COLLECTOR OF CUSTOMS, MODEL CUSTOM COLLECTORATE VS DIWAN INTERNATIONAL ASSOCIATES, 2017 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 1843 (2016)

Customs Act (IV of 1969)---

----Ss. 25 & 25-A---Customs Rules, 2001, Rr.76 & 107---Assessment and determination of value of goods/rims of motor cycle---Motorcycle being defined as vehicle, its rims were to be termed as rims, not part of vehicle---Valuation of the item had to be done while considering those as rims not part and the levy of duty, taxes under the respective PCT meant for rims and not parts---Order of High Court on valuation ruling was applicable in general on all the transactions made by the public during conduct of their business activities---When any order was suspended by the court it was mandated upon the field formation to give effect of said order to the general public and not to the extent of the company which impugned the order---Tribunal observed that valuation Ruling by the Director, Directorate General of valuation under provision of S.25-A of the Customs Act, 1969, had to be issued specifically for the "goods", "category of goods" and 'country of import' and with the application of S.25 of the Customs Act, 1969 in sequential manner and specific to the PCT and the country of origin---When motorcycle was defined as "vehicle", valuation ruling meant for "vehicle rims", was applicable.

S.M. Naqi son of Syed Muhammad Hussain Karachi v. Collector of Customs (Adj-I) and others Customs Reference No.157 of 2008 and Qazi CNG Filling Station, Gujrat and another v. Directorate General of Intelligence and Investigation-FBR, Karachi and 2 others 2016 PTD (Trib.) 107 ref.

Sajjad Rizvi A.C. and Junaid Ahmed A.O. for Appellant.

Nadeem Ahmed Mirza for Respondents.

Date of hearing: 5th April, 2016.

ORDER

TAHIR ZIA, MEMBER (JUDICIAL-II).---Through this common order, I, intend to dispose of Appeals Nos.K-1780 of 2015 and K-1781 of 2015 filed under section 194-A of the Customs Act, 1969 against the order the order of the Collector of Customs, (Appeals) (herein-in-after to be referred as respondent No.2) vide Nos.10826 to 10827 of 2015 dated 24.11.2015.

2.Since, these 02 appeals are based on similar facts and questions of law, therefore, it is needless to reproduce facts of each case separately. Therefore, being heard, dealt with the disposed off simultaneously through this common order in the light of the judgment of the Honorable High Court of Sindh in Customs Reference No.157 of 2008, S.M. Naqi son of Syed Muhammad Hussain, Karachi v. Collector of Customs (Adj-I) and others. For reference the facts of Appeal No. K-1780/2015 as reported by the appellant are that the respondent No. 1 imported a consignment of motorcycle rims from China, upon receipt of documents delivered to their clearing agent, who filed Goods Declaration with the MCC of PMBQ and as per pre-requisite paid upfront duty and taxes of Rs.235,041.00, consequent to which GD No. was allotted as KPPI-HC-9433 dated 19.08.2015. Upon appearance of Goods Declaration on his desktop, the nominated Appraiser instead of completing the assessment order directly, opted to get the goods examined first, which confirmed the declaration of respondent No. 1 and was uploaded in the system by the Customs Officials posted at terminal. The nominated Appraiser, after going through the examination report completed the assessment order on 02.09.2015 on higher value with the remarks "Data KAPE-HC-21791-13082015 & ER". The respondent No.1 being aggrieved asked for re-examination, which was allowed and upon uploading of 2nd examination report the nominated Appraiser once again re-assessed and passed assessment order on 04.09.2015 with the addition of 30% in the value of US$ 1.45/kg, while adducing remarks " the images shows that the rims are for motorcycle as such the goods have been assessed under HS Code 8714.1020. The VR No. 685/2014 dated 15.09.2014 provide customs value for motorcycle parts of china origin with a note in the last as "all other parts classify under respective headings not specified above may be assessed not below assessable value of US$. 1.45/kg". Since the goods are of Thailand origin as such 30% loading has been made in the customs value arriving at US$. 1.885, the weight has been taken as per re-examination report of "EO" and transmitted the same to PA, who on 05.09.2015 maintained that with the remarks "at par with KAPW-HC-15089-28072015 and in view of the AO assessment report.", he also transmitted it to the Deputy Collector of the Group, who endorsed the assessment while adducing remarks "upheld as per A.O., P.A. notes. However, as DC (examination) I restrict the tare weight to 500 kgs only the images have been perused and the AO has been grilled for allowing excess Tare weight, it is my considered opinion that the packing of paper cannot have such excessive weight as allowed by the EO.". That since, the whole exercise was carried out on the assessment note of the AO, the respondent No. 1 upon receipt of view message, felt aggrieved from that and filed 1st review before Principal Appraiser, who upheld on 11.09.2015 while adducing remarks reading as "already assessed by the DC-Group-VII". Resultant, respondent No. 1 filed 2nd review before the Deputy Collector, Group under Rule 441 of Sub-Chapter (III) of Chapter XXI of Customs Rules, 2001, who also upheld vide order dated 14.09.2015, with the observation "upheld and assessed previously". The respondent No.1 being aggrieved filed an application before the Additional Collector of Customs, who directed to look into the matter and re-assess the Goods Declaration after associating the representative of respondent No. 1. Consequent to which on 31.10.2015 the Deputy Collector re-assessed the Goods Declaration while observing:--

