PESHAWAR, Oct 20: The Central Board of Revenue's decision to charge customs duty on imported goods cleared at the Peshawar dry port at the same rate as those charged at the Karachi customs dry port has left local importers high and dry , making it difficult for them to compete with smuggled goods, market sources say.
Before last July, the rates of duty charged at the Peshawar dry port were on the lower side when compared with those charged at Karachi and Lahore dry ports.
Officials said the anomaly was being overlooked by the CBR previously in an effort to give incentives to local importers who were faced with tough competition from smuggled goods found in abundance in the NWFP markets.
Even though border security forces and army troops man the Pakistan-Afghanistan border, a large quantity of foreign goods still finds its way into the country without paying customs duty and other taxes.
"Lower duty rates were meant to create a level-playing field for the local importers and to help them compete with the smuggled goods," said a CBR official.
However, the board at the highest level decided to treat the NWFP's importers on a par with other parts of the country, doing away with the anomaly.
Now authorities of the Peshawar dry port charge duty on imported goods in line with the rates notified to them by the office of the controller-general valuation, Karachi.
Previously, the Peshawar dry port used to charge $16 as customs duty on single television body kit. Now, in line with the controller general valuation's advice, it is charging $26.38 per kit.
Similarly, against the previous rate of $12 charged on Video Compact Disk (VCD) player, the new rate is $18.
Zia-ul-Haq Sarhadi, a leading customs clearance agent and head of the Sarhad Chamber of Commerce and Industry's sub-committee on customs, apprehended that the CBR's move would promote smuggling.
He said the move would annoy the Afridi and Shinwari tribesmen who had recently entered into legal import business by discarding their smuggling-based businesses.
It would raise cost of legal business, forcing tribesmen to go back to smuggling, the business of their forebears.
"The move has resulted in more harm than good for the business circles of Peshawar," conceded an official.
Customs clearance agents say that under customs rules, the CBR is supposed to carry out a market survey in Peshawar to determine the rates of duty for imported goods cleared at the local dry port.
The rates charged at the Karachi and Lahore dry ports had been determined on the basis of market surveys conducted there separately, they point out.
Peshawar-based officials of the customs collectorate backed this view, saying a presentation to this effect had been made to the relevant authorities recently.
Mr Sarhadi said that applying Karachi dry port's rates, calculated on the basis of their local market survey, to goods cleared in Peshawar was not justified because prices of goods in Karachi were much higher than those of Peshawar.
"A 14-inch TV set, of a specific make, is priced at between Rs5,000 and Rs7,000 in Peshawar's markets, whereas the same costs Rs8,000 to Rs10,000 in Karachi," said Mr Ansari, another customs agent.
He, however, conceded that under the law rates of customs duty had to be uniform across the country.
But keeping in view the peculiar conditions of the NWFP where illegal trade had always thrived, the customs authorities took lenient view and charged lower rates of customs duty there, he added.
Customs agents said that imports through the Peshawar dry port would no more be a cost-effective proposition as local importers were already hard pressed by higher transportation costs.
Under CBR rules, they maintained, importers could not transport their imported goods from Karachi to Peshawar through ordinary trucks.
They must take trans-shipment permit for transporting their containers through designated goods transportation companies - bonded carriers -- which raises their overhead cost.
The importers pay between Rs45,000 and Rs50,000 to CBR's designated goods transportation companies for transporting goods in a 40ft container from Karachi to Peshawar which they can bring by paying Rs25,000 to Rs30,000 to ordinary truckers.