Customs Duty Exemption for Manufacturing Aids and Clean Room Equipment Gazetted

The Customs Duties (Exemption) (Amendment) (No. 2) Order 2024 [P.U.(A) 86/2024] (“the E.O.”) which exempts manufacturing aids and clean room equipment from payment of customs duties has been gazetted on 14 March 2024.
 
The E.O. is deemed to have come into operation on 1 January 2024.
 
The exemption is effected by inserting the following as a new item 121 of the Schedule to the Customs Duties (Exemption) Order 2017 [P.U.(A) 445/2017]:
 
(1)
No.
(2)
Persons Exempted
(3)
Goods Exempted
(4)
Conditions
(5)
Certificate to be signed by
121 (a)  Any manufacturer licensed under section 65A of the Customs Act 1967; or Manufacturing aids and cleanroom equipment (i)  That the goods are used directly or indirectly in the manufacture of the manufacturer’s finished goods;
 
The manufacturer
  (b)  Any manufacturer in the free industrial zone declared under section 3 of the Free Zones Act 1990   (ii)  that in the case of the goods to be used indirectly in the manufacture of the manufacturer’s finished goods, prior approval from the Director General shall be obtained by the manufacturer;
 
 
      (iii)  that the goods are imported or purchased from a warehouse licensed under section 65 of the Customs Act 1967;
 
 
      (iv)  that the goods are imported or purchased from the free industrial zone declared under section 3 of the Free Zones Act 1990;
 
 
      (v)  that the goods shall not be part of the manufacturer’s finished goods;
 
 
      (vii)  that the goods are stored at the manufacturer’s premises approved by the Director General;
 
 
      (viii)  that the goods shall not be sold, disposed of, transferred, exported or taken out of the manufacturer’s premises without the approval of the Director General;
 
 
      (viii)  where the goods are found damaged, destroyed due to unavoidable accident or does not meet the specified quality, the manufacturer may export, transport or return the goods to the supplier, and no duty shall be levied on the goods;
 
 
      (ix)  any other conditions as the Director General may deem fit to impose
 
 
 
Comments

The exemption of manufacturing aids from payment of customs duties was announced during the 2024 Malaysian Budget Speech1. At the same time, the Government also announced that manufacturing aids will also be exempted from payment of sales tax. This exemption has been gazetted on 29 December 2023 under the Sales Tax (Persons Exempted from Payment of Tax) (Amendment) (No. 3) Order 2023 [P.U.(A) 411/2023] which came into operation on 1 January 20242.
 
 
Alert by Chong Cai Yi (Associate) of the Corporate Practice of Skrine.
 

1 See Appendix 30 of the 2024 Malaysian Budget Speech.
2 Items that qualify for sales tax exemption as “manufacturing aids” and “cleanroom” equipment are set out in Appendices 1 and 2 respectively of Customs Ruling No 2/2024 (available only in Bahasa Malaysia).

This alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. For further information, kindly contact skrine@skrine.com.