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Duty free import of spares & equipment allowed for balancing-modernization-replacement

Nov 26 - Dec 02, 2001

With a view to facilitate industrial and manufacturing units to upgrade and expand the production capacity, the government has allowed duty free import of over 1000 items including spares and equipments that required for the purpose.

In order to check possible misuse of the facility, the duty exemption has been tied up with certain conditions, which also aim at pushing the manufacturing sector in the direction of producing more export surplus in the country.

The textile industry already working with a large number of used manufacturing units was demanding for financial allocation for BMR purpose and permission to import spares and equipment from India which is cheaper as compared to other countries. However there was no identification of the countries for the import of the exempted items which means the importers are free to import from the country of their choice. In order to remove this ambiguity the notification is required an amendment clarifying a clear position regarding import of machinery from India.

Around 1000 different types of mechanical appliances, transmission apparatus, plant, machinery, spare parts, electrical equipment other relevant components used for the expansion, balancing, modernization and replacement of industrial units or setting up a manufacturing unit have been exempted from import duty.

The exemption would be available on the import of such machine-tools, spare parts, sound recorders and reproducers, machines for preparing textile fabrics etc, electrical machinery, agricultural and harvesting machinery and accessories of all such articles, not manufactured locally, under the rules and regulations laid down in SRO 5540/98 of June 12, 1998.

A large number of consignments already lying at different ports would also benefit from this scheme. Earlier the facility was not applicable for consignments in the pipeline but this has been extended to these items also.

The decision would release thousands of spare parts consignments worth billions of rupees, against submission of indemnity bond, which have been lying at various ports for clearance by the customs authorities.

Under the notification, the importers now can claim exemptions of custom duty on the import of the following items, which were imported for initial setting, expansion, balancing, modernization and replacement if not manufactured locally.

The items exempted are identified as Electric motors and generators (excluding generating sets), electric generating sets and rotary converters; parts suitable for the solely or principally with the machines. Electrical transformers, static converters for example rectifiers and inductors, electromagnets, permanent magnets after magnetization, electromagnetic, primary cells and primary batteries, electric accumulators, including separators therefore whether or not rectangular) including square, electromechanical tools for working in the hand, with self-constrained electric motor, Electro-mechanical domestic appliances, with self-contained electric motor, reception apparatus, insulating fitting for electrical machines, transmission shafts and cranks, auto-matic goods-vending machines, machines and appliances having individual functions, office machines, machinery for sorting, screening, printing machines, book-binding machines, lifting, handling and loading machines, ships, derricks, cranes, boilers and other over 1000 items specified in Chapter 84-85 of the Pakistan custom Tariff. However the importers would be required to meet following conditions to avail this facility. The importer would at the time of importation, by documents in his possession, satisfy the Collector of Customs that the machinery or spares have been imported for setting up a manufacturing unit in bond and shall furnish an indemnity bond in the form set out below to the extent of customs duty and sales tax exempted under this notification.

The said indemnity bond should discharged on production of a certificate from the Assistance Collector, Customs and Central Excise or in the case of a unit located in Azad Jammu and Kashmir or Northern Areas, from the Secretary, Kashmir Affairs and Northern Affairs division or an officer authorized by him in this behalf to the effect that the machinery of spares as declared to the customs has been duly installed or used in the bonded premises and such other evidences as the collector of customs may require and after such inquiry as he deems fit in order to establish such installation.

The machinery or spares released under this notification would not within a period of five years from the date of filing of bill of entry for home consumption relating thereto be used for any purpose or at any place other than for a manufacturing units in bond. In case the condition is violated the amount of customs duty and sales tax exempted may be imposed in this behalf shall be recovered under section 202 of the Customs Act 1969.

The export targets have to be achieved by industrial or manufacturing unit from the date of installation of the machinery or equipment and upto a period of five years.