MUHAMMAD NADEEM QURESHI, MEMBER (JUDICIAL-I)--By this judgment we intend to dispose of the instant appeal filed by the appellant under section 194-A of the Customs Act, 1969, against Order-in-Revision No,221 of 2016, dated 03.08.2016, passed by the Director General of Customs Valuation, Karachi.
2. Brief facts of the case as stated in the impugned order are that brief facts of the case is that the petitioner is engaged in imports of Home Appliances and registered as an importer, exporter, distributor, retailer and wholesaler vide Sales Tax Registration No, 03-01-8500- 020-28 dated 3.02.2006 under the Sales Tax Act, 1990. The Appellants are enjoying a good reputation and standings in the Islamic Republic of Pakistan. For the purpose of running their company the Appellants imports CBU units as well as purchase locally from time to time required for their onward sales. The Appellants are contributing huge amount of paying duty and taxes etc on clearance of the above goods. The Appellants is seriously prejudiced to the values determined by Respondent No,2 vide Valuation Ruling No,840/2016 dated 21.04.2016 wherein the value for the home appliances have been. determined arbitrarily and without following the sequential methods as laid down in Section 25 of the Customs Act, 1969 which is also in conflict with the principles laid down by the apex court of Pakistan. That being seriously aggrieved with the above impugned valuation ruling the Appellants had filed a revision petition under section 25-D of Custom Act, 1969 on 29,04.2016 wherein the Appellants have vehemently contested the arbitrary values determined by the learned Director of Customs Valuation. During the proceeding of Revision Petition the Respondent No, 2 have issued a letter No,DG(V)VAL.REV/398/2016/9065 dated 12-05-2016 wherein certain documents were required to be furnished in order to substantiate the acceptance of transaction value in terms of section 25 (1) of the Custom Act, 1969. The Appellant in reply to the aforesaid letter have accordingly furnished the requisite documents before the Director General of Customs Valuation being Respondent No,1 with a copy to the learned Director of Customs Valuation on 26-05-2016 and further requested him to set aside the impugned valuation ruling on the basis of the grounds taken in the memo. of the Revision Petition as well as the above requisite documents furnished by the Appellants. That much to sorrow and regret the Respondent No,1 without taking formal rebuttal to the documents filed by the Appellants and without going into the merits of the case have decided the Revision Petition vide Order-in-Revision No,221/2016 dated 03- 08-2016 which is too harsh, unreasonable and unjustifiable inasmuch as without any lawful reasons. That the Appellants being seriously aggrieved with the above Order-in-Revision passed by the learned Director General of Customs Valuation beg to file this Appeal under Section 194-A of the Customs Act, 1969, assailing the above harsh order, inter-alia, on the grounds contained in memo. of Appeal. The Director General, Customs Valuation, Karachi, passed the Order-in-Revision No,221/2016 dated 03-08-2016. The operative part of the Order-in-Revision is reproduced as under:- - "19. I have examined the record of the case and considered the written and verbal arguments put forwarded by. the petitioner and respondent during the course of hearing.
20. Principal activity of Messrs Haier Pakistan (Pvt.) Ltd. are manufacturing of domestic appliances of Haier brand imported from Messrs Haier Overseas Electric Appliances Corporation Ltd., China. Of Haier brand imported from Messrs Haier Overseas Electric Appliances. There exist relationship between the consigner and consignee. The nature of relationship exist between the consignor and consignee are not known but the fact is that Messrs Haier Pakistan (Pvt.) Ltd. is a subsidiary of Messrs Haier Overseas Electric Appliances Corporation Ltd China which utilizes the brand name of 'Mier in Pakistan by the only sole importer. They were asked to produce contract and papers to show the nature of relationship between two entities but no paper was submitted. Such activity comes within the criteria of related party transaction as such the declared value could not be treated a normal value unless demonstrated in terms of Section 25(3) of the Customs Act, 1969.
