WAJIHUDDIN AHMAD, J.--1. The petitioners herein maintain that they imported a consignment of 43 Pallets containing 26912 K.Gs. (net) of Un-coated White Lined Duplex Board (Sheet size 70 x 100 CMS), as per order, dated 31st March, 1977, of M/s. Norinpaco Ltd., Karachi, at a price of U.S. Dollars 280 per 1000 K.Gs, C & F, Karachi from M/s. Bunzl Pulp & Paper (Sales) Ltd., England. Such consignment, arriving at Karachi per S.S. "RAB" on 12th April, 1977, bill of entry was submitted on 14th April, 1977. It is said that the respondent No. 1 accepted the actual Import price as Normal Value under section 25 of the Customs Act, the bill of entry was completed and the petitioners, paying the Duty and the Sales Tax, on 24th May, 1977, duly cleared the goods. Copies of the invoice and the bill of entry are filed with the petition. It is then urged that on or about 11th May, 1979 the petitioners were surprised to be served, after two years of the clearance of the goods, with a show-cause notice dated 6th February, 1979, issued by the respondent No. 1, alleging that the goods in question were released under section 81 of the Customs Act, provisionally, and on examination the normal price under section 25 of such Act was determined at U.S. Dollars 390 as against the actual import price of U.S. Dollars 280 per 1000 K.Gs. The petitioners were required to pay the difference between the Customs duty and Sales Tax payable and actually paid. Reply dated 13th May, 1979 was filed and petitioners appeared at the hearing, whereafter the matter remained dormant till a cyclostyled order, dated 24th June, 1982, was served purporting to be the final assessment, and demand under section 81 of the Customs Act was raised. The petitioners appealed under section 193 of the Act but failed, as reflected in order dated 30th April, 1984. Revision under section 196, thereafter, was sought but refused on 9th July, 1985. This petition, thereupon, has been filed and the following questions have been raised:-
(i) Allegations that the goods were released under section 81 of the Customs Act are baseless, as the goods were not released under that provision.
(ii) The original show-cause notice is barred by limitation under section 32(2) and (3) of the Customs Act.
(iii) Determination of normal price by the respondents is in contravention of section 25 of the Customs Act and, therefore, of no effect.
2. As to the first two of the above contentions, we have examined the impugned orders as well as the relevant reply and memos of appeal and revision submitted by the petitioners. In the photostat copy of the bill of entry, which is submitted with the petition, nothing is mentioned as regards the manner in which the goods were released. However, departmental file was produced in Court and shown to us wherein the relevant bill of entry is available. On such original bill the following order is expressly endorsed.
'Released subject to post importation check".
Correspondingly, a separate order is available on the departmental file wherein provisional release of the goods under section 81 of the Customs Act, 1969, is shown. Under section 81 ibid a provisional assessm ent can be made in cases where it is not possible immediately to assess the Customs duty for the reason that the goods require chemical or other test or a further inquiry or that all the documents or complete documents or full information pertaining to the goods have not been furnished. However, such order cannot be passed by an officer below the rank of Assistant Collector of Customs. Here, the goods having been provisionally released, subject to post importation check, and corresponding order having been passed by the competent authority under section 81 of the Act, the release of the goods could be under such section 81 alone and neither sub-section (2) nor sub-section (3) of section 32 would be applicable. These sub-sections of section 32 in the Customs Act, which contemplate absence of levy or short levy or erroneous refund of any duty or charge, are attracted only and notices under one or the other of the sub- sections are issuable exclusively, when a final assessment either wrongfully or erroneously has been made. If a case is not covered by section 32(2) or 32(3) no notices under those provisions can arise. A fortiori no periodicity for notices as contemplated in section 32 of the Customs Act would be attracted and a notice under section 81 ibid would be competent without any restriction as to limitation of time.
In this background, we would have been inclined to consider this case as one of suppression, but the learned counsel showed us the original counterpart copy of the bill of entry, which is said to have been provided to the petitioners by their clearing agents and it was urged that the petitioners never became aware, not having been duly informed by such Clearing Agents of what had actually transpired at the time when the goods were released. We have, reluctantly, accepted such submission as the original copy of the bill shown by the petitioners is signed by the same officer, who made the endorsement quoted above but failed, for reasons better known to him, to add such endorsement before signing the copy, delivered to the petitioners' agents. No uncontrovertible fault can thus be pinned on the petitioners. But as to how and why this came about at the departmental level would still be for the Department to prob.
