COLLECTOR OF CUSTOMS through Additional Collector of Customs VS KHAS TRADING CO., 2015 PTD-KARACHI-HIGH-COURT-SINDH 22 (2014)

(a) Administration of justice---

----Order, set aside by Court/any forum---Effect---Once an order has been set aside by a competent court of law, the same is to be treated as never to have remained in field---Such order cannot be claimed to be valid for any purpose, including for the period to it being set aside.

Sadia Jabbar and 3 others v. Federation of Pakistan and others 2012 SCMR 617 rel.

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

----S.196---Valuation Ruling---Pending proceedings---Amendment during proceedings---Retrospective effect, question of---During pendency of proceedings initiated by importer, new Valuation Ruling was issued by authorities and importer was given benefit of new Valuation Ruling---Plea raised by customs authorities was that such benefit had given retrospective effect to Valuation Ruling---Validity---Valuation Ruling in question was issued during pendency of case of importer, which was still pending and yet to be finalized and was in continuation of earlier Valuation Ruling and proceedings---Importer could not be deprived of benefit of the same, as it would amount to gross injustice to importer and defeat principles of natural justice---Importer, from day one was contesting the matter and once matter had been finally decided in favour of importer by issuance of Valuation Ruling in question, importer could not be denied benefit of the same---Such was not a question of giving any retrospective effect to Valuation Ruling, rather was a case of application of Valuating Ruling to pending proceedings---As to whether any retrospective effect was to be given to subsequent Ruling or not was immaterial---Order passed by Customs Appellate Tribunal did not suffer from any illegality nor any negligence was committed by the Tribunal in passing order in question---Reference was dismissed in circumstances.

Sadia Jabbar and 3 others v. Federation of Pakistan and others 2012 SCMR 617; Qaiser Brothers (Pvt.) Ltd. Karachi v. Controller of Customs Valuation, Customs House Karachi and 3 others 2005 PTD 2543 and Bilal Enterprises v. Federation of Pakistan 2013 PTD 1332 ref.

Kashif Nazeer for Applicant.

Faiz H. Shah for Respondent.

Date of hearing: 12th August, 2014.

JUDGMENT

MUHAMMAD JUNAID GHAFFAR, J.---Through this common judgment we intend to dispose of the aforesaid Special Custom Reference Applications wherein identical questions of law are involved. In Reference No.277/2012 the judgment dated 30-5-2012 passed in Custom Appeal No.K-338/2011 has been challenged whereas in Reference No.330/2012 the judgment dated 9-7-2012 passed in Custom Appeal No.K-339/2011 has been challenged. Although several questions were initially proposed on behalf of the applicant, however, at the time of hearing of the aforesaid reference applications the learned counsel for applicants has pressed the following question of law only:--

"Whether the Appellate Tribunal erred in law to hold that the Valuation Ruling No. 385 dated 12-10-2011 shall be applicable for the consignments of "Door Closures" imported and cleared in February, 2010?

