TASLEEM TRADERS VS DEPUTY COLLECTOR GROUP-III PaCCS, 2016 PTD-KARACHI-HIGH-COURT-SINDH 1894 (2015)

Customs Act (IV of 1969)---

----Ss. 19A, 81(1), 81(2), 81(3) & 81(4)---Import of goods---Provisional determination of liability---Release of security money deposited by importer at the time of provisional release of goods---Scope---Contention of petitioner/importer was that security money be released under S.81(3) of Customs Act, 1969 on expiry of six months of provisional determination, and as no final determination was framed by department, therefore, provisional determination became final order under the mandate of S.81(4) of Customs Act, 1969---Department's plea was that even if the provisional assessment would attain finality in case final assessment was not made within prescribed period, but importer had to prove that he had not passed on burden to end-user in terms of S.19A of Customs Act, 1969 and till then he was not entitled to any relief---Held, that Customs Authorities had failed to finalize assessment of importer's goods within stipulated period of 180 days as provided under S.81(2) of Customs Act, 1969 and in such circumstances provisional assessment made by Customs Authorities on basis of declared value of goods in terms of S.81(1) of Customs Act, 1969 had attained finality---Ad hoc amount to meet differential in case of final assessment, thus, became refundable to importer in case he discharged burden placed under S.19A of Customs Act, 1969---Customs Authorities were directed to release pay orders of the petitioner deposited at the time of provisional release of grounds---Constitutional petition was allowed, accordingly.

Messrs Hassan Trading Company v. Central Board of Revenue, Government of Pakistan 2004 PTD 1979; The Collector of Customs (Appraisement), Karachi v. Messrs Auto Mobile Corporation of Pakistan, Karachi 2005 PTD 2116 and Messrs Dewan Farooque Motors Ltd., Karachi v. Customs, Excise and Sales Tax Appellate Tribunal Karachi 2006 PTD 1276 rel.

Muhammad Afzal Awan for Petitioner.

Ilyas Ahsan for Respondents.

Date of hearing: 30th April, 2015.

ORDER

SYED SAEEDUDDIN NASIR, J.---Through this Constitutional Petition the petitioner seeks direction to the respondents Nos.1 and 2 to release the Pay Orders of the differential amount deposited by the petitioner at the time of provisional release of his goods under the provisions of Section 81(1) of the Customs Act, 1969.

2.Brief facts for the purpose of determining of the aforesaid Constitutional Petition are that the petitioner imported a consignment of Secondary Hot Dip Galvanized Coils from Germany. The price was paid by the petitioner at US$ 428/- PMT CRF Port Qasim, through letter of credit. The supplier issued invoice for the transaction value of the goods. The Petitioner filed in-bond goods declaration, the respondents made provisional determination as on 21.05.2009 and collected duty taxes @ US$ 432.90/-. As per opinion of respondents the customs value needed to be US$ 583/-.

3.The likely differential amount was paid by the petitioner equal to Rs.455,420/- through two Pay Orders. The goods were assessed at US$ 432.90 PMT at the time of ex-bond as on 27.05.2009.

4.It is also stated in the memo of petition that the security money was also required to be released under Section 81(3) of the Customs Act, 1969 on expiry of six (6) months of the provisional determination, and as no final determination was framed by the respondents, therefore, the provisional determination became final under the mandate of Section 81(4) of the Customs Act, 1969. The respondents were under obligation to return the security money Rs.455,420/- forthwith, but they neglected to release the same to the petitioner.

5.The learned counsel for the petitioner has contended that the description of goods was correct and verified by the Customs Officers. The price paid the petitioner i.e. the transaction value was also admitted by the respondents as correct as no rebuttal was ever offered till today. The duty and taxes were payable under the mandate of Section 25(1) of the Customs Act, 1969, which were paid accordingly.

6.He next contended that the respondents were under an obligation to return the aforesaid security/pay orders to the petitioner under Section 81(3) of the Customs Act, 1969, as soon as period of six months prescribed and mandated under Section 81 (2) of the said Act had expired.

7.The learned counsel for the petitioner finally submitted that the likely difference between US$ 585 PMT & US$ 432.90 PMT was secured through two (2) Pay Orders amounting to Rs.455,420/-. Which was required to be released under Section 8(3) of the Customs Act, 1969 on expiry of six (6) months as no final determination was framed by the respondents and the provisional determination became final under Section 81(4) of the Customs Act, 1969.

8.Mr. Ilyas Ahsan, the learned Appraising Officer of Customs present in Court to represent the respondents Nos.1 and 2, when called upon by the Court to assist in the present case, has candidly admitted that the provisional assessment made by the Customs Authorities shall attain finality in case the final assessment was not made within the prescribed period as provided in subsection (2) of Section 81 of the Act or within the extended period. However, according to him the petitioner has to prove that he has not passed on the burden to the end-user in terms of Section 19-A of the Customs Act, 1969 and till then he is not entitled to any relief.