"The GD was reassessed in the light of the application dated submitted by the applicant to the Additional Collector assessment. Abdul Haseeb CNIC 42101-6375593- 9 of Khurram Brothers, Karachi Cell No. 0300-828915 appeared and insisted on finalization of assessment on the basis of VR 397/2011 attracting PCT 8708.7010 and in respect of re-examination report. Perusal of aforementioned PCT and vr scanned by the importer shows that the same is not applicable on motorcycle rims. Instead the goods have been correctly classified under 8714.1020 that falls under vr 685/2014. Note added to vr 685/2014 clearly read as all other motorcycle parts classifiable under respective heading, not specified above, may be assessed not below assessable value of US$. 1.45/kg. since the vr is about Chinese origin therefore, if 20% value is added on the origin and GD assessed accordingly."

3.The respondent No. 1 being aggrieved from the assessment order dated 31.10.2015 passed by Deputy Collector of Customs, Group assailed that before respondent No. 2 through an appeal under the provision of Section 193 of the Customs Act, 1969, who after providing opportunity of hearing to both the parties passed order dated 24.11.2015 through which he disposed off the appeal, para 3 is relevant, which is reproduced here-in-below:--

"I have examined the case record. The appellant imported motorcycle rims, declared under heading 8708.7010, this heading pertains to part of motor vehicles of heading 87.01 to 87.05. Accordingly respondent corrected the heading to 8714.1020. Both the headings attracts same rates of duty and taxes. The controversy pertains to valuation of goods. The respondent have applied the valuation ruling 685/2014, which is for China origin goods and further addition of 20% was made on account of goods being Thailand origin. The appellant have stated that this ruling was suspended by High Court in Suit No. 2556 of 2014. The appellant has further cited Valuation Ruling 397/2011, wherein value of wheel rims of all vehicle falling under heading 8708.7010 was determined @ US$. 0.68/kg which is equal to their declared value. It is apparent from the above that the claims and counter claims are not based on facts. The valuation ruling 685/2014 is not applicable to the impugned goods as the ruling is specific to motorcycle parts of China origin. The valuation ruling 397 of 2011 is specific for wheel rims of heading 8708.7010, thereby not applicable to motorcycle wheel rims. Therefore, the assessment and the appeal both are dis-approved. Since, the goods are still at the port, the respondent are directed to determine the customs value of the goods under Section 25 of the Customs Act, 1969.

4.The appellant being aggrieved from the order of respondent No. 2 filed the instant appeal on the basis of the grounds argued and incorporated in memo. of appeal and which are as follows:--

(i)That the impugned order is bad in law, wrong on facts, unjust, inequitable, erroneous, harsh and lacks judicial application of mind.

(ii)That the learned Collector failed to appreciate that the appellant rightly classified the goods under 8714.1020 that fall under Valuation Ruling 685/2014 by which the value of motorcycle parts was determined and is applicable on the motorcycle parts whether specifically mentioned in the list of parts or not.

(iii)That the learned Collector (Appeals) ought to have appreciated that there is no specific ruling in the field which can be applied on the motorcycle wheel rims. The learned Collector ought to have held that motorcycle wheel rims are included in parts and accessories of motorcycle and shall be assessed as per valuation ruling No. 685/2014 untill and unless a separate valuation ruling for motorcycle wheel rim is formed.

(iv)The learned Collector failed to appreciate that it is specifically mentioned in the Valuation Ruling No. 682/2014 that all other motorcycle parts classified under respective heading not specified above, may be assessed not below assessable value of $. 1.45/kg. In view of above specific direction the imported goods can only be assessed in the light of Valuation Ruling 685/2014.

(v)That the learned Collector misread and misapplied the order passed by Hon'ble High Court of Sindh in Suit No. 2556/2014 (Messrs Memon Motors (Pvt.) Ltd. v. Federation of Pakistan and others) as the facts of the case were different and were not placed on record by the respondent. Even otherwise, the suspension was with regard to the said case only and said order cannot in any manner applied to the instant case.

(vi)That the learned Collector (Appeals) ought to have held that the appellant rightly applied heading 8714.1020 which is for the parts and accessories of motorcycle and motorcycle rim can only be assessed under the said heading. The respondent did not applied the correct HS Code.

(vii)that the ruling 379/2011 is not meant for motorcycle parts and accessories. Infact it is meant for rims of cars and other vehicles as the stake holders who attended the meeting at the time of determination of value of wheel rims were local car manufacturer i.e., Indus Motors and Pak Suzuki, which establishes the facts that the said ruling is not meant for wheels rim.

