The Directorate General of Customs Valuation, Karachi has revised customs value of shoe adhesive synthetic rubber imported from Italy, Malaysia, Thailand, Indonesia, Taiwan and China for accurate determination of customs duty.
Sources told Business Recorder on Saturday that DG, Customs Valuation issued a ruling for assessing customs duty on the import of this item based on the revised determined values. The market survey results have been duly considered to determine fresh values of shoe adhesive.
According to the ruling, the directorate has received a complaint from a local manufacturer of "shoe adhesive" regarding under invoicing on its import. It was alleged that 3 to 4 companies (constituting 80 percent of total import volume) were involved in under invoicing by declaring the value in the range of US $0.60/kg to US $0.80/kg while the actual value should be in the range of US $2.00/ kg to US $2.33/ kg. various formulations of shoe adhesive with cost computations were provided. Its market price was reported to be in the range of Rs 177.23/kgto Rs 225/ kg. Some quotations from foreign suppliers were also provided by the complainant.
The import data indicated that there was a wick variation in valuation and description of shoe adhesives. The import transactions of M/s. BATA Pakistan Limited, M/s Service Industries Limited and M/s EPCT (PVT) limited were observed to be of exclusive specifications which could not be considered for comparison as the same catered to the requirement of high-end branded market.
The directorate said that several meetings were held with the importers and the complainant, wherein the importers were confronted with the facts provided by the complainant. The importers argued that due to presence of more than one formulation of shoe adhesives and varying prices of raw materials (chemicals and solvents), no working based on raw material prices was acceptable to them.
The market prices as given by the complainant were also objected by them as being incorrect. As far as prices of shoe adhesives based on quotations were concerned, the importers argued that such quotations are always subject to negotiation and quantity discounts.
The transaction value could not be accepted under section 25(1) of the Customs Act 1969, since the landed cost of imported goods vas no where near the local selling prices. The information available under Section 25(5) and (6), being doubtful in the wake of complaints of under invoicing, could also not serve as a useful tool due to varying nature of transactions owing to different descriptions, specifications, level and quantity.
It was, therefore, decided to rely upon the subsequent mode of valuation ie to conduct, market enquiry under Section 25(7), which was carried out jointly by the complainants' nominee, the importers' representative and a departmental officer. The result of market survey revealed that the goods were available in the range of Rs 150 to 200/ kg (US $1.50 kg to 2.00 kg).
Reliance upon raw materials pricing was not a feasible option due to the fact that fluctuation in the quantity of raw materials that make up shoe adhesives affect its value of raw materials themselves varied being imported from different regions, therefore, it was decided that the customs value should be based on market findings. The results of market enquiry have yielded values that closely approximated the values given by the complainant.
The following Customs values are, accordingly determined under Section 25(A), which are based upon working carried out under Section 25(7) of the Customs Act 1969: Shoes Adhesives Synthetic Rubber (Chloroprene/Solvent base)- Brand name (Euroflex), HS code 3506.9110, origin Italy, declared value, US $0.75/Kg and its determined customs value comes to US $2.00/ kg; Shoe Adhesives Synthetic Rubber (Chloroprene/Solvent base)-Brand name (Red Horse), HS code 3506.9110, Italy, declared value US $0.75/ kg, determined value US $1.70 per kg; Shoes Adhesives Synthetic Rubber (Chloroprene/Solvent base) Brand name (NAN PAO); HS code 3506.9110, Malaysia/ Thailand/Indonesia/Taiwan/China, declared value US $0.70/ kg, determined value US $1.60 kg and Shoes Adhesives Synthetic Rubber (Chloroprence/Solvent base) having brand name (Golden Bell), 3506.9110, Malaysia/ Thailand/Indonesia/Taiwan/China, declared value of US $0.70/ kg, whereas the new determined customs value comes to US $1.60/ kg.
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