KOHSAAR DISTRIBUTOR VS COLLECTOR OF CUSTOMS, SALES TAX AND CENTRAL EXCISE, 2014 PTD-CUSTOMS-APPELLATE-TRIBUNAL-KARACHI 218 (2013)

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

----Ss. 194-A & 194-B(2)---Appeal before Appellate Tribunal---Rectification of factual or legal error in order passed by Tribunal---Powers and scope---Tribunal may amend any of its order with a view to rectify any mistake apparent from the record at any time within one year of that order---Tribunal had inherent jurisdiction to rectify the error whether factual or legal floating on the surface on an order---Error on the face of record was not restricted to clerical error or arithmetical mistake---Appellate Tribunal being final fact finding authority could rectify its orders.

Commissioner Legal Division Large Tax Payer Unit Karachi v. Paracha Textile Mills Ltd., 2010 PTD 106 and 2002 PTD 1587 rel.

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

----Ss. 194-A & 194-B(2)---Civil Procedure Code (V of 1908), O.XX, R.5 & O.XLI, R.31---Application for rectification of order before Appellate Tribunal---Failure to give decision on each issue---Rectification of error mistake floating on the face of order passed by Tribunal---Scope---Judgment had not stated points for determination, decision thereon and the reasons for its findings, the same was not a "judgment" according to law---Forum had acted in exercise of its jurisdiction with material irregularity---Good judgment must be self evident and self explanatory, it must contain reasons which should justify conclusion arrived at and the reasons should be such that a disinterested reader could find some convincing or at least reasonable---Such defect in order fell within the ambit of error floating on the face of order and liable to be rectified---Application for rectification of order passed by Appellate Tribunal was allowed.

2002 CLC 825 rel.

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

----Ss.25 & 26---Customs Rules, 2001, Rr. 107(a), 109(3), 110 & 118---Dispute regarding declared transaction value---Determination of customs value of goods---Show-cause notice---Sequential manner of determining value of goods---Scope---Customs officials disputed the declared value of transaction by the importer---Contention of the importer was that the customs officials assessed the value of goods imported without issuing show-cause notice and failed to follow the sequential manner of determination---Validity---In case the appropriate officer of customs had reservations in acceptance of the declared transaction value, it was obligatory on his part to inform the importer of reservations in writing and give the importer an opportunity to justify the price difference---On failure of the importer to justify the price difference transaction value of identical goods, transaction value of similar goods, deductive value, computer value and fall back method were to be applied in the same sequential manner---Mandatory provisions of law for determining customs value of goods could not be deviated by customs authorities---Customs officials had not fulfilled the requirement of subsection (4) of S. 25 of the Customs Act, 1969 and R.109(3) of Customs Rules, 2001---No letter or notice under S. 26 of the Customs Act, 1969 had been issued to the appellant---Customs officials had no cause or reason for disputing the declared value---Order passed by customs officials declaring the value of goods was set aside---Appeal was allowed.

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

----S. 25---Customs Rules, 2001, Rr. 107(a), 109, 110 & 118---Determination of customs value of goods---Determination on the basis of value of similar goods---Scope---Contention of the importer was that the customs officials had applied the value as per assessment available in the data maintained by the Collectorate of Customs, which had no similarities to the imported goods---Importer further contented that in case of availability of two or more value of the same or the similar item, the lowest import value has to be applied---Validity---Declared value of the importer was fair as no value of similar goods in the data was available with the customs officials---Value could not be applied for determining the value of goods imported unless the department had available similar value of goods in the data of the same period of the same country---Assessment was erroneous and could not be endorsed upon---If two or more transaction value of identical goods were available in the data of import of 90 days maintained by the customs authorities, the lowest value had to be applied for completing the assessment of the identical goods under dispute---Documents produced by the importer had confirmed that the identical disputed goods were cleared at nearest price as declared by the importer by the other Collectorate of Customs, therefore the goods in dispute should have been determined on the basis of said value---Impugned orders were set aside---Appeal was allowed.

