Haji IHSAN ULLAH VS FEDERATION OF PAKISTAN through Secretary, 2018 PTD-KARACHI-HIGH-COURT-SINDH 1419 (2018)

Customs Act (IV of 1969)---

----S. 25(6)---Import Policy Order, 2013, Para. 9(ii)(5)---Dump trucks, old and used---Value---Determination---Importers were aggrieved of delay in release of dump trucks imported by them---Validity---No bar exited on importability of vehicles under Para. 9(ii)(5) of Import Policy Order, 2013 and vehicles in question were importable---Finalized assessments purporting to have been made under S.25(6) of Customs Act, 1969 were contrary to law and same was set aside and declared value of vehicles was applicable---High Court restrained all authorities from raising any objection to importability of vehicles in question and/or from applying finalized assessments or any value other than declared values---High Court directed authorities to release vehicles, if not already released, within thirty days and security given by petitioners was released---High Court further directed, in case any security was enforced or encashed, there must be a complete refund within specified period to the taxpayer---Constitutional petition was allowed accordingly.

Baig Enterprises and Engineering v. Federation of Pakistan and others 2015 PTD 181; Collector of Customs v. Eastern Construction Company 2015 PTD 963; Collector of Customs and others v. Shafiq Traders and another 2011 PTD 1185; Sadia Jabbar's case PTCL 2014 CL 537; Alpha Chemicals (Pvt.) Ltd. v. Federation of Pakistan and others 2013 PTD 2064 and Sus Motors (Pvt.) Ltd. v. Federation of Pakistan 2011 PTD 235 ref.

Faisal Siddiqui and Muhammad Vawda for Petitioners (in C.Ps. Nos.D-3485 of 2103 , 1126 and 1162 of 2016).

Haji Abdul Razik, Petitioner in person (in C.P. No.D-3293 of 2013).

Salman Talibuddin, Additional Attorney General and Asim Mansoor Khan, D. A. G. along with Ms. Alizay Bashir for Respondents.

Kashif Nazeer and Syed Mohsin Imam for the Department along with Abdul Latif Shar Inspector/ALO MCC Dry Port, Hyderabad.

Date of hearing: 21st September, 2017.

ORDER

MUNIB AKHTAR, J.---By this judgment, we intend disposing off the four petitions identified above. The petitions arise under the Customs Act, 1969 read with the Import Policy Order, 2013 ("IPO"), which is framed under the Imports and Exports (Control) Act, 1950. In brief, the dispute is as to whether certain vehicles sought to be imported by the petitioners (which can be categorized into various types) are importable or not and as to the valuation thereof. In C.P. D-3485/2013 an interim order was made on 25.06.2015 in which some of the issues were set out. A reference to this order will give some flavor of the issues involved in these petitions. In material part, this order stated as follows:

".... According to the department's report, [the] vehicles have been put into two categories... [In one category are] "Concrete Transit Mixers" and the case of the department is that they are in fact "Old and Used Dump Trucks" and their importation is prohibited in terms of the various provisions of the Import Policy Order, 2013, that have been set out in the report and which are also referred to in the order of previous date.... Prima-facie,... it appears that the vehicles do have shape commonly expected of a concrete mixer. However, learned counsel for the department as well as Mr. Rashid Khanzada, (Machine Shed Appraiser) submit that the requirement of the Chapter 87 with regard to concrete mixer lorries (trucks) is that it should, inter alia, have the concrete mixer as permanently mounted. The Machine Shed Appraiser has explained the stance of the department, which is that in the vehicles as imported, the concrete mixers are not permanently fixed and therefore they cannot be regarded as falling under the relevant heading of Chapter 87. As opposed to this, learned counsel for the petitioner states that [the] vehicles now under consideration in fact ought to be cleared as declared. But in any case and without prejudice to the principal submission of the petitioner, it is submitted that adaptations are permissible as per the relevant explanatory note, contained in the explanatory notes that are issued from time to time by the World Customs Organization. In relation to heading 87.05, the explanatory notes provide that this heading covers motor vehicles of various sorts, including those that are specially constructed or adapted. We may note that the import tariff, which is the First Schedule to the Customs Act, 1969, is prefaced by certain "rules", which provide, inter alia, that the explanatory notes shall be "considered authentic source of interpretation". Learned counsel on such basis states that the explanatory note being relied upon has the force of law and has to be applied accordingly. Learned counsel for the petitioner also relies on a Division Bench Judgment of this Court given in Special Customs Reference Applications Nos.88 to 102 of 2014 dated 22.12.2014. Learned counsel places reliance on the observations made by the learned Division Bench at para 10 of the said Judgment.

