National Board of Revenue has waived supplementary duty on import of complete knocked down motorcycles for category two producers to facilitate manufacturing ability instead of just assembling the parts.
Customs wing of NBR on Monday issued a statutory regulatory order, amending the previous one, providing exemption from payment of 20 per cent supplementary duty on import of CKD motorcycles for the category two producers.
The NBR defines the motorcycle manufacturers in two categories for purpose of availing duty benefits. The difference between the two groups of CKD motorcycle importers is value-addition.
According to NBR, category two manufacturers are those who produce one or more important parts of motorcycle, manufacture chassis after importing the parts of chassis into pieces or collecting materials from local market. They add some value to the imported parts such as wielding, painting and burnishing before making the motorcycle ready for sale.
Category-one manufacturers have to manufacture all parts of motorcycle by raw materials either imported or locally collected, or have to produce chassis or some important parts such as swing arm, wheel, fuel tank, handle bar and silencer.
The assemblers just import the CKD motorcycle and sell those after assembling those without any value-addition.
According to the SRO, motorcycle assembling companies which import CKD motorcycle with complete chassis and other parts will not get the duty benefit.
Category one manufacturers enjoy duty benefit at larger scale including waiver on import duty, regulatory duty and supplementary duty on import of basic raw materials, spare parts and other equipment. The overall duty rate after the benefits stands around 40 per cent for the category one manufacturers.
NBR also tagged some conditions including mandatory VAT registration as motorcycle manufacturer for availing the duty waiver for category two manufactures.
The benefit will be applicable only on import of four-stroke CKD motorcycle having cylinder capacity above 50cc but below 250cc.
According to the SRO, the category two manufacturers will be able to import of four-types of CKD motorcycle with four-stroke engine for the purpose of manufacturing complete motorcycles.
The duty advantage will encourage CKD motorcycle importers or motorcycle assembling companies to enter the second category industry, officials said.
A total of 91.88 per cent duty and taxes is applicable on import of CKD motorcycle.
NBR extended the benefit following demand from various companies, they said, adding that most of the leading motorcycle brands such as Japanese Honda where the government owns 30 per cent share, Indian brands TVS and Bajaj are included in the list.
A committee consisting of representatives of NBR and industries ministry will visit the factories of applicants for being registered to get the benefit and will enlist the company for the waiver if it fulfills the all requirements.
Officials said that the difference of applicable duty on import of CKD motorcycle between second category manufacturers and assemblers would be more than 20 per cent which would encourage assemblers to enter into semi-manufacturing activities.
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