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GOVERNMENT OF PAKISTAN REVENUE DIVISION CENTRAL BOARD OF REVENUE *** C.No.1(1)CC/CGO/2002 Dated: 15th June, 2002 CUSTOM GENERAL ORDER NO. 12 OF 2002 Considering the need to simplify and streamline the customs procedures and having regard to changes in trade patterns and technology, the Central Board of Revenue scrutinized the existing Customs General Orders issued over the last three decades. As a result of this exercise about 500 CGO’s were found to be redundant and the remaining nearly 200 have been recast into an easily assimilable single document for compliance by all concerned:- CHAPTER - I DEFINITIONS 1. DEFINITIONS:- The following definitions shall be applicable wherever relevant. (i) Raw materials:--means goods which are not machined or made to size and some process has to be carried out to make components, therefrom. These goods are used by weight or volume for the manufacture of components i.e. tubes, rods, sheets, ingots, billets etc. in length but not cut to size. (ii) Sub-components:--means casting and forgings (not necessarily with runners and risers), with no other processes carried out on them e.g. engine blocks, forged gear blanks etc. Items like tubes, rods, and sheets etc. cut to size or shape but not further processed will also be treated as sub-components. (iii) Component:-- means a complete machined part of a system, not normally useful by itself and not amenable to further dis-assembly. (iv) Sub-assembly:--means a set of components assembled together designed for incorporation with other components or sub-assemblies in the final assembly of a finished product. Several sub-assemblies have to be assembled together to form a final product. (v) Job-lot:--Job-lot is a collection of odds and ends for sale as one lot. Normally these are goods of inferior quality. To cater to the needs of different customers a supplier varies specifications, colour schemes etc. It is a normal practice to produce slightly more than the order placed so that 2 after rejection, damage etc. there is still enough quantity left to meet the demand of the customer. After selling the goods to a few buyers, the supplier has an assortment of goods with slight modification or differences. These when put into a lot are called "Job-lot" and are generally sold at low prices. (vi) Stock-lot:-- The goods of this description are different from goods of job- lot in the sense that these are not different in sizes, specifications or colour etc. These are the goods which are kept in stock unsold because of change in tastes, market conditions or slight depreciation in quality because of age etc." NOTE: (a) It is evident from the above that goods imported in job-lot should be the collection of odds and ends with slight modifications or differences in sizes, specifications or colour etc. while the pre-condition for stock-lot goods is that these should be slightly depreciated in quality because of age and change of tastes etc. (b) In order to curb malpractices, the following parameters for determination of normal value of goods imported as job-lot/stock-lot are laid down :-- (i) The value of job-lot goods shall be assessed after allowing a maximum of 30% depreciation in prices of prime quality comparable standard goods; (ii) The normal value of stock-lot goods be taken after allowing a maximum of 20% depreciation in prices of comparable prime quality goods; (iii) In such consignments some importers get goods damaged, which have manufacturing defects or are rejected and claim these to be either job-lot or stock-lot, whatever suits the situations. Such goods are factory rejects and should not be treated as job-lot/stock-lot. These are clearly banned; (iv) Where the importer claims the imported goods as mixture of the two, job-lot and stock-lots, the import value be appraised; as per sub-para (ii) above; and (v) Normal value of goods cut to specific size for direct use but imported to create an impression of job-lot/stock-lot consignments shall be appraised at par with the value of comparable prime quality goods. (vii) Shredded, waste and scrap:-- Iron or steel waste and scrap prepared by means of fragmentation (shredding) of various iron and steel scrap material including motor vehicles followed by separation (which may be magnetic) with a view to obtaining a high density product that is fairly clean and includes turnings, shavings, chips, milling waste, saw dust, fillings, trimmings and stampings etc. (viii) Bundled scrap: --Waste and scrap generally of motor vehicles compressed into bales, blocks or briquettes used for the recovery of metal by re-melting. 