2010 PTD 2432
ORDER
1. MUHAMMAD ARIF MOTON, MEMBER (JUDICIAL-II).--- By this common order I intend to dispose of aforesaid (5) customs appeals having similar facts and common questions of law filed by the appellants against Order-in-Appeal Nbs.1580 to 1584 of 2009 dated 3-3-2009, passed by the Collector of Customs (Appeals), Karachi.
2. Brief facts of the case are that the appellants imported a consignment of "Steel Wire Rod" Dia: 8-13.70 mm from South Korea against confirmed L/C. Upon arrival of vessel and availability of VIR No. the appellants transmitted GD under section 79(1) of the Customs Act, 1969 and Rule 433 of Sub-Chapter III of Chapter XXI Customs Rules, 2001 to the Collectorate of PaCCS and paid the upfront duty. The Appraiser concerned instead of allowing clearance of the appellants consignments on declared value transmitted a view message for deposit of additional amount of duty and taxes while re-assessing his value under Rule 438 ibid. Being aggrieved with the re-assessment the appellants filed 1st review before Principal Appraiser online giving detailed reason for disagreement with the said assessment. The Principal Appraiser ignored the submission made by the appellants and transmitted view message for payment of additional duty and taxes earlier communicated, while summarily brushing asides the submission made through online message "received your review, unfortunately we disagree". Resultantly, the appellants transmitted 2nd review under the said rule to the respondent No. 1 who again ignored the submission made and forwarded once again the message earlier forwarded by the Principal Appraiser and directed the appellants to pay the communicated duty and taxes. That since the appellants consignments were suffering from demurrage and container detention charges he opted to -pay the communicated duty and taxes and obtained the delivery of the consignments. Subsequently, he approached the respondent No. 1 for issuance of assessment order for challenging its vires before the competent authority namely respondent No. 2 under the provisions of section 193 of the Customs Act, 1969. Consequently the respondent No.1 issued assessment order dated 30-8-2008, which reads as under:--
2. "In terms of rules 108 and 109 of the Customs Rules, 2001 read with subsection (2) of section 25 of the Customs Act, 1969, the goods namely "Steel Wire Rod, Dia: 4-14.50 mm" of PCT Heading 7213.9190 of Belgium origin were assessed at 450/MT on as against declared 288.40, while taking into consideration the prices of steel at LME and L/C dated 1-3-2008 and after considering the provisions of clause (f) of sub-section (2) and subsection (11) of section 25 of the Customs Act, read with rule thereof the declared value could not be termed as "paid or payable" in terms of subsection (1) of Customs Act, 1969. Thus the value of the consignment could not be determined under the primary method of transaction value."
3. The order was challenged before respondent No. 2 who also vide his Order dated 3-3-2009 rejected the appeal by observing that:--
3. "I have examined the case record and given due consideration to the arguments made before me. Customs value of the goods imported in this case had been determined in line with the transaction prices quoted in London Metal Exchange (LME) for the relevant date (that is, LME prices of the date on which L/C in respect of the particular consignment for import of the goods into Pakistan was opened), in line with the practice being followed not only in the Custom House but also at all Customs Stations throughout the country for a number of years now. This method has brought uniformity, predictability and transparency in assessment of metal products throughout the country. It is an established fact that the prices quoted in the LME are not estimated prices, instead they are based on actual transaction carried out by independent buyers and sellers. Therefore, those prices reflect the correct value of metal products and if an importer declares value which is significantly out of conformity with the LME prices for the date the Assessing Officer had definite reason to believe that the value has been under declared. In the instant case, the LME price for the goods on the relevant date was US$.673.30/MT whereas the appellants had declared US$.400.30/MT for the instant goods. Obviously, such a big difference in LME price and value declared by the appellants was totally unjustified and out of line with any commercial practice. Therefore, as provided under section 25 of the Customs Act, 1969 read with the rules made thereunder the Assessing Officer had reason to believe that customs value of the goods declared by the appellants was incorrect. It is not understood how the learned consultant thinks that the above method of determining customs value of imported goods in alien to the Customs Act, 1969. The precedents and rulings quoted by him are accordingly found irrelevant to the fact of the instant case. Therefore, I hold that the impugned order is correct in taw and on facts and there is no reason to interfere with the same. The appeal is rejected accordingly."
4. The appellants have now challenged the above order by way of this appeal. The consultant Nadeem Ahmed Mirza appeared on behalf of the appellants who reiterated the arguments incorporated in the memo of the appeal. And emphasized that:
(i) That the respondent No. 1 cannot discard the transaction value unless he asks for documents for satisfying him i.e. discharge burden of proof laid on appellants under Rule 109(I) of the Customs Rules, 2001, while transmitting a message under Rule 437 Sub-Chapter III of Chapter XXI of Custom Rules, 2001. Contrarily no message was transmitted under the said rule to the appellants and neither any evidential invoice relied upon was supplied to appellants as per direction contained in para. 78 of CGO 12 of 2002 and sub-rule (2) of Rule 109 of Customs Rules, 2001. Neither message was communicated in writing nor through e-mail about the decision and the ground in terms of Sub-Rule III of Rule 109 ibid. Any action contrary to the provision of section 25 and the rules framed is nullity in the eyes of law. Reliance is placed on PLD 1986 Karachi 68, Kamran Industry v. Collector of Customs, Exports, 2002 PTD 2957, Punjab Beverages (Pvt.) Ltd. v. CEST and 2 others 2008 SCMR 438, Messrs Collector of Customs, Port Muhammad Bin Qasim Messrs Zymotic Diagnostic Int'l., Faisalabad.
