ABDUL JABBAR QURESHI, MEMBER JUDICIAL-I. By this order, we intend to dispose of the Customs Appeal No. K-7457/2021 filed by M/s. Khyber Export (Far-East) Co, Peshawar, under Section 194-A of the Customs Act, 1969 against Order-in-Revision No. 17/2021 dated 31.05.2021 passed by the Director General of Customs Valuation against Valuation Ruling No. 1514/2021 dated 09.02.2021.
FACTS That the Appellant is a proprietorship concerned engaged in the regular import and supply types of General items including Dry Battery Cell of Low-End Brands category that is "555" imported from China inter alia and also further engaged in the import, marketing and sale of Dr, Battery Cells of various types. In pursuance of its economic activity, the Appellant has earned an unimpeachable goodwill through years of quality work and fulfillment of its commercial obligations. The Appellant scrupulously discharges its liabilities under the various revenue laws of Pakistan.
2. That, whereas, the Respondents Nos.1 and 2 are collectively the top echelon of the Director General of Customs Valuation, respectively being the Director General of Customs Valuation and Director ibid. The Respondent No.2, has been entrusted by the Legislature through the enactment of Section 25-A of the Customs Act, 1969, to diligently, efficiently and properly exercise the powers contained therein for the lawful determination of customs values of goods imported into Pakistan.
The exercise of such power of determination if subject to review / revision by the Respondent No.1 in terms section 25-D of the Act, 1969, which is meant of provide taxpayers / importers with a swift and impartial forum for redressal of their grievances against any failure to determine values and also against any unlawful, illegal and arbitrary fixation of values by the Respondent No.2.
3. That the instant controversy has arisen as a result of the Respondents' intentional departure from their statutory duties. Accordingly, the Appellant is seriously aggrieved by the acts of the Respondents, whereby the Respondent No.2 unlawfully, arbitrarily, and without carrying out any determination in accordance with the law, fixed the customs values of for Dry Battery Cells of various types and origins (hereinafter 'the said Battery Cells' ) vide the impugned Valuation Ruling No.1514/2021 dated 09.02.2021. The Respondent Director has acted in grave violation and excess of the power conferred thereupon, and has issued the impugned Valuation Ruling which is patently in conflict with the express provisions of the Act, 1969, the principles of natural justice and fundamental rights of the Appellant enshrined in the Constitution of Pakistan, 1973. Such actions are causing serious harm and Reparable loss to the Appellant.
4. That, being highly aggrieved and prejudiced, the Appellant Petitioned the Respondent No.1 in terms of Section 25-D of the Customs Act, 1969. The Respondent No.1 however, passed the impugned Order-in-Revision No.17 of 2021 dated 31.05.2021, i.e. the impugned Order, whereby the Respondent No.1 has completely ignored the contentions and submission of the Appellant without assigning any lawful reason thereto and has rejected the revision petition filed by the Appellant in a highly prejudicial, arbitrary and illegal manner. As evident from the impugned Order, the Respondent No.-1 has failed to consider the legality of the impugned Ruling, instead merely choosing to give credence to the bald, unsustainable and misleading submissions made by the Respondent No.2 / its officers without assigning any reasons therefore. The arguments preferred by the Appellant while addressing the various factual and legal infirmities and illegalities in the impugned Ruling, have been entirely ignored.
5 That the rejection of the Revision Petition of the Appellant by the Respondent No.1 filed against the impugned ruling, has resulted in the continuance of serious harm and loss to the Appellant. The actual price paid / payable for the imported goods remains significantly lower than the value unlawfully fixed through the impugned Valuation Ruling, however, despite the patent illegalities therein, the Respondent No.1 has deemed the impugned Ruling fit for the purposes of assessm ent of imported consignments of the said Battery Cells. The Appellant submits a brief background to the issue as follows.
6 That under the scheme of the Customs Act, 1969, the Assessment / Valuation of imported goods is carried out either, under Section 25 of the Act, 1969, or under. Section 25-A read with section 25 of the Customs Act, 1969. In terms of Section 25-A of the Customs Act, 1969, Customs / Assessable values of imported goods are determined in advance by the Respondent No. 2 through the issuance of a Valuation Ruling issued after strict adherence to the methods of valuation laid down in section 25 of the Customs Act, 1969. Any determination not in accordance with, and supported and justified by the provisions of section 25 of the Customs Act, 1969, is considered as mere fixation of values, which is impermissible under the law.
7. That by way of background, it is submitted that the impugned Valuation Ruling purports to supersede Valuation Ruling No.1189 of 2017 dated 06.07.2017 and introduce de novo values for the purposes of customs assessm ent. However, such contention of the Respondent No.2 is in dire contrast to the law, as the earlier Valuation Ruling No. 1189 of 2017, as well as its predecessor Ruling, i.e. Valuation Ruling No. .1079 of 2017 dated 13.03.2017, were set aside by the Customs Appellate Tribunal as being void ab initio. Accordingly, the said Rulings are to be treated as if the same never existed. Copies of the Valuation Rulings Nos. 1189 and 1079 of 2017 which is marked as (Annexure-D and D-1), and the judgment dated 13.06.2017 in Customs Appeal No. K-672/2017 passed by the learned Customs Appellate Tribunal Special Bench-I Karachi which is marked as (Annexure-E) and another judgment dated: 16.07.2018 passed in Customs Appeal No. K-07/2018 and Customs Appeal No. K-08/2018 passed by the learned Customs Appellate Tribunal Special Bench-I Karachi which is marked as (Annexure-E-1).
