Messrs BINACO TRADERS through Proprietor VS FEDERATION OF PAKISTAN through Secretary, Revenue Division/Chairman, Central Board of Revenue, Islamabad and 3 others, 2006 PTD-KARACHI-HIGH-COURT-SINDH 1491 (2006)

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

----Ss. 25-A & 25---Taking over imported goods---Pre-conditions---Under-valuation of goods by importer and availability of prospective buyer of goods at higher value must co exist before taking such action Before accepting higher offer of prospective buyer, authority must have material to assert that value of imported goods was understated---Object of S.25-A of Customs Act, 1969 was to discourage under-invoicing of goods and protect honest importer of his goods bought over by local purchaser without going through importer's effort made therefor---Principles.

Section 25-A of Customs Act, 1969 empowers the Customs Authorities to take over imported goods in these two conditions i.e. (1) if the value imported goods declared in Bill of Entry or Goods Declaration is understated; and (2) there is a buyer of imported goods at substantially higher value. Thus, power under section 25-A does not become exercisable merely because there is a buyer of imported goods willing to pay high price, but the importer has also undervalued the value of imported goods. The object of section 25-A is to discourage under-invoicing of goods, whereby the duties and other charges are evaded by an importer, and at the same time protect an honest importer from. his goods being bought over by a local purchaser, who, without going through the importer's effort of analyzing foreign markets, reading local market conditions and negotiating best price with foreign supplier of goods, want to become owner of imported goods. In such a situation paying more might prove for him to be a good bargain, but at the expense of importer, who would have to give up his title in goods without any just cause. This cannot be allowed. Therefore, before higher offer of an interested person is accepted, the concerned Customs Official must have material to assert that the value of imported goods has been understated.

The principle laid down in Section 25-A Customs Act, 1969 is that before exercising right to acquire goods in terms thereof, the duty on goods is to be first assessed according to the value determined under section 25 of Customs Act, 1969.

Sohaib Khan v. Collector of Customs 2005 PTD 1069 and Moon Corporation v. Central Board of Revenue 2004 PTD 2615 rel.

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

----Ss. 25-A, 25 & 217(2)---Specific Relief Act (I of 1877), S. 42---Civil Procedure Code (V of 1908), S.9---Taking over imported goods---Sale of goods to prospective buyer at value more than 300% higher than declared value---Suit for declaration and damages by importer challenging such action of authority---Maintainability---Authority, after considering declared value to be understated had directed for examination of goods on reverse of Goods Declaration---Importer, instead of subjecting goods for examination had presented Goods Declaration again for its process under Appraisement System---Authority, after receiving such higher offer from prospective buyer had served notice on importer apprising him of such offer and under-valuation of goods---Importer in reply to such notice had sought full inquiry into valuation of goods---Importer, without waiting for result of such inquiry had filed suit within four days of delivering such reply to authority---Contents of such notice, though neither disclosed in plaint nor its copy annexed thereto, showed that authority had first formed opinion regarding understatement of declared value of goods by importer---Duty of importer was to have contested such matter before authority and got valuation done by authority in order to rebut its claim---Such offered price was not just substantially higher offer, but was enormously high---Such fact coupled with importer's reluctance to agitate such matter before authority created doubts about his case---Impugned action of, authority in such circumstances could not be termed to be mala fide or without jurisdiction---Suit was dismissed for being not maintainable in view of bar contained in S.217(2) of Customs Act, 1969.

PLD 1997 Kar. 541; 2002 PTD 654; 2003 PTD 409; 2004 PTD 1189; Adamjee Insurance Company Ltd. v. Pakistan 1993 SCMR 1798; Amin Textile Mills v.- Commissioner of Income Tax 2000 SCMR 201; Shahid Agency v. The Collector of Customs 1989 CLC 1938 and Moon Corporation v. Central Board of Revenue 2004 PTD 2615 ref.

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

----S.217(2)---Civil Procedure Code (V of 1908), S.9---Action or order of Customs authority suffering from mere illegality---Remedy---Aggrieved party could seek his remedy in the hierarchy provided under Customs Act, 1969.

