REHAN UMAR VS COLLECTOR OF CUSTOMS, KARACHI
2006 P T D 909
[Karachi High Court]
Before Muhammad Mujeebullah Siddiqui and Sajjad Ali Shah, JJ
REHAN UMAR
Versus
COLLECTOR OF CUSTOMS, KARACHI and 2 others
Constitutional Petition No. 1483 of 2005, decided on 30/11/2005.
(a) Customs Act (IV of 1969)---
----Ss. 25, 79-A, 80-A & 81---Customs Rules, 2001, Rr.108 to 122---Constitution of Pakistan (1973), Art.199---Constitutional petition---Determination of customs value of goods---Different methods of valuation provided in S.25 Customs Act, 1969 and the Customs Rules, 2001 are required to be applied in a sequential order and without visible exercise reflected on record, no resort can be made to S.25(5) Customs Act, 1969 and likewise without similar exercise under S.25(5) no resort can be made to S.25(6) of the Act---In the same manner without an exercise in writing on record under S.25(6) no resort can be made to S.25(7) and similarly to S.25(8) and S.25(9)---Such exercise is to be made in each case separately---On the basis of exercise in the case of earlier imports by other importers it cannot be applied to any subsequent import by another importer---Reasons recorded.
Provisions of section 25 Customs Act, 1969 are to be followed in the sequential manner. In addition to the concession on the part of Collector of Customs and Director of Customs Valuation & PCA it is specifically provided by the legislature in subsection (10) of section 25 that subsections (1), (5), (6), (7), (8) and (9) define how the customs value of imported goods is to be determined under the Customs Act. The methods of customs valuation are required to be applied in a sequential order except reversal of the order of subsections (7) and (8) at the importer's request, if so agreed by Collector of Customs. Whenever a question for determination of the customs value of goods for the purpose of Customs Act, arises, the methods provided in section 25 are to be applied in a sequential order.
The established principle of interpretation of the tax laws is that the plain language of the law is to be applied. A bare perusal of section 25 shows that it is specifically provided in subsection (1) of section 25 that the customs value of the imported goods, subject to the provisions of this section and rules shall be the transaction value, i.e. the price actually paid or payable for the goods when sold for export to Pakistan. The detailed guidelines in this behalf are given in sub-sections (1), (2), (3) and (4). The provisions contained in section 25(1) to (4) contain primary method of valuation and in the first instance the primary method of valuation is required to be adopted in each case of valuation of the imported consignment which is mandatory. The detailed guidelines in this behalf are contained in section 25 and the rules reproduced above. Thus, it is the mandatory requirement of law that before resorting to the method provided in subsection (5), the customs officials shall make an exercise in accordance with the provisions contained in subsections (1) to (4) of section 25 and if thereafter they find that the customs value of' the imported goods cannot be determined under the provisions of subsection (1) they shall resort to the method provided in subsection (5) and not otherwise. It shall be an exercise duly reflecting on the record so that the appellate forums may examine whether the mandatory requirement of law has been carried out or not. The provisions contained in sub-rule (3) of Rule 109 provides that, "when a final decision is made, the appropriate officer shall communicate to the importer in writing his decision and the grounds therefor." In addition to the specific provisions contained in sub-section (10) of section 25 to the effect that the methods of customs valuation are required to be applied in a sequential order we find that it is provided in subsection (6) that, if the customs value of the imported goods cannot be determined under the provisions of subsection (5) the method provided in subsection (7) shall be resorted to and similar provisions are contained in subsections (7), (8) and (9).
For the foregoing reasons it is held that different methods of valuation provided in section 25 of the Customs Act, 1969 and the Customs Rules, 2001 are required to be applied in a sequential order and without visible exercise reflected on record no resort can be made to subsection (5) and likewise without similar exercise under subsection (5) no resort can be made to subsection (6). In the same manner without an exercise in writing on record under subsection (6) no resort can be made to subsection (7) and similarly to subsections (8) & (9). This exercise is to be made in each case separately. On the basis of exercise in the case of earlier imports by other importers it cannot be applied to any subsequent import by another importer. The reason being that it is provided in Rule 109 that where 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 otherwise. Under subsection (1) of section 25, the customs value of the imported goods isto be determined subject to the provisions of section 25 and the rules. The rules envisage inquiry "in case of' each import giving right to each importer to provide explanation and produce documents or other evidence in support of his/her declaration. When the provisions contained under section 25(1) of the Customs Act and the rules are read with sections 79 and 80 of the said Act, they lead to same conclusion. Under section 79 the owner of any imported goods is required to file a goods declaration containing correct and complete particulars of the goods and its assessment i.e. valuation of the goods, its value and the duty, taxes and other charges payable thereon. Under section 80, on the receipt of goods declaration under section 79, an officer of the customs shall satisfy himself of' the correctness of the import including declaration and assessment. It indicates that initially the valuation of' goods and assessment is to be given by the importer himself, which, if found satisfactory, shall be accepted. However, if the appropriate officer is not satisfied with the said declaration, he shall make his own assessment in accordance with the law. This exercise cannot be done without examination of each consignment, declaration of goods examination of assessment given by importers and of the documents in this behalf.
Sohaib Khan v. Collector of Customs Appraisement 2005 PTD 1069 fol.
(b) Customs Act (IV of 1969)---
----Ss. 25, 79-A & 80-A---Customs Rules, 2001, Rr.108 to 122---Constitution of' Pakistan (1973), Art.199---Constitutional petition---Determination of customs value of imported goods---Enhancement in value---Requirements---Enhancement in customs value of imported goods without sufficient evidence was not permissible---No enhancement in the value can be made on the recommendation of some Working Committee, which is not supported with any evidence---Resort to S.25(5) Customs Act, 1969, can only be made when the value cannot be determined under S.25(1) of the Act and where no evidence is to show that the disputed transaction is false or is an outcome of a fraudulent activity, in possession of the Customs Authorities, the commercial documents presented by an importer cannot be rejected---Transactional value cannot be rejected because there are some contemporaneous imports at higher price---Customs Authorities have to show that invoice price was not genuine and did not state the real price paid by the importer---Provisions contained in S.25, customs Act, 1969 and rules framed thereunder are complete Code in. themselves, so far, the customs valuation of the imported goods is concerned, which are required to be applied and acted upon strictly in the manner and method contained therein---No room exists for any deviation from these rules on the part of Customs Authorities.
Collector of Customs Appraisement Karachi v. Messrs H.M. Abdullah 2004 PTD 2993 and Messrs Dawlance Private Limited v. Collector of Customs 2002 PTD (Trib.) 3077 ref.
(c) Customs Act (IV of 1969)---
----S. 25(7)---Standing Operative Procedure I of 2005 dated 13-9-2005---Constitution of Pakistan (1973), Art.199---Constitutional petition---Determination of customs value of imported goods---Deductive method of valuation under S.25(7), Customs Act, 1969---Working Committee---Scope of powers---Importer or his representative shall be associated with the Working Committee if deductive method of valuation under S.25(7) is to be resorted---No assessment can be made on the basis of a Committee constituted for the purpose of . determining the deductive valuation under S.25(7), Customs Act, 1969 without associating importer or his representative in each case.
(d) Customs Act (IV of 1969)---
----Ss. 79, 80, 81 & 25---Constitution of Pakistan (1973), Art.199---Constitutional petition--Declaration by importer and assessment of customs duty---If the declared value in the Bill of Entry/goods declaration is not acceptable -to the appropriate officer of the Customs department and the value can be determined under the provisions of S.25(1) and resort is to be made to the other methods provided in S.25, Customs Act, 1969, then the importer is entitled to the release of goods under S.81 Customs Act, 1969 by provisional determination of the liability---Release of goods in such manner is a matter of right of importer and not as a matter of concession within the discretion of appropriate officer of the Customs---Principles elucidated.
(e) Customs Act (1V of 1969)---
----S. 81---Customs Rules, 2001, Rr.108 to 122---Provisional assessment of duty---No rules relating to customs computerised system having yet been framed by the Central Board of Revenue, even if goods declaration is tiled on customs computerised system, the provisions contained in Customs Rules, 2001 and in S.81, Customs Act, 1969 would be equally applicable.
(f) Interpretation of statutes---
----Plain language of the law is to be applied.
Syed Ali Bin Adam Jafri for Petitioner.
Haider Iqbal Wahniwal for Respondent No.1.
Raja Muhammad Iqbal for Respondent No.2.
Date of hearing: 30th November, 2005.
