KARACHI: Used cars importers have said that the penalty imposed by the Economic Coordination Committee (ECC) to release the cars stuck at the Karachi Port is not feasible.
All Pakistan Motor Dealers Association (APMDA) Chairman H M Shahzad said, “We are pleased with the ECC for addressing the issue that was pending for the last four months but the decision of the ECC has not brought any relief for the dealers.”
The penalty translates into 100 percent to 116 percent additional payment depending on the displacement of the vehicle. The penalty for a 1000-CC car is 100 per cent; penalty for over 1000-CC to 1800-CC car is 108 per cent; and for over 1800-CC car is 116 per cent.
APMDA chairman said that with the ECC’s penalties on a car which costs Rs 1.0 million in the local market will be Rs 2.0 million to Rs 2.2 million after paying the import duty. He said that cars which were stuck at the port from February till September 2013 should have a one-time penalty of 10 per cent and from October 2013 to January 2014 a one-time penalty of 20 per cent at the most.
However, ECC has announced 10 per cent per month penalty for the eight months, while 20 per cent for four months. He urged the government to withdraw the heavy penalties that have been put on the used cars so that the dealers could contribute sufficient revenues to the national kitty. “If the penalties were not reversed the government could not fetch anything,” he warned.
“If the government stays the decision, no one will go for releasing their vehicles due to higher penalties. So the government will have to conduct an auction. Even the auction will never pay the government equal to duties in the form of penalties,” he added.
For the sake of consumers and the industry, the government should revise the higher penalties regime and allow release of withheld cars on one-time basis against a lump sum surcharge of 10 per cent at the most as these cars were shipped prior to unexpected change of regular practice by the customs authorities, said Shahzad.
He said that the government is already incurring heavy demurrage that is causing unnecessary financial losses to the importers. It is beyond comprehension that when the customs authorities have already cleared 2009 model cars regularly against the surcharge as per Office Memorandum No 04(06)/2010-Imp-II(Part-X) dated February 25, 2013 issued by the Ministry of Commerce after condoning the excess age up to eight months then why have they withheld these cars, added the auto association leader.
Shahzad further said that around 90 per cent of these cars are below 1000-CC that will cover the sheer demand of cars in the country due to unavailability of local ones. The matter should be resolved on urgent basis, he urged.