ORDER: MR. JUSTICE NASIM SIKANDAR.--(1). This Reference under section 196 of the Customs Act, 1969 arises out of the judgment of a Division Bench of Customs, Excise and Sales Tax Appellate Tribunal, Lahore, dated 11-11-2006. Through that order the appeal filed by the present petitioner against the order of the Collector (Appeals), Lahore, dated 22-6-2006 was dismissed.
2. According to petitioner, following questions of law arise out of the said order of the learned Tribunal:--
(a) Whether learned Appellate Tribunal has fallen in error of law while interpreting S.R.O. 447(1)/04, dated 12-6-2004 according to Category-III thereof vehicle imported under diplomatic privileges on sale shall be subject to 100% of duty and taxes on prevailing rates of exchange of the value determined in foreign currency at the time of importation and not the value prevailing in market at the time of sale?
(b)Whether learned Appellate Tribunal has erred in law to hold that value was not determined at the time of import because no goods can be cleared/out of charged either on payment of taxes or under exemption unless value for customs purposes is assessed?
(c)Whether learned Appellate Tribunal has fallen in error of law to hold that since the declared value was not enhanced, thus, it cannot be termed as value determined whereas acceptance of declared value means customs value assessed under section 80 of the Customs Act, 1969?
(d)Whether learned Appellate Tribunal has fallen in error of law to apply market value to the vehicle and deny depreciation in terms of CGO 12 of 2002, dated 15-6-2002?
(e)Whether the learned Appellate Tribunal has fallen in error of law to uphold the action of department to give discriminatory treatment to applicant?
(f)Whether the impugned judgment is result of misreading and misinterpretation of relevant law?
3. The admitted facts of the case being that the present petitioner purchased vehicle Mercedes Benz S-500 Model 2002 from Ambassador of Republic of Azerbaijan, who had earlier imported the same on 23-10-2002, claiming benefit of S.R.O. 447(I)/2004, dated 12-6-2004. The Diplomat was granted the benefit and consequent exemption from levy of duty and taxes on the declared value of US $ 27000 C&F. After the purchase of the vehicle, which was duly authorized by Ministry of Foreign Affairs Islamabad the petitioner sought finalization of the .assessment to pay duty and taxes in terms of the said permission read with above mentioned concessionary S.R.O. dated, 12-6- 2004. The Revenue officials assessed the value of the vehicle at Euro 74244 on the ground that as per bill of entry, dated 23-10-2002 the model of the vehicle being 2002 it was a brand new car at the time of its import. Before the Revenue Authorities, it was the case of the petitioner that the value of the vehicle was liable to be determined in foreign currency at the time of its import. By way of Order-in-Original, dated 25-10-2005, the contention of the present petition was rejected while, as noted earlier, the appeal filed by him against the Order-in-Original was rejected by the Collector (Appeals) on 22-6-2006. The learned Members of the Tribunal while maintaining the first appellate order concluded as under:-- "(7) ..Since the vehicle has been sold out under permission of the Ministry of Foreign Affairs and duty/taxes in terms of the said S.R.O. mentioned above have to be paid, the transactional value would be the one which is certified by the manufacturer to be the price applicable to a particular vehicle at the time of its manufacture including freight charges etc. incurred upto the valuation point. In the instant case the value applicable to the said vehicle will be the value as suggested by the manufacturer or authorized dealer i,e, Messrs Shah Nawaz Private Ltd. Karachi as Euro 74244.
Therefore, by no stretch of imagination, this value can be denied. The declaration of value by the importer at the time of import on the bill of entry/goods declaration as US $ 27000 and acceptance of the same the Customs Authorities without questioning the same does not mean that the same is the transactional value. Further it is not a closed transaction because the vehicle was imported under certain conditions of the said S.R.O. ..."
4. Heard learned counsel for the parties.
5. Learned counsel for the petitioner relies heavily upon a judgment recorded by our learned brother Umar Atta Bandial, J., in W.P. No, 17292 of 2005 (re: Syed Waqar Ashraf v. Secretary to the Government of Pakistan, Ministry of Finance, Economic Affairs, Statistics and Revenue (Revenue Division), Lahore and 3 others), dated 13-9-2006 2007 PTD 1630. The facts before our learned brother were exactly the same as the comparable exemption was available to the Diplomat importing the vehicle under S.R.O. 506(1)/88, dated 26-6-1988. The Hon'ble Judge rejected the submission made by the Revenue that clearance of the vehicle on grant of exemption and without making of an assessm ent could be treated as a provisional assessment under section 81 of the Customs Act, which was liable to be re-opened at any subsequent stage. In paras. 5, 6 and 7 of the judgment it was observed as under:-- "(5) It is plain from the foregoing statutory provisions that the power of provisional assessment is exercised where fmal assessm ent of imported goods cannot be completed immediately for - the want of tests, reports, complete documents or other further enquiry about the imported goods for purpose of fmal assessm ent. In such cases a provisional assessment order must be passed allowing for clearance of the imported goods subject to furnishing securities. Reference is made to the case of Collector of Customs (Appraisement) Karachi v. Messrs Automobile Corporation of Pakistan (2005 PTD 2116). In the present case .there is no order or other indication on the bill of entry and the remaining record that at the time of clearance of the vehicle for home consumption its provisional assessm ent had been made by the respondents No, 3 for want of further enquiry, other verification or complete documents. Therefore, no security was taken by the respondents as also visualized by section 81 of the Act. Hence, the argument by the learned counsel for the respondents on the basis of section 81 of the Act is not borne out from the record of the case.
