DEENS SONS VS The DIRECTOR, DIRECTORATE GENERAL OF VALUATION, CUSTOMS HOUSE, KARACHI, 2018 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 2418 (2018)

(a) Customs Act (IV of 1969)---

----Ss. 25, 25-A, 25-D & 80---Customs Rules, 2001, Rr.107(a), 110, 113, 117, 118 & 438---Valuation Ruling---Determination of customs value of goods---Director, Directorate General of Valuation, was not empowered to fix the value of imported goods through Valuation Ruling under S.25-A(1) of the Customs Act, 1969 as value of the imported goods had to be determined by Customs Authorities under S.25 of the said Act and it was the Federal Board of Revenue to issue a notification in that regard---No deviation from the notified jurisdiction could be made---If an action had been taken or order had been passed without having competency under the respective provisions of law, same was to be declared illegal and without jurisdiction---Deputy Director, Directorate of Valuation, had been appointed under provisions of S-3(d) of the Customs Act, 1969 and had been delegated powers through notification for assisting the Director in determination of value of goods under the provisions of S.25-A of the Customs Act, 1969---Director had issued Valuation Ruling in substitution of VDB letter which itself was without lawful authority and was void ab initio---If the initial order/letter was ab intio void, the superstructure built thereupon, no matter how strong it might be had to crumble down---Director, Directorate of Valuation in the solitary meeting, which was attended by only one person, determined the value of the imported goods, which exercise was not valid---Director had no mandate to associate importer of his choice or manufacturer for determination of value of the imported goods---Any Ruling, issued with the association of specific person or importer/manufacturer, was void ab initio and could not be termed or treated as valid document within the meaning of S.25 of Customs Act, 1969---Director, Directorate of Valuation had not followed the provisions of S.25 of the Customs Act, 1969, in letter and spirit while determining the value of imported goods---Department had desired that the importer should pay excessive duty and taxes as against his competitor of Chinese origin goods---Said attitude negated the fair competition, and created monopoly which was an infringement of fundamental rights, not permissible under any circumstances---Order passed by Director General of Valuation was sketchy and bald, containing no rebuttal of grounds of importer's revision application; instead was based on personal observations of no substance and in derogation of provisions of Ss.25, 25-A of the Customs Act, 1969 and Customs Rules, 2001---Impugned order was not a proper order lacking application of judicial mind and Valuation Ruling being ab initio void, were set aside.

Mansab Ali's case PLD 1971 SC 124; Chittaranjan Cotton Mills Ltd. v. Staff Union PLD 1971 SC 197; Chief Kwame Asante, Treahon v. Chief Kwame Tawia Raunaq Ali's PLD 1973 SC 236; Messrs Shahid Impex v. Director General of Valuation 2014 PTD (Trib.) 674; Messrs AFU International v. Director General of Valuation 2016 PTD (Trib.) 1305; Ch. Muhammad Hussain and others v. Commissioner of Income Tax 2005 PTD 152; Messrs Toyo International Motorcycle v. Federation of Pakistan and 3 others 2008 PTD 1494; Goodwill Traders, Karachi v. FOP and others 2014 PTD 176; AIR 1954 SC 747; AIR 1963 SC 1811; AIR 1970 SC 1453; AIR 1971 SC 1017; PLD 2005 SC 193; 2005 YLR 1019; 2007 PTD 2500; 2004 PTD 1973; 2005 YLR 1719; 2003 PTD 777; 2003 PTD (Trib) 2369; 2002 MLD 357; 1983 CLC 2882; 2005 PTD 2519; 2005 PTD 1189; PLD 1995 SC 272; PLD 1970 SC 158; PLD 1970 SC 173; 1984 SCMR 1014 and 2012 PTD (Trib.) 619 ref.

(b) Administration of justice---

----Every judicial or quasi judicial findings were to be based on reasons, containing the justification for the findings in the order itself---If the initial order was ab initio void, the superstructure built thereupon, no matter how strong, it might be had to crumple.

PLD 1996 Kar. 68; 2006 PTD 978 and PLD 1971 SC 184 ref.

