342, for clause (i), the following shall be substituted,

namely:–

―(i) "manufacturing bond" means a premises having a proper

boundary wall, with clearly defined areas of,––

(a) bonded warehouse;

(b) manufacturing facility; and

(c) other stores, licensed by the Collector under

rule 343;‖;

(b) in rule 343,––

(i) in sub-rule (2) and (3), for the word ―seven‖ the word

―fifteen‖ shall respectively be substituted; and

(ii) in sub-rule (3), after the word ―verification‖ the words

―and premises survey‖ shall be inserted;

(c) in rule 346, after the words ―three years‖ occurring for the

second time, the words ―before every expiry date‖ shall be

inserted;

(d) in rule 349, in sub-rule (4), after the word ―exit‖ occurring for

the second time, the bracket and words ―(except for

emergency evacuation)‖ shall be inserted;

(e) in rule 350,––

(i) for sub-rule (4), the following shall be substituted,

namely:–

―(4) Input goods imported or procured locally

by a manufacturing bond licensee shall be

consumed within a period which shall run from

the date on which the imported goods are

placed under the manufacturing bond

procedure. The period will be established by

the Collectorate concerned on the basis of the

time required to carry out the processing

operations and dispose of the compensating

products, as established in the Analysis

Certificate. The period will not in any event

exceed two years from the date of in-bonding

or procurement of locally purchased goods. For

duly justified reasons, extension may be

granted for another one year by special written

approval of an officer not below the rank of

Additional Collector of Customs:

Provided that palm oil or olein shall be

consumed in the manufacture of goods meant

for export within six months from the date of

filing of Goods Declaration or procurement of

locally purchased goods.‖; and

(ii) in sub-rule (5), for the word ―three‖, the word ―two‖

shall be substituted;

(f) in rule 351,––

(i) for sub-rules (1) and (2), the following shall be

substituted, namely:–

―(1) The licensee shall apply to the Collector,

within fifteen days of issuance of

manufacturing bond license, or sixty days

before the first export of finished goods, for

issuance of an Analysis Certificate as set out in

Appendix-III showing the input and output ratio

of input goods vis–a–vis finished goods along

with wastages. The licensee shall also submit

samples of product and its input material.

(2) The Collector or the officer authorized by

him in his behalf, might request verification of

such inputs from an independent laboratory or

authority as he deem fit and in any event carry

out a detailed survey of manufacturing facility

to check and verify the actual input/output

ratios. On the basis of the afore-mentioned

procedure, the Collector or the officer

authorized by him in his behalf shall issue an

Analysis Certificate within fifteen days of

receipt of the verification results or of the

detailed survey, as the case may be, showing

the actual quantity of input goods used and

wastage occurred in the manufacture of one

unit of finished goods.‖; and

(ii) after sub-rule (5), the following new sub-rules shall be

inserted, namely:–

―(6) Improved efficiency of the manufacturing

operations may lead to improvement in

consumption of input or output ratios, the

licensee shall declare the excess material at

the end of the relevant year to the Customs

authorities. The concerned Collectorate can

allow, in writing, the consumption of such

excess input material during the subsequent

period, provided that the warehousing period is

complied with.

(7) The input or output ratio for the period

thereafter shall be amended in accordance

with the newly established input or output ratio

provided that the improvement is beyond one

per cent. If the change in input or output ratio is

within one per cent, the input or output ratios

shall remain unchanged but the excess

materials shall be declared by the licensee to

the Customs every year in accordance with

sub-para (6). The input or output ratio shall in

any event be revised every three years.

(8) If due to lower efficiency, the input or output

ratio is less than that approved by the Customs

authorities, licensee will have no right of

refund. The input or output ratio shall in any

event be revised every three years.‖;

(g) in rule 352, for sub-rules (2) and (3), the following shall be

substituted, namely:–

―(2) Item-wise record of input goods received,

manufactured and exported shall be maintained in the

format as set out in Appendix-IV to this chapter, which

shall be examined, stamped and signed by the

supervising Customs official every month:

Provided that one copy in the form of quarterly

return in the same format as Appendix IV shall be

submitted to the Collector before the tenth day of the

following quarter. Such quarterly return should show

the item-wise opening balances, accumulated inwards

during the quarter, accumulated issued for

manufacturing facility, accumulated production of

finished goods, factory rejects, wastes or losses,

accumulated exports and or removals and remaining

balances at the end of the quarter.

(3) The export of finished goods shall be made

against,––

(i) the bill of export prepared by the

licensee of manufacturing bond or his

representative and endorsed as " Export

from Manufacturing Bond‖;

(ii) a consumption sheet showing the

imported inputs consumed for relative

finished goods, providing for import

consignments reference numbers.

The Customs official examining the goods for

release before export shall strictly check and

verify the records of inputs consumed for the

export goods.‖;

(h) for rule 361, the following shall be substituted, namely:–

1. Stock taking of goods lying in a warehouse.-

An appropriate officer of customs, authorized by the

concerned Assistant Collector of Customs, shall

conduct stock taking and detailed audit of a

warehouse as and when so directed but at least once

in a year. The auditors specifically will examine the

mandatory requirements of the scheme, availabilities

of all prescribed records set out in this scheme, input

or output ratios actually consumed for the

manufacturing of finished goods, opening stocks of

the year, inward or outward input goods during the

year, finished goods stocks, wastages or rejects

(losses during the year if any), due approvals of the

Customs authorities, and shall submit its findings or

report to the concerned Collectorate and a copy

thereof to the licensee for his records.

361A. Local procurements.– The local

procurements should be kept separately and

identifiable to Customs authorities. However, during

manufacturing process, the local procurement of

same characteristic or specification or identical inputs

(as imported) can be consumed simultaneously in the

production facility with separate internal records of the

Company verifiable to the Customs authorities during

routine check-up and periodical audits. It is however

required that entries in the stock records shall allow

the Customs authorities to monitor the precise

situation of all goods under the arrangements at any

time.‖;

(i) in Appendix-III,––

(i) for item 4, the following shall be substituted, namely:–

―4. Details of the input goods to be used for the

manufacture of the finished goods: