TOYO INTERNATIONAL MOTORCYCLE through Proprietor VS FEDERATION OF PAKISTAN through Secretary, (Revenue Division) Central Board of Revenue, Islamabad
2008 P T D 1494
[Lahore High Court]
Before Kh. Farooq Saeed, J
Messrs TOYO INTERNATIONAL MOTORCYCLE through Proprietor
Versus
FEDERATION OF PAKISTAN through Secretary, (Revenue Division) Central Board of Revenue, Islamabad and 3 others
Writ Petition Nos. 2415/07, 605/07, 544/07, 834/07, 1001/07, 1002/07, 1046/07, 1206/07, 1212/07, 1443/07, 1523/07, 1602/07, 2331/07, 2350/07, 2561/07, 2619/07, 2751/07, 3263/07, 3294/07, 3622/07, 3623/07, 3879/07, 4112/07, 4547/07, 5011/08, 9664/06, 9665/06, 9666/06, 4617/07, 5507/07, 7505/07, 7431/07, 1655/07, 7762/07, 7763/07, 5497/07, 8119/07, 8187/07, 4261/07, 7764/07, 9867/07, 1554/07, 1161/07, 11238/07, 11645/07, 11646/07, 11575/06, 12733/06, 13516/06, 4385/07, 11873/07, 11874/07, 11875/07, 11876/07, 12256/07, 12257/07, 12258/07, 12259/07, 12260/07, 12261/07, 12262/07, 12263/07, 12264/07, 12156/07, 12194/07, 12195/07, 12196/07, 12197/07, 12/08, 13/08, 14/08, 15/08, 16/08, 17/08, 500/08, 501/08, 502/08, 483/08, 1059/08, 1058/08, 758/08, 759/08, 11327/07, 10285/07, 11811/07, 7765/07, 1261/08, 818/08, 1774/08, 1775/08, 1776/08, 1777/08, 1778/08, 2381/08, 2382/08, 2383/08, 2675/07, 3477/08, 4660/08, 4189/08, 4894/08, 3191/08, 4745/08, 4701/08, 4702/08, 4703/08, 4700/08, 3792/08, 4370/08, 3695/08, 3103/08, 5346/08 and 5536/2007, decided on 23/05/2008.
(a) Customs Act (IV of 1969)---
----Ss. 25 & 25-A---Determination of customs value of imported goods---Procedure---Authority as provided in S.25-A of Customs Act, 1969, while determining value of a particular item would have to follow procedure provided in S.25 thereof in sequence mentioned therein---Salient features of S.25-A of Customs Act, 1969 stated.
(b) Interpretation of statutes---
----Fiscal statutes---Methods of interpretation stated.
The settled principles of interpretation of fiscal laws are that firstly, the law should be interpreted as it is and the intention of legislature should be gathered from the plain reading of the language of law.
The second method of interpretation of fiscal statute is that if the construction of the language is not clear and there is a possibility of two interpretations, in such situation the interpretation is made in favour of the subject and not in favour of the Revenue.
Messrs Volkervam (Pakistan) Ltd. v. Sindh Employees' Social Security Institution and another PLD 1985 Kar. 37 and Arif Hussain Shah v. Operative Director, Administration, Electric Equipment Manufacturing Co. Ltd. and another PLD 1979 Lah. 603 ref.
Mr. J. Rowlet in Cape Brandy Syndicate v. Inland Revenue Commissioner 1921 K.B. 69; Messrs Hirgina and Co. (Pak.) v. Commissioner of Sales Tax Central Karachi 1971 SCMR 128; The Commissioner of Agri Income Tax East Bengal v. BWM Abdul Rehman 1973 SCMR 447 and Collector of Customs (Karachi) v. Messrs Abdul Majeed Khan 1977 SCMR 371 rel.
(c) Customs Act (IV of 1969)---
---Ss. 25 & 25-A---Preparation of value advice of imported goods---Mandatory to follow procedure provided in S.25 of Customs Act, 1969 while preparing such advice--Principles.
(d) Customs Act (IV of 1969)---
----S. 25-A---Word' "any person" as used in S.25-A of Customs Act, 1969---Connotation---Prefix "any" before "person" had enlarged its scope---Such person could be an individual firm, company, local manufacturer, importer, non-importer or a third person aggrieved for any reasons---Principles.
(e) Qanun-e-Shahadat (10 of 1984)---
----Art. 129(g)---Evidence available with a party, withholding of---Effect---Presumption would be that such party had some motive behind such withholding and that had the same been brought on record it would have not favoured him.
Muhammad Sadiq v. Federation of Pakistan through Chairman, Pakistan Railways Board 1991 MLD 1 ref.
2002 PCR (Kar.) 1718 rel.
(f) Constitution of Pakistan (1973)---
----Art. 199---Constitutional petition---Alternate remedy, availability of---Effect---Such remedy would not debar High Court from invoking its constitutional jurisdiction.
General Manager Pak Arab Fertilizers Ltd. Khanewal Road Multan v. Muhammad Ayub 2005 SCMR 843; Mst. Kaniz Fatima through Legal Heirs v. Muhammad Aslam and 27 others 2001 SCMR 1493; Muhammad Sharif v. Additional District Judge and others 2007 SCMR 49; West Pakistan Tanks Terminal (Pvt.) Ltd. v. Collector (Appraisement) 2007 SCMR 1318; Muhammad Hanif through Attorney and others v. Karachi Building Control Authority through Chief Executive and another 2007 CLC 315; Muhammad Arshad and other v. Returning Officer and others 2006 YLR 388; Mst. Kaniz Fatima through Legal Heirs v. Muhammad Aslam and 27 others 2001 SCMR 1493; Amir Sardar v. The State and 3 others 2007 PCr.LJ 985 and Collector of Customs, Lahore and others v. Universal Gateway Trading Corporation and another 2005 PTD 123 ref.