JUDGMENT
MUHAMMAD MUJEEBULLAH SIDDIQUI, J.---The relevant facts giving rise to this petition are that, the petitioner imported Electrical Products namely Energy Saving Lamps and Bulbs in Pakistan from China. He filed Goods Declaration on line, vide CRN (Customs Reference Number) I-HC-21280-241005, dated 24-10-2005, and deposited the assessed amount through the payment challan in the National Bank of Pakistan. On 26-10-2005 the petitioner was informed through "view message" to deposit an additional duty of Rs.2,61,724 for the clearance of consignment. The petitioner was further asked to refer to assessment module for further details. The petitioner being dissatisfied with the demand of additional duty filed a review with the respondent No.1, the Collector of Customs (Model Collectorate), Customs House, Karachi. In reply the petitioner received another `view message' on 27-10-2005 intimating that the Respondent No.1 has found differences and he disagrees with the view of petitioner. The petitioner was again called upon to deposit the additional duty for clearance of consignment. The representative of the petitioner thereafter appeared before Collector along with all required documents. The petitioner again received a view message on 1-11-2005 delivered at 1.39 p.m. intimating that the assessment was as per valuation advice Nos. 1/22/2004/5469 to 5479, dated 6-10-2005 and that the GD (goods declaration) was completed accordingly.
2. The petitioner thereafter submitted an application to the Respondent No. 1 and 2-11-2005 requesting for assessment under section 81 of the Customs Act, 1969. It was stated that the GD was filed to be processed under CARE System. The GD was completed by enhancing the value on the basis of some valuation advice/ruling thereby demanding additional duty on enhanced value. The petitioner informed that he was not aware of the method adopted by the Valuation Department for arriving at the enhanced value. It was submitted that dispute will take some time to resolve, therefore, the GD may be ordered to be processed provisionally under section 81 of the Customs Act. to avoid unnecessary demurrage and detention charges. It was replied by a Deputy Collector on behalf of respondent vide letter, dated November 8th 2005, stating as follows:--
"It is pertinently mentioned that several cases of Chinese origin Energy Severs, Bulbs, Tube lights etc., were referred to Valuation Department from time to time by this Collectorate as well as Collectorate of Customs. Appraisement, Karachi: The Valuation Department, has lately issued Valuation Advice No.1/22/2004/VD4/5464 to 5479, dated 6-10-2005 under section 25(7) of the Customs Act, I969. (Copy enclosed). The CRN I-HC-21280-241005, dated 24-10-2005 has been accordingly assessed under section 25(7) of the Customs Act, 1969. The request for provisional assessment under section 81 cannot be acceded to in the light of assessment already made under aforementioned provisions of the Customs Act, 1969."
3. It is contended on behalf of petitioner that the valuation advice on the basis whereof the consignment imported by the petitioner was valued is in no manner a document of legal status and the method adopted for determination of the value of imported consignment on the basis of valuation advice/assessment module is illegal and without any legal authority. The petitioner further stated that on account of delaying tactics on the part of respondents Nos.1 and 2, he was facing great hardship and hence the petition on the following grounds:--
(1) By denying the clearance of consignment under section 81 of the Customs Act, the respondents Nos.1 and 2 have committed gross illegality, when the petitioner was prepared to furnish the guarantee in respect of differential amount under protest.
(2) The customs valuation of the imported consignment was required to, be taken at transaction value, i.e., the price actually paid or payable on the goods when sold for export to Pakistan. Unless it is proved that the transaction' value is based on fake documents or it is the result of any relationship between the buyer and seller the Customs Authority is under legal obligation to accept transaction value under section 25(1) of the Customs Act, 1969, for the assessment of duties and taxes.
(3) The C.B.R. has framed the Customs Rules, 2001 by S.R.O. 450(I)/2001 which are binding on the respondents Nos.1 and 2. According to the rules, an importer or his agent is required to furnish a declaration disclosing full and accurate details of. the value of the imported goods and on perusal of any statement, information or document as considered necessary by the appropriate officer for determination of the value of the imported goods, the valuation is to be determined.
(4) If the appropriate officer is of the opinion that the value of imported goods cannot be determined under section 25(1) of the Customs Act, 1969, thereafter the consignment shall be assessed according to the methods specified in subsections (5), (6), (7), (8) or (9) of section 25 of the Customs Act, 1969, but these methods are to be applied in a sequential order as per sub-section (10) of section 25 of the Customs Act.
(5) The Respondents Nos.1 and 2 committed error in resorting to subsection (7) of section 25 directly on the basis of so-called assessment module without resorting to the earlier subsections and thereby committed an illegality.
(6) The Respondent No.1, had no lawful authority to determine the value of imported consignment on the basis of alleged advice, dated 6-10-2005. This advice has no legal value and consequently the assessment on the basis thereof is unlawful.
(7) The valuation advice, whatever its status maybe in law cannot override the provisions contained in section 81 of the Customs Act. In terms of this provision the petitioner offered to deposit the differential value and was still prepare to do so. The Respondent No.1, by declining the privilege of provisional assessment has violated the mandatory provisions of law contained in section 81.
4. The petitioner his sought a direction to the Respondent No.1 to release the consignment imported by him immediately on payment of disputed additional duties, to the Nazir of this Court. Further declaration has been sought to the effect that assessment module/valuation advice, dated 6-10-2005, is illegal and the demand of additional duty on the basis thereof is also illegal and unlawful.
5. Para-wise comments and counter-affidavits have been filed on behalf of Respondents Nos.1 and 2. In the reply filed on behalf of Respondent No.1, it is stated that the assessment of the petitioner's consignment has been made in accordance with the provisions of section 25 read with section 80 of the Customs Act, 1969 and Chapter IX of the Customs Rules, 2001. It is further stated that number of consignments of identical goods have been cleared by the other importers at the values determined by the appropriate officers and the petitioner wants to get undue benefit and extra edge over rest of the importers to distort the local market. It is further stated that the imported goods are to be valued in terms of section 25 of Customs Act, 1969, and the provisions of section 81 deals with only exceptional cases where it is not possible to check the correctness of the assessment in respect of a Goods Declaration, for the reason that the goods require chemical or other test or further inquiry. In the instant case, there was no such situation in presence of the valuation/finding conveyed by the Director of Customs Valuation through its letter, dated 6-10-2005, which has been issued under section 25(7) of the Customs Act, 1969 read with S.R.O. 917(I)/2004, dated 11-11-2004, after detailed inquiry and consultation with the stakeholders. According to Respondent No.1, the dispute of valuation of Energy Saver Lamps and Bulbs finally stands resolved through valuation advice, dated 6-10-2005. It is also contended that it is not a case of provisional assessment in terms of section 81 of the Customs Act, 1969, and in fact the assessment has been completed under section 80 of the Customs Act, and if the importer/petitioner has any grievance, he may file an appeal under sections 193 and 194-A of the Customs Act. It is averred that where GD is filed on Customs Computerized System, the importer is required to first pay duty and taxes. The petitioner had not paid the duties and taxes and the assessment was finalized under section 25 of the Customs Act, 1969, therefore, the petitioner was required to pay the additional duties and taxes. It is further contended that section 25(7) and section 81 of the Customs Act, 1969 are independent of each other and have to be applied on specific situation meant for the aforesaid provisions. It is averred that since the issue pertaining to valuation of Energy Saver Lamps and Bulbs already stands resolved by Respondent No.2, through it ruling, dated 6-10-2005 therefore, the duty is to be determined accordingly and resort is not required to be made to the provisional assessment in terms of section 81 of the Customs Act. The payment of duties and taxes on the basis of GD are not denied but it is pleaded that the petitioner has not deposited the duties and taxes as per assessment made by the Department. It is contended that as per provisions of section 80 of the Customs Act, 1969, where GD is filed on Customs Computerized System, importer is required to first pay duty and taxes. It is stated that they have adopted the procedure provided in the rules for Pakistan Customs Computerized System, 2005. It is specifically stated that every declared value cannot be considered as true transactional value for assessment purposes. The customs officials wherever find that the declared value is not in line with the transactional value, can reject the value and assess the goods are per laid down procedure under section 25 of the Customs Act, 1969. It is very important to note that in reply to ground No.3, in the petition the Respondent No.1, has stated that, "provisions of section 25 are to be followed in the sequential manner." It has been explained that the identical/similar transactional values cannot be applied in case where there is "Group under invoicing". In such circumstances, the Customs makes recourse to other valuation methods in the sequence envisaged in section 25 of the Customs Act, 1969. Referring to the facts of the present case, it is stated in this case the documents produced by the petitioner do not correspond with the prevailing prices of the imported goods of the same origin. According to Respondent No.1, the circumstantial evidence and detailed inquiry conducted by the Director (Valuation PCA) and the similar goods imported by the other importers rives credence to the fact that the importer has failed to declare the correct value of the consignment. It is further stated that the petitioner has imported goods through, `Group under-invoicing", and therefore, the appropriate method for determination of value in such cases was to advert to method envisaged under subsection (7) of section 25 of the Customs Act, 1969.
