FAIR MARKETING PAKISTAN VS DIRECTOR GENERAL, DIRECTORATE GENERAL OF CUSTOMS VALUATION, 2018 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 2195 (2017)

Customs Act (IV of 1969)---

----Ss. 25, 25-A, 25-D, 32 & 194-A---Customs value of goods---Determination---Enhancement of value---Interpretation scope and application of S.25-A, Customs Act, 1969---Importer was an association of person, which was engaged in import of confectionary items and selling further on wholesale basis to its customers throughout the country---Appeal against order-in-revision passed under S.25-D of the Customs Act, 1969 against Valuation Ruling---Director Valuation, after thorough discussion with the stakeholders, issued valuation ruling and determined value of the confectionary items---Importer was satisfied with the value determined by Director Valuation and did not challenge the same Director General, enhanced value of all the items, with the exception of certain items---Value was enhanced about 110% from the value determined by Director Valuation---Importer, being aggrieved and dissatisfied with the order-in-revision, filed appeal before the Tribunal---Validity---Appellant/importer had not been called before the disturbance of the determined value, but had been condemned unheard in violation of settled and universally recommended and accepted principle of justice "audi alteram partem" (no one should be condemned unheard)---Impugned order-in-revision, was bad example of colourful exercise of powers, while using the same as a tool of harassment---Valuation ruling issued under S.25-A of the Customs Act, 1969, which would apply only for a certain period, must ordinarily be regarded valid for a period of 90 days from the date of its issue---Principal method of determining customs value was, and must remain with S.25 of the Customs Act, 1969---Section 25-A of the Act was not intended to be a substitute for S.25, nor could it be resorted to, in such a manner and with such a frequency that, it marginalized the latter provision---Section 25-A was merely an adjunct of S.25, to be resorted to in particular circumstances and for an appropriate period---Legislatures, in enacting S.25-A, did not intend to create a statutory bye-pass to the valuation agreement---While issuance of valuation ruling under S.25-A, could not be regarded as limited only to those cases, where the department concluded that there was group under invoicing; said section also could not be issued for the wholesale determination of customs values---Section 25-A of the Customs Act, 1969 being not a simple thing, it was appropriate that the ruling should contain sufficient details to show that the provisions of S.25 had been properly applied while invoking S.25-A---Valuation ruling was to be a speaking order---In the present case, Authority/Director General, Customs Valuation ignored the direction of superior courts and made observation in contradiction of provisions of S.25-A of the Customs Act, 1969---Such ignorance was violative of law---Being custodian of law, purpose of administration of justice was to hold and not to thwart appellant's rights---Department was directed not to issue any fresh valuation ruling during the course of present judgment, wrongfully---Order-in-revision passed by Director General, Customs Valuation, which did not have any adherence to the statutory requirements, besides being derogatory to specific provisions of Ss.25, 25-A, 25-D of the Customs Act, 1969, was set aside by the Appellate Tribunal being without lawful authority and jurisdiction, ab initio void.

Najeeb ur Rehman Abbasi and Rafi Kamboh for Appellants.

Safdar Abbas, Principal Appraiser for Respondents.

Date of hearing: 13th December, 2016.

JUDGMENT

MUHAMMAD NADEEM QURESHI, MEMBER JUDICIAL-I.---By this Judgment, we intend to dispose of above appeals filed by the appellants under Section 194-A of the Customs Act, 1969, against, Order-in-Revision No.233/2016 dated 18.08.2016, passed under Section 25-D of the Customs Act, 1969, against Valuation Ruling No.838/2016, dated 20.04.2016. These appeals have identical issues of law and facts and are therefore being heard, dealt with and disposed of simultaneously through this common order in the light of judgment passed by the Hon'ble High Court of Sindh in Customs Reference No.157/2008 (S.M. Naqi son of Syed Muhammad Hussain, Karachi v. Collector of Customs (Adjudication-I) and others, Karachi).