3. The next point for consideration is whether the respondents have not taken into consideration the requirements relevant to section 25 of the Customs Act and whether the normal price, as determined, does not proceed on the basis of such material, as alone can be resorted to in terms of section 25 of the Customs Act. Against the adjudication by the Assistant Collector of Customs the petitioners had preferred an appeal but such appeal failed both for non- fulfilment of the requirement of deposit under section 194 and on merits. Revision taken before the Board of Revenue failed likewise. This petition can be dismissed on the short ground of the petitioners not having duly pursued the departmental remedies and the petition itself, essentially, involving disputed questions of fact. However, due to some questions of law, which have been agitated at the time of arguments in the context of section 25 of the Customs Act, we consider it more appropriate to also deal with the merits of this controversy.
4. It has been contended that the departmental authorities have relied upon the outcome of enquiries from the Pakistan Embassy in West Germany, a copy of letter dated 30th August, 1978 from which Embassy has been .Filed with the counter- affidavit. It is urged that such material contravenes the rule laid down in Collector of Central Excise and Land Customs v. Imdad Ali 1969 SCM R 708 and, besides, the goods though, admittedly, of German origin were imported from the United Kingdom and that it is only the prices prevailing in the latter country which would be relevant for determination of the normal price, as opined in a Division Bench case of this Court reported as M/s. Kousar Trading v. Government of Pakistan 1986 CLC 612. It is also urged that the normal rule followed by the departmental authorities is to allow 30% discount on listed prices, which discount being allowed the import price, declared by the petitioners, would be substantially correct.
It would be more convenient to first consider as to what are the meanings, significance and implications of the expression "normal price" as used in section 25 of the Customs Act. The concept of "normal price" corresponds to the real value of any imported goods and is equivalent to the price which such goods would fetch "on the date referred to in section 32 of the Act" on a sale in open market between a buyer and a seller independent of each other. Sub-section (2) of section 25 enumerates the various assumptions which are required to be kept in view in determining the "normal price" and these include delivery of the goods "at the port or place of importation", or "at the airport or place where they are unloaded in Pakistan", with the seller bearing the "freight, insurance, commission and all other costs, charges and expenses incidental to the sale and delivery of the goods" at such port, airport or place as aforesaid and further that "the buyer will bear any duties or taxes applicable in Pakistan, which will not be included in the normal price".
Besides, where the imported goods to be valued are manufactured in accordance with a patented invention or to which any protected design has been applied or covered by a Foreign Trade Mark the "normal price" shall be determined on the assumption that it includes the value of the right to use the patent, design or Trade Mark in respect of the goods. A sale in open market between a buyer and seller, independent of each other, has been explained to presuppose that the price is the sole consideration, that the price is not influenced by any commercial, financial or other relationship between the seller and the buyer other the relationship created by the sale itself and that no part of the proceeds of any subsequent re-sale or other disposal or use of the goods will accrue to the seller. Accordingly, there can be no two opinions that the expression "normal price" involves the price, pure and simple, which the imported goods would fetch, on the relevant date on a sale in open market between a buyer and a seller independent of each other. Such concept, however, by fiction of law, includes freight, insurance, commission, and all other costs, charges or expenses incidental to the sale and delivery of the goods but excludes all duties and taxes payable in Pakistan.
