WRONG ASSESMENT – LOWER SIDE OF DUTYDRAWBACK CLIAMS

04-OCT-10

Dear Members PDMEA

Subject: WRONG ASSESMENT – LOWER SIDE OF DUTYDRAWBACK CLIAMS

It is to bring in your kind notice that the duty draw back had notified by the Federal Board of Revenue vide schedule-XXXV of SRO-209(I)/2009 dated 05-03-2009 after comprehensive survey conducted of 3 numbers of Denim units against the application duly submitted by the Pakistan Denim Manufacturer and Exporters association. The rebate of rate has been increased & the comparison of old rebate rates and new rebate rate are as under:

OLD RATES VIDE SCHEDULE-1 NEW RATES VIDE SCHEDULE -XXXV

SR0-955(I)/2007 dated 17/09/2007 SRO-209(I)/2009 dated 05-03-2009

Denim Fabrics 0.71% of fob value 0.85% of fob value

Denim Garments 0.90% of fob value 1.35% of fob value

In the couple of month ago the Collectorate, PACCS has raised the objection that the Denim fabrics/Garment made from 100% cotton will be assessed vide schedule-1 of SRO-209 (in which rebate rate for fabric @ 0.71% of FOB value & Garment 0.90% of Fob value) instead of schedule-XXXV of SRO-209 as the exported products is 100% cotton fabrics & the lycra is not being used in the process. Whereas as per our view point, the Denim process is entirely different as compare to 100% cotton fabrics process due to the different dyes and chemicals used in the process. However the usage of Lycra is depend on the Buyers demand it may be used or not used. Whereas the Custom duty on import stage is 0% on lycra, therefore it is entirely irrelevant factor in the determination of duty draw back rates.

Accepting the lower duty drawback rates losses a million of Rupees for Export of Denim Fabric and Denim Garment, therefore we have already taking up the matter through a technical consultant on the subject issue with the Customs Care and Federal Board of Revenue for changing description of exported goods “Denim Fabrics and Denim Garments” with or without lycra, as accessories. which .

In this regard, we are looking for your valuable comments in the matter, please.

Yours faithfully,

Chairman