Before the announcement of the federal budget 2017-18, the customs department has made a pre-budget announcement by increasing customs value of more than 400 models of imported vehicles of above 1800cc from Rs 200,000/- to Rs 1,500,000 per vehicle from April 18, 2017.
Because of the measures of the directorate of customs, more than 200 vehicles are stuck at the port and are in the pipeline, while the dealers stopped purchasing 1800cc/above cars from Japan and other countries, said Chairman All Pakistan Motor Dealers Association (APMDA) H M Shahzad here on Thursday.
“The federal government may lose above Rs 3 billion in taxes because of this illegal measure,” he added.
The APMDA had already filed a petition in this regard, but one of the directors of customs department through a letter Misc/05/2008-VIIIA/1084 dated 18.04.2017 increased the duties on 400 models of 1800cc/above.
In a letter to Finance Minister Ishaq Dar, the chairman APMDA said, “Your very able officers of Directorate General (Customs Valuation) are not acting under the prescribed law but are rather acting according to their own personal whims. In this way, they are impeding the collection of revenue at this critical juncture instead of assisting the government to achieve its economic goals.”
The assessment of customs duty on imported vehicles (new or second hand) was being finalized since year 2008 by a consensus of all the stakeholders, including local assemblers and All Pakistan Motors Dealers’ Association.
The letter said that the customs valuation rulings have been issued from 2008 to 2016 on principle, whereby the FOB would be arrived at by deducting 20 per cent from MSRP on account of local taxation on domestic models. However, in the latest customs Valuation Ruling 1051/2017 dated 21.02.2017 there were certain glaring mistakes.
Instead of rectifying these obvious errors, the officers tried to hide them. The APMDA filed a review petition before DG Customs Valuation under Section 25D of the Customs Act, 1969.
It is legally settled position that when an appeal is filed with higher officer against whose order the Appeal is filed, it cannot change or alter the original order, the letter said. However, before DG Customs Valuation could issue any review order, the director issued a letter on 18.04.2017 to modify his Valuation Ruling; thus circumventing any future orders of the director general, it added.
The APMDA met the DG to get it rectified. However, the deputy director and director Customs Valuation did not agree to withdraw the illegal order which adds 5 per cent loading on the calculation. This new, unagreed and unilateral mechanism suggests a new formula of arriving at the FOB value of imported vehicles by deducting 20 per cent (consumption and other local taxes in country of importation) but by adding loading of 5 per cent loading.
Because of this illegal measure of Director Customs Valuation, H.M Shahzad said that the mechanism of customs valuation for imported vehicles has been changed without any consensus with stakeholders and the customs revenue has been stopped when there is a dire need to collect revenue to meet the revenue target.