8. That prior to issuance of the impugned Valuation Ruling, the Respondent No. 2 conducted a stakeholders' meeting which was erroneously framed with reference to the earlier Ruling 'mentioned hereinabove, in spite of the fact that the said Ruling had already been set aside by the Customs Appellate Tribunal in exercise of its appellate powers. As such, the Respondent No. 2 insisted that submissions be made with reference to the earlier Ruling and a narrative was created by the Respondent Directorate that the values of the said Battery Cells are "Trending upwards".
9. That is it submitted with utmost humility that such concepts as "trends" in value relied upon by the Respondent Directorate are indicative of the utter lack of understanding of the scheme of valuation under the Customs Act, 1969, and the Customs Rules, 2001, framed thereunder as well as the international obligation vis-a-vis Customs Valuation. Throughout the process. i.e. at the time of issuance of the impugned Ruling as well as during the course of adjudication by the Respondent No.1, the Respondent Directorate has remained intentionally turned a blind eye towards the scheme of valuation mandate by the law and, instead, have insisted of fictitious, arbitrary and sustainable values solely in order to meet targets of revenue collection.
10. That it is evident from the contents of the impugned Valuation Ruling and impugned Order-in- Revision that, during the stakeholders' meetings, the stakeholders were not to be confronted with material by the Respondent No. 2 on the basis of which value was being determined. Instead, however in a departure from the justice, the said' meetings were apparently conducted in order to give the impression that viewpoints of stakeholders were being taken into consideration.
11. That without prejudice to the foregoing, the impugned Ruling was issued by the Respondent No.2 in terms of the preceding methods of Valuation provided under 25 of the Customs Act, 1969. While unlawfully refusing to carry out any determination in terms of the preceding methods of valuation provided under section 25 of the Act, 1969.
12. That upon issuance of the impugned Valuation Ruling, the Appellant impugned the same before the Respondent No. '2 in terms of Section 25-D of the Act, 1969, whereby the various illegalities, factual and legal inconsistencies, patent misstatements, and the debilitating effects thereof were highlighted, with support from irrefutable evidences.
13. That it is submitted that the impugned Valuation Ruling has obviously been issued While ignoring the actual price paid/payable at the time of imports of the said Battery Cells into Pakistan.
The Appellant provide irrefutable documents in the shape of, inter alias import documents as well as post-import documentation to show the establish that the value for European imports is completely unreflective of the actual price paid / payable for imports into Pakistan. Copies of Goods Declaration vide GD No. KPPI-HC-72708 dated: 26.03.2021 and also GD No. KPPI-HC-3676 dated 14.07.2021 along with Examination Report, Item Details and Assessment Notes including import Commercial - Documents which are marked as (Annexure-F to F-V).
14. That, furthermore, it was also highlighted that the impugned Valuation Ruling has been issued without any attempt at applying the methods of determination of values provided for in terms of section 25 of the Act, 1969. Instead, however, the Respondent No. 2 merely fixed the values for the said Battery Cells without any application of law or otherwise of its mind.
15. That as had also been demonstrated before the Respondent No.1, the price actually paid / payable for the said Battery Cells remains significantly lower than the value unlawful, illegally and arbitrarily fixed through the impugned Ruling by the Respondent No:2, and the demonstrated value is the determinable and correct value for the purposes of assessment of consignments of the said Battery cells importer by the Appellant.
16. That without prejudice to the foregoing, it is submitted that the impugned Valuation Ruling is not sustainable on a legal plane in addition to being, inter alia, misconceived on the factual plane in light of the foregoing submissions. It is submitted that the Respondent Director has acted in dire contradiction to and has flouted to provisions of section 25 of the Act, 1969; the Respondent Director has given unlawful reason while refusing to adhere to sequentially provided methods of valuation in section 25 and has invoked subsection (9) thereof only in order, to justify values which have been arrived at in an arbitrary manner which is alien to the Act, 1969.
That the Respondent Director has wrongly assumed that the provisions of subsection (9) justify it to issue values in an arbitrary manner, as done through the issuance of the impugned Valuation Ruling. When invoking subsection (9), it was incumbent upon the Respondent No. 2 to justify as to how each of the preceding subsections were utilized to arrive at the values contained in the impugned Valuation Ruling.
That in fact, as shown by the impugned Valuation Ruling itself, a large variety of different items from all origins across the world have been determined with a single stroke of the pen and, while doing so, the Respondent Director has failed to even attempt any explanation as to how such exercise was conducted for each of the items covered by the impugned Valuation Ruling. It is submitted that no record exists to justify the values that have been supposed determined through the impugned Ruling.
19. That in fact, the Respondent 'No. 2 namely Director has even failed to confront the Appellant with the purported "Clearance Data", which, even otherwise, has not been relied upon while issuing the impugned Valuation Ruling.
20. That under the Customs Act, 1969, and the Customs Rules, 2001, the Respondent Director was required to act in a strict manner while considering the application of each method of valuation provided under section 25 of the Customs Act, 1969. Further, as required by the aforesaid provision, the Respondent No. 2 namely Director needed to state lawful grounds for rejecting any particular method of valuation ruling as being not applicable as given under the Act, 1969; whereas the Respondent No.2 Director has failed to provide any such grounds.
21. That the Respondent No. 2 Director has incorrectly rejected the methods of valuation contained in section 25 of the Customs Act, 1969, As to subsection (1) of Section 25 of the Customs Act, 1969, the Respondent No. 2 merely deemed it inapplicable without any cogent reason having been provided therefore. The Respondent No. 2 utterly and miserably failed to consider the declared values in the imports over the previous ninety (90) days, which evidence the actual prices payable / paid for imports.