In view of this position, it appears to us that the legal issue involved with regard to [these] trucks has narrowed down to the question whether the word "permanently" being relied upon by the department as noted above is to have precedence or whether it is to be read subject to the explanatory note being relied upon by learned counsel for the petitioner. In addition, the effect of the judgment of the learned Division Bench being relied upon by learned counsel for the petitioner with regard to the position of the vehicles as declared has also to be considered. That of course is also in itself a question of law.

We are now come to the second category as per the department's report... These units were declared as "Old and Used Dump Trucks (Off Highway)". Learned counsel for the department states that these are in fact only "Old and Used Trucks". Explaining the difference learned counsel states that off highway trucks are those that may be used off track i.e., on those routes which are dirt or earth tracks and not metalled roads, whereas the trucks as imported are intended for use on the highway and other metalled roads. Learned counsel for the petitioner on the other hand, has relied on a judgment of the Supreme Court in C.Ps. Nos.774-K to 784-K/2001 dated 06.12.2001, on such basis learned counsel contends that the... units currently under consideration ought to be allowed to be cleared as declared.

The legal issues involved have been narrowed down to some considerable extent on the basis of the case sought to be put forward by the department relying on the report filed today. However it is not possible to consider these matters without finally disposing of these petitions. At the ame time, the factual aspect/controversy that the department has sought to raise, which is strongly contested by the petitioner (i.e., it is contended that there is in fact no such factual controversy at all) also need to be kept in mind .."

2.Before proceeding further, we may note that a number of vehicles were involved in these petitions. Some of them were released under various interim orders while others apparently have not been released. However, the exact number of vehicles in respect of each category, and the status (i.e., released or not) is not, strictly speaking, germane to the legal issues involved (although of course, this is a matter of practical importance to the importers and the Department). Therefore, although the numbers involved were touched upon in the submissions made by learned counsel for both the sides (and by the petitioner who appeared in person in one petition), no detailed reference will, as such, be made to this aspect herein below. We may also note that in three petitions where learned counsel appeared, C.Ps. Nos. D-3485/2013, 1126/2016 and 1162/2016 the same party is the named petitioner, while in the fourth petition, where the petitioner appeared in person the party was different. However, the issues involved were the same.

3.Learned counsel appearing for the petitioner in the three petitions as noted above referred to the aforementioned interim order of 25.06.2015 made in C.P. D-3485/2013 and to the specific number of vehicles that had been released and were pending release as on that date. Learned counsel submitted that the case sought to be made by the Department, both as to valuation and importability, was mala fide, both in fact and law. The matter of importability already stood resolved and it was submitted that there was no issue as such on this ground at all. As regards the dispute on valuation learned counsel submitted that that also was contrived, and took a number of objections in this regard, including that the provisional assessment under which some vehicles had been released had been finalized without hearing, that there had been a. violation of section 81, including in particular the timeframe provided for in that section, and that section 168 had been violated. Referring to the mala fides of the Department, learned counsel submitted that these were established both by the conduct of the departmental officers as regards the petitioners and also by reason of their contumacious failure and refusal to give effect to interim orders made by the Court.

4.Referring to the vehicles imported, learned counsel submitted that the basic objection with regard to the "concrete transit mixers" was as set out in the aforementioned interim order of 25.06.2015. The same was the position with regard to the objection taken to the "old and used dump trucks (off highway)". In addition, there were three other categories involved, "cement bulkers", "prime mover with trailer" and "mounted tunneling equipment", Elaborating his case, learned counsel submitted the petitioner entered into a contract on or about 11.03.2013 to import around 900 vehicles in the different categories. Initially, when the first batches arrived, only an issue of valuation was raised and there was no issue at all as regard maintainability. The vehicles were provisionally released. The collectorate (the Model Customs Collectorate Hyderabad) wrote to the Directorate General of Customs Valuation seeking guidance as to the valuation of the vehicles since they were all used and second hand imports. The Directorate, by reply dated 31.05.2013 expressed its inability to issue any valuation advice as the imports were "old and used vehicles of various make, models, specifications and physical condition". The Collectorate was asked to check the "importability", classification, valuation and all other aspect as per law at its own end". The Collectorate replied vide its letter dated 06.06.2013 and learned counsel emphasized that importability was not an issue raised by it. The only issue was valuation. The Collectorate took issue with the Directorate's stated inability to give a valuation advice, and asked the latter to "again review the cases and finalize the value of the vehicles" (emphasis in original). Reference was specifically made to the time period under section 81. The Directorate replied vide its letter dated 17.06.2013 and learned counsel drew attention to the last para thereof, where the Collecorate was, in effect, again asked to finalize the valuation on its own.

