' MUHAMMAD AFZAL LONE, J.---In this case M/s. Latif Brothers, Lahore (appellants herein), imported a consignment of Teak Plywood of the. Value of Rs,65,895.46 from M/s. Fancy Veener Corporation Ltd., Bangkok, Thailand, against an import licence issued at serial No,184 of the Free List of Import Policy Order promulgated by the Government of Pakistan, vide Public Notice S.R.O. No,719(1)/80 dated 1-7- 1980. The description of importable item mentioned therein was Plywood (excluding Teak Chest Plywood). In the Bill of Entry dated 17-6-1981, filed by the appellant for the clearance of the consignment from Customs Department, Dryport, Lahore, on the basis of pro forma invoice issued by the exporter, the goods were valued C&F Karachi at the 'rate of 10932 U.S. Dollars for 1,000 square feet plywood i.e, 10.9 Dollars for 100 sq. Ft. According to the Customs Authorities, the particulars of the consignment entered in the Bill of Entry amounted to misdeclaration of quality as well as value of the goods which fell within the mischief of sections 16 and 32 of the Customs Act and was punishable under sections 156(1)-(9) and 156(1)-14. Consequently, the appellant was served with a notice by the Deputy Collector Customs, in which regarding misdescription of the quality, it was stated that the appellant actually imported Teak Plywood, but declared the same as Plywood. As regards the value, the notice reads as under:-- "The normal price of the Teak Plywood should be U.S. Dollars 18 per 100 sq. Ft. As against the D.V. U.S. Dollars 10.9 per 100 sq. Ft. The underinvoicing is to the extent of 65% which has resulted in shortfall in the Import Licence to the extent of Rs,42,604 and short recovery to Rs,1,13,460."
2. In reply to the show-cause notice it was urged that the declared description of the consignment was same as that of the importable item and its I.T.C. Classification mentioned in the Import Licence. It was also pointed out that the goods were of 'C' grade and imported from Thailand, meaning thereby that there was no under valuation. The appellant thus pressed for the release of the consignment on the declared value. This explanation was not accepted by the Deputy Collector, who after hearing the appellant on 16-8-1981 made an order reproduced below:- "I have gone through the record of the case and the evidence and also submissions made by the party. The goods as also conceded by the party have clearly been misdeclared quantity. I, therefore, order confiscation of the goods under section 156(1) clause 9 of the Customs Act, 1969.
The party may however redeem the same on payment of fine of 100% of the ascertained value under section 181 of the Customs Act, 1969. I also impose a personal penalty to the tune. Of 50% of the ascertained value for so obviously misdeclaring the goods."
3. The appellant went in appeal before the Collector Customs. Before him, in the course of hearing of the appeal, on behalf of the Department, the Appraiser Dryport, Lahore, placed a few invoices which showed that the value of similar goods imported from abroad was U.S. Dollars 17 to U.S. Dollars 20 per 100 sq. Ft. The appellant, however, contended that the precedent cases on which the appraisement section relied and made the basis for assessing the value of the consignment related to goods of Singapore origin, but his consignment was imported from Thailand, which was the cheapest market for Plywood, but, this argument did not weigh with the Collector. He maintained that according to the material before him relating to similar goods imported from different sources of Far East Countries, the value declared by the appellants was very low and the consignment under-valued to the tune of almost 100%. He thus, held that the appellants violated I.T.C. Schedule and attempted to evade Government revenue.
4. By order dated 28-9-1981, the appeal was rejected except that the penalty was reduced from 50% to 20% for the reason that the long detention of the consignment would have exposed it to heavy demurrage. With this rejection the Central Board of Revenue did not interfere and dismissed the appellant's revision on 2-5-1982. The appellant then invoked the writ. Jurisdiction of the High Court, but the writ petition was dismissed in limine by a learned Single Judge of the Lahore High Court, on the basis of the alleged concession of the appellant reflected by the Deputy Collectors order, without going into the merits of the case. It was under these circumstances that the appellant came to this Court in appeal.