The treated a normal value unless demonstrated in terms of Section 25(3) of the Customs Act, 1969. The petitioner themselves declared value of US$ 240/Pc and US$ 278/Pc. This value is per valuation ruling value. Since their declaration is same in 2016, therefore the value are correct. They failed to substantiate that the declared prices at which the goods are imported are closely approximate to one of the test values. The petition is accordingly rejected."
3. Hence, the appellant filed the instant appeal before this Tribunal on the grounds mentioned in the memo. of appeal.
4. Learned counsel for the appellant on the date of hearing argued the matter and adopted the contents mentioned in the memo. of appeal and further contended that the principles of natural justice have not been complied with as since no fair opportunity of being heard has been provided to the Appellants resulting to which the grounds taken in the memo. of Appeal has not been rebutted by the learned Director General ,of Customs Valuation. Therefore the proceedings carried out in this case is against the principles of natural justice enunciated in audi alteram partem hence the impugned order is liable to be set aside on this ground alone. The learned Director General of Customs Valuation has not considered the documents furnished by the Appellants at the time of hearing during the proceeding of the Revision Petition which clearly substantiates that the dutiable value of home appliances are the values claimed by the Appellants being true and genuine transaction values in terms of Section 25(1) of the Customs Act, 1969. The learned Director General of Customs Valuation has altogether ignored the documents furnished by the Appellants on 26.05.2016 which was not considered by the Respondent No,2 in their para-wise comments whereby they have contended that the Appellants have not furnished sales tak invoices despite the fact that the Appellants have duly furnished the said sales tax invoices vide their letter dated 26.05.2016. It has been contended in the order-in-revision that the Appellants have declared value of US$240/pc and US$ 278/Pc which is misconceived. It is submitted that at the time of clearances of the impugned home appliances goods the Appellants have vehemently contested that the value determined in Valuation Ruling No,840/2016 is not the actual transaction value as per sales contract, letter of credit and invoices produced by the Appellants. The Appellants have also approached to the Respondent No,2 as well as Respondent No,3 on 09.3.16, 24.03.2016 and 13.04.2016 to accept the transaction value and/or release the goods on securing the differential amount of duty and taxes. However, the said request against provisional release was not considered and thereafter the Appellants had no option then to declare the value determined in Valuation Ruling No,840/2016 under protest and without prejudice to their rights accrued by seeking the remedy under Section 25D of the Customs Act, 1969 with a note on G.Ds "NOTE AS PER VR NO.840/ 2016 DATED 21.04.2016". The details of import G.Ds wherein the duty and taxes were paid and assessed by Respondent No,3 on the basis of value US$ 240/pc on import of 12000 BTU AC DC Inverter. Appellant is a manufacturer of Haier brand imported from Messrs Haier Overseas Electric Appliances Corporation Limited China. The said observation is misleading the facts of the case. It is submitted that Appellants is not a manufacturer but a importer which are importing CBUs units from Messrs Haier Overseas Electric Appliances and have no nexus with any of the manufacturing of Haier product china. The burden of proof lies with the department in terms of Article 117 of the Qanun-e-Shahadat Order, 1984 to prove that both buyer and seller are related parties and the Appellants are manufacturing units of Haier China. The learned Director of Customs Valuation has determined the custom values of Conventional and Inverter Type Air Conditioners of PCT Headings 8415.1020 in the above impugned valuation ruling without following the sequential methods laid down in Section 25 of the Customs Act, 1969. It is pertinent that in terms of Section 25(I) of the Customs Act, 1969 the customs value is the transaction value which is to be accepted i,e, the price actually paid or payable. The learned Director General of Customs Valuation has altogether ignored that the actual transaction values as claimed by the Appellants have been duly verified and attested by the Economic and Commercial Consellor's Office Embassy of the Peoples Republic of China vide their letter No, ECCO/26/2016 dated 18.05.2016 addressed to the Chairman, FBR, Islamabad. The learned Director has altogether ignored the actual transaction values of the Conventional and Inverter Type Air Conditioners of PCT Headings 8415.1020 payable or paid during the period of 90 days and determined the values mentioned in the impugned ruling in terms of Section 25(9) of the Customs Act, 1969 without following the procedure laid down in Section 25 of the Customs Act, 1969, which arc not only contrary to the provisions of Section 25 of the Act but also the principles laid down by the Supreme Court of Pakistan. The Honorable Supreme Court of Pakistan in its landmark judgments in the case of (i) Messrs Collector of Customs, Port Muhammad Bin Qasim v. Zymotic Diagnostic International, Faisalabad reported in 2008 SCMR 438 and (ii)
