(a) Inspection, Valuation and Assessment of Imported Goods Rules, 1994---

‑‑‑‑R. 2(f)(g)‑‑‑S.R.O. 1108(I)94, dated 14‑11‑1994‑‑‑Clean Report of Finding (CRF) and Attested Invoice‑‑‑Distinction‑‑‑Attested Invoice is not CRF‑‑‑Both such documents entirely two different and distinct documents to be‑ used for different purposes‑‑‑Attested Invoice only certifies that invoiced goods were inspected, but same does not verify value of goods‑-‑Such verification with Assessed Tariff Codes and dutiable value is reflected in CRF.

(b) Inspection, Valuation and Assessment of Imported Goods Rules, 1994‑‑‑

‑‑‑‑Rr. 4, 7 & 8‑‑‑ S.R.O. 1108(I)94, dated 14‑11‑1994‑‑‑Import of goods in terms of R.4 of Inspection, Valuation and Assessment of Imported Goods Rules, 1994‑‑‑Pre‑shipmen inspection‑‑‑Procedure stated.

Importer wishing to import goods into Pakistan in terms of Rule 4 of I.V.A. Rules is required to obtain "CRF" certificate, and for said purpose in terms of sub‑rule (1)(a) to R it is his duty to provide documents mentioned therein to Pre‑shipment Inspection Company (PSI) to carry out the requisite pre‑shipment inspection.

When any shipment is required to be effected in, terms of Rule 4(1)(f), the final invoice is required to be "duly attested by means affixing security label" with relevant import reference, and date of attestation and confirmation that the goods described in the invoice have been inspected. In terms of sub‑rule (g) thereof, such attested invoice can be used only for purpose to negotiate the instrument for payment for the bank. The responsibility of PSI Company in terms of Rule 7 is to carry out the inspection and issue CRF certificate.

CRF certificate in terms of rules 7 and 8 is to be transmitted by PSI Company to its liaison office in Pakistan. Such liaison office m turn used to issue CRF certificate to import with a copy to Customs Authority. CRF certificate is not required to be issued and handed over in the country of origin/inspection.

Bill of Entry in terms of IVA Rule 4(5) is required to be filed alongwith copy of "CRF" certificate, and in case such certificate is not provided, same is to be obtained by importer from liaison office of PSI Company by presenting the invoice copy with security label.

This separate document (CRF certificate), is used for purposes of determining liability in terms of duty, other charges and taxes leviable under Customs Act.

(c) Inspection, Valuation and Assessment of Imported Goods Rules, 1994‑‑‑--

‑‑‑‑‑R. 8‑‑‑S.R.O. 1108(I)94, dated 14‑11‑1994‑‑‑Customs Act (IV of 1969), S.25‑‑‑Value of imported goods as indicated in CRF certificate‑‑ Jurisdiction of Customs Authority to ascertain and verify such value‑‑ Scope‑‑‑Customs Authority under R.8 of Inspection, Valuation and Assessment of Imported Goods Rules, 1994, has power to ascertain and verify value as indicated in CRF certificate issued by PSI Company‑‑ Such certificate, once accepted, would be an assessed value in terms of Customs Act and considered to be an assessment order passed by Customs Authority‑‑‑Such order is amenable to same remedy as available to importer to challenge such valuation before hierarchy provided under Customs Act.

The Collector of Customs, Karachi and others v. Messrs New Electronics (Pvt.) Limited and 59 others PLD 1994 SC 363; Messrs Kaghan Impex and others v. Deputy Collector, Custom‑II and others 1993 CLC 1838; Messrs Sasta Autos v. Government of Pakistan through Secretary, Ministry of Finance, Islamabad 1991 MLD 1582; Messrs Latif Brothers v. Deputy Collector, Customs 1992 SCMR 1983; Mian Muhammad Latif v. Province of West Pakistan through the Deputy Commissioner, Khairpur and another PLD 1970 SC 180 and Hamid Hussain v. Government of Pakistan PLD 1974 SC 336 ref.

(d) Inspection, Valuation and Assessment of Imported Goods Rules, 1994‑‑‑--

‑‑‑‑‑R. 8‑‑‑S.R.O. 1108(I)94, dated 14‑11‑1994‑‑‑Clean Report of Finding (CRF)‑‑‑Burden of proof‑‑‑ Valuation shown in CRF issued by Pre shipment Inspection Company alleged to be illegal, void and/or against documentary evidence‑‑‑Burden to prove such fact would lie on importer.