PLD 1997 Kar. 541; 2002 PTD 654; 2003 PTD 409; 2004 PTD 1189; Adamjee Insurance Company Ltd. v. Pakistan 1993 SCMR 1798; Amin Textile Mills v. Commissioner of Income Tax 2000 SCMR 201 and Shahid Agency v. The Collector of Customs 1989 CLC 1938 and ref. Moon Corporation v. Central Board of Revenue 2004 PTD 2615 rel.

(d) Tort---

----Damages, claim for---Appropriate time for agitating such claim---Act or omission resulting in injury would give rise to such claim which could be agitated under general law by way of civil suit---Legality of such act or omission, if challenged before Civil Court, then claim for damages could simultaneously be agitated in same suit---Legality of such act or omission, if challenged only before special forum provided under special statute, then until such main controversy was put at rest before such forum, filing of suit for damages before Civil Court would be premature---Principles.

A claim for damages is always agitated under the general law by way of civil suit. Claim for damages arises on account of some act or omission, which results in injury. Where legality of an act or omission is challenged under the general law by way of a civil suit, then claim for damages .can also be simultaneously agitated in the same suit. However, where legality of an act or omission is challenged only before a special forum provided under a special statute, then until the main controversy is put at rest before such special forum, filing of suit for damages in Civil Court would be premature. In such circumstances, the person who has sustained injury has to wait until the special forum decides the controversy, all appeals taken thereunder or time for filing appeal has gone by and the decision has attained finality. Only then the person who has sustained injury on account of some act or omission can file suit for damages in Civil Court. A party cannot be allowed to agitated a claim for damages in Civil Court at a time, when the main controversy is either pending or is required to be agitated before the special forum, but the aggrieved person has chosen not to take it before such forum. Filing of suit for damages in such a situation would be premature and liable to be so declared.

Junaid Ghaffar for Plaintiff.

Raja Muhammad Iqbal for Defendants Nos. 1 to 3.

Muhammad Nadeem Qureshi for Defendant No.4.

Date of hearing: 31st January, 2006.

JUDGMENT

FAISAL ARAB, J.---In the present suit the plaintiff has called in question the legality of Customs Authorities' action to acquire plaintiff's goods under the provisions of section 25-A of the Customs . Act. Section 25-A authorizes the Customs Authorities to acquire the imported goods in case their value has been understated and there is a buyer willing to buy such goods at substantially high price. In such a situation importer is given the option to get the goods cleared upon payments of duties at value which has been offered by the person interested in buying them and upon importer's failure to do so that Customs Authorities acquire the goods by paying the importer 5% over and above the declared value and sell the goods to the person interested in buying them at substantially higher price.

Brief facts of the case are that the plaintiff imported a consignment of waterproof abrasive paper and filed Goods Declaration on 23-1-2002 declaring their value to be Euro 0.44 & 0.59 per meter. The Customs Authorities, considered the declared value to be understated and therefore, on the reverse of Goods Declaration directed that examination of goods be first carried out. The plaintiff did not get the goods examined and on 28-1-2002 presented Goods Declaration with a request to process it under Appraisement System.

In the meanwhile, the Customs Authorities had received an offer from defendant No.4 under section 25-A of the Customs Act for purchase of the goods in question at Pound Sterling 1.25 per meter as compared to the declared value of Euro 0.44 & 0.59 per meter. In such circumstances, the Custom Authorities served notice, dated 11-2-2002 on the plaintiff. In the notice it was mentioned that the plaintiff. has understated that value of goods and that an offer to buy the goods at the rate of Pound Sterling 1.25 per meter has also been received from defendant No.4. The plaintiff was called upon to either exercise the option to get the goods, cleared upon payment of duties at the value of Pound Sterling' 1.25 per meter within seven days otherwise the goods shalt be acquired. The plaintiff responded to the notice, dated 11-2-2002 through its counsel's letter, dated 14-2-2002, which was delivered at Collector of Customs' office on 16-2-2002. In the concluding paragraph of the reply it was stated by the plaintiff as follows. "It is however requested that full inquiry be held in the matter remaining within the parameters of the law and the guiding principles of fixation of the value."

