KARACHI: Federal Board of Revenue (FBR) has apprised Chief Collector Appraisement South of massive mis-declartion and under-invoicing in the import of spark plugs of automobiles and ball bearings and parts thereof.
All consignments of spark plugs and ball bearings have been blocked, while post release verification of already cleared consignments is being conducted. An official said demand of millions of rupees had been created and it is expected that overall recovery demand of Rs1.5 billion approximately would be created once the verification and scrutiny is completed.
Valuation Ruling No 1401/2019 determined the valuation of Spark Plugs for Cars into two Categories i.e Iridium Tipped Spark Plugs and Non-Indium Carbon Tipped Spark Plugs. The Value of Iridium Tipped Spark Plugs has been determined in the subject Valuation Ruling at $6.14 per piece whereas the Valuation of Non Indium Spark Plugs has been determined at $0.59 per piece.
It was known that Iridium Tipped Plugs are being cleared under the garb of Non Iridium Tipped, Plugs causing a colossal loss to the exchequer.
Customs data of the past years shows that majority of the declarations and assessments of these products are those of Non-Iridium Tipped Spark Plugs despite of the fact that car manufacturers use Iridium Tipped Spark Plugs.
Similarly, Valuation Ruling No. 967/2016 determined the values of Motorcycle Spark Plugs of Japan and Chinese Origin as $0.5 and $0.15 per piece respectively. Japan origin motorcycle spark plugs are being cleared as of China origin and in many instances the values determined under the Valuation Ruling have not been applied
Valuation Ruling No. 1408/2019 fixed values for various types of ball bearings/parts from $2.3 to $4.8 per KG for bearings parts imported in Kit/Packet or SKD form and $1.80 to $3.80 for bearing parts imported in bulk packing.
Similarly, the Ruling also fixed values for whole bearings of various origins and make/models per piece. Certain elements are heavily indulged in under invoicing and misdeclarations by clearing whole bearings in the garb of parts and components. Furthermore, the revised Valuation Ruling is misused through import of high weight bearings and declaring the bearing numbers of lower weight.
FBR also mentioned that one M/s Asghar Enterprises was importing bearings at very low values based on a stay order from the Court, while Customs had failed to contest the stay order in the court.
Sources said certain importers are importing high-value goods, but the packaging was marked with low-value goods both in case of spark plugs and ball bearings.
Sources said PM Imran Khan took notice of the issue and the complaint was forwarded to Chairman FBR. Subsequently, Member Customs Tariq Huda assigned Chief Export and Valuation FBR Faisal Bukhari to investigate the case.
It was also known that certain officers of Customs Valuation Department had manipulated the Valuation Ruling, when the valuation was switched from weight based to per unit based. These manipulations benefitted the importers on the cost of national exchequer.
Sources said consignments of spark plugs and ball bearings were cleared from all collectorates across the country, which suggests that Customs assessment was not actually involved, and it was the doing of certain officers/officials of Customs Valuation Department and mostly the importers.
Sources said it was a particular cartel of traders who were involved in many wrongdoings. It was known that same persons are involved in this scam as were in the illegal removal of 50 containers from QSF off-dock terminal several years ago. The official said 50 containers were removed from the terminal without filing of GDs, and no action was ever taken against these culprits.