TREND INTERNATIONAL VS DEPUTY COLLECTOR CUSTOMS, DRY PORT, MULTAN, 2011 PTD-LAHORE-HIGH-COURT-LAHORE 2856 (2011)

Customs Act (IV of 1969)---

----Ss. 79, 80 & 81---Constitution of Pakistan, Art.199---Constitutional petition---Provisional assessment---Petitioner/importer got released imported goods after provisional assessment---Almost three years later, Deputy Director Customs issued a demand notice for recovery of amount against the said goods declaration---Under provisions of S.81(2) of the Customs Act, 1969, provisional assessment could be finalized within a period of one year and 90 days, and extension could be allowed in exceptional circumstances, but with specific approval of the Collector concerned---In the present case, provisional assessment was finalized three years back---Department having failed to finalize the assessment of goods released on provisional assessment in terms of S.81(2) of the Customs Act, 1969, provisional assessment on the basis of declared value, had become final and the additional amount or ad hoc amount to secure the differential, had become refundable, in circumstances---Impugned demand of additional amount by the department, was declared to be without lawful authority, in circumstances.

Collector of Customs (Appraisement) Karachi v. Auto Mobile Corporation of Pakistan Karachi 2005 PTD 2116 rel.

Mian Abdul Basit for Petitioners.

Ahmad Raza for Respondents.

Khawaja Noor Mustafa, Deputy Attorney General.

ORDER

MUHAMMAD KHALID MEHMOOD KHAN, J.---Through this constitutional petition the petitioner has prayed as under:--

(a)? That the demand created through notice dated 3-9-2010 is illegal, void unjust and without lawful authority.

(b)? That both the demand notices dated 13-5-2010 for the finalization of provisional assessment regarding G.D No.1143 dated 29-6-2007 and G.D. No.148 dated 9-8-2007 issued by the respondent No.1 is illegal, void, unjust, without lawful authority and of no legal fact.

(c)? That the value fixed by the respondent No.1 and application of such value on the goods of the petitioner is illegal, without justification and of no legal effect.

2. Briefly stated the facts of case are that petitioner being an importer imported a consignment of low grade soap noodles which were ex-bounder vide bill of Entry No.1143 dated 29-6-2007 and 148 dated 9-8-2007. The consignments were released from Multan Customs dry port after provisional assessment under section 81 of the Custom Act, 1969. After the lapse of almost three years the Deputy Director Customs dry port Multan issued a demand notice for recovery of amount of Rs.7,87,604 against G.D No.1143 dated 29-6-2007 and 13-5-2007 of Rs.11,40,580 was demanded for G.D No.148 dated 9-8-2007. The, petitioner replied the said letter refuting the demand raised by respondent Deputy Collector. The petitioner asserted that goods imported were 260,000 Kg and on the said quantity the differential amount comes to Rs.350,000 and he has deposited the said amount. He filed a representation before Collector Custom for reconsideration of his case, but the respondent, Custom Collector issued a demand of Rs.15,78,185. Hence, the present petition.

3. Learned counsel for petitioner submits that under section 81(2) of the Custom Act, 1969 the provisional assessment could be finalized within a period of one year and 90 days extension could be allowed in exceptional circumstances but with specific approval of Collector concerned. In the petitioner's case the provisional assessment was finalized three years back and as such after the expiry of statutory period the impugned demand is illegal and without lawful authority.

4. Learned counsel for respondents submits that under section 81 of the Custom Act, 1969 it is the right of respondents to claim the amount even after expiry of statutory period. His argument is that provisional assessment is not a final assessment and the respondents are within their authority to made the final assessment and alternatively argued that after expiry of statutory period, the provisional assessment becomes final.

5. Heard. Record perused.

6. Section 81 of the Custom Act, 1969 is a specific provision which deals with the provisional assessment and its finalization. Section 81 of the Custom Act, 1969 is reproduced as under:-

"81. Provisional determination of liability.---(1) Where it is not possible for an officer of Customs during the checking of the goods declaration to satisfy himself of the correctness of the assessment of the goods made under section 79, for reasons that the goods require chemical or other test or a further inquiry, an officer, not below the rank of Assistant Collector of Customs, may order that the duty, taxes and other charges payment on such goods, be determined provisionally:

Provided that the importer, save in the case of goods entered for warehousing, pays such additional amount on the basis of provisional assessment or furnishes bank guarantee or a post-dated cheque of a scheduled bank along with an indemnity bond for the payment thereof as the said officer deems sufficient to meet the likely differential between the final determination of duty over the amount determined provisionally:

Provided further that there shall be no provisional assessment under this section if no differential amount of duty and tax is paid or secured against bank guarantee or post-dated cheque."

