SOHAIB KHAN VS COLLECTOR OF CUSTOMS, APPRAISEMENT, KARACHI
2005 P T D 1069
[Karachi High Court]
Before S. Ahmed Sarwana and Muhammad Mujeebullah Siddiqui, JJ
SOHAIB KHAN
versus
COLLECTOR OF CUSTOMS, APPRAISEMENT, KARACHI and 3 others
Constitution Petition No. D-1141 of 2003, decided on /01/.
3rd October, 2003. (a) Customs Act (IV of 1969)---
----Ss. 25-A, 25 & 2(b)---Constitution of Pakistan (1973), Art. 199---Constitutional petition---Determination of customs value of goods---Power to take over the imported goods---Scope---Appropriate officer for the purpose of S. 25-A, Customs Act, 1969 being Additional Collector of Customs and not the Principal Appraiser who had no jurisdiction to issue any notice under S. 25-A Customs Act, 1969, notice issued by the Principal Appraiser was ultra vires, without jurisdiction, void ab initio and had no legal effect, and any action including the takeover of the consignment in terms of S. 25-A, Customs Act, 1969 on the basis of such notice was also illegal and without any lawful authority---Department was directed by the High Court not to entertain any offer on the consignment in question in terms of S. 25-A of the Act and accord the same treatment to the importer as had been given to other importers in similar circumstances by the department---Department was further directed to assess the goods of the importer strictly in terms of S. 25, Customs Act, 1969.
(b) Interpretation of statutes---
----Ascertaining the true intention of a Statute---Principles.
No provision of law is to be interpreted in isolation. Accepted general principle of the interpretation of statutes is that in order to ascertain the true intention of the legislature as well as the purport and scope of a particular provision, it has to be examined in the totality of entire scheme of the law contained in a particular statute and the context in which a particular provision has been enacted. The reason being that the words, expressions and the provisions take colour and complexion in the context they are used and appear in the totality of the scheme contained in the statute.
(c) Customs Act (IV of 1969)---
----Ss. 25-A & 25---Customs Rules, 2001, Ch.IX, (Rr.107 to 125)---Takeover of imported Goods Rules, 2003---S.R.O. 371(I)/2002 dated15-6-2002-S.R.O. 487(I)/2003 dated 7-6-2003---Determination of customs value of goods---Power to takeover the imported goods---Guidelines/principles for invoking the provisions contained in S. 25-A, Customs Act, 1969.
To examine the provisions contained in section 25-A of the Customs Act the first expression requiring consideration is the Appropriate Officer . This expression has been defined in section 2(b) of the Customs Act, to mean the Officer of the Customs to whom the functions to be performed under this Act are assigned by or under the Customs Act. Under section 4 of the Customs Act, an officer of the Customs appointed under section 3 shall exercise such powers and discharge such duties as are conferred or imposed on him by or under the Customs Act. For this purpose, the C.B.R. issues notifications from time to time assigning the functions to various categories of officers appointed under section 3 of the Customs Act. The S.R.O. for the time being in force is S.R.O. 371(I)/2002 dated 15-6-2002. Under this notification the appropriate officer for the purpose of section 25-A is the Additional Collector of Customs.
While referring to the meanings given to the word find in the dictionaries, one has to be conscious of the principle of interpretation that dictionaries cannot be taken as authoritative exponents of the meaning of the words used in Acts of Legislature, for the plainest words may be controlled by a reference to the context. One has to be further conscious of the principles that, whenever a definition is sought to be culled from a dictionary meaning of the word used with a legal provision, that meaning cannot be adopted in isolation of the context in which the word is used in the particular provision. Thus, word find used in section 25-A of the Customs Act, has to be considered in context of the legal provisions in which it has been used, further keeping in view the totality of the scheme contained in the Customs Act, pertaining to the valuation of the goods dictionary meanings can be referred for the reason that in the absence of any definition of a word in the statute, the reference to the standard dictionaries can be of assistance in assigning meaning to that word.
On a perusal of the various meanings of the word find in the dictionaries and the various aspects and variations thereof, the word Find envisages the discovery, determination and ascertainment of a fact and drawing a conclusion after due application of mind. It requires no emphasis that resolving of an issue on scrutiny and ascertainment of facts requires a proper inquiry which should entail a conclusion based upon the reasons for the drawing of a conclusion. Thus, the first condition precedent for invoking the jurisdiction under S. 25-A, is that an appropriate officer, and none else, should arrive at a conclusion based on reasons that the value of the imported goods declared in the bill of entry or goods declaration is understated. Here the question is whether the Legislature has left it at the discretion of the appropriate officer to hold the inquiry in any manner he likes or to adopt any course deemed fit by him orhasprescribedmannersandmethodsforgivingfindingthatthe value of imported goods declared is understated. A perusalof section 25(10) shows that the methods of valuation given in section 25 are not confined to the purpose of any particular section only. It is specifically stated that subsections (1), (5), (6), (7), (8) and (9) define how the customs value of imported goods is to be determined under this Act (emphasis provided by us). The words under this Act are very important and leave no doubt that, whenever, a question for determination of the customs value of the goods for the purpose of Customs Act, arises the methods provided in section 25 are to be employed and in a sequential order. Section 25-A is no exception. Thus, the appropriate officer is required to determine that the value of imported goods declared by the importer is understated, in accordance with the methods specified in section 25 of the Customs Act. In Customs Rules, 2001, detailed procedure and guidelines have been prescribed in Chapter IX. The appropriate officer for the purpose of determination of the value of the imported goods has to undertake the exercise by giving reasonable opportunity to the importer and by maintaining the complete transparency. No such exercise is to be undertaken in the absence and behind the back of an importer and in the first instance an importer should be given an opportunity to furnish the explanation including documents and evidence in support of the declaration and when a final decision is taken by the appropriate officer, the said officer is required to communicate to the importer in writing his decision and the grounds therefor as provided in Rule 109(3). Any exercise done or decision taken in violation of the rules and the provisions contained in section 25 of the Customs Act, shall always be held to be illegal, arbitrary and consequentlyliabletobestruckdown. OtherrulescontainedinChapter IX are also required to be kept in view. The Additional CollectorofCustoms,isappropriateofficerforthepurposeofsection 25-A. However, he shall be within his right to base his findings on the point that the declared value of the goods is understated on the basis of exercise done by the appropriate officer for the purpose of section 25, subject to the condition that before giving a finding for the purpose of section 25-A, he will first provide an opportunity to the importer and after hearing his point of view, shall give the final decision on the point of understatement of the value of imported goods declared by the importer.
