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International
Trade Classification |
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International Trade Classification
The purpose of International Trade Classification is to have a commonly
understood and universally applied numerical system, with commodity description,
for identifying all commodities and goods that are internationally traded.
This helps comparable compilation of international trade statistics, determination
of import/export eligibility status and application of customs tariffs such
that there is no ambiguity in regard to the nature of the product.
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SITC/PSTC
In Pakistan, we have the Pakistan Standard Trade Classification (PSTC) that
corresponds to the Standard International Trade Classification (SITC) of
the UN Statistical Office. In 1973, the Customs Co-operation Council (CCC)
had developed a Harmonized Commodity Description and Coding System (HS)
and, based on HS headings, the UN Statistical Office produced the third
revision of SITC. The present PSTC system is based on that third revision
of SITC in 1985. This revision-3 makes for greater comparability with the
Tariff Nomenclature of the CCC and was adopted from July 1989. Called PSTC-R3,
it contains 6452 items at 7-digit level. This is used for compilation of
trade data by the Federal Bureau of Statistics. It has its correlation,
at 5-digit level, with 6-digit nomenclatures of HS.
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Harmonized System
The ITC Schedule, notified by the Ministry of Commerce as SRO-783(I)/98,
is based on the 8-digit level classification according to the Harmonized
Commodity Description and Coding System. Commonly known as the HS system,
the HS Codes are used in the current Import Policy and Export Policy for
identification of the nature of products for various import and export regulations
and procedures.
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Classification Criteria
In terms of the general rules for the interpretation of the Harmonized System,
the main criteria for determining applicable HS Codes are:-
In
the HS-based ITC Schedule, the titles of Sections,
Chapters are given for facility of reference only. For legal purposes, product
classification is determined according to the terms of the headings and
the Section or Chapter Notes.
An article is classified under
an H.S. heading even
Though it may be incomplete or unfinished, but it has the essential character
of the complete/finished article. The same applies to whether an article
is unassembled or disassembled.
A material or substance includes mixture or
Combination of that material/substance with other materials. Where
an article consists of more than one material, the next rule applies. 1.4.4
Where goods are classifiable under two or more HS headings, the one which
provides the most specific description is to be preferred to headings giving
a mere general description. However, when two or more headings each refer
to only a part of the material or of the items presented in a set put up
for retail sale, those headings are equally specific, even if one of them
gives a more complete or precise description of the goods.
If
an article can not be classified by the preceding
Principle, the description which gives the article its essential character
prevails.
Goods which cannot be classified in terms of the
above
Principles are to be classified under the heading appropriate to the goods
that are most akin.
Cases or boxes specially shaped or fitted to contain
Specific articles like cameras, musical instruments, drawing instruments,
jewellery etc. are classified with the main articles with which they are
sold.
Packing material and packing containers are classified
with the goods which are normally sold in such packing, but this
does not apply where packing materials or containers are clearly suitable
for repetitive use.
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Pakistan Customs Tariff (PCT)
The Pakistan Customs Tariff (PCT) is also based on the 8-digit level HS
headings. The same HS headings are used in the Customs Act, the Central
Excise Act, the Sales Tax Act, the Income Tax Ordinance and the Statutory
Rules and Orders (SROs). This makes for precise identification of the various
products, both for the purpose of determining their import/export status
and the applicable customs and excise tariffs and income tax rates. Accordingly,
in all import and export documentation, these HS headings are invariably
used. The principal objective is to ensure that there is no ambiguity about
the nature of a given product, its import/export status and the applicable
taxes and duties. The First Schedule of the Customs Act 1969 (known as PCT)
is the same as the Second Schedule to the ITC and is to be read with the
Import and Export Policy Orders.
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Export Finance
The H. S. headings are also used to identify the products that are eligible
for concessionary export financing under the Export Finance Scheme of the
State Bank of Pakistan. That scheme gives a Negative List of items not eligible
for concessionary export finance which are identified by HS Code numbers
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Export Policy
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Imports & Exports (Control) Act 1950
Under the Constitution of Pakistan, imports and exports is a federal subject.
