All Authorized Dealers
In Foreign Exchange,

Dear Sirs,

DIPLOMATIC BONDED WAREHOUSES – SALES TO ENTITLED PERSONS / ORGANIZATIONS ETC

At present, payments by the entitled persons for purchases from the licensed bonded warehouses are required to be made through instruments drawn in favour of the overseas/owners of the goods held in the bonded stores. These instruments are sent by the stores to the overseas beneficiaries. The amount of commission accruing to the warehouses is subsequently repatriated to Pakistan through normal banking channel. The bonded warehouses are required to submit to Foreign Exchange Department, State Bank of Pakistan, prescribed statement showing sales from the stores/commission accrued etc. duly certified by the Custom authorities.

2. Central Board of Revenue has since changed the mode of payment for purchases from the Diplomatic Bonded Warehouses and has issued Customs General Order No.12/94 dated the 9^th June, 1994 in suppression of all previous orders/instructions in this behalf (copy enclosed). The said order requires opening of foreign currency accounts to receive the sale proceeds from the privileged persons. To implement the Central Board of Revenue’s above decision, following instructions are issued:

1. The Bonded Warehouse Owners will open separate foreign currency account with an Authorized Dealer in Pakistan for each Bonded Warehouse being operated with the approval of Central Board of Revenue/State Bank of Pakistan.

2. The account will be fed exclusively through crossed cheques/pay orders and drafts issued in favour of licensees by the privileged persons making purchases from the bonded warehouses.

3. No other credit into these accounts will be permissible.

4. Immediately after the proceeds of the instruments mentioned in sub-para (ii) above have been realized and credited to the relative foreign currency account, the Bonded Warehouse Owners will remit to the owners of the goods the sale proceeds of the goods less the amount of agreed commission. The amount of the agreed commission will simultaneously be converted by the warehouse owners in Pakistan rupees.

5. The amount of interest accruing on these foreign currency accounts, if any, will be converted and paid to the account holders in Pakistan rupees.

6. The Bonded Warehouse Owners will continue to submit the monthly statements prescribed by the State Bank of Pakistan as per the terms and conditions of the approval letters issued by the State Bank of Pakistan together with the requisite documents. The bonded warehouse owners will also submit alongwith the prescribed monthly statement, following additional documents:-

1. The statement of the foreign currency account indicating each credit/debit entry.

2. Proceeds Realization Certificates in evidence of conversion of the amounts of commission/interest into Pakistan rupees

3. Please bring the above to the notice of your constituents.