Vide Notification No. S.R.O. 487(I)/2003, dated 7-6-2003, the C.B.R. has framed the rules called as Takeover of Imported Goods Rules, 2003, which shall apply to the goods to be taken over by the Customs in terms of section 25-A of the Customs Act. A perusal of these rules shows that they merely prescribe as to what would be the range of understated value declared by the importer for taking over of the goods under section 25-A and the procedure to be adopted in respect of the taken over imported goods under section 25-A, after a finding is given that the customs value of imported goods declared by the importer are understated and buyer prepared to offer substantially higher value is available. This further confirms that for the purpose of determining the customs value of the imported goods and giving a finding that it is understated, the provisions contained in section 25-A are to be read with the provisions contained in section 25 of the Customs Act. A perusal of the rules contained in Sub-Chapter (ii) of Chapter IX of the Customs Rules, 2001, shows that an importer shall furnish declaration disclosing full and accurate detail relating to the value of imported goods and the appropriate officer, after determination of the value of imported goods, may call further information. In the provisions contained in Rule 112, it is clearly provided that, whenever the appropriate officer is unable to accept the transaction value without further inquiry, he shall give the importer an opportunity to supply such further detailed information as may be necessary to enable him to examine the circumstances surrounding the sale. Without referring to the detailed guidelines available in section 25 as well as in Chapter IX of the Customs Rules, the relevant provisions envisage total transparency. The importer has to be associated with every step of the inquiry/process of valuation and anything done without notice to the importer and without affording reasonable opportunity of being heard, would not be in consonance with the intention of the Legislature and the spirit of the law. All such actions taken or processed without notice to the importer and prejudicial to his interest, shall be held to be unwarranted in law and shall be liable to be struck down as invalid and illegal.
Section 25-A is consequential in nature and falls within the category of various penal actions which can be taken against an importer. Section 25-A can be invoked on valuation of the imported goods in accordance with section 25 and by adhering to the rules contained in Chapter IX of the Customs Rules 2001. The provisions contained in section 25-A are very harsh and are likely to affect the investment environment and the business/trading, therefore, in consonance with the principle that whenever any such harsh provisions are enacted, the Legislature, in order to strike a balance and to minimize the possibility of misuse of such, provisions provides certain safety valves and safeguards to the persons likely to be adversely affected, has provided such safeguards to the importers. View that the provisions in section 25A are consequential and punitive, is based on the provision that the appropriate officer may order for entertaining offer by any other person to buy these goods without prejudice to any other action he may take in respect of importer. So far, as the safeguards to the importers are concerned, they are ingrained in the provisions contained in section 25 and the Rules in Chapter IX of the Customs Rules, 2001. In addition, the Legislature has provided that the consequential/penal action under section 25-A, can be invoked if there is a finding that the value of imported goods declared in the bill of entry or goods declaration, is understated and there is a buyer of imported goods at substantially higher value. The expression substantially higher value is of significance. The Legislature has not defined this expression. However, the C.B.R., while framing rules, called as Takeover of Imported Goods Rules, 2003, applicable to the goods to be taken over by the Customs in terms of section 25-A, has specifiedtherangeofunderstatedvaluerequiringinvocationofsection 25-A of the Customs Act. The table in the rules contains 13 descriptions of goods. The list is, on the face of it, not exhaustive but is indicative of the intention as to what would be the range of understated value justifying the invocation of section 25-A of the Customs Act. The range of understated value for 6 items is 50% and for 7 items is 30%. It is indicative of the fact that for invoking the provisions contained in section 25-A, and after resorting to the valuation in accordance with the methods specified in section 25 and by adhering to the procedure provided in the rules, it should be determined that in respect of goods described in the table the range of understated is as specified and in respect of other goods, the range of understated value is at least 30%. If the range of understated value is less than 30% no resort should be made to the take over of goods under section 25-A and the appropriate officer may have resort to any other action provided in the Act.
(d) Customs Act (IV of 1969)---
----S. 25-A---Power to take over the imported goods---Expressions: Appropriate Officer and Find --Connotation.
Chambers 20th Century Dictionary 1983 Edn.; Shorter Oxford English Dictionary 1952 Edn.; Black s Law Dictionary, 6th Edn. 1991 and legal Thesaurus Second Edn. 1992 by William C. Curtain ref.
(e) Interpretation of statutes---
----Dictionary meanings of a word in a statute, when can be of assistance---In the absence of any definition of a word in the statute, the reference to the standard dictionaries can be of assistance in assigning meaning to that word.
(f) Words & phrases---
---- Find ---Connotation.
Chambers 20th Century Dictionary 1983 Edn.; Shorter Oxford English Dictionary 1952 Edn.; Black s Law Dictionary, 6th Edn. 1991 and legal Thesaurus Second Edn. 1992 by William C. Curtain ref.
(g) Words and phrases---
---- Appropriate Officer ---Connotation.
Chambers 20th Century Dictionary 1983 Edn.; Shorter Oxford English Dictionary 1952 Edn.; Black s Law Dictionary, 6th Edn. 1991 and legal Thesaurus Second Edn. 1992 by William C. Curtain ref.
Junaid Ghaffar for Petitioner.
Shakeel Ahmed for Respondents Nos. 1 to 3.
Syed Ziauddin Nasir, Standing Counsel for Respondent No.4.
Date of hearing: 3rd October, 2003.
JUDGMENT
MUHAMAD MUJEEBULLAH SIDDIQUI, J.---The petitioner an importer has sought the following relief:--
Honourable Court may be pleased to pass orders as follows:--
(a)Declare that the impugned Notice, dated 6-9-2003 is ultra vires, without jurisdiction, void ab initioand has no legal effect; and any action including take over of the petitioners consignments in terms of section 25-A of the Customs Act 1969, on the basis of the saidNotice is also illegal and without any lawful authority.
(b)Direct the respondents to assess the goods of the Petitioner strictlyintermsofsection 25(1) oftheCustomsAct,1969and also declare that the act of invoking the provisions ofsection 25A of the Customs Act, 1969 without first exhausting the methods provided in section 25 of the Customs Act, 1969 is also illegal, unlawful andwithout jurisdiction.
(c)Direct the respondents not to entertain any offer on petitionersconsignment in terms of section 25-A of the Customs Act, 1969 and accord the sametreatment to the petitioner as has been given to other importers in similar circumstances by the department vide File No. VB/98/2002/-VI.
