FBR repudiates rumours of additional customs duty on imported car parts

FBR has dismissed media speculation that it had imposed/revised additional customs duty on the import of different types of components used in the manufacturing of vehicles

LAHORE: A very senior source at the Federal Board of Revenue (FBR), in conversation with Profit has dismissed media speculation that the FBR has implemented and/or revised duties on components used in the manufacturing of vehicles. 

The matter relates to the FBR’s Statutory Regulatory Order (SRO) numbered S.R.O.1930(1)/2022. The SRO details sweeping amendments to the categorization of various vehicle components which in turn raised media speculation that the additional customs duty (ACD) had been levied and/or revised on the listed items. 

“No new ACD” sources informed Profit. In response to Profit’s inquiry as to what the SRO detailed if not a change to the existing ACDs, sources said “ “The amendment in SRO has been made to comply with the international obligation of Pakistan to harmonize the subject SRO with the transposed HS code version 2022 wherein some descriptions or HS codes were transposed.” 

“By virtue of Transposed headings, old codes/ description are substituted with new one and amending SRO incorporated the substituted HS codes/description with old ones in line with HS 2022” the sources added.

The particular parts in question that were touted to have had the changes to the ACD made were Imported seat parts made of foam, head/ armrests and seat frames, air cleaner hoses, and water cooling system hoses (except turbo system hoses) for vehicles falling under the specified Pakistan Customs Tariff heading. Imported air cleaner hoses and water cooling system hoses (except turbo system hoses) for vehicles. Imported fan pulleys for vehicles of certain PCT headings, rear combination/backup lamps, rear turning indicators, plough lamps, reverse/parking lights for vehicles; ceiling/room lamps for vehicles and wiring sets and cable sets for vehicles of specified PCT headings. 

The list of parts identified by the media further included imported brake drums and air vacuum tanks, lever assembly for parking/hand brakes (4×2 vehicles only) for vehicles, built-up drive axles with hub and brake drum for vehicles, wheel hubs for axles for vehicles and built up non-driving axles with hub and brake drums for vehicles, dust protection caps for wheel hubs and wheel hubs for axles for vehicles, road wheels (excluding casted), rims, discs, caps, ornaments and weights for vehicles, pins for shock absorbers (4×2 vehicles only) for specified vehicles and radiators other than aluminum cores for vehicles of certain PCT headings. Finally, it also included imported steering wheels (non-foamed) and covers steering shafts for vehicles and seat parts made of foam for vehicles of specified PCT headings.

No particular reason as to why the FBR would have made such sweeping changes to such a wide array of vehicle parts. However, it is likely that the rumours emerged as a result of the Public Accounts Committee’s (PAC) criticism of the current nature of the automotive industry and their reiteration of how the industry should double down on localization. 

An increase in the ACD by the FBR under current circumstances is likely to cause greater damage to the already reeling parts vendors across the industry who are seeking to hammer out a better quota for themselves amidst the State Bank of Pakistan’s (SBP) measures to curb forex outflow by the automotive industry.

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Daniyal Ahmad
The author is a member of the staff, and covers the automobile sector as a sector analyst. He can be reached at [email protected]

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