Karachi, February 9, 2024 – In an effort to address under-invoicing concerns and streamline the determination of duties and taxes, Pakistan Customs has introduced a new valuation for old and used computer LCDs and LEDs.
The move comes as a response to recommendations from the Federal Tax Ombudsman (FTO) and aims to ensure fair and accurate assessments at the clearance stage.
The Directorate General of Customs Valuation issued Valuation Ruling No. 1849 / 2024, establishing a valuation of $0.70 per inch for imported old and used computer LCDs and LEDs. This ruling is based on a comprehensive assessment and analysis of the market, taking into consideration various factors that impact the valuation of these electronic goods.
The FTO, in a directive dated December 12, 2023, urged the Directorate of Customs Valuation in Karachi to determine customs values for old and used LCD and LED computer monitor panels under Section 25A of the Customs Act, 1969. Subsequently, a meticulous evaluation process was initiated to establish a fair and transparent valuation system.
To ensure accuracy in valuation, meetings were held in January 2024 at the Directorate of Customs Valuation in Karachi. The analysis involved retrieving and scrutinizing 90 days’ clearance data, revealing that a significant portion of imported goods had been declared and assessed at a value of US $12 per piece.
Further investigation uncovered a concerning practice of certain importers declaring lower values for identical goods, indicative of a phenomenon known as group under-invoicing. Importers were requested to provide documentation to substantiate their declared values, including invoices, information about foreign manufacturers, contracts, sales tax invoices, and more. Unfortunately, the importers failed to comply with these requests.
In adherence to Section 25 of the Customs Act, 1969, the Directorate of Customs Valuation explored various valuation methods, with a sequential order to arrive at the customs values of the subject goods. The transaction value method was found inapplicable due to a lack of required information. Similarly, the identical goods value method and the similar goods value method were not solely relied upon due to inconsistencies in declared values.
Market inquiry, as outlined in Sub-Section (7) of Section 25 of the Customs Act, 1969, was conducted, but no results were obtained as the subject goods were not readily available in the market. Consequently, the computed value method, as provided in Section 25(8), could not be applied due to unavailability of conversion cost data from the country of export for manufacturing old and used LCD/LED computer monitor panels.
Finally, the Customs values of the subject goods were determined under Section 25(9), read with Section 25(5), and Customs Rule 121(2) of Customs Rules, 2001. This ruling allows flexibility in the application of valuation methods while ensuring conformity with the aims and provisions of the relevant sections.
The new valuation ruling aims to promote transparency, discourage under-invoicing practices, and facilitate a fair and equitable assessment of duties and taxes on imported old and used computer LCDs and LEDs. Importers and stakeholders are urged to comply with the established valuation for the collective benefit of the industry and the economy.