The relevant facts giving rise to this petition are that the petitioner is an importer of industrial chemicals from Spain since 2002 and is marketing the same in the local market. In the regular course of his business, the petitioner imported a consignment, on the arrival whereof the petitioner filed, For-bond Bill of Entry in terms ofsection 79 of the Customs Act, 1969 and the customs officials allowed the clearance of the consignment tobondon8-4-2003. Thereafter petitionerfiledEx-bondBillofEntry for 5600 Kgs:intermsofsection 104 of the Customs Act, which was processed bythe customs officials in terms of section 25(1)of the Customs Act, 1969, on the basis of transactional value and the goods were clearedfrom the bond. Thereafter, the Respondent No.3, Assistant Collector of Customs, Appraisement Group-II, issued a notice, dated 29-4-2003 in terms of section 26 of the CustomsAct,askingthepetitionertoprovidesales tax invoices pertaining to the import for the period from 12-11-2002 to 12-3-2003 for ascertaining the correct value of the imported consignment cleared during the above mentioned period. The requisite documents were furnished. Thereafter the petitioner through his Customs Agent applied for the release of balance quantity lying in the Bonded Ware House, but the respondents procrastinated the matter and the petitioner received a letter, dated 6-9-2003 issued by respondent No.2, the Principal Appraiser Group-II, which reads asfollows:--
Government of Pakistan
Appraisement Collectorate
Customs House, Karachi.
No. V/71/2003-IIDated 6-9-2003.
Messrs Feroz Trading Corporation, 48 Wazir Mansion. Awain-e-Tijarat, Road, Karachi.
SUBJECT:-TAKING OVER IMPORTED GOODS UNDER SECTION 25-A OF CUSTOMS ACT, 1969
Please refer to your imports made against IGM No.547 of 2003, dated 5-4-2003 Index No.39.
(2)It is informed that the prospective buyer has opted to purchase the subject goods @ EURO 1.45/kg and offered price has been accepted by the competent authority.
(3)We are therefore, directed to clear the same at offered price within seven days from the receipt of this notice otherwise consignment would be dealt under the above provisions of law.
Principal Appraiser
Group-II
Copy to:--
Messrs United Shippers.
44-45, WazirMansion.
Aiwan-e-Tijarat Road, Karachi. CHAL No.44.
The petitioner has assailed the above notice on the grounds that it is void ab initio. It is contended that proceedings under section 25-A of the Customs Act, can be initiated after following the procedure of assessment provided under section 25 of the Customs Act. The methods provided under section 25 have not been followed and the provisions contained in the rules for valuation notified vide S.R.O. 450(I)/2001, dated 18-6-2001 have not been followed.
The petitioner has further averred that no evidence is available with the respondents to show that the transactional value is incorrect and further no evidence of higher value is available with them. The respondents have been releasing the same commodity to the petitioner and issuance of notice under section 25-A on the basis of an offer by one of the rivals and competitor of the petitioner, who according to petitioner, is their former customs agent namely Messrs World Business Linkers, and has given the offer just to harass the petitioner and to ruin his business for taking revenge on account of his release of duties as Custom Agent, is not warranted in law. It is further contended that the course adopted by the respondents would make the mandatory provisions of section 25 redundant and if this practice is allowed tocontinue it will have disastrous effect on the business. According to the petitioner the appropriate customs officials can exercise the option under section 25-A in exceptionalcircumstances and on availability of a clear proof of understatement.Itisaverredthatthelegislaturehasprovidedinsection 25-A that if the appropriate officer finds that customs value of imported goods declared in the Bill of Entry or goods declaration is understated then only he can take the steps of looking for a buyer of the imported goods at substantially higher value and then only a resort can be madefor entertaining the offer and giving option to importer as specified in section 25-A. It issubmitted that the respondents have admitted that the value declared by the petitioner is not understated and the respondents have no evidence establishing the higher value of the imported goods. Therefore, the question of invoking section 25-A of the Customs Act, does not arise. According to petitioner a finding that the declared value was understated is a conditionprecedent for invoking the provisions contained in section 25-A and thus, in the absence of valuation under section 25 of the Customs Act, the action taken by the respondents is not warranted in law. The petitioner has further placed reliance on Rule 109 contained in S.R.O. 450(I)/2001, dated 18-6-2001, which provides that if a value cannot be determined in termsof provisions of section 25(1) then the appropriate officer shall inform the importer in writing of his decision for not accepting the transactional value and the grounds thereof. In the instance case, no such exercise has been done and therefore, the action taken is illegal and is liable to be quashed. It is further contended that once the respondents called upon the petitioner to produce documentary evidence to substantiate the transactional value through the notice under section 26, dated 29-4-2003 and the documents were furnished it was incumbent upon the respondents to assess the value of goods in terms of section 25, without which no resort could be made to section 25-A.
Comments have been filedby one Asif Abbas Khan, Deputy Collector Customs (Appraisement), on behalf of the respondents. It is stated in the comments that the petitioner imported the consignment and filed into bond Bill of Entry. During the course of processing the bill of entry, a prospective buyer offered to purchase the goods at higher rates in terms of the provisions of section 25-A of the Customs Act. It is further alleged that the Clearing Agent of the petitioner undertook on the reverse of the Bill of Entry to pay the extra taxes on offered price if accepted. It is further alleged that under section 25-A, the imported goods can be taken over if the declared value is understated and there is a buyer of substantial higher value. According to respondents the prospective buyer offered 25% more than the value declared by the petitioner and therefore, the respondentsissued notice to the petitioner in termsof section 25-A. It is further alleged that in themeanwhile the customs officials received an identical import on 4-9-2003, which proved the element of gross under invoicing on the part of the importer, thus, a Contravention Report, dated 19-9-2003 was prepared and the case was referred to Adjudication Collectorate for adjudicating proceedings. It is further alleged that in view of the reference to the Adjudicating Collectorate, the petition is premature and is liable to be dismissed.
The facts stated in the petitioner are not denied and it is admitted that a portion of the consignment vide Ex-bondBillofEntry,dated11-4-2003, for 5600 Kgs was released but against the undertaking, dated 12-4-2003 endorsed on the reverse of Into-bond bill of entry undertaking to pay extra taxes on offered price. It iscontended that on the basis of import by another importer, dated 4-9-2003 a Contravention Report, under section 32(1) of the Customs Act, has been prepared. A perusal of the Contravention report, dated 19-9-2003, shows that accordingto Deputy Collector of Customs (Appraisement) Group-II, the release of 5600 Kgsofimportedchemicalwasallowed atdeclaredvalueon11-4-2003 subject to undertaking given on the reverse of the bill that the petitioner would pay the extra taxesin result of acceptance of offered price at EURO1.45/kg under section 25-A of the Customs Act, 1969. At this juncture it would be appropriateto reproduce the exact undertaking appearing on the reverse of the Bill of Entry which read as follows:--
We hereby guarantee and undertake that we will pay extra duty and other taxes if value is enhanced by any buyer take over goods in excess value.