Pervaiz Iqbal Kasi for Appellant.

Muhammad Farooq for Respondent.

Date of hearing: 9th July, 2013.

ORDER

GHULAM AHMED, MEMBER (TECHNICAL-II).---This rectification application under the above mentioned provision of the Customs Act, 1969 (The Act) is directed to rectify and amend the order passed by this Tribunal on 9-7-2005 whereby the appeal filed by the appellant was dismissed maintaining the order passed by two fora below. The appellant after filing the instant rectification application also filed a Special Customs Reference Application No. 97 of 2006 before the Hon'ble High Court of Sindh, which set aside the impugned order dated 18-10-2005 and remanded the matter to the Tribunal for consideration of the rectification application filed by the applicant.

2.We have heard the learned Counsel for the appellant and departmental representative for the respondent and perused the case record.

3.The learned counsel for the appellant submitted that the dispute in the instant case was in regard to value of Canola and not for any other item imported by them through bill of entry corresponding to IGM 316 of 2003 dated 22-2-2003 Index No. 36. The official of the MCCA despite determining arbitrary/unilateral value of the canola, also applied ontheremainingitemhavingnosimilaritywhatsoeverwiththecanola , rendering the assessment of those items nullity to law. He further submitted that valuation of any imported goods cannot be determined in hypothetical manner instead with the application of section 25 of the Customs Act, 1969 in sequential manner for discarding the declared value, it is mandated upon the Customs Authorities to produceevidentialinvoiceoftheitemimportedasorderedbytheBoard in para 78 of CGO 12/2002 dated 15-6-2002 of the period expressed in Rule 107(a) of the Customs Rules, 2001, which is non existence in the case of appellant and the respondent applied the value of assessment available in the data maintained by the Collectorate under Rule 110 ibid of needles, which may be for syringes but have no similarities to the imported goods of the appellant which are Canola sets in CKD condition i.e. (i) Canola (ii) Hub (iii) Cap and these had been cleared in the period of December 2002 to February 2003 by the Peshawar Collectorate @ US$. 2/thousand pcs, which is roughly the value declared by the appellant. It was further stressed that assessment under section 25(6) of the Customs Act, 1969 has to be made in terms of clause (d) of section 25(5) of the Customs Act, 1969, applicable mutatis mutandi on section 25(6) ibid., as per which in case of availability of 2 or more value of the same of the similar item, the lowest import value has to be applied. The respondent Collectorate in nullity to the said provision of the law completed the assessment of the appellant goods with 70% loading not permitted under any subsection of section 25 of the Customs Act, 1969 northe said act ever found validation from the Superior Courts, resultant, the order earlier passed may be recalled and his declared value may be declared as fair through order of rectification in the instant application.

4.The respondent on the other hand contended that the declared value of the appellant's imported canola is not fair as they failed to provide any additionaldocumentstosubstantiatetheirdeclaredvaluein terms of Section 25(1) of the Customs Act, 1969 and Rule 109(1) of ChapterIXof Customs Rules, 2001,resultant,thevaluedeterminedbythemundersection 25(6) of the Customs Act, 1969whiletakingthevalueofUS$. 5.50/thousandpcs.Afterallowing20%discounttotheappellantonaccountof packing and freight, etc.iscorrectinlawand rectification application may please be dismissed as of no substance.

5.Before dilating upon the merit of the application, it is necessary to reproduced the relevant provision which deals with the rectification of an order i.e. section 194-B(2) , for the ready reference:---

"194-B Order of Appellate Tribunal (1) The Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit confirming modifying or annulling the decision or order appeared against or may refer the case back to the authority which passed such decision or order with such directions as the Appellate Tribunal may think fit, for a fresh adjudication or decision, as the case may be , after taking additional evidence, if necessary [:]

(2)The Appellate Tribunal may, at any time within one year from the date of order, with a view to rectifying any mistake apparent from the record, amend any order passed by it under subsection (1) and shall make such amendments if the mistake is brought to its notice by the Collector of Customs or the other party to the appeal."

