20000303

CBR explanation

Duty-drawback admissible on terry towels export

Sohail Sarfraz

ISLAMABAD: The Central Board of Revenue has explained to the Commerce Ministry that duty-drawback is admissible on the export of terry towels, it was learnt on Thursday.

The board says the issue of admissibility of duty drawback on export of 'terry towels,' which are considered to be stock lot quality, has been examined. Section 21 (c) of Customs Act, 1969 authorises repayment of duty paid on importation of goods that are used in the manufacturing of goods that are exported.

The CBR has also said that there is no restriction in the Customs Act to deny duty drawback on goods of stock lot quality. Similarly, in the current export policy orders there is no restrictions on export of stock lot and joblot or substandard goods. Therefore, the collectors should entertain duty drawback claims of towels export.

The CBR has clarified that regarding valuation of goods exported, the collectorate is empowered to ensure that overinvoicing does not take place in export of goods for obtaining undue duty drawback.

The board has said that the Towel Manufacturers Association has proposed that items such as terry head bands, terry shopping bags, terry laundry bags and face cloth may be included in the Schedule V to SRO 172 (I)/99 of March 22, 1999 by inserting "terry made up all sorts" in the list.

The CBR is of the view that according to note (1) of the Schedule V to SRO 172 (I)/'99 all sorts of terry products are covered under this notification as the list of items under the aforesaid note is not exhaustive but inclusive. Therefore, the goods referred by the association are covered under SRO 172 (I)/'99 issued on March 22, 1999 and there is no need to amend the SRO.

It has pointed out that duty drawback is not admissible on sheer wastes and leftover pieces of fabrics which are not sold as fabrics. The board's ruling in these two cases is restricted to such pieces of waste only.

The CBR has also explained its viewpoint to the National Accountability Bureau and the collectorates of Customs, Central Excise and Sales Tax all over the country.