The comparison between the words in the Contravention Report and the undertaking on the reverse of the Bill of Entry shows that the Deputy Collector of Customs (Appraisement), has attempted to distort the undertaking given by the Clearing Agent.
We have heard Mr. Junaid Ghaffar, learned counsel for the petitioner, Mr. Shakeel Ahmed, learned counsel for the Respondent Nos.1 to 3 andMr. Ziauddin Nasir, learned Standing Counsel, for the respondent No.4.
The learned advocates for the petitioner and the Respondent Nos.1 to 3have reiterated the contentions contained in the petition and the comments. The learned Standing Counsel has adopted the arguments addressed by Mr. Shakeel Ahmed. In addition to the contentions reproducedabove, the learned counsel for the petitioner has submitted that appropriate officer for thepurpose of section 25-A, is the Additional Collector of Customs and in the present case and noorder whatsoever has been passed by the Additional Collector of Customs. The notice under section 26 was issued by the Respondent No.3. Assistant Collector of Customs and the notice under section 25-A was issued byRespondent No.2. Principal Appraiser, Group-II, None of them is an appropriate officer for the purpose of section 25-A and secondly, all the proceedings and the impugned notice, dated 6-9-2003 are without jurisdiction, void, ab initio and of no legal effect. In support of his contention he has placed reliance on the Notification No. S.R.O. 371(I)/2002, dated 15-6-2002, issued by the C.B.R. in exercise of the powers conferred by Clause (b) of section 2 of the Customs Act, 1969, assigning the functions of the Appropriate Officer with reference to various sections of the Customs Act, 1969. According to this notification, the Appropriate Officer for the purpose of section 25-A is the Additional Collector of Customs.
The learned counsel for the respondents are not able to rebut the contention that under S.R.O. referred to above, the Appropriate Officer for the purpose of section 25-A is the Additional Collector of Customs and that the impugned notice has been issued by Principal Appraiser, the Respondent No.2. We further asked the learned advocates for the respondents to show us any order passed by the Appropriate Officer, and the learned advocates for the respondents afterconsulting the departmental officers, who were assisting them stated that no order has been passed in this case by the Appropriate Officer. This admission on the part of the departmental officers was sufficient to allow the petition by declaring the impugned notice without jurisdiction and of no legal effect. A similar petition on the same ground was allowed by us a few days earlier. However, Mr. Junaid Ghaffar, learned counsel for the petitioner submitted that the Customs Officials in flagrant violation of the law are engaged in massive exploitationof the provisions contained in section 25-A of the Customs Act, and the Customs House has been converted into a trading house/auction market. He requested that in order to prevent the abuse of law a detailed judgment may be delivered with the direction to C.B.R. to issue appropriate instructions to all concerned Customs Officialsto act within the parameters of law and stop harassment to the importers which is likely to affect already ruined economy of the country very adversely.
In view of various instances brought to our notice, whereby the customs officials have resorted to arbitrary actions in excess of jurisdiction and violation of the mandate of law, we propose to deliver a detailed judgment pertaining to the provisions contained in section 25-A. In order to appreciate thecontentions raised before us, it would be appropriate to reproduce, the provisions contained in sections 25 and25-A of the Customs Act, as well as Rules 109, 110, 111 of the Customs Rules, 2001, contained in Notification No. S.R.O. 450(I)/2001, which are as follows:--
(25) Determination of customs value of goods.---(1) Transaction value 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:
Provided that;
(a)there are no restrictions as to the disposition or use of the goods by the buyer other than the restrictions which:
(i)are imposed or required by law.
(ii)limit the geographical area in which the goods may be resold; or
(iii)do not affect the value of the goods:
(b)the sale or price is not subject to some condition or consideration for which a value cannot be determined with respect to the goods being valued;
(c)no part of the proceeds of any subsequent resale, disposal or use of the goods by the buyer will accrue directly or indirectly to the seller, unless an appropriate adjustment is made in accordance with the provisions of subsection (2)(e); and
(d)the buyer and seller are not related, or where the buyer and seller are related, that the transaction value is acceptable for customs purposes under the provisions of subsection (3).
(2)Subject to clause (b) in determining the customs value under subsection (1).
(a)there shall be added to the price actually paid or payable for the imported goods, if not already included in the price:---
(i)the cost of transport, excluding inland freight after importation of the imported goods to the Port, Airport or place of importation;
(ii)loading, unloading, and handling charges associated with the transport of the imported goods to the Port, Airport or place of importation; and
(iii)the cost of insurance;
(b)there shall also be added to such price, to the extent that they are incurred by the importer but are not included in the price actually paid or payable of the imported goods:---
(i)commissions including indenting commissions and brokerage, except buying commission;
(ii)the cost of containers which are treated as being one for customs purposes with the goods in question; and
(iii)the cost of packing whether for labour or materials;
(c)there shall also be added to such price the value, apportioned as appropriate, of the following goods and services where supplied directly or indirectly by the importer or his related person free of charge or at reduced cost, for use in connection with the production and sale for export of the imported goods, to the extent that such value has not been included in the price actually paid or payable:---
(i)materials, components, parts and similar items incorporated in the imported goods;
(ii)tolls, dies, moulds and similar items used in the production of the imported goods;
(iii)materials consumed in the production of the imported goods; and
(iv)engineering, development, artwork, designwork, and plans and sketches undertaken elsewhere than in Pakistan and necessary for the production of the imported goods;
(d)there shall also be added to such price, royalties and licence fees related to the goods being valued that the buyer must pay, either directly or indirectly, as acondition of sale of the goods being valued, to the extent that such royalties and fees are not included in the price actuallypaid or payable; and
(e)there shall also be added to such price, the value of any part of the proceeds of any subsequent resale, disposal of use of the imported goods that accrues directly or indirectly to the seller;
(f)if sufficient information is not available for any reason, with respect to any adjustments referred to above, the transaction value, of the imported goods shall be treated, for the purpose of subsection (1), as the one that cannot be determined.