The Federal Legislature alone, and not any Provincial Legislature, has the
power to make laws in respect of imports and exports. Section (3) of the
Imports and Exports (Control) Act, 1950(App:2.1) empowers the Federal Government
to regulate the imports and exports of goods, including the power to impose
conditions for grant of licenses. To achieve this object, Ministry of Commerce
and the Export Promotion Bureau issue various Orders, Notifications, Public
Notices, Press Releases etc. on various subjects, such as the Import & Export
policy and procedures, Quality Control Order, Registration of Importers
and Exporters Order, Textile Quota Management Policy Order. All these Orders
are discussed in relevant chapters.
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Export Policy
The Export Policy is notified yearly under the Imports and Exports (Control)
Act 1950 (App:2.1). The Export Policy and Procedures Order 2000, notified
as SRO-482(I)/2000 dated 11.7.2000 (App:2.2), provides for export of all
goods from Pakistan, subject to some exceptions and conditionalities. |
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Banned Items Exports of all goods is allowed
from Pakistan except those specified in Schedule I to the Export Policy
and Procedures Order 2000 (App:2.2). The prohibited items are listed below,
with a few exceptions in respect of items marked with asterisks and described
in Footnotes below:
- Intoxicants
- Wild life species of CITES and all protected animals, birds etc
- Charcoal and firewood
- Wood and timber
- Fissionable material
- Anti Personnel Landmines (APLS)
- Antiquities
- Edible oil (excluding consumer packs)
- Chemicals (Appendix A to the Export Policy and Procedures Order 20)
- Counterfeit products.
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Footnotes – Exceptions
- Defined in the Prohibition (Enforcement of Hadd) Order, 1979, subject
to exceptions.
- I National Council for Conservation of Wildlife (NCCW) makesexemptions
for
(i) research; and
(ii) trophies. II Exotic birds with NOC of province
wild life
- Export of all edible oils in bottles or other consumer packs
provided there is value-addition of 15% for edible uses in packs upto
5 litres and 50% value addition for non-edible uses in packs upto ½
litre.
- Export to States not party to Chemical Weapons
Convention subject to conditions.
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Exports Specially Allowed: Subject to specific
prohibitions in Schedule I and conditionalities in Schedule II & III (App:
2.2), export of following goods is allowed:
- Stores or equipment of outgoing vessels or conveyance or accompanied
baggage of the crew or passengers.
- Goods trans-shipped at a port in Pakistan.
- Stores or equipment sold abroad on government-to- government basis
or export authorised by Ministry of Defence/Director General Defence
Purchase.
- Export of samples, subject to conditions:-
(i) Export is not banned,
(ii) Upto FOB value of US$ 5,000/- per exporter per
annum, for leather garments upto 50 samples without value limit, and
no limit for all samples in mutilated form.
(iii) Goods are supplied free of charge.
- Gift parcels not exceeding Rs. 10,000/-
- Relief goods
- Bonafide baggage persons travelling abroad.
- Personal baggage of out-going passengers, without any restriction
of quantity or foreign exchange encashment certificates.
- Transit traffic and border trade as per prescribed procedures.
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Counterfeit Products:
Export of counterfeit products is not allowed and is actionable on complaint
through the EPB from holders of the trade mark, franchise, or license. Unfounded
complaints will also be penalized.
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Special Dispensation:
Where certain exports are not covered by the Export Policy & Procedures
Order 2000, special dispensation can be considered.
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Export Authorizations:
Ministry of Commerce issues export, export-cum- import or re-export authorization,
under the special dispensation, valid for six months or as specified.
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Textile Quota Exports:
Export of textiles and clothing to quota countries is governed by the Textile
Quota Management Policy Order in force. (See Chapter4)
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Exports through Public Sector-POL Products
Export of POL products is allowed through public sector agencies only, except
(i)mineral turpentine when it is to accompany and form part of paints
and varnishes exported, (ii)finished lubricants in blended form, and (iii)surplus
lube-base oil, petrochemicals, slack wax, asphalt (bitumen) and naphtha.
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