Collector of Customs (Valuation) and another v. Karachi Bulk Storage and Terminal Ltd., 2007 PTD 1858; Gatron (Industries) Limited v. Government of Pakistan and others 1999 SCMR 1072 and Messrs Chenab Cement Product (Pvt.) Ltd. and others v. Banking Tribunal, Lahore and others PLD 1996 Lah. 672 rel.
(g) Customs Act (IV of 1969)---
---Ss. 25 & 25-A---Constitution of Pakistan (1973), Art.199---Constitutional petition---Valuation advice of imported goods---Such advice prepared on deductive value method and in total disregard of sequential order provided in S.25 of Customs Act, 1969---Validity---Sequential order provided in S.25 of the Act was a mandatory requirement---Advice issued disregarding sequential order had been prepared and issued in illegal exercise of jurisdiction---Constitutional petition was accepted in circumstances.
C.P.No.D-93 of 2007, Writ Petition No.476 of 2008 and Rehan Umar v. Collector of Customs, Karachi and 2 others 2006 PTD 909 rel.
(h) Customs Act (IV of 1969)---
----S.25---Provision of S.25 of Customs Act, 1969---General Agreement on Trade and Tariff signed by Pakistan in 2001---Purpose stated.
A. Karim Malik, Mian Abdul Ghaffar, Omer Arshad Hakeem Qureshi, Afzaal Ahmad Hashmi, Hafeez Saeed Akhtar, Javed Iqbal Bhatti, Ch. Liaqat Ali Sindhu, Zafar Iqbal Chohan, Qzair Karamat Bhandari, Mian Abid Ahmad, Malik Muhammad Jehangir and Saqib Gardner for Petitioners.
Nadeem-ud-Din Malik, Deputy Attorney General for Respondent.
Muhammad Nawaz Waseer, Federal Counsel.
Ahmer Bilal Sufi for respondent-Director Customs Valuation and PCA Customs House, Karachi.
Izharul Haque Sheikh, Muhammad Nawaz Cheema, Ch. Muhammad Zafar Iqbal, Zahoor Ali Nasir Tagha, Afzaal Ahmad Hashmi, Irteza Ali Naqvi, Ehsan Ullah Cheema, Khawar Ikram Bhatti, and Kausar Parveen for Customs Department.
Dates of hearing: 15th, 18th and 21st April, 2008.
JUDGMENT
KH. FAROOQ SAEED, J.---By this single judgment, I would like to dispose of Writ Petitions Nos. 2415/07, 605/07, 544/07, 834/07, 1001/07, 1002/07, 1046/07, 1206/07, 1212/07, 1443/07, 1523/07, 1602/07, 2331/07, 2350/07, 2561/07, 2619/07, 2751/07, 3263/07, 3294/07, 3622/07, 3623/07, 3879/07, 4112/07, 4547/07, 5011/08, 9664/06, 9665/06, 9666/06, 4617/07, 5507/07, 7505/07, 7431/07, 1655/07, 7762/07, 7763/07, 5497/07, 8119/07, 8187/07, 4261/07, 7764/07, 9867/07, 1554/07, 1161/07, 11238/07, 11645/07, 11646/07, 11575/06, 12733/06, 13516/06, 4385/07, 11873/07, 11874/07, 11875/07, 11876/07, 12256/07, 12257/07, 12258/07, 12259/07, 12260/07, 12261/07, 12262/07, 12263/07, 12264/07, 12156/07, 12194/07, 12195/07, 12196/07, 12197/07, 12/08, 13/08, 14/08, 15/08, 16/08, 17/08, 500/08, 501/08, 502/08, 483/08, 1059/08, 1058/08, 758/08, 759/08, 11327/07, 10285/07, 11811/07, 7765/07, 1261/08, 818/08, 1774/08, 1775/08, 1776/08, 1777/08, 1778/08, 2381/08, 2382/08, 2383/08, 2675/07, 3477/08, 4660/08, 4189/08, 4894/08, 3191/08, 4745/08, 4701/08, 4702/08, 4703/08, 4700/08, 3792/08, 4370/08, 3695/08, 3103/08, 5346/08 and 5536/2007 as common questions of law and fact are involved in these petitions.
2. In the writ petitions mentioned above, majority of the cases are filed by Mian Abdul Ghaffar, Advocate. He was asked to bifurcate the issues and then advance his arguments accordingly. He has distributed the writ petitions filed by him in three categories:---
(i) on the basis of writ petitions filed on the orders finalized following the valuation advice issued under section 25(14) of the Customs Act, 1969;
(ii) writ petitions challenging the orders issued on the basis of the valuation advices issued by Directorate of Customs Valuation Department during the period for which there was no provision available in law for said assessed valuation advice; and
(iii) writ petitions against the rulings issued under section 25A, which remained on the statute book during the period from 1-7-2006 to 30-6-2007.
3. The petitioners' counsel says that the requirement of issuance of the valuation advice under section 25(14) was that it shall be .after adopting the sequential order; secondly; it shall be through a formal notification in the officials gazette. Referring valuation advice under discussion, he said that it is only a letter by an authority who was not competent to issue the same besides it never was given the shape of legal document so as to call it notification. He commenced that only five writ petitions filed by him are covered by the said valuation advice, which are:
(1) Writ Petition No.5011 of 2006; (2) Writ Petition No. 9665 of2006; (3) Writ Petition No. 1602 of 2007; (4) Writ Petition No. 2331 of 2007 and (5) Writ Petition No.2561 of 2007.
4. Coming to the second category, which is with regard to the legal status of the valuation advice issued in the absence of any law for the same, he said that there was already a sequential order in terms of section 25. In presence whereof any other method is its contravention, hence the same cannot stand the test of judicial review. The writ petition filed by him, which are covered by this period, are:--
(1) Writ Petition No.13516 of.2006 and
(2) Writ Petition No.502 of 2008.