2.Briefly the facts are that the Directorate of Intelligence and Investigation Karachi; vide its contravention report dated 3-3-2010 reported that the respondent was involved in the import and clearance of "Door Closures" classifiable under PCT heading 8302.6000 through mis-declaration of description and gross under assessment in violation of the Valuation Ruling No. Misc/05/2009 dated 31-10-2009, whereby the value of the subject item was determined at the rate of US$ 5.45/kg, whereas the respondent had declared its unit value at the rate of US$ 0.650/kg. The matter was referred to the adjudicating authority and when the same was pending, the respondent filed a Constitutional Petition bearing No. D-521/2010 wherein, vide order dated 8-3-2010 the petitioner's consignment was directed to be released in the meanwhile, by deposit of the differential amount of duty and taxes with the Nazir of this Court. Thereafter, the adjudicating authority passed Order-in-Original No. 23/2010 dated 13-7-2010, whereby the allegation with regard to mis-declaration of description and value was dropped, however, the assessment of the goods was ordered to be made on the basis of Valuation Ruling dated 31-10-2009. The respondent during these proceedings had also filed a Review Application in terms of section 25-D of the Customs Act, 1969 before the Director General of Valuation, Karachi, and such Review Application of the respondent and various other importers was dismissed by the D.G. Valuation vide its order dated 19-3-2010. It is further reflected from perusal of the record that Valuation Ruling No. Misc/205/2009 dated 31-10-2009 was also assailed by several importers before this Court along with other various Valuation Rulings and this Court in the case of Sadia Jabbar v. Federation of Pakistan and others reported as PTCL 2014 CL 537 was pleased to set aside the Valuation Ruling No. Misc/205/2009 dated 31-10-2009 and held that the said ruling is ultra vires to section 25-A of the Customs Act, 1969. It was further directed to the concerned officers to make a fresh determination of the Customs Value under section 25-A of the Customs Act in the light of the observations recorded in the said judgment. The Valuation Department, pursuant to the judgment passed in the case of Sadia Jabbar (Supra), issued a fresh Ruling bearing No. 326/2011 dated 25-5-2011, whereby the value of the goods in question was determined in terms of section 25-A of the Customs Act, 1969. The respondent once again being aggrieved by the Valuation Ruling No. 326/2011 dated 25-5-2011, preferred a Review under section 25-D of the Customs Act 1969, on the ground that though the same was issued pursuant to the directions of this Court in the case of Sadia Jabbar (Supra), however, the directions contained in the said judgment have once again been flouted by the Valuation Department, Custom House, Karachi. The Review Application of the respondent and other importers was once again dismissed by a common order dated 22-8-2011 by the Director General Valuation, Karachi against which the respondent preferred an appeal before the Customs Appellate Tribunal in terms of Section 194-A of the Customs Act, 1969. During the pendency of the appeal before the Customs Appellate Tribunal, the Valuation Department Karachi once again carried out an exercise to revise the Customs value fixed vide Valuation Ruling No. 326/2011 dated 25-5-2011 on the directions of the Director General Valuation, Karachi and issued a fresh Valuation Ruling bearing No. 385/2011 dated 12-10-2011, whereby, the values of the subject goods were revised downward to a considerable level. The learned Customs Appellate Tribunal through the impugned judgment has held that in so far as the case of the respondent is concerned, Valuation Ruling No. 385/2011 dated 12-10-2011 holds the field and directed the applicant to finalize the assessment of the goods imported by the respondent on the basis of Valuation Ruling No. 385/2011 dated 12-10-2011. The applicant being aggrieved by the said order of the Customs Appellate Tribunal has proposed the aforesaid question of law for the opinion of this Court in terms of section 196 of the Customs Act, 1969.

3.Mr. Kashif Nazeer, learned counsel for the applicant, contended that the goods in question were imported by the respondent much prior to the date of issuance of Valuation Ruling No. 385/2011 dated 12-10-2011, and would only be governed by the Valuation Ruling which existed and was inforce at the tune of import of the respondent's consignment. Per learned counsel no retrospective effect can be given to Valuation Ruling No. 385/2011 dated 12-10-2011, which is prospective in nature and can only be made applicable to the consignments imported on or after 12-10-2011. In view of such contention the learned counsel prayed that the proposed question be answered in favour of the applicant.

4.Conversely, Mr. Fiaz H. Shah learned counsel for the respondent has contended that since the respondent had disputed the Valuation Ruling No. Misc/205/2009 dated 31-10-2009 from day one and still contesting the same, hence the subsequent Valuation Ruling No. 385/2011 dated 12-10-2011 in respect of same goods which has been issued during the pendency of appeal before the Customs Appellate Tribunal, is applicable to the goods imported by the respondent as well. Learned Counsel further contended that in fact the Valuation Ruling No. 385/2011 dated 12-10-2011 is in continuation of the proceedings which were initiated on behalf of the petitioner by filing Constitutional Petition bearing No. 521/2010, therefore the respondent is entitled for the benefit of the subsequent Valuation Ruling No. 385/2011 dated 12-10-2011 which must not be denied to the respondent. Per learned Counsel through the said Ruling, the applicant Department has in fact corrected a wrong while issuing the two Valuation Rulings bearing No. Misc/205/2009 dated 31-10-2009 and Ruling No. 326/2011 dated 25-5-2011.