5.Learned counsel then referred to the order dated 06.08.2013 made by the Collector finalizing the provisional assessments in terms of which the vehicles had been released. The Collector finalized the values of the various vehicles in a manner that were not accepted by the petitioner, and learned counsel submitted that it was in such terms that C.P. D-3485/2013 came to be filed, on 30.08.2013. Referring to the prayer clause learned counsel submitted that since the only dispute raised was as to valuation, that was the relief sought by the petitioner. No mention was made to importability since such issue was never raised by the Collectorate. Such was the position taken also by the Collectorate in the para-wise comments. Learned counsel bolstered this submission by referring to various orders made in the petition (prior to the aforementioned order of 25.06.2015) referring in particular to the order dated 12.03.2015. Learned counsel submitted that it was only at this stage that the issue of importability was belatedly raised by the Collectorate/Department in order to unlawfully frustrate the import of the vehicles. It had been realized that there was no case on the valuation dispute. Reference was made to "contravention" reports dated 28.05.2015 and 15.06.2015, where the issue of importability was raised. Learned counsel also referred to certain correspondence issued by the Collectorate/Department to various local car manufacturers and their trade body seeking expert advice and assistance as to the vehicles and submitted that even before such advice was received the contravention reports were issued. A notice/intimation under section 171 was also issued to the petitioner on 12.06.2015 regarding the detention of the vehicles. Learned counsel emphasized that there was no expert report or advice and even the Department's own officers empowered to inspect imported goods had not made any such report. Nonetheless, the vehicles were detained on the made up issue of importability.

6.Learned counsel then referred to the "final" contravention report in respect of the vehicles in terms of which a large number of the vehicles were declared by the Department to be not importable by reason of violation of certain provisions of the IPO. Learned counsel submitted that the objection was wholly contrived. More specifically, as regards the "concrete transit mixers" reliance was placed on a decision of a learned Division Bench of this Court in which the matter, according to learned counsel, stood resolved and settled. Reference was also made to certain orders-in-original and an appellate order, on statutory appeal filed by the Department, which dismissed the Department's appeal. Reliance was also placed on orders made on 25.08.2015 and 11.09.2015 in C.P. D-3485/2013, and also to certain subsequent orders made therein.

7.Learned counsel submitted that the bulk of the vehicles involved in the dispute were "concrete transit mixers". All the vehicles were identical in all, material respects. Some were initially released but subsequently the objection as to importability was taken. Relying on the material/record referred to above and certain other documents, learned counsel submitted that the issue was without any substance. Reliance was placed on two Division Bench decisions of this Court, Baig Enterprises and Engineering v. Federation of Pakistan and others 2015 PTD 181 and Collector of Customs v. Eastern Construction Company 2015 PTD 963. As regards the "old and used dump trucks (off highway)" learned counsel made similar submissions, i.e., that initially some vehicles were released and thereafter the issue of importability was raised mala fide. The same was the position, according to learned counsel, as regards the three remaining categories. Elaborating on the objection of importability, learned counsel submitted that objections had been taken to the certificates issued by the "pre-shipment inspection" companies, as required in terms of the IPO. Learned counsel submitted that after the issue was raised, the other two petitions (C.Ps. Nos. D-1126 and 1162, both of 2016) came to be filed. As to the valuation dispute, learned counsel submitted that no hearing was given and the final order in this regard was made after the lapse of the statutory period. It was submitted that no "exceptional circumstances" existed as would allow for an extension of time. Reliance was placed on a decision of the Supreme Court reported as Collector of Customs and others v. Shafiq Traders and another 2011 PTD 1185. It was also submitted that there had been a failure to abide by the law as laid down in relation to section 25 by a Division Bench of this Court in the case of Sadia Jabbar PTCL 2014 CL 537.

8.The petitioner who appeared in person in C.P. D-3293/2013 submitted that the petition was maintainable since there was no provision for statutory appeal against an order finalizing a provisional assessment under section 81. The petitioner relied on the transaction value of the imported vehicles to submit that this was the true and correct value and ought to be enforced and given effect to. The petitioner submitted that this value had not been challenged by the Department and it had straightaway sought to take the matter to section 25A, which could not be done. It was submitted that the Directorate General of Valuation had been giving valuation advice in respect of used/second hand imported vehicles; it could not therefore turn around and claim that such valuation was not possible. Referring to the order dated 26.07.2013 finalizing the assessment (and impugned by the petitioner) it was submitted that although a large number of vehicles were involved, no specific vehicles were referred to or mentioned in the impugned order. Reliance was also placed for certain aspects on the Customs Rules, 2001 and the Explanatory Notes issued in relation to the First Schedule. It was submitted that the impugned order was without jurisdiction.

