SCHEME FOR FREIGHT SUBSIDY ON EXPORT

With a view to ensuring timely payment of freight subsidy claims of the exporters, the Export Promotion Bureau has reviewed procedure and time lines for pre-audit and payment of freight subsidy claims under its Public No 2(4)/200 PPI dated 26th October 2004, in consultation with the Commercial Banks and the

Auditors. A nurnber of amendments have been made in the aforementioned Public Notice.

One of the principal amendments provides that the commercial banks with whom the exporters file their subsidy claims, will send the claims found admissible, to the National Bank of Pakistan, FTC Branch, Karachi, instead of the Export Promotion Bureau or the Auditors. National Bank of Pakistan will forward the claims to the Auditors, within seven days. The Auditors will complete pre-audit within seven days. They will forward the accepted claims to the National Bank of Pakistan for payment to the exporters through their commercial banks within two days. The commercial banks will make payment to the exporters on the same  or the following working day,

A Public Notice dated 17th February 2004 notifying the above amendments in the procedure and time lines has been issued and put on the EPB website www.epb.gov.pk These amendments have also been incorporated in the original Public Notice No. 2(4)/2004-PPi dated 25th October 2004 already available on E PB website. (JAMSHID KHAN)

Director General

AMENDMENTS IN PUBLIC NOTICE DATED 25th OCTOBER 2004 Scheme for Freight Subsidy on Exports

The Export Promotion Bureau has reviewed the procedure and time lines for pre-audit and payment of freight subsidy chums under its Public Notice No. 2(4)/2004-PPI dated 25th October 2004, in consultation with the Commercial Banks and the Auditors. As a result of the consultations held, following amendments are notified in the aforementioned Public Notice:

a) In para 3. under the heading "Admissibility/Continuity of freight Subsidy", in sub para(a). at the end, the dale "30"' June 2005" will be read as" "30^{th September 2005".}

b) In para 4. under the heading "Documents Required for Claiming freight Subsidy", at the end. the following new sub-para (h) will be added:

(h) Check List of required documents as per Annexure VI".

c) In para-5. tinder the heading "Procedure for Payment of freight Subsidy", in sub-para (c). the words "Deputy Director (freight Subsidy) Export Promotion Bureau (EPB). will be substituted by the words National Bank of Pakistan, FFC Branch." and the word "immediately will be substituted by the word "within 07 days.

d) In para 5. in sub-para (d). the words "within two working days" will be substituted by the words within seven days.

e) In para 5. in sub-para (e), the words "bank of the exporter" will be substituted by the words "National Bank of Pakistan" and the words "within ten days of receipt of the claims", will be substituted by the words within seven days of receipt of the claims.

0 In para-6. under the heading "Implementation of the Scheme", the words "Deputy Director (freight Subsidy) in the EPB" occurring in sub-paras

(a) and ( c) will he substituted by the words "Project Officer (Freight Subsidy)

g) In para 7. tinder the heading "Audit", sub-para (a) will be reworded as follows:

"The National Hank of Pakistan will forward all subsidy claims directly to the Auditors for pre-audil".

h) In para 7(b). the words "within two working class" will be substituted by the words "within seven days".

It is notified for the information of exporters that, in terms of the Trade Policy for 2004-05, the freight subsidy scheme has been continued, according to the following revised rules and regulations.

1. Short Title and Commencement: The scheme will he called "Scheme for Freight Subsidy on Exports", hereinafter referred to as "the scheme". The scheme is designed to leverage our market and product diversification efforts. The freight subsidy scheme was last notified for the fiscal year 2003-0-1. It covered export shipments up to 30^{lh June 2004. Freight subsidy scheme will continue from 1st July 2004 up to 30th September 2005. Freight subsidy claims in respect of export shipments upto 30th June 2004 will continue to be entertained according to the EPB Public Notice No. 2(2)/2003-PPI . 11th November 2003. Freight subsidy claims in respect of export shipments from Ist July 2004 up to 30th September 2005 will be entertained according to this Public Notice.}

2. Definitions:

(a) "New products" are defined as those whose annual exports were not more than $5 million in any one of the last three fiscal years from 2001-02 to 2003-04. New products are identified at the IIS 6-digit level, but where a number of products are clubbed at the 6-digit level under the category "Others", these are differentiated at the IIS X-digit level for the purpose of eligibility for freight subsidy.