6. In the reply filed on behalf of Respondent No.2, the Director of Customs Valuation, it is stated that the Collector of Customs, Appraisement, Karachi, made specific case references of imported goods namely Energy Saving Lamps, Colour Bulbs, Florescent Lights under section 81 of the Customs Act, 1969, for determination of assessable customs value. There were complaints from the local manufacturers and consequently a meeting was held with all the stakeholders namely representatives of the importers Association, local manufacturers, FPCC&I and thereafter a joint market inquiry was decided to be conducted by a team comprising one representative from each stakeholder. The Committee comprised the following:
(a) Deputy Director of Customs Valuation and PCA.
(b) Representative of FPCC&I Valuation Sub-Committee.
(c) Appraising Officer, Collector of Customs Appraisement, Karachi and
(d) Valuation Officer, Directorate of Valuation, Customs House, Karachi.
7. It is further stated that representative of the importers was also invited but did not participate in the market inquiry. Subsequently in the meeting held with the representatives of the FPCC&I and importers on 22-9-2005 it was decided to work out the assessable/dutiable values of the referred imported goods as per the guidelines adopted by the Customs Valuation Directorate vide Standing Operative Procedure (S.O.P) 1/2005, dated 13-9-2005. The above SOP after referring to the contents of subsection (7) of section 25 of the Customs Act, has prescribed the operating procedure for conducting market inquiry in pursuance of deductive method valuation under section 25(7) of the Customs Act, 1969. The relevant paras are as under:--
"(1) No market enquiry shall be conducted without prior approval of the Director.
(2) A committee headed by a Deputy Director Valuation comprising the following stakeholders shall, invariably, be constituted with the approval of the Director for conducting market enquiry;
(a) Importer or his Representative;
(b) Nominee of the FPCC&I/relevant Chamber of Commerce and Industry or
Nominee of the concerned traders (importers) association if any;
(c) Nominee of the clearing Collectorate; and
(d) Concerned Principal Appraiser/Senior Valuation Officer of "Directorate of Valuation."
(4) All prices obtained in the shape of cash memo. or quotation shall be signed by all members of the Committee;
(5) The customs value of goods shall be ascertained using deductive method by applying the following formula:
(1) Declared value = $
(2) Assessable Value = $ Rs.
(3) Customs Duty @ =
(4) Sales Tax @ =
(5) With Holding Tax @
(6) Incidental Charges @ 5% of D.V.
(7) Landed JK Cost = D.V. + Taxes + Incidental Charges
(8) Profit of Importer =
(9) Profit of Whole seller =
(10) Profit of Retailer =
(11) Total Price as per above Calculation =
(12) Actual Selling Price =
(13) Difference = Actual Selling Price = Rs. (12) --- (11)
(14) Actual Import price = D.V. + Difference (1) + (13)
(6) The calculation sheet shall compulsorily be signed by all members of the Committee with date and year."
8. It is stated that in terms of above guidelines, the valuation was worked out under section 25(7). While explaining the points of law and the procedure prescribed therefor, it is stated that the provisions of section 81 of the Customs Act, refers the situation where there is dispute of valuation and when the Assessing Officer is not satisfied with the declaration of imported goods, provisional clearance of the goods is allowed to facilitate the importer. This provisional assessment is subjected to detailed verification at later stage for determination of correct customs dutiable value under the rules. The value of imported goods is determined by the concerned Assessing Officer and the Respondent No.2 in exercise of the powers conferred under section 25 of the Customs Act, 1969. It is explained that the assessable value of the imported goods is determined in terms of the law as defined under section 25 of the Customs Act, 1969, while determining the dutiable value of the imported goods the Assessing Officer had duly examined the provisions of subsection (1) of section 25 of the Customs Act, 1969. It is stated that in this case, the burden was on the importer to substantiate the declared value, which burden was not discharged and therefore, the Assessing Officer discarded the declared value. It is further stated that the Assessing Officer may have the additional reasons to reject the transaction value and to determine the assessable value under the subsequent valuation method defined under the law. The position in respect of valuation advice, dated 6-10-2005 issued by the Respondent No.2, has been explained to the effect that the decision was taken after detailed investigation and verification. All the stakeholders were taken into confidence and valuation by deductive method under section 25(7) of the Customs Act was made after examining the fact that the sequential method under sections 25(5) and (6) was not logically applicable for the reasons that all the import transactions were under dispute and until verification of imports under identical goods (section 25(5)) and similar goods (section 25(6)), could not be made applicable. For these reasons the Assessing Officer had to resort to apply the next valuation method i.e. section 25(7). It is further explained that the transaction value of the imported goods is taken to be price actually paid or payable by the buyer to the seller. In the petitioner's case it was not disclosed as to what amount was paid by them to the foreign supplier. No letter of credit was established and no document was provided to disclose the remittance sent by them to the seller and therefore, the actual transaction amount could not be disclosed. It is pleaded that the Respondent No.1, was justified in resorting to the assessment of imported goods as per determination on record. It is also stated that the importer could not satisfy the Assessing Officer about the correctness of the declared value and therefore, the method of valuation under subsection (1) was not relevant with the result that the resort was made to subsection (7). It is further stated that where the appropriate officer has reason to doubt, the truth of the declaration, the importer is required to provide further declaration including documents and evidence. It is further stated that since method of transaction value was not applicable and the evidences as required for the method prescribed under subsections (5) and (6) of section 25 of the Customs Act, were doubtful and were subject to provisional assessment under section 81 of the Custom Act, therefore, these methods were not applied and direct resort was made to subsection (7) of section 25. It is further stated that the Respondent No.2, is authorized to exercise jurisdiction under subsection (7) of section 25 but in this case, the assessment has been made by- the Assessing Officer, viz.; Respondent and the said authority has exercised powers by applying the sequential method of valuation.
9. We have heard Mr. Ali Bin Adam Jafri, learned counsel for the petitioner, Mr. Haider Iqbal Wahniwal, learned Advocate for Respondent No.1, Mr. Raja M. Iqbal, learned counsel for Respondent Mr. Azhar Majeed Khalid. Collector of Customs (Model Coliectorate of Customs) Karachi, Mr. Fazal Qadir Qalbani, Director Customs Valuation and PCA, Karachi, Mr. Muhammad Iqbal Munib, Additional Collector of Customs, Ms. Lubna Jaffer, Deputy Collector of Customs (Model Collectorate) Customs House Karachi, Mr. Muhammad Ashfaq, Deputy Director Valuation and PCA, Customs House Karachi, Mr. Altai Ahmed, Principal Appraiser, Custom Valuation Department and Mr. Ijyas Ahsan, the Appraising Officer (Assessing Officer).
10. Mr. Ali Bin Adam Jafri learned counsel for petitioner has reiterated the facts already reproduced above and we need not to repeat the same. The main contentions raised by Mr. Ali Bin Adam Jafri, are that the value of the imported goods are to be determined for the purpose of customs duties and taxes under the provisions of section 25 of the Customs Act, read with the provisions contained in Chapter (IX) of S.R.O. 450(I)/2001, (Customs Rules 2001). He has laid emphasis that in terms of subsection (1) of section 25, the methods of customs value are required to be applied in a sequential order and therefore, the customs officials could not have direct resort to subsection (7) of section 25 without having recourse to the provisions contained in subsections (1), (5) and (6). He has further submitted that if the valuation declared by the importer is not acceptable to the Assessing Officer and he decides to hold inquiry which is likely to consume time then, it is the right of an importer to get the consignment released by provisional assessment in terms of section 81 of the Customs Act, 1969. According to Mr. Jafri, the release of imported consignment in terms of provisional assessment under section 81 shall save the importer from the liability of demurrage and shall be conducive to the continuous process of trade and industry and at the same time the interest of Revenue shall be fully protected on furnishing of security or guarantee of a schedule bank for payment of the differential amount and the Assessing Officer shall get sufficient time for determination of the duty and taxes payable. Mr. Jafri, has submitted that in case, the Assessing Officer is not satisfied with the correctness of the assessment of the goods under section 79 for the reason that a further inquiry is required, which includes the inquiry for the purpose of subsection (1) of section 25 or resort to the other methods specified in subsequent subsections to section 25, then it is not a matter of concession in the discretion of the Assessing Officer but it is right of an importer to get the goods released on provisional assessment under section 81 of the Customs Act, 1969. He contended that in this case, the respondents while rejecting the declared value have committed gross illegalities by ignoring the relevant provisions contained in section 25 of the Customs Act, and the rules and have further acted in violation of law by rejecting the request for release of the consignment under section 81 of the Customs Act. He submitted that the impugned acts of the respondents may be declared to be vaiolative of the law and they be directed to release the goods imported by the petitioner in terms of section 81 of the Customs Act and the concerned officials of the Customs Department may be directed to determine the value of the imported goods in accordance with the provisions contained in section 25 of the Customs Act and the Customs Rules, 2001.