5. The other writ petitions are for the period for which there was specific provision in law in terms of section 25A. During this period, there was definitely an authority provided by law for issuance of valuation advice but the same was subject to observance of certain legal formalities and after exhausting the procedure prescribed under section 25 through its various subsections. He, therefore, says that all the writ petitions filed by him basically stand covered under the arguments that whatever be the language of law for all the three categories the common factor remains adoption of sequential order provided under section 25. The assessment of the imported goods can only be made after adopting various methods prescribed in sequence in sections 25(1), (2), (3), (4), (5) and (6) etc. respectively. He says that there is a long line of judgments announced by this Court as well as the august Supreme Court and for all practical purposes, the issue has attained finality. However, the departmental officers are adamant in adopting their own procedures and methods. They are ignoring that now this country is a member of General Agreement on Trade and Tariff (GATT) and have signed a protocol, as a result of which we are bound to observe that .rules prescribed therein since 2001. For all practical purposes language of law prescribed under section 25 is the result of the said agreement. The law, therefore, has been made but the mindset of the implementers i.e. the Custom Staff has not changed and groomed, so as to make it applicable in its letter and spirit.
6. Mr. A. Karim Malik, Advocate, adopted the arguments of his fellow colleague and added that besides total ignorance of the provision of section 25A, the department had also deviated from the basic principle: of law. They have never confronted the petitioner or invited him to be a party for determination of the joint valuation advice besides the petitioner never asked them for formation of such advice. He also remarks that the so-called valuation advice is without any supporting material or document. Further, notwithstanding the fact that the same was in total ignorance of the basic requirements as are provided in the sequential order under law, even otherwise it does not have any sound footing so as to determine the value of the items, which were imported by his petitioner in Writ Petition No.1157 of 2006. He challenged the issuance of the valuation advice from another angle. After repeating the language of section 25A again he brought the attention of the Court to the language of law in particular. He said that such valuation advice could only be issued by Collector of Customs at his own or by Director of Valuation on the request of a person. The advice is not issued by the Collector of Customs, hence this part of the provision has not been applied in this case. It is by Director or by other authorities, which have not been mentioned in the said provision i.e. 25A. Interpreting the said provision under the normal principle of interpreting of a fiscal law of not going beyond the language, wherever the advice is issued by the Director of Valuation it was to be initiated and subsequently issued on request of a `person'. The authorities of the Customs' Department are not covered within the definition thereof. Since, this petitioner or for that matter `any other person' had not applied for the valuation, there was no question of its application on the petitioner under discussion. He, therefore, repeated the prayer of his fellow colleague that this case is liable to be remanded for adopting the sequential order and proper valuation in consequent thereof.
7. The other counsel also adopted the arguments of their fellow colleagues.
8. The Legal Advisors from the department raised a preliminary objection that insertion of section 25D in the Customs Act has abated all the writ petitions. This objection was challenged through the arguments that Article 199 of the Constitution of Islamic Republic of Pakistan, 1973, is independent and its application cannot be abated by any enactment formed on the basis of powers derived from the said Constitution. The learned counsel further repelled the objection by saying that the Constitutional petition under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973, can be abated only through making amendment in the Constitution only. In fact this Court had already disallowed similar arguments in another writ petition besides the Hon'ble Supreme Court of Pakistan has held in 2005 SCMR 843 in the case of General Manager Pak Arab Fertilizers Ltd. Khanewal Road Multan v. Muhammad Ayub that the jurisdiction of the High Court under Article 199 of the Constitution, 1973, is superior in its form than all other laws and enactments. It cannot be abated through any amendment in any law or within the Constitution.
9. From the respondents' side, all the learned counsel mostly challenged the maintainability of the writ petitions. Mr. Izhar-ul-Haque Sheikh, Advocate, has argued that the valuation advices were issued after due deliberations with the concerned trade association. The stakeholders and the importers of the said items were invited, though not all of them contributed in the deliberations. However, since a lot of officers were involved and the decision arrived at were after discussing it with most of the concerned persons and from respective trade organizations for all practical purposes, it is compliance of the legal requirements and proper following of the procedure provided in sequence in section 25 as well as section 25A, respectively. On a question that under what authority in certain cases the people other than the Director of Valuation had been issuing the valuation advices, the reply is that since each one of them is an authority under the Customs Act, they had full power to issue the same. Moreover, they were allowed by the higher-ups to do what they did. It was also reiterated that the tendency of immediately filing writ petitions after importing goods should be disapproved and the petitioners should be directed to go and avail the departmental remedies. Before coming to the discussion of the three separate parts as have been done by Mian Abdul Ghaffar, Advocate, main counsel in these writ petitions, it will be appropriate if the history of the relevant provision is located. Section 25 in its present form was inserted by Ordinance, 2001. Except for amendments in various subsections and subsequent insertion and repeal of section 25A, the main language remains more or less the same. Earlier, provision i.e. section 25(14), as the then was, reads as follows:-
"25 (14) Notwithstanding anything contained in subsections (1), (5), (6), (7), (8) and (9), if the Board or such officer as is authorised by the (sic) on this behalf is satisfied that it is necessary or expedient so to do the Board or the officer may, by notification in the official Gazette, for the purposes of levying customs duties under this Act or any other law for the time being in force, fix the minimum customs value of goods specified in the First Schedule and the Second Schedule, having regard to the trend of value of such or like goods and subject to such conditions or limitations as the Board or such officer may deem fit. The Board or such authorised officer may fix different customs values for difference classes or difference description of the same type of goods. A notification issued under this subsection shall be effective from the day specified therein, notwithstanding that the official Gazette in which such notification appears is published at any time after that day."
10. It was on the basis of this petition that the department used to come out with such type of valuation advices. Subsequently it was considered as insufficient and section 25A was added with a clear and specific language, which reads as follows:--
"[25A. Power to determine the customs value.---(1) Notwithstanding the provisions contained in section 25, the Collector of Customs on his own motion, or the Director of Customs Valuation on a reference made to him by any person, may determine the customs value of any goods or category of goods imported into or exported out of Pakistan after following the scheme and sequential order as laid down under section 25.
(2) The customs value determined under subsection (1) shall be the applicable customs value for assessment of the relevant imported or exported goods.