2.Since these seven (07) appeals are based on similar facts and question of law, therefore, it is needless to reproduce facts of each case separately, hence for reference the fact of Appeal No.K-1919/2016 are taken into consideration for decision, wherein, facts of the case are that, the appellant is an association of persons, which is engaged in import of confectionary items from UAE and selling further on wholesale basis to its customers throughout the country. The appellant is one of the prominent importers of confectionary items and conducts its business within the parameters prescribed under the laws of land. It is categorically claimed by the appellant that it carries an unblemished record in the local and the international markets as well. The appellant maintains spotless import record and its officials are recognized as principled businessmen. The appellant is regular importer of the confectionary/bakery items and a transparent import of the appellant is evident from the recent past import. The appellant has always preferred to conduct its business within the parameters prescribed under the law. Officials of the appellant are educated persons and keep constant surveillance over the orders/notifications issued by the custom authorities from time to time. Officials of the appellant also make their possible efforts to provide their opinion as well as evidences for determination of custom values. Upon the intimation by respondent No.1, officials of the appellant travelled from Lahore to Karachi and participated in the meeting held among the stakeholders and the custom officials. After thorough discussion with the stakeholders as well as a prudent indulgence, respondent No.2 issued valuation ruling No.838/2016 on 20.04.2016 and determined values of the confectionary items as under:--

That out of the items mentioned in the said valuation ruling, the appellant is importing items mentioned at serials Nos.4, 7 and 10. The appellant was satisfied with the values determined by respondent No.2 as such the appellant agreed accordingly and did not challenge the values and/or valuation ruling No.838/2016. The appellant came to know that the above named respondent No.1 enhanced values of all the items, except item mentioned at serial No.1 (Walker Brand) determined by respondent No.2, which is as under:--

That the items mentioned at serial No.12 in the above given table is not included in valuation ruling No.838/2016 but it was added by respondent No. 1. It is evident from comparison given in the above table that respondent No.1 enhanced the values about 110% from the values determined by respondent No.2 except value of Walker Brand Biscuits. Without prejudice to the illegalities committed and the provisions of law violated by respondent No.1. It is further evident from perusal of the impugned order-in-revision that through the facts and grounds of its appeal Messrs Shadr-E-Wala Brothers has mainly objected that values of the Oreo Brand products have not disturbed through Valuation Ruling No.838/2016. Instead of raising any illegality committed by respondent No.2, while determining the values through Valuation Ruling No.838/2016 and making request to decrease values of its brand Walker Brand Biscuits, M/s. Shadr-e-Wala Brothers targeted values of its competitor (Oreo Brand).

3.Being aggrieved and dis-satisfied with the Order-in-Revision, the appellant filed these appeals before this Tribunal on the facts and grounds incorporated in the memo of appeal.

4.On the date of hearing, Mr. Rafi Kamboh, Advocate along with Mr. Najeeb-ur-Rehman Abbasi, Advocate, appeared on behalf of the Appellants, reiterated the contents of grounds mentioned in the Memo. of Appeals and further contended that, the appellant has not been called before disturbing the determined values but has been condemned unheard in violation of well-settled and universally recommended and accepted principle of justice "AUDI ALTERAM PARTEM" (No One Should Be Condemned Unheard). The impugned order-in-revision is bad example of colorful exercise of powers, while using it as a tool of harassment, which is only meant to facilitate the public. The learned Director General has failed to take notice that the importer (Messrs Shadr-E-Wala Brothers) challenged values of the brands of other importers. They further contended that, the Hon'ble Courts of law are the custodian of law and the rights of the citizens, while discharging their responsibilities of qausi-judicial nature, the learned Director General was required to follow the law, which demands that while hearing a case, all the laws of land should be written on his sleeves. The specific brand of the appellant has neither been challenged by Messrs Shadr-E-Wala Brothers nor it has been discussed in the impugned order-in-revision but astonishingly values of appellant's have been enhanced. It has wrongly been mentioned that market survey was conducted, whereas the entire market came to know about enhancement of the determined customs values much later to passing the order-in-revision. The rules provided in Chapter IX of the Customs Rules, 2001 have not been followed, while re-fixing the customs values as such the intention of the legislature has intentionally been rejected, who empowered the Federal Board of Revenue, Islamabad to make rules for carrying on the purpose of the Act, 1969. The values determined through order-in-revision are contrary to the mandates of section 25 of the Customs Act, 1969, whereas the enabling section 25A of the Act explicitly provides that Director of Customs Valuation may determine the custom value of any goods after following the methods laid down in section 25 and while exercising the powers under section 25A of the Act, the learned Director General has to act within the parameters prescribed through 25 of the Act, 1969. The judgments of Hon'ble Superior Courts are also binding upon executive officers, whereas respondent No.1 exercised his power as Qausi-Judicial Forum as such was required to follow the principles laid down by Hon'ble Superior Courts. The respondent failed to give prudent approach to the sale of smuggled bakery items and the enhanced price shall give further rise to smuggling. The Biscuits are sold down to lower states of our society with minor profit, therefore, increase of value to the tune of 110% over and above already, enhanced values, and shall not be affordable by the importers as well as the buyers, which requires sympathetic consideration. The respondent No.1 has not given professional approach to the fact that once there is no variation in value of Dollar any variation in the local currency does not affect value of the imported goods. The learned Director General has also not considered the fact that once the customs values are determined in US Dollar and upon devaluation of local currency, the prices are automatically increased. In view of the above facts and grounds, they prayed that, this Hon'ble Tribunal may kindly be pleased to set-aside Order-in-Revision No.233/ 2016 passed by respondent No.1 vide reference No.DG(V)/Val.Rev/533/2016 dated 18.08.2016 further be pleased to restore Valuation Ruling No.838/2016 in the larger interest of justice.

