FAZAL ILLAHI & SONS through Registrar VS DEPUTY COLLECTOR, CUSTOMS, 2008 PTD-LAHORE-HIGH-COURT-LAHORE 1478 (2006)

Customs Act (IV of 1969)---

----Ss. 25 & 81---Customs Rules, 2001, R.109---Constitution of Pakistan (1973), Art.199---Constitutional petition---Determination of customs value of goods and provisional assessment duty---Goods imported by the petitioner/importer were released under a provisional assessment whereby in addition to payment of liability based on declared value of imported goods, Authorities under S.81 of the Customs Act, 1969 obtained post dated cheque and indemnity bond from the importer for the difference in liability on account of higher value of imported goods claimed by the Authorities---Submission of Authorities was that provisional assessment based upon the higher value claimed by Authorities stood finalized on the failure of the importer to establish his declared price---Validity---Provisions of S.25(4) of the Customs Act, 1969 cast a duty on the taxing officer to demand proof or documents from an importer in respect of which corroboration or clarification was required---Such duty was reinforced by the provisions of R.109 of the Customs Rules, 2001---No such demand was made by the Authorities to the importer---No material was confronted to the importer to substantiate the higher value claimed by the Authorities---Importer could not be penalized for default committed by Authority---In absence of material on record showing demand of Authorities for evidence from the importer and a consequential speaking order affirming the impugned version of price on the basis of evidentiary material in accordance with S.25 of the Customs Act, 1969, importer ought not to be saddled with an attributed value to sustain liability---If that were done, same would put a premium on imaginary claims, mechanical assessments and time wasting measures to exhaust the statutory period.

Messrs Farooq Woollen Mills v. Collector of Customs, Customs Dryport Sambrial and 2 others 2004 PTD 795; Messrs Trade International through Proprietor Habib ur Rehman v. Deputy Collector of Customs (Bank Guarantee Section) and 3 others 2005 PTD 1968; Collector of Customs (Appraisement), Karachi v. Messrs Auto Mobile Corporation of Pakistan, Karachi 2005 PTD 2116 and Messrs Dewan Farooque Motors Ltd. Karachi v. Customs, Excise and Sales Tax Appellate Tribunal, Karachi and 2 others 2006 PTD 1276 ref.

Mian Abdul Ghaffar for Petitioner.

Izhar-ul-Haque Sheikh for Respondent.

ORDER

UMAR ATA BANDIAL, J.---The petitioner's imported goods were released under a provisional assessment, dated 29-12-2004 whereby in, addition to payment of liability based on the declared value of the imported goods, the respondents under, section 81 of the Customs Act, 1969 ("Act") obtained post-dated cheque and indemnity bond for the difference in liability on account of higher value of the imported goods claimed by the respondents. Pursuant to the provisions of section 81(4) of the Act, the provisional assessment is deemed to become final after lapse of one year in absence of a recorded finding. That event has happened in the present case and the question raised is whether the petitioner's liability stands finalized at declared value or at the higher attributed value. On the strength of Messrs Farooq Woollen Mills v. Collector of Customs, Customs Dryport Sambrial and 2 others 2004 PTD 795, Messrs Trade International through Proprietor Habib ur Rehman v. Deputy Collector of Customs (Bank Guarantee Section) and 3 others (2005 PTD 1968), Collector of Customs (Appraisement), Karachi v. Messrs Auto Mobile Corporation of Pakistan, Karachi (2005 PTD 2116) and Messrs Dewan Farooque Motors Ltd. Karachi v. Customs, Excise and Sales Tax Appellate Tribunal, Karachi and 2 others 2006 PTD 1276 learned counsel for the petitioner submitted that under section 81(4) of the Act, the version of the price given by importer/petitioner stands accepted and finalized upon the failure of the respondent-Authorities to establish on record through a speaking order the higher price claimed by them at the time of provisional assessment.

2. On the other hand, the learned counsel for the respondent Department submits that the bare reading of subsections (1), (2), (3) and (4) of section 81 of the Act shows that the provisional assessment based upon the higher value claimed by the respondent-Authorities stands finalized on the failure of the petitioner to establish his declared price. He supports his submission with the reasoning that provisional assessment in the first place is made where the documents submitted by the importer are incomplete. The failure to complete such documents, therefore, visits the importer's default with the liability of the higher assessment.

3. The approach adopted by the learned counsel for the respondents is based on a logical analysis of the bare provisions of section 81 of the Act. The weakness in his argument lies in the assumption that the said statutory provisions relieve the respondent-Authorities from their obligation, to demonstrate the basis of their claimed higher assessment. In this regard it is pointed out that section 25(4) of the Act casts a duty on the taxing officer to demand proof or documents from an importer in respect of which corroboration or clarification is required. This duty is reinforced by provisions of Rule 109 of the Customs Rules, 2001. No such demand was raised by the respondents to the petitioner. Nor any material was confronted to the petitioner to substantiate the higher value claimed. Clearly the importer cannot be penalized for default committed by respondent-Authorities.

4. The weight of authority on the point is also clearly in favour of the petitioner. In the absence of material on record showing the respondent's demand for evidence from the importer and a consequential speaking order affirming the impugned version of price on the basis of evidentiary material in accordance with section 25 of the Act, an importer ought not to be saddled with an attributed value to sustain liability. If that were done, it would put a premium on imaginary claims, mechanical assessments and time wasting measures to exhaust the statutory period. Petition allowed.

H.B. T./F-13/LPetition allowed.