NICE TRADERS, GUJRANWALA VS The DIRECTOR, DIRECTORATE GENERAL OF VALUATION, CUSTOMS HOUSE, KARACHI, 2018 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 2500 (2018)

Customs Act (IV of 1969)---

----Ss.25, 25-A, 25-D, 80, 81 & 194-A---Customs Rules, 2001, R.438---Determination of customs value of goods---Declared value of imported goods was accepted by the Clearance Collectorate---Director, Directorate General of valuation issued Valuation Ruing against which revision application was filed before Director General, Directorate General of Valuation, who, remanded the matter to director for conducting fresh exercise for issuance of ruling; while doing so Director General failed to set aside the ruling in question issued by Director and same remained in field for the purpose of assessment---Importer's Clearing Agent approached Chief Collector for clearance of consignment under S.81 of the Customs Act, 1969 which he refused on the basis of Chief Collector's Circular dated 22-11-2017---No cross-objections, under subsection (4) of S.194-A of the Customs Act, 1969 were filed within the stipulated period of 30 days, by the department but were filed on the date of hearing---Departmental Representative stated that order passed by Director General of Valuation was correct in fact and law---Under the provisions of S.25-D of the Customs Act, 1969, the Director General Valuation had no power to re-determine the value of the imported goods under scrutiny before him---Concept of remand was not available under the provisions of S.25-D of the Customs Act, 1969---Director General of valuation was not empowered to remand a ruling without setting aside the same---Order of remand in violation of the provision of law could not be passed without setting aside the Valuation Ruling---When a ruling was remanded, same was deemed to be set aside and as such non-existent for any purpose, including passing the assessment order under provisions of S.80 of the Customs Act, 1969 and R.438 of Customs Rules, 2001---Director General of Valuation by doing so, in fact rendered the Valuation Ruling ab initio void, being in derogation of S.25 of the Customs Act, 1969---Impugned Valuation Ruling, was not in existence and could not be applied on the consignment of the importer from the date of its issuance---Director General of valuation, in revision had not disputed the veracity of the import value of the goods nor the annexed documents were found false, but in fact had accepted the value of importer's goods as fair, falling within the ambit of S.25(1) of the Customs Act, 1969---Order-in-Revision Valuation Ruling and Circular dated 22.11.2017 by the Director General of Valuation had no adherence with statutory requirements, and derogatory to the specific provisions of Ss.25, 25-A, 25-D & 81 of the Customs Act, 1969 which were declared without lawful authority, void and infested with patent illegalities and were set aside to the extent of the importer.

Sadia Jabbar v. FOP 2018 PTD 1746; Messrs Danish Jehangir v. FOP and 2 others 2016 PTD 702; SCRA No.744 of 2016; Central Insurance Co. v. Central Board of Revenue 1993 SCMR 1232 Messrs Lever Brother Pakistan Ltd. v. Customs Sales Tax and Central Excise Appellate Tribunal, Karachi 2005 PTD 2462; Superior Textile Mills Ltd. v. FOP 2000 PTD 399 and Messrs Arjun Salt Chemical v. UC Gharo 1982 SCMR 522 ref.

Nadeem Mirza, Consultant for Appellant.

Umer Baloch, V.O. for Respondent No. 2.

Ashfaq Ahmed, P.A. for Respondent No.3.

Date of hearing: 6th February, 2018.

JUDGMENT

MUHAMMAD NADEEM QURESHI, MEMBER (JUDICIAL-I).--By this judgement, we dispose of Customs Appeal No. K-1430/2017 filed by the appellant against Order-in-Revision No. 406/2017 dated 07.11.2017 passed by Director General, Directorate General of Valuation (here-in-after to be referred as respondent No. 2), rejecting the revision application, while maintaining Valuation Ruling No. 1153/2017 dated 08.05.2017 issued by Director, Directorate General of Valuation, (here-in-after to be referred as respondent No.1) through which value of Korean origin Non Dairy Topping Cream was determined vide Serial No. 2 @ US$. 1.30/kg C&F.