11. On the other hand, Mr. Raja Muhammad Iqbal, learned counsel for Respondent No.2, has submitted that prior to the issuance of Notification S.R.O. 917(I)/2004, dated 11-11-2004 the Valuation Department had no authority to determine the value of imported goods under subsection (7) of section 25. However, under the above S.R.O. the Valuation Department has been duly empowered to exercise and discharge duties of the officers of customs in respect of provisions contained in section 25 of the Customs Act, 1969 and further the C.B.R. vide C. No.1/(19)S/Val/2004, dated 19-4-2005 has been pleased to delineate the valuation work amongst the Collectorate of Customs (Appraisement), Model Customs Collectorate Karachi and Directorate General of Customs Valuation with respect to cases, released under section 81 of the Customs Act, 1969 for finalization in terms of the provisions of the Customs Act, by the Directorate General of Customs Valuation:--
Model Customs Collectorate??????????????????????????? Sections 25(1), (2), (3), (4), (5) & (6)
Appraisement Collectorate,
Custom House, Karachi.
Directorate General of
Customs Valuation??????????????????????????????????????????? Section 25(7), (8) & (9)
He has further submitted that in pursuance of the decision taken in the meeting of all the stakeholders constituted on reference received from Collectorate of Customs, Appraisement, Karachi, the valuation advice, dated 6-10-2005 was tendered. He has taken us through this advice which contains that cases were received from Collectorate of Customs, Appraisement Karachi, under section 81 of the Customs Act, 1969 for determination of the customs value. The valuation in the cases referred to Respondent No. 2 were to be determined in accordance with the formula adopted by the Directorate of Customs, Valuation vide SOP 1/2005, dated 13-9-2005.
12. Mr. Muhammad Ashfaq, Deputy Director Valuation and Mr. Altaf Ahmed, Principal Appraiser Customs Valuation Department have stated that they have not tendered any valuation advice in the case of petitioner. They have stated that the valuation ruling was given in the case of other importers, the details whereof have been given in the ruling, dated 6-10-2005. They have further stated that the petitioner imported the consignment after 6-10-2005 and filed the goods declaration on 24-10-2005 therefore, the valuation ruling, dated 6-10-2005 issued by them on which the Respondent No.1, has placed reliance is not in respect of the consignment imported by the petitioner. Mr. Haider Iqbal Wahniwal, has supported the impugned orders passed by the Respondent No.1. Mr. Azhar Majeed Khalid, Collector of Customs (Model Collectorate of Customs) Karachi, stated that the Appraisement Department was of the view that it was not possible to determine the value of consignment imported by the petitioner on the basis of declaration made by the petitioner and therefore, it was found a case of provisional assessment. He initially argued that after coming to this conclusion a provisional assessment was made. However, when he was pointed out that whatever he was arguing was against the plea taken by his subordinate officials and particularly the averments made by Mr. Ashhad Jawwad, Deputy Collector of Customs, who filed counter-affidavit on behalf of Collector of Customs (Mr. Azhar Majeed Khalid). In the counter-affidavit a specific plea was raised that it was not a case of provisional assessment and a final assessment was made under section 80 of Customs Act. After perusal of the plea taken by departmental officers subordinate to Mr. Azhar Majeed Khalid, the learned Collector, had, to change his version. He subsequently argued that by resort to subsection (7) of section 25 and by placing reliance on the valuation ruling, dated 6-10-2005 by the Respondent No.2, a final assessment was made. However, when asked to show whether any exercise was done which is duly reflected in the assessment record for the purpose of making valuation under subsection (1) of section 25, he frankly stated that there was no such material available on record. The learned Collector was confronted with the provisions contained in section 25 to the effect that the methods of customs valuation are required to be applied in a sequential order, he did not dispute this proposition of law. He was further confronted with the provisions contained in Rules 108 to 122 of the Customs Rules, 2001, and specifically the provisions contained in Rule 109 to the effect that if after receiving information referred to in sub-rule (1) of Rule 109 or in the absence of response, the appropriate officer still has reasonable doubts about the truth or accuracy of the declared value, it may be deemed that the customs value of the imported goods cannot be determined under the provisions of subsection (1) of section 25 of the Act and that when final decision will be made, the appropriate officer shall communicate to the importer in writing his decision and the grounds therefor, and was asked whether there is anything in writing communicated to the petitioner as required above, he again conceded very frankly that there is nothing of the sort on the record.
13. We have carefully considered the contentions raised at the bar by the Advocates for the parties and the departmental officers as well as all the relevant facts and law.
14. We are of the opinion that the following questions of law require our consideration:--
(1) Whether different methods of valuation provided in section 25 of the Customs Act, 1969 and the Customs Rules, 2001 are required to be applied in a sequential order and without visible exercise reflected on record under subsections (1) to (4), no resort can be made to subsections (5), (6), (7), (8) and (9)?
(2) Whether any assessment can be made on the basis of working of a Committee constituted for that purpose to adopt method under section 25(7) without associating importer or his representative in each case?
(3) If the declared value in the Bill of Entry/Goods Declaration is not acceptable to the appropriate officer and he is of the view that customs value cannot be determined under the provisions of subsection (1) of section 25 and resort is to be made to the methods provided in-subsections (5), (6), (7), (8) or (9) and for that purpose further inquiry is required, an importer is entitled for release of goods under section 81 of the Customs Act, by provisional determination of liability, as a matter of right and not as a matter of concession within the discretion of the appropriate officer of the customs?
(4) If the Goods Declaration is filed on Customs Computerized System, the provisions contained in section 81 are equally applicable?
15. Before giving findings on the above questions it would be appropriate to produce the relevant provisions of law which read 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 commissions;
(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) goods, dies, moulds and similar items used in the production of the imported goods;
(iii) materials consumed in the production of the imported goods;
(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 a condition of sale of' the goods being valued, to the extent that such royalties and fees are not included in the price actually paid 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 or 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 value);
(iii) the customs value of identical or similar goods as determined under the provisions of subsection (8) (computed value):
Provided that in applying the foregoing tests due account shall be taken of demonstrated differences in commercial levels, quantity levels, 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 shall inform 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 provision 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 level 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, the transaction 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 such adjustments 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, 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, mutatis 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 such goods, subject to the deductions for the following:--
(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 cost of transport and insurance and associated costs incurred within Pakistan; and
(iii)? * * * *
(iv) the customs duties and other taxes payable in Pakistan by reasons of the importation 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 importation of the goods being valued, the customs value shall, subject otherwise to the 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 imported at 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 of 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 processing and the deductions provided for in clause (a).
(8) Computed value.---If the customs value of imported goods cannot be determined under subsection (7), it shall, subject to rules, be based on computed value which shall consist of the sum of:--
(a) the cost of value of materials and fabrication or other processing employed in producing the imported goods;
(b) an amount for profit and general expenses equal to that usually reflected in sales of goods of the same class or kind as the goods being valued which are made by producers in the country of 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 valuation are required to be applied in a sequential order except reversal of the order of subsections (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 or calling into question the rights of the appropriate officer of' customs to satisfy himself as to the truth or accuracy of any statement, information, document or declaration presented 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, warehouses or any other place, where any stocks, business records or documents required under this Act are kept or maintained belonging to any person after serving 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 in whole 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 the correctness of declaration, 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 conforming 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 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 determining whether 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, design work, and plans and sketches for which no adjustment has been made under subsection 2(c)(iv) because such elements were undertaken in Pakistan;
(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 persons 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 being valued; 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 industry sector, and includes identical or similar goods.
(79-A) Declaration and assessment for home consumption or warehousing.---(1) The owner of any imported goods shall make entry of such goods for home consumption or warehousing or for any other approved purpose by filing to the Customs a goods declaration containing correct and complete particulars of the goods and after having assessed, and, in case of the Customs Computerized System, paying his liability of duty, taxes and other charges thereon in such form and manner, as the Board may prescribe:
Provided that if, before filing a goods declarations to Customs, the owner makes a written request to the Collector of Customs or an officer designated that he is unable, for want of full information, to make a correct and complete declaration of any goods, then the collector or the officer so designated, subject to such conditions as he may deem fit, may permit the owner to examine the goods and thereafter make entry of such goods by filing a goods declaration after having assessed and paid his liabilities of duties, taxes and other charges:
Provided further that no goods declaration shall be filed prior to ten days of the expected time of arrival of the vessel.
(2) If an officer, not below the rank of Additional Collector of Customs, is satisfied that the rate of customs duty is not adversely affected and that there was no intention to defraud, he may, in exceptional circumstances and for reasons to be recorded in writing, permit substitution of a goods declaration for home consumption for a goods declaration for warehousing or vice versa.
(3) An officer of Customs, not below the rank of' Assistant Collector of Customs, may in case of goods requiring immediate release allow release thereof prior to presentation of a goods declaration subject to such conditions and restrictions as may be prescribed by the Board.
(80) Checking of goods declaration by the Customs.---(1) On the receipt of goods declaration under section 79, an officer of Customs shall satisfy himself' regarding the correctness of' the particulars of import, including declaration, assessment, and in case of the Customs computerised System, payment of duty, taxes and other charges thereon.