(ii) That the irrespective of the above, in case of disagreement, for which the respondent No. 1 has to give the reason can assess the value of the appellants goods only with the application of different subsections of section 25 of the Customs Act, 1969 in sequential manner as expressed in section 25(10) of the Act, in case the declared value was not acceptable being transaction value within the meaning of section 25(i) ibid as held by the Superior Court in judgments reported as 2004 PTD 38, Innovative Trading Company Ltd. v. Appellate Tribunal ,2006 PTD 232, S.T.B. International v. Collector of Customs, Lahore and 5 others 2006 PTD 909, Rehan Umer v. Collector of Customs, Karachi and 2 others 2008 PTD 1250, Najam Impex Lahore v. Assistant Collector of Customs, Karachi and 4 others 2009 and 2008 PTD 1994 Toyo Int'l Motorcycle v. Federation of Pakistan and 03 others.
(iii) That the respondents totally ignored the provision of law and the available evidences of value of identical/similar goods expressed in subsections (5 & 6) of the Customs Act, 1969, i.e. data maintained by PACCS under Rule 110 of Customs Rule 2001. The respondent No. 1 despite gross illegality as discussed above, could have assessed the appellants goods on the basis of the identical/similar goods. Contrarily, he adopted an alien method, not prescribed anywhere either in the provision of section 25 of the Customs Act, 1969 or Chapter IX of Customs Rules 2001 as evident from the assessment, which was made by him on the basis of prices of steel in LME as on 25-2-2008, which is erroneous and render the assessment order/Order-in-appeal arbitrary and unilateral, nullity in the eyes of law. Resultantly, void ab initio.
(iv) That the respondent No. 1 cannot assess the value of the appellants goods contrary to the data of identical/similar goods i.e. under provisions (5 and 6) of the Act, read with Rule 110 Customs Rules 2001, which was as detailed below of the period between 8-2-2008 to 16-8-2008 of the import made from Europe and China expressed in Rule 107(a) ibid.
4. S.No.
5. C.R. No.
6. Date
7. D.V
8. A.V
9. Country
10. 1
11. 536080
12. 4-2-2008
13. $ 394
14. $ 394
BELGIUM
15. 2
16. 540044
17. 8-2-2008
18. $ 400
19. $ 400
BELGIUM
20. 3
21. 593234
22. 29-3-2008
23. $ 400
24. $ 400
CHINA
25. 4
26. 593236
27. 29-3-2008
28. $ 400
29. $ 400
CHINA
30. 5
31. 593487
32. 29-3-2008
33. $ 400
34. $ 400
BELGIUM
35. 6
36. 595871
37. 1-4-2008
38. 303
39. 303
BELGIUM
40. 7
41. 596484
42. 1-4-2008
43. 270
44. 270
BELGIUM
45. 8
46. 603618
47. 8-4-2008
48. 270
49. 270
BELGIUM
50. 9
51. 603671
52. 8-4-2008
53. $ 400
54. $ 400
CHINA
55. 10
56. 608918
57. 12-4-2008
58. 270
59. 270
BELGIUM
60. 11
61. 610013
62. 14-4-2008
63. 273
64. 270
BELGIUM
65. 12
66. 641829
67. 13-5-2008
68. 270
69. 300
BELGIUM
70. 13
71. 650219
72. 21-5-2008
73. $400
74. $ 400
BELGIUM
75. 14
76. 662384
77. 2-6-2008
78. 270
79. 270
BELGIUM
80. 15
81. 668228
82. 6-6-2008
83. 270
84. 270
BELGIUM
85. 16
86. 678631
87. 17-6-2008
88. 270
89. 303
BELGIUM
90. 17
91. 678634
92. 17-6-2008
93. 270
94. 300
BELGIUM
95. 18
96. 715950
97. 22-7-2008
98. 280
99. 300
BELGIUM
100. 19
101. 741116
102. 16-6-2008
103. 300
104. 300
BELGIUM
(v) That as regards the observation of the respondent No.2 that the appellants have not objected to the valuation and rather had paid duty and taxes wilfully is misconceived as evident from the fact that the letters resting with the respondent No. 1 speak with clarity and loudly about the protest and objection. Irrespective of that, it is appropriate for the appellants to submit that he can assert his right that his imported goods value has to be assessed in accordance with the legal requirement any mistaken belief as to amount payable will not preclude the petitioner from asserting such legal right, despite of the fact whether he agitated at the time of assessment or not or paid duty and taxes voluntarily as held by the Lahore High Court in its reported judgment 2008 PTD 1481 (Messrs Shafique & Company v. Assistant Collector of Customs and 2 others) their lordship of High Court observed that:
105. Learned counsel for the Department, states that the petitioner was contributory in the whole matter. This assertion is made on the grounds that the payment of the enhanced amount of fiscal levies on the basis of the higher value assessed by the Customs Department was made voluntarily and without protest. This contention does not have much force because the petitioner is entitled to all remedies under law. Even if it is, for a moment conceded the he made payment voluntarily, he can at any time, assert his right to be assessed in accordance with legal requirement, any mistaken belief as to the amount payable will not preclude the petitioner from asserting such legal right."
(vi) That the assessment/determination of the appellants goods value by the respondent No. 1 and his subordinate is manifestly capricious and based on erroneous and forced construction of law and beside loudly speak about a differential treatment, not permitted under law. Hence, the assessment and order-in-appeal are nullity/bad in law/discriminatory.
5. The departmental representative Mr. Shahid Dasti, Appraising Officer, appeared on behalf of the respondent and furnished their comments on above cited grounds of appeal inter alia as under:--
(a) That the subject appeals have been filed with the same old arguments which have been made before the learned Collector (Appeals) and adjudication authority which have been adequately replied by both the above forums. It is further respectfully submitted that the consignment was released with express acceptance of assessment/valuation by the appellants and at the original assessment stage they have not been able to prove their declared value as true payable transaction value, hence at this belated stage any objection on valuation is not acceptable under the law.