Ghulam Nabi v. Central Board of Revenue through Chairman and 2 others PLD 1997 Quetta 22 ref.

Muhammad Sharif for Plaintiff.

Khalid Rehman for Defendant No.1.

Raja Muhammad Iqbal for Defendant No. 2

Date of hearing: 5th March, 2003.

JUDGMENT

This suit for declaration and damages in the sum of Rs.64 millions has been field in this Court by Dream World Limited, a Public Company, against Messrs Cotecna Inspection and Collector of Customs (Appraisement) Customs House, Karachi.

2. In brief the claim as set out in the plaint by the plaintiff is that the plaintiff in order to construct a Tourism Project/Amusement Park, intended to import Water Sport Equipment and other accessories from Action Park U.S.A. under a pro forma invoice issued by the seller, dated 14‑11‑1994. The plaintiff as per the requirement in vogue at the relevant time approached the defendant No.1 the Pre‑shipment Inspection Company (hereinafter referred to as PSI Company) to carry out the inspection and for, issuance of Clean Report of Finding (CRF) as required under the terms of Valuation Rules, 1994 issued under S.R.O. No. 1108 (I)/94, dated 14‑11‑1994. It is the case of the plaintiff that the defendant carried out the inspection certified the invoice in acknowledgement of the value declared therein. However, case set up in the plaint is that the plaintiff received from defendant No.2 CRF, dated 9‑10-1996 wherein they had unilaterally/illegally and with mala fide intention increased the valuation of the goods in U.S $ 230,531.89 without providing any evidence for such determination. It is averred that the plaintiff through letter, dated 10‑10‑1996 called upon the defendant No.1. either to amend the CRF value in accordance with certified invoice value or to take the delivery of goods as per the invoice value. It is further claimed that after affixing the security label on the invoice in knowledgement of invoice value the defendant could not have given a value different than what is mentioned in the invoice. Suit was contested by the defendants, it was specifically pleaded that, value shown by the plaintiff in the pro forma invoice submitted at the port of shipment was far below the value shown in invoice procured by the PSI Company from the seller/country of origin. It was therefore, contended that the claim of the petitioner is based in misconception of facts and law is liable to be dismissed with cost.

3. Following consent issues were adopted on 13‑10-1997:‑‑

(1)Whether the plaintiff spent considerable amount of money for the development and uplift of. Tourism Project?

(2)Whether the price of Water Sports. Equipment and accessories mentioned in the invoice was the normal value of the goods prevailing in the country of export?

(3)Whether the defendant No.1's Spain office failed to supply a copy of CRF to the shippers which resulted in delay of shipment?

(4)Whether the defendant No.1 is liable to issue CRF in the country of shipment or in Pakistan?

(5)Whether the plaintiffs suffered loss in the sum of Rs.64 million?

(6)Whether the goods were not shipped in the time due to negligence breach of duty and performance of the functions by the defendant No. 1?

(7)Whether the pre‑shipment inspection was not carried out due to problems between the importers and exporters?

(8)Whether the plaintiffs are entitled to any relief. If so, what amount?

(9)What should the decree be?

4. It appears that only defendant No.2 filed documents sought to be relied upon by them. The Commissioner was appointed to record evidence on 24‑8‑2000 but the evidence could not be recorded. The plaintiff moved an application under section 151, C.P.C., Civil Miscellaneous Application No. 8108 of 2002, praying for fixation of case for arguments on the basis of the documentary evidence. On 19‑12‑2002 following order was passed.‑

"Counsel for the plaintiff requests that he may be allowed to argue on prayer No.1 the prayer No. 2 has become infructuous as the goods have been cleared and the difference amount is lying with the Nazir of this Court. As regards prayer No.3 is concerned, he wishes to withdraw this prayer. Orders accordingly."

In view of the foregoing development only issue or controversy that requires to be answered is:‑‑

(I)Whether the valuation of US $ 230,531.89 in the CRF issued by defendant No.1 is illegal, null and void and against the documentary evidence?

(II)What should the decree be?

