Messrs DEWAN FAROOQUE MOTORS LTD., KARACHI VS CUSTOMS, EXCISE AND SALES TAX APPELLATE TRIBUNAL, KARACHI
2006 P T D 1276
[Karachi High Court]
Before Muhammad Mujeebullah Siddiqui and Sajjad Ali Shah, JJ
Messrs DEWAN FAROOQUE MOTORS LTD., KARACHI
Versus
CUSTOMS, EXCISE AND SALES TAX APPELLATE TRIBUNAL, KARACHI and 2 others
Custom Appeals Nos.83 to 89 of 2003, decided on 23/02/2006.
(a) Customs Act (IV of 1969)---
----Ss.79, 80 & 81---Provisional value of goods---Determination---Criteria---No criteria is provided in Customs Act, 1969, to determine additional or ad hoc amount which is to be added in declared value in order to reach figure of provisional value for assessment of duties and taxes---Legislature has left it to the discretion of concerned officer to add an amount which, in his opinion, is sufficient to meet the likely differential between final determination of duty and declared value---In case ad hoc enhancement over the declared value is taken as provisional. assessment then it has certain implication which negates the scheme of law as provided in Ss.79, 80 and 81 of Customs Act, 1969.
Collector of Customs (Appraisement), Karachi v. Auto Mobile Corporation of Pakistan, Karachi 2005 PTD 2116 ref.
(b) Customs Act (IV of 1969)---
----S. 81---Provisional assessment---Failure to finalize assessment within statutory period---Effect---Imported Mini buses were assessed provisionally under S.81 of Customs Act, 1969---Importer deposited duty and taxes assessed on the declared value and deposited pay orders to secure 5% loading---Valuation department failed to determine fair/ normal value of consignment as such the duties finally payable could not be determined without making any final order and authorities encashed the pay order deposited as security---Plea raised by importer was that as no final assessment could be made within the prescribed period, therefore, provisional assessment on the basis of declared value had become final and he was entitled to refund of amount deposited to secure 5% loading---Validity---As the Customs authorities failed to finalize assessment of goods within the stipulated period as provided in S.81 (2) of Customs Act, 1969, the provisional assessment made by Customs authorities on the basis of declared value had attained finality---Ad hoc amount to meet the differential in case of final assessment thus became refundable to the importer---Department was liable to refund the amount representing 5% loading over and above the declared value to importer---Appeal was allowed accordingly.
Collector of Customs (Appraisement), Karachi v. Auto Mobile Corporation of Pakistan, Karachi 2005 PTD 2116; Messrs Wall Master v. Collector of Customs 2005 PTD 2573 and Rehan Umar v. Collector of Customs and others C.P. No. D-1483 of 2005 rel.
Akhtar Hussain for Appellant.
Haider Iqbal Wahniwal for Respondents.
Date of hearing: 23rd February, 2006.
JUDGMENT
SAJJAD ALI SHAH, J.---Custom Appeals bearing Nos.83 to 89 of 2003 involving identical facts were admitted to regular hearing to consider the following common question of law:--
(1) Whether the provisional assessment made under section 81(2) of the Customs Act, 1969, which became final under section 81(4) of the Customs Act, 1969 on expiry of statutory period could include 5% loading charges on declared value by the assessee?
