M.I. TRADERS, LAHORE VS DIRECTOR, DIRECTORATE GENERAL OF VALUATION, CUSTOMS HOUSE, KARACHI, 2018 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 2437 (2018)

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

----Ss. 25, 25-A, 25-D, 194-A & 195---Customs Rules, 2001, Rr.107, 110, 117, 118 & 433---Determination of customs value of goods---Assessment, was made by the official of Clearance Collectorate on the basis of identical/similar transaction value as enunciated in S.25(5)(6) of the Customs Act, 1969 and Rr.117 & 118 of Customs Rules, 2001---Director, Directorate General of Valuation, determined customs value for levy of duty and taxes on import of different kind/brands of the item---Being aggrieved by said Ruling, importer filed revision application under provision of S.25-D of the Customs Act, 1969 before Director General, Directorate General of Valuation, who determined the value of the item and ignored the fact that the Director, Directorate General of Valuation, determined no value---Validity---No cross-objection under subsection (4) of S.194-A of the Customs Act, 1969 had been filed by the department within the stipulated period of 30 days---Director General, Directorate General of Valuation, was only empowered to re-examine the Ruling for correcting the same or improving it, if the Director had failed to adhere to the determination of value under the provisions of S.25 of the Customs Act, 1969---Director General was empowered to correct the value and in case the value determined was on the higher side, he could revise the same---Director General had to confine himself within the ambit of the valuation ruling and not empowered to add a new item in the revision order, value of which had not been determined by the Director---Director General, in revision, could only, either accept the revision application, or reject the same or modify, which meant "to change some parts thereof while not changing the other parts"---Action to the contrary by the Director General was detrimental for the importer---By including the item in the revisional order, Director General travelled beyond his mandated sphere and committed a grave illegality, which was not curable hence void ab initio---Any order passed beyond the scope of law, would be deemed to be illegal---Impugned order-in-revision and Valuation Ruling by the Director General did not have any adherence with the statutory requirements, also derogatory to the specific provision of law---Same was declared without lawful authority and jurisdiction, void being infested with the patent illegalities and was set aside---Appeal was allowed.

Collector Excise and Land Customs and others v. Rehm Din 1987 SCMR 1840; Adam v. Collector of Customs, Karachi PLD 1969 SC 446; Muhammad Sadqain v. Collector of Customs (Appraisement) 2006 PTD 2742; Messrs Exide Pakistan Ltd. v. Deputy Collect of Customs (Adjudication-III) , Karachi 2004 PTD 1449; Saadia Jabbar's case PTCL 2014 CL 537; 1992 PTD 593; 2003 PTD (Trib.) 928; 2010 PTD 1515 and 2009 PTD (Trib.) 2025 ref.

(b) Words and phrases---

----'Revision'---Literal meaning, explained.

Balcks Law Dictionary; Lexicon Webster Dictionary and Oxford Advance Learner Dictionary ref.

Nadeem Ahmed Mirza for Appellant.

Umer Baloch, P.A. for Respondents.

Date of hearing: 15th March, 2018.

JUDGMENT

MUHAMMAD NADEEM QURESHI, MEMBER (JUDICIAL-I).---By this order, we dispose of Customs Appeal No. K-1644/2016 filed by the appellant against Order-in-Revision No. 216/2016 dated 28.07.2016 passed by Director General, Directorate General of Valuation (here-in-after to be referred as respondent No. 2), determining the value of Tic Tac Mints (Mouth Freshener) @ US$. 5.16/kg C&F through Order-in-Revision passed by him on the Revision Application filed by Messrs IBL Operation (Pvt.) Ltd., Karachi against Valuation Ruling No.834/2016 dated 19.04.2016, through which Director, Directorate General of Valuation (here-in-after to be referred as respondent No. 1) determined the value of Chewing Gums under the provision of Section 25A of the Customs Act, 1969 (here-in-after to be referred as Act).

2.Brief facts of the lis placed before this Tribunal for decision are that appellant is an importer of Tic Tac Mints (Mouth Freshener), assessment of which was made by the Official of Clearance Collectorate on the basis of identical/similar transaction value as enunciated in Sections 25(5) and (6) of the Act and Rules 117 and 118 of Chapter IX of Customs Rules, 2001 (here-in-after to be referred as 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 19.04.2016 the respondent No. 1 determined custom value for levy of duty and taxes on import of different kind/brands of Bubble Gum vide Ruling No.834/2016. Being aggrieved by the Ruling, Messrs IBL Operation (Pvt.) Ltd., Karachi filed Revision Application under the provision of Section 25D of the Act before respondent No. 2, who while deciding the Revision Application determined the value of Tic Tac Mints (Mouth Freshener) while considering it chewing gum and ignoring the fact that respondent No. 1 has considered it as chewing gum and for that reason no value was determined by him through Valuation Ruling No. 834/2016 dated 19.04.2016.