(2) An officer of Customs may examine any goods that he may deem necessary at any time after the import of the goods into the country and may requisition relevant documents, as and when and in the manner deemed appropriate, during or after release of the goods by Customs;
(3) If during the checking of goods declaration, it is found that any statement in such declaration or document or any information so furnished is not correct in respect of any matter relating to the assessment, the goods shall, without prejudice to any other action which may be taken under this Act, be reassessed to duty.
(4) In case of the Customs Computerised System, goods may be examined only on the basis of computerised selectivity criteria.
(5) The Collector may, however, either condone the examination or defer the examination of imported goods or class of goods and cause it to be performed at a designated place as he deems fit and proper either on the request of the importer or otherwise.
(81) Provisional determination of liability.---(1) Where it is not possible for an officer of Customs during the checking of the goods declaration to satisfy himself of the correctness of the assessment of the goods made under section 79, for reasons that the goods require chemical or other test or a further inquiry, an officer, not below the rank of Assistant Collector of Customs, may order that the duty, taxes and other charges payable on such goods, be determined provisionally:
Provided that the importer, save in the case of goods entered for warehousing, pays such additional amount on the basis of provisional assessment or furnishes bank guarantee or a post-dated cheque of a scheduled bank along with an indenmity bond for the payment thereof as the said officer deems sufficient to meet the likely differential between the final determination of duty over the amount determined provisionally:
Provided further that there shall be no provisional assessment under this section if no differential amount of duty and tax is paid or secured against bank guarantee or post-dated cheque.
(2) Where any goods are allowed to be cleared or delivered on the basis of such. provisional determination, the amount of duty, taxes and charges correctly payable on those goods. shall be determined within nine months of the date of provisional determination:
Provided that the Collector of Customs may, in circumstances of exceptional nature and after recording such circumstances, extend the period for final determination by not more than ninety days.
(3) On completion of final determination, the amount already paid or guaranteed. shall be adjusted against the amount payable on the basis of final determination, and the difference between the two amounts shall be paid forthwith to or by the importer, as the case may be.
(4) If the final determination is not made within the period specified in subsection (2), the provisional determination shall, in the absence of any new evidence, be deemed to be the final determination.
CUSTOMS RULES 2001
CHAPTER-I
(1) ?????? ???????
???????????
(1A) Scope:-- Unless specifically provided in the rules for Pakistan
Customs Computerised System 2005, these rules shall apply.
CHAPTER-IX
VALUATION
SUB-CHAPTER II
GENERAL
108. Declaration by the importer.---The importer, or his agent, shall furnish.---
(a) a declaration disclosing full and accurate details relating to the value of imported goods; and
(b) any other statement, information or document as considered necessary by the appropriate office for determination of the value of imported goods under the Act and this Chapter.
109. Burden of proof.---(l) 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 be deemed that the customs value of the imported goods cannot be determined under the provisions of subsection (1) of section 25 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 factious values; or
(iv) the minimum customs values, except those notified under subsection (4) of section 25 of the Act.
11. Rights of Customs.---Nothing contained in this Chapter shall be construed as restricting, or calling in question, the right of the appropriate officer 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 the Act and rules Made thereunder.
112. Rights of importer.---(1) 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. In this context, the appropriate officer of customs shall examine relevant aspects of the transaction, including the way in which the price in question was arrived at in order to determine whether the relationship influenced the price. Where it can be shown that the buyer and seller, although "related persons" as defined under clause (h) of rule 2 of Chapter-I, buy from and sell to each other as if they were not related, this would demonstrate that the price had been settled in a manner consistent with the normal pricing practice of the concern industry or with the way the seller settles prices for sales to buyers who are not related to him, this would demonstrate that the price has not been influenced by the relationship.
(2) Where it is shown bat the price is adequate to ensure recovery of all costs plus a profit which is representative of the firm's overall profit realized over a representative period of time, for example, on an annual basis, in sales of goods of the same class or kind, this would demonstrate that the price had not been influenced.
SUB-CHAPTER III
PRIMARY METHOD OF VALUATION
113. Price actually paid or payable.---(1) The price actually paid or payable is the total payment made or to be made by the buyer to or for- the benefit of the seller for the 'imported goods. The payment need not necessarily take form of a transfer of money.
It may be made by way of letter of credit or negotiable instruments, or by cash or credit partly by cash and partly by credit and may be made directly or indirectly. As example of an indirect payment would be the settlement by the buyer, whether in whole or in part, of a debt owned by the seller.
(2) Activities undertaken by the buyer on his own account, other than those for which an adjustment is provided in subsection (2) of section 25 of the Act are not considered to be an indirect payment to the seller, even though they might be regarded as of benefit to the seller. The costs of such activities shall not, therefore, be added to the price actually paid or payable in determining the value of imported goods.
(3) The customs value of imported goods shall not include the following charges or costs, provided that they are distinguished from the price actually paid or payable for the imported goods, namely : --
(i) charges for construction, erection, assembly, maintenance or technical assistance undertaken after importation of goods such as industrial plant, machinery or equipment;
(ii) the cost of transport after importation; and
(iii) duties and taxes in Pakistan.
(4) The price actually paid or payable refers to the price of the imported goods. Thus the flow of dividends or other payments from the buyer to the seller, which do not relate to the imported goods, shall not be part of the customs value.
114. Restrictions which do not affect value.---Among restrictions which would not render a price actually paid or payable unacceptable are restrictions which do not substantially affect the value of the goods. An example of such resections would be the case where a seller requires a buyer of' automobiles not to sell or exhibit them prior to a fixed date which represents the beginning of a model year.
115. Restrictions which affect value.---If the sale or price is subject to some conditions or considerations for which a value cannot be determined with respect to the goods being valued, the transaction value shall not be acceptable for customs purposes. For examples:--
(a) the seller establishes the price of the imported goods on condition that the buyer will also buy other goods in specified quantities;
(b) the price of the imported goods is dependent upon the price, or prices, at which the buyer of the imported ,goods sells other goods to the seller of the imported goods; or
(c) the price is established on the ,basis of a form of payment extraneous to the imported goods, such as where the imported goods are semi-finished goods which have been provided by the seller on condition that the will receive specified quantity of the finished goods.
Explanation.---Condition or considerations relating to the production or marketing of the imported goods shall not result in rejection of the transaction value. For example, the fact that the buyer furnishes the seller with engineering and plans undertaken in Pakistan shall not result in rejection of the transaction value. Likewise, if the buyer undertakes on his own account, even though by agreement with the seller, activities relating to the marketing of the imported goods, the value of these activities shall not be part of the value of imported goods nor shall such activities result in rejection of the transaction value.
116. Transaction value acceptable in case of related parties.---Where the buyer and seller are related', circumstances surrounding the sale shall be examined and the transaction value' shall be accepted as the customs value of imported goods provided that the relationship did not influence the price. Where the appropriate officer has no doubts about the acceptability of the price, it may be accepted without requesting further information from the importer. For example, the appropriate officer has no doubts about the acceptability of the price, it may be accepted without requesting further information from the importer. For example, the appropriate officer may have previously examined the relationship, or he may already have. detailed information concerning the buyer and the seller, and may already be satisfied from such examination information that the relationship did not influence the price.
SUB-CHAPTER IV
SECONDARY METHODS OF VALUATION
117. Transaction value of identical goods.---(1) In applying sub-section (5) of section 25 of the Act, the appropriate officer shall, wherever possible use a sale of identical goods at the same commercial level and in substantially the same quantities as the goods being valued. Where no such sale if found, a sale of identical goods that takes place under any one of the following conditions may be used, namely:-
(i) a sale at the same commercial level but in different quantities;
(ii) a sale at different commercial level but the substantially the same quantities; or
(iii) a sale at a different commercial level and in different quantities.
(2) Having found a sale under anyone of the conditions referred to in sub-rule (1), adjustments shall then be made, as the case may be, for the following, namely:
(i) quantity factors only;
(ii) commercial level factors only; or
(iii) both commercial level and quantity factors.
(3) For the purposes of subsection (5) of section 25 of the Act, the transaction value of identical imported goods means a value, adjusted as provided for in clauses (a), (b) and (c) of sub-section (5) of that section, which has already been accepted under subsection (1) of the said section 25.
(4) A condition for adjustment because of different commercial levels or different quantities shall be that such adjustment, whether it leads to an increase or a decrease in the value, be made only on the basis of demonstrated evidence that clearly establishes the reasonableness and accuracy of the adjustment, e.g., valid price lists containing prices referring to different levels or different quantities. As an example of this, if the imported goods being valued consist of a shipment of ten units and the only identical goods for which a transaction value exists involved a sale of five hundred units, and it is recognized that the seller grants quantity discounts, the required adjustment may be accomplished by resorting to the seller's price list and -using that price applicable to a sale of ten units. This does not require that a sale had to have been made in quantities of ten as long as the price list has been established as being bona fide through sales at other quantities.
