GOVERNMENT OF PAKISTAN

GOVERNMENT OF PAKISTAN

CENTRAL BOARD OF REVENUE

*****

Islamabad, the July 23, 1998.

NOTIFICATION

(CUSTOMS/CENTRAL EXCISE/SALES TAX/INCOME TAX)

S.R.O.843(I)/98.- In exercise of the powers conferred by section 219 of the Customs Act, 1969, section 37 of the Central Excises Act, 1944 (I of 1944) section 50 of the Sales Tax Act, 1990 and sub-section (2) of section 14 of the Income Tax Ordinance 1979 (XXXI of 1979), the Central Board of Revenue is pleased to make the following rules, namely:-

1. Short title and application. (1) These rules shall be called the Common Bonded Warehouse (Conventional) Rules, 1998.

(2) They shall apply to the clearance of imported input goods as are importable under the Import Policy Order for the time being in-force including banned or restricted items as per Appendix-F of the said order except excluding polyester staple fibre as specified in the First Schedule to the Customs Act, 1969 (IV of 1969) of the Central Excise Act, 1944 (I of 1944) and the Sales Tax, 1990, as the case may be, for the import of goods primarily meant for export by small and medium enterprises (SMEs) and indirect exporters.

2. Definitions.- In these rules, unless there is anything repugnant in the subject or context,-

(a) "Acts" means the Customs Act, 1969 (IV of 1969), the Central Excises Act, 1944, the Sales Tax Act, 1990 and the Income Tax Ordinance 1979, (XXXI of 1979);

(b) "Analysis Certificate" means a certificate issued by the Collector of Customs under rule 11 of Manufacturing in Bond Rules, 1997.

binding himself for abiding by the required conditions and payment of government dues and penalties, if any,

in case of default;

(d) "Common Bonded Warehouse" means a warehouse licensed by the Collector of Customs for warehousing of goods meant for export purposes;

(e) "input goods" means all goods, except polyester staple fibre, required for the manufacture of goods meant for export, such as raw materials, accessories, sub-components, components, sub-assemblies, assemblies and includes unrecorded media for development of software and recorded software used as tools for development of software as approved by the Collector of Customs in the Analysis Certificate;

(f) "licensee" means a person or firm who has been granted by the Collector of Customs a licence for customs duty, sales tax and central excise duty, import or withholding tax free import of goods primarily meant for manufacture of finished goods by the Small Medium Enterprises (SMEs) or indirect exporter;

(g) "Small and Medium Enterprises" (SME) means an export unit having export quantum upto two and half millions US dollars per annum;

(h) "Indirect exporter" means a manufacturer or supplier of goods or articles which are to be used as input for export.

3. Licensing.- (1) Any person desirous of operating a common bonded warehouse shall apply to the Collector of Customs in the form set out in Appendix I to these rules along with the following documents, namely:-

(a) the site plan of the proposed common bonded warehouse indicating the location of the premises and the details of the total area, covered area and manufacturing area;

(b) national tax number card or certificate issued by the concerned income tax authority;

(d) memorandum and Articles of Association in case where the applicant is registered under the Companies Ordinance, 1984 (XLVII of 1984), or partnership deed if it is a partnership firm;

(e) copy of the national identity card of owner and directors of the company;

(f) lease or tenancy agreement with the written permission from the landlord to use the premises as common bonded warehouse;

(g) certificate from supplier of fire fighting equipment installed in the premises regarding its validity date;

(h) comprehensive insurance policy covering all risks such as fire, burglary, etc., issued by an insurance company registered with the Controller of Insurance, Ministry of Commerce, in the sum equal to the amount of customs duties and sales tax involved on the imported input goods intended to be stored in the common bonded warehouse; and

(i) an undertaking by an insurance company duly approved by the Controller of Insurance, Ministry of Commerce, on the stamp paper undertaking that-

(i) no change whatsoever shall be made in the insurance policy issued without prior intimation to the Collector of Customs;

(ii) full premium under the aforesaid insurance policy has been duly received; and

(iii) in case the licensee does not make the required stock declaration in time the company shall immediately inform the Collector of Customs.

(2) On receipt of an application alongwith the documents prescribed in sub-rule (1), the Collector of Customs, after such verification as he deems necessary, issue a licence within one month of such verification to the applicant to operate a common bonded warehouse.

4. Cancellation of license The licence may be cancelled by the Collector of Customs on conviction of the licensee for any offence under any of the Acts or non-utilization of the licence or on the request of the licensee, in writing.

5. Suspension of licence.-(1) Pending consideration whether a licence be cancelled under rule 4, the Collector of Customs may be suspend the licence if he is of the opinion that it is expedient to do so and for the reasons to be recorded, in writing, by him.

(2) In a case referred in sub-rule (1) the reasons for such suspension shall be communicated to the licensee within twenty-four hours of such suspension. During this period the common bonded warehouse shall continue to operate, for the goods already supplied to exporters or in the pipeline under the supervision of an Assistant Collector of Customs so that the exports and exporters do not suffer.