5.No cross objections filed by the respondent in compliance of the subsection (4) of Section 194-A of the Customs Act, 1969. However, learned representatives of the department/Respondents, contended that, the Directorate General of Customs Valuation has acted / performed his duties within its jurisdiction and no such action has been arbitrarily taken. The Directorate Generals of Customs Valuation always performed his duties to facilitate the trade and save interest of the national exchequer at the same time. He contended that M/s. Shandr-e-Wala Brothers contended about all brands values comparing with Walker Brand. On his assertion, the Director General (Valuation initiated working for collection of information from different angles to determine the customs values of different brands of biscuits other than Walker brand Biscuits. He further contended that, the appellant did not file revision petition being aggrieved person before the Director General (Valuation) under Section 25-D of the Customs Act, 1969, therefore, the appellants applications are not maintainable and are liable to be dismissed on this single ground. He further emphasized that, customs values of the subject goods were determined vide Valuation Ruling No.838/2016 and impugned Order-in-Revision No.233/2016 dated 18.08.2016 is strictly in accordance with valuation methods given in Section 25-A of the Customs Act, 1969, and keeping in view the international Websites prices and market enquiry. Moreover, the other appellant's names are not shown in the impugned Order-in-Revision. This shows that appellant was not aggrieved against Valuation Ruling No.838/2016, therefore, they did not file revision petition. Order-in-Revision No.233 issued on 18.08.2016 of imported Biscuits issued under Section 25-D of the Customs Act, 1969 is as per law. In presence of valid Order-in-Revision issued by the competent authority for uniform application, there exists no justification to accept the transactional value for assessment. In view of the above facts and legal position, the appeal is not maintainable and is prayed to be dismissed in the interest of justice.