6.As evident from the language of the above provision, this Tribunal may amend any of its orders under subsection (1) with the view to rectify any mistake apparent from the record at any time within one year of that order, meaning thereby the Tribunal has inherent jurisdiction to rectify the error whether factual or legal floating on the surface on an order under subsection (2) of section 194-B of the Customs Act, 1969 and this stood validated from reported judgment 2008 PTD 169 Commissioner of Income Tax Peshawar v. Gul Cooking Oil and Vegetable Ghee (Pvt.) Ltd. and 6 others and 2010 PTD 106 Commissioner Legal Division Large Tax Payer Unit Karachi v. Paracha Textile Mills Ltd., Karachi, wherein their Lordship of Supreme Court held un-equivocably that wherein error of law or fact is discovered in the order itself, such an error falls within the category of "error apparent on the face of the record".----Failure of the Court to take into consideration the material facts or statutory provision, which, if so considered , would have material effect on the fate of the case, would also amounts to an "error apparent on the face of the record" and error on the face of record is not restricted to clerical error or arithmetical mistake. Likewise the Appellate Tribunal of Inland Revenue of Pakistan, Karachi in MA(Rect) No. 47/KB/2011 48/KB/2011, 49/KB/2011 in Sales Tax Appeals Nos. 743, 745/KB and 746 KB/09 of Messrs Maxco (Pvt.) Ltd., Karachi v. CIR, R.T.O. Karachi and nothing stop the Tribunal from rectifying its order "being final fact finding authority, application for such purpose could submit rectification application before Tribunal". Interest of justice ought to have served to undo a wrong for which the applicant was not at fault" 2002 PTD 1587.

7.There is no dispute that this application has been filed prior to filing of Special Customs Reference Application No. 97 of 2006 filed with the High Court of Sindh and the same was dismissed on 18-10-2005 on the ground that same was misconceived and not maintainable under section 196(1) of theActandthesaidorderalongwithorderdated9-7-2005 was set aside by the High Court of Sindh with the direction that the rectification application filed by the application be decided by the Tribunal on merit. The question which is to be examined now is whether there is any mistake apparent from the record to be rectified.

8.Forexamination of the said fact, we havegone through the order and observed that the Tribunal passed order dated 9-7-2005 and observed that it is purely based onthe version of the respondent, beside nullity to para 78 of CGO 12/2002 and Rule 109 of Chapter-IX of Customs Rules, 2001 and the provision of section 25(6) of the Customs Act, 1969 and above all does not contain rebuttal of the grounds of the appeal and the evidence and relied upon judgment annexed with the appeal/supplied at the time of hearing, rendering the order not in accordance with law as held in reported judgment 2002 CLC 825 wherein, the Hon'ble Division Bench of the High Court held that "Failure to give decision on each issue---Trial Court while deciding the suit had framed six issues but did not extend reasons separately on all issues and decreed the suit.---while deciding appeal the Appellate Court had also not decided the suit---while deciding appeal the Appellate Court had also not deciding the appeal issue-wise. Both the Courts below had disregarded mandatory provision of O. XX, R, 5, C.P.C. and O. XLI, R. 31, C.P.C. respectively. Where in the judgment the Appellate Court had not stated points for determination, decision thereon and the reasons for its findings, the same was not a "judgment" according to law----Trial Court and Appellate Court having acted in exercise of its jurisdiction with material irregularity". The Division Bench also held that "Good judgment must be self evident and self explanatory---In other words it must contain reasons which should justify conclusion arrived at and the reasons should be such that a disinterested readers can find same convincing or at least reasonable". In words of Judicial fora such effect in the order fall within the ambit of error floating on the face of order, hence to be rectified and as such we take the instant application for rectification and hold that:--

