ISLAMABAD, Aug 27: The Federal Board of Revenue (FBR) has notified procedures for import of raw materials on zero per cent to be used in the manufacturing of eighteen products.
The procedures were notified through a sales tax notification SRO863 of 2007 released here on Monday.
The products the duty on raw materials to be exempted includes - colours in sets, writing, drawing and marking inks, erasers, exercise books, pencils sharpener, geometry box, pens, ball pens, markers and porous tipped pens, pencils including colour pencils, milk including flavoured milk, yogurt, cheese, butter, cream, desi ghee, whey, milk and cream, concentrated and added sugar or other sweetening matter, preparations for infant use put up for retail sale and fat filled milk.
The conditions notified for availing the facility includes - a sales tax registered manufacturer having suitable in-house facilities shall submit a complete list in the format prescribed in Annex-A of his annual requirement of items (inputs) he intends to import or purchase locally for the manufacture of goods.The collector shall accept the declaration of input output ratio of the manufacturer without any physical verification in case the declared input/output ratio and raw material requirement is in accordance with the prevailing industry average or the raw material consumption pattern of the applicant manufacturer.
In case the collector is not satisfied with declared input output ratios of the items to be manufactured because of their being prima facie not in accordance with the prevalent average of the relevant industry or for any other reason, he may, after allowing a six months provisional quantity, make a reference to the IOCO for final determination thereof.
On receipt of report from IOCO the Collector shall then determine the final annual quantitative entitlement of inputs and grant him final approval for zero-rated purchases or imports. In case of non-receipt of report from IOCO within four months of the application made by the manufacturer, the collector shall provisionally allow another six months quantity to the applicant manufacturer.
In case of goods to be imported by the registered manufacturer the authorised officer of Sales Tax Collectorate shall furnish all relevant information online to Customs Computerised System (PACCS); where a registered person supplies goods to registered manufacturer of goods, he shall issue a zero rated invoice.
A registered person will be entitled to claim refund of input tax paid on utilities and such inputs (goods and services) which are purchased by him after payment of sales tax, (vi) the manufacturer shall maintain records of the inputs and the goods manufactured from imported or local inputs; the input goods allowed shall be consumed within 12 months of purchase or import thereof and the consumption period shall start from the date of purchase or import of input goods.
However, the input goods shall be purchased or imported before the expiry date of the approval. The manufacturer shall communicate to the concerned Collector of Sales Tax in writing about the consumption of imported or locally procured items within ninety days of consumption of goods.
The indemnity bond shall be released on receipt of written confirmation regarding consumption of goods by the manufacturer. In case of non-consumption within the period mentioned in the approval from the date of import or local purchase, the registered manufacturer shall pay the sales tax involved or obtain extension from the Collector of Sales Tax and Federal Excise under intimation to collector of customs.
The collector of sales tax and federal excise whenever deemed necessary but not more than once during a calendar year may get the records of the registered manufacturer audited. In case it is found that the inputs have not been properly accounted for or consumed for the manufacture and supply of goods as prescribed, the collector may initiate proceedings for the recovery of leviable sales tax on unaccounted inputs besides penal action.