3.The appellant being aggrieved from the impugned order filed the instant appeal on the strength of grounds enumerated therein. No cross objection under subsection (4) of Section 194A has been filed within the stipulated period of 30 days by either of the respondents, instead comments have been filed, which are placed on record of the case for consideration and perusal.

4.Rival parties heard and case records perused. Prior to dilating the issue in hand, it is of vital importance to decide the question of locus standi, which arouse in the instant case due to non availability of order of respondent No. 2 under the provision of Section 25D of the Act, against the appellant, in the absence of which appeal is not competent before this forum under the provision of Section 194A(1) of the Act. In support of maintainability of the instant appeal the consultant/advocate argued and we are in agreement with them that in terms of expression of Section 194A ibid. a person against whom revision order has been passed by the respondent No. 2 has the right of appeal. By including Tic Tac Mints (Mouth Freshener) in the revision order by him despite not availability in the valuation ruling issued by respondent No. 1 under Section 25A of the Customs Act, 1969 grievances of the appellant accrued and he has every right under law to assail the said revision order before the Customs Appellate Tribunal under the provision of Section 194A of the Act, which expressly empowers "any person aggrieved may appeal to the appellate Tribunal against an order passed in revision by the Director-General Customs, Valuation". The words appearing as any person establishes the right of the appellant to appeal against the order passed by respondent No. 2 , irrespective of the fact that whether Revision Application was filed by him or any other person and this right is further established by the inclusion of "Tic Tac Mints (Mouth Freshener)" in the revision order, against which no valuation ruling was issued by respondent No. 1 under the provision of Section 25A of the Act. Resultant, the respondent No. 2 was not in his right to either hear any Revision Application for determination of value of Tic Tac Mints (Mouth Freshener), powers of which are exclusively vested with the respondent No. 1 and none else. Nor respondent No. 2 was empowered to fix the value of the product which is not the subject matter of the valuation ruling. This vital lapse and illegality is enough for establishing locus standi of the appellant, even otherwise, the order-in-revision passed by respondent No. 2 is order-in-persona, through which he infringed the rights of other importers as the impugned order cast the effect as order-in-rem to the extent of inclusion and determination of value of Tic Tac Mints (Mouth Freshener), it is incumbent on the Tribunal to entertain the appeal in terms of subsections (1) & (e) of Section 194A of the Act. Therefore, we are on the considered opinion that appellant has rightly filed the instant appeal and is maintainable for decision by this forum.

5.Reverting back to the main issue, no doubt respondent No. 2 is empowered to re-determine the value under the provision of Section 25A(3) of the Customs Act, 1969, as a referee, when two conflicting valuation rulings of the same item/goods are in field i.e. one issued by the Collector of Customs and the second by the Director, Directorate General of Valuation, in that case an application has to be submitted with Respondent No. 2, who in the capacity of referee re-determine the value of the goods in question in exercise of the power vested upon him through Notification No.495(I)/2007 dated 09.06.2007 while assuming the powers of Respondent No. 1, under the provision of Section 25A(1) of the Customs Act 1969. Whereas while deciding the Revision Application filed by an importer under the provision of Section 25D of the Customs Act 1969, he is empowered to revise the valuation ruling downwards as importer invariably files the Revision Application against the determination of value of any goods by respondent No.1 on higher side. Revision does not mean in any manner either determination of value of the already determined values on higher side or inclusion of any fresh item/goods, which is not appearing in the issued valuation ruling and this stood validated from the literal meaning of the word revision available in renowned dictionaries, which are taken into consideration as definition of the word revision is not available either in Section 2 of the Customs Act, 1969, Customs Rules, 2001 and Para 1 of CGO 12/2002 dated 15.06.2002 or even in any other taxing statue as it is an elementary rule of construction that phrases and sentences of the statute should be construed according to the rule of grammar and the words of the statute should be interpreted in their plain grammatical sense. Therefore the literal meanings of the word revision available in Blacks Law Dictionary is "Reexamination or careful Review for correction or improvement . A revision can occur only if it will not materially prejudice the accused.", in Chambers Dictionary 1997 Edition is "To examine and correct.", in The Lexicon Webster Dictionary of English Language Encyclopedia Edition is "A re-examination of a decision" and in Oxford Advance Learner Dictionary of current English Eighth Edition as "change or set of changes, examining with the intention of changing it.".

