FBR Increases Custom Values of Raw Materials Used in Soaps, Detergents and Cosmetics - Android

The Federal Board of Revenue (FBR) from March 1, 2021, has revised upward customs values of raw materials used in… Read More

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The Federal Board of Revenue (FBR) from March 1, 2021, has revised upward customs values of raw materials used in the manufacturing of toiletry products like soaps, detergents, shampoos, body gel, hair creams, and cosmetics etc.

According to the valuation ruling 1521 of 2021 issued by the Directorate General of Customs Valuation Karachi on Monday, the customs values have been enhanced on the import of Palm Fatty Acid Distillate (PFAD), Palm Acid Oil (PAO), Mixture of Fatty Acids (MoFA), Residue Of Fatty Substances (RoFS), Soap & Gum Stock/Sludge Of Soap Stock/ Pitch Oil/Alkaline Residue & Inedible Animal Or Vegetable Oils & Fats.

Earlier, the Customs values of Palm Acid Oil, Mixture of Fatty Acids (MoFA) & Residue of Fatty Substances (RoFS), PCTs 3823.1920, 3823.1990, 1522.0010 were determined under section 25A of the Customs Act, 1969 vide Valuation Ruling Nos. 1347/2018 dated 18-12-2018, 1346/2018 dated 18-12-2018 & 336/2011 dated 13-06-2011 respectively. Representations were received from several stakeholders including M/s Pakistan Soap Manufacturers Association (PSMA) as well as Pakistan Edible Oil Refinery’s Association that the international prices of the abovementioned goods are showing an upward trend in the international market and the Rulings be revised accordingly.

Therefore, this Directorate General initiated an exercise for determination of Customs Values of the subject goods in terms of Section 25-A of the Customs Act, 1969.

The meeting was scheduled and held on 04-03-2021 that was attended by different stakeholders including the representatives from Pakistan Soap Manufacturers Association (PSMA) and Pakistan Edible Oil Refiners Association (PEORA). The participants were requested to submit the following documents before or during the course of the meeting so that customs values could be determined:

• Invoices of imports during last three months showing customs value.
• Websites, names, and E-mail addresses of known foreign manufacturers of the item in question through which the actual current value can be ascertained.
• Copies of contracts made/LCs opened during the last three months showing the value of the item in question.
• The copies of sales tax Invoices issued during the last four months showing the difference in price (excluding duty and taxes) to substantiate their contentions.

The ruling said that during the meeting, the stakeholders intimated that the values of Palm Fatty Acid Distillate (PFAD) are published in the Reuter’s which is an accredited publication, and should be linked with it.

A unanimous proposal was also put forward that the value of Reuters for the said product be made the basis of Valuation of remaining products/by-products keeping in view international price trends, constituent materials, and other aspects. Detailed deliberations were held and finally, unanimous formulas regarding valuation on the basis of Reuter’s price for (PFAD) was agreed to arrive at values of other products.

The ruling said that the valuation methods provided in the Customs Act, 1969, were duly applied in their regular sequential order to arrive at oms values of subject goods. The transaction value method as provided in Sub-Section (1) of section 25 of the Customs Act, 1969, was found inapplicable because requisite information was not available as per law.

The wide variation of values displayed in the import data as available on record also strengthened the aforementioned fact. Hence requisite information under the law was not available to arrive at the transaction value. Therefore, identical/similar goods value methods as provided in Sub-Sections (5) & (6) of Section 25 ibid were examined for applicability to the valuation issue in the instant case.

The same provided some reference values but could not be exclusively and solely relied upon. In line with the statutory sequential order of Section 25, this office conducted market inquiries under sub-Section (7) of section 25 of the Customs Act, 1969, however, this method of valuation could not be exclusively relied upon, it added.

This Valuation Ruling supersedes Valuation Ruling Nos. 1347/2018 dated 18-12-2018, 1346/2018 dated 18-12-2018 & 336/2011 dated 13-06-2011.

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