Lahore - The Customs Department has reduced the Import Trade Prices (ITP) for motorcycle parts of China even below the rates of raw materials for commercial importers.
“The customs authorities in ruling No. 685/2014 have reevaluated the Import Trade Prices (ITPs) of motorcycle parts that gave commercial importers huge concessions of up to 400 percent against the values determined for OEMs.”
According to auto industry experts, comparison of prices of parts after the customs valuation clearly suggests that Carburetor will have 177 percent devaluation in price for commercial imports against the OEMs’ manufactured prices of the said component.
“Similarly, CDI unit will have 321 percent devaluation; Cylinder Head will have 146 percent; Ignition Coil 123 percent; Insulator Carburetor 206 percent; Main Shaft and counter Shaft 227 percent; Magneto 154 percent; Piston 155 percent; Rectifier Regulator 197 percent; Ring for Piston 150 percent; Spark Plug 317 percent; and Valve inlet/Exhaust 400 percent.
The Pakistan Association of Automotive Parts and Accessories Manufacturers has criticized the Customs for reducing valuation of Chinese motorcycle parts, saying that such arbitrary valuation rulings have been targeting the very survival of the auto parts industry.
The newly-elected Chairman Siddique Misri, in a letter written to Director General of Customs Valuation, observed that valuation ruling was issued without inviting PAAPAM or any of its members, the major stakeholders of the auto sector, to the hearing, which is clear violation of the rules, he added.
PAAPAM Senior Vice Chairman Mumshad Ali said that ever increasing smuggling and under-invoicing of auto parts and accessories is already severely affecting the business of local manufacturers of spare parts besides causing losses of billions of rupees to the national exchequer. He said that arbitrary Customs valuation rulings of imports by customs authorities were turning the country into a trading hub by favouring commercial importers on the one hand and on the other hand adversely affecting collection of federal taxes at the import stage.
Vice chairman Iftikhar Ahmad pointed out that the low valuation of imports is already showing declining trends in sales tax, withholding tax, Customs duty and Federal Excise Duty on imported items during 2013-14 and the major reasons for lower revenue collections was the absence of foolproof mechanism for accurate assessment of duties and taxes at the import stage.
The auto industry stakeholders suggested that a special committee consisting of officials from FBR, Engineering Development Board, representatives of PAMA and PAAPAM be formed to suggest measures for eradication of this malpractice, and for ending the influence of commercial importers, in order to safeguard the country’s revenue collections.
“We fully support availability of quality goods at economical prices for the consumers in Pakistan, but its solution does not lie in duty reductions through arbitrary valuations, at the cost of government revenues and the industrial base of the country.”