(3) In case of any conflict in the customs value determined under subsection (1), the Director-General of Customs. Valuation shall determine the applicable customs value.]
11. As is evident from the above, the language provides for an authority to determine the value of a particular item but the same is not independent of the various provisions of section 25.
12. A plain reading of above provisions convey that common factor in them is determination of value on the basis of the procedure provided in section 25 in the sequence mentioned therein. Each one of them serves the same purpose if looked from angle of language of law and the principle of interpretation of a fiscal statute. The settled principle of interpretation of fiscal laws are that firstly the law should be interpreted as it is and the intention of legislature should be gathered from the plain reading of the language of law. Mr. J. Rowlet in "Cape Brandy Syndicate v. Inland Revenue Commissioner" (1921 K.B. 69) ruled:
"It simply means that in a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used".
The second method of interpretation of fiscal statute is that if the construction of the language is not clear and there is a possibility of two interpretations, in such situation the interpretation is made in favour of the subject and not in favour of the Revenue. Reliance can be placed on 1971 SCMR 128 re: Messrs Hirgina and Co. (Pak.) v. Commissioner of Sales Tax Central Karachi: 1973 SCMR 447, re: the Commissioner of Agri Income Tax East Bengal v. BWM Abdul Rehman and 1977 SCMR 371 re: Collector of Customs (Karachi) v. Messrs Abdul Majeed Khan.
13. Keeping above methods of interpretation in view one can partly agrees with Mr. Izhar-ul-Haque Sheikh, Advocate, the Legal Advisor from the Department, that section 25A is a Non Obstante Clause and it supersedes the procedure provided in section 25 so far as the formation of an advice is concerned. This Court also does not have any hesitation in agreeing with the learned Legal Advisor that it is for the preparation of the said valuation advice that the provisions of section 25 have been made mandatory. However, the other argument that the same have duly been observed is not supported from the language of said advice. For example, this Court has gone through the valuation advice given and used for the purpose of the Writ Petition No.2415 of 2007, titled Messrs Toyo International Motorcycle v. Federation of Pakistan through Secretary, (Revenue Division) and others. This advice is in the shape of direction and it indicates that before arriving at the conclusion, the sequential order has been adopted, it has been so claimed by the learned Legal Advisor. He says that the presumption attached to its adoption by the authority is in favour of the Revenue. The authority is a senior Government functionary appointed for the purpose and he has circulated this advice after receiving application from a `person'. He rebutted the arguments of the petitioners' side that a `persons' can only be the importer of the said item. The advice can be issued on the request of any `person', which can be individual Firm, Company etc. or any other local manufacturer, who invokes the jurisdiction of the Director concerned. There is, therefore, no reason to say that it was not on the basis of a request from a person and by an authority prescribed by law. Here again one may not have any objection in agreeing with him that such advice can be issued even on-the request of any person, who is not an importer and can be a third person who otherwise is directly or indirectly aggrieved for any reason. The agreement of this Court, however, is not of any help to the revenue as the main ingredient of adoption of the sequential order provided in section 25 is missing in the said advice. The judgments referred by the learned Legal Advisor in terms of PLD 1985 Karachi. 37 in the case of Messrs Volkervam (Pakistan) Ltd. v. Sindh Employees' Social Security Institution and another and PLD 1979 Lahore 603 in the case of Arif Hussain Shah v. Operative Director, Administration, Electric Equipment Manufacturing Co. Ltd. and another does not cover the situation as the law itself has created a very clear and unambiguous impression, which has been further explained in a long line of judgments by this Court as well as the superior Courts, which shall be discussed later.
14. As regards reference to Article 150 of the Constitution, 1973, is concerned, there is no denial to the fact that the full faith and credit should be given throughout Pakistan to public acts and records, and judicial proceedings of every Province and it is in the same spirit that we are bringing into scrutiny and to the test of law, the advices as such. For further discussion and scrutiny, the letter (annexure A1) in the writ petition (supra) is reproduced as under:--
"GOVERNMENT OF PAKISTAN
DIRECTORATE GENERAL OF CUSTOMS VALUATION & PCA
CUSTOMS'HOUSE, KARACHI
No. Misc/31/2005-VIA/5182Karachi, the 2-9-2006
The Collector of Customs,
Appraisement/Preventive/Port Muhammad Bin Qasim,
Model Customs Collector,
Karachi
The Collector of Customs,
Dryport, Lahore/Hyderabad/Sambrial Siakot/
Faisalabad/Multan/Guj ranwala/Quetta/ Peshawar
Subject: Under-invoicing and Under-assessment of Motorcycle Parts
Kindly refer to the subject cited above.
2. A complaint has been received from Messrs Honda Atlas that motorcycle parts of Chinese origin are being under-invoiced.
3. After detailed investigation, this Directorate General has determined the Customs Values of 70CC motorcycle auto parts of Chinese origin under section 25A of the Customs Act, 1969, as per the table given below;
| S.No. | H.S. Code | Description of Goods | Customs Value C & F |
| (1) | (2) | (3) | (4) |
| 01. | 8532.3010 | Capacitor Discharge Ignition 70 CC | US$ 0.80/PC |
| 02. | 8407.3210 | Engine 70 CC | US$ 97.50/PC |
| 03. | 8483.4012 | Gear Drum 70 CC (Set of 7 PCs) | US$ 4.35/Set |
| 04. | 8714.1910 | Hub Front & Hub Rear 70 CC | US$ 4.35/Set |
| 05. | 8511.3000 | Ignition Coil | US$ 0.75/PC |
| 06. | 8301.2010 | Lock Set 70 CC (Set of 3 Pcs) | US$ 2.60/Set |
| 07. | 8504.4090 | Rectifier Regulator Assembly 70 CC | US$ 0.90/PC |
4. It is requested that the above mentioned values may be implemented at the time of assessment of these goods.
(Sd.)
