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Business Recorder
4 days ago
- Automotive
- Business Recorder
Used vehicles banned for commercial import: Customs Appraisement
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
Business Recorder
29-07-2025
- Business
- Business Recorder
Old car importers: Anti-Benami zone of FBR initiates big crackdown
KARACHI: The anti-Benami zone of Federal Board of Revenue (FBR) has kicked off massive crackdown against the billions of rupees Benami transactions carried out by old/used car importers during past seven years. According to the official document, which was exclusively available to the Daily Business Recorder, the anti-Benami zone has launched a comprehensive crackdown targeting the systematic abuse of the Vehicle Baggage and Gifts Scheme (VB&GS), which was designed for legitimate personal imports but has been extensively exploited by commercial importers through clearing agents with the alleged support of customs officials. The enforcement action is focusing on vehicle clearances conducted between February 2018 and May 2025, giving clearing agents just seven days to provide detailed explanations for thousands of vehicle imports processed under the personal baggage scheme. The notices have specifically accused clearing agents of concealing the true beneficial ownership of imported vehicles while systematically evading billions in taxes and duties during the seven-year period under investigation. The anti-Benami zone has demanded comprehensive documentation from clearing agents, including complete import records, customs declarations, detailed particulars of end users and true owners with names, national identity card numbers and addresses, information on all parties involved in transactions, copies of agreements and contracts, bank statements covering the entire seven-year period, and detailed explanations of how commercial vehicles qualified for the personal baggage and gifts scheme and warned to initiate criminal proceedings under multiple sections of the Benami Transactions (Prohibition) Act 2017 in case of non-compliance, showing the determination to hold all responsible accountable for this systematic exploitation of these schemes. Arshad Khurshid, Chairman of the All Pakistan Customs Clearing Agents Association, confirmed that the anti-Benami zone has issued notices to the association members involved in vehicles clearance. He said that the association has instructed its members to provide maximum cooperation with the investigation and furnish all requested clearance records to the authorities. Meanwhile sources informed that the crackdown was initiated following direct instructions from Prime Minister Shahbaz Sharif, who ordered comprehensive action to stop the exploitation of overseas Pakistani passports for misusing personal baggage, transfer of residence, and gift schemes in the import of old/ used vehicles. The Prime Minister's directive is now reflecting zero-tolerance approach against the systematic abuse of schemes, which although intended to facilitate overseas Pakistanis for their legitimate personal imports, being misused for years. The government had previously attempted to address the issue by introducing additional legal requirements in the Import Policy Order, 2022, implemented in 2019 for old/used vehicle imports under these schemes. These regulations mandated that all duties and taxes for vehicles imported under transfer of residence, personal baggage, or gift schemes must be paid using foreign exchange arranged by Pakistani nationals themselves or local recipients, supported by bank encashment certificates showing conversion of foreign remittance to local currency. It also restricted that remittances for duty and tax payments must originate from the account of the Pakistani national sending the vehicle from abroad, and must be received either in the sender's account or, if that account is non-existent or inoperative, in a family member's account. To ensure compliance, the government made submission of Proceed Realization Certificates mandatory, including details of remitting banks, remitter names, beneficiary information, account numbers, certificate amounts, and beneficiary banks verified by head offices. However, customs authorities have found a new pattern of fraud where unscrupulous elements involved in vehicle clearance have been submitting fake Proceed Realization Certificates in collusion with various private banks. These fraudulent certificates were being verified by the banks themselves, enabling the illegal clearance of vehicles, sources said, suggesting that the ongoing crackdown may not have lasting impact without comprehensive policy reform. They said that the government collected over Rs. 100 billion through old/used vehicle imports but didn't promulgate any policy for commercial imports, urging the government to introduce a commercial import policy to completely eliminate such illicit activities. Copyright Business Recorder, 2025
Business Recorder
15-07-2025
- Business Recorder
Customs officials accused of illegally selling luxury smuggled vehicles
KARACHI: Customs officials have allegedly sold hundreds of high-end luxury smuggled vehicles worth billions by illegally declaring them as 'auctioned vehicles'. This high-magnitude corruption scandal has jolted the Pakistan customs, as hundreds of high-end luxury smuggled/Non-Duty-Paid (NPD) vehicles worth billions have allegedly been sold illegally by a network involving customs officials, car dealers, and high-influential figures. According to documents exclusively available to the Daily Business Recorder, smuggled/NPD vehicles, which should have been auctioned after paying proper duties and taxes, were instead sold directly in the market in collusion with customs officials. Smuggled vehicles: FBR says there's no amnesty scheme in the offing The scandal came to the surface when the Directorate General of Reforms & Automation (Customs), Karachi, sent an alarming incident report on July 9, 2025, to the Customs Operations Wings (COW), highlighting systematic data manipulation in the WeBOC system. The report revealed that data manipulation was conducted through user IDs of Assistant Collectors and Deputy Collectors, allowing hundreds of luxury smuggled vehicles to leave customs premises without fulfilling legal obligations. The Directorate has scrutinized the data of over 1,900 smuggled/ NPD vehicles. Of these, approximately 350 high-end luxury vehicles that were never actually auctioned and had no duties or taxes collected were fraudulently entered as 'auctioned vehicles' in the WeBOC system. Sources confirmed that this was not an isolated incident, suggesting a deep-rooted influential network connected with customs officials from multiple FBR collectorates. While intelligence departments have put the collectorates in Karachi, Lahore, Islamabad, Faisalabad, and Gujranwala on radar, these vehicles have disappeared from the Multan collectorate, sources informed. Sources were of the view that this illicit activity was conducted in phases over several months, with vehicles first being removed from customs premises and sold secretly. Subsequently, fake bidder details were entered into the system to create fraudulent auction records, enabling the issuance of customs auction documents required for excise registration, they added. 'This crime was done in phases and took months, but it was astonishingly not noticed,' sources said, pointing to a systematic nature of the corruption. 'Although the COW has directed the concerned collectorates and field formations to expedite the recovery process, no single vehicle could be seized as the department has no mechanism to track and trace the vehicles, which were cleared as auctioned vehicles,' sources said. The situation is further complicated by the fact that all of these vehicles have now been registered with provincial excise departments against the illegally obtained customs auction documents. Therefore, these vehicles are now legally registered in provincial excise departments, and any forced confiscation could result in court battles, as these vehicles have now appeared to be owned by 'genuine buyers'. Although one female Deputy Collector has reportedly been suspended in connection with the case, sources ruled out the possibility that this large-scale scandal involving around 350 vehicles could be facilitated by a single officer. 'The suspended official is being made a scapegoat for what requires a well-organized network spanning multiple levels of the customs hierarchy,' sources said, urging the FBR to address internal systemic issues before launching crackdowns against car dealers and buyers who may have unknowingly purchased these vehicles. Copyright Business Recorder, 2025
