Customs Act (IV of 1969)‑‑‑

‑‑‑‑Ss. 14, 25, 32 & 81‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S. 2(3)‑‑‑Demurrage‑‑ Deliberate delay in assessment by Customs Authorities‑‑ Misinterpretation of provision of law‑‑‑Finally declared value was accepted‑‑‑Delay and detention certificate was issued which was not honoured by the Port Trust Authorities‑‑‑Charge of demurrage charges‑‑‑Validity‑‑‑Assessment of goods was unnecessarily delayed by the Customs Authorities without any justification‑‑‑Goods were not assessed under S.81 of the Customs Act, 1969 on the request of Complainant/importer‑‑‑Delay in finalization of assessment took place on account of processing by Customs Authorities and it had been admitted by the Assistant Collector that the Complainant/importers were entitled to delay and detention certificate for the period 27‑3‑2003 to 24‑4‑2003---Federal Tax Ombudsman recommended that Central Board of Revenue was to direct the Collector of Customs to issue a revised delay and detention certificate for the aforementioned period within fifteen days and advise Port Authorities to remit the demurrage charges and refund the same to the Complainant/importers.  

Muhammad Akram Nizami for Petitioner.

Zahid Habib, Assistant Collector of Customs (Appraisement) and Abdul Qayum, Appraiser.

FINDINGS/DECISION

The complaint has been filed against extraordinary delay in finalization of assessment of goods causing considerable expense on account of demurrage. The Complainants have stated that they imported a consignment of spare rolls for their Flour Roller Mills and filed bill of entry for clearance on 7‑3‑2003. The goods were thoroughly examined by the Customs staff; the examination was completed on 26‑3‑2003 but assessment was not finalized. The complainants requested the Customs officials to finalize the assessment under section 25 of the Customs Act but the request was not acceded to. They first sent a letter, dated 5‑4‑2003 to the Collector of Customs (Appraisement) requesting him to finalize the assessment, after hearing them to save them the burden of demurrage. At last they contacted the Additional Collector of Customs who ordered release of the consignment on the declared value and the assessment was finalized on 25‑4‑2003.

2. The Complainants stated that after payment of duty and taxes, the KPT staff refused delivery unless total amount of demurrage was paid. They requested the Customs on 7‑5‑2003 to issue a certificate of detention which was presented before the KPT staff but it was not honoured. They had no alternative but to pay the demurrage amounting to Rs.51,600. They complained that due to misinterpretation of provisions of law, they had to suffer financial loss, mental torture, physical fatigue and, above all, and reputation particularly in the business circles, and in the society generally. They alleged maladministration on the part of the Customs for delay in deciding the assessment without any reason or logic. The Customs could have released the goods under section 81 of the Customs Act or raise a demand for short‑levied duty and taxes under section 32 of the Customs Act. However, the Customs staff deliberately delayed the decision, which was nothing but a case of maladministration.

3. The Complainants emphasized there was no delay on their part in clearance of goods, and the KPT were under legal obligation to honour the detention certificate issued by the Customs Authorities and release the goods without demanding any demurrage. They added that the examination of the consignment was completed on 26‑3‑2003 and there was no justification to detain the consignment by the Customs till 25‑4‑2003 and till 8‑5‑2003 by the KPT staff. They requested that KPT be directed to repay the amount of Rs.51,600 collected on account of demurrage as the consignment was detained by the Customs and they had committed no fault.

4. The Deputy Collector of Customs relied to the complaint that when the bill of entry was filed at the declared invoice value of $ 4380 on 7‑3‑2003, the goods were subjected to first examination and the bill of entry was completed at $ 9828 i.e. at the minimum assessable value on the basis of constituent raw material. The importers did not agree with the assessment and contested the value vide letter, dated 5‑4‑2003 alleging arbitrary enhancement. Since it was not possible to immediately determine the actual value, the assessment was provisionally made under section 81 of the Customs Act on declared value. On the request of the importers, delay and detention certificate was issued for the period 11‑4‑2003 to 25‑4‑2003.

5. The Deputy Collector further stated that no delay took place on the part of the Customs as the assessment was made immediately on the production of bill of entry on 11‑4‑2003. Since the importer did not agree with the assessment, provisional release on the basis of declared value was allowed and the case referred to the Valuation Department. He averred that no maladministration had occurred on the part of the Customs Department and requested that the complaint be dismissed as unsubstantiated.

6. During the hearing of the complaint, Mr. Muhammad Akram Nizami, Advocate representing the Complainants, stated that the Customs officials asked the importer, to produce catalogue and literature on 27‑3‑2003 and the documents were presented on the same date. The Complainants contested the value of goods enhanced by the Customs from $ 365 per pair to $ 819 per pair without showing any evidence or document. The assessment was eventually finalized on 25‑4‑2003. The Customs issued the certificate of delay and detention for the period 11‑4‑2003 to 25‑4‑2003 instead of the period 27‑3‑2003 to 25‑4‑2003. The KPT charged them Rs.51,600 as demurrage charges and did not honour the delay certificate issued by the Customs.

7. The learned Advocate emphasized that because of the considerable time taken by the Customs staff and by the refusal of the KPT staff to fulfill their legal obligation of not charging demurrage for the delays on account of customs, the Complainants have been subjected to the payment of substantial amount of demurrage. He requested that Customs Authorities be directed to issue delay and detention certificate from 27‑3‑2003 to 25‑4‑2003 and they should ask the KPT authorities, in exercise of powers, conferred on them under section 14 of the Customs Act, not to charge the demurrage or any other charges for the period covered by the delay and detention certificate.

8. The Assistant Collector of Customs representing the Respondents admitted that the catalogue etc. were presented to the Customs on 27‑3‑2003, the value was first enhanced and the Additional Collector finally ordered on 24‑4‑2003 to release the goods at the declared value as the consignment comprised machinery liable to 5% duty and post‑importation audit be done afterwards.

9. It is apparent from the facts of the complainant and arguments advanced by both the sides that assessment of goods was unnecessarily delayed by the Customs without any justification. In the reply to the complaint the Customs have not stated the position accurately as the goods were not assessed under section 81 of the Customs Act. The documents produced by the Complainant show that the proposal for provisional assessment was rightly overruled by the Additional Collector. The delay in the finalization of assessment took place on account of processing by Customs and it has been admitted by the Assistant Collector that the Complainants were entitled to delay and detention certificate for the period 27‑3‑2003 to 25‑4‑2003.

10. It is recommended that C.B.R. direct the Collector of Customs to:

(i) issue a revised delay and detention certificate for the aforementioned period within fifteen days and advise KPT to remit the demurrage charges and refund the same to they Complainants; and

(ii) compliance be reported within thirty days.

C.M.A./1021/FTO Order accordingly.