S. FAISAL REHMAN VS COLLECTOR (APPRAISEMENT) CUSTOMS, KARACHI, 2009 PTD-KARACHI-HIGH-COURT-SINDH 1292 (2009)

Customs Act (IV of 1969)---

----S.25(1)---Prime Hot Cold Coils, import of-- Declaration of value of such goods by importer at price of US$ 175 to 180 per metric ton---Pre ex-bonding examination of goods revealed same to be of secondary quality and not of prime quality---Prayer of importer for valuing goods at price of US$ 157 per metric ton being transactional value of secondary quality of goods---Validity---Customs duty would be levied on basis of such declared additional value of goods---Importer had suffered due to violation of contract by shipper/Supplier by paying sale price more than sale price of goods actually shipped---Importer for violation of contract and recovery of excess duty could take action against shipper/supplier.

Batala Ghee Mills (Pvt.) Ltd., Lahore v. Collector of Customs P'I'D 2634; Messrs Flying Board and Paper Products v. Deputy Collector Customs Dry Port, Lahore 2006 SCMR 1648 and Messrs Flying Board and Paper Products v. Deputy Collector, Customs 2006 SCMR 864 ref.

Abul Inam for Applicant.

Raja Muhammad Iqbal along with Mr. Tariq Aziz (Appraising Officer) for Respondent.

Date of hearing: 25th March, 2009.

JUDGMENT

MUHAMMAD ATHAR SAEED, J.---By this Special Customs Reference Application, the following questions said to have arisen from the order, dated 20-9-2008 passed by the learned Customs, Excise and Sales Tax Appellate Tribunal in Customs Appeal No. K-95/2005/141, have been proposed for the opinion of this Court:--

(1) Whether in view of facts and circumstances of the case the Customs Excise and Sales Tax Appellate Tribunal erred in holding that the goods imported by the Applicant were/are liable to duty under section 25(1) of the Customs Act, 1969?

(2) Whether the respondents and the learned Member of Customs Appellate Tribunal ignored/misinterpreted the provisions of section 25(1) and section 25(5) of the Customs Act, 1969, which provides that if the Customs vale of the imported goods cannot be determined under the provisions of section 25(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?

(3) Whether in view of the facts and circumstances of the case the Customs Department was legally justified and competent to charge/assess the goods, which arc subject matter of this reference, to duty and other taxes at the transactional value of the goods, in terms of section 25(1) of the Customs Act, 1969?

(4) Whether in view of the facts and circumstances of this case it is an established and admitted fact that instead of prime quality Hot Rolled Steel Coils, Secondary Quality goods were wrongly shipped by the Foreign Supplier and such being the established position. Whether, the Customs, Authorities were legally justified and competent to asses the (wrong) goods to Customs Duty and other taxes by treating these a prime quality goods which admittedly did not arrive'?

(5) Whether the learned Member of the Customs Appellate Tribunal erred in holding that the since the applicant could not succeed to bring back Foreign Exchange equivalent to difference in value of Prime Quality and Secondary Quality of goods from the Foreign Supplier, there was an alleged attempt between the applicant and the supplier for purchase of secondary Quality goods at the transactional value?

(6) Whether the learned Member of the Customs Appellate Tribunal erred in dismissing the appeal of the applicant on the ground that the applicant did not exercise its rights to pursue the arbitration proceedings against the Foreign Supplier and that the applicant did not get the goods surveyed by a International Survey or?

(7) Whether is the legal affect and implication of assessment to duty of identical goods arrived by the same country of origin assessed to duty at US$ 157 per Metric Ton being the value applicable to Secondary Quality goods?

(8) Whether in view of the facts and circumstances of the case the Customs Authorities were bound to assessee the goods actually received by the applicant i.e. Secondary Quality and not the prime quality goods which did not arrive or were not shipped?

(9) Whether in view of provisions of charging section 18(1) of the Customs Act, 1969, the Customs, Authorities were bound to assess the goods actually landed in the territorial jurisdiction of Pakistan Customs and received by the applicant, as these were found on the basis of undisputed Examination/inspection Report of the Customs Department'?

(10) Whether the learned Member of the Customs Appellate Tribunal erred in placing reliance on section 88(5) of the Customs Act, 1969 as it is not a case of inadvertence error, or bona fide mistake but is admittedly a case of wrong shipment of goods by the supplier, and even otherwise, as per record, the goods were provisionally in-Bonded in order to save demurrage, subject to the condition that all aspect would be examined at time of ex-Bonding. These facts, iter-alia, are duly admitted in assailed order in Original, dated 12-5-2003, passed by the respondent No.3.?

(11) Whether the respondent, even otherwise, transgressed the defined Code of valuation as provided under the GATT Regime, in as much as the treatment meted out to the applicant's goods, which are subject matter of this Reference is violative of settled principles and law?