22. That without prejudice to foregoing, it is submitted that as to subsections (5) and (6) of Section 25 of the Customs Act, 1969, the Respondent No. 2 Director has refused to apply the same in spite of the fact that irrefutable evidence created thereunder and fully applicable for the purposes of determination are in the knowledge and possession of the Respondent No. 2 Director. It is evident from the contents of the impugned Valuation Ruling that the Respondent No. 2 Director did not have any lawful reason to reject application of methods of valuation contained in subsections (5) and (6) of Section 25. Firstly, the Respondent No. 2 Director has failed to appreciate that subsections (5) and (6) envisage two separate/independent methods of valuation, wherein subsection (5) requires consideration of identical goods being assessed by the respective Collectorates, evidence whereof is provided hereinabove. Concomitantly, where no identical goods are available as envisaged in subsection (5), the Respondent No. 2 Director must invoke subsection
(6) of section 25 of the Customs Act, 1969. Where under similar goods and values thereof have to be considered.
That instead, however, the Respondent No. 2 Director has given a bald statement to the effect that the said subsections"... were examined for applicability to the valuation issue in the instant case.
The same provided same reference values but could not be exclusively and solely relied upon.
While the Respondent No. 2 Director has made the foregoing bald statement, it has absolutely failed to state as to what the actual information / data was and how the same would lead to inapplicability of subsections (5) and (6) of section 25 of the. Act, 1969. Without prejudice to the foregoing, the Respondent No.2 has failed to refer to even one specific item covered by the impugned Ruling wherein such issue was faced, or that what the found values were.
That in fact, it is submitted that the statement of the Respondent No. 2 Director with respect to subsections (5) and (6) of section 25 are relevant considerations for the purpose of a determination under subsection (9). However, as its own statements, shows, this, task was neither carried out nor could it be, rendering the entire purported determination unlawful, illegal, arbitrary and male fide.
25. That furthermore, the Respondent No 2 Director has failed to highlight the specific provisions of subsections (5) and (6) which make application of the sane redundant in the absence of such information, which is evidently available.
26. That thereafter, the Respondent No.2 Director has stated as to subsection (7) that a market enquiry was conducted, however, purportedly ".... This method of valuation could not be exclusively relied upon. "It is also pertinent to note that while no evidence has been provided to substantiate that an actual market enquiry was conducted, even then it is evident that values of the said Battery cells could not be lumped together in manner done in impugned Valuation Ruling.
27.. That furthermore, as stated hereinabove, the impugned Ruling covers a large verity of different values, however, Paragraph-4 thereof states that "a market inquiry was conducted. This indicates that the magnitude of conducting a proper market survey for sheet number of items / goods covered by the impugned Ruling could not have been conducted and was therefore, abandoned. It is submitted that the responsibility take upon by the Respondent No 2 Director in issuing an instrument in terms of 25-A is heavy and undoubtedly onerous, and had to be discharged thoroughly and strictly in accordance with the law.
28. That without prejudice to the preceding, the Respondent No.2 Director had a positive obligation to ensure that market survey was conducted, and values and categories of goods generated in, the manner found in a lawful survey. A lawful survey would, of course, be one which is strictly compliant with the law, including conduct of stakeholders, at the same commercial level and quantities at the first stage after import, etc.
29. That as to subsection (8), it is evident from the record that the same has also been wrongly applied. At the time of issuance of the impugned Valuation Ruling, the value of constituent materials could have been ascertained. However, for the Respondent No. 2 Director to state that conversion costs from materials were not available is not reason enough to discard the provisions of subsection (8) of section 25 of the Act, 1969.
30. That while 'determining' values under the impugned Ruling, the Respondent No 2 ignored the sequential methods of valuation contained in Section-25 of the Act, 1969. And in a patently arbitrary and whimsical manner, chose Section 25(9) of the Act, 1969. As the appropriate instrument of 'determination' of values. It is submitted that the Respondent No. 2 has utterly failed to adhere to the provisions of the Act, 1969, and has failed to elucidate any cogent reasons for not applying / following the methods of valuation preceding subsection (9) of section 25 the Act, 1969.
31. That without prejudice to the foregoing, it is submitted that the Respondent No. 2 has even failed to properly follow the dictates of Section 25(9) if the Act, 1969, and has misused the provisions thereof in an attempt to justify unlawful fixation of values of the Said Battery Cells. The Respondent has in fact, used subsection (9) of Section 25 of the Act, 1969, in order to issue a list of values which is neither reflective of the actual transaction value at which Battery Cells are available in the international market, nor is permissible under the law in such a manner.
32. That although subsection (9) of section 25 of the Act, 1969, permits a flexible application of the preceding methods of valuation, the Respondent has implemented the same in order to fix arbitrary values which are alien o the prices paid / payable for Battery Cells at the time of import into Pakistan. The Respondents Nos.1 and 2 have failed to elaborate the 'flexible manner' in which the valuation methods were supposedly applied. The Respondents Nos.1 and 2 was under a positive duty identify the provisions of Section 25, which were flexibly applied in arriving at the values purportedly determined in the impugned Valuation Ruling.
That it is reiterated that the Respondents /Nos. 1 and 2 have failed to provide reasons in conformity with Section 25 of the Act, 1969, as to why the methods of valuation laid down in subsections (1), (5),
(6) and (--) were not followed, As to subsection (9), the Respondents Nos. 1 and 2 have not even attempted to state why determination proceedings were limited thereto. This by itself is an incurable defect in the impugned Valuation Ruling, which is therefore, liable to be immediately set aside.
34. That in addition to the above, it is submitted that the. Respondent No.2 Director, while undertaking such an exercise for the determination of values of the said Battery Cells, was required to strictly adhere to the provisions of the/Customs Act, 1969, as well as the Customs Rules, 2001, and apply those in a transparent, judicious and lawful manner in determining the values of the said Battery Cells. The Respondent No 2 Director, however, while causing serious prejudice and harm to the Appellant completely ignored the dictates of the Customs Act, 1969, as well as the Rules, 2001, and instead fixed values of the said Battery Cells in an entirely arbitrary, capricious and unreasonable manner, as has been demonstrated herein.
