The customs wing of the National Board of Revenue (NBR) has framed a new rule namely the 'Temporary Import of Product-machinery, Spare parts, and Equipment Subject to Return, 2022' (“the Rules”) recently. Implementing authorities of different projects would be able to import and use duty-free machinery, equipment and spare parts for multiple projects under the simplified new Rules from now on subject to fulfillment of the conditions specified in the Rules like furnishing un undertaking, a bank guarantee and returning them after the approved period. The Rules replaces the previous S.R.O. No. 542-L/84/886/Cus dated December 10, 1984.

Importer will have to submit all necessary documents to the customs authorities for physical examination and provisional assessment of customs duty. An undertaking on non-judicial stamp will have to be submitted by the importer to the concerned Commissioner of Customs that the imported consignment would not be used for any other purposes than the declared one and/or would not be sold or transferred to any other person or establishment. Importer will also have to submit an unconditional and continuous bank guarantee equivalent to the amount of custom duty provisionally assessed by the authorities.

Once all necessary documentation is in place, the concerned Commissioner will issue permit for importation of consignment to be returned within 1 year, which can be extended for further 6 months subject to prior approval. The time for returning or sending back the temporarily imported machinery could be extended upon approval by the customs authorities of NBR showing valid reasons as per the Rules. In case of failure in sending back such imported machinery without valid reasons, the importer will have to pay the applicable customs duty related to the imported consignment. Project-implementation entities import machinery for a project and after expiry its tenure or using the machinery for a year, the machinery could be used for another project under the Rules. However, approval of customs commissioner and other procedures as stated in the Rules have to be obtained.

The temporarily imported machinery, equipment and spare parts will have to be returned via the same port of importation. However, it can be returned via another port with prior approval. Physical inspection will be carried out at the time of returning the imported machinery, equipment and spare parts and all documentation formalities will have to be completed. The concerned Commissioner may approve release of bank guarantee after completion of return formalities. However, if the consignment is not returned within assigned timeframe, the concerned Commissioner can impose customs duty upon final assessment along with any applicable penalty and charges and also can order encashment of bank guarantee, if needed.      

The provisions of the Rule would not be applicable to (a) machinery, spare parts, equipment imported by diplomats and privileged persons (defined in Privileged Persons (Customs Procedure) Rules 2003), (b) machinery, spare parts, equipment listed in HS Code 87.02 and 87.03 of the First Schedule of Customs Act, 1969, and (c) consumable products imported in any project or plant or machine or for any specific purpose which has been depleted or becomes unusable due to the use thereto.

It is contemplated that implementation of the Rules would ease the process for the implementing authorities of project in importing consignment.