HAMSONS INDUSTRIES VS SECRETARY REVENUE DIVISION ISLAMABAD, 2015 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 455 (2013)

Customs Act (IV of 1969)---

----S.81(1)(2)(4)---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss. 2(3), 9 & 10(4)---Provisional Assessment---Finality of---Entitlement of the complainant for refund of differential amount---Complainant/importer, had sought refund of customs duty and allied taxes allegedly recovered illegally by the department against the security deposited by the complainant for release of his goods under Provisional Assessment order---Contention of complainant was that department having failed to finalize the Provisional Assessment within period of one year, as prescribed under S.81(2) of the Customs Act, 1969, the value declared by the complainant had attained finality; and complainant was entitled for refund of differential amount deposited by him for release of goods, which was illegally recovered by the department---Validity---After Provisional Assessment, the complainant did not pursue the matter, and no evidence was produced by him to support his declared value and that prescribed period of one year had expired---After expiry of prescribed period, Provisional Assessment, which included the declared value, as well amount secured, had attained finality under S.81(4) of Customs Act, 1969---Recovery of amount secured through PDC, could not be termed as illegal and no case for refund of the same, was made out---Compliant was rejected.

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

Naseer A. Malik, Authorized Representative.

M. Faisal, Assistant Collector, Departmental Representative.

FINDINGS/RECOMMENDATIONS

ABDUR RAUF CHAUDHRY, FEDERAL TAX OMBUDSMAN.---The complainant has sought indulgence of the Federal Tax Ombudsman for refund of customs duty and allied taxes of Rs.6,955,893 recovered by the Department against the securities deposited by the complainant for release of his goods under provisional assessment under section 81 of the Customs Act, 1969 (the Act).

2.According to the complainant pre-fabricated building imported by the complainant was declared @ US$ 0.6517/kg. The Department assessed the goods @ US$ 1.4/kg. On account of dispute of valuation, the goods were cleared provisionally under section 81 of the Act on payment of duty and taxes on declared value and securing the differential amount through post dated cheque (PDC). The complainant pleaded that the Department failed to finalize the provisional assessment within the period prescribed under Section 81(2) of the Act whereafter the declared value attained finality but the Department recovered the duty and taxes secured through PDC by creating blockade of NTN of the complainant compelling him to make payment of the differential amount. According to the complainant he submitted application for refund of amount illegally recovered by the Department but despite his reminders the Department did not redress his grievance.

3.The notice of complaint issued under section 10(4) of the FTO Ordinance has been responded by the department by filing of para-wise comments raising preliminary objections about maintainability of the compliant on the grounds that the matter involved interpretation of law, determination of value, levy of duty and taxes and that the complaint was time barred under section 10(3) of FTO Ordinance.

4.On merits the department did not dispute the facts about release of the goods on provisional assessment, however, the department pleaded that on expiry of period provided under section 81(2) of the Act the provisional assessment stood finalized in terms of section 81(4) of the Act, and explanation thereof. The complainant was communicated the decision about finalization of provisional assessment through electronic message on 11-9-2008. The department resisted the claim of the complainant for refund of the amount of duty and taxes contending that no case of refund could be entertained against legitimate revenue collected by the department.

5.The complainant responded to the para-wise comments and filed a rejoinder. The complainant contested the plea of the department about finalization of the provisional assessment within the stipulated period. The complainant reiterated his plea that on expiry of period provided under section 81(2) of the Act for finalization of provisional assessment, his declared value attained finality.

6.The parties were afforded opportunity of hearing on 2-9-2013.

7.During hearing the parties reiterated the averments of their pleadings and the DR in support of the plea of the department submitted copies of order/judgment of the Hon'ble Supreme Court, High Court as well as Findings/Recommendations of the Federal Tax Ombudsman.

8.Submissions of parties have been considered in the light of the material available on the record and relevant provision of the Act. The admitted feature of the case is that on account of dispute of valuation the goods imported by the complainant were assessed provisionally under section 81(1) of the Act on 6-9-2007. The complainant paid duty and taxes on declared value and differential amount was secured through PDC. The provisional assessment was required to be finalized within the period specified under section 81(2) of the Act. The record reflects that after provisional assessment the matter was left unattended by both the parties as neither the complainant nor the department made any effort to determine the value of the goods of the complainant and the period prescribed under section 81(2) of the Act lapsed. Although the department claimed that on expiry of period provided under section 81(2) of the Act the complainant was electronically communicated about finalization of provisional assessment in terms of section 81(4) of the Act which fact has been denied by the complainant. However, the plea of the complainant even if accepted will have no bearing on the case of the complainant for refund of differential amount paid by him for the reason that according to section 81(4) of the Act (prior to amendment by Finance Act, 2010) if the provisional assessment could not be finalized within the period provided under section 81(2) of the Act the provisional assessment shall attain finality and issuance of assessment order was not mandatory. The provisional assessment as per explanation of section 81 of the Act means the amount of duties and taxes paid or secured against bank guarantee or PDC. As already stated after provisional assessment the complainant did not pursue the matter and no evidence whatsoever was submitted to support his declared value. In such view of the matter after the expiry of period provided under section 81(2) of the Act the "provisional assessment which includes the declared value as well as the amount secured through PDC attained finality under section 81(4) of the Act. For such view reliance can be placed on the order dated 12-9-2012 passed by the Hon'ble Supreme Court in Civil Petitions Nos.825 and 826/2011, wherein the arguments of the counsel for the department that the period prescribed in 81(2) of the Act would not be of any significance when according to section 81(4) of the Act the provisional determination in the absence of any new evidence shall be deemed to be final, has been endorsed observing that:--

"After going through the impugned judgment in general and the paragraph quoted above in particular, we do not think that the interpretation placed by the High Court on the aforesaid provisions is in any way in conflict with the well recognized cannons of interpretation of statues. Yes, the Customs duty or other levies have not been actually paid but their being guaranteed is no less than the actual payment. The argument that final determination has not been made within the period stipulated in 81(2) of the Act being bafflingly answered by the learned counsel for the respondents merits no other addition."

9.In view of forgoing discussion the provisional assessment which includes the declared value and differential amount secured through PDC attained finality in terms of section 8(4) of the Act, hence recovery of amount secured through PDC could not be termed as illegal and no case for refund of the same could be made out.

10.The complaint having no merit is rejected. The file is consigned to record.

HBT/175/FTOComplaint rejected.