M/s. Madina Traders through partner vs The Federation of Pakistan
This matter comes before the Supreme Court through petitions directed against a common judgment of the High Court, which had dismissed writ petitions challenging a notification issued by the Central Board of Revenue under section 25-B of the Customs Act, 1969, fixing the valuation for customs duty on the import of Soyabean Meal for Poultry. The core legal questions involved whether the reasonableness of customs valuation can be investigated in constitutional jurisdiction and whether an alternative remedy was barred under the circumstances. The Supreme Court held that the question of whether a notified valuation has a nexus with international market prices is a factual inquiry not determinable under constitutional jurisdiction, and that the petitioner had knowledge of the notification prior to opening the letter of credit. The Court affirmed that constitutional jurisdiction cannot be invoked for such factual probes, dismissing the petitions while observing that pending objections before the Central Board of Revenue should be decided.
- Can the reasonableness of customs valuation fixed by the Central Board of Revenue be made the subject-matter of an inquiry in the constitutional jurisdiction of the High Court?
- Does a notification fixing import valuation violate fundamental rights to carry on business when the importer opens a letter of credit with prior knowledge of the notified valuation?
- Whether a factual controversy regarding international market prices versus notified customs valuation can be determined in constitutional proceedings?
- Section 25-B, Customs Act, 1969
JUDGMENT: MR. AJMAL MIAN, C.J.--(1). By this common order, we intend to dispose of the above mentioned two petitions which are directed against the common judgment dated 8-5-1998 passed by a learned Single Judge in Chambers in Writ Petitions Nos, 6613 of 1998, 6328 of 1998, 6540 of 1998, 6612 of 1998, 6762 of 1998, 7511 of 1998, 7877 of 1998, 7512 of 1998, 7513 of 1998, 7510 of 1998 and 7500 of 1998 filed, inter alia, by the petitioner challenging the Notification dated 14-2-1998 issued by the Central Board of Revenue under section 25-B of the Customs Act, 1969 (hereinafter called as the Act) fixing the valuation for the customs duty on the import of Soyabean Meal for Poultry.
2. The grievance of the petitioner is that at the relevant time the International Market price of the above item was between US $ 150 to 200 per metric ton whereas in the impugned Notification the valuation was fixed as US $ 271 per metric ton. The learned Judge in Chambers declared that the writ petitions are not maintainable, inter alia, on the ground that the petitioner had alternative remedy under the Act. Reference has also been made to the following observations from the judgment in the case of The Collector of Customs, Karachi and others v. Messrs New Electronic (Pvt.) Limited and 59 others (PLD 1994 SC 363) in which while dilating upon section 25-B of the Act, the following observations have been made.
"I have given my serious thoughts to the above submission that I am of the view that reasonableness of the various valuation fixed for various items of goods cannot be subject-matter of an enquiry in exercise of Constitutional jurisdiction by the High Court. The above controversy requires thorough factual probe into the matter on the basis of materials to be brought on record by the parties. The remedy, if any, of the respondents is to make representations through their association to appellant No, 3 and or to approach any other competent forum. I am, therefore, not inclined to accept the above contention."
3. However, learned counsel appearing on behalf of the petitioner has vehemently contended that the petitioner in fact had no remedy as they got the goods released on furnishing indemnity bond and cheques and they would not have been able to get any relief from the Customs Authorities under the Act. He has further submitted that factually Pakistan Poultry Association had filed objections to the above Notification as far back as 19-3-1998 but till today the same remained undisposed of. He has relied upon the case of Messrs Elahi Cotton Mills Ltd. and others v. Federation of Pakistan through Secretary Ministry of Finance Islamabad and 6 others (PLD 1997 SC 582 = PTCL 1997 CL. 260) in which, inter alia, it has been held that any legislation whereby either the price of marketable commodities are fixed in such a way as to bring them below the cost of production and thereby make it impossible for a citizen to carry on his business or tax is imposed in such a way so as to result in acquiring property to those on whom the incidence of tax fell, then such legislation would be violative of the fundamental rights to carry on business and to hold property as guaranteed in the Constitution.
4. In our view the above case is not applicable. Admittedly, the above Notification was issued 14-2- 1998 whereas the petitioner opened L.C. for the import of the above item in March, 1998. The petitioner knew at the time of the opening of L.C. that on what valuation basis he would have to pay customs duty and other taxes on the import of the above items. In our view as a prudent person, he would not have imported the same if he was to suffer any loss.
5. In any case, the question as to whether the valuation notified by the Central Board of Revenue in its Notification dated 14-2-1997 has nexus with the international valuation prevalent on the relevant date, in the country of origin from where the above item has been imported is a question of fact which cannot be determined in exercise of Constitutional jurisdiction as held in the above case of the Collector of Customs, Karachi and others (supra). We are, therefore, of the view that the impugned order does not suffer from any infirmity. The petitions are dismissed. However, we may observe that C.B.R. may decide if any objections of the Poultry Association are pending as alleged by the learned counsel for petitioner.