118. Transaction value of similar goods.---(l) In applying sub-section (6) of section 25 of the Act the appropriate officer shall, wherever possible use a sale of similar goods at the same commercial level and in substantially the same quantities as the goods being valued. For the purposes of subsection (6) of the said section the transaction value of similar imported goods means the value of imported goods, adjusted as provided for in subsection (2) thereof which has already been accepted under subsection (1) of that section.
(2) The provisions of Rule-117 shall, mutatis mutandis, also apply in respect of similar goods.
119. Deductive value method.-(1) For the purposes of this rule, the expression "unit price at which goods are sold in the greatest aggregate quantity" means the price at which the greatest number of units is sold in sales to persons who are not related to the persons from whom they buy such goods at the first commercial level after importation at which such sale takes place.
Explanation.---(i) When goods are sold on the basis of a printed or advertised price list which grants favourable units prices for purchase made in larger quantities, the unit price at which goods are sold in the greatest aggregate quantity shall be ascertained as per the following example:
Sale quantity???????????????? Unit Price???????? Number of Sales?????????? Total quantity sold at
each price
One to ten units??????????? 100????????????????? 10 sales of 5 units???????? 65
5 sales of 3 units.
Eleven? to???????????????????? 95??????????????????? 5 sales of 11???????????????? 55
twenty-five Units?????????????????????????????????? units.
Over twenty-five?????????? 90??????????????????? 1 sale of 30 units.????????? 80
Units??????????????????????????????????????????????????? 1 sale of 50 units.
Note:--In this example, the greatest number of units sold at a price is eighty, therefore, the unit price in the greatest aggregate quantity is ninety.
(ii) In case when there are two separate sales. For example, in the first sale five hundred units are sold at a price of ninety five currency units each. In the second sale four hundred units are sold at a price of ninety currency units each. In this example, as the' greatest number of units sold at a particular price is five hundred, therefore, the unit price of the greatest aggregate quantity shall be ninety-five.
(iii) In case where various quantities are sold at various prices. For example:--
(1) Sales:
Sales Quantity????????????????????????????????????? Unit Price
(1)??????????????????????????????????????????????????????????????????? (2)
40 units??????????????????????????????????????????????????????????? 100
30 units??????????????????????????????????????????????????????????? 90
15 units??????????????????????????????????????????????????????????? 100
50 units??????????????????????????????????????????????????????????? 95
25 units??????????????????????????????????????????????????????????? 105
35 units??????????????????????????????????????????????????????????? 90
05,units??????????????????????????????????????????????????????????? 100
Total quantity sold??????????????????????????????????????????? Unit price
(1)??????????????????????????????????????????????????????????????????? (2)
65??????????????????????????????????????????????????????????????????? 90
30??????????????????????????????????????????????????????????????????? 95
15??????????????????????????????????????????????????????????????????? 100
25??????????????????????????????????????????????????????????????????? 105
Note:--In this example, the greatest number of units sold at a particular price is sixty-five, therefore, the unit price in this greatest quantity is ninety.
(2) Any sale in Pakistan, as provided in sub-rule (1), to a person who supplies directly or indirectly free of charge or at reduced cost for use in connection with the production and sale for export of the imported goods any of the elements specified in clause (c) of sub-rule (2) of section 25 of the Act shall not be taken into account in establishing the unit price for the purposes of subsection (7) of section 25 of the Act.
(3) For the purposes of the rules, the phrase "profit and general expenses" as used in sub-clause (I) of clause (?) of sub-section (7) of section 25 of the Act, shall be taken as a whole for the purpose of determination of value. The figure for the purposes of this deduction shall be determined on the basis of information supplied by or on behalf of, the importer unless his figures are inconsistent with those obtained in sales in Pakistan, of the same class or kind of goods. Where the importer's figure are inconsistent with such figures, the amount for profit and general expenses may be based upon relevant information other than that supplied by, or on behalf of, the importer.
(4) Local taxes payable by reason of the sale of the goods for which a deduction is not made under sub-clause (iv) of clause (a) of subsection (7) of section 25 of the Act shall be deducted under sub-clause (I) of clause (a) of that subsection.
(5) In determining either the commissions of the usual profits and general expenses under clause (a) of subsection (7) of section 25 of the Act, the question whether certain goods are "of the same class or kind" as other goods must be determined on case to case basis by reference to the circumstances involved. Sales in Pakistan of the narrowest group or range of imported goods of the same class or kind, ,which includes the goods being valued, for which necessary information can be provided, should be examined. For the purposes of subsection (7) of section 25 of the Act "goods of the same class or kind" includes goods imported from the same country as the goods being valued as well as goods imported from other countries.
(6) For the purpose of clause (b) of subsection (7) of section 25 of the Act, the "earliest date" shall be the date by which sales of the imported gods or of identical or similar goods are made in sufficient quantity at the established unit price.
(7) Wherever the method of valuation provided in clause (c) of subsection (7) of section 25 of the Act is used, deductions made for the value added by further processing shall be based on objective and quantifiable data relating to the cost of such work. Accepted industry formulas, recipes, methods of construction, and other industry practices would form the basis of the calculations.
(8) The method of valuation provided in clause (c) of subsection (7) of section 25 of the Act shall normally not be applicable when, as a result of the further processing, the imported goods lose their identity. However, there can be instances where, although the identity of the imported goods is lost, the value-added by the processing can be determined accurately without reasonable difficulty. On the other hand, there can also be instances where the imported goods maintain their identity but from such a minor element in the goods sold in Pakistan that the use of this valuation method would be unjustified. Accordingly, each situation of this type must be considered on a case to case basis.
120. Computed value method.--(1) As a general rule, customs-value shall be determined under subsection (8) of section 25 of the Act on the basis of information readily available in Pakistan. In order to determine a computed value, however, it' may be necessary to, examine the costs of producing the goods being valued and other information which has to be obtained from the country of manufacture.
(2) For the purposes of this chapter, "cost or value" referred to in clause (a) of subsection (8) of section 25 of the Act shall be determined on the basis of information relating to the production of the goods being valued supplied by, or on behalf of, the producer. It shall be based on the commercial accounts of the producer, provided that such accounts, are consistent with the generally accepted accounting principles applied in the country where the goods are produced. The "cost of value" shall include the cost of elements specified in sub-clause (ii) and (iii) clause (b) of subsection (2) of section 25 of the Act. It shall also include the value, apportioned as appropriate under rule 122 of any element specified in clause (c) of subsection (2) of section 25 of the Act which has been supplied directly or indirectly by the buyer for the use in connection with production of the imported goods. The 'value of the elements specified in. sub-clause (iv) of clause (b) of subsection (2) of section 25 of the, Act which are undertaken in Pakistan shall be included only to the extent that such elements' are charged to the producer and no cost or value of the elements referred to in this subsection shall be counted twice, in determining the computed value.
(3) For the purposes of this chapter, the "amount for profit and general expenses" referred to in clause (b) of subsection (8) of section 25 of the Act shall be determined on the basis of information supplied by or on behalf of the producer unless the producers figures are inconsistent with those usually reflected in sales of goods of the same class or kind as the goods being valued which are made by producers in the country of manufacture for export to Pakistan.
(4) For the purposes of these rules, the "amount for profit and general expenses" referred to in clause (b) of subsection (8) of section 25 of the Act shall be taken as a whole. If producer's profit figure is low and the producer's general expenses are high, the producer's profit and general expenses, taken together, shall nevertheless be consistent with that usually reflected in sales of goods of the same class or kind. Where the producer can demonstrate a low profit on sales of the imported goods because of particular commercial circumstances, the producer's actual profit figures should be taken into account provided that the. producer has valid commercial reasons to- justify them and the producer's pricing policy reflects usual pricing policies in the branch of industry concerned. Where the producer's own figures for profit and general expenses are not consistent with those usually reflected in sales of goods of the same class or kind as the goods being valued which are made by the producers in the country of manufacture for export to Pakistan, the amount for profit and general expenses may be based upon relevant information other than that. supplied by, or on behalf of the producer of the goods.
(5) Where information other than that supplied by, or on behalf of the producer is used for the purposes of determining a computed value, the appropriate officer shall inform the importer, if the latter so requests, of the source of such information, the data used and the calculation based upon such data, subject to the provisions of rule 124.
(6) For the purposes of these rules, the "general expenses" referred to in clause (b) of subsection (8) of section 25 of the Act, include the direct and indirect costs of producing and selling the goods for export which are not included under clause (a) of that subsection.
(7) For the purposes of clause (b) of subsection (8) of section 25 of the Act whether certain goods are "of the same class or kind" as other goods, must be determined on the case to case basis with reference to the circumstances involved. In determining the usual profits and general expenses under subsection (8) of section 25 of the Act sales for export to Pakistan of the narrowest group or range of goods, which includes the goods being valued, for which the necessary information can be provided, shall be examined. For the purposes of subsection (8) of section 25 "goods of the same class or kind" must be from the same country as the goods being valued.