Nadeem Ahmed Mirza for Appellant.

Muhammad Aslam, P.A. for Respondent.

Date of hearing: 13th March, 2018.

JUDGMENT

MUHAMMAD NADEEM QURESHI, (MEMBER JUDICIAL-I).--By this order, we dispose off Customs Appeal No. K-1449/2017 filed by the appellant against Order-in- Revision No. 403/2017 dated 31.10.2017 passed by Director General, Directorate General of Customs Valuation (respondent No. 2), passed against Valuation Ruling No. 1071/2017 dated 6.3.2017 passed by Director, Directorate General of Valuation, (respondent No. 1).

2.Brief facts of the case are that appellant is an importer of Non Cellular Rubber Sheets of Indonesian origin, assessment of which was made by the Official of Clearance Collectorate on the basis of identical/ similar transaction value as enunciated in Section 25(5) and (6) of the Customs Act, 1969 (Act) and Rules 117 and 118 of Chapter IX of Customs Rules, 2001 (Rules) available in the data reservoir maintained by the PRAL as contemplated in Rule 110 of the period given in Rule 107(a) of the Rules. On 03.02.2017, the Deputy Director (HQ), Directorate of Valuation issued VDB No. 179, through which he circulated reference value of the goods under dispute for the purpose of assessment under Section 80 and Rule 438 of the Act/Rule for levy of duty and taxes on the imported goods. The impugned VDB remained in field as a substitute of Valuation Ruling till 06.03.2017, when respondent No. 1 issued Valuation Ruling No. 1071/2017, for replacing the VDB, through which he determined the value of China origin @ US$. 0.80 and other origins @ US$. 0.90/kg C&F under the provision of subsection (9) of Section 25 of the Act. The appellant upon noticing the parity between the two values, challenged the vires of the Ruling through Revision Application dated 20.03.2017 under the provision of Section 25D of the Customs Act, 1969 before respondent No. 2, who after conduction of multiple hearing passed Order-in-Revision No.403/2017 dated 31.10.2017 against the appellant with the opinion adduced in paras 4 and 5, reading as:--

"4. After listening to the detail discussions/arguments of the respondents/petitioners during hearing and perusal of the case record, it is evident that Valuation Department had duly taken the stake holder on Board while issuing the impugned valuation ruling. The DR presented details of comprehensive market inquiry reports as available on record to support the value determined by them vide impugned Valuation Ruling No. 1071/ 2017 dated 06.03.2017. The petitioner on the other hand fail to substantiate the cause of their grievances with conclusive evidence.

5. I, therefore, conclude that the Custom Values of Non Cellular Rubber Sheet as notified vide impugned Valuation Ruling No. 1071/2017 dated 06.03.2017 under section 25A of the Customs Act, 1969 have been determined in accordance with law after taking into consideration the prevailing market realities. Therefore, the impugned Valuation Ruling is upheld and the Petition being devoid of merit is hereby rejected accordingly. "

3.Being aggrieved and dissatisfied with the impugned Order-in-Revision No. 403/2017 dated 31.10.2017, the appellant filed the appeal before this Tribunal on the basis of grounds enumerated therein.

4.No cross objection under subsection (4) of Section 194A of the Customs Act, 1969 have been submitted by Respondents. On the date of hearing Mr. Muhammad Aslam, P.A., attended the court and contented that, the value of Non Cellular Rubber Sheet of China Origin was suggested vide VDB No. 179 dated 03.02.2017. After receipt of representations exercise was conducted to determined the customs values of subject goods under Section 25-A of the Customs Act, 1969 and meeting with stake holders were scheduled on 06.03.2017. The Appellant Messrs Deen Sons was also invited to attend the meeting but not appeared nor was any written submission received from the appellant. Only one importer attended the meeting. Import data under Section 25(5) and (6) of the Customs Act , 1969 could not conducted because the subject goods are industrial items . Internet enquiry was also conducted after gathering all information the custom value of Non Cellular Rubber Sheet of China origin determined @ US$. 0.80/kg under Section 25(9) of the Customs Act, 1969. The appellant has not furnished any tangible evidential documents in support of his contention. He further contented that, Order-in-Revision No. 403/2017 dated 31.10.2017 and Valuation Ruling No. 1071/2017 dated 06.03.2017 passed thereon by the competent authority during the hierarchy of the customs are well within the four corners of law and without prejudice, he prayed that the appeal of the appellant may be rejected in the interest of justice.