(b) "New markets" are defined as those countries where Pakistan's total exports had been less than $10 million as an average of the last three fiscal years.

(c) "Last three fiscal years" will be the years 2001-02. 2002-03 and 2003-04.

(d) "National Bank" means the National Bank of Pakistan, FTC Branch. Karachi.

(e) "Bank" means the commercial bank which processes the freight subsidy claim and which also handled export documents connected with the freight subsidy claims.

3. Admissibility/Continuity of Freight Subsidy:

(e) Annexure 11 to this Public Notice is the list of eligible products, in terms of the definition of new products in para 2 above. Importers may approach the Export Promotion Bureau for inclusion of am product not included in Annexure-ll and are claimed to be eligible as per definition in para 2 (a),

(d) Export shipments upto 30^{th June 2004 will be eligible for freight subsidy. according to the lists of eligible products and eligible countries as already notified for 2003-04.}

(e) Freight subsidy will be available for eligible products and eligible countries on all C&F/CIF shipments. In ease of FOB shipments, freight subsidy will be limited to airfreight or sea freight on containerized cargo. FOB shipments in bulk form will not be eligible for freight subsidy. For exports by, land route, subsidy will be available for eligible products and for eligible countries on the basis of actual freight paid, from the exit point in Pakistan to the destination, as per Truck Receipt/Railway Receipt, limited to benchmarks determined by the Technical Committee in the Export Promotion Bureau.

(f) Where a shipment is carried upto a port and then carried further to a land locked country by land route, freight subsidy will be allowed upto the first port of discharge.

(g) Where freight paid relates to several products some of which are eligible and some not eligible for subsidy, the freight paid for eligible products should be worked out on the basis of the commercial invoice.

4, Documents Required For Claiming Freight Subsidy: Exporters will lodge their claim of subsidy with their Banks (issuing BCA) within 60 days of realization of export proceeds of shipments concerned, on the prescribed form as per Annexure-lll accompanied by a summary of the claim as per Annexure-lV, supported by the following documents, to be listed as per Check List in Annexure VI,

(a) A copy of Commercial Invoice.

{b) Fourth copy of Shipping Bill / Goods Declaration (GD) in original, which must bear the exporter's rubber stamp "Under freight Subsidy Claim", with one photo-copy set which will be certified by the Manager of the dealing Bank and retained. The original fourth copy of Shipping Bill/GD will be returned to the exporter after making an endorsement "Freight Subsidy Claimed" in hand or rubber stamp. Where original fourth copy is not available, a photocopy attested by the Assistant Collector of Customs concerned may be accepted.

(c) Copy of the Bill of Lading/Airway Bill certified by the Shipping Company/Shipping Agent/Airline. In case of freight booked by a Freight Forwarder/Air Cargo Agent, a certificate from the concerned Association of Freight Forwarders/Air cargo Agents on their letterhead certifying the freight paid on the shipment.(d) Original freight paid receipt issued In the Shipping Company/Shipping Agent/Airline or by the Freight Forwarder Cargo Agent.

(c) In ease of FOB shipments, certificate by the Shipping company. 'Airline of the freight paid on the shipment, description of goods. destination and confirmation ( for the sea cargo) that the cargo was containerized.

(f) In case of land route freight, the original Truck Receipt / Railway Receipt.

(g) A copy of Bank Credit Advice (BC'A).

(h) Check List of required documents as per Annexure VI.

5. Procedure for Payment of Freight Subsidy: A separate account will be maintained out of KPF funds by the Government with the National Bank of Pakistan (FTC Branch. Shara-e-Faisal, Karachi). This account will be replenished by the Government as and when necessary. The process of application, approval and disbursement of subsidy will be as follows:

(a) Exporter lodges claim with his bank, in the prescribed form as per Annexure III. alongwith a summary of claim as per Annexure IV, within 60 days of realization of export proceeds, alongwith necessary supporting documents. In case of advance payment, the period of 60 days for claiming the freight subsidy will be counted from the date of shipment instead of the date of realization of export proceeds.

