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Tuesday, July 16, 2024

Customs slapped a billion rupee fine after stalling imported cars for 141 days

News Desk |

In a borderline comical situation, the custom authorities that locked down 10,000 vehicles on the Karachi port, have been slapped a huge amount of demurrage charges as the customs used private terminals for parking those vehicles. Now custom clearing agents are trying to get those charges waived for the 141 days that they utilized the storage space. The vehicles could not be cleared due to changes in the clearing rules that took effect while the automobiles were in transit to Karachi port.

Ever since the government rolled back the changes to the rules for clearing of imported used cars on February 23, 2018, the Customs Agents Association has written to three private terminal operators asking for waiver of all charges for the vehicles that were stranded on their premises. The operators include Al Hamd, Pak Shaheen Container Services, and National Logistics Cell (NLC).

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“We have spoken to customs authorities and they have agreed to grant us a delayed detention certificate, after which the terminal operators are legally required to give us a waiver on demurrage charges,” Mohammad Aamir, Secretary General of the Karachi Customs Agents Association said while speaking to a local publication. The estimated amount of total demurrage charges are being applied to lie in a range from Rs500 million to Rs1 billion.

The Customs Act of 1969, under Section 14A (2) mandates a refund or waiver of all demurrage charges “received on account of delay because of no fault of the importers or exporters”. This section of the Act was the subject of litigation between the three large terminal operators of Karachi: Qasim International Container Ter­minal (QICT), Pakistan International Container Terminal (PICT), and Karachi International Container Terminal (KICT) in a case that was filed in November 2013.

The Ministry of Commerce imposed new rules for clearing of vehicles under the schemes that required payment of all duties and taxes on these imports.

One of the prayers moved by the petitioners in that case was to “declare Section 14A of the Customs Act 1969 is unconstitutional and void ab initio.” The court granted the request in a short order, so the legality of any case built on the said section is now in doubt.

Most of the cars in the dispute are imported under the baggage or transfer of residence scheme, a facility meant only returning expatriates. In view of the widespread abuse of this facility for commercial purposes, the Ministry of Commerce imposed new rules for clearing of vehicles under the schemes that required payment of all duties and taxes on these imports to be made from bank accounts that are in the name of the person shown as the importer.

Those rules practically shut the trade down, leaving up to 10,000 cars stranded at the ports for months till February 23rd, when the government succumbed to the demands of the importers and customs agents and reversed the rules. “The reason is that our local auto industry is not able to meet the requirement of our local markets for cars” said the Secretary of KACAA in another statement, when asked how cars imported under these schemes could be labeled as “trade and industry”.

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Local assemblers are giving up to six month delivery times, he said, “and look at where the own money has gone now”. He claimed the government reopened these schemes for commercial importers keeping mind the inability of local auto assemblers to meet the skyrocketing demand for automobiles. This year, several key international players are set to enter the Pakistani market and are expected to disrupt the local monopoly and bring down imports of used Japanese and Korean cars by a significant degree.