Customs Act (IV of 1969)---

----S.25---Constitution of Pakistan (1973), Art.199--Constitutional petition---Determination of Customs value of goods---Principles---Express statutory intent was for the transactional value to be established through the procedure specified under S.25, Customs Act, 1969; this was to be applied or otherwise exhausted sequentially under S.25(10) of the Customs Act, 1969 to arrive at a lawful valuation of goods---Department, in the present case, instead of following the specified method for determination of transactional value in the prescribed sequence, had straightaway gone to the deductive method of valuation contemplated by S.25(7) of the Act and replies to Court queries had explained "group under-invoicing by all importers through fake invoices" to be the cause for rejecting the statutorily prescribed methods of valuation under S.25(5) and S.25(6) of the Act that were based on evidence of identical and similar goods in the market---Such was the factual defence, but was faulty from the legal point of view because said ground did not find mention in the impugned valuation ruling nor did the record presented with the comments justify the sweeping allegation made---Before a Court of law may accept the allegation, it should be shown some material to justify the charge---If the alleged causative phenomenon was so widespread both in terms of extent and duration (in the present case, longer than six months), it was more a case of the shipper's mischief rather than the importer's delinquency---Such a case did have its corrective remedies at the policy making level under anti-dumping laws and instruments rather than through the valuation authorities at the assessment stage---Impugned valuation ruling proceeded upon the allegation of massive fraudulent declarations---Said allegation, its prima facie basis and preventive action initiated to demonstrate veracity of the charge, should find mention in the record for resorting to action under S.25(7) of the Act---Such disclosure would lend credibility to the impugned action and satisfy the test of reason and relevance laid down in the case of Montgomery Flour and General Mills Ltd. v. Director Food Purchase PLD 1957 Lah. 914 which test remained just applicable to the impugned proceedings as any other administrative action because exercise of statutory discretion by the department was in issue---Statutory mandate that price material from the market be used to rebut declared value of imported goods was meant for the assessment to be realistic and verifiable---Valuation ruling, therefore, was at best evidentiary and to possess any sanctity it must reflect the material on which it was based---Price materials from the market should necessarily satisfy the test of contemporaneity embedded in S.25 of the Act and the Valuation Rules, 2004---Failing such validating measures demonstrating substantive adherence to the statutory requirements, valuation ruling would derogate the specific terms of S.25 of the Act and be illegal---Impugned valuation ruling was devoid of the stated attributes and was, therefore, declared to be without lawful authority---High Court remanded the matter accordingly to the department who shall reassess the imported goods in accordance with S.25, Customs Act, 1969 and the law stated in the present judgment.

Montgomery Flour and General Mills Ltd. v. Director Food Purchase PLD 1957 Lah. 914 fol.

Mian Abid Ahmed for Petitioner.

Mian Shahid Iqbal for Respondent No.5.

Akhtar Ali for Respondent No.6.

Ms. Kausar Akhtar for Respondent No.4.

Dr. S. Faisal Bukhari, Deputy Director Valuation, Lahore.

Zafar Iqbal, Principal Appraiser Valuation, Lahore

ORDER

UMAR ATA BANDIAL, J.---In this petition issue is taken with the assessed customs valuation of spiral nails imported by the petitioner under Bills of Entry Nos.1197 and 1198 dated 12-6-2005. The petition alleges non-compliance of the provisions of section 25 of the Customs Act, 1969 ("Act") by the respondent No.5 who has issued a customs valuation ruling on 11-1-2005 that attributes a value of U.S.$ 1129.45 pmt to the imported goods of the petitioner whereas their declared value is US $ 350 pmt.

2. The respondents explain the huge differential in the value attributed by them, to the findings of a market survey conducted by them upon a complaint made by the local manufacturers association of such goods. The respondents market enquiry revealed that raw material for the imported goods, namely, wire rod steel has an invoice price of US $ 650 pmt, whereas the consignment of imported goods containing the finished goods has a declared value of half that amount. The survey is said to have revealed gross under-invoicing by the importers of spiral steel nails. This survey is said to have been conducted transparently in the presence and with the participation of the representatives of various trade associations including the petitioner's association, the Pakistan Fastener Manufacturers Association. The final valuation figure given in the impugned ruling bears their endorsement and acceptance. The higher value of US $ 1129 pmt fixed in the impugned valuation ruling dated 11-1-2005 is derived from the deductive method provided in section 25(7) of the Act.

