Sindh High Court Grants Relief: Firefighting Equipment Imports Exempt from Duties

In a decision with positive implications for fire safety efforts, the Sindh High Court (SHC) has ruled that firefighting equipment qualifies for exemption from customs duties and sales tax at import. This exemption applies to equipment falling under the definition of "capital equipment."

Background of the Case

A company in Pakistan imported firefighting and lightning equipment. They claimed exemption from customs duties and sales tax under a specific regulation (SRO No. 41(I)/2009). However, the Customs Department denied their claim.

The company argued that the equipment constituted "capital equipment" as defined in the SRO and that their factory resided within a Special Economic Zone, further supporting their exemption claim.

Customs Department's Argument

The Customs Department disagreed, asserting that the equipment didn't qualify as machinery under the SRO's definition. They pointed out that while the equipment was included under a specific code (HS Code 9917) in 2019, this change wouldn't apply to past imports.

SHC's Reasoning and Decision

The SHC bypassed the debate on whether the equipment strictly fell under the SRO's machinery definition. They acknowledged that the imported items were indeed equipment and qualified for exemption as capital equipment independent of the machinery classification.

The Court disagreed with the interpretation of the Customs Department and the Federal Board of Revenue (FBR) that denied the exemption.

Court's Order

The SHC ruled in favor of the company, declaring that the imported firefighting and lightning equipment qualified as capital equipment under the SRO. Consequently, they are exempt from customs duties and sales tax.

The Court also ordered the following:

• The impugned notice and letters upholding the denial of exemption are set aside.
• The bank guarantee furnished by the company is discharged.

Significance of the Judgement

This decision is a significant development for businesses importing firefighting equipment in Pakistan. It clarifies the exemption status of such equipment under the relevant SRO and ensures smoother import processes for companies involved in fire safety solutions.

This article was published at Sindh High Court Rules Firefighting Equipment Exempt from Import Taxes