SADIA JABBAR VS FEDERATION OF PAKISTAN, 2018 PTD-KARACHI-HIGH-COURT-SINDH 1746 (2011)

2018 P T D 1746

[Sindh High Court]

Before Muhammad Athar Saeed and Munib Akhtar, JJ

SADIA JABBAR

Versus

FEDERATION OF PAKISTAN and others

Constitutional Petition No. 2673 of 2009 and connected petitions decided on 28/02/2011.

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

----Ss. 25 & 30---Customs value of goods---Determination---World Trade Organization Agreement---Scope---Rate of import duty---Date of determination---Section 25 of the Customs Act, 1969---Scope---Section 25 of Customs Act, 1969, embodied World trade Organisation Agreement and was one of the most important provisions of the Act, which laid down the general manner in which the customs value of imported goods was to be determined---Proper determination of the customs value was absolutely essential---Section 25 had provided that the customs value of imported goods was to be the "normal price" of the goods---Normal price of goods could be higher or lower than the actual price---Normal price being a statutory construct, same was to be determined by the appropriate Officer of the Customs in the manner specified in S.25---Federal Board of Revenue, through various Customs General Orders and other instructions, had made the "actual price" relevant---Valuation Agreement had to be construed as a whole---Appreciation of the fundamental principles underpinning the Valuation Agreement was important---Three points could be noted, firstly, the primary method of determining the customs value was the transaction value i.e. the price actually paid or payable for the imported goods; secondly, if the transaction value could not be determined, then the subsequent methods were to be applied sequentially, in the order set forth in the Valuation Agreement and thirdly, that the exercise must stop at the first method which was found applicable, was neither permissible nor necessary to go on to, or to consider any of the succeeding methods---To resort to a particular subsection of S.25 was not permissible unless, it was first concluded that the previous subsection referred to, did not apply and it was not permissible to apply the latter unless it was first concluded that the subsection preceding it did not apply---All the elements of the principle of sequential application were clearly embedded in S.25 of the Customs Act, 1969.

Rehan Umar v. Collector of Customs and others 2006 PTD 909; Collector of Customs (Valuation) and another v. Karachi Bulk Storage Terminal Ltd. 2007 SCMR 1357 = 2007 PTD 1858 and Toyo International Motorcycle v. Federation of Pakistan and others 2008 PTD 1494 ref.

Industrial Relations Advisors' Association v. Federation of Pakistan and others PLD 2010 Kar. 328 and Collector of Customs v. Muzammil Ahmad 2009 PTD 266 ref.

(b) Interpretation of statutes---

----Statute or statutory provision which embodied World Trade Organization Agreement---If two interpretations of such a provision, were possible, the one consistent with International Law or Pakistan's treaty obligations, would be preferred---If meaning of the Municipal law was clear, then it must be given effect to, even though it could conflict with Pakistan's obligations under International Law.

Hanover Fire Insurance Company v. Muralidhar Banechand PLD 1958 SC 138, 142 and Marine Engineers Association of Pakistan v. Shipping Office, Government of Pakistan and another 1989 CLC 588 rel.

(c) Interpretation of statutes---

----Amendments in law embodying World Trade Organization Agreement---Amendments were usually intended to change the law---In special case, even if it was concluded that the amendment had changed the law, the amendment should, if at all possible, be interpreted and applied in a manner which would remain consistent; or minimize any difference or conflict with the World Trade Organisation Agreement---If the relevant statutory provisions, or any amendment thereto, was clear and admitted only one meaning then the court must give effect to that meaning, even if inconsistent with International Law or a treaty obligations of the State---Principles of statutory interpretation, were aids to discovering and giving effect to the legislative intent, and if that intent was clear, then it must be recognized and given effect to.

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

----S. 25-A---Determination of customs value---Scope---Interpretation of S.25-A, Customs Act, 1969---World Trade Organization Agreement---Scope---Section 25-A(1) appeared to simultaneously seek to prevail over S.25 of the Act, and at the same time, mandate application of the very section (S.25) which was being overridden---Primary method of determining value was the transaction value i.e. the price actually paid or payable for the goods in question---Such a price, could arise only in relation to goods actually imported---Section 25-A(1) of the Customs Act, 1969, spoke of goods imported into Pakistan---Section 25-A permitted a predetermination of the customs value of goods to be imported into Pakistan---Subsection (2) of S.25-A, specifically provided that the value determined in terms of subsection (1) of S.25-A, was to be the customs value of the relevant imported goods---Determination of customs value, was to start with the primary method, the transaction value i.e. the price actually paid or payable, which could only arise in the context of goods actually imported---If S.25-A was intended only to apply to goods actually imported into Pakistan, then there would essentially be no point to it, since the exercise therein contemplated would in any case be carried out under S.25 of the Customs Act, 1969---Section 25-A, had to apply to goods yet to be imported into Pakistan---By adding S.25-A, the Legislature clearly intended that it ought to be permissible for the Customs Authorities to predetermine the customs value of goods imported into Pakistan; since that predetermined value was to apply to the relevant imported goods, it constituted a departure from the valuation agreement by dis-applying the primary method, i.e. the transaction value---Language of said section was carefully crafted to keep the difference to a minimum, by making the remaining methods of the Valuation Agreement applicable in the same manner as provided therein---In relation to these methods the principle of sequential application, applied in full so that, in determining the customs value the concerned Officer had to apply methods sequentially and stop at the first method found applicable---Section 25-A, allowed for the determination of customs value of both "goods" and "category of goods"---Proper determination of what constituted a "category of goods" must relate to how goods were specified in the First Schedule to the Customs Act, 1969---Proper valuation ruling issued under S.25-A, must specify the PCT Heading to which it was applicable---Section 25-A, could not have retrospective effect i.e. a valuation ruling, could not be issued in relation to goods actually imported, nor could it be applied to imported goods, unless it was issued before such importation---If there was no valuation ruling when the goods were actually imported, it was only S.25, which was applicable---Valuation ruling issued under S.25-A could only apply for a certain period and no more---Valuation ruling, must ordinarily be regarded as valid for a period of ninety days from the date of issuance---Section 25-A, was only an enabling section and would permit, but would not mandatorily require predetermination of customs value---Legislature intent of S.25-A was not, nor could be, to create a statutory by-pass to the Valuation Agreement---Section 25-A, could not be used for the wholesale determination of customs value.

(e) Interpretation of statutes---

----Words or expressions used in the same statute in different sections, were to be given the same meaning, unless the context otherwise required.

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

----S. 25-A---Power to determine customs value---Valuation ruling issued in relation to imported goods (tyres and tubes) was clearly contrary to the provisions of S.25-A of the Customs Act, 1969, same having been issued, essentially on the basis of some understanding arrived at between the Customs Collectorate and the Importers and Dealers Association---Such was not a permissible method under S.25-A---Such a Valuation Ruling was ultra vires S.25-A of the Customs Act, 1969.

