Used vehicles banned for commercial import: Customs Appraisement

Business Recorder

4 hours ago

KARACHI: Pakistan Customs Appraisement South has said that old and used vehicles are currently not permitted for commercial importation into Pakistan in terms of Appendix C of the Import Policy Order (IPO), 2022.
In response to the news report published in the Daily Business Recorder on August 5, 2024, Pakistan Customs Appraisement South, in its statement, said that used vehicles are banned for commercial import under Appendix C of the Import Policy Order (IPO) 2022.
However, overseas Pakistanis can import such vehicles under Personal Baggage, Transfer of Residence, or Gift Schemes as outlined in Appendix E of IPO 2022. These provisions are designed exclusively for Pakistani citizens residing abroad and not for commercial traders.
The policy requires that foreign exchange for purchasing vehicles must originate from outside Pakistan, and duty and tax payments must be remitted from overseas accounts belonging to the Pakistani sender or received in their family accounts within Pakistan.
It further said that declared values in Vehicle Baggage Goods Declarations serve as procedural formalities to initiate clearance and do not determine the duty assessment basis.
The authority referenced a Sindh High Court judgment dated December 24, 2020, which upheld the legality of declaring indicative values for clearance purposes by overseas Pakistanis.
For Asian vehicles up to 1300cc, duties are collected per SRO 577(I)/ 2005, while vehicles exceeding 1300cc are assessed under Customs General Order No. 14 of 2005 and Valuation Ruling No. 1051/2017. Final duty and tax liability are determined solely during assessment, independent of declared values.
All assessments follow applicable laws and valuation procedures, asserting that no revenue loss occurs in vehicle import clearances under these schemes, Pakistan Customs Appraisement South clarification concludes.
Separately, official sources in Post Clearance Audit (PCA) contested these explanations, citing a specific case where the declared value of Rs. 17,635 for a 2023 Toyota Land Cruiser was enhanced by customs to Rs. 10,049,868. Across 1,335 import declarations, declared values totalling Rs. 670 million were enhanced to Rs. 7,254 million, indicating what auditors termed 'massive under-invoicing.'
They argued that Section 79 of the Customs Act legally binds all importers, including overseas Pakistanis, to file true declarations with correct import values regardless of scheme type.
They questioned how a 2023 Toyota Land Cruiser could legitimately cost Rs. 17,635, noting that even iron and steel scrap of equivalent weight would exceed this amount. They raised trade-based money laundering concerns under Section 32C of the Customs Act, questioning whether the actual foreign exchange used matched the declared Rs. 17,635 or the assessed Rs. 10,049,868.
They suggested acquiring foreign export documents to verify actual purchase and export values, arguing that significant discrepancies could indicate illegal financial flows through hawala or hundi systems.
PCA official sources emphasized that no legal provision exempts overseas Pakistanis from declaring accurate values or differentiates between 'conventional' and 'non-conventional' commercial invoice values.
They noted that the cited High Court judgment addressed contravention case framing without reference to money laundering concerns and applied only to specific petitioners, unlike Supreme Court judgments.
The audit observation focused on money laundering risks from heavy under-invoicing rather than duty tax evasion, noting that under-declared import values could enable misreporting of moveable asset values in annual income tax returns.
Despite customs enhancing declared values during assessment, officials said no scrutiny was conducted to address trade-based money laundering concerns as required under Section 32C and the Anti-Money Laundering Act 2010.
Copyright Business Recorder, 2025