Billions of rupees lost in irregularities as directorate valuation ignors international practices in garments valuation

KARACHI: The decision of the Directorate General of Valuation for allowing ready-made garments on the value of peanuts has deprived the national exchequer from billions of rupees in terms of customs duty.
Customs sources said that the Directorate General Valuation recently amended the valuation ruling for the import of ready-made garments after the complaints of stakeholders and determination of fresh values such items prevailing around the globe. The sources said that the the directorate instead of considering to boost the revenue of the country by giving a justified value for the import clearance, it issued a very confusing valuation making the import value on the basis of dollar per dozens instead of measurement of weight.
The sources said that historically the textile made-ups are being assessed on their weight for right determination because different made-ups have different weight. The valuation ruling that was issued November 07, 2012 was not due considered by the customs authorities and influence of other business lobbies are clearly reflected, the sources said.
The sources said that through making the latest decision the directorate made unified value for import of garments. Whereas the summer and winter cloths has different weight so attracting higher customs duty, they added.
One customs officer said that the latest valuation ruling significantly reduced the duty on finished textile products incurring huge losses to the exchequer. “The value of finished products, in fact becomes much lower than the import value on textile raw materials,” the officer added.
A cursory look at the valuation shows that the shirts and T-shirts of all types and all sizes for boys and girls have been allowed at $9 / dozen customs value for clearance for the valuation of 25 percent duty. The calculation further shows that each unit to be valued at 75 cents. In contrast the valuation on the basis of weight, the customs duty was 25 percent and on such methodology attracted higher revenue.
The Valuation Ruling No.489/2012, was, however, issued by the Directorate General of Valuation for the implementation.
The sources said that international practises were not followed while making the valuation ruling. “This shows clear biased towards the importers,” the the sources said. However, in the valuation ruling, the directorate said that meeting was held with stakeholders to discuss the current international values of garments in the export markets. “The deductive value method was employed and the evidence furnished by the application of this method was used to determination of values,” it said.
On the other hands, the collectorates are refusing the accepts the valuation ruling and reporting contravention for the adjudication on the basis that the value declared under the ruling was not according to the Pakistan Customs Tariff.
The sources said that the collectorates in those cases where importers compromise with the customs officials at clearing stage by giving bribes, the customs officials are avoiding making contravention.
The importers, who had influenced in finalising the valuation ruling, now facing serious problems as customs collectorates in some cases were refusing the valuation ruling. “Since the valuation ruling has been implemented therefore, customs officials honoured the legal document,” an importer said and advised the FBR to stop such maladministration should be stopped.
The senior customs officers suggested that to stop the corrupt practises of the customs officials and undue advantage to importers, the Directorate General of Valuation should revisit the valuation ruling and issue the same considering international practises.
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