‘Changes in Customs Act to facilitate direct transfer of duty drawbacks to exporters’

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ISLAMABAD: Adviser to Prime Minister on Commerce and Investment Abdul Razak Dawood said on Tuesday that changes in the Customs Act would facilitate the transfer of duty drawbacks to the bank accounts of exporters.

He said this while chairing a meeting on duty drawbacks at the Ministry of Commerce.

Reviewing the progress on interventions by the Ministry of Commerce, the adviser emphasized that the duty drawback is neither an incentive nor a subsidy, rather it is an established right of the exporters, which needs to be properly calculated and fairly assessed to reflect the costs borne for exporting the goods.

He added that duty drawback is an essential part of international trade which is covered under the World Trade Organization rules as well as the laws of the country.

During the meeting, the adviser was briefed on the progress on implementation of duty drawback rates recalculation exercise. It was informed that the Ministry of Commerce had earlier selected 11 sectors for recalculation, out of which duty drawback revised rates have been duly notified in three sectors, including leather hides, plastic goods and carpets. The exercise for the remaining 8 sectors is in the final stages and will be finalized shortly.

The changes in Customs Act 1969 and Customs Rules, which cover the procedures of payment of duty drawbacks, were also shared during the meeting. Under the amended act and rules, duty drawbacks will be directly credited to the bank accounts of the exporters by the State Bank of Pakistan. The calculation of the duty drawback amounts will be done by Pakistan Customs computerized System WeBOC without any human involvement based on Risk Management System. 

However, this requires a secure line for data sharing between Pakistan Customs database and State Bank of Pakistan, which is under process and would be completed in the next month.

It was further explained that under the new rules, all kinds of duties, including customs’ duty, additional customs’ duty, special customs’ duty and regulatory duty, will now be part of duty drawback. In addition, to make the process of calculation of rates of duty drawback hassle-free, IOCO Director General has been authorized, through change of rules, to calculate the rates at 6HS or 4HS Codes instead of detailed exercise at 8HS Codes level if the variation is within 10% in a particular sector.

Commenting on the amended rules, Abdul Razak Dawood reiterated that use of locally produced raw material may be incentivized to reduce reliance on imported goods and to boost industrialization in the country.

At the end of the meeting, Dawood desired that after the completion of the exercise in 11 sectors, the focus should be shifted to developmental sectors including Chemicals, Engineering, Iron & Steel, Ceramics and Pharmaceuticals. He further directed his team to prepare a plan for the entire exercise, which would be shared with businessmen for their feedback.

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