3 NOTE:-- It is clarified that if the goods imported conform to either of the above definitions, the same may be treated as shredded or bundled waste/scrap, irrespective of the fact whether these fall under PCT heading 7204.4100 or 7204.4900. (ix) Rubber scrap falling under heading 40.04 P.C.T Comprises of :-- (a) Old and used tyres without ring or bead. (b) Old and used tyres without tread. (c) Old and used tyres with threads/fabric visible at least 8 across the width (Mexico tariff classifies it under 40.04). (d) Tyre parings. (e) Totally dried tyres. (f) Old and used pneumatic tyre without the layer of tread rubber and having a burst. (x) Iron and Steel Scrap :- In determining whether a certain consignment is classifiable under item 73.03 or under respective headings, the following broad principles should be kept in view:-- (i) Articles which are not useable for industrial, construction or other purposes, without recovery of metal in the first instance by the processes of either "remelting" or "forging" as defined in the Explanatory Notes shall be treated as scrap classifiable under 73.03. (ii) Articles which with repair or renovation, without first being recovered as metal, can be re-used for their original purposes or can be adapted for other uses, would not be classified as "scrap". Such goods shall be classified under their respective headings. (iii) The real test for classification under 73.03 or other heads is whether the article can be adapted to the original or other uses without recovery of metal. For this purpose, the original shape of article is not of material consideration unless the article is in a useable shape. For example, if a pipe with a number of holes cannot be retrieved and re-used as pipe and has to be melted or forged for recovery of metal, it shall be classified as 'scrap' and not as 'pipe'. But another pipe with a few repairable holes can be classified as 'pipes'. (iv) In case of mixed lots where ninety per cent or more of the consignment is undisputedly classified as 'scrap' the whole consignment shall be assessed under item 73.03. Where the content of 'scrap' is less than ninety per cent, identifiable goods, other than scrap, shall be classified and assessed to duty under respective heads. 4 CHAPTER – II CLASSIFICATION 2. METHODOLOGY FOR RULINGS:- In order to implement the recommendations of the World Customs Organization regarding the introduction of the programme for binding pre-entry classification information and improvement of Tariff Classification Work and related infrastructure. It has been decided to introduce the following procedure: i) Routine classification issues will continue to be decided by the respective Collectorates at their own level. Complicated classification disputes will be referred to the Classification Centre established at the Collectorate of Customs (Appraisement), Karachi with effect from October 01,2001. In addition to deciding the classification disputes, the centre will also issue binding pre-entry classification rulings on the specific request of an importer. ii) Classification Centre will perform the following function: a) to determine pre-entry classification; b) to examine and settle classification disputes/references/queries referred either by various Customs stations or by the traders; c) to compile and print classification rulings on yearly basis; d) to monitor and ensure that uniform and accurate classification decisions are made at all customs stations; e) to devise appropriate software/programme to monitor the quality of classification work through networked computer system; f) to create and preserve a database containing all classification matters and the related documents/publications/information; g) to maintain contacts and exchange information regarding classification matters with other customs administrations in the world; h) to groom and train officers and staff, in the field on HS classifications and classification mis-declarations, in co-ordination with the Directorate General of Training and Research, (Customs, Sales Tax and Central Excise); and i) to identify items/goods prone to misclassification. iii. The classification Centre shall be run and managed by a classification committee to be constituted by the Collector of Customs, Appraisement. The said committee shall be headed by an Additional Collector and consist of as many members as may be nominated by the Collector appraisement. The said committee may co-opt representatives of other Collectorates and trade bodies as and when required on case to case basis. The committee may also call specialists and experts for expert opinion in determining classification of an item. The committee will meet at least once in a month but may hold as many meetings as required to dispose off the work. 5 iv. Regarding pre-entry classification, the importer, prior to making actual import, may request in writing for a binding pre-entry classification ruling to the classification Centre. The said request shall be accompanied by the following; a) full description of goods along with necessary details required for determining classification, including trade name, generic name, etc; b) technical literature/certificate showing structure composition, laboratory test reports etc; c) trade sample, photograph, drawings, if any; d) correspondence or preliminary import documents, proforma invoice etc.

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