Messrs HASSAN TRADING COMPANY through Manzoor Hussain VS CENTRAL BOARD OF REVENUE, GOVERNMENT OF PAKISTAN, ISLAMABAD through, Chairman and 2 others
2004 P T D 1979
[Karachi High Court]
Before Saiyed Saeed Ashhad, C. J. and Ghulam Rabbani, J
Messrs HASSAN TRADING COMPANY through Manzoor Hussain
Versus
CENTRAL BOARD OF REVENUE, GOVERNMENT OF PAKISTAN, ISLAMABAD through, Chairman and 2 others
Petition No.3047 of 1992, decided on /01/.
th
March, 2004. (a) Constitution of Pakistan (1973)‑‑‑
‑‑‑Art. 199‑‑‑Constitutional petition‑‑‑Alternate remedy, non‑availing of‑‑‑Effect‑‑‑Where impugned action or order of public functionary was illegal, mala fide, without jurisdiction and void ab initio, then recourse to alterative remedies available under a statute would not be compulsory and aggrieved party could approach High Court directly.
Fecto Cement Limited v. The Collector of Customs Appraisement and another 1994 MLD 1136 rel.
(b) Customs Act (IV of 1969)‑‑‑
‑‑‑‑Ss. 32 & 81‑‑‑Issuance of notice under S.32 of‑Customs Act, 1969 after expiry of period provided under S.81 thereof for finalizing provisional assessment of duty‑‑‑Validity‑‑‑Imported goods, if did not conform to description of goods mentioned in Letter of Credit, IGM and Bill of Entry, then before expiry of such period, such notice ought to be issued to importer to explain discrepancy‑‑‑On failure of Customs Authorities to take any such action, provisional assessment would attain finality after expiry of period of 270 days, which would confer right on importer to get imported goods cleared on value/price declared by him.
Messrs Abdul Aziz Ayoob v. Assistant Collector of Customs and 3 others PLD 1990 Kar. 378 rel.
Junaid Ghaffar for Petitioners
Sajjad Ali Shah for Respondent No.1
Haider Iqbal Wahniwal for Respondent No.2
Date of hearing: 11th March, 2004.
JUDGMENT
SAIYED SAEED ASHHAD, C.J.‑‑‑In this Constitutional petition the petitioners have sought the following reliefs:‑‑
(a)Declare the assessment of extra fine quality of graphite flakes at FF1785 P.M.I. and assessment at the rate of pounds 980 per metric ton as illegal, without jurisdiction and of no legal effect.
(b)Declare the decision of the Deputy Collector applying ITP of U.K. to the goods originated from Madagascar as illegal without jurisdiction and of no legal effect.
(c)Direct the respondent to value the goods in accordance with law and release the bank guarantee illegally help up by the respondents and/or refund the amount in case the bank guarantee has been encashed by the respondents.
(d)Declare the demand of the Assistant Collector/respondent seeking to encash the bank guarantee as illegal, without jurisdiction and of no legal effect.
(e)Permanently restrain the respondents and/or their servants, employees, agents and persons from making any demand whatsoever for the encashment of the bank guarantee or from taking any adverse action against the petitioner.
(f)Grant such other relief to which the petitioner may be entitled.
The brief facts of the case as stated in the memo of petition are that in pursuance of an import authorization, the petitioner imported Graphite Extra Fine Flake (hereinafter referred to as the imported goods) consisting of 70/79 per cent of carbon by establishing a letter of credit on 30‑4‑1991. The above imported goods were imported from Madagascar at the price of FF 1785 per metric ton and after payment of freight the total value of the imported goods was FF 164742 equivalent to Pakistani Rs.732696. On arrival of the imported goods, in‑bond bill of entry IGM No. 1717 of 1991, dated 28‑9‑1991 was filed the imported goods were transferred to the bonded warehouse. The imported goods were assessed by Group I of the Customs Department on the declared value and the bill of entry was forwarded for examination at Pak Shaheen Container Terminal whereupon it was noticed that the imported goods were found to be of natural variety of graphite in the form of grayish luster powder. As no comparative value of the imported goods of Madagascar origin was available with the Customs Department, they arbitrarily assessed the value on the basis of ITP value of UK origin goods. The petitioner further submitted that this action of the Customs Department was absolutely illegal as the price of the imported goods for UK origin could not be made the basis for determining the value/price of the imported goods which were imported from Madagascar and the declared value ought to have been accepted. Subsequently, the goods were released on 4‑12‑1991 on furnishing bank guarantee by the petitioners. As the petitioners could not obtain any relief and their grievance was not redressed by the Customs authorities, they approached this Court by way of this Constitutional petition.