5.Argument heard and concluded. After perusal of the record as well as arguments extended by the both the parties. It has been noticed and observed that, the value of the imported goods has to be determined by the Customs under Section of section 25 of the Customs Act, 1969, as expressed in Section 46(d) of the Sales Tax Act, 1990 and subsection (6) of Section 148 of the Income Tax Ordinance, 2001, by the Authorities given in subsection (9) ibid., which are Collector of Customs, Additional Collector of Customs, Deputy Collector of Customs, Assistant Collector of Customs, or an Officer of Customs appointed under section 3 ibid. Notwithstanding, in case the Board is desirous of determining the value of the imported goods, for levy of Sales Tax, it issues notifications in terms of 1st proviso of subsection (g) of Section 46 of the Sales Tax Act, 1990 as has been done in S.R.O. 494(I)/2004 dated 12.06.2004 for phosphoric acid, S.R.O. 103(I)/2005 dated 03.02.2005 Potassium Fertilizer, SRO.563(I)/2006 dated 05.06.2006 Crystalline Sugar and SRO 732(I)/2006 dated 13.07.2006 for certain goods.

6.It has been observed that the respondent No. 1 is not empowered to fix the value of imported goods through valuation ruling in exercise of power vested under section 25A(1) of the Customs Act, 1969. It is for the Board to issue a notification, similarly, determination of value for levy/collection of Income Tax at import stage, respondent No. 1 is not empowered as evident from the expression of Subsection (9) of Section 148 of the Income Tax Ordinance, 2001, rendering the determination of value for levy of Sales Tax and Income Tax under the provision of Section 25A(1) of the Customs Act, 1969 without power/jurisdiction, resultant, the plea of the respondent stood negated as the same is being in derogation of 1st proviso of subsection (g) of Section 46 of the Sales Tax Act, 1990 and subsection (9) of Section 148 of the Income Tax Ordinance, 2001.

7.It is basic principle that if a mandatory condition for exercise of jurisdiction is not fulfilled then the entire proceeding which follows become illegal and suffer from want of jurisdiction as laid down by the Hon'ble Apex Court in Mansab Ali's (PLD 1971 SC 124) and in the case of Chittaranjan Cotton Mills Ltd. v. Staff Union reported at PLD 1971 SC, 197, it was held that "Whereas the court is not properly constituted at all the proceeding must be held to be coram non judice and, therefore, non-existent in the eyes of law. There can also be no doubt that in such circumstances "it could never be too late to admit and give effect to the plea that order was a nullity", as was observed by the Privy Council in the case of Chief Kwame Asante, Treahon v. Chief Kwame Tawia and in the case of Raunaq Ali's [PLD 1973 SC 236], it was held that "It is now well established that where an inferior tribunal or Court has acted wholly without jurisdiction or taken any action "beyond the sphere allotted to the tribunal by law and, therefore, outside the area within which the law recognizes a privilege or err", then such action amounts to a "usurpation of power unwarranted by law" and such an act is a nullity; i.e. to say, "the result of a prescribed exercise of authority which has no legal effect whatsoever". In such a case, it is well established that a superior court is not bound to give effect to it, particularly where the appeal is to the later's discretionary jurisdiction. The courts would refused to perpetuate, in such circumstances, something which would be patently unjust or unlawful". No deviation from the notified jurisdiction could be made, if an action has been taken or order has been passed without having competency under the respective provision of Act/Ordinance, same is to be declared illegal and without jurisdiction and this has been already held in many reported/unreported judgment by this Tribunal, latestly in reported judgment 2014 PTD (Trib.) 674 Messrs Shahid Impex v. Director General of Valuation and 2016 PTD (Trib.) 1305 Messrs AFU International v. Director General of Valuation. In the light of dictum laid down by the Superior Judicial Fora in above referred judgments and countless more, we hold that the determination of value for levy/collection of Sales Tax and Income Tax at import stage by the respondent No. 1 Valuation Ruling No. 758/2015 dated 08.09.2015 is coram non judice, hence ab-initio, null and void and of no legal effect.