6.Arguments heard and concluded. Perused the entire case record and given careful consideration to the arguments advanced by both the learned Advocates, before any deliberation on merits of these cases, it is important to refer and mention here that, some of the importers/ appellants have not participated in the revision proceedings because they were not given notice nor called by the Director General, Customs Valuation during the proceedings conducted under Section 25-D of the Customs Act, 1969. When the appeals were filed on their behalf before the Tribunal, office raised the objection and advocates were called to clarify the objections when they are not a party in the proceedings conducted by the Director General Valuation under Section 25-D of the Customs Act, 1969, how the subject appeals are maintainable. After giving opportunity of hearing, on that point the subject appeals are admitted for hearing by observing the point that when the Order-in-Revision was passed in persona, the rights of other importers have been infringed as the impugned order caused the effect as order in rem upto the extend of Serial Nos.4, 7 and 10 of the impugned Valuation Ruling and order passed thereon by the Director General Valuation in Revision. The court has also followed dictum of law envisaged under Section 194-A subsection (1) and (e) of the Customs Act, 1969 under which any person aggrieved by any of the order may appeal to the Appellate Tribunal. As being so, the collective order required to be passed for dispensation of justice, while considering grievance of the appellants referred above, it is the duty of the court to grant a proper redressal under the contents of legal warrant and statute. The subject Valuation Ruling was only challenged by Messrs Shadr-e-Wala Brother being an aggrieved and dissatisfied with the values of "Walker Brand Biscuits" appears against S.No.01 of the impugned Valuation Ruling No.838/2016 dated 20.04.2016. During the proceedings before the Director General Valuation they stressed their grievances on the ground that previously under reference item (excluding the Walker Brand) was being assessed as per values mentioned in the Valuation Ruling No.504/2012 dated 19.12.2012 when the said valuation ruling was withdrawn on 15.03.2016 by the Director of Customs Valuation and a fresh Valuation Ruling No.838/2016 dated 20.04.2016 was issued on the basis of market inquiry, as such the varies of the proceedings conducted during the preparation of the said impugned Valuation Ruling are been challenged under Section 25-D of the Customs Act, 1969 before Director Valuation, evidently the remaining stakeholders/importer including other appellants present before this court never attempt to challenge the varies of Valuation Ruling No.838/2016 dated 20.04.2016. Director Valuation while sitting under the jurisdiction of Section 25-D of the Customs Act, 1969 and made the observations in Para-24 of the impugned Order-in-Revision wherein he held that, the Valuation Method provided in Section 25 of the Customs Act, 1969 were adopted and applied, sequentially to address the valuation issue at hand. Consequently, the method provided under Section 25(7) of the Customs Act, 1969 was applied to drive at and determine assessable customs values of biscuits and also placed the comparative values of other brands at par with the values of "Walker Brand" and in Para-25 of the impugned Order-in-Revision on the basis of market survey all values including "Walker Brand" were worked back and new values were fixed, such enhancement directly affected the appellants as order passed in rem. At the same time grievances of M/s. Shadr-e-Wala Brothers have not properly been entertained nor properly been addressed. Inspite of doing so, the Director General Valuation while passing the impugned Order-in-Revision fixed the values of the goods under question without application of proper provisions of law and travelled beyond his authority and jurisdiction. Plain reading of Section 25-D and its interpretation under the legal prospectus simply demonstrate that, the Director General Valuation can only deliberate with the values earlier determined in a ruling issued by the Director Valuation under Section 25-A of the Customs Act, 1969. The Director General Valuation not authorized to fix the values of the goods which were already determined under Section 25A of the Customs Act, 1969. It is also noticed and observed that, Director General Valuation while passing the impugned Order-in-Revision added/inserted a new category of goods through Serial No.12 of the order which is also without any warrant of law and jurisdiction.

7.Now, under the aforesaid circumstances, question arises whether the Director General Valuation while sitting under the jurisdiction in terms of Section 25-D of the Customs Act, 1969 can exercise authority under the law by assuming jurisdiction under Section 25-A of the Customs Act, 1969 simultaneously. No doubt, S.R.O. 495(I)/2007 dated 09.06.2007 specify the powers and duties of the officers of the Directorate General of Customs Valuation. At the S.No.1 of the table of S.R.O. 495(I)/2007 dated 09.06.2007, the Director General, Customs Valuation is empowered to exercise powers and discharge duties under Sections 25-A and 32 of Customs Act, 1969. Subsection (3) of Section 25-A of the Customs Act, 1969 empowers the Director General of Customs Valuation to determine the "applicable customs values" of any imported goods in case of any conflict in the customs value determined under Section 25-A(1) of the Customs Act, 1969. It is further observed that, the contents of Section 25-D envisage that a revision petition may be filed before the Director General within thirty days from the date of determination of customs value under Section 25-A and in case of jurisdiction of Director General under section 25-A (3), he is competent to determine "applicable customs values" on his own motion or on a reference from Collector of Customs or Director, Customs Valuation. The Director General only has the power or jurisdiction under sub section (3) of Section 25-A of the Customs Act, 1969, in case of any conflict in the customs values determined under subsection (1) of Section 25-A, to determine the "applicable" Customs value. The intent and wisdom of the legislature by coining two distinct phrases "applicable customs value" and "determination of customs value" is quite evident. Determination of customs values exclusively lies within the jurisdiction of Director, Customs Valuation and Collector of Customs only. But jurisdiction with reference to "applicable customs values" is restricted to "conflict" arising out of application of customs value determined in terms of Section 25-A(1) of the Customs Act, 1969. In this particular case, only Revision Petition was filed before the Director General under Section 25D, and no Application or Reference under Section 25-A(3) was pending before the Director General at the time of passing the impugned Revision Order.

