SABIHUDDIN AHMED, J.---The admitted facts appear to be that the petitioner imported some water chillers for installation in an engineering project from abroad, which arrived in Karachi on November 23, 1981. According to the petitioner the goods were liable to be classified under P.C.T.
Heading 84.17 and liable for customs duty at the rate of 40% ad valorem, whereas the Respondent No.3 claimed that they fell under P.C.T. Heading 84.15 attracting customs duty at 120%.
Subsequently an understanding was arrived at whereby the goods were provisionally assessed at the rate of 120% but the petitioners were allowed the facility of releasing them upon payment of 40% and furnishing a bank guarantee in favour of the Respondent No.3 for the remaining amount of 80%. Thereupon two bank guarantees dated December 9, 1981 and December 14, 1981 were furnished by the Respondent No.5 respectively for the amounts of Rs.1,963,233 being the difference of customs duty and Rs.39,265 for the additional income tax that might be payable in case the rate of duty was found to be 120%. These guarantees were to expire on March 9, 1982 and March 14, 1982 respectively but were subsequently extended till June 9 and June 14.
2. It appears that no final assessm ent of duty was made and on 24th April, 1985, the Respondent No.2 addressed a letter to Respondent No.3 stating that in view of the hardship that may be caused on account of fact that many air-water cool chillers had been released by the Custom House upon payment of 40% duty, all cases where under 120% was paid under protest or where difference of 80% was secured through bank guarantee may be finalized.
3. Nevertheless, on 9-6-1994, the respondent No.3 addressed a letter to the Respondent No.4 required them to settle the principal amount together with 20% mark up and 10% surcharge on all the guarantees furnished by the said respondent failing which recovery could be made from the reserves lying with the State Bank of Pakistan. A copy of this letter was passed on by the Respondent No.4 to the petitioners stating that they would make payment in accordance with the demand. This letter of the Respondent No.3 has been called in question in this petition. Ms. Sana Minhas learned counsel for the petitioner referred to the bank guarantees furnished by the Respondent No.5 and their further extensions are clearly mentioned the dates upto which they would remain valid. Evidently these guarantees were initially issued for a period of three months and were subsequently extended for further period of three months upon the same terms and conditions. The operative provisions of the guarantee, dated 9- 3-1982 stipulated that the sum guaranteed represented difference between the duties and the taxes leviable as between heading 84.17 B03 and 84.15 D and would be paid on demand should it finally be decided that the subject goods fell for classification under heading 84.15 D of Pakistan Customs Tariff.
4. Mr. Sajjad Ali Shah learned standing counsel attempted to argue that the guarantee was to remain intact till a final assessm ent was made and such assessment having not been made to date, the same remained valid and enforceable. The mere mention of an expiry date on a top of the guarantee made no difference. Such contention we are constrained to observe must be repelled instantly. In case the guarantees were to remain alive till the respondents chose to make a final assessm ent there could be no possible ground for seeking an extension of the guarantees.
Moreover, the Respondent could not choose to delay final assessment at their leisure and claim the bank guarantees to remain alive.
5. In any event the terms of guarantees clearly show that the amounts were payable on demand in case the good were finally classified under heading 84.15. As admitted by both learned counsel, section 81(2) as it then stood required that when goods were released on the basis of provisional assessm ent the amount of duty payable was to be "finally assessed as soon as may be".
Subsequently a mandatory period of 180 days for doing so was provided. Therefore, it is perfectly logical to assume that guarantees were demanded, furnished and extended on the understanding that assessm ent would be finalized within the extended period of six months. The respondents however failed to do so and no demand could thereafter be made under the guarantees. No final assessm ent having admittedly been made no demand whatsoever could be raised.
6. Ms. Minhas however further argued that in view of the decision of the Respondent No.2 contained in the letter, dated 24-4-1985 the duty was required to be finally assessed at 40%. She contended that the directions of the Respondent No.2 were binding upon the Respondent No.3 in terms of section 223 of the Customs Act. Prima facie assessment and valuation of imported goods is an adjudicative process required to be undertaken by custom officers and the findings are subject to the incidents of appeal and revision. On the other hand proviso to section 223 contemplates that the C.B.R. Cannot in the exercise of powers under section 223 interfere in the exercise of discretion of such officers relating to performance of their quaisi-judicial functions. In M.A. Rehman's v.
FederatiOn of Pakistan (1988 SCM R 691) the Honourable Supreme Court held that an officer hearing an appeal under section 193 is only exercising quaisi-judicial powers and is not bound by the instructions of the C.B.R. Under section 223. In Central Insurance Company v. Central Board of Revenue (1993 PTD 766) the Supreme Court while interpreting section 8 of the Income Tax Ordinance, 1979 (which is similar to section 223 of the Customs Act) held that only directions of an administrative nature issued by the C.B.R. And not those interpreting statutory provisions for determination of tax liability would be binding on Income Tax Authorities.
7. In the circumstances, we are inclined to hold that the opinion of the C.B.R. Which does not even stand in the hierarchy of the authorities hearing appeals and revisions under the Custom Act could not be treated as final assessm ent. In any event the order itself suggests that assessments were to be made on a case to case basis by the competent authority.
8. At the same time it is not possible for the Respondents to claim that the provisional assessment at the rate of 120% ad valorem had assumed finality after the incorporation of section 81(4) in the Customs Act. Apart from the question whether subsection (4) would apply to such assessment made earlier the plea that the goods were provisionally assessed to duty at the rate of 120% is absolutely untenable. There is no provision of law enabling Customs Officers to provisionally assess duties at a higher value and then release them upon payment of a lessor amount. The general rule is stated in section 80 requiring assessment of goods duty and their release upon payment of the same. Section 81 is an exception to the rule and contemplates that when it is not possible to E assess duty immediately the goods could be released upon payment of the amount provisionally assessed and taking security "sufficient to meet the excess of the final assessment of duty over the provisional assessm ent" by its very nature therefore, the amount determined on provisional assessm ent has to be lower than that which could possibly be payable upon final assessment and not vice versa.
9. The position that emerges from the above appears to be that F whereas the bank guarantees ceased to remain operative, no final assessment of duty on the part of the concerned officers seems to have taken place as yet. For the foregoing reasons we allowed this petition to the extent of declaring that the bank guarantees were no more encashable and had to be returned but the Respondents were required to undertake final assessment and collect such amount if any as may be due from the petitioner. These are our reasons for the short order, dated 21-9-2004.