5. At the leave granting stage the Chief Appraisement Officer informed the Court that Teak Plywood could be imported against the import licence issued to the appellant and he was guilty of only under-invoicing of the consignment. He, however, conceded that at the time of the assessment the Department was not possessed of the price list of the Country of origin and the assessment of the value of the appellants' consignment was made on the basis of some other price list. Leave to appeal was granted to consider whether the assessment made on the basis of price list other than of the Country of origin A was justified.
6. We have heard the learned counsel for the parties. The Customs Authorities have held the appellant guilty of offences under sections 156(1)-9 and 156(1)44 of the Customs Act, 1969. Under section 156(1)-9, import of goods into Pakistan, other than the smuggled goods, by "evading" payment of leviable customs duty or in violation of prohibition or restriction on the "importation" is an offence. Section 156(1)-14 provides a penalty for commission of offence under section 32; subsection (1) whereof ordains:-- "If any person, in connection with any matter of customs:
(a) makes or signs or causes to be made or signed, or delivers or causes to be delivered to an officer of customs any declaration, notice, certificate or other document whatsoever, or
(b) makes any statement in answer to any question put to him by an officer of customs which he is required by or under this Act 'to answer, (knowing or having reason to believe that such document or statement is false) in any material particular, he shall be guilty of an offence under this section."
The violation of the provisions of the Act attributed to the appellant in the appellate order is:-- "....The evidence on record shows that the value of 'similar goods' imported from different sources of Far East countries, ranges from U.S. $ 17 to U.S. $ 20. The value declared by the appellant is very low when compared to that ascertained by Customs Staff. There exists a. Valuation discrepancy almost to the tune of 100%. The importer had, thus attempted to import the goods in violation of I.T.C. Regulations and to evade the legitimate revenue of the Government exchequer."
7. It will be seen that the allegation against the appellant is that in his declaration before the department, with a view to evade ad valorem customs duty, he under-valued the consignment and as its actual value was much more than the one shown in the invoice, there was a shortfall of the import licence resulting in breach of the import trade control laws. Thus, the entire case against the appellant has been that the price of the goods entered by him in the "Bill of Entry" filed with the Customs Department, under section 79 of the Act for clearance of the consignment was fictitious.
We have noticed that the orders passed by the different Customs Authorities, before whom the appellant was arraigned, particularly the one rendered by the Collector, reflect that the decision as to the falsity of the declaration made by him was rested on the ground that on comparison of the declared import price with the one recorded in the invoices of similar goods of Singapore origin and other Far East Countries sources, was found low, but such other Far East Countries whose price structure has been made the foundation for adjudging the appellants, declared version, have not been mentioned in any of the departmental adjudications. The appellate order, however, particularised only one invoice issued by M/s. Chimsal(s) Pvt. Ltd., Singapore in the name of Hamdani Overseas Impacts, Lahore, which showed value of the goods, claimed to be similar to those imported by the appellant, as U.S. $ 17. It is not disputed that the goods imported by the appellant are of Thailand origin, but as stated in the leave granting order, the Chief Appraisement Officer of the Department, who appeard before the Court, conceded that at the time of assessment of the value of the consignment in question, the Department was not possessed of price list of the Country of origin and the assessme nt was made on the basis of some other price list. The issue falling for determination, therefore, would be as to whether such valuation answers the requirements of law and could the declared version be dubbed as fallacious on the strength of the price prevailing in other countries.
8. Section 25 of the Act deals with the determination of the value of the imported goods and is so far as relevant for the purposes of this appeal reproduced below:- "The value of any imported goods shall be taken to be the normal price, that is to say, the price which they would fetch (on the date referred to in section 30), on a sale in open market between a.
Buyer and a seller independent of each other."