9.The learned Additional Attorney General submitted that although the issue as regards the vehicles had first emerged as a valuation dispute, the primary dispute was as to importability. The Department's case was that the vehicles could not be imported as that would be in violation of para 9(ii)(5) of the IPO read with Appendix H thereof. It was only if the vehicles were at all importable that the question of their valuation would become relevant. It was submitted that the issue of importability had been raised from the beginning and had been very much alive throughout. All submissions to the contrary were strongly denied. Referring to the aforesaid provisions of the IPO, the learned AAG submitted that for an importer to bring his vehicles in terms thereof, two things had to be satisfied: the vehicle had to be compliant with the Euro II emission standards and it had to have a life of five years. Referring to the PSI certificates produced by the petitioner in C.P. D-1162/ 2016 and CP D-1126/2016 for illustrative purposes, the learned AAG submitted that on the face of it, it was clear that the issuing agency had not been asked whether the vehicle was Euro II compliant. So, it was submitted, any such certificate could not be regarded as meeting the requirements of the IPO. It was submitted that there being no certification as to compliance with Euro II emission standards one of the mandatory requirements under the IPO had not been met. It was also pointed out that the Euro II emission requirements had undergone several changes over the years. Referring to the age of the vehicles, the learned A.A.G. submitted that the oldest vehicle was already around 25 years old at the time of import and therefore it was seriously in doubt as to whether the other condition, namely that the vehicles had a life of years was being met. It was also submitted that none of the certificates showed that the vehicles had actually been switched on during testing, which would be required if the emissions from the engine were to be properly investigated. The certificates showed that only a visual inspection had been carried out. In such circumstances, the learned AAG questioned whether there was any proper certification at all that there had been compliance with the emission requirements. The learned AAG also relied on a Division Bench decision of this Court in C.P. D-7925/2015 dated 26.04.2016 (Burki & Co. and others v. Federation of Pakistan and others) to submit that the correct interpretation and application of the IPO as presently relevant required that the vehicles be imported for some specific purpose. This also had not been shown. Therefore, it was submitted, the vehicles were simply not importable at all, as that would be in violation of the IPO. The petitions had necessarily to be dismissed.

10.Learned counsel appearing for the Department, referring to the valuation dispute, submitted that the final order had been made by the Collector after due and full correspondence with the Directorate General of Valuation and in the presence of the parties. The order made was in accordance with law and an appropriate statutory remedy against the same was available. The case of Sadia Jabbar, sought to be relied upon, was not applicable in the facts and circumstances of the case.

11.Exercising the right of reply, learned counsel submitted that the objections as to the certificates produced not showing compliance with the Euro II requirements were incorrect. The certificates had been earlier accepted and the objection now taken was merely an afterthought. It was again emphasized that import of the vehicles had started in 2013 and the objection as to importability was taken for the first time as late as 10.05.2015. Referring to the certificates, learned counsel strongly denied that they did not comply with the requirements of the IPO. It was submitted that a bare perusal of the certificates showed that the appropriate laboratory tests had indeed been carried out on the vehicles and it was only then that the certificates were issued. Even issuance of post-shipment certificates had been approved by the Ministry of Commerce. As regards the Division Bench decision relied upon by the learned AAG, it was submitted that the facts and circumstances there were completely different. Finally, it was submitted that since the valuation orders had been made under section 81(2), the same could not be appealed against and hence the petitions were maintainable. The petitioner who appeared in person also exercised the right of reply.

12.We have heard learned counsel and the petitioner who appears in person as above, examined the record and material relied upon and the case-law to which we were referred. Since much the greater emphasis was placed for the respondents on the issue of importability, we take up that aspect first. The relevant provision of the IPO was as follows:

"9. Import of used plant, machinery and equipment.- ...

(ii). Import of Secondhand Plant, Machinery and Equipment and Specialized Machinery by Construction, Mining and Petroleum Sector. - .