(6) The true essence of the respondents' case is that the value of the vehicle was not assessed properly at the time of its clearance for home consumption. Therefore the Customs Authorities can reassess the same later. This view may have had substance if allegations under section 32 of the Act for dishonest mis-declaration of value by the importer or inadvertence or error by the Assessing Officer had been made. In such event, a past assessment may be validly reopened.
However, that is neither the position on the respondents record nor is possible under the adjudicative orders made in the case that have also .attained finality and thereby created vested rights.
(7) Notwithstanding the foregoing, there may be substance in the objection by the learned counsel for the respondents that the admitted violation of a term of the exemption S.R.O. has gone unpuuished. This is the breach of the condition that the vehicle could not be sold and transferred without consent of the Federal Government. Two things must be noted here. One that the importing mission and not the petitioner committed the said breach and second that the record and the Tribunals adjudicative order that has attained finality ignores that breach of the aforesaid term of the S.R.O. The departmental view appears to be that the breach carries insignificant consequences.
Clearly the petitioner cannot be saddled with the liability of an errant diplomatic mission that is the importer in the present case. Nor should the respondents assume the authority to start a brand new case against the petitioner as soon as the present one ends. They may, however, act in the matter within the foregoing limits."
6. Besides the reliance upon the above judgment, learned counsel for the petitioner submits that we will readily agree that the acceptance of declared value at the time of import of the vehicle amounted to an assessm ent. He is correct in pointing out that the Revenue could not be allowed to avoid its responsibility of making an assessment of an item at the time of import from abroad merely for the reason that no incidence of taxation was involved. Category-III of the Schedule to the said S.R.O., dated 12-6-2004 clearly visualized that the car imported into Pakistan by a diplomatic representative or Mission of foreign government if sold within three years of the date of importation shall be liable to 100% duty and taxes "leviable at the prevailing rates of exchange and duties/taxes on value determined in foreign currency at the time of importation". The action of the departmental officer in determining the value of the vehicle at the prevailing market rate was thus clearly against the sense and spirit of the concession granted by the said S.R.O. Learned counsel for the Revenue has not been able to establish that the re-assessment of the vehicle was legally permissible either under section 81 of the Act or provisions of the S.R.O. His claim that the clearance of the vehicle by the Customs Authorities at the time of the import was a mere mechanical exercise as no duty was payable by the imported Mission is hardly of any avail. Even otherwise the declared value of the vehicle at US $ 27000 C & F being supported by all necessary documents, there was neither an occasion nor any justification for the Revenue Authorities to reject the same.
The provisions of the S.R.O. also being absolutely clear that in case of sale of an exempted vehicle by the foreign Diplomat/Mission A within three years of import, the duty and other taxes were to be charged at the imported value. There was thus no legal justification for the Revenue either to enhance the imported value or to seek payment of duty and taxes on the rate prevailing at the time of assessm ent. As observed by our learned brother in para. 6 of his order, as reproduced above, the stand taken by the department may have had substance, if the conditions stated in section 32 of the Act including dishonest misdeclaration of value by the importer or inadvertence or error on the part of the Assessing Officer were answered. It was only in that situation that past assessm ent could validly be reopened.
7. As observed above, in the case in hand none of the conditions stated in section 32 of the Act are answered, nor by any stretch of imagination the accepted declared value can be termed as provisional assessm ent. Therefore, for the various reasons stated in the said order recorded by our learned brother Umar Atta Bandial, J., and those mentioned above, we will return a positive answer to questions (a) and (c), as a result thereof the other questions are not needed to be answered.
Resultantly, this Reference succeeds. The Revenue shall release the vehicle within thirty days, from the date this order is conveyed to them, after charging 100% duties and tax on the value declared and accepted in foreign currency at the time of importation of the vehicle in terms of S.R.O.
447(1)/2004, dated 12-6-2004.