O/C (Muhammad Nasir Azhar)
Director
Copy to:
1. The Director-General (Customs Valuation & PCA), Customs House, Karachi.
2. The Director (Customs Valuation & PCA), Custom House, Lahore.
3. The Deputy Director (Customs Valuation and PCA), Islamabad."
15. A plain reading, of the letter conveys that it is on the basis of a complaint. Whether through the said complaint a request for preparing a valuation advice was also made is not clear. Further, regarding the efforts for determining the value, the comment is "After detailed investigation", nobody knows about he nature thereof. The presumption of existence of certain facts under Article 129 of the Qanun-e-Shahadat Order, as is claimed by learned Legal Advisor also would not apply in a case like this. Such presumption made to the evidence is contrary and can be rebutted. Reference is made to 1991 MLD 1 in the case of "Muhammad Sadiq v. Federation of Pakistan through Chairman, Pakistan Railways Board". In fact, it is settled principle of law that if a piece of evidence available with a party is withheld, then it is presumed that the said party has some motive behind withholding the said piece of evidence. In such a situation, presumption can fairly be drawn that had the said piece of evidence been brought on record, it would have been unfavoured to the said party, which has been reported in 2004 PCR (Karachi) 1718 (a). This argument in fact, therefore, rather goes to favour the respondents. Non-reference to the adoption of the procedure provided in section 25 in the above mentioned advice in fact would lead to the presumption that if the sequential order was adopted and is not mentioned in the letter, it was against' the Revenue and the draftsman of the aforementioned advice.
16. Mr. Ahmer Bilal Sufi, Advocate, says that as per Article 7 of the General Agreement of Trade and Tariff (GATT), the method provided is a guidance and Pakistan even after becoming a signatory is not bound to follow the same. He brought the attention of this Court to annexure-1 of the General Agreement of Trade and Tariff (GATT) that deals with the interpretative notes. Referring para. No.1 of the same, he said that Articles 1 to 7 defines how the custom value of imported goods is to be determined under the provisions of this Item. The methods of valuation are set out in a sequential order of application. The primary method of custom valuation is defined in Article 1 and imported goods are to be valued in accordance with the provision of this Article, whenever the conditions prescribed therein are fulfilled. He says that all these directions are of a guiding nature and does not hold that the sequential order should be adopted as a mandatory procedure. Not only that the same can be ignored but the department can resort to the provisions of section 25A avoiding the same.
17. This Court does not find itself in agreement with the learned counsel on this interpretation. Not only the languages of General Agreement of Trade and Tariff (GATT) in its subsequent paras dislodge his claim, but even otherwise this Court is dealing with a specific law of this land. The answer to the arguments is available in the law itself in terms of section 25(10), which, before the amendment in July, 2007, by Finance Act, 2007, reads as follows:--
"25(1) 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." (Emphasis added)
18. Mr. Ehsan Ullah Cheema, Advocate, challenged the petition from another angle and said that the petitioners in fact have not informed as to how they have been sending the foreign exchange to the seller from whom they have made imports. The petitioners had, therefore, not come with clean hands, hence they were not entitled to any relief by challenging the non-adoption of the proper procedure. The objection raised by the learned counsel in fact does not arise from the orders, hence ignored.
19. The other Legal Advisor of the Department, Mr. Muhammad Nawaz Cheema, Advocate, arguing in favour of the department's point of view, says that section 25A provides ample powers to the department for issuing valuation advice. He commented that the responsibility of the importer is to provide correct and complete details in. GD. Further it should declare and disclose the accurate details relating to value as well as description of the imported goods.
19. Since, in all the cases, in which he was counsel, the petitioners had violated the provisions to section 79(1)(a) of the Customs Act and rule 108(a) of the Customs Rules, 2001, the declaration was incorrect and consequently GD was also liable to rejection. He gave example of some of them. In Writ Petition No.1046 of 2007 for assessment of GD 1192 of 2006, dated 27-12-2006, in Column No.35 instead of declaring the complete and correct particulars, the word "electronic goods" is mentioned. In Writ Petition No.4994 of 2007, in GD Nos. 1248 and 1462, dated 11-1-2007 and 24-3-2007 respectively, the import of PC kits, complete for colour TV, was given the nomenclature of electronic goods'. Unit value in the first writ petition was US $ 18 while in the GD 1248, the same was mentioned as US $5. In Writ Petition No. 1523 of 2007, for GD 4196 of 2007, dated 30-1-2007, in Column No.35, the word `CKD' components for Ghani Brand Motorcycle 70CC in the 2002 set in Kit Form has been disclosed. It was said that in the above set of the writ petitions, the purpose was, therefore, obviously to conceal and deprive the Government of its well-deserved revenue. This in his opinion amounts to coming with unclean hands before this Court. Further referring Writ Petition No.1655 of 2007, he said that for a complete motorcycle the value as per GD No.5079, dated 11-2-2007 comes to Rs.4449. In his opinion the same is ridiculous. The rate of sale being at Rs.37856 required consideration for application of custom duty by the Custom Department. He said that it was under these circumstances that the customs authorities earlier failed to devise a foolproof method for determination of value, hence section 25A was inserted. Referring various valuation advices, he claimed that the same were prepared after due deliberation with the Chamber of Commerce and Industry, the concerned business community i.e. importers of some items and other relevant customs staff. He said that the valuation advices have been issued on the complaints from the local manufacturers because of under invoicing by such people. Regarding the maintainability, he said that in 2001 SCMR 1493 re: Mst. Kaniz Fatima through Legal Heirs v. Muhammad Aslam and 27 others, it has been held that the relief in Constitutional jurisdiction being discretionary should not be granted in aid of retention of ill-gotton gains. He said that since in all the cases, action of non-discloser of the true facts amounts to coming with unclean hands, the writ petitions are not maintainable. Reliance is placed on 2007 SCMR 49, re: Muhammad Sharif v. Additional District Judge and others 2007 SCMR 1318, re: West Pakistan Tanks Terminal (Pvt.) Ltd. v. Collector (Appraisement) 2007 CLC 315, re: Muhammad Hanif through Attorney and others v. Karachi Building Control Authority through Chief Executive and another and 2006 YLR 388, Muhammad Arshad and other v. Returning Officer and others. He further relied upon 2001 SCMR 1493, re: Mst. Kaniz Fatima through Legal Heirs v. Muhammad Aslam and 27 others, 2007 PCr.LJ 985 Amir Sardar v. The State and 3 others v. and 2005 PTD 123 re: Collector of Customs, Lahore and others v. Universal Gateway Trading Corporation and another. He said that the impugned orders, through which the value of the petitioner's goods have been assessed, have a remedy of the first appeal under section 193, besides it is assailable before Director General (Valuation) under section 25A(3) of the Customs Act. His last argument was that section 25D, which is inserted by Finance Act, 2007, have abated the writ petition.
