JAHANZAIB WAHLAH, MEMBER JUDI CIAL-III.---- Through this order , I intend to dispose off Customs Appeal No.K-785/2015 filed against the Order-in-Appeal No.10100/2015 dated 08.05.2015 passed by Collector of Customs (Appeals), Karachi.
2. Briefly facts of the case are that respondent No.1 is a commercial importer of general merchandise and confectionary during the course of his business activities he imported a consignment comprising of (i) 1126800 pcs weighing to 7817.9 kgs of assorted candies and (ii) 378000 pcs weighing to 4987.5 kgs of water bubble, packed in 1845 cartons, inclusive of essential non-e ssential packing namely plastic bottles and wrappers weighing to 8506.60 kgs from China against invoice No.MM-2 14-1213NI dated 13A2.2014 and B/L No.952633872 dated 29:12.2014.
Upon receipt of shipping documents delivered those to his clearing agent Messrs Hussein Traders, Karachi for transmitting Goods Declaration (GD) under the provision of Section 79(1) of the Customs Act, 1969 (Act) and Rule 433 of Sub-Chapter III of Chapter XXI of Customs Rules, 2001 (Rules) with the MCC of PMBQ, which he did and as per pre-requisite deposited upfront duty and taxes of Rs.271,326.00 on 14.12.2015 vide cash No.C-KPPI- 002146, consequent to which GD was numbered as KPPI-HC-36413-14012015. The assessing officer upon appearance of GD on his workstation, instead of completing the assessment on the basis of declaration, uploaded documents forming its integral part as defined in section 2(kka) opted to get the goods examined first, to proceed with after adducing his apprehension / opinion, referred the GD to the Assistant Collector of theGroup, who gave his assent and transmitted that to the Deputy Collector , Examination, who marked it to the examiner selected as per devised selection criteria. The goods were found as per declaration in all aspects, report so prepared was uploaded by him in the reservoir of the GD. The assessing officer after perusal of that instead of taking the actual quantity of the imported candies and water bubble to the extent of quantity imported i.e. 7817.90 kgs and 4987.50 kgs added the weight of wrapper , bottle and carton in those and construed the quantity as 8463,60 kgs and 6426 kgs of these and assessed these for levy of duty and taxes with the application of Valuation Ruling (VR)
No.625/2013 dated 23.12.2013 US $ 1.00 and US $ 0.45/kg, while adducing remarks in the assessment note reading as "Assessed the GD as per VR the examination staff has reported the ER with the weight of essential packing and without essential packing. Since the VR is for Customs Value (C&F) US $ 1/kg as such in the light of guideline issued by the Directorate Gene ral of Valuation vide letter dated 04.11.201 1, wherein the valuation ruling has been issued explicitly so mentioned, only then the net contents weight is to be considered otherwise Customs Value shall be considered with essential packing. Considering this fact GD is being assessed with weight of essential packing as reported in ER." Being aggrieved respondent No.1 filed 1st review before the Principal Appraiser with the submission that the assessment made by the AO is nullity to the provision of Section 25 of the Act and VR dated 23.12.2013, which is for C&F basis, hence the assessment made by AO should be reviewed and the correct assessment be made on the basis of imported consumable quantity . He without going through the provision of Section 25 and the VR, upheld the assessment made by the Assessing Officer in very casual, cursory and wonton manner and stands validated from his remarks reading as "reviewe d , upheld". Since the order of review was nullity to law the respondent No.1 filed 2nd review before the Assistant Collector with the submission as was made with the Principal Appraiser he was so adamant and dumb that he ignored the submission. Resultant, Additional Collector of Customs was approached, who also gave cold shoulder which compelled respondent No.1 to hire the services of consultant, who appeared before the learned Collector of Customs, with the representation dated 30.01.2015 which she marked to the Additional Collector and upon receipt of representation he onward referred the same to the Assistant Collector and so on. Despite of receipt of representation, none of the authority was inclined to act judiciously and within the parameter of law and this stood validated from their attitude that instead of resolving the issue there and then, they took about 8 days and this was made possible by several phone calls by the consultant to the Additional Collector and continues presence of the respondent No.1 Clearing Agent at QICT during this period and the end result was the same as was of the AO and this stood confirmed from the assessment order , which is completely contrary to the submission made in the representation and is being based on alien understanding having no nexus either with the goods of appellant or the representation. This was detrimental for the respondent No.1 as his consignment was suffering with the container detention/rental and terminal demurrage/storage charges, not accounted for in the landed cost and the said amount was completely would had been unbearable in addition to cancellation of order from his buyer . Notwithstanding, as agreed by the appellant and his subordinates, the Assis tant Collector of the Group passed assessment order under section 80 and Rule 438 of the Act/Rules on 07.02.2015 reading as: "Brief facts of the case are that M/s. MM Traders, Karachi imported a consignment vide IGM No. 12 dated 13.01.2015, Index No. 354 and filed Goods Declaration vide machine No. KPPI-HC-36413 dated 14.01.2015 declaring the goods as "Assorted China Candies" and "Water Bubble" weighing 787.90 kgs and 4987.50 kgs under HS Code 1704.9090 and 3401.1900 with declared unit value as US$. 0.45 and US$. 0.20 respectively through Messrs Hussain Traders, Karachi, Customs Clearing and Forwarding Agent CHAL: # 1890. The system referred the GD for examination under Red Channel in terms of Section 80 of the Customs Act, 1969.
