ABDULLAH TRADERS, GUJRANWALA VS COLLECTOR OF CUSTOMS (APPEALS), KARACHI, 2015 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 1064 (2014)

Customs Act (IV of 1969)---

----Ss. 25, 25-A, 26, 26-A, 32, 156(1), Cl.(14) & 194-A---Value of imported goods---Determination---Failure to apply valuation ruling---Effect---Importers, allegedly imported and cleared Goods Declaration, without proper application of Valuation Ruling, which tantamounted to the mis-declaration of the value of imported goods---Short levied amount was enforced, and penalty was imposed on the importers for violation of law---Validity---Value of the imported goods was to be assessed on the basis of 90 days prior to the import, or within 90 days after import of the goods---Impugned imported goods were imported much after the expiry of impugned valuation ruling---Valuation Authorities, were duty bound to justify the failure to issue fresh advice, or to record reasons to maintain the existing valuation advice---Purpose of S.25 of Customs Act, 1969, was to bring a system based on mutual trust and harmony so that particulars of import be declared truly---Valuation Ruling applied to consignments of the importers which had expired, being non-existing, impugned orders passed by Customs Authorities, were set aside.

Aqeel Ahmed for Appellant.

Agha Jamshed Ali, A.O., for Respondents.

Date of hearing: 27th October, 2014.

JUDGMENT

CHAUDHRY MUHAMMAD TARIQ, CHAIRMAN---These appeals have been directed against Order-in-Appeals Nos.8240 to 8329/2013, dated 6-11-2013, passed by the Collector of Customs (Appeals), Karachi. Since issues in all the above appeals are identical, hence, all the above appeals are decided through this consolidated judgment.

2.Brief facts of the case as narrated in the show-cause notice are that the appellant imported and cleared consignments of stainless steel sheets/coils (magnetic) 400 series without proper application of Valuation Ruling No. Misc./25/2007-IV-A/3711 dated 10-12-2007. This non application of valuation Ruling resulted in short realization of duties and taxes amounting to Rs.423,594. Whereas, the appellants are liable to pay short levied amount of duty and taxes (short payment of taxes due to non applicability of proper Valuation Ruling under Section 25A of the Customs Act, 1969) under the relevant provisions of law and the adjudicating officer held that the charges against the appellants had been proved. The operative part of the impugned order reads as under:-

"I have gone through the record of the case and submissions made by the learned counsel of the respondent. It has been alleged that the respondent imported and cleared Goods Declaration (GD) bearing CRn Nos. I-HC-1310958-110210, I-HC-1365652-010410, I-HC-1527727-030910, I-HC-1527731-030910, I-HC-1550233-270910 and I-HC-1550237-270910, consignments of Stainless Steel Sheets / Coils (Magnetic) 400 series without proper application of Valuation Ruling No. Misc/ 25/ 2007-IV-A/ 3711 dated 10-12-2007. The learned counsel of the respondent denied the charges levelled in the show-cause notice. With a view that, clearance of goods on value lower than that is mentioned in the Valuation Ruling, in other terms non applicability of the Valuation Ruling is tantamount to the mis-declaration of the value, hence the contention of the respondent is not tenable, therefore, the differential amount of duty and taxes is to be recovered. In view of the above, the demand of payment of short levied amount of Rs. 423,594 is enforced in this case. For violation of the law, a penalty of Rs. 40,000 is also imposed on the respondent. The respondent is directed to make the payment of demanded amount within 10 days hereof failing which the same shall be recovered along with surcharge in terms of section 202-A of the Customs Act, 1969 and the import / export shall be stopped.

The Federal Board of Revenue issued vide notification of S.R.O.886(I)/2012 dated 18-7-2012 notifying the respective jurisdiction of Adjudication Collectorate according to para 3 of sub-para (e) of the said SRO the above case pertaining to this Collectorate and involving determination of the value under section 25A of the Customs Act, 1969, shall be adjudicated by this Collectorate."

3.Feeling dissatisfied with the Order-in-Original, the appellants filed appeals before the Collector Customs Appeals Karachi, who vide order dated 6-11-2013, dismissed all the appeals and confirmed the Order-in-Original. Hence these appeals, inter alia, on the grounds incorporated in the memo. of appeals.

