BOARD CLARIFICATION
C.No.1(140)C(RGST)/2011 (Pt-V)/182550-R Dated: 31st December, 2017
Sub: Clarification regarding import of label cloth as “finished fabric” under sro 1125(i)/2011 dated 31.12.2011
The undersigned is directed to refer to your letter no. SI/Misc/1101/SRO/1125/DC-V/2017, dated 28.10.2017 on the subject cited above and to say that the issue of chargeability of sales tax on the import of “label cloth” falling under the PCT heading 5907.0000 under the provisions of SRO 1125(I)/2011, dated 31.12.2011 amended from time to time has been examined and is clarified as under:
02. The Collectorate is of the opinion that benefit of zero-rating of sales tax alongwith 0% value addition tax is not available to commercial import of label cloth under S.No.1(ii) of Table-II of SRO 1125(I)/2011, dated 31.12.2011 as amended vide SRO 584(I)/2017, dated 01.07.2017.
03. It may be noted that commercial imports of fabric were specifically subjected to sales tax @ 6% plus 2% value addition tax under S.No.1(viii) of Table-II of SRO 1125(I)/2011, dated 31.12.2011 as inserted vide SRO 584(I)/2017, dated 01.07.2017 and the insertion was aimed at subjecting those types of fabric which were meant for use by general body of consumers. However, certain items of industrial use not meant for sale to general body of consumers also come to be classified as fabric in view of classification under Pakistan Customs Tariff. Therefore, S.No.1(viii) of Table-II of SRO 1125(I)/2011, dated 31.12.2011 was substituted vide SRO 868(I)/2017, dated 31st August, 2017 to provide for PCT headings of “finished fabric” which were likely to be used by general body of consumers and thus attracting sales tax @ 6% alongwith 2% value addition tax.
04. SRO 868(I)/2017, dated 31st August, 2017 has specified PCT headings of “finished fabric” and this does not include PCT headings of items like label cloth i.e. 5907.0000 which even if qualifying as finished fabric under Pakistan Customs Tariff do not attract sales tax @ 6% alongwith 2% value addition tax and are entitled for 0% sales tax alongwith 0% value addition tax.
[Addressed to the Collector,MCC (Appraisement-East), Customs House, Karachi signed by Zulfiqar Hussain Khan Chief (ST& FE Policy)].