6. Revalidation or revival of licence The licence shall be issued for a period of three years and the same shall stand revalidated for successive periods of three years by the Collector of Customs without further application thereof by the licensee provided the Collector of Customs is satisfied that no action under the Acts is pending against the licensee or the licensee himself has applied to the Collector of Customs for revoking his licence.

7. Import of input goods: (1) For import of input goods into a common bonded warehouse a bill of entry shall be filed as per procedure applicable for clearance into the public bonded warehouses under the Customs Act, 1969 (IV of 1969).

(2) The officer in charge of the common bonded warehouse shall maintain record of the bills of entry serially numbered. A master register shall be maintained by the officer incharge of common bonded warehouse in the form set out in Appendix V in these rules.

(3) The input goods shall be stored and marks and number on each item shall be mentioned as per procedure to be specified by the Collector of Customs keeping in view the nature of input goods.

8. Facilities to the officer in charge of common bonded warehouse: The licensee shall provide proper accommodation to the officer incharge of the common bonded warehouse and all expenses incurred thereon shall be borne by the licensee.

9. Removal of input goods from common bonded warehouse.- Removal of input goods to the SMEs, indirect and direct exporters shall be made as per procedure to the specified in this behalf by the Collector of Customs.

10. Re-export of imported input goods.(1) The licensee may be allowed to re-export input goods imported for manufacture of export goods under these rules in their original and unprocessed form within three years of their import subject to the limitations and restrictions of Import Policy Order and Export Trade Control Order for the time being in force.

(2) Application for re-export of input goods shall be made by the licensee in the form set out in Appendix-IV to these rules.

11. Retention period for the procured input goods (1) The licensee shall supply the input goods to the SMEs and other exporters within a period of three years from the date of importation.

(2) Warehousing surcharge payable under section 98 of the Customs Act, 1969 (IV of 1969), shall not be payable for a period of three years in respect of input goods referred to in sub-rule (1).

12. Transfer of ownership or title The licensee shall not be allowed to transfer the ownership or title of the common bonded warehouse unless all outstanding customs-duty, central excise duty, sales tax and income tax are paid and any other liabilities are discharged.

13. General bond The licensee shall execute a general bond to observe all rules, procedures and instructions that may be required in respect of such licence.

14. Unaccounted input goods If any licensee fails to give proper account of the input goods to the satisfaction of an officer of customs not below the rank of an Assistant Collector, the licensee shall pay on demand an amount equal to the customs duty, central excise duty, sales tax and income tax leviable thereon as if they were imported and used for home consumption and shall also be liable to penalties imposed for such violation under the Acts.

15. Remission of customs-duty, central excise duty, sales tax and income tax.- Subject to the satisfaction of the Collector of Customs, the customs-duty, central excise duty, sales tax and income tax, if any, may be remitted in full or in part, as the case may be, in the following cases, namely:-

(a) when the goods are damaged or destroyed by any unavoidable circumstance or for cause beyond the control of the licensee; or

(b) when goods procured are bonafide samples drawn under these rules or samples for study, testing or design.

16. Destruction of input goods.- Any imported input goods that are rendered unfit for consumption or sale may be allowed to be destroyed by an officer of customs not below the rank of an Assistant Collector, in such manner as the Collector of Customs may, by order in writing specify.

17. Procurement of input goods and maintenance of records.-

(1) The licensee shall maintain a separate record of all the input goods imported and the goods supplied to SMEs, direct and indirect exporters, in the form set out in Appendix V to these rules.

(1a) The indirect exporter or SME shall submit to the licensee of a Common Bonded Warehouse an application inthe form set out in Appendix-II, for procuring input goods, for further manufacturing or processing.

(2) The licensee shall issue four copies of the record referred to in sub-rule(1). The first copy of which shall be issued to SME or indirect exporter, as the case may be. The second copy shall be sent to the Collectorate of Customs with whom the licensee is registered. The third copy shall be issued to SME or indirect exporter who will, at the time of exportation of finished goods or their supply to a direct exporter, shall attach the same with the shipping bill or delivery order as a proof of supply or export as the case may be. The fourth copy shall be retained by the licensee for his record.

(3) After the goods have been duly exported by SME or direct exporter, as the case may be, the third copy shall be authenticated to the effect that the goods mentioned in the delivery order have been duly exported and the same shall be sent to the licensee as well as to the Assistant Collector incharge of the common bonded warehouse.

(4) A serially numbered register in the form set out in Appendix V to these rules shall be maintained by the licensee and a duplicate of the same by the Customs House on the basis of information received by them through delivery orders issued by the licensee. These entries shall be checked and authenticated on a quarterly basis by the Assistant Collector incharge of the common bonded warehouse.

( MUHAMMAD NADIR KHAN HOTI )

CHIEF (SURVEY & REBATE)

As amended

S.R.O.921(I)/98, - dated 20.08.1998