2. Since, the examination report provided weight of the goods as total net contents and with essential packing net weight as such goods were accordingly bifurcated into four (4) items, i.e. Assorted Candies, Bubble Water packed in Plastic Bottle. The assessment in respect of Item Nos.1, 3 and 4 were assessed in terms of Valuation Ruling 625/2013, 23.12.2013, wherein, Customs Value (C&F) US$. /kg was provided and for Item No. 2 the assessment was made through data respectively under section 80 of the Customs Act, 1969.
3. The importer contested the assessment that the weight of essential packing may be excluded since the referred Valuation Ruling provides Custom Value (C&F) US$. /kg and it does not mention that the weight of essential packing is to be included and filed review with the Principal Appraise' and Assistant Collect, Group-I, which was upheld. The Customs clearing Agent filed an application before the Additional Collector (Assessment), MCC Port Muhammad Bin Qasim who 'directed that the case be decided on merit. Later on Messrs Nadeem & Co., Karachi filed application on behalf of the importer , which enumerated that Section 25 of the Customs Act, 1969 and valuation rules embodied in chapter 9 of Customs Rules, 2001 which clearly speaks about C&F Value which incorporate all the element right from raw material till shipment (cost of raw material plus manufacturing cost plus selling and administrative expenses plus advertisement expenses plus incidental expenses plus packing expenses whether in detail or bulk plus freight).
The shipper sells and so the buyer buys the goods in accordance with the mode of packing and price quoted are in accordance with quantum of the item stuffed/filled in container/bottle/box etc., prominently indicating the quantity of the items of those and so on which was addressed to and final assessment made including weight of essential packing of the goods and is being upheld accordingly .
4. The application filed by the importer refuses the assessment made and contested that the assessment be made on the basis of net contents and that the weight of essential packing should not be included in the assessment. However , since no where in the Valuation Ruling has been mentioned that the goods be assessed on the basis of net contents, therefore, the weight of essential packing has been included at the time of assessment. This is in contrast to Valuation Ruling No.25-A-588/2013 for perfumery which clearly specified in it respective column that the value determined pertains to net contents of the perfumery etc., keeping in view the foregoing the review application filed by/on behalf of the importer is without substance and the value assessed by Ap and P A is the inclusive weight of the essential packing is upheld"
3. Vires of assessment order dated 07.02.2015 passed by the Assistant Collector , Group-I was challenged by the respondent No.1 before respondent No.2 vide Appeal No.Cus/6789/2015PQ, who after extending hearing to the both parties set aside the assessment order vide order dated 08.05.2015, while observing in paras 5 to 8 that:
5. I have examined the case record. In this case the appellant 's imported and declared assorted goods some of which are assessable as per Valuation Ruling No. 625 dated 23.12.2013. The impugned order shows that further addition to the net weight of the goods has been made which are otherwise subjected to Valuation Ruling. The relevant provision of law authorizes addition of certain costs and charges incurred by the importer which are not included in the price actually paid or payable for the imported goods. However , these additions are to be made if customs value is being determined under subsection (1) of Section 25 of the Act, which is not the case here. In the current scenario there is no determination of customs value under subsection (1), rather customs value has been determined already under section 25-A, the provisions contained in section 25, notwithstanding. It is inbuilt in the customs value determined Section 25-A of the Act that method laid down in section 25 have been followed.
Therefore, valuation determined under section 25-A could not be further saddled in the name of weight of essential packing.