35. That while the Appellant raised the numerous and irremediable illegalities present in the impugned Ruling before the Respondent No.1, while acting in a patently arbitrary, illegal and impermissible manner, the Respondent No.1 passed the impugned Order in a palpably high- handed manner on the basis of considerations entirely alien to the Act, 1969, and indeed contrary to the facts and circumstances of the case. Through the impugned Order, the Respondent No.1 has dismissed the revision petition filed by the Appellant.
36. That as is evident from the operative part of the impugned Order, the Respondent No.1 has made bald statements in respect the arguments raised by the Appellant before it while rejecting the same, and has blindly accepted the contentions made by the Respondent No. 2/ it's officer appearing on its behalf. In spite, of the fact that the Appellant had provided plethora of evidences in support of its contention, including but not limited to import data pertaining to the said. Battery Cells, the Respondent No.1 in a patently high-handed, arbitrary and illegal manner rejected the petition filed by, inter alia, the Appellant on sole basis that the petitioner failed to provide "Counter evidence", which is belied by the record of the case itself.
37. That in either case, it is reiterated that "counter evidence" would mandate that the Respondents present some evidence in support of their determination for which the Appellant be required to rebut the same with the support of evidence. In the instant case, however, the Respondent No 2 Directorate utterly failed to place on record any such evidence.
38. That the respondent No 1 failed to controvert the submission made by the Appellant with reference to any specific argument raised thereby, and merely gave sweeping statements devoid of any reasoning whatsoever. Furthermore, the Respondent No.1 praised the Respondent No. '2 for having properly followed the valuation methods to determine the Customs values, whereas no basis for such statements has been given and the arguments in relation thereto have been utterly ignored. It is evident that the only intention of the Respondent No.1 while passing the impugned Order was to uphold the unlawful impugned Ruling in order to give effect to the illegal, arbitrary and patently erroneous values contained therein, which have not been determined in accordance with the law.
39. That it is evident that the Appellant has been deprived of any fair opportunity of hearing and while, sitting in a judicial capacity, the Respondent No. 1 has exercised its authority in a highly unlawful, arbitrary and prejudicially biased manner against the Appellant and in favour of its own departmental officers, namely the Respondent No. 2.
40. That as a result of the patently unlawful and illegal actions of the Respondents the consignments of the said Battery Cells being imported by the Appellant are being assessed at grossly high values which are not sustainable under the law. As a result of 'the assessment on the basis of these unlawful values, huge amounts of duties and taxes which are otherwise not leviable under the law are being demanded. Being unable to satisfy such demands due to the prejudicial effect thereof, the Appellant is suffering great prejudice and unable to get possession of its lawfully imported consignments unless such unlawful demands are satisfied. As such, it is prayed that this Honourable Tribunal suspends the operation of the impugned Ruling as well as the impugned Order with immediate effect.
41. That the actions of Respondents in respect of fixation of values for the said finished Battery.
Cells, are in stark contrast to and in utter, disregard for, inter alia, the fundamental rights of the Appellant as enshrined in the Constitution of Pakistan, 1973, Including Articles 4, 8, 10-A, 18 and 25-A, thereof.
42. That ordering of encashment of the Appellant's Pay-Order vide GD No. KPPI-HC-72708 dated: 26.03.2021 by the. Respondents Nos. 3 and 4 is in contravention of the expression of Section 81 of the Customs Act, 1969 by any Authority him Superior he may be and denial of return of the same, by the Respondents Nos.3 and 4 is not more than an usurpation of an "Amanah", which the Appellant deposited with the Respondent Collectorate as security subject to its encashment or return upon determination of final value within the stipulated period given in subsection (2) of Section 81 of the Customs Act, 1969. This type of usurpation rather any other type is not permitted under the Customs Act, 1969 beside every Act of Pakistan as these are direct in conflict with the Constitution of Islamic Republic of Pakistan, Islamic Moral Standards and Tenants of Islam. Reference is made to the objective resolutions which have been made substantive part of Constitution. The objective resolution reflects the will of the people of Pakistan to establish an order wherein the principle of social justice as enunciated in Islam shall also be fully observed The objective resolution admits that sovereignty over the entire universe belongs to Allah All Mighty alone and authority which He has delegated to the State of Pakistan, through its people for being exercised within the limit prescribed by him, is a sacred trust.
Few commandments of Allah (SWT) relevant to the issue are reproduced below: Do not usurp one another's property by unjust means. (2: 188).
O believer's! do not consume/usurp one another's property/wealth among yourself illegally (4: 29).
Weight with even scale and do not cheat other of what is rightly there's nor corrupt the land with evil (26: 182-183).
Surely Allah commands you (0 man in authority) that you shall render dues ("Amanah/Amanat") unto those entitled to them and when you judge between man judge fairly (4: 58).