Collector of Customs (Valuation) and another v. Karachi Bulk Storage and Terminal Limited, reported in 2007 PTD 1858 and similarly the Honorable High Court of Sindh in its landmark judgements in the case of Messrs ,Najam Impex v. Assistant Collector of Customs, Karachi and 4 others reported in 2008 PTD 1250 and (ii) Messrs Khan Trade International v. Assistant Collector Customs (Group-VII), Appraisement Collector, Karachi and 4 others reported in 2006 PTD 2807 have repeatedly laid down the principles of law that for the purpose of determination of customs value the customs value shall be determined by strictly following the sequential methods provided in Section 25 of the Customs Act 1969. The Director of Customs Valuation has ignored that the prices of China which will be found much lower than the prices determined in the impugned valuation ruling. Therefore at no point of time the prices in China have touched at US $ 192 per unit, and US $ 240 per unit for Split Air-conditioner conventional and inverter respectively. The Director of Customs Valuation has also failed to adopt the method as given in Section 25(1) of the Customs Act, 1969 wherein the prices of actual transaction of the goods are available, duly certified by Government of China and it is urged that by no process of reasoning there can be hardly an evidence so as to attract the prices mentioned in impugned ruling. The Director of Customs valuation has also failed to adopt the method as given in Section 25(5) of the Customs Act, 1969, wherein the prices of identical goods are also available with the customs authorities and it can easily be determined that at no point of time the prices have touched the ranges of the values mentioned in the impugned ruling. The Director of Customs Valuation has also failed to adopt the method as given in Section 25(6) of the Customs Act, 1969, wherein the prices of similar goods are also available with the customs authorities and it can easily be determined that at no point of time the prices have ever touched the ranges of values mentioned in the impugned ruling and prayed that the impugned Order-in-Revision No,221/2016 dated 03.08.2016 followed by valuation ruling No,840/2016 dated 21.04.2016 may be declared illegal, harsh and violative of law and be set aside.
The Respondents may be directed to revise the valuation ruling in accordance with the duly attested transaction values claimed by the Appellants in terms of Section 25(1) of the Customs Act, 1969.
5. No cross objections under subsection (4) of Section 194-A of the Customs Act, 1969 were submitted by the department/Respondent. The D/R only filed para-wise comments which were taken on record. The D/R argued the matter and contended that no violation in the spirit of law in impugned order passed by the Director General of Customs Valuation as well as the valuation ruling issued by the Director of Customs Valuation under Section 25A of the Customs Act, 1969. The appellant was asked to produce contract and papers to show the nature of relationship between two entities but no paper was submitted at the time of proceedings of review application before the Director General, Customs Valuation, Karachi. As per Section 25(2) of the Act read with Rule 109 of the Valuation Rules, issued under Chapter-IX of S.R.O. 450(1)/2001, dated 18-06-2001, the burden to proof of correctness of the declared value as true payable transaction value shifts on to the importers/applicants. However, the contents of the Order-in-Revisions are proving that the respondent importers (applicants) were failed to discharge this burden under the law and even failed to put up import documents, as requisitioned by the Directorate General at review stage, under Section 25-D of the Act. The nature of relationship exist between the consignor and consignee are not known but the fact is that Messrs Haier Pakistan (Pvt.) Ltd is a subsidiary of Messrs Haier Overseas Electric Appliances Corporation Ltd. China, which utilizes the brand name of Haier in Pakistan by the only sole importer. They were asked to produce contract and papers to show the nature of relationship between two entities but no paper was submitted. Such activity comes within the criteria of related party transaction as such the declared value could not be treated a normal value unless demonstrated in terms of Section 25(3) of the Customs Act, 1969.
