1. ' The complaint relates to the finalization of assessment of Tiles imported from Turkey at enhanced value without waiting for advice from the Valuation Department and without affording opportunity to the importers for hearing of their view-point. The complainants stated that they imported Turkish Origin Tiles for the first time at a low price as Turkish manufacturers were new in the field and they offered competitive price. While the ITP system was in vogue, they paid customs duty on the basis of ITP. After abolition of ITP system, Valuation Database (VDB) was adopted under which minimum prices of commodities were issued by the Valuation Department which formed the basis of valuation and assessm ent. From January, 2000, GATT Code of Valuation was adopted under which the Customs Officers are bound to accept the transaction value.
2. ' The complainants stated that they imported 2 consignments of Tiles of Turkish Origin @ US$3.69 per SQM. The Assessing Officer, refused to accept the declared value. He assessed the Ceramic Tiles @ US$ 5.85 per SQM without showing any evidence of higher value and adopting the ITP value fixed 3 or 4 years ago. When they approached the Collector of Customs, he allowed release at declared value under section 81 of the Customs Act, with the condition to deposit pay order as security for the differential amount, with instructions to refer the case to Valuation Department for finalization of value. Under the Customs Act the value should be finalized within 6 months. The pay orders for Rs,193,279 and Rs,96,820 were accordingly deposited and the goods were released.
3. ' The Valuation Department did not finalize the assessment in the prescribed time frame and the Bank Guarantee Cell encashed the pay orders without getting any response from the Valuation or Appraisement Department or giving opportunity of hearing to the complainants. The complainants' bills of entry were blocked by the Computer Section on instructions of Bank Guarantee Cell on 26- 7-2000. The bill of entry No,0001 dated 26-7-2000 was blocked although 6 months had not elapsed nor assessm ent finalized.
4. ' The complainants stated that they filed an appeal to CBR, approached the Collector of Customs and the Controller of Customs Valuation but their efforts failed and the amount charged in excess was neither refunded nor any response was given. They requested that Custom House be directed to assess the goods in accordance with the GATT Code of Valuation on the basis of declared value as there is no evidence for higher value of goods of Turkish Origin and the extra amount paid by them should be released.
5. ' The complainants submitted copies of letters dated 3-8-2000 and 14-10-2000 addressed to the Member (Customs), CBR's letter dated 17-10-2000 conveying Board's inability to accede to their request, and another letter dated 1-11-2000 from the Board advising the importers to seek remedy available in law.
6. ' The Collector Customs (Appraisement), responding to the complainant, stated that the value of Ceramic Tiles used to be fixed in consultation with the associations of importers and local manufacturers irrespective of the origin of goods. The import of 2 consignments from Turkey was made during the transition period when ITP had been abolished and Valuation Database had not yet been introduced. The goods were provisionally released and security of duty and taxes for the differential amounts for the ITP of US$ 5.85 per SQM and declared value of US$ 3.93 was secured.
7. The case was referred to the Valuation Department for further investigation.
8. ' In the meanwhile Valuation Database was introduced on 1-1-2000 wherein the value US$ 5.85 SQM was fixed for goods of all origins including Ceramic Tiles from Turkey. The Valuation Department did not issue any advice within the statutory period. The concerned (Appraisement) Group finalized the assessm ent at $ 5.85/SQM (higher value) just before expiry of 6 months' period. This item had never been assessed at a lower value.
9. ' The provisional assessm ent was finalized within 6 months and pay orders submitted on 14-2-2000 were encashed on 18-8-2000 after expiry of 6 months. As regards giving opportunity of hearing, the importer's point of view was already available on record. The higher value was included in the Valuation Database and the importer had accepted assessment at higher value by paying duty and taxes accordingly. Identical goods of all origin were assessed on the same value and any revision in assessm ent in case of the complainants would be unjustified. The complaint, the Collector stated, was not maintainable and be rejected.
10. ' In the rejoinder the complainants submitted that Valuation Database fixed in collaboration with the Merchants and Manufacturers Associations was contradictory to the transaction value system under the GATT Code of valuation. The prices fixed 4 years ago, reproduced in the valuation manual of 20-2-1999 and not changed ever since, were not in conformity with the amended section 25 of the Customs Act effective from 1-1-2000 and applicable to the bills of entry filed in February, 2600. The GATT Code of Valuation was already in place. The Valuation did not finalize the valuation because evidence of higher value was not available.
11. ' If the Appraisement Department was bent upon applying Valuation Database, what was the reason for reference to Valuation Department and what was the status of principle of acceptance of transaction value. The pay orders given as security were sent for encashment before the expiry of six months' period which was against section 81 of the Customs Act. It was binding on the Department to give an opportunity to the complainants to be heard in person or in writing. It was wrong to act on the presumption that the importers would not have anything to add further. Merely on this assumption the right for appeal was denied: No action seemed to have been taken on the claim filed by the complainants. The Department had not finalized the assessment and it seemed that the Department had no evidence of higher value which amounted to the acceptance of the declared value. The complainants reiterated the request to accept the transaction value and refund extra rate in all such cases of arbitrary enhancement in value in violation of sections 25 and 30 of the Customs Act.
12. The submissions made by the complainants and the stand taken by the Customs have been thoroughly discussed above. The Customs Authorities admitted that reliance was placed on the Valuation Database in provisional assessment under section 81 of the Customs Act. But the Customs did not finalize the assessm ent in accordance with the provisions of the said section. The bank guarantees furnished by the importers as security were arbitrarily encashed without observing the mandatory provisions of section 81. The higher value adopted for finalization of assessm ent did not seem to represent the customs value. It seems that the origin of goods, a significant factor, in determining customs value, was also not taken into account. The alarm of impending completion of six months aroused the concerned Group to finalize the assessment but it was done in an arbitrary fashion without hearing the importers. The action of blocking the processing of importer's bills of entry in the pipeline was arbitrary and unnecessary. There is also considerable force in the complainants' argument that the principles of GATT based Code of Valuation, legislated in section 25 of the Customs Act, providing various methods for determination of customs value were not followed.
13. ' It is recommended that CBR direct the Collector of Customs:--
(i) to re-examine the valuation of Ceramic Tiles of Turkish Origin in consultation with the Controller of Customs Valuation;
(ii) afford opportunity to the complainants/importers to represent their views about the valuation aspect;
(iii) issue formal assessm ent order within six weeks: and
(iv) report compliance within eight weeks.