(5) Construction companies, mining, oil, gas and petroleum sector companies are also allowed to import specialized vehicle-mounted machinery and transport equipment such as mobile transit mixture, concrete pumps, crane lorries, concrete placing trucks, dumpers designed for off highway use, cement bulkers and prime movers 380 HP and above, etc. specified in Appendix-I. However, import of such items will be subject to certification by the competent authority of exporting country or a recognized pre-shipment inspection company listed in Appendix-H to the effect that the said machinery or transport equipment (a) is compliant with Euro-II emission standards (b) is in good working condition and has a remaining productive life of five years."

13.It is convenient to begin with the two issues identified in the order of 25.06.2015 made in C.P. D-3485/2013, mentioned above. As regards the first issue, the question is whether the word "permanently" is to be read into the aforesaid provision of the IPO at least insofar as concrete transit mixers are concerned. This, in effect, is the Department's case, relying inter alia on certain Explanatory Notes in relation to the relevant tariff heading in the Import Tariff. It is to be noted that the Department's objection is premised on the factual assertion that the concrete mixers are not permanently fastened or mounted on the trucks, a proposition not accepted by the petitioners. We put to one side this factual aspect and consider the Department's objection as a matter of law. In our view, the answer to the question posed ought to be against the Department. Learned counsel for the petitioner has relied on two decisions of the same learned Division Bench of this Court, Baig Enterprises and Engineering v. Federation of Pakistan and others 2015 PTD 181 and Collector of Customs v. Eastern Construction Company 2015 PTD 963. In the second mentioned case the vehicles involved were concrete transit mixers and the objection taken to their importation related to para 9(ii)(5) of the IPO. The learned Division Bench was, inter alia, pleased to observe as follows (pg. 976):

"We may observed that the Customs Authorities without any factual or legal basis, have disallowed the release of the subject vehicles merely on the presumption that the respondent will not use the imported Concrete Transit Mixer for mixing and transportation of liquid cement, and may subsequently use such vehicles as normal loading trucks for transportation of other goods, by removing the welded, adopted and fabricated Concrete Transit Mixer. We may observe that Customs Authorities under the law are required to conduct examination process the G.Ds, and to make assessment of the consignment imported "as presented" on the date of import, presentation of G.D, examination and assessment, and not on assumption or suspicion that subsequent to clearance of such consignment, the goods may be used for some other purpose by altering and changing its structure, particularly, when no such eventuality has surfaced. Such authority, if allowed to be exercised by the Customs Authorities, would result in multiplicity of unnecessary litigation and is likely to defeat the purpose and implementation of Import Policy as formulated by the Federal Government, keeping in view the economic conditions and financial implications, which may be involved while formulating such policy."

It will be seen that the objection taken here is essentially of a similar nature: that since the concrete mixers were not "permanently" affixed to the trucks, they could be dismantled and the trucks could then be used for some other purpose, presumably unrelated to that of construction. In our view, the foregoing observations of the learned Division Bench apply to the objection at hand. "As presented", the concrete transit mixers were precisely that. Therefore, respectfully following what has already been held, we are of the view that this objection must be overruled. As regards the second objection, taken with regard to the "old and used dump trucks (off highway)", it also cannot, and essentially for the same reasons, be sustained.

14.We now come to the principal objection taken as to importability, namely that the petitioners have failed to establish that the two conditions laid down in para 9(ii)(5), as to emissions and age, have not been fulfilled. More precisely, the objection is that the certificates presented by the petitioners from the pre-shipment inspection (PSI) company do not comply with these requirements, and fail to show that the conditions have been fulfilled. Before proceeding to consider the certificates actually tendered, it will be appropriate to take a closer look at the second of the two conditions (the first presenting no particular difficulty). The second condition, that the vehicle is in "good working condition" and has "a remaining productive life of five years", requires an evaluation or assessment to be made, an opinion to be formed and the matter then to be certified. Obviously, the condition is to be applied objectively, i.e., it is not the subjective assessment and opinion of a PSI company (or even of a "competent authority" in the exporting company) that suffices. But, equally, the condition has to be applied reasonably, i.e., if in respect of a particular vehicle a reasonable person could have formed the opinion that the certificate ought to issue, it matters not whether the Court or, more pertinently, the Department would or could have (equally reasonably) come to a different conclusion. So much is a rather straightforward application of settled law. But, in our view, there is something in addition that ought also to be kept in mind in the present context. The requirements of the condition ("good working condition" and "remaining productive life") are broadly and, to an extent, ambiguously stated. What is "good working condition", and what is meant by "remaining productive life"? What is required to be done by a reasonable person in order to make an assessment of these factors? Obviously, whatever is required can, and must, be done. But, given the broad-brush approach that has been taken in the formulation of the condition, the "margin of appreciation" (to---very cautiously---borrow and adapt for use here an expression from an altogether different branch of the law) must be correspondingly greater. In other words, in determining the reasonableness of an assessment and evaluation, the manner in which it is carried out and the opinion ultimately formed in respect of a particular vehicle must correspondingly be given a greater leeway. That is, in considering what a reasonable person would or could or ought to (or would not, could not or ought not to), do when asked to opine whether the condition is, or is not, fulfilled requires that an expansive approach be taken. The point being made here can also be understood by contrasting the condition with the corresponding provision under the Import Policy Order, 2016, which replaced and superseded the IPO. There, in the provision equivalent to para 9(ii)(5) the condition now under consideration has been replaced to read simply as follows: "not older than five years". The contrast between that, and the condition here applicable, is at once obvious and stark. In our view, this aspect, relating to the "margin of appreciation", must be kept in mind when considering whether the certificates presented by the petitioners were compliant with the conditions laid down in para 9(ii)(5).