The petitioner themselves declared value of US$ 240/pc and US$ 278/pc. Since their declared declaration is same in 2016. In the light of submissions made above. The valuation methods given in Section 25 of the Customs Act, 1969, were followed to arrive at customs value of conventional and inverter type air conditioners. Transaction value method provided in Section 25(1) was found inapplicable because the requisite information was not available. Identical/similar goods value methods provided in Section 25(5) and (6) were examined for applicability to the valuation issue in the instant case which provided some reference values of the subject goods but the same could not be exclusively relied on due to wide variation in declared values of subject goods. Thereafter, market enquiry as envisaged under Section 25(7) of the Customs Act, 1969, was conducted. The computed value method as provided in Section 25(8) of the Customs Act, 1969, could not be applied as the conversion costs from constituent material at the country of export were not available. Online values of subject goods were also obtained. All the information so gathered was evaluated and analyzed for the purpose of determination of customs values. Consequently, the customs value of conventional and inverter type air conditioners have been determined under Section 25(9) of the Customs Act, 1969. The petitioners have not substantiated their statement through any corroboratory documents. This Directorate General of Customs Valuation had issued the said valuation ruling after exhausting subsections (1), (4), (5), (6), (7) and (8) of Section 25 of the Customs Act, 1969 and finally customs values were determined under subsection (9) of the Section 25 of the Customs Act, 1969. The valuation ruling itself a speaking one clearly reveals that Section 25 of the Customs Act, 1969 for the purpose of determination of customs values have been exhausted in accordance with it spirits for determination of Customs value under Section 25A of the Customs Act, 1969. He prayed that the impugned valuation ruling was issued after associated all stakeholders including the appellant, however in revision petition filed by the appellant the Director General has rejected the applicant under Section 25A(3) of the Customs Act, 1969.
Therefore, the petition have no merits for consideration and the same may graciously be pleased to reject the appeal and maintain valuation ruling No, 840/2016 dated 21-04-2016 and Order-in- Revision No,221/2016 dated 03-08-2016 in the interest of justice.
6. Argument heard, record of the case perused. After gathering the strength from the arguments extended by both the parties before the Court and perusal of the record requires the legal deliberations. Whether the valuation ruling No,840/2016 dated 21-04-2016 was expressly issued in accordance with the statutory obligations and prescribed rules thereunder or otherwise? It has been observed that the impugned valuation ruling and customs value determined under Section 25(9) of the Customs Act, 1969, the department/respondent placed the arguments at the time of preparation of said impugned valuation ruling that the transactional value method provided in Section 25(1) found inapplicable because the requisite information was not available. The value of identical/ similar goods cannot be exclusively relied on due to wide variation in declared values of subject goods. Under such specific circumstances, ultimately the market inquiry basis to be adopted for the determination of value of such kind of goods. The department also probably admitted the fat that why they had not adopted the method prescribed under Section 25(7) and
(8) of the Customs Act, 1969 due to lack of information the department escaped from the said Section and jumped over to the Section 25(9) of the Customs Act, 1969 simultaneously. The goods and their value assessed by the department on the basis of Valuation Ruling No,744/2015 dated 10- 06-2015, which was accordingly rescinded and superseded with the present Valuation Ruling No,840/2016. The description of the goods in the impugned valuation ruling referred from serial Nos,1 to 12 pertains only to the split air conditioner (inverter) wall mounted and floor standing only.
Meetings for the determination of the customs value of conventional and inverter type air conditioners with stakeholders including the present importer/appellant were called on 13-04-2016.