5.We have heard both the learned counsel and have perused the record. By consent of the learned counsel the instant Reference Applications are being decided at Katcha peshi stage through this common judgment.

6.It appears that initially the Valuation Department had issued Valuation Ruling No. Misc/205/2009 dated 31-10-2009 in respect of the goods being imported by the respondent. During clearance of one of the consignment of the respondent, the Directorate General of Intelligence and Investigation made out a contravention report dated 3-3-2010 against the respondent on the basis of Valuation Ruling No. Misc/205/2009 dated 31-10-2009. During pendency of the adjudication proceedings initiated on the basis of the contravention report as aforesaid, the respondent had challenged the same through a Constitutional Petition bearing No. D-521/2010 and a Division Bench of this Court vide its order dated 8-3-2010 directed the release of the respondent's consignment by deposit of the disputed amount of duty and taxes before the Nazir of this Court pending decision of the Review Application before the Director General of Valuation, Karachi. It further appears from the record that thereafter the order-in-original dated 13-7-2010 was passed against the respondent, whereby the charge of mis-declaration was dropped, however it was directed that the petitioner's consignment is to be assessed on the basis of Valuation Ruling No. Misc/205/2009 dated 31-10-2009. Since the statutory remedy against issuance of a Valuation Ruling is a Review in terms of section 25-D of the Customs Act, 1969, therefore, the respondent had also preferred a review application against the Valuation Ruling No. Misc/205/2009 dated 31-10-2009 on the basis of which the Order-in-Original dated 13-7-2010 was also passed against the respondent. In the meantime, the Valuation Ruling No. Misc/205/ 2009 dated 31-10-2009 was also challenged/impugned before this Court by various petitioners in a number of petitions and the said Valuation Ruling was set aside by this Court through its judgment in the case of Sadia Jabbar (Supra) with certain directions. Subsequently, the Valuation Department issued another Valuation Ruling bearing No. 326/2011 dated 25-5-2011 and the respondent being aggrieved by such Ruling once again challenged the same through a Review application under section 25-D of the Customs Act, 1969. However, once again the Review Application filed by the respondent was dismissed by the Director General Valuation, Karachi vide its order dated 22-8-2011 against which an appeal was preferred before the Customs Appellate Tribunal by the respondent and during the pendency of the said appeal, the Valuation Department has once again re-determined/revised its Valuation Ruling 326/2011 dated 25-5-2011 by issuing a fresh Valuation Ruling bearing No. 385/2011 dated 12-10-2011. The Appellate Tribunal has allowed the appeal of the respondent to the extent that the respondent's consignment is to be assessed and finalized on the basis of subsequent Valuation Ruling No. 385/2011 dated 12-10-2011 by which the applicants are aggrieved and have filed the instant Reference Applications.

