The Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM), criticised the customs for reducing valuation of Chinese motorcycle parts even below the rates of raw materials for commercial importers, and said that such arbitrary valuation rulings have been targeting the very survival of the auto parts industry.
The Association's Chairman Mohammad Siddique Misri, in a letter to Director General of Customs Valuation, stated that the new Import Trade Prices in ruling No 685/2014 regarding motorcycle parts of China has been reduced by huge margins for commercial importers, which is detrimental to the local industry of parts manufacturers.
The valuation ruling was issued without inviting PAAPAM or any of its members, the major stakeholders of the auto sector, to the hearing, which is clear violation of the rules, he added. He asked the Director General of Customs Valuation to withhold the implementation of ruling No 685/2014 and call an immediate hearing of all the stakeholders, including Pakistan Association of Automotive Parts and Accessories Manufacturers at the earliest. Although 3 months have passed since the request, no hearing has been convened by the customs authorities, he added.
PAAPAM Senior Vice Chairman Mumshad Ali was of the view that the auto parts manufacturing (APM) industries employ more than 2,000,000 highly skilled work forces which is around 95 percent of the total manpower employed in auto industry. During the last 15 years, the APM sector has come a long way in terms of acquiring technologies to manufacture a wide range of hi-tech products not only for domestic industry but also catering for export market.
The localisation levels achieved so far by this industry are 55 - 70 percent for passenger cars, over 90% for motorcycles & tractors and 40 percent in case of trucks & buses. He said that ever increasing smuggling and under-invoicing of auto parts and accessories is already severely affecting the business of local manufacturers of spare parts besides causing losses of billions of rupees to the national exchequer.
He said that arbitrary Customs valuation rulings of imports by customs authorities were turning the country into a trading hub by favouring commercial importers on the one hand and, on the other hand, adversely affecting collection of federal taxes at the import stage.
Iftikhar Ahmad pointed out that the low valuation of imports is already showing declining trends in sales tax, withholding tax, Customs duty and Federal Excise Duty on imported items during 2013-14 and the major reasons for lower revenue collections was the absence of foolproof mechanism for accurate assessment of duties and taxes at the import stage.
PAAPAM office-bearers suggested that a special committee consisting of officials from FBR, Engineering Development Board, representatives of PAMA and PAAPAM be formed to suggest measures for eradication of this malpractice, and for ending the influence of commercial importers, in order to safeguard the country's revenue collections.
The Association fully supports availability of quality goods at economical prices for the consumers in Pakistan, but its solution does not lie in duty reductions through arbitrary valuations, at the cost of government revenues and the industrial base of the country.
PAAPAM office bearers also urged the FBR Chairman to direct DG Customs Valuation to immediately call a hearing for re-considering the above Ruling immediately.
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