5. However, the question for examination in this petition is whether the notional "price", which the imported goods should fetch in an open market between a buyer and a seller, independent of each other, would involve only the price in the country of origin or, in appropriate cases, the price prevailing in the country of manufacture, can be displaced altogether where, for instance, the goods are purchased in a different country, to which they have travelled before being purchased for import in Pakistan. Now, in so far as the additions to or exclusions from the "normal price" contemplated by the deeming clauses of section 25 are concerned such are, principally, relevant for the purposes of assessm ent of duty. In the context of under-valuation of imported goods the only connotation of the "normal price", which is relevant , is the price in the open market in terms detailed in section 25 of the Customs Act. Such provision neither refers to the price in the country of manufacture nor to the price prevailing in the country of actual purchase of the goods imported in Pakistan. If such prices are common there can be no problem. Difficulties would, however, arise when divergence is encountered in such prices and import is made not from the country of manufacture but from another, to which the goods have travelled. For obvious reasons, the concept of "sale in open market" in section 25 ibid would come in the way of any exclusion of "freight, insurance, commission and ail other costs, charges and expenses incidental to the sale and the delivery of the goods" from the price of the imported goods incurred in relation to transporting the same from the country of manufacture to the country of purchase. As it is, such inclusion, in terms of section 25(2)(b) shall have to be made in the "normal price" by an importer, on an overall basis, incidental to delivery in Pakistan, as an ingredient of the price and the inflated value should occasion a higher levy of taxes on import in Pakistan. Resultantly, it has to be, as a rule, uneconomical to import goods from a country other than that of manufacture and the Customs may well remain content that those situations would be rare of occurrence. But, what if, in spite of these drawbacks, the price range in the country of purchase is claimed and found to be lower than that in the country of manufacture. This perhaps, can happen where due to dumping and other artifices of International Trade, traders in the country of manufacture sell the goods at a much lower rate to a particular country or countries, where the price level of such goods may reflect a steep fall. It has been observed in Muhammad Khursheed v. Collector of Central Excise and Land Customs PLD 1977 Lah. 971, Farooq International v. Chief Controller, Imports and Exports PTCL 1985 CL. 353 a decision authored by one of us namely Saleem Akhtar, J., and Kousar Trading Company v. Government of Pakistan PTCL 1986 CL. 300 that the concept of "normal price" refers to the price prevailing in the country of purchase, and that may be irrespective of the fact whether such is the country of manufacture or not, and we can take no different view in this case. Indeed taking another view could deprive the traders in Pakistan of an advantageous price structure prevailing in the country of purchase which, obviously, may not be in the commercial interests of Pakistan. However, what is to be safeguarded against is an undue advantage which inscrupulous importers in Pakistan may derive on a supposed prevalence of lower prices of the same goods in a country other than that of their manufacture. In such cases of diversity of prices between the country of manufacture and the country of purchase, the burden should shift on the importer to show and explain as to how the price obtained by him in a country other than that where the goods were manufactured happened to be lower and unless, that is clearly and equivocally shown Customs in this country would be free to reject the projected lower price and correspondingly apply the higher price level in the country of manufacture for the purposes of assessing relevant duties and taxes in terms of the normal price. Such a course may not be detrimental to the commercial interests of the Nation as the importer would still enjoy a lower import price but be liable only to normal customs duties and charges. However, we may here add that where the Customs are disposed to invoke the penal provisions of section 32(2) or those in the relevant items of section 156(1) of the Customs Act, such burden would remain on them and would not shift in conformity with the fundamental principle of penal statutes that the burden to establish the commission of an offence remains invariably on the prosecution, unless a statute expressly provides otherwise. Such rule in the context of the Sea Customs Act, VIII of 1878, which conceptually is no different than the present statute, has been favoured by the Supreme Court of Pakistan in Eastern Rice Syndicate v. Central Board of Revenue PLD 1959 SC 364.
6. This brings us to the next question whether the basis which was adopted by the Customs to determine the price of the imported goods was contrary to law. As seen above, learned counsel has placed reliance on Collector of Central Excise and Land Customs v. Imdad Ali 1969 SCM R 708 in which case, for the various reasons detailed in the judgment, the Supreme Court declined to uphold reliance on a certificate issued by the relevant Embassy of Pakistan as regards the price of the imported commodity. We would straightaway record that such basis, as a rule, suffers from serious infirmity and should be avoided. Where such a letter or certificate is relied upon the Embassy concerned should be asked, as opined in the Supreme Court judgment, to attach a price list or certificates from traders or their own certified assessment in the relevant country and short of this the version of the Embassy should not be accepted or relied upon.
7. However, in this case such reliance was placed and the following observation occurs in the order dated 30th April, 1984:- "The normal value was determined on the basis of valuation advice supported with the enquiries/confirmation made through Embassy of Pakistan, abroad."
Clearly, the Customs were in error in doing so. Still, we have held that in situations of this character, where the price level in the country of manufacture is higher than in the country of import, the burden for establishing the divergence, except where penalties are in contemplation, shifts on the importer. This burden remains undischarged here, as the invoice alone on which reliance is placed was not conclusive on the question. Besides, it is not shown to us that the above basis of the relevant finding was questioned in the higher departmental forums. Nor does the quoted observation show that confirmation from the Embassy was alone relied upon. In this state of facts, it is difficult to record an adverse finding at this level. This ground, therefore, also fails.
8. Lastly, it was urged that the departmental functionaries, by practice, are permitting 30% rebates on the prices shown in the relevant price lists and if that rule is applied the price projected by the petitioners would be duly supported. We could have agreed if this case was based on a price list which was, mutually, acceptable to the parties and if such rule of practice was conclusively established. As it is, neither the case is based on any price list whatever nor. Has the rule of practice been accepted as prevalent by the department.
9. In view of the foregoing, we see no merit in this petition and dismiss it but without any order as to costs.