7.From the perusal of the record, we have noted that in so far as the Valuation Ruling No. Misc/205/2009 dated 31-10-2009 is concerned, the same was in field when the consignment of the respondent was imported. It is on the basis of this Ruling that a case of contravention was made out against the respondent, however, it must be kept in mind that the said Ruling was set aside by this Court vide its judgment in the case of Sadia Jabbar (Supra), therefore, the Ruling No. Misc/205/2009 dated 31-10-2009 would be deemed to be never existent particularly, when the Hon'ble Supreme Court has declined leave to appeal filed against judgment of this Court (see Sadia Jabbar and 3 others v. Federation of Pakistan and others reported as 2012 SCMR 617). It is a settled law that once an order has been set aside by a competent Court of law, the same is to be treated as never to have remained in the field. It cannot be claimed to be valid for any purposes, including for the period prior to it being set aside. In the instant matter, the assessment of the consignment made on the basis of Valuation Ruling No. Misc/205/2009 dated 31-10-2009, is therefore non-existent or void ab-initio. It is further reflected from the record that the petition bearing No. D-521/2010 filed by the present respondent was disposed of by this Court vide its order dated 8-3-2010 by directing the respondent to deposit the differential amount of duty and taxes on the basis of Valuation Ruling No. Misc/ 205/2009 dated 31-10-2009 with the Nazir of this Court. It was further observed by this Court that the differential amount of duty and taxes will remain with the Nazir of this Court till the Review Application filed under section 25-D of the Customs Act is decided and immediately on such decision being made, the amount deposited will be released to the party who may succeed and is found entitled to the same. On perusal of Valuation Ruling 326/2011 dated 25-5-2011, it is noticed that the same was issued pursuant to the judgment in the case of Sadia Jabbar (Supra), hence, it clearly reflects that in so far as Valuation Ruling No. 326/2011 dated 25-5-2011 is concerned, the same was issued in continuation to its earlier Valuation Ruling No. Misc/205/2009 dated 31-10-2009. After issuance of Valuation Ruling 326/2011 dated 25-5-2011, the respondent had immediately filed a Review Application against the Valuation Ruling 326/2011 dated 25-5-2011 which was dismissed by the Director General Valuation, Karachi. Again in continuation of the said proceedings, the respondent preferred an appeal before Customs Appellate Tribunal under section 194A of the Customs Act, 1969, which was pending and during such pendency, another Valuation Ruling bearing No. 385/2011 dated 12-10-2011 has been issued. It is pertinent to note that in so far as this current Ruling is concerned, the grievance of the respondent is redressed. On perusal of Valuation Ruling 385/2011 dated 12-10-2011, it is reflected that in fact this has been issued in continuation to its earlier Valuation Ruling No. 326/2011 dated 25-5-2011, whereas, it is further stated in this Ruling that the Director General Valuation Karachi has desired to Re-determine/revise the Customs Valuation of the said goods, therefore, in our view, insofar as Valuation Ruling 385/2011 dated 12-10-2011 is concerned, the same is in continuation of the earlier Rulings in respect of similar subject goods which were under challenge either in Review under section 25D of the Customs Act, 1969 or before this Court in Constitutional Jurisdiction. The respondent is continuously pursuing its review applications and other remedies as provided under the Customs Act, 1969, therefore, we are of the opinion that Valuation Ruling 385/2011 dated 12-10-2011, which has been issued during the pendency of the case of the respondent, which was still pending and yet to be finalized, is a Valuation Ruling which is in continuation of the earlier Valuation Ruling and proceedings. Therefore, the respondent cannot be deprived of the benefit of the same, as otherwise, this would amount to gross injustice to the respondent and would defeat the principles of natural justice. The respondent from day one is contesting the matter and once the matter has been finally decided in favour of the respondent at least to some extent by issuance of Valuation Ruling 385/2011 dated