9.We have carefully considered the arguments advanced by the learned counsel and perused the material available on record of the case. The short controversy involved in this petition seems to be in respect of interpretation of finality of provisional assessment as contemplated under Subsection (4) to Section 81 of the Customs Act, 1969. In order to ascertain the controversy involved in this petition it will be advantageous to reproduce hereunder the relevant provisions of Section 81 of the Customs Act, 1969:

"Provisional assessment of duty (1) where it is not possible immediately to assess the customs duty that may be payable on any imported goods entered for home consumption or for warehousing or for clearance from warehouse for home consumption or on any goods entered for exportation, for the reason that the goods required chemical for other test for a further enquiry for purpose of assessment, or that all the documents or complete documents or full information pertaining (Assistant Collector or Deputy Collector) of Customs may order that the duty payable on such goods be assessed provisionally:

Provided that the importer (save the case of goods entered for warehousing) or the exporter pays such additional amount as security or furnishes such guarantee of a scheduled bank for the payment thereof as the said officer deems sufficient to meet the excess of the final assessment or duty over the provisional assessment.

(2)Where any goods are allowed to be cleared or delivered on the basis of such provisional assessment, the amount of duty actually payable on those goods shall, as soon as may be, finally assessed within one hundred and eighty days of the date of provisional assessment:

Provided that the Collector of Customs may, under circumstances of exceptional nature, extend the period of final assessment by nor more than ninety days, after recording such circumstances.

(3)On completion of such assessment, the appropriate officer shall under that the amount already paid or guaranteed be adjusted against the amount payable on the basis of final assessment, and the difference between the two months shall be paid forthwith to or by the importer or exporter, as the case may be.

(4)If the final assessment is not completed within the period specified in subsection (2), the provisional assessment shall become final."

10.Upon bare reading of the above provision of law it can be said that the same has been enacted for the benefit of both the Customs Authorities as well as the importer/exporter of goods in a specific situation i.e. where it is not possible to assess the customs duty immediately, the goods could be released on the basis of provisional assessment for want of required documents, for further enquiry or where for any other valid reason final assessment of goods is not possible, at the relevant time. The proviso to subsection (1) of Section 81 contemplates that the Customs Authorities, at the time of provisional assessment can call upon the importer or exporter, as the case may be, to deposit payment of additional amount as security or to furnish bank guarantee, to secure the payment of such amount, which at a later stage may be found further to be due or final assessment of duty over the provisional assessment.

11.Subsection (2) to Section 81 of the Act of 1969 provides the period during which such provisional assessment is to be finalized by the Customs Assessing Authority, whereas the proviso of subsection (2) empowers the Collector of Customs to extend the period of final assessment up to 90 days under circumstances of exceptional nature after recording of such circumstances. Subsection (3) to section 81 provides that on completion of assessment, the concerned Assessing Officer shall order that the amount already paid or guaranteed be adjusted against the amount payable on the basis of final assessment and the difference between the two amounts, if any, shall be paid forthwith to or by importer or exporter as the case may be. Further, subsection (4) to section 81 provides that if the final assessment is not completed within the specified period given under subsection (2) to section 81 then provisional assessment shall attain finality. In other words, sub-section (4) to section 81 is a penal provision incorporated in the scheme to save the assesses/importers/exporters from unnecessary highhandedness/ red tape by the Customs Authorities by way of delay and inaction in respect of their assessments for indefinite period on the pretext of finalizing the assessment.

12.In the instant case, admittedly it appears that the Customs Authorities have failed to finalize the assessment of the petitioner's goods within the stipulated period of 180 days as provided by sub-section (2) to Section 81 of the Customs Act, 1969, in such circumstances the provisional assessment made by the Custom Authorities on the basis of declared value of the goods in terms of Section 81(1) of the said Act, has attained finality. The ad hoc amount to meet the differential in case of final assessment thus became refundable to the appellant in case he discharges the burden placed under Section 19-A of the Customs Act.

13.We are fortified in our view by the judgments in the cases of Messrs Hassan Trading Company v. Central Board of Revenue, Government of Pakistan (2004 PTD 1979), The Collector of Customs (Appraisement), Karachi v. Messrs Auto Mobile Corporation of Pakistan, Karachi (2005 PTD 2116), Messrs Dewan Farooque Motors Ltd., Karachi v. Customs, Excise and Sales Tax Appellate Tribunal Karachi (2006 PTD 1276) and Sus Motors (Pvt.) Ltd., Karachi v. Federation of Pakistan through Secretary Revenue Division/ Chairman, wherein it is held that the customs department is liable to refund the amount to the importer if the Customs Authorities have failed to finalize the assessment of the petitioner's goods within the stipulated period of 180 days or extended period of 90 days, as the case may be, as provided by subsection (2) to Section 81 of the Customs Act, 1969,

14.We, therefore, for the aforesaid reasons allow the instant petition and direct the respondents Nos.1 and 2 to release the Pay Orders deposited by the petitioner with them at the time of provisional release of the goods, and if the same have already been encashed, the amount equivalent to them shall be paid to the petitioner on being satisfied that the burden of such duties has not been passed on.

15.Above are the reasons for the short order announced in open Court on 30.04.2015 whereby this petition was allowed.

RR/T/1/SindhPetition allowed.