The Federal Board of Revenue’s (FBR) customs classification committee announced a 50% customs duty on the import of “Mild Hybrid Vehicles” in addition to stating that vehicles without electric motors cannot be classified as hybrids in order to receive tax benefits. The importer’s claim was rejected by the FBR’s classification committee.
The Classification Committee does not classify vehicles as HEVs if an electric power source, such as an integrated alternator/starter, is used only for non-propulsion functions. Stop-start systems can be powered by these power sources, which may have regenerative braking and charge management systems.
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Although they lack an electric motor for propulsion, these vehicles may be referred to as “micro-hybrids” or “hybrid technology.” Hybrid cars are therefore those that have an electric motor for propulsion.
The Classification Committee noted that these cars have been manufactured and are equipped with hybrid technology features in accordance with the report and insignia in order to achieve a number of desirables, such as operating stop-start systems and charge management systems, etc. On the basis of a physical evaluation of their functionality and features, these vehicles have been officially reported not to have an electric motor for propulsion.
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The Collectorate of Customs Appraisal, West, Karachi was instructed to send the classification of the complainant’s imported cars to the Classification Center by the Federal Tax Ombudsman (FTO) in Findings/Recommendations/Order dated December 12, 2022.
In a few words, the complainant imported “Used Nisan Dayz Hybrid Cars,” “Used Suzuki Wagon-R Hybrid Cars,” and “Used Suzuki Hustler Hybrid Cars” and claimed lower rates of duties and taxes in accordance with SRO 499(1)/2013 dated 12.06.2013. Due to a Circular from the Collectorate of Customs, Appraisal-West, Karachi, dated October 5, 2018, this was not allowed.
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The Classification Committee noted that the Clearance Collecto’s jurisdiction and domain extend to determining the applicability of and interpreting any concessionary regime in respect of imported goods, and that the Classification Committee’s inherent authority, authority, and mandate under Chapter-II (Classification) of COO 12/2002, dated 15.06.2002, is limited to determining the classification of goods. After that, according to the committee, the Classification Committee determined what kind of vehicle the disputed ones were.