The plaintiff considered its reply, dated 14-2-2002 to be sufficient and did not cared to seek material from the Customs Authorities which was made basis to assert that the value of the goods has been understated. On 20-2-2002, without waiting for a response from the Custom Authority hastened to file the present suit. The Customs Authorities on the other hand, acquired the goods vide letter, dated 20-2-2002. The defendant No.4 paid the entire offered price to the Custom Authorities on 20-2-2002 and obtained delivery of the goods on the same day.

It is an admitted position that after the sale of the consignment in question to defendant No.4, the plaintiff, during the pendency of this suit, having left with no other option collected 5% profit payable to the plaintiff under section 25-A of the Customs Act. Therefore, the only question which is now left for examination of this Court is the legality of the action taken by the Custom.; Authorities under the provisions of section 25-A of the Customs Act, apart from examining the objection of as the maintainability of a civil suit on account of bar contained in section 217(2) of the Customs Act.

The plaintiff's counsel has contended that Custom Authorities resorted to the provisions of section 25-A of the Customs Act without first applying the provisions of section 25 with regard to determining the value of the imported goods and therefore the entire process of acquiring the goods under the provisions of section 25-A is nullity in the eyes of the law. Learned counsel for the plaintiff submitted that section 25-A begins with the words "if the appropriate officer finds that customs value of the imported goods declared in the bill of entry or goods declaration is understated....". He therefore contended that before resorting to acquire the plaintiff's goods under section 25-A, there has to be a finding that the value of the goods imported by the plaintiff has been understated and in order to reach this conclusion resort must be had to provisions of section 25 which provides modes of determining the value of the imported goods.

From the bare reading of section 25-A it is evident that section 25-A empowers the Custom Authorities to take over the imported good in following two conditions i.e. (1) if the value of imported goods declared in the bill of entry or goods declaration is understated and (2) there is a buyer of imported goods at substantially high value. Thus power under section 25-A does not become exercisable merely because there is a buyer of imported goods willing to pay high price but the value of the imported goods has also been undervalued by the importer. The object of section 25-A is to discourage under-invoicing of goods whereby the duties and other charges are evaded by an importer and at the same time protect an honest importer from his goods being bought over by a local purchaser who without going through the importer's effort of analyzing foreign markets, reading local market conditions and negotiating best price with the foreign supplier of goods wants to become owner of the imported goods. In such a situation paying more might prove for him to be a good bargain but at the expense of the importer, who would had to give up his title in goods without any just cause. This cannot be allowed. Therefore, before higher offer of an interested person is accepted, the concerned Customs Official must have material to assert that the value of the imported goods has been understated. In forming this opinion, I am fortified by the decision of the Division Bench of this Court referred to by the learned counsel for the plaintiff in the case Sohaib Khan v. Collector of Customs 2005 PTD 1069. At page 1094-95 of the said decision it was held as follows:

"We would also like to observe that section 25-A is conse quential in nature and falls within the category of various penal actions, which can be taken against on 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 the 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 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/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."

In another judgment reported as Moon Corporation v. Central Board of Revenue in 2004 PTD 2615 relied upon by the defendant's counsel Mr. Raja Muhammad Iqbal, it was held as follows:--

"The petitioner was given the option of getting the goods released after payment of duty according to the value determined by Respondent No.3 under section 25 of the Customs Act and only in the event of failure to do so the right to acquire the goods on payment of value declared in the bill of entry together with an extra amount of 5% was exercised."

The above cited case also recognizes the principle laid down in . section 25-A that duty on goods is to be first assessed according to the value determined under section 25 of the Customs Act before right to acquire the goods can be exercised in terms of section 25-A.