15.In contesting the petitioners' case, the learned AAG referred, for illustrative purposes, to a certificate to be found at pg. 299 of the file of C.P. D-1162/2016. Referring to the "scope of services" identified in the certificate the learned AAG submitted that the services provided did not, on the face of it, comply with what was required for purposes of determining whether the two conditions were met. The learned AAG also referred to the examination report prepared by the Department in respect of one of the vehicles (on the reverse side of pg. 349 of the file of C.P. D-1126/2016). Reliance was also placed on certain material handed over during submissions in relation to the Euro II emissions standards. It was submitted that the certificates presented did not at all show whether the vehicles had been properly tested and therefore did not certify as to the first condition. In right of reply, learned counsel submitted that the certificates showed that the vehicles had been properly tested for compliance with the Euro II emissions standars. In the certificate used for illustrative purposes, learned counsel drew attention to the following line: "Engine Type: Euro II Emission Standard (No. WSE 15-13141.22 dated: 20.06.2015". Learned counsel submitted that this date was the date on which the vehicle was tested in the laboratory for compliance with the Euro II emission standards.

16.Having considered the material to which we were referred, we are of the view that the certificates presented by the petitioners were compliant with both the conditions laid down in para 9(ii)(5). The "scope of services", as stated in the certificate, was as follows: "1. Verify description. 2. Verifying the present condition. 3. Assessment of average residual life." The conclusion was as follows (emphasis in original):

"Upon result of survey it is without prejudice, our opinion that under normal circumstances, usage and providing that a proper and satisfactory maintenance schedule will be carried out as recommended by manufacturer, the Used Dump Truck (OFF Highway) is considered to be Acceptable and may be able to continue the service for at least Five (05) Years.

Cautions: These conclusions are only for customs purpose, and the residual life assessment is based on and limited to the visual inspection."

The learned AAG took issue with the PSI company certifying the matter on a mere visual inspection. In our view, the "scope of services", when read as a whole were sufficient to cover both the conditions laid down in para 9(ii)(5). As regards the objection that the conclusion that the vehicle had a life of at least five years was arrived at by a visual inspection we are, with respect, unable to accept it as valid. This aspect relates of course to the second condition. The proper approach to take with regard to that condition, and in particular the "margin of appreciation" that must be granted to the certifying authority/agency has already been referred to. In our view, the fact that the PSI company was satisfied that it could make an assessment and form the requisite opinion on a visual inspection is neither fatal for the petitioners' case nor contrary to the broad terms in which the second condition has been set out in the IPO. Insofar as the first condition is concerned, we are satisfied with the explanation given by learned counsel for the petitioner that the date given along with "engine type" is the date on which the vehicle was actually tested for the Euro II emissions standards. It must be remembered that para 9(ii)(5) requires the PSI company to certify that the two conditions are met. The para does not require for the certificate to be in any particular form or meet any specific procedural requirements under the IPO. It requires only that there be a "certification". It may be arguable that as regards the first condition the certification is somewhat obscure. But that, in and of itself, is not sufficient to reject it. In our view, a reasonable explanation has been offered and ought to be accepted as such. Finally, as regards the detailed material handed over during submissions by the learned A.A.G. as to what is meant by the Euro II emission standards and what is required to ensure that a vehicle is properly tested to ensure that it meets those standards, we are, with respect, unable to accept that it is within the domain of this Court, in exercise of constitutional jurisdiction, to consider such highly technical matters in any detail or with particularity. Once it is shown, as we conclude that the petitioners have succeeded in doing, that it can be reasonably concluded that the vehicle has been properly certified, it is not appropriate for us to delve into technical details that are in any case outside the scope of our experience and expertise.