2 Brief facts of the case are that appellant is a commercial importers and stockiest/whole-sellers of Non Dairy Topping Cream. He imports the said products mostly from Korea and upon filing of Goods Declaration, his declared value was accepted by the Clearance Collectorate due to the fact that he is the only importer of the said product from Korea. On 22.01.2016, Respondent No. 1 issued Valuation Ruling No. 801/2016, against which Revision Application was filed before respondent No. 2, who rejected that vide Order dated 13.05.2016, vires of both were assailed before the Hon'ble Tribunal, which vide Order dated 23.07.2016 set aside the Ruling/Revision Order with the direction to respondent No. 3 and his subordinate to assess the goods of the appellant on declared value on 04.05.2016 the respondent No. 1 again determined the value of Non Dairy Topping Cream vide Ruling No. 897/2016 dated 04.08.2016, against which appellant filed Revision Application before respondent No. 2, which met the same fate as of earlier Revision Application, resultant, an appeal was filed before Customs Appellate Tribunal, which vide Order dated 21.08.2017 declared the ruling/revision order as of no legal effect and set aside those. Between the period when the ruling/revision order was under scrutiny with the Tribunal, respondent No. 1 issued yet another Ruling No. 1153/2017 dated 08.05.2017, against which Revision Application was filed before respondent No. 2. Respondent No. 2 vide order dated 07.11.2017 remanded the case to respondent No. 1 for conducting fresh exercise for issuance of ruling, while doing so she intentionally failed to set aside the ruling, resulting to which that remain in field for the purpose of assessment. Resultant, appellant clearing agent approached subordinate of respondent No. 3 for clearance of his consignment imported vide GD No. KAPE-HC-85367-13.11.2017 under the provision of Section 81 of the Customs Act, 1969, which he refused on the basis of circular dated 22.11.2017 issued by SA of respondent No. 3 in the presence of judgment of the High Court of Sindh in 2018 PTD 1746 Sadia Jabbar v. FOP and 2016 PTD 702 Messrs Danish Jehangir v. FOP and 02 others, passed in the presence of subsection (4) of Section 25A of the Customs Act, 1969.

3.Being aggrieved and dissatisfied with the Order-in-Revision, the appellant filed the instant appeal before this Tribunal on the grounds mentioned in the Memo. of Appeal and the consultant on the date of hearing argued the case strictly in line with those and prayed for acceptance of appeal, while setting aside the Order-in-Revision and Valuation Ruling being nullity to law and as such of no legal effect.

4.No cross objections under subsection (4) of Section 194A has been filed within the stipulated period of 30 days by either of the respondents, instead on the date of hearing representative of the respondents stated at bar that the order passed by respondent No. 2 is correct in fact and law and she is empowered to remand the case, even in the absence of availability of power in Section 25D of the Customs Act, 1969 and that also without setting aside the Valuation Ruling, which ought to hold field for the purpose of assessment of the imported consignment till the time fresh Valuation Ruling is not issued by the respondent No. 1 and prayed for the dismissal of appeal.

5.Argument heard and concluded. After perusal of the record and arguments extended by both the parities, it has been noticed and observed that, under the provision of Section 25D of the Customs Act, 1969 the Director General Valuation has no power to re-determine the value of the impugned goods under scrutiny before him. No concept of remand is available in the provision in question (25-D). Director General is not empowered to remand a Ruling without setting aside that. Order of remand in isolation cannot be passed in the absence of setting aside the Valuation Ruling. When a ruling is remanded, it is deem to be set aside and as such non existent for any purpose, including passing the assessment order under the provision of Section 80 of Customs Act, 1969 and Rule 438 of Sub-Chapter III of Chapter XXI of Customs Rules, 2001. By doing so the Director General in fact termed the impugned Valuation Ruling ab-initio void by virtue of being in derogation of Section 25 of the Customs Act, 1969, as such, the impugned valuation Ruling No. 1153/2017 dated 08.05.2017 is not in existent and cannot be applied on the consignment of the appellant from the date of its issuance, emphasis relied on judgement passed by the Hon'ble High Court of Sindh in SCRA No. 744/2016, wherein it has been held that "the jurisdiction of Director General under 25D is therefore limited to the determining the legality and propriety of the exercise carried out in terms of subsection (1) of Section 25A. Was it or was it not in accordance with law? If it was, then the customs value stands and is to be applied as it is. If it was not, then the customs value determined must be declared to be contrary to law and set aside." In this present case the Director General relying on aforementioned observations infact made the reference to the Director Valuation under section 25-A-(1) of Customs Act, 1969 to re-determine the subject customs values such legal standards were denied.

