1. MR. SAFDAR ALI, MEMBER (TECHNICAL).--(1). This appeal has been filed by the Collectorate of Customs, Port Qasim and is directed against the orders passed by the leamed Respondent No. 2 vide Order-in-Original No. 14-17/2000, dated 09.05.2003.
2. 2.Brief facts of the case are that the Respondent No. 2 imported consignments of "LG" Brand Air Conditioners of various specifications. Whereas the Respondent being importers of LG Brand Air- conditioner in Pakistan, associated with the Supplier, therefore, the value could not be determined under sub-section (1) of Section 25 of the Customs Act, 1969 as provided in the proviso (d)thereof.
3. Keeping in view the concrete evidences of identical goods of same LG Brand Air Conditioners of similar type and capacity imported from the same source of supply, the goods imported by the Respondent were held liable to be assessed under sub-section (5) and (6) of Section 25 of the Customs Act, 1969. The Custom Staff also conducted a discrete market enquiry, which also substantiated that the assessable values ascertained by the staff are just equitable and correct.
4. The matter was also referred by the Respondent No. 2 to Valuation Department who advised the Department to assess the goods after 5% loading as it is established that the Importers are associated with the supplier but further investigation & verification is still required to ascertain the relationship as associated or related person. However, the goods were not released by the appellants who approached the Honourable High Court of Sind and Honourable High Court was pleased to pass orders for release of goods after detaining the goods equivalent to the alleged prices difference ascertained by the Collectorate of Port Qasim under Section 81 of the Customs Act, 1969 and Adjudicating Authority was directed to decide the case within six weeks.
5. 3.The Show Cause Notice was issued by the Respondent No. 3 which was contested by the Respondents No. 1 & 2 and after hearing the case in length and were decided the cases vide operative para read as under:- "Bare perusal and study of case record reveals that the Collectorate has failed to make out a strong and sustainable case. Even law points raised by the defendant's Counsel have not been successfully rebutted. Drastic decrease of retail price in local market of the disputed items also denies the Collectorate's stance of under invoice. In view of the above the facts and legal position the charges as mentioned in the Collectorate's Show Cause Notice C. # 191-Adj-l/2003, dated 20.02.2003 are not proved. Therefore I have no alternate but to vacate the same with the directions that the goods may be released after 5% value addition on declared value as advised by the Valuation Department as per Valuation Advice No. Misc/02/03-VA/696, dated 25.01.2003. A bank guarantee covering the amount of 5% value addition may be secured from the importer before release of the goods and the same may be kept by the Collectorate till the finalization of value slip by the Valuation Department.".
6. 4.The hearing was fixed on 11.06.2003 when the leamed Advocate for the Appellants argued that the Respondent No. 1 did not come with clean hands and was guilty of an act of gross misdeclaration in form of "fraudulent transaction value". The appellants have produced evidences of identical goods and similar goods under sub-sections (5) & (6) of Section 25 of the Customs Act, 1969 which already assorts to under invoicing to the extent of 75% which attract the provisions of Sections I6 & 32 of the Customs Act, 1969. The leamed Respondent No. 3 have misread the provisions of Section 25 of the Customs Act, 1969, which caused great loss to the Government exchequer.
7. 5.The appellants have provided concrete evidence of imports of similar brands and the invoice of the same supplier of similar goods to Saudi Arabia. A market enquiry was also conducted which supports the contention of the Appellants. Moreover, the Adjudication Officer was not competent to pass orders for the release of goods under Section 81 of the Customs Act, 1969 in the light of Valuation Advice.
8. 6.The leamed Consultant for Respondents No. 1 & 2 stated that the transactional value cannot be rejected because there are some contemporaneous imports at higher price. It has to be shown that invoice price is not genuine and does not show the real price paid for the imports. He stated that in the present case, the imports are made against irrevocable Letter of Credits and documents which clearly indicates that the transactional value is price actually paid. The department has not been able to rebut this evidence. There is no evidence available on record to show that the disputed transaction is false or is an outcome of a fraudulent activity, has been produced by the Appellants. No evidence is produced to reject the commercial documents either at the time of hearing before Adjudicating Authority or before this Forum.