12-10-2011; therefore, the respondent cannot be denied the benefit of the same. In fact it is not a question of giving any retrospective effect to Valuation Ruling 385/2011 dated 12-10-2011 as contended by the learned Counsel for the applicant, rather it is a case of application of the Valuation Ruling to the pending proceedings, therefore, in the facts and circumstances of the instant case, it is immaterial that as to whether any retrospective effect is to be given to the subsequent Ruling or not. In this regard reference may be made to a Division Bench judgment of this Court in the case of Qaiser Brothers (Pvt.) Limited Karachi v. Controller of Customs Valuation, Customs House Karachi and 3 others reported in 2005 PTD 2543. In the above cited case, the petitioner had imported a consignment of chemical at an invoice price of US$ 800/Ton which was allowed to be stored in a Bonded Warehouse whereafter Ex-Bond Bills of Entries were filed during the period between December, 1991 to February, 1992. At the relevant time an Import Trade Price (ITP) of that chemical was fixed @ US$ 1165/Ton in terms of a Notification dated 29-10-1991 issued in terms of section 25B of the Customs Act, 1969. The petitioner protested against such higher fixation of Value @ US$ 1165/Ton as according to the petitioner US$ 800/Ton was the realistic and correct price. Thereafter, the goods of the petitioner were allowed to be released on furnishing of Bank Guarantee of the disputed amount of duty and taxes. Subsequently the Notification dated 29-10-1991 was amended w.e.f. 1-4-1992 and ITP price of the chemical was fixed @ US$ 830/Ton. On issuance of such Notification dated 1-4-1992, the petitioner applied for discharge of its Bank Guarantee with an undertaking to pay further/additional duty and taxes to be calculated on the basis of difference of US$ 830/Ton and US$ 800/Ton, however, such request of the petitioner was turned down on the ground that the Notification dated 1-4-1992 was effective from the date of its issuance and that the petitioner could not avail the benefit of this Notification dated 1-4-1992 as the petitioner's consignment was cleared between December, 1991 to February, 1992. The petitioner had challenged such action before this Court and had contended that reconsideration or downward revision of ITP took place at the behest of the petitioner and as a matter of law a Notification conferring benefit could always be given retrospective effect. Such contention of the petitioner was opposed by the respondents on the ground that section 25B (3) of the Customs Act, 1969, expressly provided as to when a Notification under subsection (1) of section 25B of the Customs Act would become effective. However, this Court did not agree with such contention and held that since the petitioner's consignment had been allowed to be released upon furnishing Bank Guarantee of the disputed amount subject to resolution of the question as to the correctness of the ITP fixed by the respondents, as such it was an alive dispute rather than a past and closed transaction on 1-4-1992, and allowed the petition by extending the benefit of Notification dated 1-4-1992 to the petitioner. The facts of instant matter are more or less similar as of the case of the petitioner which was pending at various forums either under Review or in Appeal and the respondent was contesting the matter, when Valuation Ruling No. 385/2011 dated 12-10-2011 was issued, hence we are of the view that the petitioner is entitled to the benefit of Valuation Ruling 385/2011 dated 12-10-2011 as the same was issued during the pendency/ continuation of the proceedings after filing of Review application under section 25D of the Customs Act, 1969 as well as the appeal under section 194A of the Customs Act, 1969 before the Tribunal.

8.Similarly in the case of Bilal Enterprises v. Federation of Pakistan reported in 2013 PTD 1332 a learned Single Judge of the Lahore High Court in an identical situation has held as under:--

"7. I have heard the learned counsel for the parties and examined the record. It is clear and obvious that the valuation Ruling No.350 dated 2-7-2011 was sought to be revised by way of revision application. The subsequent ruling is a result of such revision and would be deemed to have taken effect from the date when the original ruling was given. There is no lawful or logical reason to burden the petitioner with the effects of an evaluation ruling, which the department itself found to be erroneous. The argument of the learned counsel for the respondent that the subsequent ruling cannot have retrospective effect has not impressed me."

8.It is settled law that the benefit of ambiguity or error, if any, relating to status or the interpretation of ruling must go to the taxpayer. Further, the department itself has, after considering all facts and circumstances, come to the conclusion that the rates fixed in the earlier ruling were excessive and there is consensus between the parties that the subsequent ruling is based upon all relevant factors as incorporated and visualized in section 25 of the Customs Act. I, therefore, find substance in the argument of the learned counsel for the petitioner that it is just and fair that his provisional assessment be finalized on the basis of latest Ruling No.402 under section 25-A of the Customs Act, 1969. Even otherwise, it is just and fair that the petitioner may be given the benefit of the revised ruling.

9.In view of herein above, we are of the considered opinion that the impugned order passed by the Customs Appellate Tribunal, does not suffer from any illegality nor any negligence has been committed by the Customs Appellate Tribunal, in passing the said order. Consequently, the aforesaid Reference Applications are hereby dismissed for being misconceived. The question referred for opinion of this Court is answered in the negative in favour of the respondent and against the applicant. The Registrar of this Court is directed to send a copy of this judgment under the seal of this Court to the Customs Appellate Tribunal.

MH/C-14/SindhReference dismissed.