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

----Ss. 25 & 25-A---Determination of customs value of goods---Valuation Ruling---Effect---Valuation Ruling was retrospective, since it purported to apply to the relevant goods imported during the period November, December 2008 and January-February, 2009---Said Ruling purported to apply a method, which was not one of the methods provided under S.25---Said Ruling, did not give the PCT Heading of the goods to which it was to apply i.e. did not properly identify and specify the "category of goods" to which it was applicable---Section 25-A, contemplated and permitted predetermination of customs value; it was impermissible to apply the transaction value in terms of S.25-A; such value could only apply under S.25---Validity---Ruling was ultra vires S.25-A of the Customs Act, 1969.

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

----Ss. 25 & 25-A---Determination of customs value of goods---Valuation Ruling---Effect---Valuation Ruling purported to apply a method other than those permitted under S.25 of the Customs Act, 1969---No attempt was made to establish as to which were the applicable methods and which one of those methods was the method of S.25 at all---Said Ruling, did not give the PCT Headings of the goods to which it was to apply---Ruling in question was though issued by the Director Valuation, who had merely endorsed, without any proper or independent application of mind of his own---Same was a clear abdication of the statutory powers vested under S.25-A---Valuation Ruling in question purported to apply the "invoice value; if it was "higher" than the value determined in the Ruling---Valuation Ruling was ultra vires S.25-A of the Customs Act, 1969.

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

----S. 25-A---Determination of customs value of goods---Valuation Ruling appeared to come closest to correctly applying and following the provisions of S.25-A---Director Valuation had applied his mind to the various methods in the proper sequential order, though the reference to the transaction value was not relevant---Reasons of one sort or another, were given in respect of each method, as to why that method was inapplicable, and ultimately the fall-back method was purportedly applied---Ruling in question was ultra vires S.25-A of the Customs Act, 1969.

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

----Ss. 25 & 25-A---Determination of customs value of goods---Valuation Agreement of World Trade Organization---Scope---Valuation Ruling was issued in relation to goods (automotive safety glass) which referred to some of the methods of S.25 and purported to apply the computed value method; it was not evident as to how the computed value method was applied---Valuation Agreement and S.25, operated in the context of country of export and country of import---Vaulation Ruling was ultra vires S.25-A of Customs Act, 1969.

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

----Ss. 25 & 25-A---Determination of customs value of goods---Valuation Ruling was issued in relation to imported goods (drawer locks, door closures and door hinges)---Said Ruling though referred to some of the methods of S.25 and purported to apply the "deductive value method" which was non-compliant with the requirements of S.25-A---Selling price in the local market was irrelevant; as to how the deductive value method had been applied was not clear---Valuation Ruling was ultra vires S.25-A of the Customs Act, 1969.

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

----Ss. 25 & 25-A---Determination of customs value of goods---Valuation Ruling was issued in relation to imported goods (bicycle parts and components)---No attempt was made to establish as to which applicable methods related to the category of goods which were the subject matter of the Valuation Ruling---Valuation Ruling did not refer to any of the methods of S.25 at all and purported to apply the "invoice value" (i.e. the transaction value), if it was "higher" than the value determined in the ruling---Said Ruling was ultra vires S.25-A of the Customs Act, 1969---Valuation Ruling was quashed and set aside by the High Court with observation that concerned Officer, could, in each case, make a fresh determination of the customs value under S.25-A of the Act.

(m) Administration of justice---

----If the basic order was set aside or quashed, then the entire superstructure of orders resting thereon, automatically would fall.

Atta ur Rahman v. Sardar Umar Farooq and others PLD 2008 SC 663 and Yousuf Ali v. Muhammad Aslam Zia and others PLD 1958 SC 104 ref.

Amer Raza Naqvi, Shakeel Ahmed, Mrs. Ismat Mehdi, Aziz A. Shaikh and Zain A. Jatoi for Petitioners.

Khalid Jawaid Khan by Court permission.

Raja Muhammad Iqbal, Haider Wanhiwal, Shakeel Ahmed, Ghulam Haider Shaikh along with Dr. Iftikhar, Additional Collector, Fayyaz Rasool, Deputy Collector, Syed Imran Bukhari, Deputy Collector and Ilyas Ahsan for Respondents.

JUDGMENT

MUNIB AKHTAR, J.---By this common judgment, we intend disposing off a number of connected constitutional petitions, which raise important questions as to the proper interpretation, application and interaction of sections 25 and 25A of the Customs Act, 1969 ("the Act"). The petitioners are all importers, who have imported goods on which customs duty is payable ad valorem, and the question is how the value of the goods is to be determined for purposes of the Act. In each case, the appropriate officer has sought to apply a determination made under section 25A by the concerned Collector of Customs or the Director Valuation. (It may be noted that determinations under section 25A are commonly referred to as "valuation rulings", and are so referred in this judgment.) The petitioners challenge the valuation rulings and seek declarations to the effect that the said rulings are ultra vires the powers conferred by section 25A. Although different goods, which are subject to different valuation rulings, are involved in the various petitions, the petitioners raise the same or similar questions, and therefore the petitions were taken up and heard together.

2.Mr. Amer Raza Naqvi, appearing on behalf of some of the petitioners, submitted that section 25A enabled a "determination" of the customs value which, according to him, was different from the power to "fix" such value. A determination had to be on a case-by-case basis, whereas a fixation could be in general terms, i.e., relate to goods in general. He pointed out that the word "imported" was used in both sections 25 and 25A, and contended that there was no power under section 25A to predetermine the customs value. Thus, his case was that the power under section 25A could only be exercised in respect of goods actually imported. Learned counsel relied on Rehan Umar v. Collector of Customs and others 2006 PTD 909, a Division Bench decision of this Court, to contend that the valuation methods laid down in section 25 had to be applied in strict sequential order and in the manner as therein specified, and in the corresponding provisions of Chapter IX of the Customs Rules, 2001. He submitted that section 25A also made the methods laid down in section 25 applicable, and contended that the valuation ruling in the cases in which he appeared was issued without properly following the applicable method. Thus, the ruling was non-compliant with section 25A, and hence liable to be quashed. As regards the maintainability of the petitions, he placed reliance on Collector of Customs (Valuation) and another v. Karachi Bulk Storage Terminal Ltd. 2007 SCMR 1357 = 2007 PTD 1858. Mr. Aziz A Shaikh, also appearing for the petitioners, contended that a valuation ruling under section 25A could not have retrospective effect. His submission was that the goods in the cases in which he appeared had already been imported into Pakistan and the ruling was issued in relation thereto with purported retrospective effect. He submitted that the ruling was therefore liable to be set aside. Mrs. Ismat Mehdi, learned counsel for some of the petitioners, also emphasized the distinction between "determination" and "fixation", and submitted that a proper ruling under section 25A required the former and not the latter. She further submitted that the power under section 25A could only be exercised in respect of goods actually imported and not in relation to goods yet to be imported. In fact, her case was that the exercise under section 25 had first to be completed before section 25A could be resorted to. She also submitted that in the cases in which she appeared, the valuation ruling actually applied purported to be a "revision" of an earlier ruling. She contended that such a power could only be exercised by the Director General Valuation under section 25D.