The issue of determination the value of the impugned goods is extensively deliberated but even having the fruitful settlement and evidence provided by the stakeholders / importers including the present appellant to the concerned quarters inspite of available evidence, the said impugned Valuation Ruling was issued on 21-04-2016, the vires of impugned Valuation Ruling were challenged under Section 25-D of the Customs Act, 1969 before the Director General Valuation on 29.04.2016 only after eight (8) days of its issuance. Before initiating hearing through Assistant Director (Revenue) called specific documents listed through letter dated 12-05-2016 same were accordingly replied and the appellant on 19-05-2016 submitted all the relevant required documents to the Director General Valuation which include the proforma invoice, contract, copy of LC/bank advice, copy of sales contract with exporter, copies of import GDs, sales tax paid invoices, etc. But on the contrary without considering the relevant important documents the Director General made the observations on the presumptive grounds and states that the principal activity of Messrs Haier Pakistan (Pvt.) Limited are manufacturing of domestic appliances of Haier brand imported from Messrs Haier Overseas Electric Appliances China. He further observed that nature of relationship to the consignor and consignee are not known but the fact is that Messrs Haier Pakistan (Pvt.) Limited is a subsidiary of Messrs Haier Overseas Electric Appliances China which utilizes the brand name of Haier in Pakistan by the only sole importer. The appellant were asked to produce the contract and papers to show the nature of relationship between the two entities but according the Director General Valuation no papers were submitted and as such activity comes within the criteria of the related party transaction, as such the declared value cannot be treated a normal value unless demonstrated in terms of Section 25(3) of the Customs Act, 1969. The appellant in rebuttal of that allegation submitted a letter issued by Economic and Commercial Counsellor's Office Embassy of the People's Republic of China in Pakistan, wherein the declared prices had been duly certified. If it is so, then it is important to follow the contents of the section 25(3) of the Customs Act, 1969, which says as under:-- "(3) If the buyer and seller are related in terms of the rules the transaction value shall be accepted for the purposes of subsection (1); whenever:
(a) the examination of the circumstances surrounding the sale of the imported goods as demonstrated by the importer, indicate that the relationship did not influence the price; or
(b) the importer demonstrates that such value closely approximates to one of the following Test Values occurring at or about the same time;
(i) the transaction value in sales to unrelated buyers of identical or similar goods for export to Pakistan.
(ii) the customs value of identical or similar goods as determined under the provisions of subsection (7) (deductive value);
(iii) the customs value of identical or similar goods as determined under the provisions of subsection (8) (computed value): Provided that in applying the foregoing tests due account shall be taken of demonstrated differences in commercial levels, quantity levels, the elements enumerated in subsection (2) and cost incurred by the seller in sales in which the seller and the buyer are not related that are not incurred by the seller in sales in which the seller and the buyer are related."
7. In this context the appropriate officer of Customs shall examine relevant aspects of the transaction, including the way in which the buyer and seller organized their commercial relation and in way in which the prices in question were arrived at, in order to determine whether the relationship influence the price. Whether it can be shown that the buyer and seller, although "related persons" as defined under clause (h) of Rule 2 of Chapter-I buy from and sell to each other as if they were not related, this would demonstrate that the price had been settled in a manner consistent with the normal pricing practice of the concerned industry or that whether the seller settles prices for sales to buyer who are related to him, this would demonstrate that the price has not been influenced by the relationship. Rule 116 of the Customs Rules, 2001 of Chapter-IX of valuation places the transactional value settable in case of related parties. The subsequent Rules 117, 118 and 119 also provides the procedure for application of Section 25 of the Customs Act, 1969 in its sequential form. It is also observed that Rule 121 of the Customs Rules, 2001 of valuation, values of imported goods determined under subsection (9) of Section 25 of the Customs Act, 1969, shall, to the greatest extent possible be based on previously determined customs values of identical goods assessed within 90 days. The method of valuation, to be implied under subsection (9) of Section 25 of the Customs Act, 1969, may be exclusive of those laid down in subsections (1), (5), (6), (7) and
(8) of the said Section. But a reasonable flexibility in the application of such method would be in conformity with the aims and proviso of subsection (9) of Section 25 of the Customs Act, 1969.