(b) That without prejudice to above as per section 25D of the Customs Act, 1969, on valuation aspect no appeal can be filed without exhausting the remedy available before the Director General of Valuation as the. contents of section 25D are very much clear in this regard.
(c) That it is a case of group under invoicing and to combat this menace the investigations were carried out and international market trend of the steel sector while taking into account by the Collectorate, baring some exceptions which are subject to audit/recovery, all the consignments are regularly assessed @ Euro 0.45/Kg. Thus, considering the valuation data maintained in terms of subsection (13)(a) of section 25 of the Customs Act, 1969, read with Rule 107(a) of the Customs Rules, 2001, the assessment of the appellant's consignments has been correctly made @. Euro 0.45/kg in terms of subsections (9), (10) and (11) of section 25 of the Customs Act, 1969.
(d) That it is respectfully submitted that nowhere in the section 25. of the Customs Act 1969, it has been stated that every declared value is to be accepted for the assessment purposes and rather the provision of subsection (1) of section 25 of the Customs Act, 1969, asking for the acceptance of a payable transaction value (which is not in this case) as customs value on the following conditions:-
(i) Subject to subsequent subsections of section 25 and Rules (i.e. Chapter-IX of the Customs Rules, 2001).
(ii) That the value paid by an importer must be in agreement with the "payable" value in the market of similar kind of goods.
(e) That first of all it is proved from the record of the case that no information or corroborative documents were provided by the appellants in respect of the adjustments embodied in sub-section (2) of section 25 of the Customs Act, 1969, to prove that their declared value is corresponding to the "payable" transaction value to be considered as customs value for assessment purposes. Admittedly in the instant case the appellants have failed to provide the said information/documents thus in terms of clause (f) of section 25(2) of the Customs Act, 1969, there is no question to accept the declared value as customs value in terms of section 25(1) of the Customs Act, 1969. The record and circumstances of the case proving that the customs value of the appellants' consignment cannot be determined on the basis of their declared value.
(f) That secondly, the appropriate officer, by virtue of powers conferred under subsection (11) of section 25 of the Customs Act, 1969, shall have a right to satisfy himself whether the "paid" value is true "payable" transaction value to be considered as customs value for assessment purposes. In the presence of higher customs value evidences of release it is not fair for the appropriate officer to assess the same class of goods at lower value.
(g) That thirdly, the word "subject to the provisions of this section and rules", appeared in section 25(1) of the Customs Act, 1969, have a great importance while accepting any transaction value as customs value. These words clearly confirms that even if an importer proves his declared value as truly paid transaction value in that case too the acceptance of the said value as customs value is subject to comparison with the 90 days data of the customs values in terms of Rule 107 of the Customs Rules, 2001. If the said declared value is not in agreement with Rule 107's data than the same cannot be accepted as payable transaction customs value.
(h) That without prejudice to above, it is also respectfully submitted that the PaCCS is mainly based on post clearance audit and all the consignments cleared against the GD's filed in PaCCS Collectorate are subject to scrutiny/audit by the Directorate General of Post Clearance Audit, thus, all such consignments which have been released below the bench mark of @ Euro 0.45/Kg are subject to audit and recovery and the Collectorate has already started recovery proceedings against the importers of such isolated lower assessed consignments. Therefore, such isolated GDs make no defence for the appellants in the presence of assessment/clearance @ Euro 0.45/kg. Further it is a cardinal principle of law that two wrongs cannot make one right, therefore, any bad precedent cannot be followed for creating other bad precedents.
6. The consultant of the appellants exercising his right of rebuttal, submitted rejoinder comments on the counter submission/ comments of respondent No. 2, with the reiteration of the followings:
(i) The comments in hand are of a generic nature, readily available with the respondent No. 1 in his system for submitting with the Appellate Authority and the Tribunal in case of need, most precisely the subject comments are considered as medicine for all diseases. The said facts stand further proved from the fact that the comments contain date as 042009, reconfirming that these are totally irrelevant to the grounds and the relied upon authorities by the appellants (copies of which were supplied to the respondent representative vide letter dated 21-1-2010) in support of his argument advanced during the course of hearing (Exhibit "A").
(ii) The generic nature also stood verified from Para. 1 which respondent No. I submitted without going through facts Nos. 1 to 5, in which the appellants vehemently objected to the adopted method of valuation in nullity to the provision of section-25 of the Customs Act, 1969. The said agitation was communicated to him subsequently in writing vide letter dated 23-5-2008 and was requested to supply assessment order, enabling to challenge it veracity before the Competent Authority. Consequent to which assessment order was issued by him on 30-8-2008. The said fact validity nullifies his assumption that the appellants obtained release of the consignment with express acceptance of the assessment/valuation. The respondent No. 1 also lost sight of ground "E" of the memo of appeal, wherein, the appellants submitted his arguments in this regard while placing reliance on the reported judgment 2008 PTD 1481 Messrs Shafique and Company v. Assistant Collector of Customs and 2 others). The respondent No. 1 intentionally restraint himself in offering comments on that ground, resulting to which the plea taken by him in the said Para stood aptly rebutted.
(iii) The respondent No.1 in his comments has taken the stance that the appellants should have approached the Director-General (Valuation) for review of the assessed value in terms of section 25-D of the Act for revision of the value. The said plea is superfluous and based on inapt interpretation of the provision of sections 25D, 80, 193 and 194A of the Customs Act, 1969. The subject appeal is against assessment order admittedly made by the respondent No. 1 under the provision of section 80 of the Customs Act, 1969, against which an appeal lies under sections 193 and 194A of the Customs Act, 1969. Whereas, value fixed through valuation ruling in terms of section 25-A of the Customs Act, 1969, by the Collector of Customs or Director of Customs Valuation can be challenged through a review under the provision of section 25D of the Customs Act, 1969. For ease referred sections 25-A, 25-D and 193(1) are reproduced below:
106. [Section 25A
107. "Power to determine the customs value ".---(1) Notwithstanding the provisions contained in section 25, the Collector of Customs on his own motion, or the Director of Customs Valuation [on his own motion or] on a reference made to him by any person [or an officer of Customs], may determine the customs value of any goods or category of goods imported into or exported out of Pakistan, after following the methods laid down in section 25, whichever is applicable.
