December 28, 2023 (MLN): A new “Export Facilitation Scheme” has been added to the Customs Rules 2001, which includes an International Toll Manufacturing (ITM) procedure allowing the import of input goods without foreign exchange remittance, a circular issued by the State Bank of Pakistan (SBP) showed today.
To note, International Toll Manufacturing means an arrangement wherein a foreign principal provides input goods to an exporter to produce finished goods for subsequent export.
In this regard, a module has been developed by Pakistan Customs/WeBOC to facilitate EFS including import-cum-export transactions under ITM.
A checkbox “EFS toll manufacturer” has been added in GD type “Export Facilitation Scheme”.
After completion of relevant formalities, the license holder can avail EFS ITM facility.
Accordingly, the central bank outlined instructions for Authorized Dealers (ADs).
As per which, the import and export of goods under ITM shall be undertaken through single Authorized Dealer for reconciliation and reporting purposes.
Moreover, at the time of import, ADs shall be required to provide a financial instrument (FI) on ‘remittance not involved from Pakistan’ basis in PSW before filing of ‘EFS import GD’ availing Toll Manufacturing facility by the local importer-cum-exporter, for import of raw material/ input goods from the principal abroad.
At the time of export, ADs shall provide FI in PSW equivalent to the service charges/value added, before filing of ‘EFS export GDs availing Toll Manufacturing facility by the local importer-cum-exporter.
These ‘service charges’ shall be received as foreign remittance from abroad.
Additionally, SBP said that the ADs shall submit bank credit advice (BCA) against respective FI in PSW confirming receipt/ realization of service charges from abroad for release of security submitted to Customs by local importer-cum-exporter at import stage.
ADs are also advised to report realization of foreign exchange equivalent to the service charges, as per the contract, to SBP on Form-R on code ‘9236 – Processing fees on goods owned by others’ in Schedule J/O-3 of ITRS.
In case of non-realization or delay in realization of export proceeds, ADs shall report such cases as overdue as per the existing procedures defined in Paras 33 and 33A of Chapter 12 of FE Manual.
ADs shall continue to perform the KYC/CDD of the applicants and ensure compliance of the EFS scheme parameters and all other applicable rules and regulations including the Framework for Managing Risks of Trade Based Money Laundering and Terrorist Financing, as amended from time to time, the circular reads.
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Posted on: 2023-12-28T13:04:42+05:00
