Valuation ruling for ready-made garments implemented to promote under-invoicing, misdeclaration

KARACHI: Serious irregularities have been detected in the new valuation ruling for customs duty on import of ready-made garments as it has open the doors for corruption and incurring huge monetary losses to public exchequre.
Customs sources said that the Valuation Ruling No. 489/2012 dated November 07, 2012 was implemented with malice intention and all the stakeholders combinedly taking advantage of the ruling.
The sources said that under the new ruling the customs duty on import of ready-made garments had been fixed on dollar terms per dozen quantity. Whereas the duty for such imports is fixed at 25 percent across the board of ready-made garments in the Customs Tariff.
The valuation ruling No. 489 said that since the earlier customs values of garments were determined more than third and half year ago through valuation ruling No. 309 dated April 28, 2011, a redetermination of custom values of these goods was deemed necessary to reflect the current price trend of these goods in the international markets.
Under this valuation ruling the various catagories of finished textile products have been assigned different value for import in fixed quantity. The ruling evisages customs duty $9 per dozen on import of shirts and T-shirts, similarly the other duty rates are included $20, $5, $3.80 and $11.
Customs sources said that different duty structure is itself exposing to corruption as importers and clearing agents with the help of customs staff misdeclaring and under invoicing such goods.
The sources said that in Pakistan Customs Tariff that across the board 25 percent duty had eliminated the corruption on import of such items. Now the it is open for importers and clearing agents to declare the lower value e.g. at $9 against the actual value of $20. Furthermore, the size of garments also matters because there are incidents of misdeclaration of men/women readymade garment by showing boy/girl finished textile products, having lower duty.
The sources said that entire chain of stakeholders are involved in this corruption and the governemnt has been deprived an estimated amount of about Rs400 million since the implementation of valuation ruling.
The sources said taht the online consignment clearance system WeBOC has flawed in processing GD of such imports because in the WeBOC the duty rate had been fixed on the basis of old valaution ruling, which was fixed on weight basis. The change in structure of imposing duty, the WeBOC is denying to process, therefore, customs officials manually input the the quantity. Thus most of import under this head have been cleared through One-Customs, which has already bad reputation for attracting corruption.
The sources informed that the present duty rate for textile finished products has become lower than the raw material of cotto and yarn cloth, which is assessed at 5 percent.

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