121. Fall back method.---(1) Value of imported goods determined under subsection (9) of section 25 of the Act, shall, to the greatest extent possible be based on previously determined customs values of identical goods assessed within ninety days.
(2) The methods of valuation, to be employed under subsection (9) of section 25 of the Act, may be inclusive of those laid down in subsections (1), (5), (6), (7) and (8) of the said section, but a reasonable flexibility in the application of such methods would be in conformity with the aims and provisions of subsection (9) of that section.
Explanation.---Some examples of reasonable flexibility are as follows, namely:
(i) Identical goods---
(a) the requirement that the identical goods' shall be imported at or about the same time as the goods being valued, could be flexibly interpreted;
(b) identical imported goods produced in a country other than the country of exportation of the goods being valued could be the basis for customs valuation; and
(c) customs-values of identical imported goods already determined under subsection (7) and (8) of Section 25 could be used.
(ii) Similar goods.---
(a) the requirement that the similar goods shall be imported at or about the same time as the goods being valued could be flexibly interpreted;
(b) similar imported goods produced in a country other than the country of exportation of the goods being valued could be the basis for customs valuation; and
(c) customs-values of similar imported goods already determined under subsections (7) and (8) of section 25 of the Act could be used.
(iii) Deductive method.---
The requirement that the goods shall have been sold in the "condition as imported" as provided in clause (a) of sub-section (7) of section 25 of the Act could be flexibly interpreted, and the ninety days requirement could be administered flexibly.
122. Adjustment of value.---(l) For adjustment of value there shall be two factors involved in the appointment of the elements as specified in clause (c) of subsection (2) of section 25 of the Act to the imported goods namely:-,
(i) the value of the element itself; and
(ii) the way in which that value is to apportioned to the imported goods. The apportionment of these elements shall be made in a reasonable manner appropriate to the circumstances and in accordance with generally accepted accounting principles.
(2) The value of the elements shall be adjusted as follows namely:
(i) if the importer acquired the element from a seller not related to him at a given cost, the value of the element is that cost;
(ii) if the element was produced by the importer or by a person related to him, its value shall be the cost of producing it; and
(iii) if the element had been previously used by the importer, regardless of whether it had been acquired or produced by such importer, the original cost of acquisition or production would have to be adjusted downward to select its use in order to arrive at the value of the element.
(3) Once a value has been determined for the element, it shall be apportioned to the value of the imported goods, as follows namely:
(i) the value might be apportioned to the first shipment if the
importer wishes to pay duty on the entire value at one time;
(ii) the importer my request that the value of apportioned over the number of units produced up to the time of the first shipment; or
(iii) the importer may request that the value be apportioned over the entire anticipated production where contract or, firm commitments exist for that production.
Explanation.---If an importer provides the producer with a mould to be used in the production of the imported goods and contracts with him to buy ten thousand units. By the tune of arrival of the first shipment one thousand units, the producer has already produced four thousand units. The importer may request the appropriate officer to apportion the value of the mould over one thousand units, four thousand units or ten thousand units.
(4) Addition for the elements specified in sub-clause (iv) of clause (c) of subsection (2) of section 25 of the Act shall be based on objective and quantifiable data. In order to minimise the burden for both the importer and appropriate officer in determining the values to be added, data readily available in the buyer's commercial record should be used insofar as possible.
(5) For those elements supplied by the buyer which were purchased or leased by the buyer, the addition shall be made for the cost of the purchase or the lease. No addition shall be made for those elements available in the public domain, other than the cost of obtaining copies of them.
(6) Payments made by the importer for the right to distribute or resell the imported goods shall not be added to the price actually paid or payable for the imported goods if such payments are not a condition of the sale for export of the goods to Pakistan.
(7) Where objective and quantifiable data do not exist with regard to the additions required to be made under clauses (b), (c) and (e) of subsection (2) of section 25 of the Act the transaction value cannot be determined under the provisions of subsection (1) of section 25. As an illustration of this, a royalty is paid on the basis of the price in a sale in Pakistan of a litre of a particular product that was imported b weight in kilograms and made up into a solution after importation. If the royalty is based partially on the imported goods and partially on other factors which have nothing to do with the imported goods, (such as when the imported goods are mixed with domestic ingredients and are no longer separately identifiable, or when the royalty cannot be distinguished from special financial arrangements between the. buyer and the seller), it would be inappropriate to attempt to make an addition for the royalty. However, if the amount of this royalty is based only on the imported goods and can be readily quantified, an addition to the price actually paid or payable can be made.
16. So far, the question No.1, is concerned, we have already shown that the .Respondents Nos.1 and 2 have conceded in the parawise comments that the provisions of section 25 Customs Act, 1969 are to be followed in the sequential manner. In addition to the concession on the part Respondents Nos.1 and 2 it is specifically provided by the legislature in subsection (10) of section 25 that subsections (1), (5), (6), (7), (8) and (9) define how the customs value of imported goods is to be determined under the Customs Act. The methods of customs valuation are required to be applied in a sequential order except reversal of the order of subsections (7) and (8) at the importer's request, if so agreed by Collector of Customs. This aspect has been examined in a Division Bench judgment of this Court in the case of Sohaib Khan v. Collector of Customs, Appraisement 2005 PTD 1069, wherein it has been held that, "whenever a question for determination of the customs value of goods for the purpose of Customs Act, arises, the methods provided in section 25 are to be applied in a sequential order." In the cited judgment the question under consideration was as to how section 25-A of the Customs Act, is to be applied and it was held that, 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.
17. The established principle of interpretation of the tax laws is that the plain language of the law is to be applied. A bare perusal of section 25 shows that it is specifically provided in subsection (1) of section 25 that the customs value of the imported goods, subject to the provisions of this section and rules shall be the transaction value, i.e. the price actually paid or payable for the goods when sold for. export to Pakistan. The detailed guidelines in this behalf are given in sub-sections (1), (2), (3) and (4). The provisions contained in section 25(1) to (4) contain primary method of valuation and in the first instance the primary method of valuation is required to be adopted in each case of valuation of the imported consignment which is mandatory. The detailed guidelines in this behalf are contained in section 25 and the rules reproduced above. Thus, it is the mandatory requirement of law that before resorting to the method provided in subsection. (5), the customs officials shall make an exercise in accordance with the provisions contained in subsections (1) to (4) of section 25 and if thereafter they find that the customs value of the imported goods cannot be determined under the provisions of subsection (1) they shall resort to the method B provided in subsection (5) and not otherwise. It shall be an exercise duly reflecting on the record so that the appellate forums may examine whether the mandatory requirement of law has been carried out or not. We are further fortified in our views in this behalf with the provisions contained in sub-rule (3) of Rule 109 which provides that, "when a final decision is made, the appropriate officer shall communicate to the importer in writing his decision and the grounds therefor." In addition to the specific provisions contained in subsection (10) of section 25 to the effect that the methods of customs valuation are required to be applied in a sequential order we find that it is provided in subsection (6) that, if the customs value of the imported goods cannot be determined under the provisions of subsection (5) the method provided in subsection (7) shall be resorted to and similar provisions are contained in subsections (7), (8) and (9).
18. For the foregoing reasons it is held that different methods of valuation provided in section 25 of the Customs Act, 1969 and the Customs Rules, 2001 are required to be applied in a sequential order and without visible exercise reflected on record no resort can be made to subsection (5) and likewise without similar exercise under subsection (5) no resort can be made to subsection (6). In the same manner without an exercise in writing on record under subsection (6) no resort can be made to subsection (7) and similarly to subsections (8) & (9). This exercise is to be made in each case separately. On the basis of exercise in the case of earlier imports by other importers it cannot be applied to any subsequent import by another importer. The reason being that it is provided in Rule 109 that where 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 otherwise. Under sub-section (1) of section 25, the customs value of the imported goods is to be determined subject to the provisions of section 25 and the rules. The rules envisage inquiry in case of each import giving right to each importer to provide explanation and produced documents or other evidence in support of his/her declaration. When the provisions contained under section 25(1) of the Customs Act and the rules are read B with sections 79 and 80 of the said Act, they lead to same conclusion. Under section 79 the owner of any imported goods is required to tile a goods declaration containing correct and complete particulars of the goods and its assessment i.e. valuation of the goods, its value and the duty, taxes and other charges payable thereon. Under section 80, on the receipt of goods declaration under section 79, an officer of the customs shall satisfy himself of the correctness of the import including declaration and assessment. It indicates that initially the valuation of goods and assessment is to be given by the importer himself, which, if found satisfactory, shall be accepted. However, if the appropriate officer is not satisfied with the said declaration, he shall make his own assessment in accordance with the law. This exercise cannot be done without examination of each consignment, declaration of goods examination of assessment given by importers and of the documents in this behalf. This point came for consideration before a Division Bench of this Court in the case of Collector of Customs Appraisement Karachi v. Messrs H.M. Abdullah 2004 PTD 2993 and .it was held that the enhancement in value without sufficient evidence was not permissible. No enhancement in the value could be made on the recommendation of some working committee, which is not supported with any evidence. This point was considered by a Division Bench of the Customs, Excise and Sales Tax Appellate Tribunal Karachi also in the case of Messrs Dawlance Private Limited v. Collector of Customs 2002 PTD (Trib.) 3077. We approve the findings given by the Tribunal in this behalf to the effect that resort to subsection (5) of section 25 of the Customs Act, can only be made when the value cannot be determined under subsection (1) and that where no evidence to show that the disputed transaction is false or is an outcome of a fraudulent activity, in possession of the customs, the commercial document presented by an importer cannot be rejected.