17.The learned AAG quite properly restricted himself to one certificate for illustrative purposes, and we have examined the matter on that basis. We conclude that the certificates issued for the vehicles showed that both conditions laid down in para 9(ii)(5) were met. We now turn to consider the Division Bench decision of this Court relied upon for the respondents, being judgment in C.P. D-7925/2015 dated 26.04.2016 (Burki & Co. and others v. Federation of Pakistan and others). Learned counsel for the petitioners sought to distinguish this decision on the facts and having gone through the same, we are in agreement with this conclusion. The vehicles involved there were imported by a construction company and then sold to the petitioners before the Court, who put them up in a showroom "for onward sale to the public in open market". It is in such circumstances that the vehicles were seized on the basis that there had been a contravention of para 9(ii) of the IPO. Learned counsel who had appeared for the petitioners had sought to rely on clause (5) contending that the vehicles, as imported, came within the scope thereof. Thus, the vehicles fell outside the scope of clause (1). The learned Division Bench repelled this contention, observing that this would "be a gross misreading and abuse of the framework defined by the said Policy and a clear divergence from the intent and purpose for which the said import facility has been formulated benefiting the construction industry". The learned Division Bench further opined (emphasis supplied): "If the sole intent would have been for a company to name itself as a construction entity and start importing prime movers for the very purpose of selling those to the open market, one wonders why the said facility was restricted to construction company only". Reference was also made to clause (6), which related to commercial importers. The construction company that had imported the vehicles was described as "seemingly a paper company", which had imported the same in "falsification" of the conditions laid down in the IPO. None of these observations apply in the present cases, and no such allegations have been levelled against the petitioners. In our view, the facts and circumstances then before the Court are far removed from those at hand, and therefore, with respect, the reliance placed by the learned A.A.G. on this decision cannot be accepted.

18.In view of the foregoing, we conclude that the objection as to the importability of the vehicles as taken in terms of para 9(ii)(5) cannot be sustained and must be repelled. The vehicles were importable under the IPO.

19.We turn to the valuation dispute, which was very much on the sidelines insofar as the submissions on behalf of the respondents were concerned. The dispute here essentially centers on two valuations, one dated 06.08.2013 challenged in C.P. D-3485/2013) and the second dated 26.07.2013 (challenged in C.P. D-3293/2013). Both were finalizations of provisional assessments made under section 81. Learned counsel for the petitioner, and the petitioner who appeared in person rightly relied on a decision of the Lahore High Court, Alpha Chemicals (Pvt.) Ltd. v. Federation of Pakistan and others 2013 PTD 2064 rebut the objection as to maintainability. Learned counsel for the petitioner also relied on a decision of the Supreme Court, Collector of Customs and others v. Shafiq Traders and another 2011 PTD 1185, where (at pp. 1188-9), in relation to the expression "'exceptional circumstances" as used in the proviso to subsection (2) of section 81, the Court referred with approval to a passage from a Division Bench decision of this Court, Sus. Motors (Pvt) Ltd. v. Federation of Pakistan 2011 PTD 235. It was also submitted that the assessment had been finalized in Violation of the principle enunciated by this Court in the case of Sadia Jabbar PTCL 2014 CL 537.