8. If Respondent has applied clause (a) to section 25(7), then data of imported goods, or identical goods or similar imported goods (now being sold in Pakistan) has been used. If this data was available with Respondent for the period at time of importation, then why he did not apply the method envisaged under section 25(5) or 25(6) of Customs Act, 1969, if he deliberately did not use the method envisaged above subsection, then he erred in law and in determination of customs value (whether under section 25 or under 25A) the rejection of any method in the sequence of use of methods cannot be made mechanically or without application of mind. Respondent applied section 25(7)(b) which states that "If neither the- imported goods nor identical nor similar imported goods are sold at or about the time of importation of the goods being valued, the customs value shall, subject otherwise to the provisions of clause (a) of this subsection, be based on the unit price at which the imported goods or identical or similar imported goods are sold in Pakistan in the conditions as imported at the earliest date after the importation of the goods being valued but before the expiry of ninety days after such importation." Even then the Respondent had to use the data of identical or similar goods as are sold in Pakistan in the conditions as imported at the earliest date after importation of goods being valued but before the expiry of 90 days after such importation.
9. It is evident from the record as well as on part of the respondent that, identical or similar goods is/are sold in Pakistan were imported for which relevant data was available with the respondents, but did not use the data therefore, the whole exercise of issuance of valuation ruling No,840/2016 is based on mala fide on such accounts. Meaning thereby that (i) not using the requisite data which was available (ii) not using the "greatest aggregate quantity' concept (iii) not applying "first sale after import" (commercial level) for method envisaged under section 25(7) of Customs Act, 1969 coupled with Rule 119 of Customs Valuation Rules 2001. All these factors combined make the input data used for issuance of impugned ruling as illegal and super structure built on such illegal input is also void and unsustainable in accordance with law.
10.The impugned valuation ruling has been issued on basis of Section 25(9) of the Customs Act, 1969, whereas, WTO in Article (7) of Article VII to GATT has prohibited the use of following methods:-- "Article 7 If the customs value of the imported goods cannot be determined under the provisions of Articles 1 through 6, inclusive, the customs value shall be determined using reasonable means consistent with the principles and general provisions of this Agreement and of Article VII of GATT, 1994 and on the basis of data available in the country of importation.
2. No customs value shall be determined under the provisions of this Article on the basis of:
(a) the selling price in the country of importation of goods produced in such country;
(b) a system which provides for the acceptance for customs purposes of the higher of two alternative values;
(c) the price of goods on the domestic market of the country of exportation;
(d) the cost of production other than computed values which hove been determined for identical or similar goods in accordance with the provisions of Article 6;
(e) the price of the goods for export to a country other than the country of importation;
(f) minimum customs values; or
(g) arbitrary or fictitious values.
3. If the importer so requests, the importer shall be informed in writing of the customs value determined under the provisions of this Article and the method used to determine such value".
11. The Section 25 of the Customs Act, 1969, which is based on Article VII of GATT (WTO Valuation Agreement), at the very outset depicts "The customs value of imported goods, subject to provisions of this section and rules shall be ---" meaning thereby that in determination of customs value, whether under Section 25 or under Section 25A besides the provisions of these sections the relevant Customs Valuation Rules have to be kept in view. Unfortunately, neither provisions of Act nor Rules have been followed correctly by the Respondent while formulation of impugned Ruling or its ratification without proper course, which makes it ultra-vires and legally void. Appropriate data for identical goods for the same commercial level for similar quantities imported from same manufacturer of same country of origin was available, even then learned Director Customs Valuation did not mention that in his Ruling and learned Respondent ignored this fact and issued ruling under section 25(9) of Customs Act, 1969. He argued that even if the learned Respondent relied on method envisaged in Section 25(7).as a first instance, he had to abide by for taking into account the data of sale of identical/similar goods at the same commercial level and substantially the same quantities. However, the learned Respondent discarded such verifiable data of imports without any reason in total negation of Rule 119 of Customs Valuation Rules. The use of irrelevant arid inadmissible data in the impugned Valuation Ruling by the Respondent makes it illegal and upholding such void ruling in the any proceeding would also amount to ignoring the substantive law and rules. The Honorable Islamabad High Court in case of [Messrs Faco Trading v. Member Customs, Federal Board of Revenue (W.P. No,17562010)] has held that Internet data prices are assumption only and customs valuation cannot be determined on assumptions. The Honorable Sindh High Court in case [Dawlance (Pvt.) Ltd., v. Collector of Customs, Karachi 2002 PTD (Trib.)