The brief facts for the purposes of determining the aforesaid appeals are that the appellants in all the aforesaid appeals imported consignment of Hyundai Mini Buses H-100 from Korea. The consignments were assessed provisionally under section 81 of the Customs Act, 1969 against 5% loading on declared value in the light of Customs General Order 4 of 1993, dated 7-7-1993. Consequently, the appellant deposited the, duty and taxes assessed on the declared value and deposited pay orders to secure 5% loading. The case thereafter was referred to the Valuation Department for determination of fair normal value. The Valuation Department of the Respondents failed to determine the fair 1 normal value of the consignment as such the duties finally payable could not be determined, without making any final order the Respondents encashed the pay order deposited as security. The appellants being aggrieved with lodged a claim for the refund of amount adjusted and pleaded that since no valuation advice was received by the Respondent from their Valuation Departments and consequently no final assessment could be made within the prescribed period, as such the provisional assessment on the basis of declared value had become final and therefore the Appellant as provided in CGO 4 of 1993 was entitled to the refund of amount deposited to secure 5% loading. The Adjudication Officer did not agree with the contention of the appellant and rejected the refund claim as inadmissible. The appellant thereafter preferred an appeal against the order of Adjudicating Officer which was also rejected. The appellant thereafter challenged the order of the Appellate Authority before the Custom Excise and Sales Tax Appellate Tribunal, Karachi who also dismissed the appeals vide its impugned judgment.
Mr. Akhtar Hussain, the learned counsel for the appellants has contended that the provisional assessment is always on the basis of value declared by the importer and not on the basis of ad hoc or additional value for which security is obtained by the Customs and since the Respondents have failed to make any inquiry in respect of the value declared by the appellant under section 79 of the said Act and failed to assess the goods finally within the time prescribed under subsection (2) of section 81 of the said Act, the pay orders submitted to secure 5% loading were liable to be returned. Our attention was further invited by the learned counsel for the appellant to the last para of CGO 4 of 1993 which reads as follows:--
"In case the FOB value of particular vehicle is not ready available, the vehicle may be assessed provisionally under section 81 of the Customs Act, 1969 by 5% loading of the FOB value of a similar vehicle. The Controller of Customs Valuation will immediately be informed of this provisional assessment and the resulting provisional deposit shall be adjusted/refunded on receipt bf final advice from the Controller of Valuation."
The learned counsel by referring to above portion of CGO contended that since no final valuation advice was received from The Controller of Valuation, therefore, the Respondents were liable to refund the amount of 5% loading secured by way of pay orders. In support of his contention the learned counsel has placed reliance upon the cases of Collector of Customs (Appraisement) Karachi v. Auto Mobile Corporation of Pakistan Karachi 2005 PTD 2116) and Messrs Wall Master v. Collector of Customs (2005 PTD 2573), and contended that it is the consistent view of this Court that ad hoc amount if any received to secure the revenue by way of provisional assessment is liable to be refunded in case the amount of duties are not assessed finally in terms of subsection (2) to section 81.
On the other hand the learned counsel for the Respondents has conceded to the legal position that the provisional assessment made by the Customs Authorities shall attain finality in case the final assessment was not made within the prescribed period as provided in subsection (2) to section 81 of the Act or within the extended period. However, Mr. Iqbal contended that the provisional assessment would include 5% loading and in' case the goods are not assessed finally in terms of subsection (2) of section 81 of the Act then the Provisional assessment including the ad hoc amount will become final and therefore, the Respondents have rightly encashed the said pay orders.
We have given due consideration to the arguments advanced by the learned counsel for the respective parties and have perused the record placed before us. A perusal of Bill of Entry reflects that the duties of Customs have been assessed after loading the declared value by 5% in the manner provided in CGO 4 of 1993 for the reason that the Assessing Officer at that point of time was not in possession of any material to displace the declared value and to finally evaluate the goods and to assess them accordingly. For this reason the goods were assessed provisionally and to secure the interest of revenue and ad hoc amount in the shape of 5% loading to meet the differential amount if any upon final assessment was obtained.
The scrutiny of the relevant provisions on the subject as provided under the Customs Act reveal that an Importer under section 79 of the Customs Act is required to file a goods declaration containing correct and complete particulars of the goods, including his own assessment of the import value. Upon filing of such declaration the concerned officer of the Customs under section 80 of the Customs Act if satisfied with the correctness of the particulars of import including declaration and assessment shall release the goods on payment of duties and taxes. However, if such officer is not satisfied on the basis of the goods declaration, then he may call for the relevant documents and assess the value of the goods imported and upon payment of the duties and taxes shall release the goods. However, if, for the reasons as specified in subsection (1) of section 81 of the "said Act" it is not possible for the officer of Customs to satisfy himself as to the correctness of the, assessment on the basis of goods declaration in that event duty, taxes and other charges payable on such goods are to be determined provisionally. The provisional assessment always include and ad hoc or additional amount which in the opinion of the officer of the Customs is sufficient to meet the likely differential between the provisional and final assessment.