43. There is no dispute the public servant hold the amount of security deposit as an "Amanah" and are supposed to return that or in case of encashment refund that to the person entitled to it. The legislature has set a time limit of 06 months in Section 81(2) of the Customs Act, 1969 in order to ensure timely determination of value or otherwise. If the determination is not made within time, the amounts so deposited as "Amanah" become retumable/refundable without any let, hitch and hindrance. The lapse on the part of Government Servant cannot be attributed to a tax payer under the provision of Section 81 of the Customs Act, 1969 Constitution of Islamic Republic of Pakistan and commandments of Allah (SWT). The same view was taken by the Honourable Supreme Court of Pakistan in the case of Pfizer Laboratories Ltd. v: Federation of Pakistan and others reported as PLD 1998 SC 64 for the refunds not governed under the provision of Section 33 of the Customs Act, 1969 that "That if one party under a mistake, whether of fact or law, paid some money to another party (which includes a Government Department), which was not due by law and contract or otherwise, that must be repaid in view of section 72 of the Customs Act, 1872. ii) "That the customs duties and charges referred to in section 33 of the Act should be chargeable and payable by an importer or exporter and that due to advertence, error or misconstruction, more amount was paid or recovered that was due and payable, the claim for the refund of such recovered that what was due and payable, the claim for refund of such an excess amount should be made within six months as envisaged in above section 33, but where the duty or tax charged and recovered was not payable at all, above section 33 has not application. iii) "That if the customs duty or any other levy was realized and its realization was outside the statutory authority, the provisions of section 27(1) of Indian Customs Act, 1982, providing limitation of six months was not attracted." iv) That when any excise duty is recovered which was of leviable, limitation of one year provided in Rule 11 of the Central Excises and Sale Rules, 1944 is not applicable nor an alternate remedy by way of a suit will be a bar to a Constitutional Petition.
"That payment of excise duty or any other tax without knowledge that the same is expected under a notification is refundable on the same footing as if there was no lawful imposition." vi) "To return what has been wrongly is as much a duty and grace of Government to levy relentlessly and fully what is due as remarked by V. R. Kirshna Lyer". vii) "That where some money is received by the Government not lawfully due the plea of limitation by its departments one which the Court always looks upon the dis-favour as it is violative of the, principles of morality and justice." viii) "That when money are paid to the State which the State has no legal right to receive, it is ordinarily the duty of the State, subject to special provisions of any particular statute or special facts and circumstances of the case, to refund the amount so received and in case of failure, superior Court in exercise of its. Constitutional jurisdiction can direct the refund of the same if no disputed questions of facts are involved." ix) "That these may be legal liability on the part of a Government functionary to refund any mount received by it as a tax or other levy by virtue of certain special provisions under the special law but keeping in view that we are living in a democratic society governed by the rule of law and every Government, which claims to have ethical and moral values, must do what is fair and just to the citizens regardless of legal technicalities."
"That as per Indo-Pak Laws the fact that the amount or tax of which refund is claimed was voluntarily paid does not preclude the right to claim refund, if it was not lawfully payable." xi) "That the money paid by a citizen to a public authority in the form of taxes or other levies paid pursuant to an ultra vires demand by the authority is prima facie recoverable by a citizen as a right. Lord Bridge of Harwich of the House of Lords in the case of Tower Namlets Borough Council (supra) remarked "that the retention of moneys known to have been paid under a mistake at law, although it is a course permitted to an ordinary litigant is not regarded by the Courts, as a high- minted thing" to do but rather as a "Shabby thing" or dirty trick."
GROUNDS A. That the impugned Order-in-Revision No. .17/2021 dated: 31.05.2021 passed by the Respondent No. 1 read with impugned Valuation Ruling No. 1514/2021 dated: 09.02.2021 passed by the Respondent No 2 is arbitrary, unlawful, illegal and against the principles of natural justices and hence, is liable to be set aside with immediate effect.
That the impugned Order-in-Revision No 17/2021 dated: 31.05.2021 passed by the Respondent No 1 has erroneously, unlawfully and palpably falsely rejected the revision petition, and has attributed legality to the impugned Ruling No. 1514/2021 dated: 09 02.2021 passed by the Respondent No. 2 which is patently unlawful and issued in an illegal exercise of power.
That the Respondent No. 1, by acting in such an unlawful manner, has misappropriate a forum for redressal of grievances provided by the Act, 1969 to the Appellant. In addition thereto, the fundamental rights of the Appellant enshrined by the Constitution of Pakistan, 1973, Including but not limited to Articles 4, 8, 10-A, 18, 23, 24, and 25 have been trampled and entirely shunned by functionaries of the Federation of Pakistan, which is otherwise under a positive mandate to uphold such rights and ensure they are tillable with equal facility to all' citizens, including the Appellant. in respect of the arguments raised by the Appellant before it while rejecting the same, and has blindly accepted the contentions made by the Respondent No. 2/it's officer appearing on its behalf.
In spite of the fact that the Appellant had provided plethora of evidences in support of its contention, including but not limited to import data pertaining to the said Finished Battery Cells, the Respondent No. 1 in a patently high handed, arbitrary and illegal manner rejected the petition filed by, inter alia, the Appellant on sole basis that the Petitioner failed to provide "substantive documentary proof", which is belied by the record of the case itself.
E. That the Respondent No. 1 failed to controvert the submissions made by the Appellant with reference to any specific argument raised thereby, and merely gave sleeping statements devoid of any reasoning whatsoever. Furthermore, the Respondent No.1 praised the Respondent No. 2 for having properly followed the valuation methods to determine the customs values, whereas no basis for such statements has been given and the arguments in relation thereto have been utterly ignored. It is evident that the only intention of the Respondent No.1 while passing the impugned Order was to uphold the unlawful impugned Ruling in order to give effect to the illegal, arbitrary and patently erroneous values contained therein, which have not been determined in accordance with the law.
F. That it is evident that the Appellant has been deprived of any fair opportunity of hearing and, while sitting in a judicial capacity, the Respondent No.1 has exercised its authority in a highly unlawful, arbitrary and prejudicially biased manner against the Appellant and in favour of its own departmental officers, namely the Respondent No. 2.
G. That the Respondent No. 2 has not carried out any determination through the impugned Valuation Ruling in respect of the said Finished Battery Cells.