(2) The Customs value determined under subsection (1) shall be the applicable customs value for assessment of the relevant imported or exported goods.
(3) In case of any conflict in the customs value determined under subsection (1) the Director-General of Customs Valuation shall determine the applicable customs value].
108. [Section 25-D
109. " Review of the value determined "----Where the customs value has been determined by the Collector of Customs or Director of Valuation or any other authority competent to do so, a review application shall lie before Director-General of Valuation and any proceeding pending before any court, authority or tribunal shall forthwith abate].
110. [Section 193(1)
111. Appeals to Collector (Appeals) .---(1) any person [other than] an officer of customs aggrieved by any decision or order passed under [sections 79, 80 and 179 of this Act by an officer of Customs not below the rank of an Assistant Collector] [***]may prefer appeal to the Collector (Appeals) within thirty days of the date of communication to him of such decision or order;
112. The Lahore High Court vide its reported Judgment 2008 PTD 1594 Sun Traders v. Deputy Collector of Customs, Faisalabad and 4 others held in unambiguous terms that "law required that when a valuation was determined by the Collector or Director of Customs-Valuation etc. at review petition lies before the Director-General under section 25-D of Customs Act, 1969 and an application lie to the Director-General section 25-A(3) of the Customs Act, 1969 in case of conflict in the customs valuation determined under subsection (1) of section 25-A of the Customs Act, 1969." This view has been confirmed by a different angle by the Hon'ble High Court of Sindh while deciding the Special Customs Reference Application 35 of 2009 whereby the Customs Appellate Tribunal dismissed the appeal of the appellants which was filed in terms of section 194A of the Customs Act, 1969 against order of the Collector (Appeals) passed under section 193 ibid, while holding that:
113. "The Tribunal seems to have misled itself in considering then the impugned order before it was that of valuation ruling which was not the case rather it was an order of adjudication passed under section 193-A of the Customs Act, against which appeal only lies to the Tribunal. The impugned order of the Tribunal is thus not in accordance with law.
114. In the circumstances, we set aside the impugned order and remand the matter to the Tribunal for fresh decision of the appeal".
(iv) That the respondents have miserably lost sight of the fact that when the appellants transmitted GD online, he in the space allocated for "financial information" in the GD clearly mentioned that his import is against confirmed letter of credit. While doing so he in fact on one hand transmitted his declaration and on other hand fulfilled his legal duty of discharging the burden of proof laid upon him under section 25(1) of the Customs Act, 1969 and Rule 109 of the Customs Rules, 2001. Besides that he also confirmed remittance of value of the imported goods to the supplier as per Rule 113 ibid. In the light of given position, in case of disputing the declared value, it was mandated on the respondent No. 1 to transmit to the appellants a view message under sub-Rule (2) of Rule 109 of Chapter IX and 437 of Sub-Chapter III of Chapter XXI of Custom Rules, 2001 for scanning additional documents. Contrarily no such exercise was undertaken either by the Appraiser, Principal Appraiser or the respondent No. 1 as evident from the fact that no copy of the transmitted view message to the appellants and denial of the appellants of not complying the requirement of law are annexed with the comments or even the copy of decision communicated with grounds as enunciated in sub-Rule (3) of Rule 109 was forwarded to the said fact. In spite of shifting of burden of proof on his shoulders to prove that the appellants transaction value falling under section 25(1) of the Customs Act, 1969 was dubious, tainted or colourable. Resultantly, no cause or reason was available with the respondents for disputing the value and the said fact further stood proved from the fact that no evidential invoice as directed in Para 78 of CGO 12 of 2002 of the period expressed in Rule 107(a) was placed before this Tribunal. The respondents miserably failed to discharge the onus of establishing that the price declared by the appellants of his imported goods is not the transaction as enunciated under section 25(1) of the Customs Act, 1969. The same view has been taken by the Hon'ble Supreme Court of Pakistan and High Courts and Tribunal in Judgments in Customs Appeal No.K-249/ 2000/ 13372, Customs Appeal No. K-35/2002, Customs Appeal No.K-1670/2001, 2005 PTD (Trib) 617, 1668/LB and 1669/LB of 2002, Customs Appeal No. K-1281/05 and reported as 1986 MLD 790 Karachi, PLD 1996 Karachi 68, 2006 PTD 909, 2002 PTD 2957, 2007 SCMR 1357 = 2008 PTD 1858, 1992 SCMR 1083, 2008 PTD 1250 and 2008 SCMR 438". It is significant to quote the opinion held by their lordship of High Court in reported Judgment (2004 PTD 2592) Karachi Bulk Storage and Terminal (Pvt.) Ltd., v. Controller of Customs (Valuation) Karachi and others.
115. "Enhancement of value of goods by the Customs Department on the ground that the declared value was not the true price --Basic requirement for refusing to accept the declared price in view of S.25, Customs Act, 1969 was that the department was in possession of sufficient material on the basis of which it could be said that department has rightly come to the conclusion that the declared price/value of the goods by way of concealment or undervaluation or was not the true price---Onus was on the Customs Authorities to prove that the declared price was untrue before the same could be rejected warranting the enhancement or determination of the value/price--Customs Department, in the present case, failed to produce any material or evidence in support of their contention that they had relied on the very important material in concluding that the declared price was not the true price, was by way of concealment or was undervalued and further that at the relevant time the price of the goods in question was more than the declared price---In view of lack of material, the action for rejection of the declared values/prices and for determining/ascertaining of the value or price of goods, would appear to be arbitrary, whimsical, capricious and in complete disregard of the provisions of section 25, Customs Act, 1969 which required the Customs Authorities to disclose evidence or material for rejecting the declared value/price and enhancing/determining the same."