3.Mr. Zain Jatoi, learned counsel who also appeared for some of the petitioners, contended that the valuation methods set forth in section 25 had to be followed in the exercise of powers under section 25A. He however, unlike other learned counsel for the petitioners, accepted that section 25A did not apply only in relation to goods actually imported, but the customs value in terms thereof could be determined even in relation to goods yet to be imported. He submitted that the valuation ruling applied in the cases in which he appeared did, on the face of it, seem to consider the various valuation methods in the proper sequential order, but he contended that the exercise of applying the actual method adopted in his case had not been properly carried out, and hence the ruling was unlawful. Mr. Khalid Jawaid Khan, appearing with Court permission, submitted that sections 25 and 25A had to be read in conjunction with sections 79 and 80, and contended that the words "imported goods" and "imported into Pakistan" had the same meaning, and thus, the power under section 25A could only be exercised in relation to goods actually imported. He however, submitted that the various valuation methods of section 25 required to be applied by section 25A did not need to be applied in the sequential order laid down in the former provision. This, according to him, was the result of statutory changes made to sections 25 and 25A by the Finance Act, 2007. He also referred to Toyo International Motorcycle v. Federation of Pakistan and others 2008 PTD 1494; a decision of the Lahore High Court, with regard to the proper interpretation and application of section 25A.

4.Mr. Raja Muhammad Iqbal opened the case for the Respondents. He and other learned counsel appearing for the Department were ably assisted by the departmental officers, Dr. Iftikhar, Additional Collector, Mr. Fayyaz Rasool, Deputy Collector, Syed Imran Bukhari, Deputy Collector and Mr. Ilyas Ahsan, departmental representative. We would like to place on record our appreciation of the skill and professionalism with which these officers apprised the Court of the departmental perspective on sections 25 and 25A, including, especially, the reasons why, and manner in which, valuation rulings were issued under the latter provision. Learned counsel for the Department submitted that the words used in section 25A, "goods imported into Pakistan", were different from those used in section 25, "imported goods". He submitted that the words in section 25A were the same as those used in section 18, the charging section of the Act. His case therefore was that the words used in section 25A did not apply only to goods actually imported, but also to goods yet to be imported, i.e., to future consignments. Learned counsel further submitted that the purpose of section 25 was to establish the "customs value" of the goods, and this was also the purpose of section 25A. In this regard, he referred to subsection (2) of the latter provision. His case was that once a determination had been made under section 25A(1), that applied (under subsection (2)) as the "customs value" to the goods in relation to which the ruling was issued, when those goods were imported into Pakistan. As regards the expression "category of goods" used in section 25A, he submitted that the proper determination of the "category" required reference to the relevant PCT heading of the goods under the First Schedule to the Act. As regards the "applicable methods" of section 25 to which reference was made in section 25A, learned counsel submitted that any of the methods could be applied in terms of the latter section, and there was no need for the methods to be considered or applied in sequential order. In this context, he emphasized that section 25A opened with a non-obstante clause, which had the effect of overriding the provisions of section 25. Learned counsel also contended that section 25A did not violate any WTO agreement, especially the provisions of the agreement generally referred to as the Valuation Agreement, which is reflected in section 25. As part of his submissions to explain section 25 as it now stands, and also section 25A, learned counsel also referred to the historical background, in particular the form in which section 25 had earlier been enacted. The other learned counsel for the Respondents adopted the submissions of Mr. Raja Muhammad Iqbal, while emphasizing particular aspects of matter to which they wished to draw attention.

5.The departmental officers explained the need for the introduction of section 25A. They submitted that after the adoption of the WTO system of valuation from 2000 onwards, many developing countries (including Pakistan) faced a growing problem of under-invoicing, which resulted in a shortfall of customs revenues. The officers explained that under-invoicing could be of two types: individual or group. Individual under-invoicing occurred when a particular importer misdeclared the transaction value of the goods imported by him. Group under-invoicing occurred when a group of dominant importers in a particular industry or trade sector engaged (either in concert or otherwise) in under-invoicing the goods being imported. The officers explained that the latter problem was particularly pernicious since in such a situation, it was not possible to ascertain the correct value by a comparative approach: essentially, all the relevant importers were under-invoicing their goods. According to the officers, the problem of group under-invoicing had been recognized at the international level, both by the WTO and the World Customs Organization (WCO). It was these considerations which had led to the introduction of section 25A. They emphasized that the valuation rulings under section 25A applied also to future importations and although the concerned officer was free to use any of the methods of section 25, in practice an attempt was made to apply the methods sequentially. In any case, the valuation rulings were not issued arbitrarily or whimsically and without any basis. Great care was taken to ensure that the relevant data was gathered and properly analyzed and utilized in terms of the method being actually applied. Consultations were held with the relevant trade bodies and associations so that the points of view of all the stakeholders were taken into consideration. Their case therefore was that section 25A was being properly interpreted and applied, and the valuation rulings impugned in the various petitions had been issued in accordance with law.

6.We have heard learned counsel for the parties, examined the record with their assistance, and considered the case law and other material relied upon by them. In order to place the matter in its proper context, it will be necessary to examine how section 25 had stood earlier, and how this section, and section 25A, subsequently evolved. Section 25 is of course, one of the most important provisions of the Act. It lays down the general manner in which the customs value of imported goods is to be determined. The customs value determined under the Act is also used in relation to the levy of sales tax, income tax and excise duty in respect of imported goods. A proper determination of the customs value is therefore absolutely essential. As originally enacted, section 25 had provided that the customs value of imported goods was to be the "normal price" of the goods. The "normal price" was a legal construct. Subsection (1) provided that it was the price that the goods would fetch on the date mentioned in section 30 "on a sale in open market between a buyer and a seller independent of each other". The subsequent subsections then set forth in detail the rules by which the normal price was to be determined. The date mentioned in section 30 was the date on which the bill of entry for home consumption or ex-bonding (as the case may be) for the goods was filed. It will be seen that the actual price of the goods was not, as such, determinative of the normal price, since (e.g.) the date specified in section 30 was later (perhaps even much later) than the date on which the contract between the foreign seller and Pakistani buyer came about. In principle therefore, the normal price could be higher or lower than the actual price of the goods. It is also important to keep in mind that since the normal price was a statutory construct, it was to be determined by the appropriate officer of customs in the manner specified in section 25. In practice, the Central Board of Revenue, through various Customs General Orders and other instructions did make the actual price relevant. It is not necessary however, to consider this latter aspect in any detail.

7.In 1988, a new section 25B was added to the Act. By a non-obstante clause, it overrode the provisions of section 25, and empowered the relevant officer (invariably the Director Valuation), to fix, by notification in the official Gazette, the value of imported goods for purposes of the Act. A number of notifications were issued (and/or revised/substituted, as the case may be) from time to time in terms of section 25B, and the goods included in the notifications were charged to duty in terms of the specific values so fixed for them. We are informed that once the WTO valuation system was in place, the powers conferred by this section were not exercised.

