D.S. MOTORS VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2011 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 1286 (2010)

Customs Act (IV of 1969)---

----Ss. 25 & 25-D---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.2, 9 & 10---Issuance of valuation advice---Complainants had impugned issuance of valuation advice under S.25(9) of Customs Act, 1969, contending that said valuation advice was issued in violation of provisions of S.25 of the Customs Act, 1969---Representative of the complainant had contended that complainants were Original Equipment Manufacturer brand Motorcycles manufacturers---Same brand of Motorcycles were manufactured by a number of companies throughout the country,- but valuation advice was issued only for Hyderabad Collectorate, which clearly reflected discriminatory treatment towards the manufacturers of Hyderabad---Department did not dispute the fact that the said brand of Motorcycles were being manufactured throughout the country---Plea of Departmental Representatives that department had already taken steps for issuance of valuation ruling for motorcycle parts, reflected that department was itself mindful that issuance of valuation advice only for Hyderabad Collectors was improper and to have a uniform policy throughout the country, a valuation ruling applicable to all the manufacturers needed to be issued---As the motorcycles were being manufactured throughout the country, department could not treat the manufacturers of Hyderabad differently than the rest of the motorcycle manufacturer of the same brand in the country---Federal Board of Revenue was directed to order the Hyderabad Collectorate not to apply the discriminatory Valuation Advice; and pending issuance of valuation ruling, assessment be made as per law having regard to the assessment of similar goods being made in other Collectorates; Director Valuation to expedite the issuance of valuation ruling, concerning motorcycle parts of brand in accordance with law; and compliance be reported within 30 days.

Justice (Retd.) M. Nadir Khan, Advisor, Dealing Officer.

Afzal Await, Authorized Representative.

Iftikhar Ahmed, Additional, Director and Moin Akhtar, Assistant Director, Departmental Representatives.

FINDINGS/RECOMMENDATIONS

DR. MUHAMMAD SHOAIB SUDDLE, FEDERAL TAX OMBUDSMAN.---The complainants are manufacturers of motorcycles. They have filed the complaints before the Hon'ble FTO with common grievance about issuance of Valuation Advice No.1/56/2009-VIIA/871 under section 25(9) of the Customs Act (hereinafter referred to as the Act) and rejection of review applications filed under section 25-D of the Act. The complainants pleaded that the valuation advice was issued in violation of the provisions of section 25 of the Act. Besides, the advice issued for Hyderabad Collectorate only and so the same was not applied in other Collectorates. According to the complainants, the discriminatory treatment to the motorcycle manufacturers of Hyderabad was tantamount to maladministration.

2. The complainants also filed review applications which were dismissed without passing of a speaking order and the issue was not resolved. Dismissal of review applications was also termed to be maladministration on the part of the Department.

3. The complainants requested the Hon'ble FTO for grant of following reliefs:

(i)that the issuance of Valuation Advice No.1/56/2009-VIIA/871 dated 1-4-2010 may be declared as illegal, discriminatory and within the meaning of maladministration under section 2 of the Federal Tax Ombudsman Ordinance, 2000.

(ii)that the order-in-review being non-speaking order may be declared maladministration, illegal and set aside.

(iii)That the Collector of Customs, Hyderabad may also .be restrained to take any coercive action against the complainant during the pendency of this complaint before the honourable Federal Tax Ombudsman.

(iv) any other better relief as the Hon'ble Federal Tax Ombudsman may deem fit and appropriate."

4. Notices of the complaints in terms of section 10(4) of the FTO Ordinance were issued to the Secretary Revenue Division. In response parawise comments were filed by Director Valuation, wherein it was contended that the value of motorcycle parts imported by the complainants was determined under section 25(9) of the Act. The complainants, review applications were dismissed as the same were not maintainable due to procedural infirmities. The complainants thereafter filed representations under section 7 of F.B.R. Act, which were also dismissed. According to the Department the order of rejection of the review applications under section 25-D of the Act was appealable before the Appellate Tribunal, but the complainant did not avail the legal remedy available to them.

5. According to the Department, the valuation ruling was issued under section 25 (9) of the Act, after affording of opportunity of hearing to the complainants and considering all previous clearances and market position. The review applications were dismissed as the complainants failed to produce documents to support their transaction value. The Department denied allegations of maladministration.