We further approve the finding that a transactional value cannot be rejected because there are some contemporaneous imports at higher price. It has to be shown that invoice price was not genuine and does not show the real price paid by the importer. In short the provisions contained in section 25 of the Customs Act and the rules framed thereunder are complete code in themselves, so far, the customs valuation of the imported goods are concerned, which are required to be applied and acted upon strictly in the manner and method contained therein. There is no room for any deviation from these rules on the part of the customs officials.
19. Coming to the second question we find that in the Standing Operative Procedure I of 2005, dated 13-9-2005, it is specifically provided that the importer or his representative shall be associated with the working committee if deductive method of valuation under D section 25(7) is to be resorted. No lengthy discussion is therefore, required and it is held that no assessment can be made on the basis of working of a committee constituted for the purpose of determining the deductive valuation under section 25(7) without associating importer or his representative in each case.
20. It brings us to third question. A perusal of section 79 of the Customs Act, shows that an importer is required to file the goods declaration containing correct and complete particulars of the goods and his own assessment of the import value. Under section 80 an officer of the customs on receipt of goods declaration if satisfied with the correctness of the particulars of import, including declaration and assessment shall release the goods on payment of duties and taxes. In case the officer of customs is not satisfied he may call for the relevant documents and thereafter assess the customs value of the imported goods and on the payment thereof the goods shall be released. It is further provided in section 81 that where it is not possible for the officer of customs during the checking of the goods declaration to satisfy himself of the correctness of the assessment of the goods made under section 79, for reasons that the goods required chemical or other test or a further inquiry, an officer, not below the rank of Assistant Collector of Customs, may order the duty, taxes and other charges payable on such goods be determined provisionally. Section 81 further prescribes the manner and method in which the goods shall be released on provisional assessment and thereafter shall make further inquiry as deemed necessary for the purpose of final determination of duty over the amount determined provisionally. The differential amount is to be paid through bank guarantee or post, dated cheque. This differential amount is to be determined by the officer of the customs which according to him is sufficient to meet the likely difference between the final determination of duty over the amount determined provisionally. Here the question arises as to how the duty, taxes and other charges payable on such goods are to be determined provisionally. The law is silent on the point as to what is meant by provisional determination and how it is to be made. So far, final determination is concerned there is no ambiguity, as it is to be made by officer of Customs either by accepting the declared valuation and assessment or after complete scrutiny, examination of documents, evidence and full-fledged inquiry. It is provided in subsection (4) of ' section 81, that if final determination is not made with in the period specified in subsection (2), the provisional determination shall in the absence of any new evidence, be deemed to be the final determination. In the explanation to section 81, the legislature has defined the expression provisional assessment to mean the amount of duties and taxes paid or secured against bank guarantee or post dated cheque. As already observed the expression provisional determination has not been defined by the legislature. There are two possibilities only. The first, that in the absence of any evidence in the possession of customs and in the take of further enquiry ensued the declared valuation and assessment in terms of section 79 read with section 80 be taken as provisional determination and the State revenue be protected through the mechanism provided in section 81. The second, is that officers 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 Customs Law. Thirdly, in the absence of evidence and in anticipation of enquiry such enhancement- would be merely subjection and arbitrary. Such course is anathema to justice and cannot be allowed by any judicial forum. It is also pertinent to observe that if evidence is available with the officer of customs and valuation can be made in accordance with provision contained in subsections (1) to (4) of section 25, then, there is no question of resorting to provisional assessment/determination and final assessment is to be made under section 80. However, if no sufficient material is available with the Customs and no valuation can be made under section 25(1) for the reason of conducting chemical or other tests or further enquiry including resort to the methods specified under subsections (5) to (9) of section 25, then, any determination of value or enhancement in the declared value shall amount to groping in the dark. The hazardous consequences of such are not difficult to visualise. At this point, it would be appropriate to refer the salutary principal of the Tax Laws that, if there is any ambiguity it is to be resolved in favour of citizens/assessees and not the Revenue. It is therefore, held that since in case of provisional assessment further inquiry shall be made therefore, the officer of the customs shall make the provisional assessment on the basis of assessment made by the importer in the goods declaration under section 79 of the Customs Act, and the amount which will be sufficient to meet the differential of the provisional and final assessment shall be determined by the officer of the customs. In this manner the interest of Revenue shall be fully protected and no undue harassment shall be caused to the importer. The tenor of the language used shows that the legislature has made substantial provisions for protecting the interest of Revenue in case of release of the goods on provisional assessment under section 81 and has allowed sufficient time to the customs officials for making necessary inquiry/probe to determine the final valuation under section 80. The purpose of making these provisions is to protect the State revenue in a manner that the trade and industry is also allowed to run smoothly. After prescription of detailed method to be adopted in such situation it appears reasonable, that, when if it is not possible for the officer of the customs to determine the final tax liability for the reason that chemical or other tests or a further inquiry is required then it give right to the importer to get the goods released on payment of duty and taxes assessed by him under section 79 and on furnishing of bank guarantee or a post dated cheque of a schedule bank along with an indemnity bond for payment of the differential amount as determined by the .customs officials. In such situation the importer should not be left at the mercy of Assistant Collector of Customs or any officer above in rank. It is therefore, held that if the declared value in the Bill of Entry/goods declaration is not acceptable to the appropriate officer of the customs department and the value cannot be determined under the provisions of subsection (1) of section 25 and resort is to be made to the other methods provided in section 25 of the Customs Act, then the importer is entitled for the release of goods under section 81 of the Customs Act, by provisional determination of the liability. The release of goods in such manner is a matter of right of importer and not a matter of concession within the discretion of appropriate officer of the customs.
21. Now we take up the fourth question. This question was framed for the reason that the respondents had taken plea that under the Customs Computerised System an importer is required to first pay full amount of duty and taxes as demanded by the customs officials and then only the goods can be released. A plea was taken that the customs officials have adopted the procedure provided in the rules for the Pakistan Customs Computerised System 2005.
22. We have produced Rule 1-A of the Customs Rules, 2001, which has been inserted vide Notification No. S.R.O. 563(I)/2005, dated 6th June, 2005. It specifically contains that unless specifically provided in the rules for Pakistan Customs Computerised System 2005, the Customs Rules, 2001 shall apply. During the course of arguments a plea was taken that the rules have been framed by the C.B.R. however, the copy of rules was not available. Mr. Azhar Majeed Khalid, Collector of Customs had undertaken to inform this Court, if any rules have been framed by the C.B.R. and if so, a copy thereof shall be supplied. Subsequently, he intimated to this Court in writing that the C.B.R. has not framed any such rules so far. In these circumstances, it is held that even if the goods declaration is filed on Customs Computerised System, the provisions contained in the Customs Rules, 2001 and in section 81 of the Customs Act are equally applicable.
23. After hearing the learned Advocates for the parties the petition was allowed by a short order in the following terms:--
"Learned counsel for the parties and officers have concluded their arguments. We appreciate the assistance provided to us by Mr. Azhar Majeed Khalid, learned Collector, and Mr. Muhammad Ashfaque, Deputy Director Valuation.
For the detailed reasons, to be recorded later on, the petition is allowed in the following terms:
(i) The final assessment order, dated 27-10-2005 is hereby set aside.
(ii) The Respondent No.1 is directed to pass a provisional assessment order in terms of section 81 of the Customs Act by 12.00 noon on 1st December, 2005. The petitioner has already paid the Customs duty and taxes at Rs. 5,28,314.00. The differential demanded by the concerned Customs Officials is Rs.2,61,724.08. These facts shall be recorded in the provisional assessment order and the petitioner shall be directed to furnish the bank guarantee in the amount of differential, as above.
(iii) After furnishing of bank guarantee, the consignment imported shall be released forthwith.
(iv) The concerned officials of the Customs Department shall, thereafter, proceed to determine the value of the imported goods in terms of section 25 of the Customs Act read with relevant Rules in the Customs Rules, 2001. The final assessment shall be completed within the period provided for this purpose in the Statute."
24. These are the detailed reasons in support of the above short order.
M.B.A./R-7/K???????????????????????????????????????????????????????????????????????????????????? Petition allowed.