In order to protect the local tyre industry from the negative impacts of smuggling and under invoicing of imported tyre products, the Customs regulators have been recommended to fix the maximum import tariff prices (ITP) for each size of tyre being traded in the international market.
In addition, the government could at least fix the ITP of a particular brand based on the maximum import cost quoted by the brand manufacturer in any of the importing countries. If this is not possible the Customs should collect data of the export price of the brand being imported into Pakistan and set the average price leaving out those quotations that look absurdly low. Tyre manufacturers are dismayed that their genuine concerns have not been addressed by the policy makers as they continue to operate at a disadvantage in the domestic market against global competitors whom they successfully challenge in other markets. A manufacturer said: There should be some rationale in fixing the ITP of the imported tyres. They also added that the Custom officials should have a brief of the manufacturing process of the tyres and the inputs used in those tyres like rubber and chemicals. The rates of inputs could then be retrieved through internet .
He further said that cases where the price of imported tyre is quoted even below the input cost, the consignment should be confiscated instead of providing the unscrupulous importer the choice to pay the duty at very high ITP determined by the officials. The tyre industry would willingly provide all international data in this regard that could be rechecked by the Customs through information high way, he affirmed. Most of the industry expert believes in cases where some Pakistan s car and motorcycle tyre manufacturers have been regularly exporting certain sizes the price quoted by them should be the least ITP for the import of that size. This, they added, is a fair solution as no one in current globalised world would import tyres on inflated rates. They said that deflated rates are regularly quoted to save the government levies like Custom duty, sales tax, and excise and advance income tax. They said that unethical importers make it sure that the invoice of the tyres is 20-30 per cent of the original price. They pay the balance in cash to the manufacturer through hundi (that is also illegal). They said that if a tyre worth $100 (Rs8,600) is imported at $40 (Rs3,440) then even at 5 per cent duty the importer would save huge amount in government levies. They said that the 5 per cent duty on Rs3,440 would be only Rs172 while it would be Rs430. They said that the sales tax or GST is levied on duty paid value of the tyre. In case of under invoiced tyre it would be Rs614 but on original rate it would be Rs1,535. Thus the importer of under invoiced tyre would pay only Rs786 as duty and sales tax while the real amount without under invoicing comes to Rs1,965 - a difference of Rs1,179. They said that the difference would further increase after excise and income tax amount collected at import stage is factored in. This, they added, marginalises local tyre industry that pays all taxes. They said that smuggling is another menace where no duty is paid at all. They said that tyres are bulky products that cannot be concealed in suit cases so the smugglers take advantage of flaws in Afghan Transit Trade agreement signed by Pakistan to facilitate imports in land locked Afghanistan. They said that Afghans import more tyres than Pakistan that is five times larger in size and has huge tyre demand. In Afghanistan the number of registered vehicles is very low and they do not need so many tyres. These tyres find way in Pakistani markets through our porous borders. They urged the government to put quantity restrictions on import of tyres by Afghanistan.