8.The advent of the WTO system completely upended the previous position. It will be recalled that the Uruguay round, which culminated in the World Trade Organization, resulted in the member states entering into a whole series of agreements relating to different aspects of international trade. One such agreement was the "Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994" (herein after the "Valuation Agreement"). This agreement set forth what was (at least for Pakistan) an entirely new system of how the customs value of imported goods was to be determined. The concept of normal price was abolished, and a different conceptual framework introduced in its stead. Although the WTO system came into effect from 01.01.1995, developing countries like Pakistan were given five years to bring their laws in conformity with the Valuation Agreement, and accordingly, the new system was enforced in this country with effect from 01.01.2000. The Valuation Agreement can, for present purposes, be regarded as falling into two parts. One part comprises of the main articles, which contain the substantive rules for determining the customs value of goods. The second part comprises of interpretative notes to the various articles, contained in an annex to the agreement. Of course, the Valuation Agreement has to be construed as a whole, and Article 14 expressly provides that the notes in Annex I form an integral part of the Agreement and that "the Articles of this Agreement are to be read and applied in conjunction with their respective notes". The system enforced in Pakistan since 01.01.2000 in the main reflects this divide. Section 25 was substituted in its entirety, and its various provisions primarily embody the main articles of the Valuation Agreement. Rules framed by the Central (now Federal) Board of Revenue ("FBR") primarily contain, in what is now Chapter IX of the Customs Rules, 2001 ("the Rules"), the interpretative notes of Annex I of the Valuation Agreement. (Henceforth, unless otherwise expressly stated, all references to section 25 are to its post-WTO form.)

9.The first point to note about section 25 and Chapter IX of the Rules is that for the most part they reproduce the very language of the Valuation Agreement itself. Of course, there are certain differences, some of which are important for present purposes, and these differences have been brought about by amendments made to the section from time to time. However, there cannot be any doubt that section 25 and Chapter IX are intended to comply with Pakistan's obligations under the Valuation Agreement; paragraph 1 of Article 22 expressly provides that "[e]ach Member shall ensure the conformity of its laws, regulations and administrative procedures with the provisions of this Agreement". In order to understand the full significance of the obligations undertaken by member states under the WTO system, it must also be kept in mind that the WTO provides for a detailed formal mechanism for dispute resolution, to which any member state can resort if it is of the view that another member state is not fulfilling its WTO obligations. This mechanism is contained in a separate agreement known as the "Understanding on Rules and Procedures governing the Settlement of Disputes" (generally referred to as the "Dispute Settlement Understanding" or "DSU"). Article 19 of the Valuation Agreement expressly provides that the DSU applies to disputes arising under it. The DSU provides for an adjudicatory mechanism by which binding rulings can be made by "panels" and, on appeal, by appellate bodies. If the defaulting state fails to abide by its obligations, and the relevant panel and/or appellate body find against it, then the aggrieved member state may, if certain conditions are met, impose sanctions (known as "measures") against the former. Thus, the WTO system has a lot of bite in it, and member states must be, and generally are, careful to ensure that they are compliant with their obligations under its various agreements.

10.In our view, the foregoing position must be reflected in the interpretation of any statute or statutory provision which embodies a WTO agreement. It is of course, well settled as a general principle that if two interpretations of a provision are possible, then the one consistent with international law or Pakistan's treaty obligations will be preferred. And it is equally well settled that if the meaning of the municipal law is clear then it must be given effect to, even though it may conflict with Pakistan's obligations under international law. Reference in this regard may be made to Hanover Fire Insurance Company v. Muralidhar Banechand PLD 1958 SC 138, 142 and Marine Engineers' Association of Pakistan v. Shipping Office, Government of Pakistan and another 1989 CLC 588 (SHC; DB). In our view, a gloss should be placed on these principles in their application to the special case of the WTO system and its component agreements. If it is clear that a statute or statutory provision embodies a WTO agreement, and especially where the statutory language essentially reproduces or closely follows the text of the agreement, then the interpretation should invariably be that which is consistent with the agreement and obligations thereunder. In other words, the threshold for concluding that a meaning inconsistent with the WTO agreement was intended must be regarded as higher than would be the situation in the general case. To the maximum extent possible, the relevant provision should be understood and applied in its WTO context. This applies equally to an amendment. If the statutory provision, as originally enacted (whether for the first time or by way of substitution of an existing provision), clearly conforms to a WTO agreement, and is then amended, the amendment must be regarded in the same light. Amendments are usually intended (and therefore generally presumed by courts) to change the law. In the special case now under consideration, even if it is concluded that the amendment has changed the law, the amendment should, if at all possible, be interpreted and applied in a manner which remains consistent, or minimizes any difference or conflict, with the WTO agreement. Of course, if the relevant statutory provision, or any amendment thereto, is clear, and admits to only one meaning, then the courts must give effect to that meaning even if inconsistent with international law or a treaty obligation. But Parliament is presumed to know and keep in mind the country's international treaty obligations, and the consequences that could flow from any non-compliance with such obligations. The courts should therefore, to the maximum extent possible, avoid an interpretation that conflicts with the WTO agreement concerned, and thereby has the potential of exposing Pakistan to the possibility of retaliatory measures being adopted by other member states under the WTO system. At the same time, it must also be remembered that, in the final analysis, principles of statutory interpretation are but aids to discovering and giving effect to the legislative intent, and if that intent is clear, then it must be recognized and given effect to. In our view, the foregoing principles must be kept in mind while considering, interpreting and applying sections 25 and 25A.

11.Since section 25 embodies an entire WTO agreement, it is, not surprisingly, one of the longest sections in the Act. It is not however, necessary for present purposes to reproduce the entire section. What is important is to appreciate one of the fundamental principles underpinning the Valuation Agreement, and how (and to what extent) this principle is embodied in section 25. This is the principle of sequential application. In order to properly appreciate this principle, the relevant extracts from section 25 and the Valuation Agreement need to be listed in tabular form as follows:

Subsection of section 25	Article of Valuation Agreement	Valuation Method
(1) The customs value of imported goods, subject to the provisions of this section and the rules, shall be the transaction value, that is the price actually paid or payable for the goods when sold for export to Pakistan .	(1) The customs value of imported goods shall be the transaction value, that is the price actually paid or payable for the goods when sold for export to the country of importation	Transaction Value
(5) If the customs value of the imported goods cannot be determined under the provisions of sub-section (1), it shall, subject to rules, be the transaction value of identical goods sold for export to Pakistan and exported at or about the same time as the goods being valued....	(2) If the customs value of the imported goods cannot be determined under the provisions of Article 1, the customs value shall be the transaction value of identical goods sold for export to the same country of importation and exported at or about the same time asthe goods being valued.	Identical Goods
(6) If the customs value of the imported goods cannot be determined under the provisions of sub-section (5), it shall be the transaction value of similar goods sold for export to Pakistan and exported at or about the same time as the goods being valued .	(3) If the customs value of the imported goods cannot be determined under the provisions of Articles 1 and 2, the customs value shall be the transaction value of similar goods sold for export to the same country of importation and exported at or about the same time as the goods being valued	Similar Goods
(7) If the customs value of the imported goods cannot be determined under sub-section (6), it shall, subject to rules, be determined as follows: .	(4) & (5) If the customs value of the imported goods cannot be determined under the provisions of Articles 1, 2 and 3, the customs value shall be determined under the provisions of Article 5 .	Deductive Value
(8) If the customs value of the imported goods cannot be determined under sub-section (7), it shall, subject to rules, be based on computed value	(4) & (6) If the customs value of the imported goods cannot be determined under the provisions of Articles 1, 2 and 3, the customs value shall be determined under the provisions of Article 6 . [Article 6:] The customs value of imported goods under the provisions of this Article shall be basedon a computed value .	Computed Value
(9) If the customs value of the imported goods cannot be determined under sub-sections (1), (5), (6), (7) and (8), it shall, subject to the rules, be determined on the basis of a value derived from among the methods of valuation set out in subsections (1), (5), (6), (7) and (8), that, when applied in a flexible manner to the extent necessary to arrive at a customs value.	(7) If the customs value of the imported goods cannot be determined under the provisions of Articles 1 through 6, inclusive, the customs value shall be determined using reasonable means consistent with the principles and general provisions of this Agreement and of Article VII of GATT 1994 and on the basis of data available in the country of importation.	Fall-back Method