116. The said order of the High Court of Sindh came for judicious scrutiny before the Supreme Court of Pakistan through C. P. L.A. No.676-K of 2004. Which dismissed same as being having no merit and ground and leave was refused vide reported judgment 2007 SCMR 1357. Their lordship of the Supreme Court held that:
117. "We are afraid, we cannot subscribe to this bald argument of the learned Advocate-On-Record as it is well settled proposition in law that where the impugned order is found to be illegal, contrary to the law or void ab inito, aggrieved person would been entitled to invoke the jurisdiction of the High Court under Article 199 of the Constitution without availing of remedies under the department hierarchy. In case in hand, Division Bench of High Court after examining the contention of the parties and material placed on record has come to a definite finding that there was no material on record as to what were the grounds or reasons which prompted the Custom Authorities not to accept the declared value of the molasses anti for determining the same @ US$. 54/MT as against declared value. High Court found that in view of lack of material, action of rejection of the declared value and fixing enhanced value of molasses would appear to be arbitrary, whimsical, capricious and incomplete in this regard of the section 25 of the Customs Act, which requires the relevant authority to disclosed the evidence and adequate material for rejecting the value and enhancing the same.
118. Confronted with this situation, learned Advocate-on-Record has not been able to persuade us that the view taken by the High Court suffers from factual or legal infirmity, except reiterated respondent did not wait for ultimate decision of notice and challenged the show-cause notice. As observed hereinabove in view of the inherent defect and lacuna in the act of the petitioner/respondent would not be legally obliged to avail the remedies under Customs Act as it would have been sheer wastage of time and energy and exercise in futility.
(v) That the plea taken by the respondents that the appellants' consignment assessment was correctly made in terms of subsections 9, 10 and 11 of section 25 of the Customs Act, 1969 is also without any substance and contrary to the expressed provisions of section 25 of the Customs Act, 1969. Each subsection of section 25 ibid is to be followed in sequential manner, in addition to the concession on the part of respondent, it is specifically provided by the legislature in subsection (10) of, the section 25 that subsections (1), (5), (6), (7), (8) and (9) define how the customs value of the imported goods is to be determined by the Customs. The method of customs valuation are to be required to be applied in a sequential order except reversal of the order of subsections (7) and (8) at the importer's, request, if so agreed the Collector of Customs. This aspect has been examined in a Division Bench in a case of 2008 PTD 1494 Messrs Toyo International Motorcycle v. Federation of Pakistan and 3 others. Their lordship observed:
119. "Common factor in sections 25 and 25A is determination of value on the basis of the procedure provided in section 25 in the sequence mentioned therein---The language of sections 25 and 25A provides for an authority to determine the value of a particular item but the same is not independent of the various provisions of section 25.
120. A plain reading of provisions of sections 25 and 25A convey that common factor in them is determination of value on the basis of the procedure provided in section 25 in the sequence mentioned therein. Each one of them serves the same purpose if looked from angle of language of law and the principle of interpretation of a fiscal statute."
121. And in Paras. 24 and 25 further that:
122. "In principle this court has agreed with learned Legal Advisor Mr. Izhar-ul-Haque Sheikh, Advocate, that section 25A is a non obstante clause and it is in supersession to section 25, therefore, all the arguments with regard to adoption of the said procedure as a normal and mandatory requirement stands abated. However, the matter does not end there. There is a very clear direction for the Collector of Customs and Director of Customs Valuation, which is discussed hereinafter.
(25) The provisions of section 25A(1) reproduced earlier can be classified in the following manner:-
(i) That it is a non obstante clause, hence it supersedes section 25,
(ii) That the Collector of Customs can prepare such advice at his own motion,
(iii) That the Director of Customs Valuation can prepare the same on request of a person,
(iv) That while preparing such advices, the sequential order provided under section 25 shall be followed.
123. In the cited Judgment the question under consideration was as to how the section 25 of the Customs Act, 1969 is to be applied by the Director-General of Valuation for determining the value of the imported and exported goods for issuance of ruling under section 25-A of the Customs Act, 1969.