(3)If the buyer and seller are related in terms of the rules the transaction value shall be accepted for the purposes of subsection (1); whenever:--
(a)the examination of the circumstances surrounding the sale of the imported goods as demonstrated by the importer indicate that the relationship did not influence the price; or
(b)the importer demonstrates that such value closely approximates to one of the following Test Values occurring at or about the same time;
(i)the transaction value in sales to unrelated buyers of identical or similar goods for export to Pakistan;
(ii)the customs value of identical or similar goods as determined under the provisions of subsection (7) (deductive valued);
(iii)the customs value of identical or similar goods as determined under the provisions of subsection (p) (computed value):
Provided that in applying the foregoing tests due account shall be taken of demonstrated differences in commercial levells, quantity levells, the elements enumerated in subsection (2) and cost incurred by the seller in sales in which the seller and the buyer are not related that are not incurred by the seller in sales in which the seller and the buyer are related.
(4)Where, in relation to the goods being valued, the appropriate officer is of the opinion that importer has not, for the purposes of clause (a) of subsection (3), demonstrated that the relationship did not influence the price or for the purposes of clause (b) of subsection (3), that the declared price at which the goods are imported does not closely approximate to one of the test values mentioned therein; the appropriate officer shallinform the importer of his reservations in writing and give the importer an opportunity to justify the price difference. If the importer fails to justify the price difference, the customs value cannot be determined under the provisions of subsection (1).
(5)Transaction value of identical goods.---If the customs value of the imported goods cannot be determined under the provisions of subsection (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:---
(a)In applying the provisions of this subsection, the transaction value of the identical goods in a sale at the same commercial levell and substantially the same quantity as the goods being valued shall be used to determine the customs, value of imported goods.
(b)Where no sale referred to in clause (a) is found, thetransaction value of identical goods sold at a different commercial level and/or in different quantities, adjusted to take account of differences attributable to commercial level and/or to quantity, shall be used, provided that suchadjustments can be made on the basis of demonstrated evidence which clearly establishes the reasonableness and accuracy of the adjustment, whether the adjustment leads to an increase or decrease in the value.
(c)Where the cost and charges referred to in clause (a) of subsection (2) are included in the transaction value of identical goods, an adjustment shall be made to take account of significant differences in such costs and charges between the goods being valued and the identical goods in question arising from differences in distances and modes of transport.
(d)If, in applying the provisions of this subsection, there are two or more transaction values of identical goods that meet all the requirements of this subsection and clauses (b), (d), (e) and (f) of subsection (13), the customs value of the imported goods shall be the lowest such transaction value, adjusted as necessary in accordance with clauses (b) and (c).
(6)Transaction value of similar goods.---If the customs value of the imported goods cannot be determined under the provisions of subsection (5), it shall, subject to clauses (c), (d), (e) and (f)of subsection (13) and rules, 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, and the provisions of clauses (a), (b), (c) and (d) of subsection (5) shall, mutates mutandis, also apply in respect of similar goods.
(7)Deductive value. If the customs value of the imported goods cannot be determined under subsection (6), it shall, subject to rules, be determined as follows:--
(a)If the imported goods or identical or similar imported goods are sold in Pakistan in the condition as imported, the customs value of the imported goods shall be based on the unit price at which the imported goods or identical or similar imported goods are so sold in the greatest aggregate quantity, at or about the time of the importation of the goods being valued, to persons who are not related to the persons from whom they buy suchgoods, subject to the deductions for the followings:--
(i)either the commissions usually paid or agreed to be paid or the additions usually made for profit and general expenses in connection with sales in Pakistan of imported goods of the same class or kind;
(ii)the usual costs of transport and insurance and associated costs incurred within Pakistan; and
(iii)(xxxxx)
(iv)the customs duties and other taxes payable in Pakistan by reasons of theimportation or sale of the goods.
(b)If neither the imported goods nor identical nor similar imported goods are sold at or about the time of importationof the goods being valued, the customs value shall, subject otherwise tothe provisions of clause (a) of this subsection be based on the unit price at which the imported goods or identical or similar imported goods are sold in Pakistan in the condition as importedat the earliest date after the importation of the goods being valued but before the expiry of ninety days after such importation.
(c)If neither the imported goods nor identical nor similar imported goods are sold in the country or importation in the condition as imported, then, if the importer so requests, the customs value shall be based on the unit price at which the imported goods, after further processing, are sold in the greatest aggregate quantity to persons in the country of importation who are not related to the persons from whom they buy such goods, due allowance being made for the value added by such processingand the deductions provided for in clause (a).
(8)Computed value.---If the customs value of the imported goods cannot be determined under subsection (7), it shall, subject to rules, be based oncomputed value which shall consist of the sum of:--
(a)the cost of value of materialsand fabrication or other processing employed in producingthe imported goods;
(b)an amount for profit and general expenses equal to that usuallyreflected in sales of goods of the same class or kind as the goods being valued which aremade by producers in the countryor exportation for export to Pakistan; and
(c)the cost or value of all other expenses as specified in clause (a) of subsection (2).
(9)Fall Back Method.---If the customs value of the imported goods cannot be determined under subsections (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.
(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 value are required to be applied in a sequential order except reversal of the order ofsubsections (7) and (8), at the importer s request, if so agreed by Collector of the Customs.
(11)Nothing contained in the section or the rules, shall be construed as restricting of calling into question the rights of the appropriate officer of customs to satisfy himself as to thetruth or accuracy of any statement, information, document or declarationpresented for customs valuation purposes.
(12)An appropriate officer of Customs appointed by an order in writing by the Board, or Collector of Customs, on case to case basis, shall have free access to business premises, registered office, wharehouses or any other place, where any stocks, business records or documents required under this Act are kept or maintained belonging to any person afterserving notice to such person whose business activities are covered under this Act or who may be required for audit, inquiry or investigation in any offence committed under this Act by such person, his agent or any other person; and such officer may at any time during the working hours, inspect the goods, stocks, records, data, documents correspondence, accounts and statements and any other record or documents and may take into custody such records inwhole or in part, in original or copies thereof against a signed receipt. The Board or Collector of Customs may also order for audit for ascertaining thecorrectness of declarations, documents, records and value of imported goods. All searches and seizure of documents made under this subsection shall be carried out mutatis mutandis in accordance with the provisions of the Code of Criminal Procedure, 1898 (Act V of 1898).