It was contended by the learned counsel for the plaintiff that the plaintiff requested for pre‑shipment inspection of the subject consignment, as required under Valuation Rules 1994, furnished pro forma invoice reflecting US $ 1,63,089.50 as value of the consignment. However, according to the plaintiff when the goods arrived, defendant No.1 issued CRF reflecting value at US $ 2,30,531.89 such action has been impugned. According to the learned counsel, unless some discrepancies are detected by PSI Company, pro forma invoice is treated as the basis for CRF value. Mr. Sharif contended that in terms of rule 4 of the IVA Rules CRF certificate is to be issued at the place of inspection and not at the port of import i.e. at Karachi. According to him as per rule 7(6) of the Valuation Rules the invoice was returned after attestation and affixing a security label, which according to him demonstrates that value shown thereon was accepted and endorsed by the PSI Company. It for all intents and purposes was CRF certificate as contemplated under IVA Rules, 1994. According to him, subsequent issuance of CRF certificate at Karachi is in fact re‑assessment and re determination of the value higher than what was given in the invoice. According to Mr. Sharif such re‑assessment is whimsical and arbitrary. Mr. Sharif learned counsel for the plaintiff has drawn my attention to the Collector of Customs, Karachi and others v. Messrs New Electronics (Pvt.) Limited and 59 others (PLD 1994 SC 363), according to him in somewhat similar circumstances identical issue was raised in said reported case but, since the apex Court concluded the disputed questions of facts and laws are involved, therefore, writ petition is not a proper remedy it was further observed such remedy may be availed "before other competent forum". He therefore, urged that since in suit the evidence could be led therefore, it is a proper forum and consequently the suit is maintainable. He further urged that where the valuation is not carried out in accordance with the rules and regulations then matter is to be remanded to the competent authority for determination. To back up his argument, he has placed reliance on Messrs Kaghan Impex and others v. Deputy Collector Customs‑II and others (1993 CLC 1838), Messrs Sasta Autos v. Government of Pakistan through Secretary Ministry of Finance, Islamabad (1991 MLD 1582) and Messrs Latif Brothers v. Deputy Collector, Customs (1992 SCMR 1983).

5. To meet the objection of defendant as to the availability of the alternate remedy it was urged that the availability of alternate remedy is no bar to a suit. It is only a relevant consideration to maintain a writ petition. Secondly, the defendant No.2 has packed up his office at Karachi, therefore, the plaintiff cannot approach the same forum. Lastly, that if the order complained of is not in accordance with law, illegal and mala fide it will not bar the jurisdiction of this Court. To buttress his such contention he relied upon Mian Muhammad Latif v. Province of West Pakistan through the Deputy Commissioner, Khairpur and another, (PLD 1970 SC 180) and Hamid Hussain v. Government of Pakistan (PLD 1974 SC 336). He, therefore, contends that the relief sought may be granted.

6. Messrs Khalid Rehman and Raja Muhammad Iqbal contended that, the whole case is based on alleged revision and enhancement in value. According to the learned counsel for the defendants such arguments are based on fallacious assumption of facts and law. It was contended that the attested invoice and CRF certificate are two different documents. It was urged that function of PSI Company was, merely of advisory nature. It was and is up to the Custom Authority to accept such value as reflected in CRF Certificate. Mr. Khalid Rehman urged that the plaintiff is erroneously relying on the attested invoice and mistaking it to be CRF certificate. According to him, suit is based on misconception. Mr. Khalid Rehman also controverted contention of Mr. Sharif that CRF certificate is to be issued at the place of inspection. According to him under the rules it is to be issued from liaison office at Karachi. Even otherwise, he contends that remedy of importer in case of dispute as to valuation shown in CRF certificate was provided in the form of representation of PSI Company and if within 73 hours such dispute was not resolved, matter could have agitated with C.B.R, which remedy was not availed. Further writ was contended that once CRF value is accepted by Customs Authorities, it was for all intents and purposes treated as the valuation carried out by the Customs Authorities and same could have been assailed and challenged before hierarchy provided for under the Customs Act itself and not before this Court. He has placed reliance on Ghulam Nabi. v. Central Board of Revenue through Chairman and 2 others (PLD 1997 Quetta 22) and the Valuation Rules 1994.

7. Exercising right of rebuttal Mr. Sharif distinguished the case of Ghulam Nabi (supra) by urging firstly that, the determination of the valuation by PSID Company could not have been ventured it writ jurisdiction. Secondly that, in said case the difference in value was merely $6 whereas, in the case in hand the valuation is almost double the invoice value.