21. Since writ petitions, in such and similar situations, have earlier been entertained by this Court, there is no reason for us to agree with the respondents that the writ petitions should not have been entertained. There is a consensus in the High Courts as well as the Hon'ble Supreme Court that the availability of alternative remedy alone does not debar the High Court from invocation of its writ jurisdiction. There is a long line of judgments on the subject, however, one can refer following for ready reference:--
(1) 2007 PTD 1858 re: Collector of Customs (Valuation) and another v. Karachi Bulk Storage and terminal Ltd., (2) 1999 SCMR 1072 re: Gatron (Industries) Limited v. Government of Pakistan and others and (3) PLD 1996 Lahore 672 re: Messrs Chenab Cement Product (Pvt.) Ltd. and others v. Banking Tribunal, Lahore and others.
22. Among the three categories described by learned counsel, Mian Abdul Ghaffar, Advocate, so far as the valuation advices issued before insertion of section 25A is concerned, there is in fact consensus that such power not being available, the same were without any sanctity. Similarly is the situation in respect of the advices issued after repeal of the section 25A. All these advices having been issued without any sanctity and strength, therefore, have no legal basis. The orders passed on the basis of the same are also illegal and void.
23. It is true that the situation in respect of declaration on the part of many of the importers is not happy. However, for the reason of some wrong doers the policy of law or the principles for determination of the value prescribed under the law cannot be compromised. It is true that the law as are framed to recover the revenue and thus the prime interest is that of the revenue. However, the rules of interpretations, which have now approval of the Courts with special reference to the fiscal statutes being known, there is no question of penalizing those who may be few in number but are doing business as per law and rules. Even otherwise, the recent developments inter alia signing of the General Agreement of Trade and Tariff (GATT) have come out with a hope and good wishes for a bright future and collection of revenue in an amicable and harmonious atmosphere. It is under the same spirit that the Federal Board of Revenue has prepared its policy, which is claimed to be based on mutual respect and harmony among the taxpayers and tax collectors.
24. So far as the valuation advices issued without any sanctity is concerned, section 25(14), (repealed), to some extent, provided power to the department for preparation of the same. However, section 25A came out with a very clear and unequivocal authority for the officer mentioned therein on the basis of the procedure specified. In principle this Court has agreed with learned Legal Advisor Mr. Izhar -ul-Haque Sheikh, Advocate, that section 25A is a non obtante clause and it is in supersession to section 25, therefore, all the arguments with regard to adoption of the said procedure as a normal and mandatory requirement stands abated. However, the matter does not end there. There is a very clear direction for the Collector of Customs and Director of Customs Valuation, which is discussed hereinafter.
25. The provisions of section 25A(1) reproduced earlier can be classified in the following manner:--
(i) that it is a non obstante clause, hence it supersedes section 25,
(ii) that the Collector of Customs can prepare such advice at his own motion,
(iii) that the Director of Customs Valuation can prepare the same on request of a person,
(iv) that while preparing such advices, the sequential order provided under section 25 shall be followed.
26. Keeping these parameters in view as already mentioned, in Writ Petition No.2415 of 2007, para. 2 of the said valuation advice, dated 2-9-2006 speaks of a complaint received from Messrs Honda Atlas that motorcycle parts of Chinese original are being under-invoiced. It is generally claimed that the person, as mentioned in section 25A, means only the concerned importer but, however, the same has not convinced this Court. The same undoubtedly includes even a third person as the prefix `any' before `person' has enlarged its scope. It can even be a person, who is otherwise aggrieved for the reason of inaction of the department in such cases. The third para of the said advice speaks of the detailed investigation by the Directorate General but does not speak of what kind of detailed investigation was made therein. This is a very vague way and to this extent, this Court will have no doubt that is in total disregard and disrespect to the sequential order provided in section 25. Similarly, with special reference to writ petitions argued by Mr. Muhammad Nawaz Cheema, Advocate, few more valuation advices are reproduced:--
In W.P. No.1046 of 2007
"GOVERNMENT OF PAKISTAN
DIRECTORATE GENERAL OF CUSTOMS VALUATION & PCA
CUSTOMS HOUSE, KARACHI
No. Misc/04/2006-VIA/193-5Dated 16-1-2007
The Collector of Customs,
Appraisement/MCC/Port Muhammad Bin Qasim,
Preventive Karachi.
The Collector of Customs,
Dry Port, Lahore/Rawalpindi/Gujranwala/Faisalabad/Multan
Sambrial-Silakot/Hyderabad/ Quetta/Peshawar.
Subject: DETERMINATION OF VALUES OF HOUSEHOLD APPLIANCES UNDER SECTION 25A OF THE CUSTOMS ACT, 1969
Kindly refer to the subject cited above.
2. On receiving a complaint regarding import values of household appliances imported from China a sector study was initiated to ascertain the factual position. Import data was obtained from Messrs PRAL and it was observed that the declared and assessed values were not only abnormally on lower side but the identical/similarly goods were declared and assessed with an unusual margin of value difference. This showed that the available data is not reliable, as in most cases the values were enhanced by the clearance Collectorates at the time of assessment and were not accepted under section 25(1) of the Customs Act, 1969 (transaction value method) without assigning any plausible reason. Therefore, the same could not be made basis for determinating the values of these goods.