(12) Whether the impugned orders, even otherwise, suffer from legal infirmities, and are based on surmises and conjectures'?

2. Brief facts of the case are that the applicant had under a contract No. NF/613/005-2001, dated 28-11-2001 imported a consignment of Prime Hot Rolled Coils and had declared the same at a price of US$ 175 to 180 per Metric ton in the goods declaration filed at the time of ex-bonding of such goods. However, before ex-bonding of such goods the goods were examined by the Customs Authority and found not to be of Prime Quality but of secondary quality and this finding of the Customs Authority was also ratified by the Deputy Collector Shed. Once this examination report was received by the applicant, he applied to the Customs Authority to value the goods at US$ 157 per Metric Ton, which according to him was the transactional value of the secondary quality of Hot Rolled Coils and also according to Mr. Abul Inam the learned counsel for the applicant, they wrote five letters to the foreign exporter/supplier to refund the excess amount paid on account that the goods shipped were not of the Quality specified in the contract but no reply was received by the exporter and since according to the learned counsel the cost of seeking remedy under the contract which provided for arbitration under the jurisdiction of the Lodon Courts 'vas more than the amount, which have been refunded to the applicant, they did not seek such remedy.

3. Mr. Abul Inam again stressed that once it was determined by the Customs Authority that the goods were of secondary quality and not of Prime Quality, the Customs authorities were bound to determine the transactional value of such goods in accordance with the provisions of section 25(5) of the Customs Act and could charge duty only on the basis of such transactional value. He submitted that in case a number of other consignments imported through the same shipping companies from the same importer/supplier the Customs authorities had accepted the transactional value of US$ 157 Per Metric Ton but in his case this was not done. The learned counsel further stated that subsection (5) of section 88 of the Customs Act will not apply to him as in his case it was not due to inadvertence or mistake that the quantity or value are not rightly declared but in fact he had made the right declaration in accordance with the provisions of contract as he was certain that the importer had shipped the goods in accordance with the contract and it was only when the goods were examined by the Customs Authority that he learnt that the importer/supplier hoodwinked hire and supplied secondary quality of goods. He relied on a judgment of this Court in the case of Batala Ghee Mills (Pvt.) Ltd., Lahore v. Collector of Customs reported in PTD 2634 wherein it was held by this Court that the incidence of levy of duties and other charges are attracted on the basis of description of the consignment at the time of import.

4. Mr. Raja Muhammad Iqbal learned counsel for the respondent strongly opposed the arguments of learned counsel for the applicant and argued on the merits of the case without prejudice to his claim that the question of secondary or Prime Quality of goods was a question of fact, which could not be adjudicated by this Court in its advisory jurisdiction under section 196 of the Customs Act. He submitted that the value declared by the importer become the transactional value under section 25(1) and only if they intend to reject this value and arrive at the transactional value then they have to follow the sequential order of section 25. The learned counsel further submitted that once the value has been declared by the importer, then he may change it before warehousing but after warehousing he has no right and entitlement to change such value.

5. In this connection he relied on the following judgments of the Hon'ble Supreme Court of Pakistan:---

(1) Messrs Flying Board and Paper Products v. Deputy Collector Customs Dry Port, Lahore reported in 2006 SCMR 1648.

(2) Messrs Flying Board and Paper Products v. Deputy Collector, Customs reported in 2006 SCMR 864.

6. We have perused the proposed questions referred in the light of the arguments of the learned counsel and have carefully perused the records of the case and the judgments relied on by the learned counsel.

7. In the judgment of Hon'ble Supreme Court of Pakistan reported as 2006 SCMR 1643 their lordships have held that once the applicant has declared a price then he cannot claim to be assessed at a price lower than the declared price even if he succeeds to establish that the prices have gone down after the purchase of the above consignment.

8. In the second case relied on by the learned counsel the Hon'ble Supreme Court has held that where the minimum value of the imported goods entered in the notification is less than the price actually declared by the importer then the importer cannot take shelter behind the notification and the actual price will have to he taken for the purpose of levy of duty.

9. After perusing the above judgments we are of the considered opinion that despite the fact that it is observed that the applicant has suffered due to the violation of contract by the shipper and on one hand has paid the sale price, which was more than sale price of goods actually shipped and on the other hand the duty is being levied on the basis of such additional value but his only remedy lies in taking action against the importer/supplier for violation of the contract and the excess duty can also he recovered from the shipper but for the purpose of the customs duty the value declared has to be taken into consideration and the forums below cannot be faulted for doing so.

10. For these reasons we dismiss this Special Customs Reference Application in limine.

S.A.K./S-55/KReference dismissed.