4.Learned counsel for the appellants contended that consignments of stainless steel sheets as detailed in the show cause notice were imported. The appellants paid their liabilities towards duty and taxes for clearance of the said consignment. The declaration with regard to description and value of imported goods besides other particulars was electronically transmitted to MCC, PaCCS and after proper scrutiny and assessment of GDs the consignment was allowed to be released under automated clearance system. Notice under sections 26 and 26A of the Customs Act, 1969 was not issued to the appellants before initiation of audit/scrutiny and issuance of SCN. The service of above notice is mandatory in nature and non-compliance of the same renders the entire proceedings illegal and without lawful authority. The SCN was issued without providing an opportunity of hearing which is against the basic canons of natural justice and equity and also against Article 10-A of the Constitution of the Islamic Republic of Pakistan, 1973. Further contended that there is no justification of invoking provisions of sections 32(1) 32(2) and 32(3-A) of the Customs Act, 1969 punishable under clause 14 of Section 156(1) of the Customs Act, 1969 as there is absolutely no mis-declaration in respect of any particular regarding consignment in the GD. The GD was scrutinized and value was assessed/finalized by the competent authorities who cleared the goods which fact itself establishes that the assessing staff were sure that the Valuation Ruling being over 90 days old was not relevant for the purpose of assessment. The issuance of show cause notice in a case of audit simultaneously under sections 32(2) and 32 (3A) makes the show cause notice defective, unlawful and void ab initio. The SCN in terms of section 32(2) is not at all warranted in these cases since the appellants have not indulged into any mis-declaration of material particulars that is description, value, origin and quantity of the goods. Counsel for the appellants contended that the Assistant Collector of Customs is not competent to re-open the assessment of any consignment which has been cleared after assessment and payment of customs duty and taxes. Further contended that order passed without jurisdiction is a nullity in the eyes of law. The Collector of Customs PaCCS, is the only competent authority who can re-open the completed assessments in a closed transaction in terms of Section 195 of the Customs Act, 1969. The language of section 195 of the Act is sufficient to understand that the Collector Customs can only revise the Order, if any illegally or irregularity is committed by Principal Appraiser (Customs) or its subordinate and obviously the order passed by Deputy Collector is without jurisdiction. In these circumstances the order impugned herein, be declared illegal, unlawful and without lawful authority qua the rights of petitioners." Learned counsel further contended that it is settled law that assessment orders are appealable and where an appeal has not been filed, the matter could be reopened by a competent and authorized officer under section 195 of the Customs Act, 1969 and failure to do so would render the initiated proceedings as being illegal and not warranted by law and prayed that all the appeals be allowed as prayed and the impugned orders passed by both the forums below be set aside.

5.Conversely, the departmental representative not only opposed the arguments of appellants side, he also supported the impugned orders and prayed that since there is concurrent findings of two forums below against the appellants, therefore, all the appeals be dismissed and impugned order be maintained.

5A.Arguments heard, record perused.

6.There is no ambiguity in the law that value of the imported goods would be assessed on the basis of 90 days data prior to the import or within 90 days after import of the goods. The parameter for the assessment of the customs value has been defined under Rule 107(a) of the Customs Rules, 2001. The respondents applied the valuation ruling which was issued on 10-12-2007, and was reviewed on 1-9-2008, despite the fact that the impugned goods were imported much after the expiry of impugned ruling.

7.There is no second opinion that the valuation advices issued on different dates continue and survive to have validity for duration of 90 days from the date of their issuance, thereafter, the valuation authorities are duty bound to justify the failure to issue fresh advice or to record reasons to maintain the existing valuation advice. The valuation ruling ordinarily be recorded as valid for a period of 90 days from the date of issuance.

8.Section 25 provides a system for the purposes of valuation. It has to be adhered to and appreciation of any evidence in this respect has to be in conformity with what is prescribed because otherwise depending on something outside the laid methodology would amount to an aberration resulting to damage the requirement given by law.

9.The provision of section 25 of the Customs Act, 1969, is a follow up of the General Agreement of Trade and Tariff (GATT). The purpose of Section 25 of the Act is to bring a system based on mutual trust and harmony so that particulars of import be declared truly. Now discussing the merit of the case, the appellants imported their consignments on 9-4-2010, 29-4-2010, 6-5-2010 and 18-6-2010. The respondents applied the Valuation Ruling issued on 10-12-2007, revised on 1-9-2008, knowing this fact that the goods were imported much after the expiry of impugned Ruling.

10.The main question regarding the period of validity of the valuation advice under section 25(v) and (vi) of the Act, read with Rule 107(a) and Rule 121 of the Rules has been elaborately dealt with by the Supreme Courts.

10A. As discussed above, the appellants have proved their contention without any ambiguity. The Valuating Ruling applied to the consignments of appellants, in fact had expired and was non-existing. As a result, all the appeals are allowed. The impugned orders are set aside.

11.Announced.

HBT/145/Tax(Trib.)Appeals allowed.