(vi) The established principle of interpretation of the tax law is that the plain language of the law is to be applied. A bare perusal of section 25 shows that it is specifically provided in subsection (1) of section 25 that the customs value of the imported goods, subject to the provisions of this section and Rules shall be the transaction value i.e. the price actually paid or payable for the goods when sold for export to Pakistan. The detailed guidelines in this behalf are given in subsections (1), (2), (3) and (4). The provisions contained in section 25 (1) to (4) contain primary methods of valuation and in the first instance the primary method of valuation is required to be adopted in each case of the valuation of the imported consignment which is mandatory. The detailed guidelines in this behalf are contained in section 25 and Chapter IX of Customs Rules, 2001. Thus, it is the mandatory requirement of law that before resorting to the method provided in subsection (5) the Customs officials shall make an exercise in accordance with the provisions contained in subsections (1) to (4) of section 25 and if thereafter they find that the customs value of the imported goods cannot be determined under the provisions of subsection (1) they shall resort to the method provided -in subsection (5) and not otherwise. It shall be an exercise duly reflecting on the record so that the Appellate Forums may examine whether the mandatory requirement of law has been carried out or not. The appellants are further fortified in his views in this behalf with the provisions contained in sub-rule (3) of Rule 109 which provided that "when a final decision is made, the appropriate officer shall communicate to the importer in writing his decision and the grounds therefor." In addition to the specific provisions contained in subsection (10) of section 25 to the effect that the methods of customs valuation are required to be applied in a sequential order, the appellants feel appropriate to invite attention to subsection (6), which provides that, if the customs value of the imported goods cannot be determined under the provisions of subsections (5) and (6), the method provided in subsection (7) shall be resorted to and similar provisions are contained in subsections (7), (8) and (9). The Customs is barred under the provision of section 25 of the Customs Act, 1969 in adopting method prescribed in different subsections of section 25 according to their whims and wishes. The section 25 clearly and in unambiguous terms direct that different method of valuation provided in section 25 of the Customs Act, 1969 and Customs Rules, 2001 are required to be applied in a sequential order and without visible exercise reflected on record no resort can be made to secondary method of valuation as had been done in the instant case of the appellants of valuing his goods under sections 9, 10 and 11 of the Customs Act, 1969. The same view has been taken by the Supreme Court of Pakistan in its reported judgment 2008 SCMR 438 Collector of Customs, Port Muhammad Bin Qasim v. Zymotic Diagnostic International, Faisalabad their lordship of the Supreme Court held that:
124. "Resort to section 25(7) of the Customs Act, 1969 was to be made when Customs officers, who had to make assessment or determination of fair value or normal consignment, was of the view that the same could not be determined in view of impossibility of procuring evidence Order of Collector of Customs was silent in such regard which was an important factor for drawing an inference that no such attempt was made before passing the order--Customs officer dealing with the case proceeded in a perfunctory, whimsical and arbitrary manner and Customs, Excise & Sales Tax Appellate Tribunal was justified in setting aside the same---High Court also did not commit any illegality or infirmity in accepting order of the Tribunal and dismissing Constitution Petition filed by the authorities--Supreme Court declined to interfere with the judgment passed by High Court---Of fair value---Leave to appeal was refused."
(vii) That irrespective of the above gross illegality, it is pertinent to point out that the declared value of the appellants are also fair in the light of transaction value of identical goods expressed in subsection (5) of section 25 of the Customs Act, 1969. The clause (d) of the said section states that if two or more transaction values of the identical goods are available in the data of import of 90 days as per stipulation of Rule 107(a) of the Customs Rules, 2001, maintained by the respondent in terms of Rule 110 ibid. the lowest value has to be applied for completing the assessment of the identical goods under dispute. The CR Nos. mentioned in ground "D" and copies of GDs mentioned therein were supplied to the representative of the respondent No.1 by the appellants consultant vide letter dated 21-1-2010. Veracity of which has not been denied by the respondents, reconfirming that the declared value of the appellants goods was either less or equal. The same view has been taken by the Appellate Tribunal in Custom Appeal No. K-576 of 2007 (Collector of Customs MCC Karachi v. Feco Trading Karachi and others Custom Appeal No. K-118 of 2008 Messrs Abdul Wahid and Co. v. Assistant Collector MCC, Karachi and reported in 2009 PTD (Trib.) 1926. (Exhibit "B")
(viii) That while assessing the appellants goods on alien method, nowhere prescribed in section 25 of the Customs Act, 1969, rendering it under prohibited method enunciated in Rule 110 of Customs Rules, 2001. Which is now termed by the respondent No. 1 as being done under subsections (9), (10) and (11) of section 25 ibid. He on one hand committed gross illegality while ignoring the evidence of identical goods transaction value as per expression of section 25(5) of the Customs Act, 1969 and Rule 117 of Customs Rules, 2001 and on the other hand gave a differential treatment to the appellants. Which is violation of Article 25 of the Constitution as well as Rulings of the Superior Courts delivered in umpteenth numbers of judgments. Wherein their lordship held with clarity that "there is no power to target incident of tax in such a way that similarly placed persons are dealt with discrimination or facility allowed to one and denied to other, amounts to discrimination"
(a) Messrs Zaman Cement Company (Pvt.) Ltd. v. C.B.R. 2002 SCMR 312.
(b) Pakistan v. Messrs Muhammad Saleem PLD 1995 SC 396.
(c) Messrs Gatron Industries Ltd. v. Pakistan 1990 SCMR 1072.
(d) Pakistan v. Messrs Azhar Brothers Ltd. 1990 SCMR 1059.
(e) Commissioner v. Makhdoom Syed Haissain Shah 1975 SCMR 352.
(f) Collector v. Messrs Novartis Pakistan Ltd., 2002 PTD 976.
(g) Messrs M.Y. Electronics 1998 SCMR 1404.
(h) Messrs Elahi Cotton Mills Ltd. v. Pakistan PLD 1997 SC 582.
(i) Messrs Sandalbar Enterprises v. C.B.R. PLD 1997 SC 334.
(j) Messrs Flying Craft Paper Ltd. v. C.B.R. 1997 SCMR 1974.
(k) Government of Pakistan v. Village Development Organization 2005 SCMR 492.
7. Rival parties heard and case records perused and the following issues are framed for consideration by this forum:
(i) Whether the appellant's declared value was transaction value within the meaning of section 25(1) of the Customs Act, 1969 and the appellants have discharged the burden of proof laid upon him under Rule 109 of Customs Rule, 2001?
(ii) Whether the respondent has discharged the burden of proof by following the provisions enumerated in section 25 of the Customs Act, 1969 while determining the assessable value of the subject goods?
(iii) Whether the transaction value declared by the appellants are in conformity with clause (d) of subsection (5) of section 25 of the Customs Act, 1969 ?
(iv) Whether a review lies under section 25D of the Customs Act, 1969 to Director-General Customs Valuation against an assessment order passed by Assistant Collector of Customs under the provisions of section 80 of the Customs Act, 1969?
(v) Whether appellants loses their right of appeal after the completion of unilateral assessment against payment of duty and taxes on the said assessed value for obtaining delivery of the consignment?