9. 7.The Consultant stressed the main point that the basis of Show Cause Notice and value ascertained by the appellants is as a result of provisions of sub-section (5) of Section 25 of the Customs Act, 1969 which cannot be exceeded under sub-section (4) of Section 32 of the Customs Act, 1969. The evidences provided by the Appellants do not conform in accordance with sub- section (5) of Section 25 of the Customs Act, 1969 read with rules made thereunder vide Chapter IX (Sub chapter-I Para 107(a)) of SRO 450(I)/2001, dated 18.06.2001 which provides "at or about the same time" means within 90 days prior to the importation or within ninety days after the importation of goods being value. The Appellant cannot travel beyond the basic charge of the Show Cause Notice. The other evidence of similar goods which are not mentioned in the show cause notice cannot be relied upon as held by the Superior Courts. Even the market enquiry conducted is for the period from March 2002 to November 2002 which are for the goods imported during period March 2002 to August 2002 and on basis which the Appellants have made out the case for under invoicing.
10. 8.We have considered the view points of the both sides and impugned Order-in-Original and conclude that parties are at variance on the following issues:- (i)Whether or not sufficient material exists to reject the transaction value of the Respondent?
11. (ii)On what basis the department claims that declared value is not covered by the provisions of subsection (1) of Section 25 of the Customs Act, 1969 whether concrete evidence as required under subsection (5) of Section 25 of the Customs Act, 1969 is in possession of the Department/Collectorate?
(iii) Whether there is sufficient evidence to prove the mens rea i.e. Guilty mind exists or not?
(iv) Whether the Adjudicating Authority was competent to pass an order under Section 81 of the Customs Act, 1969?
12. 9.In order to appreciate the said issues, the first important instrument containing the relevant rule for determination of value of the imported goods is the transactional value i.e. The price actually paid or payable for the goods when sold for exports to Pakistan. It is evident that the goods of the Respondents do not fall within any of the exceptions contained in clauses (a) to (d) to the proviso to sub-section (1) of Section 25 of the Customs Act, 1969.
13. 10.Law relating to identical goods is provided in sub-section (5) of the Section 25 of the Customs Act, 1969. This sub-section only comes into effect when the value cannot be determined under Section 25(1). Where a case does not fall in any of the four exceptions to Section 25(1), it cannot be assumed that the value of imported goods cannot be determined under that sub-section. We are in agreement with the view point of the leamed Consultant for the Respondents No. 1 & 2 that the basis of show cause notice and value determined falls under the purview of the sub-section (5) of Section 25 of the Customs Act, 1969. The evidences relied upon by the appellants are for the month of March 2002 to August 2002 and market enquiry is also based on the same prices during the period of March 2002 to November 2002 which do not conform to sub-section (5) of Section 25 of the Customs Act, 1969, read with rules made thereunder vide Chapter IX (sub-chapter-I Para 107(a)) of SRO 450(I)/2001, dated 18.06.2001. Market enquiry have also not been conducted in accordance with clauses (a) & (b) of subsection (7) of Section 25 of the Customs Act, 1969.
14. 11.The appellants is not himself clear how the goods to be assessed. They have adopted every provisions of Section 25 of the Customs Act, 1969, where the provisions of Section 25 of the Customs Act, 1969, required to be implemented or to be relied upon in sequential method. There is no material on record to substantiate that an offence of illegal import or of making an untrue statement in material particular under Section 32 of the Customs Act, 1969, was committed by the defendants.
15. 12.We agree with view points of the leamed Adjudicating Authority that evidence of import by a importer of Saudi Arabia does not pertain to goods supplied/exported to Pakistan and it is not a part of Show Cause Notice and reliance of the same at this belated stage tantamount to travelling beyond the parameters of Show Cause Notice.
16. 13.The appellants failed to prove the allegations charged in the show cause notice and Adjudicating Authority is justified to vacate the same. The question arise whether or not the Adjudicating Authority was competent to direct the appellants to release the goods after 5% loading under Section 81 of the Customs Act, 1969. Perusal of the Show Cause Notice and memo of appeal, indicate that the appellants have referred the Valuation Advice No. Misc/02/03-VA/696, dated 25.01.2003 and by virtue of this the appellants were advised to release goods after 5% loading under Section 81 of the Customs Act, 1969. It is to be further investigated whether or not the Respondents No. 1 & 2 are related persons under sub-section (3) of Section 25 of the Customs Act, 1969. If it is proved then the subsequent methods of valuation on the basis of identical or similar goods, deductive methods, computed value methods, fall back methods as provided under subsections (5), (6), (7), (8) & (9) of Section 25 of the Customs Act, 1969 cannot be resorted to. The appellants would be at liberty to raise demand under Section 81(3) of the Customs Act, 1969.
17. 14.In view of the above discussions, we observe that there is no illegality or any legal impropriety in the impugned orders and there is not any justification for interference thereof. We therefore upheld the impugned Order-in-Original and dismiss the appeals. This order shall also be applicable to Appeal No. 275 to 277/2003 mutatis mutandis. Appeals are disposed of accordingly.