IN THE HIGH COURT OF SINDH, AT KARACHI
Spl.Custom Reference Application No.154 of 2008
Mr. Justice Gulzar Ahmed &
Mr. Justice Irfan Saadat Khan.
J U D G M E N T
Date of hearing : 14th October 2009
Appellant through : Mr. Raja Muhammad Iqbal, Advocate.
Respondent through : Mr. Ziaul Hassan, Advocate.
GULZAR AHMED, J.:- By this Special Custom Reference Application, the applicant has challenged the order dated 03.3.2008 passed by learned Member (Technical-I) of Customs, Excise and Sales Tax Appellate Tribunal, Bench-I, Karachi. Following questions of law have been raised in the memo of reference application:
1) Whether in terms of second proviso to sub-section (3), of Section 194-C of the Customs Act, 1969, a Member (Technical) of the Appellate Tribunal has jurisdiction to decide a case which involves questions of law?
2) Whether the Tribunal erred in law by not considering the proposition of law that w.e.f. 01-07-2007, under the newly promulgated provision of law i.e. Section 25D of the Customs Act, 1969, the Tribunal has no jurisdiction to interfere or decide an issue relating to customs value of the imported goods? For ease of reference the text of Section 25D is reproduced below:-
“25D. Review of the value determined:-Whether 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 nay Court, authority or tribunal shall forthwith abate”.
3) Whether the Tribunal erred in law by not considering the proposition of law that in terms of Section 81(3) read with Section 180 of the customs Act, 1969, and as confirmed by the Honourable High Court of Sindh vide order dated 26-04-2006 in the case of M/s. Sana International Corporation (Pvt.) Ltd., v/s. Collector of Customs and others (CP No.137/2006) it is not mandatory to issue any show cause notice or Order-in-Original for finalization of provisional assessment made under section 81(1) of the Customs Act, 1969?
4) Whether the Tribunal erred in law by not considering the legal position that in terms of sub-section 5(b) of Section 32 of the Customs Act, 1969, a notice under section 32A, 32(2), 32(3A) or 32(3) of the Customs Act, 1969, can be issued after adjustments in terms of Section 81(3) of the Customs Act, 1969?
5) Whether the Tribunal erred in law by not considering the proposition of law that in terms of proviso to sub-section (2) of Section 81 of the Customs Act, 1969, the provisional assessment was finalized on 26-02-2004 and not on the date of Order-in-Original?
6) Whether in terms of pre-amended clause (b) of sub-section (4) and sub-section (3) of Section 194-C of the Customs Act, 1969 (i.e. at the time of filing of appeal and import) a case, which involves issue of valuation and determination of duties and taxes, can be heard and decided by a single member of the Tribunal?
7) Whether the findings of the Tribunal are not perverse for non reading and mis-reading of the record and provisions of law available before the Tribunal?
Learned counsel for the applicant has contended that learned Tribunal has omitted to take into consideration that Customs Department has finalized the provisional assessment under Section 81 of Customs Act, 1969 (the Act) in time and that there was no need for issuing of show cause notice to the importer under Section 32 of the Act and that the finalization of the assessment has been made on the basis of proper evidence. In support of his submissions the learned counsel has relied upon the case of M/S GOLDEN PLASTIC (PVT.) LTD. V/S THE COLLECTOR OF CUSTOMS AND OTHERS (PLD 2002 Karachi 54) and the case of M/S ABDUL AZIZ AYOOB V/S ASSISTANT COLLECTOR OF CUSTOMS AND THREE OTHERS (PLD 1990 Karachi 378).
On the other hand, learned counsel for the respondent has contended that no final assessment was made by the Customs Authorities within the period of one year and that the demand notice issued by the Customs Authorities was not a finalized assessment. He further contended that in terms of Section 81(4) of the Act the provisional assessment attained finality. He further contended that declared value has to be accepted for the purpose of assessment and that there was no evidence on the record to disregard the transaction value of the imported goods. He further contended that for raising of an additional demand, the issuance of show cause notice in terms of Section 32(5)(b) of the Act was mandatory, which show cause notice was not issued by the Customs Authorities. In support of his submissions he has referred to Custom General Order No. 66, order dated 2.12.2008 in Customs Reference No.68 of 2008, the case of COLLECTOR OF CUSTOM (APPRAISEMENT) KARACHI V/S M/S AUTOMOBILE CORPORATION OF PAKISTAN, KARACHI (2005 PTD 2116) and the case of REHAN UMAR V/S COLLECTOR OF CUSTOMS AND TWO OTHERS (2006 PTD 909). He has further contended that the matter involves factual controversy which has been finally decided by the Tribunal and no point of law arises for determination in this case and in this regard has relied upon the case of COLLECTOR OF CUSTOMS, MODEL CUSTOMS COLLECTORATE OF PACCS, KARACHI V/S MUSAMMIL AHMAD (2009 PTD 266).