3077] has ruled that:-- "However, the law relating to identical goods, as contained in subsections (5), (6) of section 25 comes into effect only, 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 the imported goods cannot be determined under that subsection. The burden of proof in this respect would he on the Department".
12. It is the duty of the department to follow the prescribed statutory obligations and rules, under the Finance Act, 2007, after the introduction of Section 25A of the Customs Act, 1969, certain amendments were made to Section 25 and Section 25A, the Federal Board of Revenue as well as the subordinate affiliates and persons working under their command, designated with specific powers are required to follow the dictums of law as well as agreements executed and accepted thereon by the member countries including the Government of Pakistan. The important factor has been over ruled by the Director General, Valuation while declining the actual transaction value, it is the responsibility of the customs authorities to bring into light any direct evidence to controvert the transaction value of the importers. While preparing the impugned Valuation Ruling, he has not been able to provide any valid reason or justification as to why the other methods prescribed under Section 25, Subsections (1), (5), (6) and (7) were not found applicable, specially there is no traces available on record about the activity conducted thereon for market inquiry, as per per SOP 1/5 and Rule 119 of Customs Rules, 2001. Although, the department emphasis on the point that, market inquiry has been conducted, but entirely on the basis of gospel truth, it is clear from the circumstances and facts of the case that no market inquiry was ever conducted, record shows that, because stakeholders involved in the said controversy were never been called upon or noticed to became the part of such market inquiry, if so conducted ever by the respondent, then why the element of specific brands grouped together in the impugned Valuation Ruling mentioned at Sr. Nos,1 to 8 without reference of any origin or not been equated with reference to the origin or manufacturing country, only a generalized and arbitrary values were taken into consideration, ignoring the fact that the variance in country of origin makes a remarkable difference in the actual cost of the subject goods and as such the values determined through the impugned Valuation Ruling are entirely unrepresentative of the international market and trade, as such provisions of Section 25(13) (a) of the Customs Act, 1969 were also initially violated. Under the World Trade Organization member states entered into the agreement, called "Valuation Agreement" on implementation of Article VII of the General Agreement on Tariffs and Trade, 1994. This agreement set for what was (at least for Pakistan) how the Customs value imported goods were to be determined. Although the World Trade Organization assessment came into the effect from 01-01- 1995, and accordingly that was enforced in Pakistan w,e,f, 01-01-2000. The Valuation Agreement can, for present purposes, be regarded as falling into two parts. One part comprises of the main articles, which contain the substantive rules for determining the customs value of goods. The second part comprises of interpretative notes to the various articles, contained in an annex to the agreement. Of course, the Valuation Agreement has to be construed as a whole, and Article 14 expressly provides that the notes in Annex I form an integral part of the Agreement and that the Articles of this Agreement are to be read and applied in conjunction with their respective notes".
The system enforced in Pakistan since 01-01-2000 reflects this divide. Section 25 was substituted in its entirely, and its various provisions primarily embody the main articles of the Valuation Agreement. Rules framed by the Central (now Federal) Board of Revenue primarily contain, in what is now Chapter IX of the Customs Rules, 2001 ("the Rules"), notified under S.R.O. 450(1)/2001 dated 18.06.2001, the interpretative notes of Annex-I of the Valuation Agreement, which describes the sequential application of law.
