SUNNY TRADERS through Proprietor VS FEDERATION OF PAKISTAN through Secretary, Revenue Division (FBR), Islamabad, 2009 PTD-LAHORE-HIGH-COURT-LAHORE 281 (2008)

(a) Customs Act (IV of 1969)---

----Ss. 25-A, 25 & 32---Constitution of Pakistan (1973), Art.199---Constitutional petition---Valuation Ruling---Scope---Valuation Ruling can not be considered as a valid document for cancellation of an appraised assessment---Valuation Ruling, if issued by an authority which did not figure anywhere in S.25-A the issuance, of same was illegal, void and of no legal effect.

(b) Customs Act (IV of 1969)---

----S. 32---Scope and extent of application of S.32.

Section 32, Customs Act, 1969 has been inserted to correct an error, modify an assessment and to recover the refund issued inadvertently. This obviously means review or correction of the error in a finalized matter. Once a consignment is out of charge after due consideration of relevant facts it becomes a past and closed transaction to the extent of its value etc. The same, therefore', should not be invoked only on the basis of the mere estimate, gosips, personal whims or feelings that the value could have been enhanced or it could fetch more taxes etc. The opening of an appraisement for the purposes of re-valuation of an earlier estimate or adopted figure would require `reason to believe' and not `reasons to suspect'. For example, if one subsequently, finds that the description''-of the imported goods was different, H. S. Code applied was wrong as a result of mis-representing or the number of items mentioned in GD and accepted by the Department incorrectly, etc., nobody will have any objection on the application of provisions of section 32. However, if one feels that more revenue could have been generated and thus invokes the provisions of section 32, said course was not justified. The valuation ruling cannot be considered a piece of evidence unless the same is based upon sound footings. However, on the basis of a valuation ruling, the provisions of section 32 cannot be invoked.

Writ Petition No. 8400 of 2008 fol.

2006 PTD 2237 ref.

Mian Abdul Ghaffar for Petitioner.

Sarfraz Ahmad Cheema for Respondent.

Date of hearing: 24th November, 2008.

JUDGMENT

KHAWAJA FAROOQ SAEED, J.---Through this writ petition the petitioner has sought cancellation of the order of earlier appraisement on the basis of a valuation ruling.

2. Brief facts are that the petitioner imported goods which was declared through G.D. No.LTNB-HC-1757, dated 7-10-2008 claiming assessment on the basis of transactional value in terms of section 25(1) of the Customs Act, 1969 read with Rule 113 of the Customs Rules, 2001. The consignment was examined and assessed under section 80 of the Customs Act, 1969, at US $ 18313. On completion of assessment, duty amounting to Rs.90,655 was paid and the consignment was released. Later the petitioner received a demand cum-show-cause notice, dated 1-11-2008 issued by respondent No.5 alleging that according to the valuation advice, dated 11-10-2008 issued by the respondent No.3 the consignment of Cylinder Liners, Pistons and Rings of Turkish origin was assessed provisionally, hence, it is now being finally assessed under section 81 of the Customs Act, 1969.

3. The notice/demand notice is challenged inter alia on the basis of following grounds:--

(i) that valuation ruling has already been held to be as no base for invocation of jurisdiction under section 36 in a number of cases.

(ii) That the present valuation ruling has been issued by the Additional Director which does not have any authority to issue the same.

(iii) That even the said valuation ruling is not completed in the manner that it claims that the inquiry through diplomatic mission policy embassy abroad has been initiated and result is awaiting. However, a final conclusion is yet to be drawn.

4. Learned Legal Advisor claims to which this Court would readily agree that firstly in view of very clear findings in Writ Petition No.8400 of 2008 valuation ruling cannot be considered as a valid document for cancellation of an appraised assessment. Moreover, the valuation ruling having been issued by an authority which does not figure any where for issuance of such a valuation ruling in section 25(a), is illegal, void and of no legal effect. Learned Legal Advisor, however, insisted that all the due efforts required for preparation of a valuation ruling has been done by the concerned authorities. He said that the Federal Board of Revenue has assigned power through a proper notification to the said authority to issue a ruling like this which inter alia is after exhausting all the requirements as are provided in section 25, hence, there is no question of any interference.

5. This Court has already decided this controversy through the aforementioned writ petition, wherein, the observations to relevant issue are as follows:---

"Section 32, also is not being understood in its true spirit. One must understand that it has been inserted to correct an error, modify an assessment and to recover the refund issued inadvertently. This obviously means review or correction of the error in a finalized matter. Once a consignment is out of charge after due consideration of relevant facts it becomes a past and closed transaction to the extent of its value etc. The same, therefore, should not be invoked only on the basis of the mere estimate, gosips, personal whims or feelings that the value could have been enhanced or it could fetch more taxes etc. The opening of an appraisement for the purposes of re-valuation of an earlier estimate or adopted figure would require `reason to believe' and not `reasons to suspect'. For example, if one subsequently, finds that the description of the imported goods was different, H.S. Code applied was wrong as a result of mis representing or the number of items mentioned in GD and accepted by the Department incorrectly, etc., nobody will have any objection on the application of provisions of section 32. However, if one feels that more revenue could have been generated and thus invokes the provisions of section 32, this Court will not agree to the said understanding. In this case, reference to the judgment reported as 2006 PTD 2237 is quite relevant. The valuation ruling cannot be considered a piece of evidence unless the same is based upon sound footings. How-ever, on the basis of a valuation ruling, the provisions of section 32 cannot be invoked. This Court, therefore, agrees with the petitioner that the notices issued in theses cases are not lawful. Since the process, which the learned legal advisor has proposed for the petitioner to adopt is quite lengthy and writ petition is an expeditious and immediate remedy the same is hereby allowed."

6. In view of the un-equivocal findings and also for the reasons that the valuation rulings have been issued by a person who was not c competent to issue the same, re-opening on the basis thereof is held to be as illegal.

7. The order under section 32, therefore, is set aside and the writ petition is accordingly accepted.

C.M.A./S-152/LPetition accepted.