(13)For the purposes of this section:---
(a) customs value of imported goods means the value of goods for the purposes of levying duties of customs and other taxes on imported goods;
(b) identical goods means goods, which are the same in all respects including physical characteristics, quality and reputation. Minor differences in appearance would not preclude goods otherwise confirming to the definition from being regarded as identical;
(c) similar goods means goods which although not alike in all respects have like characteristics and like component materials also which enable them to perform the same functions and to be commercially interchangeable. The quality of the goods, their reputation and the existence of a trademark are among the factors to be considered in determiningwhether goods are similar;
(d)the terms identical goods and similar goods do not include as the case may be, goods which incorporate or reflect engineering development, artwork,designwork, and plans and sketches for which no adjustment has been made under subsection (2)(c)(iv) because such elements were undertaken inPakistan;
(e)goods shall not be regarded as identical goods or similar goods unless they were produced in the same country as the goods being valued;
(f)goods produced by a different person shall be taken into account only when there are no identical goods or similar goods, as the case may be, produced by the same person as the goods beingvalued; and
(g) goods of the same class or kind means goods which fall within a group or range of goods produced by a particular industry or sector, and includes identical or similar goods.
(14)Notwithstanding anything contained in subsections (1), (5), (6), (7), (8) and (9), if the Board or such officer as is authorized by the Board in this behalf is satisfied that it is necessary or expedient so to do the Board or the officer may, by notification in the officials Gazette; for the purposes of levying customs duties under this Act or any other law for the time being in force, fix the minimum customs value of goods specified in the First Schedule and the Second Schedule, having regard to the trend of value of such or like goods and subject to such conditions or limitations as the Board or such officer may deem fit. The Board or such authorized officer may fix different customs values for different classes or different description of the same type of goods. A notification issued under this subsection shall be effective from the day specified therein, notwithstanding that the official Gazette in which such notification appears is published at any time after that day.
(15)Customs value of exported goods.---The customs value of any exported goods shall be the value at the prescribed time, on a sale in open market for exportation to the country to which the goods are consigned having regard to the following provisions, namely:--
(a)that the goods are treated as having been delivered to the buyer on board the conveyance in which they are to be exported; and
(b)that the seller will bear all packing, commission, transport, loading and all other costs, charges and expenses (including any export duty which may be chargeable) incidental to the sale and to the delivery of the goods on board the conveyance inwhich they are to be exported and which will be included in the customs value;
(c)that where goods are manufactured inaccordance with any patented invention or are goods to which any protected design has been applied, the customs value shall be determined taking into consideration the value of the right to use design in respect of the goods;
(d)that where goods are exported for sale, other disposal or use, whether or not after further manufacture, under a Pakistan trade mark, the customs value shall be determined taking into consideration the value of the right to use the patent, design or trade mark in respect of the goods.
Explanation I.---A sale in open market between a buyer and a seller independent of each other presupposes---
(a)that the customs value is the sole consideration and sale is between a buyer and seller independent of each other;
(b)that the customs value is not influenced by any commercial, financial or other relationship, whether by contract or otherwise between the seller or any person associated in business with him and the buyer or any person associated in business with him other than the relationship created by the sale itself;
(c)that no part of the proceeds of any subsequent resale, other disposal or use of the goods will accrue, either directly or indirectly, to the seller or any person associated in business with him;
(d)that two persons shall be deemed to be associated in business with one another if, whether directly or indirectly, either of them has any interest in the business or property of the other or both have a common interest in any business or property or some third person has an interest in the business or property of both of them.
Explanation II.---For the purposes of the subsection, the expression prescribed time shall mean the time when the bill of export for goods declaration is delivered under section 131 or 131-A or when export of the goods is allowed without a bill of export or goods declaration or in anticipation of the delivery of a bill of export or goods declaration the time when export of the goods commences.
25-A. Power to take over the imported goods.---(1) If the appropriate officer finds that customs value of imported goods declared in the bill of entry or goods declaration is understated and there is a buyer of imported goods at substantially higher value, he may order the following without prejudice to any other action, he may take in respect of the importer, namely:--
(i)entertain offer by any other persons to buy these goods at substantially higher value than the declared customs value in the bill of entry and payment of customs, duties and other leviable taxes therein, provided such offer is accompanied by a pay order equal to twenty-five per cent of the amount of such value and duties and other taxes leviable on imported goods;
(ii)give an option in writing to the importer of such goods for clearance of imported goods at the customs value equal to such highest offer for purchase of goods and payment of customs duties and other taxes chargeable thereon; and
(iii)in case the importer fails to clear the imported goods within seven days of the receipt of notice under clause (ii) above, the appropriate officer may take over the goods on payment of customs value declared in the bill of entry and an amount equal to five per cent of such declaredvalue.
(2)The imported goods taken over under subsection (1) shall be delivered to the offerer on submission of two pay orders, one equal to the customs value declared in the bill of entry plus five per cent in the name of importer and the other pay order equal to the remaining amount of value of imported goods and the amount of customs duties and other taxes leviable on the imported goodsin the name of Collector of Customs.
(3)In case the local buyer fails to take the delivery of the goods on payment of value and taxes as prescribed in subsection (2) above, the pay order equal to twenty-five per cent of the amount shall be forfeited in favour of the Federal Government and imported goods shall be released to the importer as per customs value determined under section 25.
Customs Rules, 2001
109. Burden of proof .---(1) Where the appropriate officer has reason to doubt the truth or accuracy of the particulars or of documents produced in support of the declaration, such officer may ask the importer to provide further explanation, including documents or other evidence.
(2)If, after receiving information referred to in sub-rule(1) or in the absence of a response, the appropriate officer still has reasonable doubts about the truth or accuracy of the declared value, it may bedeemed that the customs value of the imported goods cannot be determined under the provisions of subsection (1) of section25 of the Act.
(3)When a final decision is made, the appropriate officer shall communicate to the importer in writing his decision and the grounds therefor.
110. Prohibited methods.--- Where the value of imported goods cannot be determined under subsections (1), (5), (6), (7) and (8) of section 25 of the Act, the customs value shall be determined on the basis of data of imports available with the Customs Department. However, no value shall be determined under these rules on the basis of:
(i)the selling price of the identical goods produced in Pakistan;
(ii)the price of the goods in the domestic market of the country of origin except after allowing deduction of local taxes and profits at each level of sale in the country or exportations;
(iii)arbitrary or fictitious values; or
(iv)the minimum customs values, except those notified under subsection (4) of section 25 of the Act.
111. Rights of Customs.--- Nothing contained in this chapter shall be construed as restricting, or calling in question, theright of the appropriateofficer to satisfy himself as to the truth or accuracy of any statement, information, document or declaration presented for valuation purposes by or on behalf of the importer under theAct and rules made thereunder.
