The Customs Classification Committee of the Federal Board of Revenue (FBR) has declared that the exemption of regulatory duty cannot be granted to small/medium carbon alloy wire rods.
In this regard, the committee has issued a detailed ruling on Friday.
In the instant case, in the context of conditionality stipulated in SRO 903(1)/2021, lab reports, and international standards, the impugned goods cannot be termed and specifically categorized and treated as high carbon wire rods, the ruling added.
The Collectorate of Customs Appraisement-Port Muhammad Bin Qasim forwarded a reference for the determination of classification for entitlement of exemption of Regulatory Duty (RD) in terms of SRO 840(1)/2021 amended vide SRO 903(1)/2021 for goods, self-declared as ‘Prime Quality High Carbon Steel Wire Rods’ under PCT heading 7227.9090.
The classification committee declared that it is quite evident that the case matter is not related to tariff classification, rather it relates to the interpretation of SRO in view of the conditional exemption of RD which has been subject to laboratory tests that the imported items were high carbon wire rods. Both the representatives of the department and the importer also concurred with this observation of the Committee.
The committee further observed that Valuation Ruling No.I331/2018 was issued in terms of Section 25A of the Customs Act, 1969 whereby Customs values were determined for Iron or Non-Alloy Steel Wire Rod Low and High Carbon Draw Quality (PCT headings 7213.9190 and 7213.9990) on the basis of LMB prices and same is not related to classification of carbon wire rods on the basis of carbon content.
Brief facts of the case as reported by the referring Collectorate are that the importer M/s Al-Majeed Ibrahim Steel Industries (Pvt) Ltd. imported consignments, declared to contain ‘Prime Quality High Carbon Steel Wire Rods’ for clearance thereof under PCT headings 7227.9090 by claiming exemption of RD under SRO 840(1)/2021 amended vide SRO 903(1)/2021.
In order to ascertain the admissibility of the claimed exemption of Regulatory Duty, samples were forwarded to the Custom House Laboratory which reported the goods as ‘medium carbon alloy wire rod’ on the basis of Carbon content 0.46% and 0.34%, contrary to the description provided in SRO as a ‘high carbon wire rod’, therefore, exemption of Regulatory Duty was denied by the Collectorate.
On the other hand, the importer contested that wire rods can only be categorized as ‘high carbon’ and ‘low carbon’ and there is no category of ‘medium carbon wire rod’. The importer further contended that the Laboratory’s reliance on the metallurgical handbook is irrelevant.
Being aggrieved with the decision of the Collectorate, the importer filed C.P No 2677 of 2022 before the Court of Sindh. The Court passed orders dated 16.11.2022 as under:
In the instant matter, the dispute is with regard to the appropriate classification of the goods. The petitioner claims that the goods imported by it fall under HS Code 7227.9090 whereas according to the Department, such goods fall under HS Code 7227.9010. It is the claim of the petitioner that it has imported ‘High Carbon Steel Wire whereas as per the provisional assessment made by the Department, goods are classified as ‘Medium Carbon Wire’. Since the counsel appearing in the instant petition as well as the Department agree that in the instant petition, the dispute is with regard to classification that is sent to the Classification Committee.
In compliance with these orders, the relevant Collectorate forwarded the case to the Classification Committee for further action. A meeting of the Classification Committee was held, which was attended by representatives of the importer M/s Al-Majeed Ibrahim Steel Industries (Pvt) Ltd, departmental representatives from the Collectorate of Customs Appraisement-PMBQ and the members and coopted members of the Classification Committee.
The importer declaced the goods under PCT heading 7227.9090 which was accepted by the Collectorate. This fact was confirmed by the representative of the importer and the departmental representative during the meeting.
Regretfully, the learned counsels of the Petitioner Importer and the Respondent Department did not submit the correct factual and legal position before the High Court during the hearing of the case. In its essence, the issue of dispute is the exemption or otherwise of Regulatory Duty in terms of SRO 840(1)/2021 as amended vide SRO 903(1)/2021, which is subject to confirmation through laboratory tests that the imported goods were high carbon wire rods.
The Classification Committee observed that goods are exported from the United States and as per American Standards, the impugned goods do not fall under the category of high carbon wire rod. Even as per other international standards in the light of lab reports, the impugned goods cannot be categorized as high carbon wire rods.
The representative of the importer did not furnish any documents or certification to the effect that the impugned goods were high-carbon rods. The Classification Committee observed that there was no dispute of PCT heading as declared PCT heading 7227.9090 by the importer was accepted by the Collectorate.
The Committee noted that exemption of RD in terms of S.No.2(o) of SRO 840(1)/2021 amended vide SRO 903(1)/2021 was available on “Imports under PCT codes 7227.9010 and 7227.9090, if imported by Sales Tax registered manufacturers, subject to laboratory test that the imported item was a high Carbon Wire Rod”.
The committee also observed that the said RD exemption already stands withdrawn/omitted in subsequent RD SROs with effect from 30.06.2022. The issue/dispute of exemption from RD is restricted to these two consignments only. In the instant case, in the context of conditionality stipulated in SRO 903(1)/2021, lab reports, and international standards, the impugned goods cannot be termed and specifically categorized and treated as high carbon wire rods.
The view of the Classification Committee is in compliance with orders passed by the High Court of Sindh in C.P No 2677 of 2022 and is specific to the product whose details/ specifications have been given.
Further, this view is based on the documents, literature, and information provided by the referring Collectorate/importer and shall be treated as annulled if it is found at any subsequent stage that the same was obtained by providing incorrect, false, misleading or incomplete information, the committee added.
Source: Pro Pakistani