The Directorate General of Customs Valuation in Karachi has introduced new customs values for 189 types of used auto parts, including engines, gearboxes, and AC compressors. This new ruling, issued under Valuation Ruling Number 1994 of 2025, is set to affect the import of these auto parts from all countries.
These changes aim to address concerns from businesses regarding fluctuating prices, as used parts are typically priced based on their condition and efficiency. Let’s take a closer look at the reasons behind this shift and what it means for the auto parts industry.
Why Are the Customs Values Changing?
The importation of used auto parts has always been challenging due to the variation in prices based on factors like wear and tear. Parts of the same model can differ significantly in price depending on their usability and condition. The Directorate of Customs Valuation responded by reviewing the current system and revising customs values based on data analysis and feedback from key industry stakeholders.
Importers, local manufacturers, and associations such as the Old & Used Auto Parts Importers Association and the Sindh Auto Parts Scrap Importers & Dealers Association (SAPSIDA) expressed concerns that an increase in customs values could hurt legal trade and reduce government revenue.
The Process
The customs valuation process was thorough and involved multiple steps:
Transaction Value Method: The authorities first considered using the transaction value method, where customs values are based on actual transaction prices. However, it was found to be inapplicable due to missing or incomplete information.
Identical or Similar Goods Method: The next step was examining prices of similar goods, but this approach also failed because the available data showed inconsistencies in quality and specifications.
Market Inquiry Method: Finally, a market inquiry was conducted. This method involved investigating actual market prices to establish a more accurate valuation of the parts. This approach provided the most reliable data, leading to the new customs values.
The Key Changes
Here’s a summary of the new customs valuation rules:
Uniform Valuation Across Origins: The updated values apply to imports from all countries, creating a consistent and standardized approach to valuing used auto parts.
Minimum Value Per Metric Ton: One major change is that the customs value of old and used auto parts cannot be assessed below US$ 600 per metric ton, regardless of the part’s condition or origin. This establishes a baseline price to prevent undervaluation.
Impact on Importers: While the new valuation system aligns more closely with market conditions, it may result in higher customs fees for some parts. Importers should be prepared for potential changes to their cost structures. However, the aim is to keep trade fair and balanced, ensuring that the prices of used parts reflect their actual market value.
What Does This Mean for the Industry?
The new rules bring both challenges and opportunities. On one hand, importers will need to adjust to these updated customs values, which could impact their profit margins. On the other hand, these changes create a more transparent and fair system for pricing used auto parts. Importers should stay informed about the new system to ensure they comply with the rules and avoid any issues with their shipments.
Additionally, the ruling helps to maintain a fair balance between taxation and the realities of international trade. With used auto parts typically sold at scrap values, raising the customs valuation too much could limit legal trade, which in turn affects government revenue. By carefully analyzing market data and consulting with industry players, the Directorate of Customs Valuation has aimed to avoid these negative consequences.
The introduction of the new customs values for used auto parts represents a major shift in how these goods are taxed in Pakistan. While it may take some time for the industry to adjust, the revised system aims to create a fairer and more transparent framework for both importers and the government.