6. Identical matter with reference to a Valuation Ruling came up before, Lahore High Court in W.P No. 3000/2010 and in pursuance thereof the Directorate General of Valuation clarified vide their letter dated 04.11.201 1 that all valuation ruling were kept applicable on net weight basis (excluding essential packing weight) except those wherein it is explicitly so mentioned to include weight of essential packing. This clarification had the blessing of the Court vide order dated 15.12.201 1. This view has been reiterated by the Directorate General of Valuation vide letter dated 16.02.2015. The instant valuation ruling does not mention or instruct to include weight of essential packing and as such customs value determined in the said ruling is applicable on net weight.
7. It is further noted that the whole assessment is made in haphazard manner . The valuation ruling is applicable to candies (China) and Jelly (All origin), whereas items like Twist M-Mellow Bunty and Star Ring which are not candy have been assessed as candy and subjected to the Valuation Ruling. Similarly , there is no ruling for Chocolate (China), yet Valuation Ruling of Turkey origin has been applied. It is also noted That Bubble Water should had been classified under heading 9503.0090 of the first schedule to the Customs Act, 1969, whereas, it is classified under heading 3401.2000.
8. Accordingly , the whole assessment is set aside with the direction to assess the items subject to Valuation Ruling in accordance with the decision in para 6 above. The other item shall be assesse d under Section 25 of the Act, it seems likely that these goods will be assessed under one of the secondary methods of Valuation, where the question of addition or deduction of weight of essential packing will not arise es this adjustment pertains to assessment been made under section 25(1) of the Customs Act, 1969. The appeal is disposed of in these terms."
4. The appellant filed the instant appeal on the basis of grounds enumerated therein, the representative of the appellant on the date of hearing argued the case strictly in accordance with those. Respondent No.1 filed cross objection under Section 194A(4) of the Act within the stipulated period of 30 days, which cross appeal within the meaning of Section 194A(3) of the Act. Therefore, these ought to be considered by virtue of having binding force having warrant of law .
5. Rival parties heard and case record perused, in addition with the relied upon citations. For reaching at a just conclusion within the mandate of law, the representative of the appellant was asked that as to whether it is correct that candies were packed in wrappers thereafter in pouch, box and water bubble in plastic bottles and thereafter in boxes and finally in cartons, his answer was in affirmative. He was further confronted with the query that in which condition these are sold in the local market? Answer was in pouches/bottles in retail and after stuffing those in cartons at wholesale stage. On yet another query , that as to whether seller , charge extra amount for the use essential/non-essential packing, in addition to the amount depicting e retail price of these. The representative stated that the seller only charge the amount (price) of the candies and water bubbles not for the essential/non- essential packing, in which these are packed. Finally , he was asked that as to whether any shop keeper/seller demands any additional amount for the cost of weight of used essential/non-essential packing or ever appellant/he paid any amount for the said material at the time of purchasing these. His reply was in negative. I fail to comprehend the rationale adopted by the appellant and his subordinates of including/adding of weight of essential/non-essential packing in the weight of candies and water bubble in the absence of availability of candies equivalent to the weight of essential/non-essential packing. The duty and taxes on the essential/non-essential packing could be levied, if declaration for the import of pouches, bottles, boxes and cartons have been made respondent No.1 separately under their respective PCT headings and on the value if determined by the Director , Directorate General of Valuation under the provision of Section 25A or with the application of identical /similar goods value within the meaning of section 2 (5)(6) and Rules 117 and 118 of the Act/Rules, available in the data reservoir maintained by PRAL under Rule 110 of the period given in Rule 107(a) of the Rules. In the absence of no separate declaration for se, no duty and taxes are either to be deposited or can be charge . The appellant and his subordinates included the weight of aforesaid packing material in the weight of candies and water bubbles in derogation of the unit of measurement (UOM) given in First Schedule to the Act, which speaks with clarity about the goods imported, which in the case of respondent No.1 are candies and water bubbles without any exception.