6.That, as defined in the Dictionaries, revision means careful re-examination or correction for improvement, the correction/improvement should be such that it should not prejudice the affected person. Meaning thereby, that respondent No. 2 is only empowered to re-examine the ruling for correcting it or improving it i.e. if respondent No. 1 has failed to adhere the determination of value under the provision of Section 25, he is empowered to correct that and in case the value determined is on the higher side, he can revise that to be on the lower side. Additionally, respondent No. 2 has to confine himself within the ambit of the valuation ruling, he is not empowered to insert a new item in the revision order, value of which has not been determined by the respondent No.1. In the revision order, respondent No. 2 can only either accept the Revision Application or reject or modify, which means "to change some parts of while not changing other parts". This does not mean in any manner increasing in the value or inserting anything new. Acting contrary, is detrimental for the importer being prejudiced. By including Tic Tac Mints (Mouth Freshener) in the revision order, the respondent No. 2 travelled beyond his allotted sphere and committed a grave illegality, which is not curable under law and renders the order-in-revision to the extent of appellant goods as non existent and not enforceable under law, hence void and ab-initio because it is settled principle of law that while passing order Adjudicating/Appellate or Revisional Authority, which is respondent No. 2 has to remain within the charter of the show cause notice/valuation ruling. Any order passed beyond the scope of those is deemed to be palpably illegal. The respondent No. 2 while passing order-in-revision travelled beyond the charter of valuation ruling and this stood validated from the inclusion of Tic Tac Mints (Mouth Freshener) in the revision order, which is non existent in valuation ruling No. 834/2016 dated 19.04.2016. Rendering the order-in-revision without lawful authority/jurisdiction as held in the judgments reported at Collector Excise and Land Customs and others v. Rehm Din reported at 1987 SCMR 1840 and Adam v. Collector of Customs, Karachi PLD 1969 Supreme Court 446, Muhammad Sadqain v. Collector of Customs (Appraisement) 2006 PTD 2742 and Messrs Exide Pakistan Ltd., v. Deputy Collector of Customs (Adjudication-III), Karachi, 2004 PTD 1449, "wherein it has been held that "Order of adjudication, being ultimately based on a ground which was mentioned in the show cause notice is palpably illegal on the face of it".

