NEW ELECTRONICS (PVT.) LTD VS COLLECTOR OF CUSTOMS (APPRAISEMENT), KARACHI
2008 P T D 133
[Karachi High Court]
Before Sabihuddin Ahmed and S. Ali Aslam Jafri, JJ
NEW ELECTRONICS (PVT.) LTD. through Director
Versus
COLLECTOR OF CUSTOMS (APPRAISEMENT), KARACHI and 2 others
C.Ps. Nos. D-2215, 1029, 1144, 1145 and 3127 of 1992, heard on 29/03/2004.
(a) Customs Act (IV of 1969)---
---Ss. 25 & 25-B---Customs value of goods, determination of---Section 25-B of Customs Act 1969 had an overriding effect and operated as an exception to the general rule under S.25 of the Customs Act, 1969 which enabled the C.B.R. or an officer authorized by it to fix the value at such rates as it deemed fit and thus it conferred a substantial amount of discretion on the designated officer to determine the value of goods.
(b) Customs Act (IV of 1969)---
----Ss. 25 & 25-B---Constitution of Pakistan (1973), Art.199---Constitutional petition---Notification---Striking down notification---Any notification could be struck down only if it was demonstrated that it was either mala fide or entirely perverse bearing no nexus with the objects of Legislation---Mere fact that difference between the rates stated by the petitioners and those determined by the authorities varied between 11 to 25%, was not by itself sufficient to show that discretion was perversely exercised---Once the matter was taken out of the regime of S.25 of Customs Act, 1969 and brought under S.25-B of the said Act between 1988 and 1998, the actual value of goods apparently became inconsequential---Contention by petitioner that in any event the notification determining the value of goods could only have prospective effect and could not affect cases where firm orders had been placed or letters of credit had been established prior to the issuance of the notification, prima facie appeared attractive, but upon careful consideration, it was not tenable.
Collector of Customs and others v. New Electronics (Pvt.) Ltd. PLD 1994 SC 363; Al-Samraz Enterprises v. Federation of Pakistan 1986 SCMR 1917; Mian Nazir Sons v. Government of Pakistan 1992 SCMR 883; Abdul Waheed Abdul Majeed v. Government of Pakistan 1993 SCMR 17 and Molasses Trading Company v. Federation of Pakistan 1993 SCMR 1905 ref.
(c) Taxation---
----Courts in taxation matters had been conceding a great deal of latitude to the taxing authorities and interference was called for only in cases of evident perversity.
Naveed Merchant for Petitioners (in C.Ps. D. Nos.1029, 2215 and 3127 of 1992).
Mustafa Lakhani for Petitioners (C.Ps. D. Nos. 1144 and 1145 of 1992).
Nadeem Azhar, D.A.-G. and Javed Farooqui for Respondents.
Date of hearing: 29th March, 2004.
JUDGMENT
SABIHUDDIN AHMED, J.---The similar questions of fact and law are being heard together. Without going into details at this stage of may be sufficient to state that all the petitioners appear to the aggrieved by different Notifications issued by the Controller of Valuation (Customs) to the exercise of the delegated powers of the Central Board of Revenue under section 25-B of the of Customs Act prescribing specific rates of duties upon goods imported by them. It may be explained that under section 25 of the Customs Act the value of imported goods for the purpose of levy of duty, the price actually paid or payable for the goods when sold for export to Pakistan and such value was to be determined in accordance with the detailed mechanism laid down in that section.
2. However, through the Finance Ordinance (Ordinance II of 1988), re-promulgated through Ordinance XXII of 1988, which was subsequently passed as an Act of legislature, section 25-B was inserted which read as follows:--
"25-B. Fixation of value for imports and exports.---(1) Not-withstanding anything contained in section 25, the Board or such officer as authorised by the Board in this behalf may, from time to time by Notification in the official Gazette, for the purpose of levying customs duties under this Act or any other law, for the time being in force, fix the value of the goods specified in the First Schedule and the Second Schedule to this Act, at such rates as it may deem fit and subject to such conditions or limitations as it may impose.
(2) Different values may be fixed for different classes or descriptions of the same type of goods."
