KARACHI: The Islamabad High Court has ordered the used auto parts imported by the petitioners including M/s Ajmal & Brothers will be released on payment of the applicable import duties, plus the redemption fine, plus penalty within the range that was prevalent and would have been charged before the Finance Act 2023 was introduced, and in any case not more than Rs. 20,000.
As for the balance amount of the penalty, the petitioners will submit security in the form of post-dated cheques with the Deputy Registrar of the Court before approaching the Customs for release of their imported goods in question.
A group of importers of used auto parts have filed petitions in the High Court against the refusal of the Customs officials to release their imported goods unless they pay a penalty equal to the value of the goods. The importers claim that this penalty is excessive and unreasonable, and that it violates their fundamental right to trade and business.
The importers argue that they have been engaged in regular import of used auto parts for many years, and that they have always paid the applicable import duties, redemption fine of 20% of the Customs Value, and a token penalty of a few thousand Rupees. They say that this was a consistent departmental practice, which was based on the Customs General Order 11 of 2006, SRO 499(I)/2009, and the Valuation Ruling 1714 of 2022.
However, the Customs officials have changed their stance after the amendment introduced by the Finance Act 2023, which added the words ‘not less than the value of the goods’ to the words ‘not exceeding twice the value of goods’ in section 156(1) of the Customs Act. The importers contend that this amendment is being applied incorrectly, because it was meant to curb smuggling and not to kill the trade of import and sale of used auto parts, which is still allowed under the Import Policy Order of 2016.
The importers also submit that the amendment cannot have retrospective effect, and that it cannot affect their contracts and letters of credit that were opened and entered into before the Finance Act 2023. They cite a Supreme Court judgment in support of this submission.
The importers seek a declaration from the High Court that the penalty imposed by the Customs officials is illegal and unconstitutional, and that their imported goods should be released without any further delay. They also seek a stay order against any coercive action by the Customs authorities.
The High Court has admitted the petitions for hearing and issued notices to the respondents.