However, there is no criteria provided in the Customs Act to determine the additional or ad hoc amount which is to be added in the declared value in order to reach the figure of provisional value for assessment of duties and taxes. It appears that the legislature has left it to the discretion of the concerned officer to add an amount which in his opinion is sufficient to meet the likely differential between final determination of duty and the declared value. In case the ad hoc enhancement over the declared value is taken as provisional assessment then it has certain implication which negate the scheme of law as provided in sections 79,80 and 81 of the Customs Act, 1969. The implications of provisional assessment by ad hoc enhancement over the declared value were deliberated in detail by us in the case of Rehan Umar v. Collector of Customs and others in C.P. No.D-1483 of 2005 in the following manner:
"The second, is, that officer of Customs be allowed to make provisional determination by ad hoc enhancement over the declared value. This in turn has three implications. First introduction of ad hoc assessment which concept is alien to law of Customs. Secondly, piecemeal determination of duty and taxes and the assessment, for which there is no room in Custom law. Thirdly in the absence of evidence and in anticipation of inquiry such enhancement would be merely subjective and arbitrary, such course is anathema to justice and cannot be allowed by any judicial forum.
A perusal of subsection (4) of section 81 of the Customs Act further reveals that in case final assessment is not completed within the period specified in subsection (2), the provisional assessment shall become final. A Division Bench of this Court in the case of Collector of Customs (Appraisement) v. Messrs Auto Mobile Corporation (Supra) while examining the provisions of section 81 has held as follows:--
"In other words, subsection (4) to section 81 is a penal provision incorporated in the Scheme for the benefit of Assessee Importers/Exporters to save them from unnecessary harassment by the Customs authorities by way of lingering on their cases for indefinite period on the pretext of finalizing the assessment. When the practical working of scheme of provisional assessment, as provided under section 81 of the Act of 1969 is analyzed, it will be seen that the figure of provisional assessment de notes figure of levy of duty on the basis of value declared by the Importer / Exporter plus any reasonable percentage of loading over such declared value made by the Assessing Officer to secure any excess payment of duties / charges which may be found due in addition to the duty levied on the declared value of the goods at the time of final assessment within the period stipulated by subsection (2) to section 81. It is such excess payment of duties / charges levied on the basis of loading, which are secured by charging additional amount or furnishing of guarantee of schedule bank. Thus, it is apparent that charging of such additional amount or furnishing of guarantee is subject to terms of final assessment and not otherwise. In other words, when no final assessment is made in terms of subsection (2) to section 81, the provisional assessment will become final at declared value of goods by the Assessee and disbursement of additional amount or guarantee furnished by the Importer / Exporter, in terms of subsection (3) to section 81, will be regulated on such premises."
The admitted position in the present case also appears to be that the Customs Authorities have failed to finalize the assessment of the Respondent goods within the stipulated period as provided in sub-section (2) to section 81 of the Customs Act, 1969. Consequently, the provisional assessment made by the Custom Authorities on the basis of declared value has attained finality. The ad hoc amount to meet the differential in case of final assessment thus became refundable to the appellant. It is therefore, held that department is liable to refund' the amount representing 5% loading over and above the declared value to the appellant. The question of law is answered in negative.
After hearing the learned counsel for the respective parties, all the appeals were allowed by a short order, dated 23-2-2006 by answering the question in negative.
These are the detailed reasons in support of the above short order.
M.H./D-I/KAppeal allowed.