KARACHI, Dec 31: In the absence of proper guidelines and criteria from the Ministry of Commerce for determining rule of origin of 15 CNG-dedicated buses imported from the United Arab Emirates (UAE) for urban transport are awaiting clearance at the Karachi Port for the last five months.

A private party in the first phase imported 15 CNG-dedicated buses of UAE-origin for the city government’s urban transport scheme, but were detained on the objection from an assessment committee set up by the customs that 65 per cent of the components of these buses are of Indian origin.

Therefore, the committee suggested that buses be treated as that of Indian origin which can’t be imported.

The Karachi city government plans to introduce CNG dedicated buses to facilitate commuters not only by providing lower fares, but also to ensure comfortable mode of transport for which the company is likely to import around 250 CNG dedicated buses.

For sorting out the issue, the customs authorities also referred the issue to commercial counsellor of Abu Dhabi (UAE) to verify the origin of the buses. The commercial counsellor visited the manufacturing facility of these buses in Mussaffah Industrial Area, Abu Dhabi, and confirmed that the subject buses have been manufactured by M/s TCL, Abu Dhabi.

Giving other details of his investigation, the counsellor said that in value terms the contribution of Indian parts in the green CNG buses ranges between 30 and 35 per cent.

The assembly of the whole body parts is, however, done by M/s TCL Abu Dhabi.

In the meantime, the commerce ministry has asked the commercial counsellor in Dubai to give his input with regard to the buses which may help determine the origin.

In his reply to the MoC, the counsellor raised a number of issues and also pointed out that since there was no Preferential Trade Agreement and Free Trade Agreement between Pakistan and UAE, therefore, no preference can be allowed in the matter of origin. So Pakistan customs was in a better position to take action in this matter.

During meetings with the director-general Sharjah Chamber of Commerce and director of ministry of economy, the Pakistani commercial counsellor based in Dubai pointed towards a number of grey areas in the break-up of the value-addition provided by the company to commercial counsellor, Abu Dhabi in which value-addition had been claimed at 65.15 per cent.

The Federal Board of Revenue (FBR) directly approached the Ministry of Commerce to provide them the guidelines with regard to “origin” so that the issue of detained CNG buses could be resolved.

In response to the FBR’s query, the MoC also repeated the findings of Pakistani commercial counsellor based in Dubi.

As per his findings, no buses are manufactured in the UAE and there could be some arrangement for assembling or fabricating bus bodies.

The MoC also informed the FBR that 40 per cent value-addition was required to claim the origin of UAE and that issuance of certificate of origin was the domain of ministry of Economy, UAE and not with any chamber as was done by Sharjah Chamber of Commerce.

It was also disclosed by the MoC that investigations relating to value-addition by the UAE though were not finalised, the commercial counsellor Dubai considers that it was 29.75 per cent (i.e. less than 40 per cent).

The MoC also suggested to the FBR to set up a committee of senior customs officers, if it feels so, and conduct an inquiry at Dubai and Abu Dhabi to ascertain all the facts before taking a final decision.

However, the FBR, taking strong exception of the MoC’s reply and suggestions, pointed out that the MoC is silent on the issue raised by the Board with regard to criteria that would be followed to determine the question of “origin” of impugned CNG buses which have partly been manufactured/assembled in the UAE form the chassis, engine and other components imported from India.

The FBR was also critical about the proposed course of action by the ministry relating to determination of the value-addition for conferring origin whereas the core issue for which guidance from the MoC was solicited related to the question as to what would be the basis for conferring “origin” in case of non-preferential trade and in the absence of any rule of origin on the subject.

The board pointed out to the MoC that determination of “value-addition factor” alone would not resolve the issue in question.

Left in utter confusion, the FBR asked the MoC to provide guidelines for the criterion, to be followed for conferring origin in case of non-preferential trade and also advise the commercial counsellor to conclude his investigations relating to value addition by the UAE manufacturer.