At the very outset we would like to observe that in view of the admitted proposition that an order under section 25-A can be passed by an appropriate officer only; and in terms of section 2(b) of the Customs Act, the appropriate officer for the purpose of section 25-A, is Additional Collector of Customs and no order whatsoever, in respect of the consignment under consideration has been passed by him and the impugned notice, dated 6-9-2003 has been issued by the Respondent No.2 the Principal Appraiser, who has admittedly no jurisdictionto issue any such notice, there is no difficulty in granting the declaration sought in Para(a) of the prayer. Likewise the direction sought in para(c) of the prayer clause is consequential, which is also hereby granted. The result is that the impugned notice, dated 6-9-2003 is held to be without jurisdiction and void ab initio having no legal effect and that all actions in pursuance of the above notice are also declared to be illegal and without lawful authority. The respondents arefurther directed not to entertain any offer in respect of the petitioner s consignment in terms of section 25-A and are directed to accord the same treatment to the petitioner as being given to the other importers. The respondents are further directed to assess the goods of thepetitionerstrictly in terms of section 25 of the Customs Act, 1969.
After issuing writs to the respondents in the above terms we are left with the request of the learned counsel for the petitioner that a declarationbemadetotheeffectthattheprovisionscontainedinsection 25-A are to be read in conjunction and continuation of section 25 of the Customs Act and to lay down the guidelines for invoking the provisionscontained in section 25-A of the Customs Act.
Before dwelling on the contention and examining the provisions contained in section 25-A of the Customs Act, we would like to observe that, no provision of law is to be interpretedin isolation. Accepted general principle of the interpretation of statutes is that in order to ascertain the true intention ofthe legislature as well as the purport and scopeof a particular provision, it has to be examined in the totality of entire scheme of the law contained in a particular statute and the context in which a particular provision has been enacted. The reason being that the words, expressions and the provisions take colour and complexion in the context they are used and appear in the totality of the scheme contained in the statute.
With these observations, we proceed to examine the provisions contained in section 25-A of the Customs Act. The first expression requiring consideration is the Appropriate Officer . This expression has been defined insection 2(b) of the Customs Act, to mean the officer of the Customs to who the functions tobe performed under this Act are assigned by or under the Customs Act. Under section 4 of the Customs Act, an officer of the Customs appointed under section 3 shall exercise such power and discharge such duties as are conferred or imposed on him by or under the Customs Act. For this purpose, the C.B.R issues notifications from time to time assigning the functions to various categories of officers appointed under section 3 of the CustomsAct.The S.R.O. for the time being in force in S.R.O. 371(I)/2002,dated15-6-2002. Under this notification the appropriate officer for the purpose of section 25-A is the Additional Collector of Customs.
The second word appearing in section 25-A and requiring interpretation is find . This word has not been defined in the Act and therefore, we have to fall back on the meaning of this word given in the standard dictionaries. In Chambers 20th Century Dictionary (1983 Edition) the meaning assigned to the word find inter alia is to discover or arrive at: to come to perceive to determine after judicial inquiry. In the Shorter Oxford English Dictionary (1952 Edition), the meaning assigned to the word find in the realm of law is, to determine or declare; to agree upon and bring in (verdict); to ascertain the validity of (an instrument). In the Black s Law Dictionary, 6thEdition (1991), the meanings given to the word find are to discover; todetermine; to ascertain and declare; to announce a conclusion upon a disputed facts or state of facts; to determine a controversy in favour of one of theparties. In the Legal Thesaurus by William C. Burton. Second Edition (1992), a large number of meanings and their variation have been given which are as follows:---
Find (Determine) verb adjudge, adjudicate, announce a conclusion, arrive at a conclusion, arrive at averdict, ascertain, ascertain and declare, ascertain by judicial inquiry, calculate, come to a conclusion, compromise, conclude, decide, decide a question of fact, decide upon, declare a verdict, deduce, deliver judgment, determine a controversy, determine after judicial inquiry, determine an issue, draw a conclusion, establish as facts, give an opinion, give judgment, hold, judge, make a decision, pass an opinion, pass judgment, pronounce as an official act, resolve, rule, set a question at rest, sit in judgment.
Associated Concepts.---Findings of fact. Find (Discover) verb acquiring information about answer, apprehend, ascertain, attain by effort, bare, becomeacquainted with, become apprised of, become informed, bring into the open, catch a glimpse of chance upon, cognoscere, come upon, create, decipher, decode, detect, discern, disclose disentangle, disinter, divine, divulge, elicit, encounter, explore, expose, fathom, ferret out, figure out, gather knowledge, get to the bottom of, glimpse, happen upon, hit upon, identify,invenire, invent, ken, know, learn, light upon, locate, make certain, meet with, notice, observe, obtain by search, perceive, realize, recognize, reveal, run across, solve strike, stumble on, trace, uncloak, unconceal, uncover, understand, unearth, unfold, unlock, unmask, unreval, unscramble, unscreen, unshroud, unveil, verify.
Finding, noun ascertainment, award, conclusion, decision, decree, determination, judgment, judicial conclusion, judicial outcome, judicial verdict, opinion, opinion of the Court, order, outcome, precedent, pronouncement, report, resolution, resolution of the Court, result, ruling, sentence,solution, verdict, verdict after judicial inquiry.
While referring to the meanings given to the word find in the dictionaries, we are conscious of the principle of interpretation that dictionaries cannot be taken as authoritative exponents of the meaning of the words used in Acts of Legislature, for the plainest words may be controlled by a reference to the context. We are further conscious of theprinciple that, whenever a definition is sought to be culled out from a dictionary meaning of the word used with a legal provision, thatmeaning cannot be adopted in isolation of the context in which the word is used in the particular provision. Thus, we will consider the word find used in section 25-A of the Customs Act, in context of the legal provisions in which it has been used, further keeping in view the totality of the scheme contained in the Customs Act, pertaining to the valuation of the goods. We have referred to dictionary meanings for the reason that in the absence of any definitionof a word in the statute,the reference to the standard dictionaries can be of assistance in assigning meaning to that word.