8.The Valuation Ruling issued under Section 25-A, applies only for a certain period and no more. This position has been defined in Chapter-XI of the Rules, (in Rule 107 meaning) "within 90 days prior to the importation or within 90 days after the importation of goods being valued". In our view, Valuation Ruling must, therefore, ordinarily be regarded valid for a period of 90 days from the date of issue. After the amendment, Section 25A subsection (4) of the Customs Act through Finance Act, 2010 provides that a Valuation Ruling "shall be applicable until or unless revised or rescinded by the competent authority". Which the Valuation Ruling will continue to hold the field unless revised or rescinded, any aggrieved importer has the right to approach the Director, Customs Valuation, after 90 days period mentioned above and he would then has to give reasons why the Ruling has not been revised or rescinded, as such, the observation made by the Director General, Customs Valuation, are perverse from the evidence, ultra vires and without lawful authority. In these cases parties are at liberty to initiate the subject matter afresh under Section 25-A of the Customs Act, 1969 before the Director Valuation accordingly.

9.Before further conclusion, general observation must also be made on Section 25A which is only an enabling section. It permits, but does not mandatorily require, a predetermination of customs value in terms as explained. The principal method of determining customs value is, and must remain, with section 25. Section 25A is not intended to be a substitute for Section 25, nor can it be resorted to, in such manner and with such frequency that, it marginalizes the latter provision. It is merely an adjunct to Section 25, to be resorted to in particular circumstances and for an appropriate period. In our view, in enacting Section 25A, the legislatures' intent was not, nor could be for the reasons stated above, to create a statutory bye pass to the Valuation Agreement. While issuance of valuation ruling under section 25A cannot be regarded as limited only to those cases where the Department concludes that there is group under-invoicing, the section also cannot be used for the wholesale determination of customs values. Such as an approach would, in effect, transform the "determination" permissible under section 25A to an impermissible "fixation" of value, which, in essence would be violative of Valuation Agreement. This is an important point which must be kept in mind, and may be relevant in particular cases when considering the vires of a valuation ruling.

10.All observations and relevant references along with the Judgements passed by the Superior Courts are preferably to maintain and follow the proper interpretation of law, more importantly for the Customs officers 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 in any particular case, the Customs officers/authorities want to jump 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 limited or 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 complied, 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 obligations, prescribed under Sections 25 and 25A of the Customs Act, 1969. The determination of value under Section 25-A of the Customs Act, 1969, is not a simple thing. It is, therefore, appropriate that the ruling should contain sufficient details to show that the provisions of Section 25 have been properly applied while invoking Section 25-A. Therefore, it is imperative that the Valuation Ruling must be a speaking order, as per the mandatory requirement of Section 24-A of the General Clauses Act, 1887. 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 of law. Being custodian of law, purpose of administration of justice is to hold and not to thwart appellants' rights. We therefore, direct the respondents not to issue any fresh Valuation Ruling during the course of present judgment, (a tort) 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.

11.On the basis of ably deliberations, and by getting the strength, what has been stated and observed herein above particularly the interpretation of law and legal prepositions, in the light of prescribed law and to follow the ratio decidendi as observed by the superior courts, along with our additional observations made therein, we are led to conclude that the Order-in-Revision No.233/2016 dated 18-08-2016, passed by the Director General, Customs Valuation, which does not have any adherence to the statutory requirements, besides being derogatory to specific provision of Sections 25, 25-A and 25-D of the Customs Act, 1969. We hereby set aside the said Order being without lawful authority and jurisdiction, void ab initio with no order as to cost.

12.Judgment passed and announced accordingly.

HBT/38/Tax(Trib.) Appeals allowed.