' According to section 30, the value and rate of duty leviable on the imported goods are those which shall be in force for the goods meant for home consumption, like the consignment in dispute, on the date when the "Bill of Entry" is presented to the Customs Authority, Section 25 speaks of "normal price" which is described as the price, the goods would fetch on sale in "open market" in a bona fide transaction. The "open market" here means the market in the country of origin and not at the place of importation. Thus, criterion for determination of the value of the goods should have been the prevailing commercial price in Thailand at the time of import and not the price obtaining in Singapore or other Far East Countries. Admittedly, the price list of similar goods of Thailand origin was not before the Authorities concerned when the appellant's consignment was evaluated. The onus to establish that the appellant made a misstatement was entirely on the department who failed to muster any evidence from the country of origin to belie the declared value. No such material has been placed before us even at the time of hearing of the appeal. The position would be different, if the price list from the country of origin was not at all available, despite efforts of the departmental authorities. But, such is not the case here. In the circumstances of the case, it is difficult to hold that the appellant is guilty of making misstatement within the meaning of section 32 or of violation of section 156(1)-9 'and section 156(1)-14.
9. After going through the record before us, we are unable to find any mala fides or fabrication in the price evidenced by the invoice issued to the appellant by his exporter in Bangkok, which formed the basis of the declared value before the department. There are indications on the file that Thailand was then the cheapest market of plywood. Indeed the rejection by the Customs authority of the value declared by the appellant was wholly arbitrary and not countenanced by law.
' This appeal is, therefore accepted. The orders of the departmental authorities are set aside, and it is directed that the value of the goods declared by the appellant shall be accepted and his case processed accordingly. The parties are left to bear their own costs.
' RUSTAM S. SIDHWA, J.---I have read the judgment of my learned brother Muhammad Afzal Lone, J., and the final order proposed by him with which I agree,.But I would like to add a few words :-
2. In Messrs Eastern Rice Syndicate v. Central Board of Revenue (PLD 1959 SC (Pak) 364) this Court dealt with the case of the appellant who was alleged to have made a false declaration as to the value of the consignment, which fell within the mischief of section 39 of the Sea Customs Act, 1878 (its corresponding provision being section 32 of the Customs Act, 1969) where this Court observed :- "...If it is claimed by the authorities that he has made a misstatement of price in his invoice, that cannot, in our opinion, be established otherwise than by furnishing proof of the prevailing commercial price in the country of origin at the time of the import. Without first making an attempt to furnish such evidence, it is impossible to see how the making of an untrue statement, within the meaning of section 39, and the consequent mischief of item (9-B) in section 167 can be imputed to any one."
The Customs Act, IV of 1969, was enacted, which came into force on 1st January, 1970. Earlier Pakistan had acceded to the Convention on the Since then, much water has flown under the bridge. Valuation of Goods for Customs purposes on 14th October, 1957. This Convention was initially signed by a large number of countries on 15th December, 1950, and entered into force on 28th July, 1953. This Convention established the Customs Cooperation Council to supervise the operation of the Convention with a view to securing uniformity in its interpretation and application and with that end to establish a Valuation Committee on which each member of the Council had the right to be represented. This Convention established the Brussels Definition of Value under the principles of the General Agreement on Tariffs and Trade (GATT) with the object of providing an equitable system for determining the CIF valuation of imported goods. The Definition of Value, which constituted Annex-ure "I" to the Convention on the Valuation of Goods for Customs Purposes, provided the basis for determining the value of exported and imported goods for appraisement of customs duty. The said Definition of Value was actually incorporated into section 25 of the Customs Act, 1969, with slight modifications. The Customs Cooperation Council on the proposal of the Valuation Committee on 1st June, 1965, had also agreed to certain recommendations concerning the Application of Brussels Definition of Value. The said Recommendations recommended that contracting parties to that Convention should apply the following rules :- "1. A price which falls within any of the following categories is not regarded as the price which the goods would fetch on a sale 'in the open market between buyer and seller independent of each.Other' and 'dans des conditions de pleine concurrence entre un acheteur et un vendeur independants':
(a) a price on a sale which does not satisfy the conditions of Article II of the Definition;
(b) a price which is lower than those at which identical goods from the same seller are freely available, at the same time and in the same quantities, to any buyer in the country of importation at the same commercial level as the actual buyer, it being understood that various prices made by the same seller shall be accepted provided that:-
(i) any buyer may obtain the goods at those prices in the same conditions and the variations correspond to the practice of the sector of trade concerned, or
(ii) the price reduction is so slight that it can reasonably be expected that it would be granted to any buyer;
(c) subject to the provisions of paragraph 3, a price which is considerably lower than those at which identical goods are being freely sold by other sellers in the same country, at the same time and in the same ' quantities, to any buyer in the country of importation at the same commercial level as the actual buyer;
(d) subject to the provisions of paragraphs 2(a) and 3, a price which is considerably lower than those at which similar goods are being freely sold, at the same time and in the same quantities, by sellers in the same country to any buyer in the country of importation at the same commercial level as the actual buyer;
(e) subject to the provisions of paragraphs 2(b) and 3, a price which is considerably lower than those at which identical or, failing this, similar goods are being freely sold, at the same time and in the same quantities by sellers in other countries to any buyer in the country of importation at the same commercial level as the actual buyer.