We have considered the submissions made by learned counsel and have gone through the record.
Brief facts of the matter are the respondent had imported 8 units of new Mitsubishi Dump Truck, Model FV515 JDCR in CBU condition from Japan. On arrival of the consignment, respondent filed bill of entry for consumption and declared the unit value of the imported consignment at the rate to be Japanese Yen:4,970,000/-. Such declared value was not accepted by the Customs Authorities, who made a provisional assessment under Section 81(1) of the Act by adding value of 15% and referred the matter to the Director General of Valuation. The Director General of Valuation, on the basis of information obtained form Embassy of Pakistan in Japan advised valuation per unit of Japanese Yen 6,000,000/-, upon which the Deputy Collector of Customs issued a demand notice dated 17.3.2004 to the respondent stating that the valuation of the Dump Truck is finalized and in the light of undertaking dated 05.4.2003 of the respondent and called upon the respondent to pay the amount of Rs.4,240,636/- within seven days. It seems that the respondent opposed the said demand notice and filed a representation before the Additional Collector of Customs, who through order in Original dated 11.12.2006 maintained the demand notice. The respondent filed an appeal before the Collector of Customs, which failed. The respondent then filed appeal before the Customs Excise and Sale Tax Appellate Tribunal, which was allowed by the impugned order.
Learned Tribunal gave findings that the provisional assessment was to be finalized within a period of one year in terms of Section 81(2) of the Act which was not done and secondly show cause notice was invalid as it did not disclose on what basis the demand is being raised and thirdly the assessment was not in terms of Section 25 of the Act as there was no evidence to show as to why the transaction value is not being accepted.
Taking up the submissions made by the learned counsel for the applicant, it appears that the controversy mostly is of facts and appreciation of the material placed on the record. The fact that the goods were provisionally assessed by addition of 15% value in terms of Section 81(1) of the Act is not disputed but the dispute is as to whether the final assessment was made within one year time as provided under Section 81(2) of the Act or not and whether there was proper evidence with the Customs Authorities to finalize the assessment in terms it was done and whether there is justification for demand notice. Learned Tribunal has given the date of 24.4.2003 on which the provisional assessment is said to have been made and has referred to demand notice dated 17.3.2004 as a show cause notice and has termed the order-in-original dated 11.12.2006 to be the date of finalization of assessment and therefore has come to the conclusion that the finalization of the assessment was beyond one year time of provisional assessment and in terms of Section 81(4) of the Act the provisional assessment became final.
It is unfortunate that during the course of his arguments, learned counsel for the applicant did not, in specific term, gave the date of provisional assessment made by the Customs Authorities but kept on asserting that the assessment was finalized within one year. Section 81 of the Act, as it existed at the time when controversy arose, was as follows:
“81 Provisional assessment of duty.—(1) Where it is not possible immediately to assess the customs-duty that may be payable on any imported goods entered for home-consumption or for warehousing or for clearance from a warehouse for home-consumption or any goods entered for exportation, for the reason that the goods require chemical or other test [or a further enquiry] for purposes of assessment, or that all the documents or complete documents or full information pertaining to those goods have not been furnished, an officer not below the rank of [Assistant Collector or Deputy Collector] of Customs may order that the duty payment on such goods be assessed provisionally:”
Provided that the importer (save in the case of goods entered for warehousing) or the exporter pays such additional amount as security or furnishes such guarantee of a scheduled bank for the payment thereof as the said officer deems sufficient to meet the excess of the final assessment of duty over the provisional assessment.
(2)Where any goods are allowed to be cleared or delivered on the basis of such provisional assessment, the amount of duty actually payable on those goods shall be finally assessed within [one year] of the date of provisional assessment:
Provided that the Collector of Customs may, under circumstances of exceptional nature, extend the period for final assessment by not more than ninety days, after recording such circumstances.