Parawise comments were filed on behalf of the respondents. It was submitted that the declared value of the imported goods at FF 164742 could not be termed as correct value for determining the customs duty and other taxes. It was further submitted that the bill of entry was filed for warehousing of the imported goods and not for their, release for home consumption on payment of duty and taxes, therefore, the in‑bond bill of entry was processed as per importer's request and declaration for storage of the goods in the bonded warehouse provided that the assessment for payment of duty and taxes would be made at the time of clearance i.e. ex‑bonding of the goods for home consumption. It was further submitted that warehousing of the imported goods did not mean that the assessment and valuation had been finalized. A statement was also made in the parawise comments to the effect that the petitioners had acted in a mala fide manner as they had mis declared the description of the goods as "graphite flakes" instead of "graphite powder" which was revealed on physical examination. It was further submitted that as value of the similar goods of UK origin only was available in the ITP, therefore, the value of the imported goods of UK origin was taken at the time of finalizing the assessment. It was further submitted that the assessment at the time of in‑bond bill of entry was provisionally made against submission of bank guarantee in terms of section 81 of the Customs Act and subsequently, the same was finalized calling upon the petitioners to make payment of the guaranteed amount as per their guarantor's commitment. It was also submitted that the petitioners did not exhaust the remedies available to them under the Customs Act on account of which this Constitutional petition was not maintainable. The respondents prayed that this Constitutional petition be dismissed.
We have heard the arguments of Mr. Junaid Ghaffar, Advocate on behalf of the petitioners, Mr. Sajjad Ali Shah, learned Standing counsel for respondent No.1 and Mr. Haider Iqbal Wahniwal, Advocate for respondents No.2 and 3 and have perused the relevant law and the material on record.
With regard, to the objection that the petitioners had not exhausted the remedies available to them, it is to be observed that the Supreme Court in a large number of cases has held that where the impugned action or order of a public functionary was illegal, mala fide, A without jurisdiction and void ab initio, then recourse to the alternative' remedies available under a Statute would not be compulsory and the aggrieved party could directly approach this Court. This Court in the case of The Fecto Cement Limited versus The Collector of Customs Appraisement and another (1994 MLD 1136) held that where the dispute between the parties was a fiscal dispute the aggrieved party could directly approach superior Courts by invoking Constitutional jurisdiction. This objection is therefore, not tenable and is overruled.
The Customs Authorities had framed the provisional assessment at the time of in‑bond bill of entry on 9‑10‑1991 whereby they had accepted the declared value of the imported goods for levying Customs duty and other taxes on petitioners' furnishing bank guarantee as security for payment of the difference of the Customs duty and taxes, if the value of the imported goods was assessed at a higher rate than the declared value. By virtue of subsection (2) of section 81 of the Customs Act, the Customs Authorities were required to make final assessment of the Customs duty actually payable on the imported goods within a period of 180 days at the relevant time, the period for making final assessment was 180 days which was raised to one year by Ordinance, 21 of 2000, dated 19‑6‑2000. However, the Customs Authorities neither made any final assessment within the period of 180 days nor extended the period for making the final assessment to the maximum of 90 days as permissible by the proviso to subsection (2) of section 81 of the Customs Act. Subsection (4) of section 81 of the Customs Act clearly envisages that on failure of the Customs Authorities to complete the final assessment within the period specified in subsection (2), the provisional assessment shall become final. It was emphatically submitted by Mr. Junaid Ghaffar that in view of the provisions of subsection (4) of section 81, the provisional assessment made by the Customs Authorities on 9‑10‑1991 attained finality when the final assessment was not made within the period of 180 days as provided in subsection (2) or within a further period of 90 days which could be extended in view of the proviso to subsection (2) of section 81 of the Customs Act, Mr. Junaid Ghaffar in support of his above contention placed reliance .on the judgment of Lahore High Court, dated 2‑11‑1999 in W.P. No. 19668 of 1999. We have gone through the above judgment wherein a learned Single Judge of the Lahore High Court held that on failure of the Customs Authorities to make a final assessment within a period of either six months or within the extended period, the provisional assessment, would be‑deemed to have become final entitling the petitioners for release of bank guarantee.
Mr. Haider Iqbal Wahniwal was, unable, to controvert the arguments advanced by Mr. Junaid Ghaffar and conceded that the provisional assessment was required to be finalized within a maximum period of 270 days from the date of provisional order which included the extension of 90 days for which an order was to be passed by the Collector of Customs recording the reasons for extension of period of time. He, however, submitted that the petitioners were trying to take benefit of a lapse on the part of the Customs Authorities though they were not entitled to any relief under Article 199 of the Constitution of the Islamic Republic of Pakistan as they had misdeclared the nature of the imported goods and under the guise of graphite flakes had imported graphite powder. He further submitted that the petitioners being guilty of misdeclaration and fraud were disentitled from equitable relief under Article 199 of the Constitution.
