Three sealed handsets in the green channel
On 12 September a Pakistani national who has lived in Dubai for four years lands at Karachi on a scheduled flight and walks through the green channel. His baggage declaration lists one used handset. During scanning, officers find three sealed retail boxes of the same 128 GB smartphone model in his hand-carry, each accompanied by a Dubai invoice for AED 2,150. The interbank rate that day is PKR 75.80 per dirham. The same model sells in Karachi for about PKR 245,000, and the FBR valuation database shows PKR 210,000 for it. The passenger says the three sets are gifts for his brothers and that he has already paid for them in Dubai. For the heading in question the applicable rates are customs duty 10%, regulatory duty nil, sales tax 18% and advance income tax 2% under section 148. He asks to pay 'whatever is due' and leave with the sets. The counter officer has to decide how the four handsets are to be treated and documented.
1. Are the three sealed handsets eligible for clearance as accompanied baggage? Set out how you would decide and what you would do at the counter.
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The starting point is purpose, not packaging alone. One used handset carried in the pocket is a personal effect and raises no issue. Three identical, sealed, retail-boxed units of the same model, supported by retail invoices, have the characteristics of stock rather than personal use: identical specification, factory seals, no accompanying family members to absorb three sets, and a repeat-traveller profile.
My decision path would be:
- Interview and record: purpose, family composition, previous trips and whether the sets were bought on this trip. Record the statement and have it signed.
- Apply the baggage rules on their own terms. The allowance is for personal effects and limited articles for personal or family use; it is not an allowance for goods in commercial quantity. Three sealed identical units exceed that description.
- Offer the lawful route. Tell the passenger the sets can be cleared on a goods declaration as an import, with him as importer, and that the used handset can go through as a personal effect.
- If he declines or the declaration is found to be false by omission, detain the sets under a proper detention receipt, prepare a seizure report with witnesses, and put the case up for adjudication. The omission of three dutiable sets from the declaration is a misdeclaration, not a clerical slip.
The judgement the examiner is testing is that 'gift' is not a duty-free category; it describes the motive, not the customs status.
2. Assume the three sets must be cleared as an import. How do you determine the customs value, and which of the three figures - the AED invoice, the Karachi retail price, or the database value - do you adopt?
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Section 25 requires the sequential methods, and the reasoning must be recorded, not just the result.
Step 1 - transaction value. The AED 2,150 invoice is the price actually paid. Convert at the interbank rate: 2,150 × 75.80 = PKR 163,000 per set. Before accepting it I would test whether it is a genuine arm's-length price: is the invoice from a retailer, does it match the model and capacity, is there any relationship between buyer and seller, and are there restrictions or conditions that affect the price? For retail purchases abroad, the invoice is normally acceptable.
Step 2 - if the invoice is rejected, move in order: identical goods, then similar goods, then the deductive method. Under the deductive method the Karachi retail price of about PKR 245,000 is reduced by post-importation costs and the reseller's margin; a 20–25% deduction gives roughly PKR 184,000–196,000. The computed and fallback methods follow only if those fail.
Step 3 - the database. The PKR 210,000 database figure is a risk indicator, not a valuation method. It cannot be substituted for the sequential analysis; if the department wants to depart from a genuine invoice, the reasons must be written and defensible on appeal. My working conclusion would be to adopt PKR 163,000 per set unless the invoice fails the arm's-length test, in which case the deductive figure is used.
3. Compute the duty and taxes on the three sets and explain the DIRBS consequences and what the passenger must do to keep the handsets usable.
Read the worked answer
Value: 3 × 163,000 = PKR 489,000.
Customs duty: 10% × 489,000 = PKR 48,900. Sales tax: 18% of (489,000 + 48,900) = 18% × 537,900 = PKR 96,822. Advance income tax under section 148: 2% × 489,000 = PKR 9,780. Total incidence: PKR 155,502, giving an effective load of about 31.8% on the value.
Note the sequencing: sales tax is computed on value plus customs duty, not on value alone, and advance income tax is collected on the value. Advance tax is a collection mechanism, not a fine, and its adjustability depends on the taxpayer's category.
DIRBS is separate from payment. Clearing the goods and paying duty does not by itself whitelist the IMEIs. Each handset's IMEI must be registered through the mobile device registration process, using the passenger's particulars and the clearance evidence, within the permitted period after arrival. If registration is not completed, the IMEIs are blocked on the networks even though duty has been paid, and the passenger then has a paid-for but unusable device.
At the counter I would therefore hand over a short written note: pay through the PSID, complete IMEI registration for all three sets, and keep the GD and payment receipt. If the passenger prefers not to pay, the alternative is to abandon the sets or re-export them; they cannot be released on the used handset's personal allowance.