Small exporters must provide bank guarantee to cover taxes on raw material import

The Federal Board of Revenue (FBR) has proposed a series of amendments to the Customs Rules aimed at securing government revenue and discouraging mis-declaration.

The new amendments stipulate that manufacturers-cum-exporters with exports valued at less than $20 million in the past two years will be required to furnish bank guarantee, an indemnity bond and post-dated cheque (PDC) equivalent to the average annual duty and taxes of input goods used in exports over the same period.

Additionally, a bank guarantee or revolving bank guarantee must be provided for any excess duty and taxes deferred or remitted.

For manufacturers-cum-exporters with self-owned manufacturing facilities, the indemnity bond and PDC will be equivalent to the average annual duty and taxes of input goods used in exports over the past three years.

Similarly, a bank guarantee or revolving bank guarantee must be furnished for any excess duty and taxes deferred or remitted. Those with rented production facilities must provide a bank guarantee or revolving bank guarantee covering their annual requirements.

Customs Collector holds the authority to encash the PDC or bank guarantee if the input goods have been illegally removed, disposed of, retained beyond the utilization period, or failed to achieve the required value addition within the prescribed period.

Additionally, the collector may conduct stock-taking of inputs through an officer not below the rank of Assistant Collector at any time during the utilization period.

Manufacturers are required to maintain proper traceability of inputs through accurate inventory records available for review.

Goods declarations filed under these rules may be assigned for sample collection based on computerized selectivity criteria.

Three samples of imported input goods or output goods intended for export will be drawn at the time of import or export.

The input goods acquired under these rules must be utilized within nine months, with extensions granted only in exceptional circumstances.