With regard to the above contention of Mr. Haider Iqbal Wahniwal, it is to be observed that from perusal of the material on record it transpires that the Customs Department had never confronted the petitioners with the alleged misdeclaration of the nature of the imported goods or that they were not the same as were declared in the bill of entry appearing at page 27 of the file. A photocopy of the letter of credit has been filed as annexure `B' (page 21). From perusal thereof, it transpires that the goods to be imported were natural graphite. There is also nothing on record on the basis of which it can be held that there would have been difference in the value/price of graphite flakes and graphite powder. It is also pertinent to note that even if it be admitted for the sake of argument that the imported goods were graphite powder and not graphite flakes then whether the ITP notified price for graphite powder of UK origin could be applied to the alleged graphite powder imported by the petitioners from Madagascar.
The main issue to be considered in this case is as to why the Customs Department did not finalize the provisional assessment within a period of 180 days or the extended period of 270 days as provided by section 81 of the Customs Act. Had it come to the knowledge of the Customs Department that the petitioners had imported the goods other than the goods which were mentioned in the Letter of Credit. IGM, and the Bill of Entry then a notice ought to have been issued to the petitioners to explain the discrepancy and if it was found that the imported goods did not conform to the description of the goods mentioned in the aforesaid documents then the Customs Department could have proceeded accordingly. However, from the material on record it stands confirmed that no such action was taken by the Custom. Department within the period provided to them by section 81 of the Customs Act. The provisional order was made on 9‑10‑1991 which was required to be finalized on or before 8‑4‑1992. This period of 180 days could have extended by further 90 days that still 7‑7‑1992 but the Customs Department did not comply with the requirements of section 81 of the Customs Act and issued a notice on 17‑11‑1992. Mr. Junaid Ghaffar, submitted that once a provisional assessment was made under section 81 of the Customs Act then notice under section 32 of the Customs Act could not be issued and it was incumbent upon the Customs Authorities to finalize the assessment as per requirement of section 81 of the Customs Act. In support of his above contention he placed reliance on the case of Messrs Abdul Aziz Ayoob v. Assistant Collector of Customs and 3 others reported in PLD 1990 Karachi 378. From a bare perusal of the judgment referred to above it is crystal clear that the Customs Authorities did not have the jurisdiction to issue a notice under section 32 of the Customs Act in a matter where provisional assessment was made and the only course available to the Customs Department was to finalize the assessment under section 81 of the Customs Act during the course of which the question of misdeclaration could have been raised and considered. It was further observed that the provisions of subsections (2) and (3) of section 32 of the Customs Act would be attracted only when a final assessment either wrongfully of erroneously had been made. This Court further went on to pronounce that where the goods were provisionally released under section 81 of the Customs Act, the Customs Department could have issued a notice under section 81 for any discrepancy which was found in the case subject to the period of limitation prescribed by section 81 of the Customs Act, Mr. Junaid Ghaffar while explaining the alleged misdeclaration or fraud as stressed by Mr. Haider Iqbal Wahniwal submitted that the petitioners had imported Natural Graphite as would be evident from the Letter of Credit, dated 30‑4‑1991 (Annexure‑B) and further that the said Natural Graphite could have been imported either in the form of Extra Fine Flake or Grayish Luster Powder. He further submitted that irrespective of the fact whether the Natural Graphite was in the form of Extra Fine Flake or of Grayish Luster Powder. It did not alter the nature of the imported goods which was Natural Graphite and the form in which it was imported was immaterial. To accept the arguments advanced by Mr. Junaid Ghaffar it would be necessary to have an authoritative view or opinion before being accepted it as it is of technical nature and not possible for us to decide whether the Extra Fine Fake or Grayish Luster Powder would be the natural variety of Graphite and would conform to the description of natural variety of Graphite. However, in view of the provisions of sections 32 and 81 of the Customs Act, the Customs Department was under a legal obligation to finalize the assessment under section 81 and to issue a notice under section 81 if at the time of finalization of the assessment it was discovered that the goods imported by the petitioners did not conform to the description of the imported goods. On failure of the Customs Department to proceed in accordance with the provisions of section 81 of the Customs Act, the provisional assessment attained finality after the expiry of the period of 270 days which conferred a right on the petitioners to get the imported goods cleared on the value/price declared by them.
For the foregoing reasons and upon the above discussion, it is absolutely clear that the Customs Authorities had failed to make compliance of the provisions of section 81 of the Customs Act as they failed to make final assessment within the maximum period of 270 days as provided by subsection (2) and the proviso thereto of section 81, as a result of which the provisional assessment attained finality. This Constitutional petition was found to have force and by a short order, dated 11‑3‑2004 it was allowed in terms of the reliefs sought by the petitioners for reasons to be recorded later. The provisional assessment was to be treated as final assessment and the petitioners were entitled to release of the bank guarantee furnished by them in favour of the Collector of Customs. There are the reasons for the said short order.
S.A.K./H‑9/KPetition accepted.