Motorcycle Parts: Custom Valuation Ruling Fraud

908 views import dutyThe Association of Pakistan Motorcycle Assemblers (APMA) has questioned the role of EDB and FBR as to what they have done to eliminate the Valuation Ruling No. 458/2012 dated May 24, 2012.

“This ruling by the Directorate General Customs Valuation; was a big source of corruption and smuggling of motorcycle parts in the country,” said Muhammad Sabir Shaikh, Chairman APMA. He said that issuance of production certificates and importable lists every year by the EDB have been creating corruption and promote smuggling culture and sales tax evasion. Sabir asked EDB to immediately release the production certificates of all the assemblers by ensuring validity up to September 30, 2014 as the industry was in deep crisis for the last 10 years. These issues, which were creating hurdles, should now be resolved.

APMA strongly urged the government to support small and medium sized assemblers, vendors, importers and genuine traders. Smuggling culture is being promoted due to red-tapism and bureaucratic hurdles from the government’s lower staff.

Replying to various queries from MOBILE WORLD, the APMA chief disclosed that because of customs’ corrupt valuation ruling policy, presently four to five smuggler parties were operating in all major cities of the country and conveniently supplying at least one million parts per annum at the rate of Rs100 per kg at buyers’ door step.

He said that out of 239 total parts used in assembling of motorcycle; 100 parts are imported while 139 or 60 percent parts were localized. Similarly, car assembling requires about 5,000 parts out of which 3,000 parts are imported and remaining 2,000 were localized as per claim of one leading OEM in the country. CUSTOMS VALUATION-COLORHe further disclosed that due to inept attitude of custom authorities car parts were being cleared at a flat valuation rate of US$ 1.75 per kg. On the other hand out of 100 motorcycle parts 61 types’ clearance valuation was fixed at the rate of US$ 1.75 per kg while remaining 39 items were separately notified under the above-referred Valuation Ruling No. 458/2012 dated May 24, 2012.

Under this ruling the value of motorcycle carburetor is fixed @ US$ 13.00 per kg, CDI Unit $13.54, Insulator Carburetor $13.60, Oil Through $25.00, Rectifier Regulator $10.20, Ring for Piston 10.00, Spring Clutch Lever $11.00 and Valve Inlet Exhaust $10.84. Most of the other items in this list are valued at more than two dollar per kg or you can say these are more costly than Car components in the country.

Sabir informed that if we import a CBU (Complete Built Unit) 70cc Motorcycle from China weighing 90 kg, they charge its price @ USD 235/- only. But here our customs authorities are charging 39 kg parts of Chinese origin at the value of US$ 214 from OEMs while the cost of another 200 parts for the bike is yet to be added.

This pitiless attitude is further exposed when we go through other column of the list of 39 items, which is showing the same parts import allowed for Commercial Importers at the cheapest value of a total of US$ 104 only. This is the reason why Motorcycle OEMs are compelled to purchase their required parts through Commercial Importers or Smugglers just to save unnecessary cost of components imposed by corrupt custom officials, the APMA Chief added.

-Published on page#18, December-2013 edition of MOBILE WORLD Magazine