8. That as regard Issue No. (i), it is observed that when the appellants in the column of (financial information) of the GD transmitted clearly that the import is against confirmed letter of credit, its number and date, he discharged the burden laid upon him under section 25(1) of the Customs Act, 1969 and under Rule 109 of the Customs Rules, 2001. That for disputing the said value, it was mandated upon the respondent to transmit the message under sub-rule (2) of Rule 109 of Chapter IX and 437 of Sub-Chapter III of Chapter XXI of Custom Rules, 2001 to the appellants for transmitting/scanning additional documents. On the contrary no such exercise was undertaken either by the Appraiser, Principal Appraiser and the respondent No.1 as no copy of the transmitted view message has been placed on record by the respondent. No decision was communicated with grounds as enunciated in sub-rule (3) of Rule 109 confirming that no cause or reason was available with the respondent for disputing the value. This position is further established from the fact that no evidential invoice as directed in para 78 of CGO 12/2002 of the period expressed in Rule 107(a) was placed before this Tribunal. The department has failed to discharge the onus of establishing that the price declared by the appellants of the imported goods is not the transaction value within the meaning of section 25(1) of the Customs Act, 1969. The same view has been taken by the Hon'ble Supreme Court of Pakistan and High Court and Tribunal in judgments reported Customs Appeal No.K-249/2000/13372, Customs Appeal No.K-35/2002, Customs Appeal No. K-1670/2001, 2005 PTD (Trib.) 617, 1668/LB and 1669/LB of 2002, Customs Appeal No. K-1281/05, 1986 MLD 790 Karachi PLD 1996 Kar. 68, 2006 PTD 909, PLD 2003 SC 124 = 2003 CLD 621; 2007 SCMR 1357 = 2007 PTD 1858, 1992 SCMR 1083, 2005 PTD 1250 and 2008 SCMR 438". As such issue No.(i) is answered in affirmative.
9. As regard issue No.(ii), the provisions of section 25 of the Customs Act, 1969 are to be followed in sequential manner barring certain exceptional cases where massive group under-invoicing is rampant. However, resort to subsequent methods is not permissible without exhausting the sequence indicated in section 25 as it would annihilate and terminate the spirit and essence of the transaction value which in the first instance has to be established as colourable and tainted. The mere insertion of words "may or may not" in place of `are required to" in subsection (15) of section 25 of the Customs Act, 1969 through Finance Ordinance, 2007 does not give unbridled and unfettered authority to Customs Administration to play havoc with the provisions of section 25 ibid. thereby making them ineffective and redundant. Discretion has to be exercised within limits based on reason, rationale and fair play. It is specifically provided by the legislature in sub-section (10) of the section 25 that subsections (1), (5), (6), (7), (8) and. (9) define how the Customs value of the imported goods is to be determined by the customs. The methods of customs valuation are normally required to be applied in a sequential order except reversal of the order of subsections (7) (8) at the importer's request, if so agreed by the Collector of Customs. This aspect has been examined in a Division Bench in a case of 2008 PTD 1494 Messrs Toyo International Motorcycle v. Federation of Pakistan and 3 others. Their lordship observed:--
125. "Common factor in sections 25 and 25A is determination of value on the basis of the procedure provided in section 25 in the sequence mentioned therein.---The language of sections 25 and 25A provides for an authority to determine the value of a particular item but the same is not independent of the various provisions of section 25.
126. A plain reading of provisions of sections 25 and 25A convey that common factor in them is determination of value on the basis of the procedure provided in section 25 in the sequence mentioned therein. Each one of them serves the same purpose if looked from angle of language of law and the principle of interpretation of a fiscal statute." and in para 24 and 25 further that:
127. "In principle this court has agreed with learned Legal Advisor Mr. Izhar-ul-Haque Sheikh, Advocate, that section 25A is a non obstante clause and it is in supersession to section 25, therefore, all the arguments with regard to adoption of the said procedure as a normal and mandatory requirement stands abated. However, the matter does not end there. There is a very clear direction for the Collector of Customs and Director of Customs Valuation, which is discussed hereinafter.
(25) the provisions of section 25A(1) reproduced earlier can be classified in the following manner:
(vi) That it is a non obstante clause, hence it supersedes section 25,
(vii) That the Collector of Customs can prepare such advice at his own motion,
(viii) That the Director of Customs Valuation can prepare the same on request of a person,
(ix) That while preparing such advices, the sequential order provided under section 25 shall be followed.
128. In the cited judgment the question under consideration was as to how the section 25 of the Customs Act, 1969 is to be applied by the Director-General of Valuation for determining the value of the imported and exported goods for issuance of ruling under section 25-A of the Customs Act, 1969.
10. The established principle of interpretation of the tax law is that the plain language of the law is to be applied. A bare perusal of section 25 shows that it is specifically provided in subsection (1) of section 25 that the customs value of the imported goods, subject to the provisions of this section and rules shall be the transaction value i.e. the price actually paid or payable for the goods when sold for export to Pakistan. The detailed guidelines in this behalf are given in sub-sections (1), (2), (3) and (4). The provisions contained in sections 25(1) to (4) contain primary methods of valuation and in the first instance the primary methods of valuation is required to be adopted in each case of the valuation of the imported consignment which is essential to keep the spirit of transaction value alive. The detailed guidelines in this behalf are confined in section 25 and the rules reproduced above, thus, is a very important requirement of law that before resorting to the method provided in subsection (5) the Customs officials shall make an exercise in accordance with the provisions contained in subsections (1) to (4) of section 25 and if thereafter they find that the customs value of the imported goods cannot be determined under the provisions of subsec tion (1) they shall resort to the method provided in subsection (5) and not otherwise. It shall be an exercise duly reflecting on the record so that the appellate forums may examine whether the requirements of law has been carried out or not. I am fortified in my view in this behalf with the provisions contained in sub-rule (3) of Rule 109 which provided that "when a final decision is made, the appropriate officer shall communicate to the importer in writing his decision and the grounds therefor." In addition to the specific provisions contained in subsection (10) of section 25 to the effect that the methods of customs valuation are required to be applied in a sequential order we find that it is provided in subsection (6) that, if the customs value of the imported goods cannot be determined under the provisions of subsection (5) method provided in subsection (7) shall be resorted to and similar provisions are contained in subsections (1), (8) and (9). For the said reason, it is held that different methods of valuation provided in section 25 of the Customs Act, 1969 and Customs Rules, 2001 are required to be applied in a sequential order and without visible exercise reflected on record no resort can be made to secondary method of valuation. In these cases the evidences available of like contemporaneous imports on record and also produced by the appellants have been ignored, no visible exercise brought on record or communicated to the appellants to asseable(sic) value arrived at by ignoring the sequential manner. As such the Issue No. (ii) is answered in the affirmative.
