The custom classifications committee of the Federal Board of Revenue (FBR) has increased the customs duty up to 50% on the import of “mild hybrid vehicles.” According to the custom classifications committee, vehicles without electric motors cannot be declared as hybrid vehicles for availing tax concessions.
In this regard, the classification committee of FBR issued a ruling on Saturday outlining how hybrid vehicles will classify to qualify for lower import duties and taxes.
As per the classification committee, a vehicle is not an HEV if it uses an electric power source for non-propulsion purposes.
These power sources may have regenerative braking and charge management systems. Moreover, they can be used to power stop-start systems. These vehicles lack an electric motor for propulsion. They may be described as having “hybrid technology.”
According to the report, these vehicles have been produced. They are embedded with hybrid technology features to achieve several desirable like running a stop-start and charge management systems.
Hence, after investigating the whole function in terms of functionality and attributes, these vehicles don’t have any electric motor for propulsion.
The Federal Tax Ombudsman (FTO) passed an order on December 12, 2022, directing the Collectorate of Customs Appraisal, West Karachi, to refer the issue of the classification of the complainant’s imported vehicles to the Classification Centre.
Though, if we talk about the brief facts as reported, the complainant imported a “Used Nisan Dayz Hybrid Cars,” a Used Suzuki Wagon-R, and a Used Suzuki Hustler Hybrid car and claimed the benefit of concessionary rates of duties and taxes under SRO 499(1)/2023 dated 12.06.2013. Though, which was not permitted under the circular dated 05.10.2018 issued by the Collectorate of Customs, Appraisement West, Karachi.
Moreover, the FTO rules on the importers’ complaints in the previous order for referring the case to the Classification Centre.
Whereas, according to the different representatives, the circular dated 05.10.2018 has already been declared illegal.
Moreover, the representatives also focused on SRO 499(1)/2013, dated 12.06.2013. They claim not to differentiate between various types of vehicles.
Later, the classification committee noticed that the mandate and scope of the Classification Committee Under Chapter II of COO12/2002 dated 15.06.2002 is restricted to some extent of determination of classification of goods and do not have vested authority, powers and mandate to assess whether any concessionary system for imported products falls under the scope and management of the Board. As a result, the classification committee decided what category the contested vehicles fell under.