KARACHI, Oct 19: The Directorate General of Customs Valuation, on the request of a leading Japanese bike maker, has asked all the collector of customs to implement the higher value of 15 parts at the time of their assessment as per mentioned in the letter addressed to all the collectorates.
The valuation department had conducted a detailed investigation on the complaint lodged by Atlas Honda Limited (AHL) that motorcycle parts of Chinese origin were being under-invoiced.
After the inquiries, the directorate has issued the list of 15 parts to its relevant collectorates about 70cc motorcycle auto parts of Chinese origin and issued orders for implementation of the value at the time of assessment of the goods.
In April/May this year, Atlas Honda had lodged similar complaint to the Customs but at that time Chinese bike makers had taken up the case with the Customs Department of Karachi and Hyderabad which after assessing the situation refused to charged higher declared value on CKD imports as they thought that they could not act on the complaint lodged by a single Japanese bike maker.
According to annual report of Atlas Honda Limited (AHL) 2006, the company had suggested valuation of 26 major parts to the Customs Valuation Department. Valuation advice for 15 parts was issued and working on remaining 11 parts was in the process. The already issued advice was partly implemented on different customs posts, the annual report said.
Under-invoicing had emerged as a core issue for the organised industry, causing unfair competition and loss of revenues to the national exchequer in billions of rupees, it added.
The report had also mentioned about a raid on 10 units in the unorganised sector which had unearthed a huge tax evasion scam. Over Rs1 billion penalties had been assessed. Tax evasion was the main cause of price difference between Japanese bike and Chinese bike, the report added.
The newly-formed Association of Pakistan Motorcycle Assemblers (APMA) of Chinese bike makers had written a letter to the Chairman Central Board of Revenue (CBR) Abdullah Yousuf on October 18 urging him to issue orders to the collectorates to evaluate the CKD on the declared prices by the Chinese bike makers.
The association said that huge quantities of motorcycle parts were being brought in by different importers and manufacturers-***-assemblers as CKD. “Every importer and assembler has different specifications and qualities of the motorcycle parts they import, hence the prices, which they pay to their principals, are also different,” it elaborated.
The association had submitted a list to the CBR chief showing current higher valuation on parts by the Customs as per advice of Atlas Honda and three other customs values (branded, non branded and direct vendor purchase value).
It said that these prices could be verified by the Commercial Attaché of Pakistan High commission in China. However, the Customs officials were assessing the CKD on almost four times of the actual prices of the components, because of valuation advice issued on complaint of Japanese bike maker.
The association said the Chinese bike makers were responsible for rapid growth in the local bike industry as they were offering bikes at Rs34,500 as compared to Japanese make at Rs54,000. Due to intense competition, Atlas Honda had to reduce its 70cc bike prices to Rs54,000 from Rs68,000.
Now, based on a false allegation by a Japanese bike assembler, the whole industry was suffering and it may result in closure of various factories and industries. Further, it would also discourage foreign investment because of wrong evaluation of motorcycle parts by the Customs Department, the association maintained.