Pakistan Association of Automotive Parts and Associates Manufacturers (PAAPAM) has asked Federal Board of Revenue (FBR) to issue a revised customs valuation ruling on the import of all kinds of Chinese motorcycle parts for uniform/accurate assessment of duties and taxes on the import of such items.
PAPAAM said on Thursday that the existing valuation advice of the Directorate General of Customs Valuation has been termed as discriminatory by the association. The methodology of assessment of duties and taxes as specified in the valuation ruling has legal flaws due to different kinds of treatment to Chinese motorcycle parts. It is strange to note that FBR has placed no check on the Directorate General of Customs Valuation Karachi in case of illegal valuation rulings have been issued creating problems for a specific industry.
No penalty or punishment for officials responsible for issuance of wrong valuation rulings has been mentioned in the Customs Act 1969. PAAPAM appealed FBR to remove this discriminatory practice and to set up one value for import of all Chinese motorcycle parts based on realistic criteria of raw material plus manufacturing costs. This would lead to significant increase in GoP revenues while also giving impetus to potential of local manufacturing of such hi-tech parts in Pakistan"
Details of the issue revealed that the association believes that valuation advice for Chinese motorcycle parts issued on March 26th is meaningless because it has specified the assessment values of only for those motorcycle parts that are being imported by motorcycle manufacturers in their own name.
When a comparison is made between the earlier Valuation Advise dated April 15th, 2010 vs the one issued on March 26th, 2011, it is found that, out of 21 parts, the Customs Valuation Directorate has increased the assessment values for 12 parts, while it has drastically reduced the assessment values for 9 major parts. All of these changes have been done arbitrarily, without giving any details on how the values arrived at the department. In any case, PAAPAM argued that the March 26th, 2011 Valuation advise, which assigns values ranging from USD 2.30 to USD 15.01 for various parts, is meaningless since it is applicable only on direct imports by Motorcycle Assemblers.
It said it is evident from the import data that the Motorcycle Assemblers are importing negligible quantities of parts in their own name. Bulk of motorcycle parts are being imported by the Assemblers via a channel of Commercial Importers. Interestingly, Customs is releasing parts imported by Commercial Importers at a value of USD 1.1 per kg, even though the international prices of metals /aluminium used in these parts is more than USD 3 per kg.
The association opined that the above practice is discriminatory and allows massive under-invoicing of motorcycle parts used in annual production of over 750,000 Chinese motorcycles in the country. Due to the extremely low clearance of USD 1.1 per kg, Pakistani manufacturers of these parts are unable to compete and huge investments in this sector are lying unutilised, sources added.