H. That the Respondent No. 2 has issued the impugned Valuation Ruling on misconceived; unlawful and arbitrary grounds, and has unlawfully ignored the evidences presented by the Appellant.
L. That the Respondent No. 2 has not given any lawful reason for imposing the listed values for assessm ent of the said Finished Battery Cells contained therein at the time of import into Pakistan.
J. That the Respondent No. 2 has wrongly applied the provisions of section 25 of the Act, 1969 and has invoked subsection (9) only for the purposes of justifying fixation of value which is otherwise impermissible under the Act, 1969, and is indeed alien to the scheme thereof. Detailed reasons therefore have been elicited hereinabove.
K. That the Appellant was not provided any opportunity to submit any documents before the Respondent No.2 prior to issuance of the impugned Ruling. As submitted hereinabove, the Appellant was never granted a proper opportunity to do so.
L. That in addition to the foregoing, it was also submitted before the Respondent No. 1 that due to the unlawful fixation of-values of the said Finished Battery Cells and non-determination of the actual price paid / payable for the said Finished Battery Cells at the time of import into Pakistan, the process of litigation vis-a-vis Finished Battery Cells shell continue unabated, and that it is imperative that a proper and lawful determination be carried out strictly in accordance with the Act, 1969. The Rules, 2001, framed thereunder and the dicta of the Hon'ble Superior Courts.
M. That as had also been demonstrated before the Respondent No.1, the price actually paid / payable for the said Finished Battery Cells remains significantly lower than the value unlawful, illegally and arbitrarily fixed through the impugned Ruling by the Respondent No. 2, and the demonstrated value is the determinable and correct value for the purposes of assessment of consignment of the said Finished Battery Cells imported by the Appellant.
2. Being aggrieved with the Order-in-Revision passed by the Director General of Customs Valuation, Karachi, appellants filed the instant appeal before this Tribunal on the grounds incorporated in the Memo of Appeal.
3. On the last date of hearing Mr. Muhammad Adnan Moton, Advocate appeared on behalf of the appellant and reiterated the contents of the appeal and contended that, the impugned Order is arbitrary, unlawful, illegal and against the principles of natural justice and, hence, is liable to be set aside with immediate effect. He further contended that, In the light of the various factual and legal aspects of the case highlighted above substantiated by judgments of Honourable apex Court and Superior Judicial Fora including Customs Appellate Tribunal this Honourable Customs Appellate Tribunal being a final fact finding authority may be pleased to order to set aside the impugned Order-in-Revision No. 17/2021 dated: 31.05.2021 passed by the Respondent No.1 read with impugned Valuation Ruling No. 1514/2021 dated: 09.02.2021 passed by the Respondent No. 1 and also in light of new Valuation Ruling No. 1561/2021, dated 18.11.2021' issued by Director Customs Valuation, Custom House, Karachi during the pendency of the subject appeal hence of lower /reasonable value as compared to earlier Valuation Ruling No. 1514/2021, dated 09.02.2021, read with Order-in-Revision No. 17/2021, dated 31.05.2021 and requested for refund of pay order vide No. PDC No. 00545697 dated 25.03.2021 amounting to Rs.4465169/- (Four Million Four Hundred Sixty Five Thousand One Hundred sixty Nine Rupees Only) vide GD No.KPPI-HC-72708 dated 26.03.2021 which was encashed arbitrarily, unlawfully, illegally and malafidely inspite a letter dated: 16.07.2021 already addressed to Respondent Collectorate asking them to hold to the security in the shape of Pay-Order and not encash the same in respect of Goods. Declaration No. KPPI-HC-72708 dated: 26.03.2021 which was completely overlooked. The same be applied for second consignment for which pay order given vide PDC No. 00575277 dated 02.08.2021 amounting Rs.4579773/- for differential amount of 'duty and taxes vide GD No. KPPI-HC-3676 dated: 14.07.2021. Stay order dated 16.12.2021 was also granted by the leaned Tribunal upon stay application filed by the appellant under section 194-B(2) of the Customs Act, 1969 for grant of stay/ restraining orders for not to encash the pay orders.
4. Cross objections were filed by the respondent in compliance of the subsection (4) of Section 194-A of the Customs Act, 1969 which along with parawise comments are taken on record.
5. Arguments heard and concluded. After perusal of the record as well as arguments extended by both the parties, it has been observed that, the previous Valuation Ruling No. 1514/2021, dated 09.02.2021 read with Order-in-Revision No. 17/2021, date&31.05.2021 which has been replaced by current Valuation Ruling No. 1561/2021, dated 08.11.2021 which is in field for determination of Customs Values of Dry Battery Cells under section 25A of the Customs Act, 1969. The reason for re- determination of the customs values of Dry Battery Cells was that earlier the Customs values of Dry Battery Cells under PCT 8506.1000 were determined under section 25A of the Customs Act, 1969 vide Valuation Ruling No. 1514/2021 dated 09-02-2021. Revision petition Was filed before the Director General of Customs Valuation under section 25D of the Customs Act, 1969 which was rejected vide Order-in-Revision No. 17/2021 dated 31-05-2021 in the following terms: "may however choose to apply to Director Valuation in future for re-determination of values of Dry Battery Cells by the presenting concrete evidence of change in prices of goods in the country of export by supported by objective verifiable data/ information to prove their claims. The Order-in-Revision was challenged before the Honorable Customs Appellate Tribunal by few petitioners and the case is still pending.
Additionally, several representations were also received for re-determination of customs values of Dry Battery Cells: Therefore, this Directorate conducted a fresh exercise for the determination of Customs Values of the subject goods in terms of Section 25A of the Customs Act, 1969.