6.It is evident that in the impugned Order-in-Revision the Director General has not disputed the veracity of the import value of the appellant goods, nor the annexed documents by the appellant were found fake or fabricated or even tainted, in fact accepted the value of the appellant goods as fair, falling within the ambit of section 25(1) of the Customs Act, 1969. This august Tribunal vide their judgements dated 23.07.2016 and 21.08.2017 passed in Appeals Nos. 1131/2016 and K-25/2017 are on the same preposition infact involved in present appeal and issue made there under were decided, resultantly the consignments imported by the appellant from the period of 05.07.2017 till to date were considered by the respondent as fair value declared without any exception.

7.It is also evident from the contents of the Order-in-Revision that the Valuation Methodologies adopted by the department could not given satisfactory response to justify the basis of revision of values in the last three (3) successive rulings bearing Valuation Ruling No. 801/2016 dated 22.01.2016, Valuation Ruling No. 897/2016 dated 04.08.2016 including the present impugned Valuation Ruling No.1153/2017 dated 08.05.2017 which are lacking in material aspects and the department could not substantiate their values notified vide the impugned Valuation Ruling. Relying on aforementioned observations the case was remanded back to the Director Valuation, to conduct comprehensive valuation exercise whereby the nature of product, quality and the price, value basis on various aspects, are required to be investigated thoroughly and re-determined the customs values of the subject goods. At the time of passing this order the Director General Valuation even otherwise fail to apply the statutory provision of Section 25A subsection (3) of the Customs Act, 1969, (without determining the applicable customs value) remanded the case back to the Director Valuation, which is transgressional and derogatory from the statutory provision of law. Director General Valuation while sitting under jurisdiction, envisaged in section 25-D of the Customs Act, 1969 and passed the impugned Order-in-Revision, and remanded back the case to Director Valuation for re-determine the custom values of the subject goods under section 25-A of the Customs Act, 1969. Under such directive, it is the duty of the Director Valuation to initiate prompt action in accordance with section 25-A-(1) of the Customs Act, 1969, same shall be considered as reference made to him and to act upon the legal obligations laid down under subsection (4) of section 25-A of the Customs Act, 1969. Inspite of doing so, and by taking the refuge under such transgressional act caused and created by the Director General Valuation, office of Chief Collector of Customs, Appraisement (South) issued a circular dated 22.11.2017, under which he issued the directions about the validity of the valuation rulings, such directions are perverse from the statutory obligations and interpretation made therein by the Superior Court including observation passed by the Hon'ble Supreme Court in case of Saadia Jabbar. In presence of these legal obligations the amendment followed by the Chief Collector made in rule 107 of the Customs Rules, 2001 through sub-para (a) are basically contradicted from the provisions of sections 25-A(1)(2)(3) and (4) of the Customs Act, 1969. Under the circumstances said impugned circular is purposely issued and tried to override the judicial power of the courts as well as statutory provisions of law. In this present case conflict about the customs values determined under section 25-A of the Customs Act, 1969 are much apparent specially with reference to the previous judgement passed by this august court against valuation rulings, previously issued under section 25-A of the Customs Act, 1969 previous Valuation Ruling No.801 of 2016 dated 22.01.2016 along with Order-in-Revision No. 182 of 2016 dated 13.05.2016 were set aside through judgement passed in C.A. No.K-1131 of 2016 dated 23.07.2016. After said judgement Director Valuation issued a fresh Valuation Ruling No. 897 of 2016 dated 04.08.2016 vires of the said valuation ruling were again assailed before Director General Valuation under section 25-D of the Customs Act and ultimately, the matter came up before this august Tribunal and after ably deliberations the said Valuation Ruling No. 897 of 2016 dated 04.08.2016 was set aside through judgement passed in C. A. No. K-25/2017 dated 30.08.2017, present Valuation Ruling No. 1153 of 2017 was in fact issued on 08.05.2017 since then values determined under said impugned Valuation Ruling are under challenge and issue is still under conflict.