12.The principle of sequential application is expressly set forth as follows in the interpretative notes contained in Annex I to the Valuation Agreement (emphasis supplied):

"Sequential Application of Valuation Methods

1. Articles 1 through 7 define how the customs value of imported goods is to be determined under the provisions of this Agreement. The methods of valuation are set out in a sequential order of application. The primary method for customs valuation is defined in Article 1 and imported goods are to be valued in accordance with the provisions of this Article whenever the conditions prescribed therein are fulfilled.

2. Where the customs value cannot be determined under the provisions of Article 1, it is to be determined by proceeding sequentially through the succeeding Articles to the first such Article under which the customs value can be determined. Except as provided in Article 4, it is only when the customs value cannot be determined under the provisions of a particular Article that the provisions of the next Article in the sequence can be used.

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4. Where the customs value cannot be determined under the provisions of Articles 1 through 6 it is to be determined under the provisions of Article 7."

Three points may be noted. Firstly, the primary method of determining the customs value is the transaction value, i.e., the price actually paid or payable for the imported goods. (The price actually paid or payable may be subject to certain adjustments, but this aspect of the matter need not be considered in detail.) This is duly recognized in terms of both Article 1 of the Valuation Agreement, and subsection (1) of section 25. Secondly, if the transaction value cannot be determined, then the subsequent methods are to be applied sequentially, in the order set forth in the Valuation Agreement. As is clear from the table above, the relevant subsections of section 25 are arranged in the same sequence. Thirdly, and this is of crucial importance for present purposes, the exercise must stop at the first method which is found applicable. It is neither permissible nor necessary to go on to, or to consider, any of the succeeding methods. In this context, it will be noted that the opening words of each of subsections (5), (6), (7), (8) and (9) expressly provide that the subsection is to apply only if "the customs value of the imported goods cannot be determined under" the preceding applicable subsection. In other words, it is not permissible to resort to a particular subsection unless it is first concluded that the previous subsection referred to does not apply, and it is not permissible to apply the latter unless it is first concluded that the subsection preceding it does not apply, and so on. Thus, all the elements of the principle of sequential application are clearly embedded in section 25. The requirement of sequential application was further elaborated in subsection (10) which, as originally enacted, provided as follows:

"(10) Subsections (1), (5), (6), (7), (8) and (9) define how the customs value of imported goods is to be determined under this Act. The methods of customs valuation are required to be applied in a sequential order except reversal of the order of sub-sections (7) and (8), at the importer's request, if so agreed by Collector of the Customs."

13.By means of the Finance Act, 2006, a new section 25A was added to the Act. As originally enacted, it provided as follows:

"25A. Powers to determine the customs value.---(1) Notwithstanding the provisions contained in section 25, the Collector of Customs on his own motion, or the Director of Customs Valuation on a reference made to him by any person, may determine the customs value of any goods or category of goods imported into or exported out of Pakistan after following the scheme and sequential order as laid down under section 25.

(2) The customs value determined under subsection (1) shall be the applicable customs value for assessment of the relevant imported or exported goods.

(3) In case of any conflict in the customs value determined under subsection (1), the Director-General of Customs Valuation shall determine the applicable customs value."

(For purposes of completeness and to avoid any confusion, we may note that the then existing section 25A, which has nothing to do with the present matter, was renumbered as section 25C.)

It will be noted that subsection (1) opened with a non-obstante clause, which overrode the provisions of section 25. Now non-obstante clauses are well known to the law and their interpretation and application is well understood. In Industrial Relations Advisors' Association v. Federation of Pakistan and others PLD 2010 Kar. 328 (DB), it was observed as follows:

"A 'non-obstante' clause is used in a provision to indicate that the provision shall prevail despite anything to the contrary in any provision and it operates so as to set aside as no longer valid anything contained in the relevant existing provision which is inconsistent with what followed the word 'notwithstanding'." (para 52)

Similarly, in Collector of Customs v. Muzammil Ahmad 2009 PTD 266, another Division Bench of this Court held as follows:

"There can be no cavil to the proposition that non-obstante clause in a statute overrides the provisions of the statute which have been mentioned in the non-obstante clause." (para 14)

14.Subsection (1) of section 25A however, had a rather unusual feature. While the opening non-obstante clause overrode section 25, the subsection closed by requiring that the "scheme" and "sequential order" laid down in section 25 should be followed. This, on the face of it, appears to be a contradiction. Section 25A(1) appeared to simultaneously seek to prevail over section 25, and at the same time, mandate application of the very section which was being overridden. This raises the obvious question: what was being overridden and what was to be applied? Indeed, if the "scheme" and "sequential order" contained in section 25 was to be followed, what was the point to section 25A? These questions go the heart of the matter before us. The first point to note in this regard is that the Valuation Agreement and section 25 both relate to "imported goods". Although this expression is not defined in either the agreement or the section, it is clear that it means and refers to goods actually imported. This is indeed, obvious and understandable. The objective both under the Valuation Agreement and section 25 is to find the "customs value of imported goods", which expression is defined in both the agreement and the section in near identical terms. The Valuation Agreement defines this expression as meaning "the value of goods for the purposes of levying ad valorem duties of customs on imported goods", and section 25(13)(a) defines it as "the value of goods for the purposes of levying duties of customs and other taxes on imported goods". The primary method of determining this value is the transaction value, i.e., the price actually paid or payable for the goods in question. Such a price can arise only in relation to goods actually imported. Section 25A(1), on the other hand, spoke of "goods imported into... Pakistan". As pointed out by learned counsel for the Respondents, section 18 of the Act, which is the charging section, levies customs duty on "goods imported into Pakistan". It is a well-settled principle of interpretation that words or expressions used in the same statute in different sections should be given the same meaning unless the context otherwise requires. Obviously, as used in section 18, the expression relates to goods to be imported into Pakistan. The same meaning was, in our view, intended in section 25A(1). Therefore, as used therein, this expression applied to goods that could be, or were to be, imported into Pakistan at any time or from time to time. In other words, section 25A permitted a predetermination of the customs value of goods to be imported into Pakistan. It is also pertinent to note that subsection (2) of section 25A specifically provided that the value determined in terms of subsection (1) was to be the customs value of the "relevant imported goods". This is the reason why subsection (1) opened with a non-obstante clause. If only section 25 was applicable, or there were no non-obstante clause, there could be no predetermination of the customs value. The determination of the customs value would have to start with the primary method, the transaction value, i.e., the price actually paid or payable, which could only arise in the context of goods actually imported. Furthermore, if section 25A were intended only to apply to goods actually imported into Pakistan, then there would essentially be no point to it, since the exercise therein contemplated would in any case be carried out under section 25. Section 25A therefore had to apply to goods yet to be imported into Pakistan.

