High Court of Sindh Questions 7% Customs Duty on Automobile Industry

The Sindh High Court has directed the Federal Board of Revenue chairman to explain the imposition of an additional 7% customs duty on the automobile industry, as petitioners claim it exceeds the guaranteed ceiling under the Automotive Development Policy 2016-21.

Automobile manufacturers filed around 100 petitions between 2019 and 2024, citing the policy's concessions and exemptions aimed at attracting investment. They argue that the federal government's decision to impose the duty is unlawful, as it was done without withdrawing or modifying earlier concessions. The FBR officials, however, claim that the concession was only for customs duty and not other constituents of the Customs Act.

The court noted that the Supreme Court has taken notice of litigation caused by the government's acts and omissions, and the FBR has been directed to file a specific reply. The Sindh High Court observed that the government's inconsistent positions and contradictory remedial measures have caused litigation, and it is the government's responsibility to resolve these issues.

The petitioners argue that the concession/exemption in respect of duties encompasses each of the three constituents under Section 18 of the Customs Act 1969, making the impugned SRO 670/2019 unlawful. The court has directed the FBR chairman to file a statement on the matter and continued the interim orders in the case till the next hearing.

The case highlights the need for clarity and consistency in government policies, particularly in the automobile industry, which has been affected by the imposition of the additional customs duty. The court's decision will have significant implications for the industry, and the outcome is eagerly awaited.