6. In regards to the line of arguments a of the appellant for justifying the inclusion essential packing in the weight of the imported goods, that the weight of it is deemed to be part and parcel of the weight of the goods so imported and to be construed as UOM/quantity (contents) as mentioned against each PCT heading of First Schedule to the Act i.e. based on misconception and inapt interpretation of the UOM and in derogation to the First Schedule to the Act which speaks about the contents of the imported goods/items sans weight of essential/non-essential packing, which is disposed off, after unwrapping/u sing the contents of actual goods, as trash. Only the weight of imported goods matter and that is to be construed as goods, the weight of essential/non-essential packing, cannot be considered through any definition as an integral part of the goods so imported. The duty and taxes has to be charged/collected on the goods actually imported for use/consumption by the general public. No provision of the Act, empowers appellant's and his subor dinates to include the weight of essential/non-essential packing, the vital element is its cost not weight and this is validated from the provision of Section 25 which speaks about determination of value of the "goods" and "category of the goods" and Section 25A speaks about "goods" and "class of goods" which means the goods so imported and its quantity excluding the weight of essential/non- essential packing, which is not for use instead "trash" which cannot be used as goods so imported through any stretch of imagination or definition availa ble in reputed dictionaries of english language. Weight of essential/non- essential packing is immaterial. However , addition of cost of essential/non-essential packing material in the value of the imported goods is permitted under Section 25(2)(iii)(b) of the Act. while determining the value of imported goods under the concept of "Transaction Value" within the meaning of Section 25(1) of the Act, only then when it is confirmed that the importer has incurred that but has not included that in the price actually paid or payable of the imported goods. This means that the onus to prove that the cost of packing whether for labour or essential/non- essential packing material is not included by the exporter , rests on the shoulders of the appellant and his subordinates in terms of Articles 117 and 121 of Qanun-e-Shahadat (10 of 1984), unless it is not proved through tangible incriminating evidence, the cost whether for labour or essential/non-es sential packing material is not permitted to be added under law. The representative of the respondents also laid emphasis on Section 25(2) (ii)(b) of the Act, which read as "the cost of container which are treated as being one for customs purpose with the goods in question". This is in consonance with the illustration made in Rule 5(a) of General Rules of Interpretation, i.e. for the purpose of classification and valuation items listed therein or akin to those are to be treated as integral part of the goods so imported. To the contrary , the goods imported by the respondent No.1 are/were not in any manner akin to those, resultant, stand excluded from Section 25(2) (iii)(b) ibid. Notwithstanding, when against any imported item a ruling is in field issued by Director , Directorate General of Valuation under Section 25A of the Act, for levy of custom duty, he determine that to the extent of unit as given in the respective applicable PCT of First Schedule on C&F basis, meaning thereby in the said custom value every single element/expense is taken into consideration by him i.e. "cost" not "weight" which is immaterial due to the fact that the essential/non essential packing or akin receptacle, in which goods or item products are packed or filled are to be thrown after use of the contents in the garbage bin as trash. In the instant case the item so imported namely candies and water bubbles subject to assessment for levy of duty and taxes with the application of VR No.625/2013 dated 23.12.2013, on the net contents of the goods as weight of essential/non-essential packing cannot be made part and parcel of assessable weight, if i.e. allowed to be included, in derogation of the norms of business, WTO Agreement on Valuation and provision of Section 25 of the Act, then it is tantamount to "extortion" not perm itted in any scheme of law. No commodity is sold without its essential packing and while a seller offering the goods for sale includes the incidental charges in its final cost. In juxtaposition an importer/buyer will also not lift the imported goods without its essential packing. The value of essential/non-essential packing is in fact inbuilt in the custom value determined under section 25A of the Act, after following the method laid down in Section 25 ibid. Therefore, valuation determined under section 25A could not be further saddled in the name of weight of essential/non-essential packing. It is apparent that the value determined by Director , Directorate General of Valuation through VR is on C&F basis of the net contents of the goods so imported, in which inclusion of weight of essential/non-essential packing is not supported by warrant of law. If it allowed as opined by the appellants for generating revenue for the exchequer on that weight containing no goods. In terms of the respective PCT Heading of the First Schedule, duty and taxes can only be recovered on the net contents of the imported goods. Essential/non-essential packing cannot be construed as goods by any mean and as defined in Section 25 and First Schedule to the Act, without supplying the goods equivalent to the included weight, in addition to the imported goods declared in GD transmitted under the Provision of Section 79(1) and Rule 433 of the Act/Rules. In the instant case, the appellant and his subordinates desires to collect duty and taxes of Rs.420,342.00 on C 8506.7kgs valuing to US $ 6587. 00 on the weight of essential / nonessential packing without supplying of 639348 pcs of candies and 110000 water bubbles. This type of generation of revenue is in derogation of the provision of Section 25 of the Act, and Article 13 of Constitution of Islamic Republic of Pakistan and without any exception is "extortion" and to be construed as double taxation not permitted under the Act / Constitution of Pakistan and even of the world and the law laid down in reported judgment 1992 PTD 593, 2003 PTD (T rib.) 928 , 2010 PTD 1515 and 2009 PTD (T rib.) 2025. (Emphasis Supplied)