6. Meetings were hem on 07-07-2021 and 14-09-2021 and attended by different stakeholders. The participants were requested to submit following documents before or during the course of meeting so that customs values could be determined:- i. Invoices of imports during last three months showing customs value. ii. Websites, names and E-mail addresses of known foreign, manufacturers of the item in question through which the actual current value can be ascertained. iii. Copies of Contracts made / LCs opened during the last three months showing the value of item in question. iv. Copies of Sales Tax Invoices issued during the last four months showing the difference in price (excluding duty and taxes) to substantiate their contentions.
7. During the meetings, stakeholders were of the view that the values of the subject goods in the existing Valuation Ruling were much higher than their actual transaction values. They contended that the values of the goods are on a downward trend and Keeping in view the decreasing prices in the international market, a fresh Valuation Ruling should be issued accordingly. In this regard, they submitted documentary evidences like copy of GDs, invoices and L/Cs, sales tax invoices and copy of Export GDs. Furthermore, they argued that the values should be based on the brands and accordingly categorized Alkaline based dry battery cell after taking local selling prices of aggregate quantity. The view point of all participants was heard in detail and considered to arrive at Customs values of the subject goods.
8. That the Valuation methods provided in Section 25 of the Customs Act, 1969, were duly applied in their regular sequential order to arrive at customs values of subject goods. The transaction value method as provided in subsection (1) of Section 25 of the Customs Act, 1969, was found inapplicable because requisite information was not available as per law The wide variation of values displayed in the import data as available on record also strengthened the aforementioned fact. Hence requisite information under law was not available to arrive at the transaction value.
Therefore, identical / similar goods value methods as provided in subsections (5) and (6) of Section 25 ibid were examined for applicability to the valuation issue in the instant case. The same provided some reference values but could not be exclusively and solely relied upon. In line with the statutory sequential order of Section 25, this office conducted market inquiries under subsection
(7) of section 25 of the Customs Act, 1969, after taking selling prices of greatest aggregate quantity.
All information so gathered were analysed for determination of customs values of the subject goods under Section 25 (7) of the Customs Act, 1969".
9. The appellants however have submitted the following the issue of market inquiry was strongly debated and ably deliberations were conducted on the said issue by both the parties. Apart from all the dictums of law always prevails and also jurisprudence of law covers the legal leakiness, if otherwise, found or required to be covered by the courts and legal procedure is mandated responsibility of the courts to do the same: The court find that in the Standing Operative Procedure I of 2005 dated 13.09.2005, it is specifically provided that the importer or his representative shall be associated with the working committee it deductive method of valuation under section 25 (7) is to be resorted. No lengthy discussion is therefore, required and it is held by the Honorable High Court of Sindh in case of Rehan Umar reported 2006 PTD 909, that no, assessm ent can be made on the basis of working of a committee constituted for the purpose of determining the deductive valuation under section 25 (7) without, associating importer or his representative in each case.
Evidently in present case respondents deliberately violated the subject provisions or observations of the Honorable Court.
10. For proper application of-the procedure, we had already given the detailed description and legal interpretation in so many judgements passed by this august Tribunal, here again we prefer to make some of the observations about the procedure and principles required to be maintained and carried out in the line of legal obligations, by the relevant department, to must take care under the General Agreement of Tariff and Trade (GATT) Agreement. According to that agreement "transaction value" defined, in Article 1, Article 1 is to be read together with Article 8 which provides, inter alia, for adjustments to the price actually paid or payable in cases where certain specific elements which are considered to form a part of the value for Customs purposes are incurred by the buyer but are not included in the price actually paid or payable for the imported goods: Article S also provides for the inclusion in the transaction value of certain consideration which may pass from the buyer to the seller in the form of specified goods or services rather than in the form of money. Articles 2 through 7 provide methods of determining the customs value whenever it cannot be determined under the provisions of Article 1. Where the customs value cannot be determined under the provisions of Article 1 there should normally be a process of consultation between the customs administration and importer with a view to arriving at a basis of value under the provisions of Article 2 or 3. It may occur, for example, that the importer has information about the customs value of identical or similar imported goods which are not immediately available to the customs administration in the part of importation. On the other hand, the customs administration may have information about the customs value of identical or similar imported goods which is not readily available to the importer. A process of consultation between the two parties will enable information to be exchanged, subject to the requirements of commercial confidentiality, with a view to determining a proper basis of value for customs purposes. Articles 5 and 6 provide two bases for determining the customs value where it cannot be determined on the basis of the transaction value of the imported goods or of identical or similar imported goods. Under Paragraph 1 of Article 5 the customs value is determined on the basis of the price at which the goods are sold in the condition as imported to an unrelated buyer in the country of importation. The importer also has the right to have goods which are further processed after importation valued under. the provisions of Article 5 if the importer so requests. Under Article the customs value is determined on the basis of the computed value. Both these methods present certain difficulties and because of this the importer is given the right, under the provisions of Article 4, to choose the order of application of the two methods. Article 7 sets out how to determine the customs value in cases where it cannot be determined under the provisions of any of the preceding Article. Agreement and procedure laid down referred above clearly describes the rights and responsibilities of both the parties, importers and the relevant department. Section 25 of the Customs Act, 1969 completely corresponded with the above noted Articles of GATT Agreement and mandatorily requires its implementation with its true letter and spirit as such the legal strength of the said section, empowers the concern officials of customs to act accordingly.
11. 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 officer 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 any particular case, the Customs officers/authorities want to Amp 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 linked of 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 compiled 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 obligation, prescribed under Sections 25 and 25A of the Customs Act, 1969. The determination of value under section 25-A of 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, 1897. In the present case, the authority/Director General, Customs Valuation ignored the directions of the Superior Courts and made observations in contradiction of provisions of Section 25-A of the Customs Act, 1969. Such ignorance is violative from the law. Being custodian of law, purpose of administration of justice is to hold and not to thwart appellant' 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, non-compliance shall deem to be infraction.