3) On completion of such assessment, the appropriate officer shall order that the amount already paid or guaranteed be adjusted against the amount payable on the basis of final assessment, and the difference between the two amounts shall be paid forthwith to or by the importer or exporter, as the case may be.
(4). If the final assessment is not completed within the period specified in sub-section (2), the provisional assessment shall become final.]
The reading of sub-section (1) shows that it provides for contingencies on the basis of which the provisional assessment has to be made in respect of imported goods. The main feature of this provision, relevant for the present purpose, is that it requires the Assistant Collector and Deputy Collector of Customs to make an order giving reasons for making of the provisional assessment of duty and such reasons should be those which are enumerated in the provision itself.
We had asked the learned counsel for the applicant to show us an order that may have been passed by the Assistant Collector or Deputy Collector, Customs, making the provisional assessment in terms noted above, the learned counsel for the applicant could not show any such order but made reference to the one page bill of entry for home consumption, filed as annexure ‘B’ to this Reference Application. The bill of entry shows its IGM number and date which is respectively 645 and 24.04.2003. Besides the usual contents of the bill of entry, there appears to be no order of Assistant Collector or Deputy Collector of Customs on the bill of entry showing making of provisional assessment in terms of Section 81(1) of the Act. There appears to be a rubber stamp affixed on the bill of entry leaving blanks for entering the number of letter of guarantee, its date, the amount and its valid date. The blank spaces in this rubber stamp appear to have been filled in by hand and who is the authority who has signed under this rubber stamp, the same is not clear nor the counsel for the applicant informed the court about it. The bill of entry apparently contains signatures of Rashid Khan, Appraiser and Waqar Qureshi, Appraising Officer, KCH No. 396, dated 07.5.2003. The bill of entry shows that the revenue recovered under it is that of Rs.9,963,498/- which seem to have been deposited with the National Bank of Pakistan on 10.6.2003.
On the face of bill of entry, the order as is postulated by Section 81(1) does not seem to be available as in terms of this provision there has to be proper, conscious reasoned order passed by the Assistant or Deputy Collector of Customs making provisional assessment. In the memo of Reference, the applicant in para 5 of the statement of facts has stated that provisional assessment was made on 07.5.2003. On the bill of entry this date is mentioned under the signatures of Waqar Qureshi, Appraising Officer, KCH No. 396. In terms of the provisions of Section 81(1) of the Act the only authority who is competent to pass the provisional assessment order is Assistant Collector or Deputy Collector of Customs and obviously the Appraising Officer is below in rank to Assistant Collector and Deputy Collector and not a competent person to make provisional assessment. It will thus appear that there is apparently no compliance of the provision of Section 81(1) of the Act inasmuch as there does not appear to be on record a reasoned order passed by Assistant Collector or Deputy Collector of Customs making the provisional assessment of duty.
Be that as it may, the admitted fact on the record is that the respondent was allowed to clear the consignment by making addition of 15% on the declared value and it is also admitted that such addition was made in terms of Section 81(1) of the Act meaning thereby that it was a provisional assessment.
The Tribunal, which is the ultimate authority on facts, has given the date of 24.4.2003 to be the date of provisional assessment. Nothing has been shown to us by learned counsel for the applicant that such finding of fact about the date of provisional assessment by the Tribunal was perverse or not based upon the evidence available on the record. In para 5 of statement of facts in the memo of Reference Application, the applicant has given the date of provisional assessment as 07.5.2003. Such date appears in column 48 of the bill of entry and is given under the signatures of the Appraising Officer. The Appraising Officer is not an Assistant Collector or Deputy Collector rather is a lower rank officer and not competent to make provisional assessment and therefore this date cannot be accepted as date of provisional assessment. Thus, for the purpose of date of provisional assessment, we will have to base the same on the findings given by the Tribunal that is of 24.4.2003. If that be the date of provisional assessment, in terms of Section 81(2) of the Act the Customs Authorities were required to make final assessment of the provisional assessed duty within a period of one year. The demand notice dated 17.3.2004, which states the provisional assessment has been finalized and makes a additional demand of Rs. 4,240,636 appears to be within one year time as provided under Section 81(2) of the Act and such finalization of assessment and demand cannot be termed to be out of time. The Tribunal in its finding has taken the date of order-in-original dated 11.12.2006 to be the date of final assessment which order, in our view, is not an order of final assessment but has been passed on the basis of representation made by the respondent against the final assessment conveyed to the respondent by the notice of demand dated 17.3.2004 which seems to have all ingredients of final assessment in terms of Section 81(2) of the Act. Thus, in our view the Tribunal was not right in coming to the conclusion that final assessment was made beyond one year period and that in terms of Section 81(4) of the Act the provisional assessment has become final.