15.It will be seen from the foregoing that section 25A allowed for a major departure from the Valuation Agreement/section 25. (The close manner in which section 25 follows and replicates the Valuation Agreement must always be kept in mind.) By allowing a predetermination of the customs value of goods imported into Pakistan (subsection (1)), and applying this value to the relevant imported goods (subsection (2)), the section in effect did away with the primary method mandated by the Valuation Agreement for determining the customs value, i.e., the transaction value of such goods. However, the section sought to minimize the effect of this divergence by requiring that the customs value under subsection (1) be determined "after following the scheme and sequential order as laid down under section 25". Thus, although section 25A knocked out the primary method of determining the customs value, it did not sweep away section 25/the Valuation Agreement in its entirety. It carefully sought to keep the determination of customs value under it aligned with the Valuation Agreement by requiring that the remaining methods of the agreement be followed and applied in the same manner as laid down therein. It is not difficult to understand why this approach was taken, and the underlying reasons have been stated and examined in paras 9 and 10 supra. This, in our view, is the correct explanation for the unusual feature of section 25A(1) where, at one and the same time, section 25 is both overridden and applied. It is to be noted further that if the determination of customs value diverges from the Valuation Agreement, the danger of Pakistan being exposed to complaints and the possibility of retaliatory measures under the WTO system is all the greater. By adding section 25A, the legislature clearly intended that it ought to be permissible for the customs authorities to predetermine the customs value of goods imported into Pakistan. Since this predetermined value was to apply to the relevant imported goods, it constituted a departure from the Valuation Agreement by disapplying the primary method, i.e., the transaction value. The language of the section was therefore, carefully crafted to keep the difference to a minimum, by making the remaining methods of the Valuation Agreement applicable in the same manner as provided therein. In relation to these methods, the principle of sequential application applied in full so that, in determining the customs value, the concerned officer had to apply the methods sequentially, and stop at the first method found applicable. In other words, although the first of the three elements (see para 12 supra) of the principle was disapplied, the remaining two elements had to be followed and applied strictly.

16.By the Finance Act, 2007 (i.e., in the very next year after the introduction of section 25A), certain amendments were made to section 25, and section 25A was substituted in its entirety. We first take up the changes made to section 25, where subsection (10) was amended as follows (the deletions being shown in square brackets, and the additions by way of emphasis):

"(10) Subsections (1), (5), (6), (7), (8) and (9) define how the customs value of imported goods is to be determined [under this Act]. The methods of customs valuation may or may not [are required to] be applied in a sequential order except reversal of the order of subsections (7) and (8), at the importer's request, if so agreed by Collector of the Customs."

For present purposes, it is the second change, whereby the words "are required to" were substituted with the words "may or may not", that is relevant. On the face of it, this appears to confer discretion on the appropriate customs officer: he may or may not, but is no longer required to, apply the sequential order laid down in subsections (1), (5), (6), (7), (8) and (9). Two points need to be made. Firstly, for the reasons stated in para 10 supra, the proper interpretation of subsection (10) must be to regard the scope of the discretion, if any, now conferred by it as limited. The difference between the Valuation Agreement and section 25 must be minimized. Therefore, on its proper interpretation, the change made to subsection (10) has only a limited ambit. It is only on rare occasions, and in exceptional circumstances and/or for compelling reasons, that the appropriate customs officer may deviate from the principle of sequential application. Otherwise, the invariable practice must be to adhere to the said principle in the strict sense described in para 12 supra. Secondly, and perhaps more importantly, even if the customs officer is now to be regarded as having some discretion in the matter, it is difficult to see how he would be able to exercise it. The reason is that, as noted above, each of subsections (5), (6), (7), (8) and (9) expressly opens with words that make it applicable only if "the customs value of the imported goods cannot be determined under" the preceding applicable subsection. These words lock-in the principle of sequential application into the very structure of section 25. If, for example, in a particular case, the customs officer seeks to jump straight to (say) the computed value method (subsection (8)), he would be able to apply it only if he can first show (as required by the subsection itself) that subsection (7) cannot be applied. If he cannot do this, the matter goes back to subsection (7), but that subsection itself applies only if it can be shown that subsection (6) does not apply, and so on. As will be seen, the matter would (or could) thus go back to subsection (1) itself, the transaction value method. In our view therefore, the changes made to subsection (10) have made no substantive change, and the principle of sequential application continues, as before, to apply to section 25 in its full rigour.

17.We now turn to examine section 25A, which was substituted in its entirety. Certain changes were subsequently made to this section by the Finance Acts of 2009 and 2010 and, for convenience, we refer to the section as it stands today:

"25A. Power to determine the customs value.---(1) Notwithstanding the provisions contained in section 25, the Collector of Customs on his own motion, or the Director of Customs Valuation on his own motion or on a reference made to him by any person or an officer of Customs, may determine the customs value of any goods or category of goods imported into or exported out of Pakistan, after following the methods laid down in section 25, whichever is applicable.

(2) The Customs value determined under subsection (1) shall be the applicable customs value for assessment of the relevant imported or exported goods.

(3) In case of any conflict in the customs value determined under subsection (1), the Director-General of Customs Valuation shall determine the applicable customs value.

(4) The customs value determined under subsection (1) or, as the case may be, under subsection (3), shall be applicable until and unless revised or rescinded by the competent authority."

The changes made in 2009 are not relevant for present purposes. The Finance Act, 2010 added subsection (4) to the section, and this provision will be considered later in the judgment.

18.When the substituted section 25A is compared with the section as originally enacted (see para 13 supra), it will be seen that subsections (2) and (3) are the same as before. The real change has come about in subsection (1). As before, this subsection opens with a non-obstante clause which overrides section 25, and closes by mandating that the provisions of the latter section are to apply. The difference is that while earlier, subsection (1) required that "the scheme and sequential order as laid down under section 25" was to be followed, it now mandates that the "methods laid down in section 25, whichever is applicable" are to be followed. The question that requires consideration is whether, and if so, to what extent, this change in language has brought about a change in the manner in which section 25A is to be applied. It will be noted that apart from this change, subsection (1) as now in force is otherwise in the same form as originally enacted. The analysis in paras 14 and 15 supra therefore applies just as much. As before, the subsection permits a predetermination of the customs value of goods to be imported into Pakistan. This, as before, has the effect of knocking out the primary method of determining the customs value of imported goods, i.e., the transaction value, with the result that there continues to be a major departure from the Valuation Agreement. Previously, the subsection sought to minimize this divergence by requiring that the remaining methods of the agreement be followed and applied in the same manner as laid down therein. Now however, the language is different: the "methods laid down in section 25, whichever is applicable" are to be followed, and the question is, what do these words entail.