8.The Deputy Director Valuation indeed has been appointed under the provision of Section 3D of the Customs Act, 1969 and has been delegated powers through notification for assisting the respondent No. 1, in determination of value of goods and class of goods under the provision of Section 25A of the Act, with the application of different subsections of Section 25 in sequential manner. He is in no way empowered to issue a valuation ruling under the provision of Section 25A of the Act, which stood validated from various orders of the Honorable High Court of Sindh, in which it has been held that Section 25-A does not grant or delegates powers to a Deputy Director (HQ) Valuation to issue a Valuation Data Base or any kind of letter that suggests determination of value of goods. That by issuing VDB letter No. 179 dated 03.02.2017, the Deputy Director (HQ) Valuation acted in derogation of the provision of Sections 25, 25A and Order of the Board dated 22.07.2002 through which value data base maintained by the Collectorate/DGV was withdrawn with the introduction of transaction value under the WTO Valuation Agreement, rendering the letter as of no legal effect and as such void and ab-initio.

9.We are flabbergasted to observe that the respondent No. 1 issued valuation ruling dated 06.03.2017 in substitution of VDB letter, which is itself without lawful authority and as such void and ab-initio. It is settled principle of law that if the initial order/letter is ab-initio void, the superstructure built thereupon no matter how strong it may be, has to crumble down as held in PLD 1996 Karachi 68, that "where the initial order or notice was void all subsequent preceedings, orders or super structure built on it were also void and in 2006 PTD 978 it is held that "the entire proceeding initiated by the Adjudicating authority and further super structure thereon including the order passed by the learned Tribunal are without jurisdiction void and in-operative." Whereas, the Apex Court in PLD 1971 Supreme Court 184 held that "order of a Tribunal found to be without jurisdiction ---all successive orders based upon it illegal and liable to be quashed". This fact alone render the valuation ruling and Revision Order ab-initio void and of no legal effect and is not enforceable under law for the purpose of imported goods.

10.Notwithstanding, to the above legal deficiency, it is also a shocking revulsion for us that the respondent No. 1 in the solitary meeting, which was attended by only one person determined the value of the impugned goods, rendering it not valid. Amazingly, since the instant valuation ruling was a guarded secret. No copy of that has been dispatched to those importers or the manufacturer, despite mandated and this stood validated from the bottom of the ruling, wherein copies of the ruling were dispatched, containing no name of importer or manufacturer, instead of FPCC&I and Chamber of Commerce and Industries. The respondent No. 1 does not desires to associates the actual stake holder and for the reason best known to him and always issues the ruling on the basis of his own opinion or of his officials, who least understands the norms of business and the provision of Act in letter and spirit. The appellant has been condemned unheard as against the well known maxim of audi alterm partem and the law laid down by the Hon'ble Supreme Court of Pakistan in reported judgment 2005 PTD 152 Ch. Muhammad Hussain and others v. Commissioner of Income Tax wherein it has been held that " notice is mandatory despite non availability of the provision in the statute", rendering the Valuation Ruling nullity in the eyes of law and not applicable on the appellant import.

11.The Section 25 of the Act, speaks about customs values of the imported goods and the respondent No.1 is empowered under Section 25A to determine the value of the goods and the class of goods, with the application of different subsections of Section 25 of the Customs Act, 1969 in sequential manner. The said section nowhere speaks about giving protection to the local industry or manufacturer through determination of unilateral/arbitrary value in derogation of Rule 110 of the Rules. The value of supply for local sale has to be determined by the manufacturer or by the Valuation Committee in terms of clause (e) of subsection (46) of Section 2 of Sales Tax Act, 1990.The respondent No. 1 has no mandate to associate importer of his choice or manufacturer for determination of value of the imported goods. The impugned valuation ruling has been issued by the respondent No. 1 for pleasing Mr. Waseem Qadri, a manufacturer, who has no locus standi to approach the respondent No. 1 for determination or re-determination of the value of the Non Cellular Rubber Sheets. Any ruling issued with the association of specific person or importer/manufacturer is void and ab-initio and cannot be termed or treated as valid legal documents within the meaning of section 25A of the Customs Act, 1969.

