Pakistani textile exporters allowed duty drawback of taxes

The Pakistan Ministry of Textile Industry under the prime minister’s package of incentives has allowed duty drawback of taxes for exporters. The duty drawbacks under this order shall be allowed for exports GDs, filed on or after Jan 16, 2017 to June 30, 2017. Further, duty drawback of taxes under this order shall be allowed for exports GSs, filed on or after July 1, 2017 to June 30, 2018, if the exporter would achieve an increase of 10 percent or more in exports over 2016-17 exports.

The notification issued states that in pursuance of entry 7 of item 39 of Schedule II of the Rules of Business, 1973 under the Prime Minister Package of Incentives for Exporters approved by Economic Co-ordination Committee (ECC) of the Cabinet in order to provide duty drawback of taxes collected from garments, home textiles, processed fabric, greige fabric and yarn manufacturing-cum-exporters units, the ministry is pleased to make the following order, namely “Duty Drawback of Taxes Order 2016-17.”

Elaborating, the notification says that it extends to the whole of Pakistan, including Export Processing Zones. It shall come into force at once. The duty drawbacks under this order shall be allowed for exports GDs, filed on or after Jan 16, 2017 to June 30, 2017. Further, duty drawback of taxes under this order shall be allowed for exports GSs, filed on or after July 1, 2017 to June 30, 2018, if the exporter would achieve an increase of 10pc or more in exports over 2016-17 exports. The procedures for applying for claims of shipments made during 2017-18 will be notified in the month of July 2017.

The duty drawback shall be provided to manufacturing-cum-exporting units on exports of products under specific tariff codes of the Pakistan Customs Tariff at specified rates.

The drawback shall be available only to manufacturing-cum-exporting units. The units availing the drawback shall be registered with the Ministry of Textile Industry. The unit availing the drawback shall be a registered sole proprietor, partnership or a company and shall be a member of a textiles association, registered with the Directorate of Trade Organisations, Ministry of Commerce. The units shall furnish data and any information relating to its operations, domestic sales, accounts and exports as and when required by the Ministry of Textile Industry.

Each textile association shall be responsible for certifying the authenticity of information provided by the exporting units pertaining to application documents for claims. The association concerned shall exercise due diligence in ensuring authenticity of the documents.

Only notified executive members of the association shall be eligible for verifying the claim documents. The units shall file claims for the incentive in the form as specified this and get online verification on the form from the respective association of which the unit holds valid membership. Submit the printouts of the form duly certified by the association and supporting documents as mentioned, within 90 days of the date of realisation of export proceeds to the field offices of the State Bank of Pakistan – Banking Services Corporations (SBP-BSC) – through nominated authorised bank.

The units shall declare the association for processing claims relating to the product being exported. The association once designated for a product by the unit shall not be changed subsequently. The authorised banks shall scrutinise the claim forms and submit the same, duly certified with an undertaking, in the form specified to this order, to the field offices of the SBP-BSC during banking hours.

The admissible duty drawback payment as approved by the field offices of the SBP-BSC shall be made by crediting the account of the authorised bank after allocation of funds by the Ministry of Finance, which shall pay the amount to the unit within 24 hours. In order to avoid delay or rejection of the duty drawback claim, the authorised banks while certifying the e-form, shall ensure that the description of the commodity is recorded in the e-form and the invoices is correct and corresponds with the nomenclature given in Pakistan Customs Tariff 2016-17. Authorised banks, while forwarding applications for payment of drawback shall affix rubber stamp at the top of the copy of the relevant e-form with the following narration, namely: “Applications for Duty Drawback of Rs ___submitted to field office, SBP-BSC vide forwarding scheduled No. dated _at serial No. For manual bill of exports, the unit shall affix a stamp at the top of the copy of the Goods Declaration Form (containing examiner”s report and MR dated) prescribed under the Customs Act, 1969 (IC of 1969), the following narration, namely: “Duty drawback as notified shall be claimed for this consignment.” Applications containing discrepancies shall be returned by the State Bank of Pakistan to the authorised banks within a week from the date of submission of claims for re-submitting the applications, authorised banks shall quote the reference of the “forwarding schedule” under which the application was originally submitted.

No remittance on account of foreign importer”s subsequent claims for refund of money on account of quality or short quantity, etc, shall be allowed, unless proportional amount of drawback is refunded. In case of exports against advance payments, claim for duty drawback may be lodged once the shipment of the goods has been made. Ninety days period shall be accounted from the date of shipment.

Any unit which in contravention of the provisions of this order, through acts of omission or commission, files fraudulent or false claims shall be liable to penalty of 100pc of the claim along with reversal of the claim amount. The association concerned may also become ineligible for future verification of documents.

The receipt of drawback payments shall be properly reflected in the book of accounts or balance sheets of the claimant. The appellate authority for penalties on units shall be the SBP. Textiles associations verifying the duty drawback claims shall submit quarterly reports of verifications to the Ministry of Textile Industry with the chairman”s signature after taking printout from their online panel.

The order further states that the federal government reserves the right to make any changes, additions, deletions and modifications in the scheme under this order which, it may consider necessary.