On a perusal of the various meanings of the word find in the dictionaries and the various aspects and variations thereof, we are of the opinion that the word Find envisages the discovery, determination and ascertainment of a fact and drawing a conclusion after due application of mind. It requires no emphasisthat resolving of an issue on scrutiny andascertainment of acts requires a proper inquiry which should entail into a conclusion based upon the reasons for the drawing of a conclusion. Thus, the first condition precedent for invoking the jurisdiction under section 25-A, is that an appropriate officer and none else should arrive at a conclusion based on reasons that the value of the imported goods declared in the bill of entry or goods declaration is understated. Here the question is whether the Legislature has left it at the discretion of the appropriate officer to hold the inquiry in any manner he likes or to adopt any course deemed fit by him or has prescribed manners and methods for givingfinding that the value of imported goods declared is understated. Aperusalofsection25(10)showsthatthemethodsofvaluationgivenin section 25 are not confined for the purpose of any particular section only. It is specifically stated that subsections (1), (5), (6), (7), (8) and (9) define how the customs value of imported goods is to be determined under this Act (emphasis provided by us). The words under this Act are very important and leave no doubt that, whenever a question of determination of the customs value of the goods for the purpose of Customs Act, arises the methods provided in section 25 are to be employed and in a sequential order. Section 25-A is no exception. Thus, the appropriate officer is required to determine that the valueof imported goods declared by the importer is understated, in accordance with the methods specified in section 25. At this stage, it would be appropriate to observe that in Customs Rules, 2001, detailed procedure and guidelines have been prescribed in Chapter IX. We have reproduced few rules in ourjudgment to demonstrate that the appropriate officer for the purpose of determination of the value of the imported goods has to undertake the exercise by giving reasonable opportunity to the importer and by maintaining the complete transparency. No such exercise is to be undertaken in the absence and on the back of an importer and in the firstinstance an importer should be given an opportunity to furnish the explanation includingdocuments and evidence in support of the declaration and when a final decision is taken by the appropriate officer, the said officer is required to communicate to the importer in writing his decision and the grounds therefor as provided in Rule 109(3). Any exercise done or decision taken in violation of the rules and the provisions contained in section 25 of the Customs Act, shall always be held to be illegal, arbitrary and consequently liable to be struck down. Other rules contained in Chapter IX are also required to be kept in view. At this juncture, we would like to observe that, the Additional Collector of Customs, is appropriate officer for the purpose of section 25-A. However, he shall be within his right to base his findings on the point that the declared value of the goods is understated on the basis of exercise done by the appropriate officer for the purpose of section 25, subject to the condition that before giving a finding for the purpose of section 25-A, first he will provide an opportunity to the importer and after hearing his point of view, shall give the final decision on the point of understatement of the value of imported goods declared by the importer.
We have further found that, vide Notification No. S.R.O. 487(I)/2003, dated 7-6-2003, the C.B.R. has framed the rules called as Takeover of Imported Goods Rules, 2003, which shall apply to the goods to be taken over by the Customs in terms of section 25-A of the Customs Act. A perusal of these rules shows that it merely prescribe as to what would be the range of understated value declared by the importerfor taking over of the goods under section 25-A and the procedure to be adopted in respect of the take over imported goods under section 25-A, after a finding is given that the customs value of imported goods declared by the importer are understated and buyer prepared to offer substantially higher value is available. This further confirms that for the purpose of determining the customs value of the imported goods and giving a finding that it is understated, the provisions contained in section 25-A are to be read with the provisions contained in section 25 of the Customs Act. A perusal of the rules contained in sub-Chapter (ii) of Chapter IX of the Customs Rules, 2001, shows that an importer shall furnish declaration disclosing full and accurate detail relating to the value of imported goods and the appropriate officer, after determination of thevalue of imported goods, may call further information.In the provisions contained in Rule 112, it is clearly provided that, whenever the appropriate officer is unable to accept the transaction value without further inquiry, he shall give the importer an opportunity to supplysuch further detailed information as may be necessary to enable him to examine the circumstances surrounding the sale. Without referring to the detailed guidelines available in section 25 as well as in ChapterIX of the Customs Rules, we would like to observe that, the relevant provisions envisage totaltransparency. The importer has to be associated with every step of the inquiry/process of valuation and anything done without notice to the importer and without affording reasonable opportunity of being heard, would not be in consonance with the intention of the Legislature and the spirit of the law. All such actions taken or processed without notice to the importer and prejudicial to his interest, shall be held to be unwarranted in law and shall be liable to be struck down as invalid and illegal.
We would also like to observe that section 25-A is consequential in nature and falls within the category of various penal actions which can be taken against an importer. Section 25-A can be invoked on valuation of the imported goods in accordance with section 25 and by adhering to the rules contained in Chapter IX of the Customs Rules, 2001. The provisions contained in section 25-A are very harsh and are likely to affect the investment environment and the business/trading, therefore,in consonance with the principle that whenever any such harsh provisions are enacted, the Legislature, in order to strike a balance and to minimize the possibility of misuse of such provisions, provides certain safety valves and safeguards to the persons likely to be adversely affected, has provided such safeguards to the importers. Our view that the provisions in section 25-A are consequential and punitive, is based on the provision that the appropriate officer may order for entertaining offer by any other person to buy these goods without prejudice to any other action he may take in respect ofimporter. So far as the safeguards to the importers are concerned, they are ingrained in the provisions contained in section 25 and the Rules in Chapter IX of the Customs Rules, 2001. In addition, the Legislature has provided that the consequential/penalty action under section 25-A, can be invoked if there is a finding that the value of imported goods declared in the bill of entry or goods declaration, is understated and there is a buyer of imported goods at substantially higher value. The expression substantially higher value is of significance. The Legislature has not defined this expression. However, the C.B.R. while framing rules called as Takeover of Imported Rules, 2003, applicable to the goods to be taken overbythecustomsintermsofsection 25-A,has specifiedtherangeofunderstatedvaluerequiringinvocationofsection 25-A of the Customs Act. The table in the rules contains 13 description of goods. The list is, on the face of it, not exhaustive but indicative of the intention as to what would be the range of understated value justifying the invocation ofsection 25-A of the Customs Act. The range of understated value for 6 items is 50% and for 7 item, is 30%. It is indicative of the fact that for invoking the provisions contained in section 25-A, and after resorting to the valuation in accordance with the methodsspecified in section 25 and by adhering to the procedure provided in the rules, it should be determined that in respect of goods described in the table the range of understated is as specified and in respect of other goods, the range of understated value is at least 30%. If the range of understated value is less than 30% no resort should be made to the take over of goods under section 25-A and the appropriate officer may have resort to any other action provided in the Act.
After hearing learned Advocates for the parties on 3-10-2003, the petition was allowed by a short order with the directions to the Respondents Nos.1 to 3to assess the goods of the petitioner strictly in terms of section 25 of the Customs Act, 1969, within seven days. These are the detailed reasons in support of the short order.
H.B.T./S-102/KPetition allowed.