12.It has also been observed that the respondent No. 1 has not followed the provision of Section 25 of the Act, in letter and spirit while determining the value of non Cellular Rubber Sheet of Indonesia origin, imported by appellant i.e. in sequential manner and this stood validated from the narration made in the ruling against each discarded subsection of Section 25 of the Act. It was mandated upon the respondent No. 1 to first establish the declared value of the appellant as colorable and tainted, prior to proceeding to the next subsection, for discarding each subsection, he has made very vague and unsubstantiated remarks, which are not admissible under law. Section 25(13)(a) does not give him unbridled and unfettered authority to play havoc with the provision of Section 25 ibid., thereby making them in-effective and redundant. Discretion has to be exercised within limits based on reason, rationale and fair play. It is specifically provided by the legislature in Subsection (10) of Section 25 that Subsections (1) (5)(6)(7)(8)(9) define how the customs value of the imported goods is to be determined by the customs. The method of custom valuation are normally required to be applied in a sequential order except reversal of the order of subsections (7) (8) at the importers, request, if so agreed by the Collector of Customs as held in judgments 2008 PTD 1494 Messrs Toyo International Motorcycle v. Federation of Pakistan and 3 others, C.P. No. 2673 of 2009 of Sadia Traders v. FOP the Hon'ble High Court of Sindh, W.P. No. 756/2010 Messrs Faco Trading and 45 others v. Member Customs , FBR and 2014 PTD 176 Goodwill Trader , Karachi v. FOP etc.

13.The respondent No. 1 has stated in para 5 of the ruling that identical/similar transaction value expressed in subsections (5) and (6) of Section 25 was found to be in applicable due to variation in value of the non Cellular Rubber sheets and therefore are ignored. Besides, none of the importers came forward and submitted documents, it is totally erroneous because the data maintained by the PRAL under Rule 110 of the period expressed in Rule 107 (a) of Rules contains every detail of imported consignments, which includes the declared value and the mode of import i.e. either through letter of credit L/C, Contract or cash, therefore, the value available in the data has to be examined and analyzed first. Notwithstanding, appellant has annexed documents as an example in the instant application, veracity of which are un-disputed and this stood further validated from the telephonic transfer of the invoice amounts to the exporter and Sales Tax invoice issued to the buyers under Section 23 of the Sales Tax Act, 1990 and cheque received as expressed in Section 73 ibid. Rendering his observation completely nullity to law because due to the fact that his value is transaction value within the meaning of Section 25 of the Customs Act, 1969 and Rule 113 of Customs Rules, 2001.

14.We also fail to visualize the adopted rationale and acumen of the respondent No. 1 in determination of value of Indonesian origin goods as of other origin, despite of the fact that the value of the goods have to determine country specific, which he ignored in the impugned value as against adopted mechanism in Valuation Ruling No.1004/2017 dated 06.01.2017 for shoe adhesive, 1028/2017 dated 02.02.2017 for PVC Transparent/ clear and printed flexible sheet and PVC Ceiling film, 917/2016 dated 22.08.2016 for synthetic rubber, wherein, value has been determined at par of China, Indonesia, UAE, India, Korea, Taiwan, Malaysia, Thailand , Iran and Russia origin goods and in valuation Ruling Nos. 1029/2017 dated 02.02.2017 for Carbon Black (Rubber Grade) and 1055/2017 dated 28.02.2017 for Bagomatic Bladder Scrap of all origin. The treatment given to appellant goods in determination of value is tantamount to given partial treatment, which is discrimination and barred under Articles 4 and 25 of the Constitution of Islamic Republic of Pakistan.

