Auto importers cry foul at new valuation method on imported vehicles

The Ceylon Motor Traders’ Association (CMTA), an industry body consisting of automotive franchise holders, cried foul at the recently implemented valuation method on imported vehicles and urged the authorities to immediately withdraw the new method.

“The new valuation method is creating a serious impact on our industry. If the method continues, we might even have to shut down our business. Therefore, the authorities should immediately withdraw t he new valuation method,” CMTA Chairman Tilak Gunasekara told a press briefing yesterday.

According to a gazette notification issued in April this year, the Finance and Planning Ministry has enacted a new valuation method stating that the Customs duty on imported vehicles would be set by the Director General of Customs, based on manufacturer values.

“The Customs generally does not adhere to manufactures’ values. Based on the gazette, The Customs immediately stopped accepting our transacted values and instead, they published a set of values that are now applicable for the payment of The Customs duty,” Gunasekara said. He further said that the new valuation method requires the valuation of an imported vehicle up to the standard of its version in other countries like the United States or United Kingdom.

“This method is completely unacceptable because the vehicles are usually customized to a specific country. Vehicles we import here don’t have some of the features they have in other countries.

If we made the valuation based on the standards and manufacturer values of other countries, customers will have to pay more,” he said.

Gunasekara noted that the Customs’ action was putting numerous permit holders in trouble as vehicles they imported now cost a significantly higher sum of money.

“Permit holders are also incurring demurrage on their imports as the Customs is not allowing importers to clear their vehicles without paying a higher duty based on the new method of valuation. No relief has been given for vehicles already ordered, not even for the ones imported before the publishing of the notification,” he said, adding that most of the vehicles were imported on government employees’ permits.

About 200 vehicles are currently being held by the Customs following the new valuation method, Mirror Business learns.

The CMTA averred that the General Agreement on Tariffs and Trade (GATT) agreement, which requires all signatories to base The Customs duty on ‘Transacted Values’, should be reintroduced for valuation purposes.

“All the brand-new motor vehicle importers have followed this process across the world.

The general practice of valuations being based on agent valuations was carried out for years without any hindrance until the new method was introduced,” they said. Meanwhile, Vice Chairman Gihan Pilapitiya said the CMTA had several talks with the Customs in this regard, as to why a new method was introduced.

“But they were unable to provide a credible answer to us. They said they are carrying out the new method as per the orders of the Finance and Planning Ministry.

We have already requested for a meeting with the ministry and we hope we will be able to meet the ministry officials during this week,” he said.

Refuting the allegations that the fraudulent behaviour of some vehicle importers had paved the way for the new method, Gunasekera said if there were such incidents, action should be taken and said the CMTA was fully backing the authorities to take action against fraudulent importers.

Highlighting the CMTA’s contributions to the country’s economy and development, Gunasekera said the CMTA had paid Rs.50 billion worth total taxes for the year 2013, had provided employment opportunity for over 100,000 people, including technical training for around 5,000 persons annually. He said these programmes of the CMTA would also be affected severely along with the industry, had the new valuation method continues.