CONCESSION OF CUSTOMS DUTY TO NEW ENTRANTS USING NEW TECHNOLOGY FOR MANUFACTURE OF MOTORCYCLES

Federal Government has introduced certain changes with regard to concessionary rate of duty on import of kits by motorcycle manufacturers. For this purpose, the following two notifications have been issued:-

1)    SRO 939(I)/2013 dated 21.10.2013

Through this SRO, amendments have been made in SRO 693(I)/2006 dated 01.07.2006. After this amendment, additional customs duty leviable under SRO 693(I)/2006 shall not be applicable in respect of motorcycle manufacturers who are new entrants and are introducing new technology. “New entrants” and “new technology” have been separately notified by Ministry of Industries and Production vide Notification No.4-1/2013/LED-II-(Vol-III) dated 26.09.2013. As per the amending notification the additional customs duty leviable under SRO 693(I)/2006 shall not be charged on sub-components/ components, imported in any kit form by  new entrants / assemblers or manufacturers for assembly or manufacture of  motorcycles for a period of five years from the start of assembly or manufacturing. The exemption of additional duty will be subject to the following conditions:-

1)    the new entrant assembler or manufacturer shall achieve the annual localization or indigenization targets/levels in accordance with the localization plan spreading ov er a maximum period of five years, duly approved by Ministry of Industries and Production;

2)    the additional customs-duty shall be levied on the             sub-components and components which become localized/ indigenized by the new entrant assembler or manufacturer, in accordance with the said localization plan;

3)    the new entrant shall abide by all the terms and conditions laid down in separate notifications issued by the Ministry of Industries and FBR for assembly or manufacturing of motorcycles.

2)    SRO 940(I)/2013 dated 21.10.2013

Through this notification, amendments have been made in SRO 656(I)/2006 dated 22.06.2006. The said notification relates to partial exemption on import of components/sub-components, imported in any kit form by assemblers of vehicles, including motorcycles. According to the amending notification, the incentive of importing the CKD kits @ 10% customs duty by the new entrants for assembly or manufacturing of motorcycles shall be withdrawn on components localized by the new entrants each year in accordance with the approved localization plan. Further, the concessionary rate of customs duty @ 10% shall continue for new entrants for a period of five years subject to adherence to the approved localization plan.