"After coming into force of the new section 25 of the Customs Act, 1969 vide Finance Act, 1999 and as amended by Finance Ordinance, 2000 the value of customs purposes is transaction value---the price actually paid or payable for the goods when sold for export to Pakistan, in terms of subsection (10) section ibid. In case the appropriate officer of customs had reservations in acceptance of the declared transaction value, it was obligatory on his part to "inform the importer of reservation in writing in terms of Sub-Rule (3) of Rule 109 of Customs Rules, 2001 and give the importer an opportunity to justify the price difference". In terms of subsection (4) of section 25 of Customs Act, 1969. On failure of the importer to justify the price difference then transaction value of identical goods (subsection (5) of section 25 ibid) , transaction value of similar goods (subsection (6) of section 25 ibid) , deductive value (subsection (7) of section 25 ibid) computer value (subsection (8) of section 25 ibid), and fall back method (subsection (9) of section 25 ibid), were to be applied in the same sequential manner, as per subsection (10) of section 25 ibid. These were mandatory provision of law and could not be deviated. Admittedly the respondent did not fulfill the requirement of subsection (4) of section 25 of the Customs Act, 1969 and Rule 109(3) of Customs Rules, 2001 as no letter or notice of section 26 of the Customs Act, 1969 and evidential invoice of the similar goods as directed in para. 78 of CGO 12/2002 dated 15-6-2002 has been placed on record of the Tribunal, resultant, there was no cause or reason for disputing the declared value. Irrespective of the said fact the respondent relied upon the data maintained under Rule 110 ibid for determining the value under subsection (6) of section 25 of the Customs Act, 1969 and that also in nullity to the clause (d) of section 25(5) applicable mutatis mutandi on the said section and tothedirectionoftheBoardcommunicatedvideletterC. No. 1(25)/S/VAL/98. Dated 22-7-2000 that "Valuation data base should be discontinued as it has invited lot of criticism from the Trade and Industry beside this has not been helpful in generating additional revenue, instead that has been used as a substitute to ITP, which find no place in the provision of section 25 of the Customs Act, 1969." Rendering the determination of value of the appellant goods contrary to the provision of section 25 of the Customs Act, 1969. On the basis of data base is nullity and cannot be endorsed.

9.Notwithstanding, it is apparent from the record that the declared value of the appellantisalso fair as no value of similar goods in the data was available with the respondent, instead of needles, which comprise of (i) cannola + Hub + Cap as against cannola imported by the appellant comprised of cannola+cap+hub , resultant, value of needlescannot be appliedfor determining the value of the goods imported by appellant. An apple has to be compared with an apple and an eye with an eye not with any other fruit or part of the body respectively. Unless the respondent have available similar value of cannola in the data of the same period expressed in Rule 107(a) of the same country. The assessment on the basis of needles is erroneous and cannot be endorsed upon. Even otherwise the value of similar goods expressed in subsection (6) of section 25 of the Customs Act, 1969 read with Rule 118 of the Customs Rules, 2001. The clause (d) of section 25(5) is applicable mutatis mutandi on the said section and the said clause states that if two or more transaction value of the identical goods are available in the data of import of 90 days as per stipulation of Rule 107(a) of the Customs Rules, 2001, maintained by the respondent in terms of rule 110 ibid. the lowest value has to be applied for completing the assessment of the identical goods under dispute. The documents produced by the appellant confirming that the said goods were cleared @ US$ 2.21/1000 pcs, which is near to the declared price of the appellant by the Collectorate of Peshawar. Veracity of which has not been disputed by the respondent, therefore their goods should had been determined on the basis of the said value.Ignoring those without any valid reason and cause, defeat the norms of fair play , we therefore hold that the value declared by the appellant for their imported goods was fair and fall within the ambit of transaction value expressed in section 25(1) of the Customs Act, 1969.

10.In view of the above discussion, it is clear that the orders passed by this Tribunal dated 9-7-2005 and 18-10-2005 were based on mistake apparent from the record, hence required to be rectified. Order accordingly. Consequently, the appeal succeed.

JJK/172/Tax(Trib.)Appeal accepted.