8. I have heard the arguments and perused the record.

9. In the year 1994 in order to regulate and to create uniformity in. inspection, valuation and assessment of imported goods, Government in exercise of power conferred under section 219 of the Customs Act read with other enabling provisions issued "Inspection, Valuation and Assessment of Imported Goods Rules 1994" through S.R.O. 1108(I)/94, dated November 14, 1994 (hereinafter referred to as "IVA Rules". Under said IVA Rules Government contracted out function as to verify the physical nature of the goods, their quality specification, quantity, dutiable value, classification and calculation of leviable duties and taxes as per applicable notification and import regulations. Such functions were otherwise performed by the Customs Authorities.

10. In order to appreciate the contentions of both the learned counsel it will be beneficial to understand the manner in which CRF certificate was issued under the IVA Rules: Before proceedings further to analyse such rules I deem appropriate to point out that the definitions of "CRF" and "Attested Invoice" are given in the definition clause 2(f) and (g) respectively of the IVA Rules which reads as under:‑‑

(f)"CRF" means a Clean Report, of Finding issued by the PSI Company;

(g)"Attested Invoice" means one copy of the seller's final invoice to which an adhesive security label issue by the PSI Company has been affixed confirming that goods described on the invoice have been inspected by the PSI Company and which shall give details of the relevant import reference number and the date of attestation.

Above referred definition clause is clear manifestation that "CRF" certificate and the "Attested Invoices" are two different and distinct things, as will be seen later, were to be used for different purposes.

11. The importer at the relevant time who wished to import goods into Pakistan in terms of rule 4 of the IVA Rules was required to obtain "CRF" certificate and for said purpose in terms of sub‑rule (1)(a) to rule 4 it was his duty to provide the requisite pre‑shipment inspection. Rule 4(1)(a)‑reads as follows:‑‑

"The seller shall give to the PSI Company in the country of export; at least three working days' notice prior to the proposed date of inspection of the goods and shall provide copies of the pro forma invoice, indent, purchase order, price list, packing list and any other documents relevant to the transaction which the PSI Company may require for carrying out its service."

Whenever any shipment was required to be effected in terms or IVA rule 4(1)(f) the final invoice was required to be "duly attested by means of affixing security label" with relevant import reference and date of such attestation and confirmation that the goods described in the invoice have been inspected. In terms of sub‑rule (g) thereof such attested invoice could be used only for the purpose to negotiate the instrument for, payment from the bank. The responsibility of PSI Company in terms of rule 7 was to carry out the inspection and issue CRF certificate. Rules 7 and 8 thereof are of direct relevance for the purposes of instant case which read as follows:‑‑

Rule 7. In case the price comparison reveals that the prevailing export price in the country of supply is in excess of the invoice price declared by the seller, the PSI Company shall issue CRF report indicating value in accordance with the prevailing export market price and in accordance with the prevailing laws of Pakistan.

Rule 8. The PSI Company's offices in the country of export shall transmit the CRF or Discrepancy Report to the PSI Company liaison offices in Karachi or Lahore whose, addresses will be published alongwith tax, telephone and telex numbers by the PSI Company. The liaison office shall in turn issue CRF indicating all `the details of the goods and the duties and other taxes payable by the importer, with a copy to the Customs.

Therefore, it could be safely concluded that the CRF certificate in terms of the above‑referred rules 7 and 8 were to be transmitted by the PSI Company to its liaison office in Karachi or Lahore as the case may be. Such liaison office in turn used to issue the CRF certificate to the importer with a copy to the Customs Authority, therefore, contention of Mr. Sharif, learned counsel for the plaintiff that, CRF certificate was required to be issued and handed over in the country of origin/inspection is not substantiated by the IVA Rules. The plaintiff himself has admitted in para 10 of the plaint that such certificate; dated 9‑10‑1996 was received from the defendant No. 1, whose address at Karachi is shown. It is to be noted that the Bill of Entry in terms of IVA Rule 4(5) was required to be filed alongwith copy of "CRF" certificate and in case such certificate was not provided same was to be obtained by the importer from liaison office of PSI Company by presenting the invoice copy with security label. From the definition clause it could be seen that CRF certificate this separate document used for the purposes for determining liability in terms of duty and other charges and taxes leviable under the Customs Act. I have examined the attested Invoice (copy), dated 26‑9‑1996, produced alongwith statement, dated 15‑1‑2003, endorsement on the reverse reads as follows:‑‑

"We confirm that the goods covered by this/these invoice have been inspected under inspection order received No CK 059276, dated 3‑10‑1996."