Provided that the exporters who have not filed claims of freight subsidy, in respect of shipments made during 2004-05. will be allowed to submit their subsich claims within 60 days of the realization of export proceeds, or within 30 days of the date of this public notice, whichever date is later.

(b) Bank examines documents to ensure eligibility and validity of the claim on the basis of list of eligible countries and products, Banks will ensure that there is no discrepancy between the product description in the export documents, (lie application lor freight subsidy and the claim summary and that the IIS codes claimed match with those given in the list of eligible products. Doubtful cases \\iil be referred to Export Promotion Bureau. Head Office. Karachi, for advice.

(c) If claim is valid, the Bank forwards the claim within 10 days, alongwith all supporting documents, to the National Bank of Pakistan. FTC Branch, FTC" Building. Shara-e-Faisal Karachi, who sends on the claims within seven days to the auditors for pro-audit.

(d) The Auditors will audit each claim and forward the acceptable claims to the National Bank, within seven days, with a covering letter in the form as pet-Anne sure V,

(e) If claim is not valid, (he Auditors will return the claim to the National Bank of Pakistan under covering letter giving reasons for non-acceptance of the claim within 07 days of receipt of the claim. If a claim filed in time is thus returned by the Auditors, it will not be trailed as time haired when re-presented later, after removing the objection In the Auditors, within 30 days of the objection memo by the Auditors, unless the lime limit is extended by EPB on the request of the exporter,

(0 Bank will maintain record of all claims received, paid and refused (with reasons). Auditors will maintain a database on all freight subsidy payments, by products and by countries, on a monthly basis and provide copies to the Export Promotion Bureau.

(g) National Bank will ensure payment of the subsidy to the Bank within two working days of the receipt of the audited claims from the auditors,

(h) The bank, on receipt of the funds, from the National Bank, would make the payment of the subsidy to the exporter on the date of receipt of the funds or latest by the next working day.

(a) Implementation of the scheme will be monitored by a Steering Committee, in the EPB comprising

1. Chairman EPB / Vice Chairman EPB

2. Director General (PP1) EPB

3. Director General (Supply Management) EPB

4. Consultant (Policy) EPB

5. Collector of Customs (Exports). Karachi

6. Director Foreign Exchange. State Bank of Pakistan. Karachi

7. Manager. National Bank of Pakistan. FTC Branch. Karachi

8. Representative of Pakistan Banking Association 9. Representative of Pakistan Shipping Association

10. Representative of Air Cargo Agents Association

11. Representative of freight Forwarders Association

12. Chairman fruits and Vegetables Exporters Association

Project Officer (freight Subsidy) in the EPB will act as the Secretary of the Steering Committee. The Steering Committee nun co-opt any person to assist the Steering Committee.

(b) The Steering Committee will:

(i) Monitor the working of the scheme;

(ii) Review the rules and implementation of the scheme and to make

such modifications, as it considers necessary for the purpose: (iv) Determine admissibility of freight subsidy in individual cases

referred to it: (v) Advise recovery of the subsidy payment that may have been made

wrongly to any exporter.

(d) The Technical Committee will deliberate on requests for freight subsidy on products not already covered in the list of eligible products and make recommendations to the Steering Committee.

(e) The Technical Committee will determine the maximum land freights for distances for which land route freight subsidy is admissible.

(i) The Technical Committee will handle all references received in EPB for advice from the Commercial Banks, the National Bank and the Auditors.

7, Audit

(a) The National Bank of Pakistan will forward all freight .subsidy claims directly to the Auditors for pre-audit.

(h) 1 he auditors will carry out pre-audit within seven days and send the accepted claims to the National Bank lor payment.

(c) All payments of freight subsidy will also be subject to post-audit. Atleast 10% of the claims will he selected on a random basis, for detailed scrutiny by the Technical Committee.

8. Appeals: Exporters \\ho are not satisfied on am matter relating to a freight subsidy claim, may file an appeal with the Steering Committee whose decision will be final.

Dr. Masroor Aimar Memon

 Deputy Director (Freight Subsidy)