3. On the Court's query, learned counsel for the respondents defended the formula adopted for arriving at the valuation contained in the impugned ruling dated 11-1-2005 on the basis of Article 6 of the W..T.O. Agreement on Customs Valuation (Agreement on the implementation of Article VII of the General Agreement on Tariffs and Trade 1994) whose legislative enforcement is reflected in section 25(7) of the Act. This valuation ruling is stated to have been circulated to all Collectorates and Chambers of Commerce. It is accordingly claimed to have the backing of law both under the Act and otherwise on merits because it is derived from the findings of a market survey conducted in the presence of the representative office-bearers of the affected persons i.e. the petitioner.

4. The submissions of the learned counsel for the respondents do reflect a bona fide effort to arrive at the valuation adopted by them. However, the law has undergone substantial changes after the recasting of the valuation procedure provided in the Act in consequence of the terms of the W.T.O. Agreement. The power of the respondents to fix value of imported goods through I.T.Ps. conveyed by the Valuation Manual under section 25-B of the Act has been deleted. The entire emphasis .of the valuation procedure is on the determination of the transactional value. Even the last vestige of authority for prior determination of value of imported goods that was available to the respondents by a notification under section 25(14) of the Act has been repealed by the Finance Act, 2005. The express statutory intent is for the transactional/value to be established through the procedure specified under section 25 of the Act, this is to be applied or otherwise exhausted sequentially under section 25(10) of the Act to arrive at a lawful valuation of imported goods.

5. The impugned action fails to do so. Rather than following the specified ^'methods for determination of transactional value in the prescribed sequence, the impugned action has straightaway gone to the deductive method of valuation contemplated by section 25(7) of the Act. The instructive set of replies to Court queries by the respondents explain "group under-invoicing by all importers through fake invoices" to be the cause for rejecting the statutorily prescribed methods of valuation under section 25(5) and section 25(6) of the Act that are based on evidence of identical and similar goods in the market. This is a factual defence; but is faulty from the legal point of view because this ground does not find mention in the impugned valuation ruling nor does the record presented with the comments justify the sweeping allegation made. Before a Court of law may accept the allegation of fake invoicing by all importers in the country, it should be shown some material to justify the charge. If the alleged causative phenomenon is so widespread both in terms of extent and duration (in the present case, longer than six months), it is more a case of the shipper's mischief rather than the importers' delinquency. Surely, such a case has its corrective remedies at the policy making level under anti-dumping laws and instruments rather than through the valuation authorities at the assessment stage.

6. Be that as it may, the impugned valuation ruling proceeds upon the allegation of massive fraudulent declarations. This allegation, its prima facie basis and preventive action initiated to demonstrate veracity of the charge should find mention in the record for resorting to action under section 25(7) of the Act. Such disclosure would lend credibility to the impugned action and satisfy the test of reason and relevance laid down in the case Montgomery Flour and General Mills Ltd. v. Director Food Purchase PLD 1957 Lah. 914. That test remains just as applicable today to the respondents proceedings as any other administrative action because the exercise of statutory discretion by the respondents is in issue. The statutory mandate that price material from the market be used to rebut declared value of imported goods is meant for the assessment to be realistic and verifiable. Therefore a valuation ruling is at best evidentiary and to possess any sanctity it must reflect the material on which it is based. It would also be necessary that the price materials from the market used to arrive at a valuation should satisfy the test of contemporaneity embedded in section 25 of the Act and the Valuation Rules, 2004. Failing such validating measures demonstrating substantive adherence to the statutory requirements, a valuation ruling would derogate the specific terms of section 25 of the Act and be illegal. The impugned valuation ruling that is devoid of the foregoing attributes and is therefore declared to be without lawful authority. The matter is accordingly remanded to the respondents who shall reassess the imported goods in accordance with section 25 of the Act and the law declared above. Petition allowed.

M . B. A. /S-443/L????????????????????????????????????????????????????????????????? Case remanded.