12. From bare reading of above endorsement it is clear that, such endorsement only certifies the fact that, invoiced goods were inspected. It does not verify the value of the goods. Such verification, with G Assessed Tariff Codes and dutiable value was reflected in the "CRF" Annexure `J' to the plaint, therefore, contention of the learned counsel for the plaintiff that attested invoice is in fact CRF is not correct. In may not be out of place to point out that in terms of rule 8 of the Valuation's Rules, Customs Authority still retained power and jurisdiction for the purpose of ascertaining and verifying the value as may be indicated in the CRF certificate issued by PSI Company. Once such certificate was accepted for all intents and purposes it was an assessed value in terms of customs Act and considered to be an assessment order passed by the Customs Authority. It was amendable to the same remedy, as otherwise is available to the importer to challenge such valuation before hierarchy provided under the Customs Act.

13. Mr. Khalid Rehman learned counsel for the, defendant No.2 pointed out that after the settlement of issues, defendant No.1 has filed the documents for the purposes of adducing evidence to show that the invoice value obtained from the country of import shows the value of said consignment as US $ 2,55,000 besides various other documents to show that the plaintiff had produced the invoice which does not reflect the correct valuation of the goods. It was the duty of the PSI Company in terms of rule 7(5) to "undertake a price comparison of the goods in the country of export or origin to verify whether the price elements of the total amount invoiced by the foreign suppliers correspond within reasonable limits with the export price levels generally prevailing in the country of supply or origin, or where applicable, the world market at the time of examination of the goods. Such price comparison is not limited to the price of the goods but cover the total contracted value, rate, insurance, commission and all related services.

14. It was, therefore, urged by Mr. Khalid Rehman that the plaintiff employed all methods to avoid evidence and insisted for decision of the case on the basis of documents on record filed alongwith pleading. According to him, the purpose was obvious, to deter the defendant to show that the invoice value as declared by the plaintiff was not correct. Such contentions are not without any force. Firstly for the reason that Mr. Sharif learned counsel for the plaintiff himself relied on Collector of Customs, Karachi (PLD 1994 SC 363) supra. In support of his contention that the controversy urged in suit could not be decided in writ jurisdiction, where the evidence is not permissible. Mr. Sharif also made efforts to distinguish the case of Ghulam Nabi (supra) on the ground that the exercise to challenge CRF Certificate could not be ventured in writ jurisdiction therefore, he has invoked the plenary jurisdiction of this Court under section 9 of Code of Civil Procedure Fact that plaintiff avoided evidence appears to be purposeful. Plaintiff did not invoke writ jurisdiction, as he could not lead evidence. But filed instant suit, with object to prove his case by producing evidence. However, plaintiff chose not to lead any evidence, such conduct cast adverse inference against the plaintiff. Burden to prove that valuation of US $ 230,531.89 shown in the CRF issued by defendant No.1 is illegal, null and void and against the documentary evidence" was on the plaintiff, which burden the plaintiff has failed to discharge. Even otherwise the contention raised in instant suit was dispelled by a learned Division Bench in the case of Ghulam Nabi (PLD 1997 Quetta 22) (supra) in the following words:‑‑

In order to appreciate the arguments so advanced we would take firstly the contention that since P.S.I. Company Cotecna Inspection S.A. has certified the invoice of the declared value on the back of the invoice, therefore, the value as declared by the petitioner has been confirmed and same could not have been altered subsequently by the PSI Company. This argument is devoid of any force. As stated by the third respondent that PSI Company is required to verify the physical nature as to specification, quantity and classification of the goods and to determine the value of the goods on the basis of prevailing export price in Pakistan. This was in fact a `Physical Inspection Report' and not a confirmation of value as declared by the importer in the invoice. The endorsement on the invoice has no nexus with the declared value, which in fact is issued independently by PSI Company through CRF. The CRF value almost corresponds with the value prevailing in the open market. In such view of the matter contention that certificates of pre shipment inspection is a certificate of confirmation of declared value as given in invoice is not tenable hence ruled out.

15. Therefore, in view of the foregoing reasons, I have no hesitation in my mind to conclude that the attested invoice is entirely different document than CRF certificate within contemplation of the IVA Rules, 1994. Plaintiff itself chose not to lead any evidence. Plaintiff was not able to show that the defendant No.1 acted illegally or the `CRF' was void, illegal and or against the documentary evidence. The case‑laws relied upon by the plaintiff are distinguishable as it could not be shown that `CRF' was revised or changed.

In view of foregoing, reasons I do not find any illegality in the said CRF value on the manner in which such has been issued.

The suit is accordingly dismissed with cost.

S.A.K./D‑52/KSuit dismissed.