2.(a) paragraph 1(d) shall apply only where:
(i) prices of the kind envisaged as a basis for comparison in paragraph 1(c) are not available, or
(ii) all the prices of the kind envisaged in paragraph 1(c) which are available are considerably lower than those to be used as a basis for comparison under paragraph 1(d).
(b) Paragraph 1(e) shall apply only where:
(i) prices of the kinds envisaged as a basis for comparison in paragraphs 1(c) and (d) are not available, or
(ii) all the prices of the kinds envisaged in paragraphs 1(c) and (d) which are available are considerably lower than those to be used as a basis for comparison under paragraph 1(e)."
' Para. 3 of the recommendations is not relevant to this case, and therefore, has not been reproduced above. However, para 1 refers to the circumstances where the declared price of the goods need not be accepted by the Customs, but where the Customs can make its own inquiries and determine the normal price. If paragraphs 1(a), (b), (c) and (d) are scrutinised, they basically do not conflict with the provision of section 25 of the Customs Act, 1969, or the rule laid down by this Court in the case of the Eastern Rice Syndicate PLD 1959 SC (Pak.) 364, other than on trivial matters.
3. It is true that the said recommendations. Have not been incorporated into the Customs Act, 1969, or the Rules framed thereunder, or in any of the orders, instructions or directions issued by the Central Board of Revenue under section 223 of the said Act. They, therefore, have no legal effect.
Yet. They are applied, perhaps more in their breach than in their observance. Since they have no legal force, at best they can be used as aids in the interpretation of section 25, to the extent that they are not in conflict with that section, on the equitable principle of common sense and logic and as rules having international respect.
4. Assuming that the Customs applied para. 1 of the said recommendations, as aid to the interpretation of section 25 of the Customs Act, 1969, it first had to secure material to show that the declared price of the instant goods were considerably lower than those at which identical or similar goods were being freely sold by the same or other sellers in Thailand at the same time for the same quantity to any buyer in Pakistan at the same commercial level as the appellant, or that there were no such sellers in Thailand for identical or similar goods at the same time for the same quantity at the same commercial level as the appellant and resort could be had to para.1(e) of the recommendations. There is nothing on the record to show that the Customs had secured or attempted to secure invoices from other importers relating to identical or similar goods from the same seller or other sellers in Thailand to show that the prices were considerably higher, or that they had obtained or attempted to obtain through the Pakistan Embassy or High Commission in Thailand price lists regarding identical or similar goods from the same seller or other sellers or from some recognised trade association based in Thailand to show that the prices were considerably higher. In the absence of proof or reasonable material to show that the Customs had made such an attempt to secure such material and had failed, they could not have taken into consideration the prices at which identical or similar goods were being sold by sellers in other countries to any buyer in Pakistan. And whether they could have applied para. 1(e) of the Recommendations, I would not presently deal with the same, as it is now no longer relevant. In this view of the matter, I agree with my learned brother that the assessment of the disputed goods made by the Customs Authorities on the basis of the price of the goods as provided by the Singapore exporter could not have been taken into consideration in treating the declared version of the appellant as any form of misdeclaration.
5. In conclusion, I would like to submit that with the addition of section 25-B to the Customs Act, 1969, with effect from 26th June, 1988, the position is now different. The Central Board of Revenue has now a statutory right of fixing the value of goods specified in the First and Second Schedules of the Act by notification at such rates as it may deem fit, and where such rates are fixed they are taken into account for the purposes of calculating the value of the imported or exported goods for purposes of section 25.