3. The Notifications questioned by the petitioners were issued from time to time in the exercise of the powers so conferred by section 25-B. It may lie pertinent to add that a large number of other petitions impugning similar notifications were filed before this Court wherein the validity of section 25-B was also questioned.
4. Notification No. S.R.O. 610(I)/88, dated 13th June, 1988 was issued whereby the Controller of Valuation (Customs) was authorized to exercise the powers of the Board under section 25-B of the Act. Subsequently the aforesaid officer issued different notifications from time to time determining the value of goods imported by the petitioners for assessment of custom duty in terms of section 25-B of the Act.
5. A large number of constitutional petitions calling in question assessment made under section 25-B of Customs Act were preferred in 1991-92, which were allowed by this Court vide judgment, dated 15-3-1993 to the extent that though assessments under section 25-B during the currency of Ordinance II of 1988 was valid but one issued subsequent to 25-10-1988 under a repromulgated Ordinance (Ordinance XXII of 1988) was ultra vires the powers of the C.B.R. as an Ordinance could not be repromulgated upon its expiry and therefore, the statutor, power to issue a notification did not exist. On appeal to the Honourable Supreme Court however, it was held that the repromulgated Ordinance was also valid in view of the specific situation where the National Assembly did not exist. The aforesaid decision is reported as Collector of Customs and others v. New Electronics (Pvt.) Ltd. (PLD 1994 SC 363).
6. In the five petitions before us, the question of vires of section 25-B, however, has not been pressed by learned counsel in view of the earlier pronouncements of this Court and the Honourable Supreme Court. Nevertheless, learned counsel have attempted to. persuade is to hold that the valuation determined by the respondent No.2 (Controller of Valuations) is entirely arbitrary and disproportionate to the actual price of the goods and that in any event could not be enforced in respect of goods where Letters of Credit for import had been established prior to the issuance of a notification under section 25-B of the Customs Act.
7. With respect to the first contention Ms. Naveed Merchant learned counsel appearing for the petitioners in C.Ps. 1029, 2215 and 3127 of 1992 urged with a great deal of emphasis that C. & F valuation of Samsung brand Refrigerators determined by the respondent No.2 was far in excess of the actual import value of such goods declared by the petitioners and duly certified by government appointed pre-shipment Inspectors COTECNA .??? of Switzoland. In support of her contention she referred to a comparative chart enacting that the valuation under section 25-B was higher than the actual import value in respect of different modes of refrigerators. Learned counsel further urged that the notification was ultra vises the powers of the respondent as being totally arbitrary and fanciful.
8. Indeed learned counsel appears to be correct to the extent that public power must always be exercised reasonably, fairly and in the public interest. Nevertheless, the contention appears to overlook the scheme of the Statute to the extent that while under section 25, customs duty is required to be paid on the transaction value of the imported goods. Section 25-B (as it then stood) has an overriding effect and operated as an exception to the general rule under section 25. It enabled the C.B.R. or an officer authorized by it to fix the value "at such rates as it may deem fit". Evidently it conferred a substantial amount of discretion to the designated officer to determine the value of goods. We are fortified in our view by the fact that the legislature in its wisdom decided to curtail this discretion by amending section 25-B through Finance Act, 1998 whereby it was stipulated that it would be attracted only where the value of goods could not be determined under section 25 and even thereafter the concerned officer was to determine such value in accordance with certain parameters laid down in the Act. Admittedly however, the amended provisions was enacted long after the transaction and could be of no avail to the petitioners.
9. Against the above perspective it could possibly be said that a notification could be struck down only if it was demonstrated that it was either mala fide or entirely perverse bearing no nexus with the objects of Legislation. The mere fact that the difference between the rates stated by the petitioners and those determined by the respondent No.2 varied between 11 to 25%, however, is not by itself sufficient to show that discretion was perversely exercised. Once the matter was taken out of the regime of section 25 and brought under section 25-B between 1988 and 1998, the actual value of goods apparently became inconsequential. Mr. Nadeem Azhar learned D.A.G. therefore, argued that the respondent could for a variety of reasons, determined the rate of duty as it deemed fit and such rate could not be questioned unless it wag confiscatory. Moreover, the Honourable Supreme Court in the New Electronics case (PLD 1994 SC 363) that reasonableness of the valuations fixed for various items of goods cannot be subject-matter of an enquiry in exercise of constitutional jurisdiction by the High Court. We are also aware that in taxation matters Courts have conceding a great deal of latitude to the taxing authority and interference is called for only in cases of evident perversity.