3. Local market inquiries for applying the deductive value method were conducted and the values were calculated after necessary adjustments and deductions. It was endeavored to get prices prevailing in the international market, wherever it was possible.
4. After completion of the exercise, meetings with all the stakeholders, including the representatives of the importers, clearing agents and local manufacturers and Chamber of Commerce and Industry, were conducted and they all were brought on board with the working of the Directorate-General with a view to obtain their feedback. Their response was very positive and they emphasized on the uniform application of value in all parts so the country in order to ensure a level playing field for all the importers. They were assured that this is an on going process and with the help of all the stakeholders the exercise will be made more comprehensive.
5. As a first step and after following the scheme of section 25 of the Customs Act, 1969, values of 161 items are hereby determined under section 25A of the Customs Act, 1969 (list of items attached, each page bears the original signature of the undersigned). The Collectors are requested to ensure the application of these values at the time of assessment of the subject goods in their respective jurisdictions. As it is not practically possible to provide the values for each and every brand and model, it is further requested that, in case the brand or model is different from the one mentioned in the list, the features/specifications of the same may be examined and the values given in the list may be considered as indicative values for such cases. In case the Collectorate is not able to decide the matter at its end the same may be forwarded to this Directorate General for necessary inquiry and advice.
(Sd.)
(Muhammad Nisar Azhar)
Director
Copy to:
1. The Director-General (Customs Valuation & PCA), Custom House, Karachi.
2. The Director (Customs Valuation & PCA), Custom House, Lahore.
3. The Deputy Director (Customs Valuation and PCA), Islamabad."
In Writ Petition No.1523 of 2007
"GOVERNMENT OF PAKISTAN
DIRECTORATE GENERAL OF CUSTOMS VALUATION & PCA CUSTOMS HOUSE, KARACHI
No. Misc/31/2005-VIA/636427th September, 2006
The Collector of Customs,
Appraisement/Preventive/Port Muhammad Bin Qasim,
Model Customs, Collectors, Karachi.
The Collector of Customs,
Dryport, Lahore/Hyderabad/Quetta/Gujranwala/ Sialkot-
Sambrial/Multan/Faisalabad/Rawalpindi/ Peshawar.
Subject: UNDER-INVOICING AND UNDER-ASSESSMENT OF MOTORCYCLE PARTS
Kindly refer to the subject cited above.
2. A complaint has been received from Messrs Atlas Honda that motorcycle parts of Chinese origin are being under-invoiced.
3. After detailed investigation, this Directorate General has determined the Customs Values of 70 CC motorcycle auto parts of Chinese origin under section 25A of the Customs Act, 1969 as per the table given below;
| S.No. | Description of goods | Origin | P.C.T. Heading | Customs Value C&F |
| (1) | (2) | (3) | (4) | (5) |
4. It is requested that above mentioned values may be implemented at the time of assessment of these goods.
(Sd.)
(Muhammad Nisar Azhar)
Director
Copy to:
1. The Director-General (Customs Valuation & PCA), Custom House, Karachi.
2. The Director (Customs Valuation & PCA), Custom House, Lahore.
3. The Deputy Director (Customs Valuation and PCA), Islamabad."
In Writ Petition No.1655 of 2007
"GOVERNMENT OF PAKISTAN
DIRECTORATE GENERAL OF CUSTOMS VALUATION & PCA
CUSTOMS HOUSE, KARACHI
No. Misc/31/2005-VIA/636427th September, 2006
The Collector of Customs,
Appraisement/Preventive/Port Muhammad Bin Qasim,
Model Customs, Collectors, Karachi.
The Collector of Customs,
Dryport, Lahore/Hyderabad/Quetta/Gujranwala/ Sialkot-
Sambrial/Multan/Faisalabad/Rawalpindi/ Peshawar.
Subject: UNDER-INVOICING AND UNDER-ASSESSMENT OF MOTORCYCLE PARTS
Kindly refer to the subject cited above.
2. A complaint has been received from Messrs Atlas Honda that motorcycle parts of Chinese origin are being under-invoiced.
3. After detailed investigation, this Directorate General has determined the Customs Values of 70 CC motorcycle auto parts of Chinese origin under section .25A of the Customs Act, 1969 as per the table given below;--
| S.No. | Description of goods | Origin | P.C.T. Heading | Customs Value C&F |
| (1) | (2) | (3) | (4) | (5) |
4. It is requested that above mentioned values may be implemented at the time of assessment of these goods.
(Sd.)
(Muhammad Nisar Azhar)
Director
Copy to:
1. The Director-General (Customs Valuation & PCA), Custom House, Karachi.
2. The Director (Customs Valuation & PCA), Custom House, Lahore.
3. The Deputy Director (Customs Valuation and PCA), Islamabad."
Except for advice, dated 16-1-2007, there is total ignorance of the sequential order. Regarding advice, dated 16-1-2007 its first para speaks of non-reliability of available data as the same was based upon assessments by the appraisement department. The second para speaks of direct jump to deductive value method, which means application of section 25(7) and total ignorance of transaction value method provided from sections 25(1) to 25(6). All these advices are in total ignorance and in deviation of the sequential order provided in section 25, which is' contradiction of the provision of section 25A(1).
27. This is where the reference to the judgment announced by High Court to Sindh as well as this Court shall be of help. The relevant paras are as under:--
C.P. No.D-93 of 2007 decided on 14-3-2008
(High Court of Sindh at Karachi)
" .After hearing the learned counsel, we observe that through the comments filed in the petition by the respondent that they have made up their mind to avail the departmental ruling given in the document, dated 27-12-2006, therefore, no useful purpose will be served if the case are finally examined under section 8.1 as the petitioners' request, as has been made here, will not be entertained by the Customs Authority. We have also observed that the language of section 25 of the Customs Act is mandatory and it requires the department to follow step by step for the purpose of determining the value of the imported goods 'and if there is no result coming out then they may avail the remedy under section 25-A. (Emphasis added) As per language of the above section the determination of the import value should be on the basis of transaction value, provided that condition provided in subsection 1(a) then other subsections of section 25 of the Act to be followed. Here in the case, the customs authorities have given the ruling without any reasoning nor it has been mentioned as to how they have ready that conclusion or do they have evidence of other imports on more value nor the affected persons have been given any opportunity to be heard."