8.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 phases "applicable customs value" and "determination of customs value" is quite evident. Determination of customs values exclusively i.e. 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 reference was filed by the Collector MCC Appraisement (East) before the Director Valuation under Section 25-A of the Customs Act, 1969 and in compliance, Director Valuation issued the subject impugned amendment in the Valuation Ruling. The Valuation Ruling issued under Section 25A, 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". In this case Director General Valuation made reference to the Director Valuation by passing the impugned Order-in-Revision to re-determine customs values of subject goods under section 25-A of the Customs Act, 1969. Now the question arises why even lapse of 90 days period, the impugned Valuation Ruling has not been revised or rescinded, instead of doing so, the matter is still unresolved and respondents deliberately caused and created unavoidable circumstances in form of said impugned circular dated 22.11.2017 about the validation of the Valuation Ruling. This act is clear reflection of mala fide intention and deliberate attempt for getting their ultra motive better known to the respondents.

9.Keeping in view the aforesaid observations, it is important to observe that, the Chief Collector, Appraisement (here-in-after to be referred as respondent No. 3) has no power or authority under any provision of the Act to issue a circular directing the competent authorities notified in the provision of Section 81 not to exercise their powers, neither he is empowered to interpret the provision of Section 81 ibid and the Order of the Hon'ble High Court of Sindh in the case of Danish Jehangir v. FOP and 2 others reported as 2016 PTD 702. The interpretation of the subordinate legislation rests with the Supreme/High Courts as has been held in 1993 SCMR 1232 in the case of Central Insurance Co. v. Central Board of Revenue the Hon'ble Supreme Court of Pakistan held that "Board's view as to the interpretation of law do not have the force of law and the exception would be, where a fiscal statute is involved, that should be implemented with strict impartiality" and 2005 PTD 2462 Messrs Lever Brother Pakistan Ltd. v. Customs Sales Tax and Central Excise Appellate Tribunal, Karachi that "CBR has no place to in the Scheme of Law, conferred with the jurisdiction to interpret any law, statutory or in exercise of any deliberate authority i.e. subordinate legislation". The circular issued is without any lawful authority and jurisdiction and even in derogation of reported judgment PTCL 2014 CL 537 Sadia Jabbar v. FOP and others passed by the Division Bench of the Sindh High Court despite availability of subsection (4) of Section 25A of the Customs Act, 1969 as has been inserted through Finance Act, 2017 in Rule 107(a) of Chapter IX of Customs Rules, 2001 reading as "the Customs value determined under subsection (3) shall be applicable until and unless revised or rescinded by the competent authority". No drastic change has been made in the said subsection by the insertion in Rule 107(a), as evident from its expression "except in the cases where Valuation issued under Section 25A exist, the Valuation Ruling shall remain in field unless rescinded, modified or replace with the New Valuation Ruling". Rules being subordinate legislation cannot undo the provision of statute, it has to prevail on the subordinate legislation, and in case of any conflict between the two former has to prevail as held in 2000 PTD 399 Superior Textile Mills Ltd. v. FOP that where rules were in-conflict with parent Act, the former must yield to the later and the rules to the extent of inconsistency would be void. The said opinion is further fortified by the Supreme Court in its reported judgment 1982 SCMR 522 Messrs Arjun Salt Chemical v. UC Gharo, wherein their lordship of Supreme Court settled the ratio while observing that "It is now well established principal or statute that rule which are merely subordinate legislation cannot override or prevalent on the parent statute and whenever there is inconsistency b/w the rule and statute the later must prevail".

10.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 hereby pass the order, that the Order-in-Revision No. 406/2017 dated 07.11.2017, Valuation Ruling No.1153/2017 dated 08.05.2017 passed by respondent No. 2, issued by respondent No. 1 and circular dated 22.11.2017 issued by Special Assistant to respondent No. 3 does not have any adherence with the statutory requirements, also derogatory from the specific provision of Sections 25, 25-A, 25-D and 81 of the Customs Act, 1969, therefore, declared without lawful authority, void and infested with patent illegalities, hereby set aside to the extent of appellant. Appeal is accordingly allowed with no order as to cost.

11.Judgement passed and announced accordingly.

HBT/33/Tax(Trib.) Appeal allowed.