(2) Where any goods are allowed to be cleared or delivered on the basis of such provisional determination, the amount of duty, taxes and charges correctly payable on those goods shall be determined within one year of the date of provisional determination:

Provided that the Collector of Customs may, in circumstances of exceptional nature and after recording such circumstances, extend the period for final determination by not more than ninety days.

(3) On completion of final determination, the amount already paid or guaranteed shall be adjusted against the amount payable on the basis of final determination, and the difference between the two amounts shall be paid forthwith to or by the importer, as the case may be.

(4) If the final determination is not made within the period specified in subsection (2), the provisional determination shall, in the absence of any new evidence, be deemed to be the final determination.

Explanation.---Provisional assessment means the amount of duties and taxes paid or secured against bank guarantee of post-dated cheque."

7. Now the question required for resolution is whether the provisional assessment made under section 81(2) of the Custom Act, 1969 had become final, under section 81(4) of the Custom Act, 1969 on expiry of statutory period, any demand can be raised for the differential amount.

8. It is an admitted fact between the parties that goods imported were released on the basis of provisional assessment. Under section 79 of the Custom Act, an importer is required to file goods declaration containing correct and complete particulars of the goods including his own assessment of the imported goods. The importer when files said declaration the custom official' under section 80 of the Custom Act, if is satisfied with the correctness of the particulars of declaration of demand, shall release the goods on payment of taxes and duties. In case said officer is not satisfied of the declaration submitted, he is within his rights to call the relevant document and assess its own value and in case as per section 81(1) of Act ibid it is not possible for the officer to satisfy himself about the correctness of assessment on the basis of declaration, he is within his legal right to determine the payable taxes and duties provisionally. The provisional assessment towards incorrect and ad hoc or additional amount which according to the Assessing Officer is sufficient to made the differential between provisional and final assessment.

9. There is no hard and fast rules available in the Custom Act to determine additional or ad hoc amount adding towards declared value of goods.

10. Under section 81(4) of the Custom Act, if the final assessment is not completed within the period specified in subsection (2), the provisional assessment shall become final.

11. This issue was dilated upon by the learned Division Bench of this Court in a case Collector of Customs (Appraisement) Karachi v. Auto Mobile Corporation of Pakistan Karachi (2005 PTD 2116) and it was held as under:--

"In other words, subsection (4) to section 81 is a penal provision incorporated in the Scheme for the benefit of Assessee Importers/Exporters to save them from unnecessary harassment by the Customs authorities by way of lingering on their cases for indefinite period on the pretext of finalizing the assessment.' When the practical working of scheme of provisional assessment, as provided under section 81 of the Act of 1969 is analyzed, it will be seen that the figure of provisional assessment de notes figure of levy of duty on the basis of value declared by the Importer/Exporter plus any reasonable percentage of loading over such declared value made by the Assessing Officer to secure any excess payment of duties/charges which may be found due in addition to the duty levied on the declared value of the goods at the time of final assessment within the period stipulated, by subsection (2) to section 81. It is such excess payment of duties/charges levied on the basis of loading, which are secured by charging additional amount or furnishing of guarantee of schedule bank. Thus, it is apparent that charging of such additional amount or furnishing of guarantee is subject to terms of final assessment and not otherwise. In other words, when no final assessment is made in terms of subsection (2) to section 81, the provisional assessment will become final at declared value of goods by the assessee and disbursement of additional amount or guarantee furnished by the Importer/Exporter, in terms of subsection (3) .to section 81, will be regulated on such premises."

12. The facts of above case show that respondents have failed to finalize the assessment of goods released on provisional assessment in terms of subsection (2) of section 81 of Custom Act, 1969 and as such the provisional assessment made by custom authority on the basis of declared value become final and the additional amount or the ad hoc amount to secure the differential is thus become refundable.

13. The upshot of the above discussion is that this petition succeeds and the impugned demand is declared without lawful authority.

H.B.T./T-32/L????????????????????????????????????????????????????????????????????????????????????? Petition allowed.