Coming to the facts of the present case, I find that when Goods Declaration was first submitted on 23-1-2002, the Custom Authorities considered the declared value of Euro 0.44 to Euro 0.59 per meter to be understated and directed examination of goods on the reverse of Goods Declaration. The plaintiff, instead of subjecting the consignment for examination, retained the Goods Declaration with it and presented it again on 28-1-2002 with the request to process the Goods Declaration under Appraisement System. In the meanwhile, the Customs Authorities received an offer from defendan No.4 to purchase the consignment under section 25-A of the Customs Act, 1969 at Pound Sterling 1.25 per meter which is roughly equivalent to Euro 1.80 per meter i.e. more than 300% higher than the declared value of Euro 0.44 & 0.59 per meter. After receiving defendant No.4's offer, a notice, dated 11-2-2002 was served by authorized officer on the plaintiff. In the notice it was clearly stated that the plaintiff has understated the value of consignment. In the said letter the plaintiff was also informed of the offer of defendant No.4 to buy at Pound Sterling 1.25 per meter. The plaintiff responded to the notice, dated 11-2-2002 through its counsel's letter, dated 14-2-2002 which was delivered at Collector of Customs' office on 16-2-2002. In the concluding paragraph of the reply it was stated by the plaintiff "it is however requested that full inquiry be held in the matter remaining within the parameters of the law and the guiding principles of fixation of the value." Thus from the series of events it is evident that it was plaintiff who first avoided to get the goods examined as sought by the Customs Authorities on 23-2-2002 and then did not adhered to its own stand taken in its response, dated 14-2-2002 where [he plaintiff itself sought full inquiry into the valuation of the goods and rushed to this Court by filing the present suit on 20-2-2002 i.e. within four days of delivering its reply to Customs Authority. When inquiry into the matter was sought by the plaintiff itself, it was imperative that the plaintiff should have contested the matter before the Customs Authorities and got the valuation done from Customs Authority in order to rebut the customs claim that the declared value of plaintiffs goods has been understated.

It is also strange to note that plaintiff chose not to annex with the plaint copy of the notice, dated 11-2-2002, though it was the main cause of plaintiff's grievance to come before this Court. Surprisingly' in paragraph 7 of its plaint, the plaintiff has only stated that notice, dated 11-2-2002 was served to acquire the plaintiff goods but concealed; the fact that in that very notice it is first mentioned that the plaintiff has understated the value of the goods. Such concealment of material which is of vital importance to the controversy in issue, recoils adversely on the conduct of the plaintiff. Nevertheless, from the contents of the notice it is evident that Customs Authorities had first formed an opinion that the value of the goods has been understated by the plaintiff. In such circumstances, it was imperative for the plaintiff to have agitated the matter before the Custom Authorities but the plaintiff chose not to do so and leaving the matter unattended before the Customs Authorities, rushed to this court and filed the present suit. Reading the notice, dated 11-2-2002 as a whole coupled with the fact that Custom Authorities on 23-2-2002 sought examination of goods, one finds that Customs Authorities first considered value to be understated before taking steps to acquire them.

Now I shall take up the second argument of the case. Mr. Raja M. Iqbal has taken a legal objection that the present suit is not maintainable and is liable to be dismissed as the plaintiff failed to avail departmental remedy and there is clear bar under section 217(2) of the Customs Act. In response to Mr. Raja M. lqbal's legal objection, the plaintiff's counsel has relied upon cases reported as PLD 1997 Kar. 541, 2002 PTD 654, 2003 PTD 409 and 2004 PTD 1189. In the first case it was held that bar of jurisdiction is attracted when impugned action was found to be within four corners of statute and did not suffer from taint, mala fides or absence of jurisdiction. In the second case alternative remedy by way of constitution petition was allowed to be availed as the Revenue Authorities in that case took a decision bypassing the decision of the Peshawar High Court and went to the extent of holding that the judgment of Peshawar High Court has not taken into consideration relevant provision of law. In these circumstances, resort to alternative remedy was allowed to be availed in the second case. In the third cited case, the impugned order was declared to be without jurisdiction and nullity in law and therefore it was held that an importer cannot be asked to have recourse to the forum of appeal provided in the Customs Act. In the forth case it was held that order or action of Authority or Tribunal, if violative of the provisions conferring jurisdiction or is in excess of jurisdiction or is without jurisdiction or is mala fide or violative of principles of natural justice can be challenged before a civil court in spite of provisions in a statute barring its jurisdiction.