12. Reliance is placed upon the judgment of Honourable High Court of Sindh at Karachi in the case of Sadia Jabbar v. Federation of Pakistan reported as 2018 PTD 1746. Messrs Goodwill Traders Karachi v. Federation of Pakistan reported as 2014 PTD 176. In Sadia Jabbar case the Honourable High Court of Sindh at Karachi which was also upheld by the Honourable Supreme Court of Pakistan which held that when Section 25 of the Customs Act, 1969 exhaustively provided the modes for determination of value, resorting to Section 25A of the Act without any convincing reason was uncalled for.
13. Reliance is also placed upon the judgment of the Honourable High Court of Sindh at Karachi including Rehan Umer v. Collector of Customs, Karachi (2006 PTD 909), Najam Impex Lahore v.
Assistant Collector of Customs, Karachi (2008 PTD 1250), Faco Trading Co. v. Member Customs, Federal Board of Revenue (2013 PTD 825) and Goodwill. Traders Karachi v. Federation of Pakistan (2014 PTD 176).
14. We have given anxious consideration to facts of the case. 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 reported as 2018 PTD 1746 and in conformity of the aforesaid observations along with our additions, the subject impugned Valuation Ruling 1514/2021, dated 09.02.2021 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-Revision No. 17/2021, dated 31.05.2021 passed within the hierarchy of the Customs infested with patent illegalities, are hereby declared null and void and accordingly set aside.
15. We shall also bring it on record that at the time filing of the subject appeal impugned Valuation Ruling No. 1514/2021, dated 09.02.2021 was in field and by virtue of that Valuation Ruling the appellant has deposited with the clearance Collectorate namely. MCC Appraisement Port Muhammad Bin Qasim, Karachi the disputed amount in the shape of pay orders as mentioned in the preceding para above. However subsequently the Valuation Ruling No. 1561/2021, dated 08.11.2021 was issued by the Directorate General of Customs Valuation, Custom House, Karachi granting substantial relief to the Appellant. As such the disputed amount deposited in the shape of pay orders with the clearance Collectorate MCC Port Muhammad Bin Qasim, Karachi for release of the subject two consignments in view of Valuation Ruling No. 1514/2021, dated 09.02.2021 has become redundant. This position has been endorsed by the learned DR appearing for the department. We therefore, are disposing of this appeal by also directing the Collector of Customs Model Customs Collectorate Appraisement, Port Muhammad Bin Qasim, Karachi and the Deputy Collector of Customs bank guaranties / securities to release the amount deposited in the shape of pay orders by the appellant after due verification and identification as given in the chart goods declaration wise:- KPPI-HC-72708-26-03-2021 PARTICULARS RS.
Total Duty 3,247,396 Duty Paid 2,638,509 Invoice Fine 5,000 Additional Duty 613,887 Security Pay Order 4,465,169 Balance from Pay Order to be paid by. MCC Port Muhammad Bin Qasim, Karachi in the light of Revised Valuation Ruling No. 1561/2021, dated 08.11.20213,851,282 PARTICULARS RS.
Total Duty 3,330,743 Duty Paid 2706,229 Invoice Fine 5,000 Additional Duty 629,514 Security Pay Order 4,579,773 Balance from Pay Order to be paid by. MCC Port Muhammad Bin Qasim, Karachi in the light of Revised Valuation Ruling No. 1561/2021, dated 08.11.20213,950,259
16. This also gets strength and substantiated by the judgment of the Honorable Lahore High Court Lahore in the cases titled as M/s. Bilal Enterprises v. Federation of Pakistan and others reported as 2013 PTD 1332 wherein the Honorable High Court held that revised Valuation Ruling would be deemed to have taken effect from date when original ruling was given. Petitioner could not be burdened to pay taxes at excessive rates fixed in original ruling having been found to be erroneous by department itself. Revised ruling was based upon all relevant factors specified in Section 25 of Customs Act, 1969 and petitioner was entitled to take benefit thereof. Honorable High Court directed the authorities to finalise provisional assessment of petitioners on basis of revised valuation ruling.
17. Reliance is also placed upon the judgment of the Honourable High Court of Sindh, Karachi in case Collector of Customs v. M/s. Khas Trading and Company reported as 2015 PTD 22/ PTCL 2015 CL. 192 wherein the Honourable High Court held that the valuation ruling which has been issued during the pendency of the case which was still pending and yet to be finalized is a valuation ruling which is a continuation of the earlier valuation ruling and proceedings, the party cannot be deprived of the benefit of the same as it would amount to gross in justice to him and would defeat the principles of natural justice.
18. Reliance is also placed upon the recent order dated 28.02.2022 passed in C.P. No. D-4085 of 2021 titled as M/s. SR Enterprises v. Federation and others where the same principle as mentioned' above was followed and the security deposited with the Nazir of the Honorble High Court was ordered to be released to the petitioner after due verification of the amount deposited by the petitioner.
19. In view of what has been stated here in above, we allow this appeal against the impugned Order-in-Revision No. 17/2021, dated 31.05.2021 on the grounds mentioned above as the Director General of Customs Valuation while issuing impugned Valuation Ruling No. 1514/2021, dated 09.02.2021 relied on the fallback method under section 25(9) of the Customs Act, 1969 by ignoring the sequential methods as provided under section 25 of Customs Act, 1969.
20. The Collectorate is directed to process the refund application in respect of Pay Order / security already encashed by them and also return the Pay Order still not encashed.
21. The appeal is disposed of in above terms.