11. That as regard Issue No. (iii), the declared value of the appellants are also fair in the light of transaction value of identical goods expressed in subsection (5) of section 25 of the Customs Act, 1969. The clause (d) of the said section states that if two or more transaction values of the identical goods are available in the data of import of 90 days as per stipulation of rule 107(a) of the Customs Rules, 2001, maintained by the respondent in terms of Rule 110 ibid. the lowest value has to be applied for completing the assessment of the' identical goods under dispute. The copies of the GDs supplied by the appellants and mentioned at para. 4(iv) of the order have not been disputed. As such the Issue No.(iii) is answered in the affirmative.
12. As regard Issue No.(iv), the respondent in their comments has taken the stance that the appellants should approach the Director-General (Valuation) for review of the assessed value in terms of section 25-D of the Act for revision of the value which is neither tenable nor applicable and hence irrelevant in this case. The subject assessment of the value was admittedly made by the respondent No. 1 under the provisions of section 80 of the Customs Act, 1969, against which an appeal lies under section 193 of the Customs Act, 1969. However, values fixed through valuation rulings in terms of section 25-A of the Customs Act, 1969, by the Collector of Customs or Director of Customs Valuation are subject to a review under the provision of section 25D of the Customs Act, 1969. For ease of reference, the referred sections 25-A, 25-D, 86 and 193(1) are reproduced below:
129. [Section 25A
130. "Power to determine the customs value ."---(1) Notwithstanding the provisions contained in section 25, the Collector of Customs on his own motion, or the Director of Customs Valuation [on his own motion or] on a reference made to him by any person [Or an officer of Customs], may determine the customs value of any goods or category of goods imported into or exported out of Pakistan, after following the methods laid down in section 25, whichever is applicable.
(2) The Customs value determined under subsection (1) shall be the applicable customs value for assessment of the relevant imported or exported goods.
(3) In case of any conflict in the customs value determined under subsection (1) the Director-General of Customs Valuation shall determine the applicable customs value]
131. [Section 25-D
132. " Review of the value determined ".---Where the customs value has been determined by the Collector of Customs or Director of Valuation or any other authority competent to do so, a review application shall lie before Director General of Valuation and any proceeding pending before any court, authority or tribunal shall forthwith abate].
133. [Section 193(1)
134. Appeals to Collector (Appeals) .---(1) Any person [other than] an officer of customs aggrieved by any decision or order passed under [sections 79, 80 and 179 of this Act by an officer of Customs not below the rank of an Assistant Collector] [***]may prefer appeal to the Collector (Appeals) within thirty days of the date of communication to him of such decision or order;
13. The Lahore High Court vide its reported judgment 2008 PTD 1594 Sun Traders v. Deputy Collector of Customs, Faisalabad and 4 others held in unambiguous terms that "law required that when a valuation was determined by the Collector or Director of Customs Valuation etc., a review petition lay before the Director-General under section 25-D of Customs Act, 1969 and an application lay to the Director-General under section 25-A(3) of the Customs Act, 1969, in case of conflict in the customs valuation determined under subsection (1) of section 25-A of Customs Act, 1969." This view confirmed by a different angle by the Hon'ble High Court of Sindh while deciding the Special Customs Reference Application 35 of 2009 whereby the Customs Appellate Tribunal dismissed the appeal of the appellants which was filed in terms of section 194A of the Customs Act, 1969 against order of the Collector (Appeals) passed under section 193 ibid, while holding that:
135. "The Tribunal seems to have misled itself in considering that the impugned order before it was that of valuation ruling which was not the case rather it was an order of adjudication passed under section 193-A of the Customs Act, against which appeal only lies to the Tribunal. The impugned order of the Tribunal is thus not in accordance with law.
136. In the circumstances, we set aside the impugned order and remand the matter to the 'Tribunal for fresh decision of the appeal".
137. As such issue No. (iv) is answered in negative.
14. That as regard Issue No. (v), stance taken by respondent No.2 that appellants cannot dispute the assessment completed by respondent No. 1 at a belated stage, when he paid the duty and taxes on the said assessed value for obtaining the delivery is misconceived. It is the right of the appellants to raise the objection in accordance with his desires and he is free to challenge the vires of the said assessment before the legal forum provided under the Act. It is a mistaken belief as to the amount payable will not preclude the petitioner from asserting such legal right. The said opinion stands fortified by the view taken by Hon'ble High Court of Lahore in its reported judgment 2008 PTD 1481 (Messrs Shafique and Company v. Assistant Collector of Customs and 2 others. As such Issue No.(v) is answered in negative.
15. In view of the foregoing the assessment order dated 30-8-2008 is based upon proceedings which are infested with patent illegalities and which are held to be null and void. As such as the assessment order as well as impugned order of the Collector (Appeals) based on such proceedings are also ab initio null and void and therefore, set aside. The subject appeals are accordingly allowed.
138. H.B.T./170/Tax (Trib.) Appeals allowed.