19.In our view, it is clear that a change was intended in the manner in which section 25A is to be applied when this provision was substituted in 2007, and this is especially true of subsection (1). Earlier, this subsection, by referring to the "scheme" and "sequential order" of section 25, bound section 25A tightly to the Valuation Agreement. In particular, it required a strict adherence to the principle of sequential application. The language is now markedly different. Section 25A has not of course, been cut loose from the Valuation Agreement. It still remains expressly tethered to it. In determining the customs value under subsection (1), the concerned officer is still limited and restricted only to the methods set forth in section 25. If therefore, some method other than that specified in section 25 is applied, that would be clearly ultra vires the powers conferred by section 25A. But the drift and divergence now permissible is greater. In our view, when all of the relevant factors, including in particular the principles stated in para 10 supra, are kept in mind, the proper interpretation and application of section 25A, as it now stands, is as follows. Strict adherence to the third element of the principle of sequential application (see para 12 supra) is now no longer mandatory. However, this does not mean that the concerned officer (the Collector Customs or Director Valuation) can simply choose whichever method he deems appropriate. He must apply his mind to all the methods, and first determine the ones which are applicable in relation to the goods or category of goods for which the customs value is being determined. If two or more methods are found applicable, he may then choose the one most appropriate in the facts and circumstances of the case, but while doing so, he must specify the reasons why (if at all) he is discarding or not applying any applicable method(s) that sequentially precede the method being adopted. In other words, the applicable methods must be arranged in the same order as in the Valuation Agreement. While the concerned officer is not limited to the first of these methods (as he would be if the principle of sequential application applied stricto sensu), and may move on to any other applicable method, he must give his reasons why the preceding method(s) are being abandoned. The method actually adopted must of course be applied in the manner set forth in section 25 read with the relevant rules under Chapter IX, subject to such adaptation (which must be expressly stated) as may be necessary to take into account the fact that there is no actual transaction value (since there are no actual imported goods). Furthermore, the valuation ruling must reflect that this exercise has been properly carried out in the manner aforesaid. The reasons why the particular method chosen was adopted and the reasons why the preceding applicable methods (if any) were not applied must be stated in the ruling, though not necessarily in full detail. (The concerned officer must of course, be prepared to provide the full details if so required.) As pointed out by learned counsel for the petitioners, the exercise carried out under section 25A is a "determination" and not a mere "fixation" (as was the case, e.g., under section 25B, or subsection (14) of section 25, both omitted from the Act in 2004 and 2005 respectively). The "determination" is a multi-step exercise, at each stage of which there has to be a proper application of mind by the concerned officer. It is therefore appropriate that the ruling should contain sufficient details to show that section 25A has been properly applied. Furthermore, the fact that the determination is subject to revision by the Director-General Valuation under section 25D, and the latter's decision is now appealable to the Appellate Tribunal (see section 194A(1)(e)), also make it necessary that the valuation ruling should be a speaking order. This is in any case, the requirement of section 24A of the General Clauses Act, 1897. As is clear from the foregoing, a determination under section 25A is no simple thing. It may therefore be helpful for FBR to consider issuing appropriate guidelines under section 223 of the Act to assist the concerned officer, without of course, affecting or usurping the powers statutorily vested in him by section 25A.

20.It is also important to note that section 25A allows for the determination of customs value of both "goods" and "category of goods". In practice, valuation rulings issued under this section relate to "category of goods", and we will focus attention accordingly. In our view, the proper determination of what constitutes a "category of goods" must relate to how goods are specified in the First Schedule to the Act. The reason is that the whole purpose of the exercise under section 25A is to determine the customs value on the basis of which customs duty is to be charged, and section 18 levies duty only on the goods specified in the First Schedule. Now the scheme adopted in the First Schedule is to classify goods according to the Harmonized Commodity Description and Coding System (commonly known as the "Harmonized System") developed by the World Customs Organization. Goods are classified in different parts and chapters, and listed in detailed headings, referred to as PCT (or Pakistan Customs Tariff) headings. In our view, the expression "category of goods" referred to in section 25A must relate to the various PCT headings. A proper valuation ruling issued under the section must therefore specify the PCT heading (or headings) to which it is applicable.

21.Two further points must be made. Firstly, it is clear that the section 25A cannot have retrospective effect, i.e., a valuation ruling cannot be issued in relation to goods actually imported, nor can it be applied to imported goods unless it was issued before such importation. As noted above, what section 25A enables is a predetermination of the customs value. Such a determination can only apply in relation to goods not actually imported at the time that the determination is issued. If there is no valuation ruling when the goods are actually imported, it is only section 25 which is applicable. Secondly, a valuation ruling issued under section 25A can, in our view, only apply for a certain period and no more. The reason for this lies in the fact that the valuation ruling must be determined using one of the methods of section 25/the Valuation Agreement. Now at least three of those methods, the identical goods method, the similar goods method and the deductive value method, require the value to be determined "at or about the same time" as the goods being valued. This expression has been defined in Chapter IX of the Rules (in Rule 107) as meaning "within ninety days prior to the importation or within ninety days after the importation of goods being valued". In our view, a valuation ruling must therefore ordinarily be regarded as valid for a period of ninety days from the date of issuance. Subsection (4) of section 25A, added by the Finance Act, 2010, of course now provides that a valuation ruling "shall be applicable until and unless revised or rescinded by the competent authority". In our view, the proper interpretation and application of this subsection, in the light of the principles stated in para 10 supra, is that while the valuation ruling will continue to hold the field unless revised or rescinded, any aggrieved importer has the right to approach the concerned officer after the ninety day period mentioned above, and he would then have to give reasons why the ruling has not been revised or rescinded.

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

23.We now turn to consider the various valuation rulings impugned before us in light of what has been stated in the foregoing. The first ruling is C.No.Misc/08/05-II dated 25.02.2008, issued in relation to tyres and tubes. In our view, this ruling is clearly contrary to the provisions of section 25A. Firstly, it appears to have been issued essentially on the basis of some understanding arrived at between the Customs Collectorates and the Pakistan Tyres Importers and Dealers Association. This is not a permissible method under section 25A. Secondly, although the ruling purports to have applied the fall-back method (section 25(9)), there is no indication whether any other (preceding) method was applicable, and if so, why it was not applied. This ruling is therefore, ultra vires section 25A.

