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Appraisement South issues new conditions for steel products import
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Appraisement South issues new conditions for steel products import

KARACHI: Customs Appraisement South has issued new conditions for import of steel products.

Chief Collector Appraisement South Abdul Rasheed Sheikh notified the new conditions to make examination and assessment process of steel products transparent.

Since 2002, quality of steel products was being decided as “primary” or “secondary” depending upon certain attributes given in the Public Notice 01/2002. However, there were persistent complaints of massive misuse of that Public Notice resulting in extortion and recurring loss of revenue since it contained some grey areas giving undue discretion to customs functionaries.

After detailed deliberations for months at senior level officers of the three appraisement collectortaes of south region (MCCA-East, MCCA-West and MCC PMBQ) and after taking feedback from the relevant stakeholders of the iron & steel sector, Public Notice 02/2018 was issued which was further amended on the recommendations of Pakistan National Steel Association (PNSA) and Karachi Iron & Steel Merchants Association (KISMA), and Public Notice 03/2018 was accordingly issued.

Pakistan Auto Parts Manufacturers Association (PAAPAM) came up with objections to the Public Notice 03/2018. PAAPAM submitted Public Notice 03/2018 has only replaced the previously existing Public Notice 01/2002, which was issued by the then Collector Appraisement Karachi. Thus, in principle, a Public Notice issued by Collector Appraisement Karachi has been replaced by another Public Notice issued by the Chief Collector Appraisement-South who heads three appraisement collectortares of the south region. Therefore, it is preposterous to call Public Notice 03/2018 discriminatory as it has actually eliminated discrimination by withdrawing discretionary powers of customs officers.

The PAAPAM added Mill Test Certificate (MTC) is a quality assurance document which is always issued to the purchaser by the manufacturer of prime quality products. Mill Test Certificate certifies product’s chemical and physical properties and compliance with international standards (such as ANSI, ASME, etc.).

MTC provides traceability and assurance to the end user about the quality of the steel used and the process used to produce it and, therefore, prime quality products are always accompanied with the MTCs issued by the manufacturer.

PAAPAM has proposed that MTCs issued by Buying Houses should be accepted, but the problem is that Buying Houses do not produce goods and, hence, do not have lab testing facilities; therefore, any MTC issued by a Buying House is not meaningful to give assurance to an end user with regard to the quality of iron & steel products.

As prime quality products are always accompanied with MTCs issued by the manufacturer, therefore, the same condition has been incorporated in the Public Notice to differentiate between Prime versus Secondary products.

Condition of assortedness is one of the main criteria to identify “Non-Prime or Secondary” products. There are various kinds of iron & steel products (defective, second grade, second / third choice, prime excess, mill excess, surplus stock, overstock etc.) which are collectively categorized and sold as “Non-Prime or Secondary” lots.

Defective, second or third grade/choice products have quality short comings, but prime excess, mill excess or prime overstock products don’t have any defects, and have same quality as that of Prime products, but are sold as leftover stocks under the broad term of “Secondary or Non-Prime”. Such secondary goods keep on accumulating in stocks as by-products during the process of manufacturing prime goods and eventually sold as one lot containing assorted products having varying sizes/dimensions.

Chief Collector notes the argument of PAAPAM does not carry weight to do away with the criteria of assortedness which is an important differentiating factor between prime and secondary products. “The Public Notice 03/2018 already provides remedy for such genuine consignments in which a purchaser orders a prime lot of assorted products, provided that LC conditions could substantiate that the order was placed for such assorted purchase.

The public notice has already provided for a speedy dispute resolution mechanism whereby collector can decide any dispute regarding categorization of a consignment as prime and secondary. Furthermore, to save the importers from demurrages in case of dispute, the public notice provides that the consignment will be released provisionally under section 81 of the Customs Act, 1969. The previous arrangement of Steel Committee was necessary because the conditions of public notice 01.2002 provided discretion to the customs staff as to which condition to apply and which to ignore. This discretion has been done away with in the instant public notice, and a speedy dispute resolution mechanism has been provided at collector level. Under the said dispute resolution mechanism, the collector may adopt any measures to resolve a dispute which may include forming a committee, on the pattern of steel committee, for assistance, if deemed necessary.

Genuine demands of trade and industry have already been accommodated under the Public Notice 03/2018, which superseded Public Notice 02/2018 and was issued after taking into account the genuine concerns of the stakeholders, Chief Collector Abdul Rasheed Shaikh notified. The main objective of the latest Public Notice is to make examination and assessment process transparent by eliminating grey areas, which were prone to manipulations.