Writ Petition No.476 of 2008, decided on 21-2-2008
(Lahore High Court, Lahore).
"(7) The admitted fact in this case is that the letter which has been made the base of the assessment is by an unauthorized person. Since entire subsequent proceedings have been contained (correct word is `continued') on the basis of said letter, ignoring the sequential order provided under section 25, the jurisdiction was not properly acquired. Besides, petitioner was not confronted properly before determination of the value. This is practically deviation from the basic and most important principle of natural justice `audi alterm partum' which means no one shall be condemned unheard. The Court may agree with the legal advisor that where there is no possibility of determination of facts on hard and fast rules, some estimate can be made but cannot agree that the said estimates can be just hypothetical and in contradiction to the sequential order under section 25. Since a proper procedure has been provided in the law, bald estimates cannot be approved. This Court also cannot agree that since the remedies in terms of appeal are provided in law, the importers should be left to the mercy of the Customs authorities. A balance, however, is to be maintained so as to help in getting the taxes as it is the State which has the prime right, but, however, it cannot be ignored that in fiscal laws the doubt is to be interpreted in favour of the taxpayer. In any case, since the judgments referred by the learned counsel for the petitioner are applicable on all fours, on the facts and circumstances of the case, no exception is required. The value adopted by the respondent is held to be as against legal norms and lawful jurisdiction on the strength of (2006 PTD 909) reported as "Rehan Umar v. Collector of Customs, Karachi and 2 others". The order, dated 27-9-2007 is, therefore, set aside with further instructions to the authorities to adopt the value of the consignment on the basis of sequential order under section 25."
28. The other judgment is in Writ Petition No. 15636 of 2005, titled Messrs Arif Garments v. Collector of Customs etc. It is not in respect of section 25A but, however, since we have already agreed that even for the preparation of valuation advice, section 25 is to be applied. One can agree that the sequential order therein also provides a mandatory procedure for preparation of valuation advice. The relevant extracts from the above writ petition being direct are also reproduced as follow:--
" .Learned counsel for the respondents defends the impugned assessment on the provision of section 25(7) of the Act. This provision allows valuation of imported goods on the basis of the value obtaining for identical or similar imported goods that are sold in greatest aggregate quantity at the time of importation of the goods being valued. There is no material having nexus to section 25(7) of the Act available on the record in order to justify the impugned assessment. Be that as it may direct report to section 25(7) of the Act by the respondents for purpose of valuation is also contrary to the provisions of section. 25(10) of the Act because the assessment procedure is linked directly to the establishment of transactional value under a step-wise procedure that contemplates the application of t" prescribed steps in a sequential manner. The impugned action does not show grounds to exhaust or exclude the prior stages of valuation and is, therefore, violative of the aforesaid section 25(10) of the Act."
29. The valuation advice, dated 16-1-2007 also being directly on the basis of `deductive value' method is hit by this judgment while the others being in total disregard to section 25 are also without any lawful authority.
30. The outcome of the above discussion, therefore, is obvious. The advices issued by the Directorate-General of Customs Valuation are in total ignorance of the directions provided in section 25A. None of the same complied with requirements, mentioned therein, in stricto senso. The provision of law though remained on statute book only for one year could have brought some fruits, if the people behind the affairs had adopted proper procedure provided in the said section. Directorate of Customs Valuation is not supposed to prepare the advice at his own and its jurisdiction starts after receipt of an application from a person to determine the value of a particular produce. Advices have been initiated not on request but on complaint. In some cases, names of the complainant have been mentioned while in some cases, the same is not mentioned. There appears to be some effort on the part of the respondent-department and one can appreciate but, however, since that effort is in total disregard of the sequential order provided in section 25, which is a mandatory requirement, obviously is illegal. The law has directed for adopting various methods for determination of a product, one by one, which is not only to be adopted for clearance of consignment after charge of custom duty but also is equally necessary requirement for arriving at the value of the said goods for the purpose of a valuation advice as such. In this regard, all the judgments referred by the Legal Advisors of the department are ignored. This Court, in a long line of judgments, has entertained writ petitions, some of which have been referred in the earlier part. Thus, while agreeing with the petitioners that the writ petitions in the circumstances like in the present case have correctly been entertained, it is held that the valuation advices were prepared and issued in illegal exercise of jurisdiction. The purpose of section 25, which is follow up of the General Agreement of Trade and Tariff (GATT) is to bring a new system based upon harmony, trust and mutual respect. The new system intends to train the importer and to bring them to a stage where they themselves feel obliged to declare the true particulars of their import. The policy adapted in respect of other similar laws 'by the Federal Board of Revenue can also be used as supporting arguments. Since, 2001 and onwards the Federal Board of Revenue has not disturbed the income tax returns filed by taxpayers and have accepted, declared income of all the taxpayers as a policy. This means that Federal Board of Revenue is working for a progressive system of taxation wherein taxpayer is a partner and not the subject and tax Collector is a facilitator and not a boss. However, apparently the system has not yet taken its roots. The way these valuation advices have been prepared is a clear evidence of the amount of effort, which is required to be put in for achieving these goals. Similarly, the importers also do not appear to have moved forward to play their role in national progress. The G.Ds filed by them are not only without any tangible evidence but in some cases the value of the imported goods shown is ridiculously low.
31. All the cases, therefore, are hereby remanded back for re- appraisement. The Customs authorities are directed to reappraise all the import consignments following the criteria fixed by this Court in the earlier part i.e. after adoption of the sequential order provided in section 25 and if the department wants to issue fresh valuation advices for the respective period, it should also be after adoption and following the lawful procedure.
32. All the writ petitions, therefore, are allowed in the above terms.
S.A.K./T-12/LCases remanded.