KARACHI: The Direc­torate of Customs Valuation has increased the customs valuation rate on import of 1,800cc and above vehicles ahead of federal budget 2017-18.

All Pakistan Motor Dealers Association (APMDA) Chairman H.M. Shehzad said the decision would raise the duty of such vehicles by Rs200,000 to Rs1.5 million depending on around 400 models as the mechanism of customs valuation for imported vehicles had been changed without taking stakeholders into confidence.

He said the association members had suspended the clearance of around 200 vehicles at the port due to an increase in valuation rate.

However, the government would not get Rs3 billion revenue due to non clearance of vehicles.

In a letter to Finance Minister Ishaq Dar on April 27, the assessment of customs duty on imported vehicles (new or used) was being finalised since 2008 by consensus of all stakeholders including local assemblers and APMDA.

The customs valuation rulings have been issued since 2008 to 2016 on the principle whereby the freight-on-board (FOB) would be arrived at by deducting 20 per cent from manufacturers’ suggested retail price on account of local taxation on the domestic models of vehicles being imported into Pakistan.

He said the Association had pointed out to the Directorate Customs about glaring mistakes in the customs valuation ruling of February 21, 2017. The APMDA filed a review petition before DG Customs Valuation under Section 25D of the Customs Act, 1969.

Before Director General Customs Valuation could issue any review order, the department issued a letter on April 18, 2017 revising valuation upwardly. APMDA met DG Customs valuation on April 26, 2017 to get it rectified.

However, the department did not agree to withdraw the order. This new mechanism suggested a new formula of arriving at FOB value of imported vehicles by deducting 20pc (consumption and other local taxes in country of importation).

Published in Dawn, April 28th, 2017