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

----S.25-B---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.2(3)---Fixation of value for imports and exports---Prices of televisions imported were fixed by the Central Board of Revenue---Complaint against for fixing over value ---Validity-- Complainant expressed disagreement with the provisional value of $ 105 for assessment 21 " TV and contended that local manufacturers were deliberately over-invoicing the imports of kits of TV sets with a view to justify their allegation that the imports of TV sets were under-invoiced-- Federal Tax Ombudsman recommended that Central Board of Revenue direct the Controller of Customs Valuation to obtain reliable export prices from the suppliers of the country of origin; elicit the evidence of values from the importers/assemblers and. the Customs Authorities; carefully examine the collected valuation data and decide the fair customs values of the TV sets of Chinese origin and advise the Customs Collectorates accordingly for assessment.

Muhammad Ahsan Sheikh, Partner.

Ashhad Jawwad, Deputy Collector of Customs (Appraisement).

FINDINGS/DECISION

The complaint has been made against the values of colour television sets fixed by the C.B.R. vide Letter No.1(8)/Val/2002 dated 18-2-2003. It was alleged that C.B.R. had arbitrarily fixed the value of 117 items including, colour TVs imported from China. The complainants stated that the Customs, Department was assessing the TV sets imported from China at $ 58.50 for 14" colour TV and $ 76.50 for 21" colour TV before the issue of C.B.R. aforesaid letter.

2. The complainants stated that since the values fixed as aforesaid were exorbitant, some of the importers challenged the vires of the letter through writ petition in the Lahore High Court. The matter was decided by the Division Bench of the Lahore High Court vide order dated 11-2-2003, I.C.A. No. 107 of 2003, declaring the aforesaid letter without jurisdiction and of no legal affect. During the period from the issue of the C.B.R.'s letter and the announcement of the aforesaid High Court's order, the Customs Department released the goods against bank guarantees for (duty and taxes on) the difference in the values and the complainants had furnished payment orders as guarantee. The Department should have returned the guarantees after the High Court's order but they have been unlawfully holding the same despite several applications/representations. They requested that the Department be directed to return the guarantees submitted in files No. VB/355/203-V and VB/629/2003-VI.

3. The Deputy Collector of Customs replied to the complaint and admitted that prices of 117 items were communicated by C.B.R. as reference prices after market inquiries conducted by various Collectorates. He also admitted that Lahore High Court had issued order on the petition of some importers and allowed Customs Authorities to evaluate the goods in accordance with law and rules applicable. He stated that the pay order in respect of file No.VB/629/2003-VI had been released as the valuation of 14" colour TV had been finalized at $ 65 per piece and $ 58.50 per piece .for a container load. In respect of 21 " colour TV sets, investigations were made on the representation of the importer and it was decided to provisionally assess the same at $ 105 per set. The matter was under consideration and the complainants have been asked to submit fresh pay orders to get the earlier pay orders released.

4. Mr. Muhammad Ahsan Sheikh, partner of the complainant's firm, stated during the hearing of the complaint that 21" TVs were imported from China at the invoice price of $ 72 per piece but the Customs Authorities determined in the value at $ 85 and, on a container load, they allowed 10 % discount and assessed at the value of $ 76.70. The Lahore High Court declared C.B.R's letter fixing the values of 117 items, including the value of TV at $ 120, without jurisdiction. On the announcement of the judgment, the Customs should have reverted to the previous practice of assessing the. 21" TV at $ 85, and after 10% discount, at $ 76.50.

5. He stated that when the complaint was filed with this office, both the pay orders deposited in respect of the import of TVs 14" and 21" were returned. However, the Department has now indicated that they would assess the 21" TVs at $ 105 per piece. In their reply to the complaint they seem to be demanding the submission of pay orders on the basis of the new price adopted by them. He argued that the C.B.R.'s letter fixing the price of TV at $ 120 has been declared without jurisdiction. The Customs Department has not yet decided the assessable value and the provisional value of $ 105 adopted by them is without any basis. He stated that $ 72 and $ 76.50 are the appropriate prices for import of 21" TV from China and there was no justification to apply higher values.

6. The Deputy Collector of Customs replied that the price of $ 120 per piece TV 21" fixed by the C.B.R. was not effectively applied and provisional assessment was made during the period. He stated that the Department had made inquiries into the valuation aspect and the domestic manufacturers of television have complained that the kit of the 21" TV was imported at the price of $ 88 and there was no justification to accept the price of $ 85 for built-up TV. Keeping in view these facts the imports were being provisionally assessed at $ 105 and the Customs would decide the final value as soon as possible.

7. Mr. Ahsan Sheikh submitted the counter-argument that the local assemblers were in fact over-invoicing the import of kits because they paid only 5 % duty whereas the importers of CBU TV paid 25 % duty. He stated that the assemblers had made allegation of under-invoicing against the importers with a view to harassing and forcing them to charge high, price so that they could market their products at much higher prices. He stated that the Customs Authorities should not rely on the misstatement and wrong information submitted by the local assemblers. They should obtain accurate, precise and reliable export values of televisions through the diplomatic channels so that fair value could be ascertained.

8. It is evident from the submissions made by the two sides that the grievance of the complainants about the non-release of the guarantees has been redressed and the pay orders have been returned by the Customs Authorities. However, the problem of determination of fair value of the television sets has yet to be resolved. Mr. Sheikh, the representative of the complainants, has expressed disagreement with the provisional value of $ 105 for assessment 21" TV. He also contended that the local manufacturers were deliberately over-invoicing the imports of kits of TV sets with a view to justify their allegation that the imports of TV sets were under-invoiced.

9. It is recommended that C.B.R. to direct the Controller of Customs Valuation to:--

(i)Obtain reliable export prices from the Chinese suppliers;

(ii)Elicit the evidence of values from the importers/assemblers and the Customs Authorities;

(iii)Carefully examine the collected valuation data;

(iv)Decide the fair customs values of the TV sets of Chinese origin and advise the Customs Collectorates accordingly for assessment.

(v)Compliance be reported to the office within forty-five days.

C.M.A./897/FTOOrder accordingly.