6. Copies of parawise comments were supplied to the complainants and the complaints were fixed for hearing on 5-11-2010. Mr. Afzal Awan, assisted by Mr. Imran Javeed and Imran Iqbal, Advocates, along with the complainants attended the hearing. The Department was represented by Mr. Iftikhar Ahmed, Additional Director, and Moin Akhtar, Assistant Director.

7. During arguments the AR contended that the complainants were OEM (Original Equipment Manufacturer) brand Motorcycles manufacturers. Although same brand of motorcycles were manufactured by a number of companies throughout the country, the valuation advice was issued only for Hyderabad Collectorate, which clearly reflects discriminatory treatment towards the manufacturers of Hyderabad. The AR argued that the review petitions were dismissed on two grounds; firstly, that the complainants failed to produce evidence in support of their transaction value, and, secondly, that the counsel himself was not an aggrieved person. According to the AR the Director General Valuation did not consider the submissions made by the AR about issuance of valuation advice in violation of provisions of section 25 of the Customs Act and that the valuation ruling was issued without availability of evidence to dispute the transaction value. Both the issues were not duly attended to by the Director-General Valuation. "The observation of the Director-General that the counsel himself was not an aggrieved person on the face of it was perverse, arbitrary, unreasonable, unjust and biased". The AR pleaded that the issuance of valuation ruling and rejection of the review applications in the stated circumstances was clearly tantamount to maladministration on the part of the Department.

8. The AR admitted that petitions were filed under section 7 of F.B.R. Act. However he contended that filing of representation with Chairman F.B.R. was no bar to the jurisdiction of the Hon'ble FTO. Similarly, non-availing of remedy of appeal against the order of rejection of the review applications could not affect the maintainability of the complaints.

9. In rebuttal, the arguments of DR were restricted to the legal objections raised about maintainability of the complaints. However, the DR did not dispute the fact that the subject valuation advice applied to Hyderabad Collectorate. He explained that as reference was received from Hyderabad Collectorate, the advice was issued to Hyderabad Collectorate. According to the DR once an advice comes into the system; the other Collectorates can also place reliance on the advice. However, he admitted that it would have been proper to issue valuation ruling instead of advice to one Collectorate. According to the DR, the Directorate-General had already taken steps to issue valuation ruling which would be applicable to all the Collectorates.

10. Submissions made by the parties have been considered and the documents available on the record perused minutely. The admitted feature of the case is that the subject valuation advice was issued to Deputy Collector Customs Model Customs Collectorate, Dry Port Hyderabad, for motorcycle parts of OME brand. The Department did not dispute the fact that the said brand of motorcycles was being manufactured throughout the country. In such view of the matter, a c feeling of discrimination developed by the complainants could not be considered as unreasonable. It would not be out of place to observe that the plea of the DR that the Department had already taken steps for issuance of valuation ruling for motorcycle parts of OME brand reflects that the Department itself was mindful that issuance of valuation advice only for Hyderabad Collectorate was improper and to have a uniform policy throughout the country, a valuation ruling applicable to all the manufacturers needed to be issued.

11. Adverting to the order of rejection of the review applications, it would suffice to observe that the Director-General Valuation did not address the issues involved: violation of provisions of section 25 of the Act; non-availability of evidence to dispute the transaction value; and manufacturers of Hyderabad being discriminated by issuance of valuation advice only to Hyderabad Collectorate. Prima facie the review applications were dismissed in a slipshod manner on technical grounds, which being unreasonable and unfair amounted to maladministration.

12. The Departmental objections, that the complainants had availed the remedy under section 7 of the F.B.R. Act and that against the order of rejection of review applications legal remedy of appeal was not availed, when examined in light of section 9(2) of the FTC`s Ordinance, it is observed that none of the objections has any implication on the maintainability of the complaints filed on the ground of maladministration.

Findings:

13. The upshot of the above discussion is that as the motorcycles of OME brand are being manufactured throughout the country, the Department cannot treat the manufacturers of Hyderabad differently than the rest of the motorcycle manufactures of the same brand in the country.

Recommendations:

14. F.B.R. to direct:-

(i)Hyderabad Collectorate not to apply the discriminatory Valuation Advice No.1/56/2009-vii-A/871, dated 1-4-2010 and pending issuance of valuation ruling, assessment be made as per law having regard to the assessment of similar goods being made in other Collectorates;

(ii)Director Valuation to expedite the issuance of valuation ruling concerning motorcycle parts of OME brand, in accordance with law; and

(iii) compliance be reported within.30 days.

H.B.T./1/FTOOrder accordingly.