LAHORE - Low valuation of imports has adversely affected sales tax, withholding tax, customs duty and Federal Excise Duty on imported items during 2013-14 and the major reason of less revenue collection is the absence of foolproof mechanism for accurate assessment of duties and taxes at the import stage.

Millions of rupees’ under-invoiced auto parts are coming into the country from China. Chinese motor bikes manufacturers are importing spare parts under commercial imports through outsourcing, which is a real challenge to the local vendors.

The ever-increasing smuggling and under-invoicing of auto parts and accessories is severely affecting the business of local manufacturers of spare parts besides causing loss of billions of rupees to the national exchequer, said Pakistan Association of Automotive Parts & Accessories Manufacturers chairman Usman Malik.

He invited the attention of FBR, Chairman towards this big menace of Customs value determination of imported auto parts at the Directorate General of Customs Valuations, Karachi, arbitrary customs valuation rulings of imports by customs authorities are turning the country into a trading hub by favoring commercial importers on one hand while on the other affecting collection of federal taxes at the import stage.

He said that almost all types of auto spare parts including rings, pistons, gas kits, filters and Radiators are being imported from Thailand and Dubai in astonishing quantities at extremely lower valuation. Pakistani markets are flooded with under-invoiced and smuggled goods of all descriptions and the dealers are selling these parts at 50-60 percent less rates than the parts made locally. Quoting the figures, he said that major discrepancy in prices has been witnessed on imports from UAE in various sectors, causing about Rs150 billion losses each year due to under-invoicing in imported goods. Per Kg. Assessing values of parts have been made without taking into consideration, the material cost or manufacturing overheads etc. That’s why these values are extremely on the lower side. Local manufacturers are required to go through a most primitive and completely obsolete system of deductive values. This method itself is a product of corruption and lack of understanding on part of customs valuation teams. On the other hand National Tariff commission is also unmoved, whereas this subject should also fall in ambit of anti dumping laws.

Unless the methodology required for establishing a realistic price of a part is not changed, the Mafia of importers in collaboration with Customs valuation department will keep depriving country of billions in revenue generation from collection of duties.

Usman Malik suggested that a special committee consisting of officials from FBR, EDB, representatives of PAMA and PAAPAM be formed to suggest measures for eradication of this malpractice and to condense the influence of commercial importers, safeguarding the interest of automotive industry.