7. After perusal of the annexure of the memo. of appeal and the grounds, enumera ted therein, it is apt and just for me to dilate upon the attitude of appellant/Additional Collector of Customs, Port Muhammad Bin Qasim, Karachi in handling the instant case of the respondent No. 1 regarding inclusion of essential/non-essential weight in the weight 'of imported goods for home consumption, decision on which would had been taken by them immediately as no rocket science was involved, rather has to be made on the strength of enunciatio n available in Sections 25, 25A, First Schedule to the Act and Chapter IX of the Rules and VR. Both restraint from resolving the issue and permitted their subordinates to play havoc with the respondent No.1, contrary to the confines of law and on the qualification and wisdom of the Assistant Collector , Group-I, in passing such a sketchy and bald assessment order , having no nexus whatsoever either with the fact of the case, submission made by the consultant in representation dated 30.01.2015 and dictate of law expressed in Sections 25 and 25A, First Schedule to the Act and Chapter IX of the Rules. It is specified duties of the appellant and Additional Collector to act and order within the framework of the provisions of the Act and Rules and Regu lation framed there-under . No room was available for them to act contrary to the expression of the Act/Rules or import the word/phrase not incorporated in Sections 25. and 25A, First Schedule to the Act and Chapter IX of the Rules for achieving their desired results for causing hardship and losses to the respondent No.1 by way of squee zing extra amount of duty and taxes neither leviable nor payable as per mandate of law as held by superior Judicial fora in umpteenth reported judgments that "in interpreting the taxing statute the customs must look to the words of the statute and interpret in the light of what is clearly expressed. It cannot imply anything which is not expressed, it cannot import provision in the statute so as to support assumed deficiency . There is no room for intendment. There is no equity about a tax. There is no presumption as to tax nothing is to be read in, nothing is to be implied. One only look fairly at the language used nothing else to be done".
Similarly , assessment order passed by Assistant Collector of Customs, Group-I, is also unique in nature, being senseless, evident from the fact that no reasoning for acting contrary to the mandate of the provisions of Sections 25 and 25A, First Schedule to the Act and Chapter IX of the Rules have been adduced by him, in addition to the formed opinion that the weight of essential/non-essential packing have to be included in the weight of imported goods for home consumption, if VR is on C&F basis instead of "net contents" non-existent in the provision of Sections 25 and 25A of the Act and Chapter IX of Rules. The assessment order on the face of it is ab initio and void by virtue of the fact that it cannot be construed a valid order through any definition, instead unilateral/arbitrary order . Rendering it biased, suffers from the vice of self interest or tardy , indolent and incompetent and conform that the Assistant Collector , Group-I, has no urge, will, passion and ability to decide the case/dispute put before him for decision within the parameter of law. No room was available for such illegal, void and arbitrarily orders in any system of law. If any authority Court or Tribunal gave a finding of fact which was not based on material available on record was illegal arbitrarily without discus sing and considering the material availab le on record it became perverse and a perverse finding of fact which is violative of the established principle of appreciation of evidence on record was not sustainable in law. The principle that every 'judicial or quasi-judicial finding should be based on reasons containing the justification for the finding in the order itself is an established principle of dispensation of justice. The order-in-review passed by respondent No.2, is being in violation of basic principle of the good governance and mandatory requirement a Section 24A of the General Clauses Act, is not only illegal and void but also not sustainable under law. Finally , regarding adopted grounds in the memo of appeal, those have no nexus whatsoever with the order passed by respondent No.2, which is apt and just and based on the facts of the case and on WCO Agreement on Valuation, Sections 25 and 25A, Chapter IX of Customs Rules, 2001 and norms of business. The representative of the appellant also failed extend any assistance in support of those, instead the entire arguments was based on fabricated assumption/presumption contrary to the confines of law. In short, the appeal have been filed by the appellant only for the sake of filing appeal, which is appreciated under law as the same is listing wasting valuable time of the Tribunal. Such act cannot be endorsed under any circumstances as appeal is competent, when the order appeal against is defective, suffer from illegality , infirmity none of these are apparent in the instant case and order passed by respondent No.2 needs no interference.
8. What have been discussed hereinabove, particularly the interpretation of law, legal propositions and observations made thereon and to follow the ratio-decidendi observed by the Superior Courts, the order passed by respondent No.2 is maintained being correct in fact and law and appeal is dismissed as of no substance and of no legal ef fect.
9. Order passed and announced accordingly .