In the present case no jurisdictional defect can be attributed to the action taken against the plaintiff. The Customs Authorities first sought examination of the consignment in question as they doubted that the value has been correctly disclosed. The plaintiff did not get them examined. Then, the plaintiff was served with the notice, dated 11-2-2002 under section 25-A indicating (i) that Additional Collector Customs has reported that the declared value has been grossly under-valued and (ii) that offer of Pound Sterling 1.25 per meter has been received contrary to the declared value of Euro 0.44 & 0.59 per meter. The plaintiff very conveniently first did not annexed notice, dated 11-2-2002 with the plaint. Then in paragraph 7 of the plaint while referring to notice, dated 11-2-2002 only mentioned the second part of the notice i.e. getting higher offer of purchase and omitted the first part which related to under-valuation of goods. When the entire controversy hinged upon the question whether the Customs Authorities considered the declared value to be undervalued or not, the contents of the notice, dated 11-2-2002 should have been fully disclosed. Not only this, its copy should have been annexed with the plaint. In the above background it cannot be said that action of the Customs Authorities suffered from any jurisdictional defect or for any reason it was nullity in the eyes of the law so as to permit resort to remedy by way of suit.

This Court also cannot loose sight of the fact that the offered price of Pound Sterling 1.25 was not just substantially high offer but was enormously 'high as it was more than 300% of the declared value. This coupled with plaintiffs reluctance to agitate the matter of under-valuation before the Customs Authorities creates doubts about the plaintiff's case. In this background too the Additional Collector's action cannot be termed as mala fide or without jurisdiction.

In support of his argument Mr. Raja Muhammad Iqbal has relied upon the case of Adamjee Insurance Company Ltd. v. Pakistan reported in 1993 SCMR 1798. In this case it was held that absence of alternate remedy to an aggrieved party is condition precedent for exercise of jurisdiction under Article 199. Mr. Raja also relied upon the case of Amin Textile Mills v. Commissioner of Income Tax reported in 2000 SCMR 201. In this case, the Hon'ble Supreme Court depreciated the tendency of bypassing the remedy provided under the relevant statute.

In the case reported as Shahid Agency v. The Collector of

Customs reported in 1989 CLC 1938 it was held by the Division Bench of this Court that where the law provides a remedy by way of appeal or revision to another Tribunal fully competent to give relief, any indulgence to the contrary by the High Court is bound to produce a sense of distrust in statutory Tribunals.

In the case reported as Moon Corporation v. Central Board of Revenue in 2004 PTD 2615 relied upon by the defendant's counsel Mr. Raja Muhammad Iqbal, it was held as follows:--

"In any event, even if the order suffers from any illegalities the petitioners could always seek appellate and revisional remedies in the hierarchy in the Tribunal established under the Customs Act. We are, therefore, not inclined to interfere with the impugned order and dismiss the petition in limine. The observations made above, however, are only tentative and will not prejudice the petitioner in case he chooses to approach any appropriate forum for redress. The petitioner will also be free to approach the concerned authorities and seek extension of time for compliance of the impugned order, if he so desires."

The ratio of the above-cited case is that when an action or order suffers from mere illegality, an aggrieved party could always seek remedies in the hierarchy provided under the Customs Act.

In the present suit plaintiff has also claimed damages. A claim for damages is always agitated under the general law by way of civil suit. Claim for damages arises on account of some act or omission, which results in injury. Where legality of an act or omission is challengeable under the general law by way of a civil suit, the claim for damages can also be simultaneously agitated in the same suit. However, where legality of an act or omission is challengeable only before a special forum provided under a special statute, then until the main controversy is put at rest before such special forum, filing of suit for damages in Civil Court would be premature. In such circumstances, the person who has sustained injury has to waite until the controversy is decided by the special forum, all appeals taken thereunder or time for filing appeal has gone by and the decision has attained finality. Only then the person who has sustained injury on account of some act or omission can file suit for damages in Civil Court. A party cannot be allowed to agitate a claim for damages in Civil Court at a time when the main controversy is either pending or is required to be agitated before the special forum but the aggrieved person has chosen not to take it before such forum. Filing suit for damages in such a situation would be premature and liable to be so declared.

In view of the above discussion I hold that the plaintiff ought to have contested the matter before the Customs Authorities instead of filing the present suit which is not maintainable in law on account of the bar contained in section 217(2) of the Customs Act. However, the plaintiff shall be free to approach the appropriate forum and only upon I succeeding in establishing its claim that the value of the goods was not understated, that the plaintiff shall become entitled to file suit for damages. At this stage it is premature. With these observations, this suit is dismissed.

S.A.K./B-6/K Suit dismissed.