ISLAMABAD: Clearance of more than 10,000 used cars stuck at Karachi port since October is about to begin as the Commerce Ministry issued a notification withdrawing the new clearing procedure that had left the vehicles stranded.

SRO261 was issued on Friday, implementing a decision of the Economic Coordination Comm­ittee of the Cabinet doing away with the conditions introduced to minimise misuse of the facility.

On the recommendation of the State Bank of Pakistan, commerce ministry notified new rules for clearance of used imported cars which required that payment of duties and taxes on every vehicle must be made from a bank account controlled by the person shown as the importer under baggage and transfer of residence rules.

The ministry said it introduced the new provision to stop the misuse of these facilities by commercial importers of used cars. But the new rules left close to 10,000 cars stranded at the port because orders for them had been placed prior to the notification of the new rules.

The import of used cars are only allowed to overseas Pakistani under three schemes — transfer of residence, personal baggage and gift scheme.

After Friday’s notification, the provision of arranging foreign exchange remittance to pay the duties for the cars up to 1800cc will not apply. The bulk of car imports fall in this category.

But in the case 1800cc cars and above, the procedures will remain the same — payment of duties and taxes in foreign exchange by the importers from his/her own bank account. This means they still need to arrange customs duty through remittance.

A senior officer of commerce ministry told Dawn that the decision was taken to control outward remittance through informal channels. The commercial importers in Pakistan arrange passports of overseas Pakistanis and import car in their names.

The officer who is not willing to be named further said the decision was reversed following tremendous pressure from the vested interests involved in the commercial imports of these cars.

A tax official said that the Federal Board of Revenue is expecting to generate nearly Rs8 billion from payment of duty and taxes on these cars in the next few days. “We needed this money to reach closer to the revenue target for the current fiscal year”, the official added.

Ideally, import of used cars takes place under these three schemes individually. But, it is only on paper and the schemes are used extensively by commercial importers. Those cars are not supposed to be older than three years.

Published in Dawn, February 24th, 2018