15.That the respondent No. 1 also ignored the fact, which he could had easily verified while logging on the website of the exporter of the appellant and transmitting e-mail in regards to prices of the goods imported by the appellant , if that would had been done, it would had been proved that the shipper is a manufacturer and operates at Export Processing Zone, Surabaya, Indonesia, wherein, import of raw material is free from levy of duty and taxes akin to the Export Processing Zone of Pakistan, Resultant, they export the goods at much lesser price as against exporter operating in tariff area and would have not fixed value of the appellant goods @ US$. 0.90/kg as against declared. That while determining the value for Chinese origin goods, the respondent No. 1 also lost sight of the fact that the facility of customs duty at reduced rates of 5% is payable under Pakistan China Free Trade Agreement (FTA) as against appellant, whose goods are leviable to 10% customs duty. By determining the value of appellant goods the respondent No. 1 also acted in derogation of Article 18 of the Constitution, which guarantees freedom of trade, business or profession and Sub-Clause (b) restricts regulation of Trade, Commerce or Industry for safe guarding the interest of the citizen through healthy and free competition. In the case under consideration the respondents desires that the appellant should pay excessive duty and taxes as against his competitor of Chinese origin goods. This act/attitude of his negated the level playing field for maintaining of healthy and fair competition, instead created monopoly. Rendering the ruling to the extent of appellant as infringement of his fundamental rights, this is not permissible under any circumstances being in derogation of Article18 of the Constitution and law laid down in the reported judgments AIR 1954 SC 747, AIR 1963 SC 1811, AIR 1970 SC 1453, AIR 1971 SC 1017 and PLD 2005 SC 193.

16.The order passed by the respondent No. 2 is also sketchy and bald as evident from the order itself containing not a single ground of appellant revision application and rebuttal on those, instead based on personal observation of no substance and in derogation of the provision of Sections 25, 25A and Chapter IX of Act/Rules, hence, impugned is not a proper order through any stretch of imagination being lack of judicial mind and as such did not conform to the mandated requirement of section 24-A of the General Clauses Act, 1897 and this stood validated from the order containing no rebuttal on the pleas of the appellant. Orders which do not contain rebuttal on the grounds advanced and decision/judgments relied upon by the appellant and also not containing substantial reasons and do not show that these were passed on objective consideration shall always be treated as illegal, void arbitrary and a result of misused of authority vested in public functionary. No room was available for such illegal, void and arbitrarily orders in any system of law. If any authority Court or Tribunal gave a finding of fact which was not based on material available on record is deemed to be illegal/arbitrarily as without discussing and considering the material available on record it becomes perverse and a perverse finding of fact which is violative of the established principle of appreciation of evidence on record which is not sustainable in law. The principle that every judicial or quasi-judicial finding should be based on reasons containing the justification for the finding in the order itself is an established principle of dispensation of justice. The impugned revision order is a violation of basic principle of the good governance and mandatory requirement of Section 24A of the General Clauses Act, is not only illegal and void but also not sustainable under law. The said position is also fortified by the judgments of Superior Courts reported as 2005 YLR 1019, 2007 PTD 2500, 2004 PTD 1973, 2005 YLR 1719, 2003 PTD 777, 2003 PTD (Trib) 2369, 2002 MLD 357, 1983 CLC 2882, 2005 PTD 2519, 2005 PTD 1189, 2003 PTD 2369 and PLD 1995 SC (Pak) 272, PLD 1970 SC 158, PLD 1970 SC 173, 1984 SCMR 1014 and 2012 PTD (Trib.) 619.

17.On the basis of deliberation made in paras supra, we set aside the Order-in-Revision No. 403/2017, the valuation data base dated 03.02.2017, the Valuation Ruling dated 06.03.2017 as being ab-initio void on the face of it and not enforceable under law for the purpose of assessment of imported goods and as such set aside with the acceptance of appeal and Order acceptance of appellant declared value as transaction value within the meaning of Section 25(1) of the Customs Act, 1969

18.Judgment passed and announced accordingly.

HBT/35/Tax(Trib.) Appeal accepted.