As regards the question as to whether final assessment of value of the imported consignment made by the Customs Authorities is based upon valid, cogent and reliable evidence, the demand notice only relies upon the letter dated 26.2.2004 of the Valuation Department. The said letter dated 26.2.2004 of the Assistant Collector of Customs Valuation has been filed with the memo of Reference Application as annexure ‘D’ and its contents are as follows:
“The case has been examined in the light of colelctorate’s file notings and data available on the record of this office.
2. The value of Mitsubishi Dump trucks (Scoop & End Type) CBU Condition is not available on the record of this office. Reference for verification of the prices was made to the Commercial Counselor, Embassy of Pakistan, at Tokyo, Japan Vide letter dated 19-07-2003. The Commercial Counselor, Embassy of Pakistan at Japan vide its letter (Fax) No. Misc(3)/2003-CS, dated 20-02-2004 (copy enclosed) has confirmed the value which is as under;
Mitsubishi Dump Truck >> F.O.B.J.Yen 6000000/=
Insurance >> 1 to 2%
Freight >> J.Yen 200,000/- to 300,000/=
3. Collectorate may finalize the assessment in the light of information forwarded by the Embassy of Pakistan at Japan.”
The letter dated 20.2.2004 of the Commercial Counselor, Embassy of Pakistan at Japan is also filed with the Reference Application as annexure ‘F’ and its contents are as follows:
“Please refer to your letter No.1/71/2003-VIA/60 dated January 7, 2004 on the above mentioned subject. The required information is as given below:
1.Mitsubishi Dump Truck
FOB Price : JY around 6000,000/-
Insurance : 1 to 2%
Freight : JY 200,000 to 300,000/-
2.Hino Truck Model WU 410R
C&F Price : JY 1,7130,000”
The perusal of the two documents, which have been relied upon for raising of demand, shows that it is not based upon the enquiry of this particular import made by the respondent nor is based upon information collected form the exporter whose name and address is given in the bill of entry which is in Tokyo Japan nor from the manufacturer though as mentioned in the bill of entry the consignment is made in Japan. No such enquiry or source is quoted in the letter of the Commercial Counselor of Embassy of Pakistan, Japan nor any such material is mentioned in the letter of Valuation Department on which letter the demand is squarely based. Learned counsel for the applicant has referred to the case of M/S Abdul Aziz Ayoob (supra) which is a Division Bench judgment of this Court in which the Court considered the implication of section 25 of the Act for determination of normal value of the imported consignment and as regards certificate issued by the Embassy of Pakistan at page 386 of the judgment observed as follows:
“6. This brings us to the next question whether the basis which was adopted by the Customs to determine the price of the imported goods was contrary to law. As seen above, learned counsel has placed reliance on Collector of Central Excise and Land Customs v. lmdad Ali 1969 S C M R 708 in which case, for the various reasons detailed in the judgment, the Supreme Court declined to uphold reliance on a certificate issued by the relevant Embassy of Pakistan as regards the price of the imported commodity. We would straightaway record that such basis, as a rule, suffers from serious infirmity and should be avoided. Where such a letter or certificate is relied upon the Embassy concerned should be asked, as opined in the Supreme Court judgment, to attach a price list or certificates from traders or their own certified assessment in the relevant country and short of this the version of the Embassy should not be accepted or relied upon.”
The above observation is made by relying upon an earlier judgment of Hon’ble Supreme Court of Pakistan referred to therein and it has been emphasized that the Embassy concerned should be asked to attach the price list or certificate from the traders or their own certified assessment in the relevant country and short of this the version of the Embassy should not be accepted or relied upon. There is no price list or certificate from the traders attached to the letter dated 20.2.2004 of the Embassy of Pakistan nor the Commercial Counselor has given his own certified assessment regarding the value of the imported consignment. Thus, in our view the demand raised by the demand notice dated 17.3.2004 does not find support as to the valuation of the imported consignment and to this extent we agree with the finding of the Tribunal that it is based merely upon heresy and does not reflect either transaction value or the correct value of the imported consignment.
We, therefore, find no merit in this Special Custom Reference Application. The same is, therefore, dismissed.
J U D G E
J U D G E