10. The next contention of Ms. Naveen Merchant was that in any event the notification determining the value of goods could only have prospective effect and could not affect cases where firm orders have been placed or Letters of Credit had been established prior to the issuance of notification. She relied upon the doctrine of promissory estoppel laid down in Al-Samraz Enterprises v. Federation of Pakistan case (1986 SCMR 1917). The argument prima facie appeared attractive, but upon careful consideration we are of the view that it is not tenable.
11. In Al-Samraz case (1986 SCMR 1917) certain goods which were exempted from payment of custom duty were imported by the appellant through firm, orders placed by the appellant upon foreign suppliers but before the actual arrival of goods and filing of the bill of entry the exemption in question was withdrawn. The appellant nevertheless, claimed the benefit of exemption which was rejected by the custom authorities and the High Court. Nevertheless, their Lordships in the Supreme Court applied the doctrine of promissory estoppel and held that the notification granting exemption amounted to a representation on the part of the Government and once the appellant had, on the strength of said representation, placed firm purchase orders, the Government was estopped from withdrawing the same unilaterally to the detriment of the appellant. It was held that vested rights could not be impaired by giving retrospective effect to a notification. Moreover with reference to section 30, a distinction was drawn between non-liability and exemption and it was held that while section 30 was relatable to liability an exemption granted under section 19 operated independently to which section 30 did not apply.
12. However, the effect of the judgment in Al Samraz case, was nullified by the Legislature through Finance Ordinance, 1988 i.e. the same Ordinance through which section 25-B was incorporated, Section 31-A expressly stipulated that notwithstanding any decision of any Court, for the purposes of sections 30 and 31 the rate of duty applicable would be the rate payable in consequence of withdrawal of any exemption of concession from duty whether before or after the conclusion of a contract for sale of goods or opening of a Letter of Credit. In Mian Nazir Sons v. Government of Pakistan (1992 SCMR 883), a five members Bench of the Honourable Supreme Court held in a judgment authored by the same learned Judge who decided Al Samraz case (Zafar Hussain Mirza, J.) that duty was chargeable according to the rate prevailing on the date of filing a bill of entry in terms of section 30 irrespective of the consideration that a lower rate prevailed oil the date of entering a contract for import of goods. The same view was reiterated in Abdul Waheed Abdul Majeed v. Government of Pakistan (1993 SCMR 17) and Molasses Trading Company -v. Federation of Pakistan (1993 SCMR 1905).
13. It is evident therefore, that the petitioners were required to pay duty at such rates as were applicable on the respective dates of the filing of the bills of entry and it was nowhere alleged that duties at such rates were demanded which did not prevail on the filing of the bills of entry. In fact the respective bills of entry placed on record in all the three petitions filed by Ms. Naveen Merchant showed that the rates claimed were operative when such bills of entry were filed. Indeed Mr. Mustafa Lakhani learned counsel for the petitioners in C.Ps. 1144 and 1145 of 1992 argued that the respective bills of entry pertaining to equipment imported by the two petitioners were filed before the issuance and publication of the notification by the custom authorities. A perusal of the record however, in these cases shows while some goods have been cleared by the petitioner the remaining were consigned to a bounded warehouse and ex-bond bills of entry were filed long after the issuance of the impugned notification. The rates of duty under section 30 in respect of warehoused goods could only be the dates on which ex-bond bills of entry were filed and therefore, the question of retrospective operation did not arise in these cases as well.
14. For the foregoing; reasons, we are firmly of the view that the contentions raised are neither sustainable upon farts nor under the law. These are our reasons for the short order, dated 29-3-2004 dismissing all these petitions.
H.B.T./N-47/KPetition dismissed.