FTO cites 20% import duty for limousines

Says present classification for such vehicles lacks clarity.

ISLAMABAD: While deliberating a case pertaining to duty levelled on an imported Chrysler limousine, the Federal Tax Ombudsman (FTO) has proposed that the Federal Board of Revenue (FBR) consider setting up a separate Classification Directorate to make classification rulings more authoritative and binding for all customs stations across Pakistan.

According to details issued by the FTO Secretariat, Shahid Muhammad Swabi on December 13, 2011 had complained against the non-refund of additional amount of duties and taxes collected by Peshawar Customs due to the allegedly arbitrary classification of the Chrysler limousine. The complainant had imported the limousine and filed a goods declaration at the Peshawar dry port. However, instead of accepting the declared classification under the Pakistan Customs Tariff (PCT) heading 87.02 (chargeable at 20% duty), the Customs arbitrarily determined its classification under PCT heading 87.03 (chargeable to 100% customs duty and 50% regulatory duty). In doing so, Customs disregarded a ruling of the Classification Committee, Karachi, dated September 17, 2011 and recommendations of the FTO Secretariat while deciding a complaint dated December 13, 2011.

After examining the complaint, the FTO maintained that the classification heading 87.02 reads as: “Motor Vehicles for the transport of ten or more persons, including the driver.” It has said that a plain reading of the PCT headings 87.02 and 87.03 is indicative of a lack of clarity in the two headings.

The FTO has recommended the Classification Directorate be set up along the lines of the Valuation Directorate. The FTO Office has already asked the FBR, being the final authority on classification, to remove this confusion by adding an appropriate amendment or explanation in the PCT Code, as three such cases have already been referred to the FTO Office.

Published in The Express Tribune, June 19^th, 2012.