20.Having considered the finalized assessments, we are unable to accept that they accord with the law. Insofar as C.P. D-3485/2013 is concerned, the Collector essentially purported to apply section 25(6) to the vehicles considered by him. Section 25(6) requires that the transaction value of the similar goods (which are to be used to value the goods in question) must of those goods which have been exported to Pakistan "at or about the same time" as the goods in question. This expression is defined in Rule 107 of the Customs Rules, 2001 as being a period ninety days prior to the importation of the goods in question, up to ninety days thereafter. The vehicles in question were imported from December 2012 onwards, as per the Collector's order itself. However, he used values as per certain criteria laid down by the Directorate General of Valuation in its communication of 01.02.2012. In terms of these criteria, the Collector applied a formula (a certain stated percentage being added or subtracted to the declared value) to arrive at the value determined in terms of section 25(6). As is obvious, the values used could not be "at or about the same time" within the meaning of the subsection. Furthermore, a bare perusal of the subsection shows that the approach adopted is wholly extraneous to what is required by law. The subsection neither contemplates nor permits any such computation as adopted. Furthermore, section 25(13)(e), which is expressly made applicable to subsection (6), states that goods are not to be regarded was "similar" unless "they were produced in the same country as the goods being valued". It is not at all clear from the order whether this requirement was fulfilled. It also appears to be the case that the valuations used were of Hino Dump Trucks, whereas the vehicles being valued were not all dump trucks; many were different types of vehicles. Yet, the Collector simply lumped them together as "dump trucks and such other vehicles". Section 25(13)(c), which also is expressly made applicable to subsection (6), explains what is meant by "similar goods". It is clear that the Collector has simply not applied his mind to this aspect in considering the various types of vehicles that were before him. Here it must be kept in mind that even though different types of vehicles may fall within the rubric of the same tariff heading, that does not mean of itself that they can all be treated as "similar goods". There must in each case be a proper application of mind to the requirements laid down in section 25(13)(c). Finally, subsection (6) expressly provided that in applying it, clauses (a), (b) and (c), and (at the relevant time, also) clause (d) of subsection (5) would apply, mutatis mutandis. As the use of the word "shall" indicates, this is a mandatory requirement. Again, it is obvious that the Collector has not at all applied his mind to this aspect. For all of these reasons, we are of the view that the finalized assessment was clearly contrary to law and cannot be sustained in terms of section 25(6). The finalized assessment must be quashed. If follows that it is the declared values that must be applied.

21.Turning to the finalized assessment in C.P. D-3293/2013, which was made by order dated 26.07.2013 we are of the view that this assessment also cannot be sustained. Here also it is section 25(6) that has been applied. Whatever has been said above with regard to the requirements of the subsection, and the failure of the Collector to abide by and apply the same, is equally applicable here. (This is perhaps not that surprising since both orders were made by the same Collector.) It appears that the Collector has made only a perfunctory gesture in referring to subsection (6) and used it to erect and use a methodology essentially of his own making. This is of course, completely contrary to law. It is quite obvious that subsection (6) is carefully crafted in light of (and indeed, to give effect to) the Valuation Agreement that is part of the WTO system. (Reference may be made to the detailed discussion and analysis in the case of Sadia Jabbar.) It certainly cannot be molded to suit the purposes of the Department and applied in any manner as the "appropriate officer" may deem fit. The finalized assessment is clearly contrary to law and must be said aside and quashed. It follows that it is the declared values that must be applied.

22.It may be that vehicles have been released or processed in terms of provisional assessments, which are still pending finalization. In view of what has been stated above, since the provisional assessments cannot now be finalized, the same are also quashed and set aside. It may also be that in the case of some vehicles there is not even a provisional assessment, whether completed, pending or under process. In all such cases, it is the declared values that must be applied.

23.Before concluding, one point may be noted. These petitions were earlier heard and reserved by a Bench that included one of us (Munib Akhtar, J). However, before judgment could be announced the other member of that Bench, for reasons that need not be recorded here, unexpectedly ceased to be a Judge of this Court. That Bench could not therefore thereafter assemble again or be reconstituted. It was in such circumstances that these petitions came to be placed before this Bench.

24.In view of the foregoing discussion, we hold as follows:

a.The objection as to the importability of the vehicles under para 9(ii)(5) of the IPO cannot be sustained and is hereby rejec-ted. The vehicles were importable under and in terms of the IPO.

b.The finalized assessments, purporting to have been made under section 25(6), are contrary to law and are hereby quashed and set aside. It therefore follows that it is the declared value of the vehicles that is applicable.

c.The Department and all concerned Directorates, Collecorates and the officers are restrained from raising any objection to the importability of the vehicles and/or from applying the finalized assessments or any value other than the declared values.

d.Such of the vehicles as have not already been released must be released within 30 days of this judgment in the foregoing terms. All security given by the petitioners is released and must, within like period, be returned. In case any security has been enforced or encashed there must be a complete refund within the aforesaid period.

e.The foregoing apply mutates mutandis also in respect of those vehicles that have been released and/or are pending processing or release under provisional assessments that have yet to be finalized. The foregoing also apply mutates mutandis to all other vehicles even if the same have not yet been processed/assessed on any basis.

25.Before concluding we would like to thank the learned counsel who appeared in these matters, but would in particular like to express our appreciation of the manner in which the petitioner who appeared in person, Haji Abdul Raziq Khan conducted his case. He had the facts on his fingertips. But, in addition, he also pleaded the law and made submissions on the legal aspects with the confidence and poise that one would expect. from a seasoned and experienced lawyer. It was a case well argued.

26.The petitions stand disposed off in the above terms. There will be no order as to costs.

MH/I-12/Sindh Order accordingly.