KARACHI: Ever since the government rolled back the changes to the rules for clearing of imported used cars on February 23, 2018, a new dispute has emerged between customs clearing agents and terminal operators over the huge demurrage charges that have been incurred during the 141 days as more than 10,000 vehicles remained stranded at the port.

The Customs Agents Association has written to three private terminal operators asking for waiver of all charges for the vehicles that were stranded on their premises. The vehicles could not be cleared due to changes in the clearing rules that took effect while the automobiles were in transit to Karachi port. The operators include Al Hamd, Pak Shaheen Container Services, and National Logistics Cell (NLC).

“We have spoken to customs authorities and they have agreed to grant us a delayed detention certificate, after which the terminal operators are legally required to give us a waiver on demurrage charges,” Mohammad Aamir, Secretary General of the Karachi Customs Agents Association told Dawn. He estimated the total amount of demurrage charges being applied to lie in a range from Rs500 million to Rs1 billion.

Huge demurrage charges have accrued while vehicles are stuck at port due to changes in clearing rules

“This is a burden on trade,” he said referring to the charges. “This is a kind of trade after all, even the used car showroom owners, after all, that is also a trade in a sense”.

The Customs Act of 1969, under Section 14A (2) mandates a refund or waiver of all demurrage charges “received on account of delay because of no fault of the importers or exporters”. This section of the Act was the subject of litigation between the three large terminal operators of Karachi — Qasim International Container Ter­minal (QICT), Pakistan International Container Terminal (PICT), and Karachi International Container Terminal (KICT) — in a case that was filed in November 2013. One of the prayers moved by the petitioners in that case was to “declare Section 14A of the Customs Act 1969 is unconstitutional and void ab initio.” The court granted the request in a short order, so the legality of any case built on the said section is now in doubt.

Most of the cars in the dispute are imported under the baggage or transfer of residence scheme, a facility meant only returning expatriates. In noting the widespread abuse of this facility for commercial purposes, the Ministry of Commerce imposed new rules for clearing of vehicles under the schemes that required payment of all duties and taxes on these imports to be made from bank accounts that are in the name of the person shown as the importer.

Those rules practically shut the trade down, leaving up to 10,000 cars stranded at the ports for months till February 23, when the government bowed to the demands of the importers and customs agents and reversed the rules. “The reason is that our local auto industry is not able to meet the requirement of our local markets for cars” said Aamir, when asked how cars imported under these schemes could be said to be part of “trade and industry”.

Local assemblers are giving up to six month delivery times, he said, “and look at where the own money has gone now”. He claimed the government reopened these schemes for commercial importers keeping mind the inability of local auto assemblers to meet the skyrocketing demand for automobiles.

Published in Dawn, March 6th, 2018