13.It is also observed that, the WTO system has a lot of bite in it, and member states must be, and generally are be careful to ensure that they are committed with their obligations under its various agreements, these specific norms are also overruled during the hierarchy of the Customs and preparation of subject impugned Valuation Ruling. The said important legal obligations are not been followed nor conducted during the determination and issuance of the present impugned Valuation Ruling. It is the high time to think over such discrepancies and to obey and follow the international agreements, legitimately executed between the countries by the concerned officials as well as the officials of the Federal Board of Revenue having the competent jurisdiction to comply with, if otherwise, such consistent derogatory and transgrossional acts of dis-obedience from legal provisions of law were not eliminated, the repetition would cause the irreparable losses and damages not only to the relevant importers, but serious losses could be occurred to the government exchequer also, department needs to invoke suck liabilities for their better performance.
14. All observations and relevant references along with the Judgments passed by the Superior Courts are preferably to maintain and follow the proper interpretation of law, more importantly for the Customs officers having discretion in preparation of Valuation Ruling. It is not so difficult to follow the legal dictum prescribed under the law by the concerned authorities or officials at the time of preparation of valuation ruling. The words 'look-in', provided the link, how principle of sequential application of subsections defined under structure of Section 25 of the Customs Act, 1969. For example, if in any particular case, the Customs officers / authorities want to jump over from non-obstinate clause without referring any specific reasons that would amount to override the provisions of Section 25. The concerned Customs officers are limited or restricted only to the methods set forth in Section 25 of the Customs Act, 1969, not to act otherwise. If, some method other than that specified in Section 25 is complied, that would clearly be ultra vires the powers conferred under Section 25A of the Customs Act, 1969. The Department has no justification about such increase which clearly reflected against the statutory obligations, prescribed under Sections 25 and 25A of the Customs Act, 1969. The determination of value under Section 25-A of the Customs Act, 1969, is not a simple thing. It is, therefore, appropriate that the ruling should contain sufficient details to show that Section 25-A has been properly applied and also make it necessary that the Valuation Ruling should be a speaking order, as per the mandatory requirement of Section 24-A of the General Clauses Act, 1987. In the present case, the authorities / Director and Director General, Customs Valuation both ignored the directions of the Superior Courts and made observations in contradiction of provisions of Sections 25-A and 25-D of the Customs Act, 1969.
Such ignorance is violative from the law. Being custodian of law, purpose of Courts for administration of justice and is, to hold and not to thwart appellants' rights. We therefore, direct the respondents not to issue any fresh Valuation Ruling during the course of present judgment, (atort) wrongfully from the procedure laid down under Section 25 of the Customs Act, 1969 and observations, held by the superior courts, noncompliance shall deem to be infraction.
15. By getting the strength from the Judgments passed by the Superior Courts including the Hon'ble High Court of Sindh in the case of Sadia Jabbar and in conformity of the aforesaid observations along with our additions, the subject impugned Valuation Ruling No,840/2016 dated 21.04.2016 lacks the warrant of law and its issuance has no adherence to the statutory requirements as laid down in Section 25 of the Customs Act, 1969. Therefore, the said Valuation Ruling is declared as void, illegal and without lawful authority is hereby set aside accordingly. The impugned Order-in-Review passed within the hierarchy of the Customs is also infested with patent illegalities, therefore, the same is also set aside with directions that, the Department should take appropriate measures and issue a fresh Valuation Ruling, considering the above noted observations, specially in accordance with the principles laid down in Sections 25 and 25-A of the Customs Act, 1969 (stricto senso), after giving the opportunity, being heard to all stakeholders. The exercise will be completed within one month from the receipt of this order. Compliance report shall be submitted accordingly. Appeal is allowed with no order as to cost.
16. Judgment passed and announced accordingly.