24.The next ruling is C.No.Misc/32/2007-IVA dated 13.03.2009, issued in relation to flat rolled iron and steel products. This ruling is retrospective, since it purports to apply to the relevant goods imported during the period November-December, 2008 and January-February, 2009. Furthermore, it purports to apply a method (taking the average of prices reported in the London Metal Bulletin) which is not one of the methods provided under section 25. The ruling does not give the PCT headings of the goods to which it is to apply, i.e., does not properly identify and specify the "category of goods" to which it is applicable. It also purports to apply the "invoice value" (i.e., the transaction value) if it is "higher" than the "formula value". As noted above, section 25A contemplates and permits a predetermination of customs value. It is impermissible to apply the transaction value in terms of section 25A; that value can only apply under section 25. This ruling is therefore, also ultra vires section 25A.

25.The next ruling is C.No.Misc/32/2009-IVA/1255 dated 13.06.2009, also issued in relation to flat rolled iron and steel products. This ruling, which appears to be a revision of the ruling last mentioned, also purports to apply a method other than those permitted under section 25. There is no attempt to establish which are the applicable methods, and which one of those methods is being applied, and why. Indeed, the ruling does not refer to any of the methods of section 25 at all. The ruling does not give the PCT headings of the goods to which it is to apply, i.e., does not properly identify and specify the "category of goods" to which it is applicable. Furthermore, though issued by the Director Valuation, it is clear that he has merely endorsed, without any proper or independent application of mind on his own, the decision of a committee set up by FBR. This is a clear abdication of the statutory powers that vest in him under section 25A. Finally, it also purports to apply the "invoice value" (i.e., the transaction value) if it is "higher" than the value determined in the ruling. This ruling is therefore, also ultra vires section 25A.

26.The next ruling is No.Misc/01/2009-VIIB dated 23.10.2009, issued in relation to ball bearings imported from Japan and China. This ruling, in our view, appears to come closest to correctly applying and following the provisions of section 25A as noted above. There appears to have been an application of mind by the Director Valuation to the various methods in the proper sequential order, although the reference to the transaction value is not relevant for reasons stated supra. Reasons of one sort or another are given in respect to each method as to why that method is inapplicable, and ultimately the fall-back method (subsection (9)) is purportedly applied. However, when the ruling is examined in more detail, it is clearly ultra vires section 25A. Thus, it appears to set a minimum customs value for Japanese ball bearings. Setting minimum values is prohibited both under the Valuation Agreement (Article 7, which corresponds to the fall-back method) and Rule 110 of Chapter IX of the Rules. Furthermore, the customs values actually determined are simply based on some price list issued in relation to Japanese ball bearings. In relation to Japanese ball bearings, this is obviously not an application of the fall-back method, but one of the preceding methods, although ostensibly those methods were found inapplicable. In respect of Chinese ball bearings, the price list aforesaid is applied with a 75% "discount". Now both under the Valuation Agreement and section 25 read with Chapter IX, it is only the prices in the country of export or the country of import (i.e., Pakistan) that are relevant to the extent permissible. The prices prevailing in any other country are not relevant. Thus, subsection (13)(e) of section 25 expressly provides that "goods shall not be regarded as 'identical goods' or 'similar goods' unless they were produced in the same country as the goods being valued". Finally, it also purports to apply the "invoice value" (i.e., the transaction value) if it is "higher" than the value determined in the ruling. As already noted, this is impermissible under section 25A. This ruling is therefore, also ultra vires of the section.

27.The next ruling is No.Misc/38/2009-VI-A dated 28.10.2009, issued in relation to automotive safety glass. The ruling refers to some of the methods of section 25 (referring to subsections (1), (5), (6) and (7)) and then purports to apply the computed value method (subsection (8)). However, it is not evident how the computed value method has been applied. It is clear from Rule 120 that in order to properly apply this method, information must be obtained from the producer of the imported goods. It seems that no such exercise was carried out, and the method was applied essentially on the basis of information supplied by local manufacturers. Furthermore, the customs value determined is applied to China and the "Far East". As noted above, the Valuation Agreement and section 25 operate in the context of a country of export and a country of import (which of course, is Pakistan), and the "Far East" is not a country. This ruling therefore, is also ultra vires section 25A.

28.The next ruling is No.Misc/05/2009-IVC dated 31.10.2009, issued in relation to drawer locks, door closures and door hinges. Although this ruling also refers to some of the methods of section 25 (referring to subsections (1), (5) and (6)) and then purports to apply the deductive value method (subsection (7)), it is, in our view, nonetheless non-compliant with the requirements of section 25A. Subsection (1) (transaction value) is in any case not applicable to a determination under section 25A. Subsections (5) and (6) are apparently rejected because the "declared" prices of previously imported goods of the same category are "extremely low" compared with their "selling prices in the market". However, subsections (5) and (6) (the identical and similar goods methods) clearly provide that it is the transaction value of the said goods "when sold for export to Pakistan" and "exported at or about the same time as the goods being valued" that is relevant. The "selling prices" in the local (Pakistan) market are irrelevant. It is also not clear how the deductive value method (subsection (7)) has been applied. This ruling is therefore, also ultra vires section 25A.

29.The next ruling to be considered is C.No.Misc/16/2008-IVA/3094 dated 21.12.2009, issued in relation to bicycle parts and components. There is no attempt to establish which are the applicable methods which relate to the category of goods which are the subject matter of the ruling, and which one of those methods is being applied, and why. Indeed, the ruling does not refer to any of the methods of section 25 at all. This ruling also purports to apply the "invoice value" (i.e., the transaction value) if it is "higher" than the value determined in the ruling. This ruling is therefore, also ultra vires section 25A.

30.We may note that in respect of at least some of the valuation rulings, it appears that the Director-General Valuation has made orders in revision under section 25D of the Act, whereby the rulings have been upheld. It is well settled that if the basic order is set aside or quashed, then the entire superstructure of orders resting thereon automatically falls away. Reference may, in this regard, be made to Atta ur Rahman v. Sardar Umar Farooq and others PLD 2008 SC 663 and Yousuf Ali v Muhammad Aslam Zia and others PLD 1958 SC 104. Accordingly, it is not necessary to consider the orders of the Director-General in detail. Once the valuation rulings are found to be ultra vires section 25A, the orders in revision also cease to hold the field.

31.In view of what has been stated above, we allow these petitions to the extent that the valuation rulings impugned thereby (and corresponding orders in revision, if any) are quashed and set aside. The concerned officer may, in each case, make a fresh determination of the customs value of the concerned category of goods under section 25A in light of what has been stated herein above within 90 days from today, after following the procedure applicable to the method actually adopted and giving an opportunity to the stakeholders to make representations. If such customs values are determined within this period, then the imported goods of the petitioners shall be assessed to duty on that basis. If however, no such determination is made within the stipulated period, then the imported goods shall be assessed to duty on the basis of customs values determined under section 25. In either case, if on such determination, it is found that the concerned importer has made an overpayment of customs duty (and/or any other taxes or duties assessed on an ad valorem basis) then the overpaid amount shall be refunded forthwith. If any security is given for, or amount deposited by way of, any differential amount, such security shall stand discharged or amount deposited refunded, as the case may be. If of course, an underpayment has been made, the balance amount may be recovered from the importer in accordance with the provisions of the Act.

HBT/S-61/Sindh Petitions allowed.