7.We also noted with great concern that the respondent No. 1 issued the ruling without mentioning, therein that the value so determined be applied on the goods imported by the importer (appellant) on its actual/net weight/quantity (contents) defined in applicable PCT heading in the column of UOM of First Schedule to the Customs Act, 1969 sans, weight of essential/non essential packing, which is disposed off after unwrapping/using the contents of actual goods as trash. This lapse provided a tool to the Officials of Clearance Collectorate in terming the weight of essential/non essential packing as the weight of goods actually imported for sale/consumption of the general public and started including the said weight in the weight of declared goods , in the absence of availability of the goods in units. Section 25 speaks about determination of value of the "goods" and "category of the goods" and Section 25A speaks about "goods" and "class of goods" which means the goods so imported and its quantity, excluding the weight of essential/non essential packing, which is not for use instead "trash", and cannot be used as goods so imported through any stretch of imagination or definition available in reputed dictionaries of English language. Weight of essential/non essential packing is immaterial, addition of cost of the material in the value of the imported goods had to be made as defined in Serial No. (iii) of clause (b) of subsection (2) of Section 25 of the Customs Act, 1969 while determining the value of imported goods under the concept of "Transaction Value" within the meaning of Section 25(1) of the Customs Act, 1969, only then when it is confirmed that the importer has incurred that but has not included in the price actually paid or payable of the imported goods. This means that the onus to prove that the cost of packing whether for labour or material is not included by the exporter, rest on the shoulders of the Officer of Customs in terms of Articles 117 and 121 of Qanun-e-Shahadat, 1984, unless it is proved through tangible incriminating evidence, the cost of essential/non essential packing whether for labour or material is not permitted to be added under law. The representative of the respondent also laid emphasis on Serial No. (ii) of Clause (b) of subsection (2) of Section 25 of the Customs Act, 1969, which read as "the cost of container which are treated as being one for customs purpose with the goods in question". This is in consonance with the illustration made in Rule 5(a) of General Rules of Interpretation, i.e. for the purpose of classification and valuation items listed therein or akin to those are to be treated as integral part of the goods so imported e.g. "Camera Cases musical instrument Cases, Gun Cases, Drawing Instrument Cases, Necklace Cases and similar containers specifically shaped or fitted to contain specific article or set of article, suitable for long term used as presented with the article for which they are intended, shall be classified with such articles when of a kind normally sold therein. This Rule does not, however apply to the container which give the whole its essential Character." In contrast the goods imported by the appellant are not in any manner akin to those, resultant, stand excluded from Serial No.(ii) of Clause (b) of sub-section (2) of Section 25 ibid. Notwithstanding, when respondent No. 1 determine "custom value" of "goods" or "class of goods", under Section 25A of the Customs Act, 1969 for levy of custom duty determine those to the extent of unit as given in the respective applicable PCT of First Schedule to the Customs Act, 1969 on C&F basis , meaning thereby in the said custom value every single element/expense is taken into consideration by him i.e. "cost" not "weight" which is immaterial due to the fact that the container or akin receptacle, in which akin products are filled / packed are to be thrown after use of the contents in the garbage bin as trash. While issuing the instant valuation ruling the respondent No. 1 gave partial treatment to the appellant as against importers of "Talcum Powder, Face and Skin Cream/Lotion/ Toothpaste, Aftershave, shaving Cream/Gel, Soap in other form and Facial Wash, Shampoos/Conditioners and Hair Spray/Wax/Cream/ color/Oil/Hair Coat, Aqua/ Hyrdogen Peroxide Liquid/Developer, Accelerator" for which Valuation Ruling Nos. 848/2016 dated 06.05.2016 and 849/2016 dated 06.05.2016 to the extent of net contents (consumable) were issued and even in negation of the previous Valuation Ruling of the goods in question bearing No. 858/2016 dated 25.05.2016 and letters dated 04.11.2011, 06.02.2015, 20.05.2015 and 22.03.2016, wherein, it have been held that Valuation Ruling are applicable on the net contents of the goods as weight of essential/non essential packing cannot be made part of assessable weight, if i.e. allowed to be added, it shall be in derogation of the norms of business, WTO Agreement on Valuation and provision of Section 25 of the Customs Act, 1969. Detail of subject concept has already defined and observed by the Hon'ble High Court of Sindh in case of Saadia Jabbar reported in PTCL 2014 CL 537, Hon'ble Supreme Court of Pakistan also validated and up held the same. In juxtaposition an importer/buyer will also not lift the imported goods without its essential packing. The value of essential/non essential packing is infact inbuilt in the custom value determined under section 25A of the Act, after following the method laid down in Section 25 ibid. Therefore, valuation determined under section 25A could not be further saddled in the name of weight of essential packing. It is apparent from the Valuation Ruling that the respondent No. 1 allowed officials of Clearance Collectorate to add weight of essential/non essential packing in the weight of the goods actually imported for generating revenue for the exchequer with the application of Valuation Ruling on that weight containing no goods. In terms of the respective PCT Heading of the First Schedule to the Customs Act, 1969, duty and taxes can only be recovered on the net contents of the imported goods. Essential/non essential packing cannot be construed as goods through any stretch of imagination and as defined in Section 25 of the Customs Act, 1969 and First Schedule to the Customs Act, 1969 without supplying the goods declared in Goods Declaration transmitted under the Provision of Section 79(1) of the Customs Act, 1969 and Rule 433 of Sub-Chapter III of Chapter XXI of Customs Rules, 2001. Any such exercise carried out by any Officer of Customs and respondents is in derogation of the provision of Section 25 of the Customs Act, 1969 and Article 18 of Constitution of Islamic Republic of Pakistan are transgressional. Double taxation not permitted under the Act/Constitution of Pakistan and even of the World and the law laid down in reported judgment 1992 PTD 593,2003 PTD (Trib.) 928, 2010 PTD 1515 and 2009 PTD (Trib.) 2025.

8.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, the subject impugned Order-in-Revision 216 /2016 dated 28.07.2016 and Valuation Ruling No. 834/2016 dated 19.04.2016 passed by the Respondents Nos. 1 and 2, does not have any adherence with the statutory requirements, also derogatory from the specific provisions of law, therefore, declared without lawful authority and jurisdiction, void , infested with patent illegalities, hereby set aside. Appeal is accordingly allowed with no order as to cost.

9.Judgment passed and announced accordingly.

HBT/37/Tax(Trib.) Appeal allowed.