COLLECTOR OF CUSTOMS, LAHORE VS SHAFIQ TRADERS, 2011 PTD-SUPREME-COURT 1185 (2011)

(On appeal against the judgments dated 24-5-2007 passed by Lahore High Court, Lahore in Writ Petitions Nos. 6420 and 6440 of 2006).

Customs Act (IV of 1969)---

----S. 81(2)---Passing of final assessment order by Additional Director Valuation during period extended at his proposal by Collector--Validity---Pre-requisites for such extension being existence of exceptional circumstances and recording thereof by Collector---Neither Director in his proposal had referred to exceptional circumstances nor Collector had recorded such circumstances for extending time---Factual premise for exercise of power to extend time in terms of S.81(2) of Customs Act, 1969 was non-existent---Impugned final order was set aside in circumstances.

Izharul Haq, Advocate Supreme Court for Appellants.

Shehzada Mazhar, Advocate Supreme Court for Respondents.

ORDER

TASSADDUQ HUSSAIN JILLANI, J.----This order shall dispose of Civil Appeals Nos. 282 and 283 of 2010 as they have nexus and directed against the judgments vide which the learned High Court allowed respondents' Writ Petitions, set aside the final assessment order passed by the Deputy Collector of Customs dated 22-5-2006 on the ground that the same was time-barred and violative of the section 81(2) of the Customs Act, 1969.

2. Learned counsel for the appellants submitted that the learned High Court fell in error in not appreciating that the Collector was competent to extend the time for final assessment for a further period of 90 days and that the assessment was carried out during the extended period to which no exception could be taken. He further submitted that since respondents had wrongly declared the value of the imported items i.e. door locks, the appellant Authority had to carry out investigation which inter alia included seeking report from the manufacturers in China and that took time. He placed on record the order of the Collector of Customs dated 27-2-2006 whereby on the report received from the Additional Director Valuation, Karachi seeking extension of time, he extended the same to enable the Department to correctly determine the value of the goods imported.

3. Learned counsel for the respondents, on the other hand, submitted that there is no cavil to the proposition that the Collector could extend the time but the law has provided a cutup period of one year within which the final assessment had to be carried out and if the Collector wanted to extend the time, he could do so in exceptional circumstances and that too after recording reasons to that effect. In support of the submissions made, learned counsel relied on SUS Motors (Pvt.) Ltd. v. Federation of Pakistan (2011 PTD 235).

4. Having heard learned counsel for the parties at some length, we find that admittedly the final assessment could not be made within the prescribed time which was one year under the un-amended section 81(2) of the Customs Act at the time when the provisional assessment was made i.e. 25-2-2005. This however was amended and the period was reduced to nine months which amended provision had to take effect from 1-7-2005. It is not denied that the final assessment was made during the extended period of 90 days and the moot point before this Court is whether the said extension was warranted or not to appreciate the point in issue. A reference to the said provision would be in order, which reads as follows:

"(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 six months of the date of provisional determination:

Provided that the Collector of Customs or as the case may be, Director of Valuation may in circumstances of exceptional nature and after recording such circumstances, extend the period for final determination which shall in no case exceed ninety days." (Emphasis is supplied)

5. A bare reading of the afore-referred proviso would indicate that there are two pre-requisites for extension of time i.e. (i) exceptional circumstances and (ii) recording of such circumstances by the Collector. Learned counsel for the appellants placed on record a copy of the order whereby the Collector extended the time on the proposal received from the Additional Director Valuation which reads as under:--

"(9) Brief fact's of the cases, are that the issue regarding valuation of door locks has been referred to the Directorate Customs Valuation and P.C.A. Karachi. The said quarter vide letter C.No .Div-III-V-PI-14/2005 dated 14-1-2006 has informed/ advised that the cases are under process, therefore extension under section 81(3) of the Customs Act, 1969 may be sought so that the said cases may be finalized within time.

(10) In order to finalize the cases within stipulated period, it is requested, that extension of 90-days in time limit under Section 81(3) of the Customs Act, 1969 regarding the following Goods Declaration (G.Ds) may kindly be granted.

(11) Submitted please.

(Sd.)

20-2-2006

SOHAIL BASHIR

Appraising Officer

LAHORE.

(12) Please refer to the pre paras ante, extension may be granted for 90 days under section 81(3) of CA 1969, in the light of Dy. Director Valuation letter dated 14-1-2006 (P/0): For kind perusal approval and onward submission for favour of condonation pls.

(Sd.)

Ch. Shakil Muhammad

Principal Appraiser Customs

(Sd.)

Extended as proposed in para 10 above.

(Sd.)(Sd.)

21-2-200621-2-2006

Shuja-ud-Din(Farrukh Sharif)

Additional Collector, L.D.P. Assistant Collector of Customs"

6. Neither in the reference received from the Additional Director Valuation, the exceptional circumstances were alluded to nor the Collector recorded such exceptional circumstances for extending the time. The factual premise for exercise of the power to extend time in terms of section 81(2) of the Customs Act was non-existent. In similar circumstances a Bench of the High Court of Sindh found the extension to be untenable by holding as follows:--

"(19) As noted above, it was contended by learned counsel for respondent No. 2 that the period of nine months for completion of the final determination under subsection (2) was properly extended by further ninety days pursuant to the proviso thereof. Now the proviso applies only if both. the conditions stated therein are fulfilled, i.e., (a) there are circumstances of an "exceptional nature", and (b) the Collector has recorded those circumstances. The onus lies on the Department to show that these conditions have been complied with. In the present case, nothing was shown to us that would establish that these conditions had been complied with. Our attention was drawn to a noting in the relevant file, which lists a number of cases received from different collectorates in which the stipulated period was about to expire, and to which noting the Director (Valuation) simply appended his signature. It appears that an extension was given simply because it was reported that the stipulated period was close to expiry. However, the mere fact that the stipulated period of nine months is about to expire is not, in and of itself, a circumstance of an "exception nature". Furthermore, it is apparent that the order relied upon was passed in a mechanical manner on an omnibus request made in respect of a number of consignments/cases. Thus, there was not, and could not be, any recording of the exceptional circumstances as required by the proviso. We may note that the purpose behind requiring the Collector to record the exceptional circumstances which warrant extension of time is clearly to ensure that the Collector has applied his mind to the relevant facts of each case, and made his decision on a proper consideration of the same. An omnibus request, assented to in a mechanical manner, is no compliance with the requirements of the proviso to sub-section (2). In our view therefore, the stipulated period was not extended as required by law, with the result that the period in each case lapsed on the expiry of nine months."

7. In the cases in hand, we find that the order of extension passed by the Collector did not satisfy the parameters laid down in proviso to Section 81(2) of the Customs Act to which reference has been made above. In the afore-referred circumstances, we find the impugned judgments of the High Court to be exceptionable. Finding no merit in these appeals, these are dismissed with no order as to costs.

S.A.K./C-2/SCAppeal dismissed.