Duty Drawback is an Established Right of Exporters: Razzaq Dawood

The Advisor to the Prime Minister on Commerce and Investment, Abdul Razak Dawood, chaired a meeting on Duty Drawbacks at the Ministry of Commerce to discuss the progress on various initiatives by the Ministry in this regard.

The meeting was attended by senior officers of the Ministry of Commerce.

Reviewing the progress on interventions by the Ministry of Commerce, the Advisor emphasized that Duty Drawback is neither an incentive nor a subsidy, rather it is an established right of the exporters, which needs to be properly calculated and fairly assessed to reflect the costs for exporting the goods.

He added that Duty Drawback is an essential part of international trade which is covered under the World Trade Organization Rules as well as the laws of the country.

During the meeting, the Advisor was briefed on the progress on the implementation of Duty Drawback rate recalculation exercise. It was informed that the Ministry of Commerce had selected 11 sectors for recalculation, out of which Duty Drawback revised rates have been duly notified in three sectors, including Leather Hides, Plastic Goods, and Carpets.

The exercise for the remaining 8 sectors is in the final stages and will be finalized shortly.

The changes in Customs Act 1969 and Customs Rules, which cover the procedures of payment of Duty Drawbacks, were also shared during the meeting. Under the amended Act and Rules, Duty Drawbacks will be directly credited to the bank accounts of exporters by the State Bank of Pakistan.

The calculation of the duty drawback amounts will be done by Pakistan Customs’ computerized system WeBOC without human involvement based on a Risk Management System. However, this requires a secure line for data sharing between the Pakistan Customs and State Bank of Pakistan, which is under process and would be completed in the next month.

It was further explained that, under the new rules, all kinds of duties, including Customs Duty, Additional Customs Duty, Special Customs Duty, and Regulatory Duty will now be part of Duty Drawback. In addition, to make the process of calculation of rates of Duty Drawback hassle-free, Director-General IOCO has been authorized, through a change of rules, to calculate the rates at 6HS or 4HS Codes instead of detailed exercise at 8HS Codes if the variation is within 10% in a particular sector.

Commenting on the amended rules, Abdul Razak Dawood reiterated that the use of locally produced raw material may be incentivized to reduce reliance on imported goods and to boost industrialization in the country.

Dawood said that after the completion of the exercise in 11 sectors, the focus should be shifted to developmental sectors including Chemicals, Engineering, Iron & Steel, Ceramics, and Pharmaceuticals. He further directed his team to prepare a plan for the entire exercise, which would be shared with businessmen for their feedback.

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