(viii) The learned Collector ought to have held that the appellant correctly made assessment of the impugned goods as per valuation Ruling No. 685/2014 and in the absence of any ruling of Thailand origin goods therefore, 30% ruling had been made in the customs value.

(ix)That the impugned order cannot be sustained under law and is illegal.

(x)The appellant carve leave to urge fresh and additional grounds at the time of hearing and the appellant desired to be heard.

5.The respondent No.1 in exercise of their right filed cross objections under subsection (4) of Section 194-A of the Customs Act, 1969, verbatim of which are reproduced here-in below:

(i)That the respondent No. 2 ordered dated 24.11.2015 is correct to the extent that the imported "Wheel Rims" are of motorcycle and falls under PCT 8714.1020 but not to the extent of definition of "vehicle" notified by the Board in clause (d) of Sub-Rule 76 of Chapter VI of Customs Rules, 2001 reading as "Vehicle means a Motorcar, Motorcycle, Van, Microbus, Bus, Pick-up, Jeep, Truck, Self driven Carvans and Tractor with Trailer or Semi Trailer or Carvan".

(ii)That when a motorcycle is defined by the Board as vehicle, it is to be honored and adhered by the field formation which includes the appellant and respondent No. 2 as mandated under section 223 of the Customs Act, 1969. Rims of vehicle irrespective of their shape attract application of Valuation Ruling No. 397 dated 03.11.2011 (See exhibit "C" annexed with memo of appeal at page 53) by virtue of settled interpretation available in Note 1 to Sixth Schedule to the Sales Tax Act, 1990 that:--

"PCT classification of heading is provided for ease of reference and commodity classification purpose only and exemption under the said serial No. said to be admissible on the description of good as mentioned in column (2)".

(iii)That in the light of definition of vehicle, the Serial Nos. 3 and 4 of Valuation Ruling dated 03.11.2011 is applicable for assessment for levy of duty and taxes on the imported rims other than alloy of all sorts of vehicle irrespective of their shapes and this stood validated from the evidential GD's annexed as Exhibit K & L at pages 77 to 83 of memo. of Appeal.

(i) That as regard to the opinion of the appellant that the Valuation Ruling No. 685/2014 dated 15.09.2014 has been suspended by the Hon'ble High Court of Sindh vide order dated 15.01.2015 is to the extent of the company for which it has been issued. The said opinion is based on mistaken belief as through the said order the Valuation Ruling not stood suspended to the extent of the company who challenged that through a suit rather it suspended for assessment of motorcycle parts imported by any one, stood validated from the order of the High Court (See Annexure J at pages 71-75 of memo. of appeal) which at no where support the contention of the respondent No. 1. Even otherwise the Hon'ble High Court never ever issue a discriminatory order attracting Articles 4 and 25 of the Constitution of Islamic Republic of Pakistan. The said order of the High Court is binding on the field formation under Article 201 of the Constitution of Islamic Republic of Pakistan. Any deviation to the said expression would tantamount to defiance beside contempt of court and this stood validated from the reported judgment 2016 PTD (Trib.) 107 Qazi CNG Filling Station, Gujrat and another v. Directorate General of Intelligence and Investigation-FBR, Karachi and 02 others containing observation and order to the said effect reading as

"Compliance of the Order of the Hon'ble High Court irrespective of filing of CPLA by respondent No. 1 with the Hon'ble Supreme Court of Pakistan, because the order of the High Court has to be complied with under Article 201 of the Constitution of Islamic Republic of Pakistan unless stay has been granted or the order of the High Court is reversed by the Hon'ble Supreme Court. This principle is honoured without any exception by all and sundries, including the field formation as held by their lordship Chief Justice (R) of Pakistan Mr. Justice Saeed uz Zaman Siddiqui while presiding a Bench in the capacity of Judge of High Court of Sindh as was their lordship was then in reported judgment 1983 PTD 246 Khalid Adamjee v. Commissioner of Income Tax (West), Karachi that "until decision of High Court reversed by Supreme Court Law declared by High Court will remain same" and in unreported judgment in Customs Reference No. 52/2007 N. Ahmed and Sons v. Collector of Customs (Appraisement) and others that "it is a settled principle of law that even after the suspension of the order of the Hon'ble High Court by the Hon'ble Supreme Court, Order of the High Court is binding on the subordinate judiciary or quasi judicial authorities until and unless it is set aside."

6.Rival parties heard and the case record perused, since in this case controversy in regards to motorcycle wheel rims and applicability of Valuation Ruling No. 685/2014 dated 15.09.2014, for resolving those, following issues are framed:--

(i)Whether motorcycle falls within the definition of vehicle and as to whether its wheel is to be termed as rim of vehicle?

(ii)Whether Hon'ble High Court of Sindh suspended the Valuation Ruling No. 685/2014 dated 15.09.2014 only to the extent of Messrs Memon Motors (Pvt.) Ltd., Hyderabad?

(iii)Whether any assessment can be made by the appellant on the basis of suspended Valuation Ruling for levy of duty and taxes?

(iv)Whether Valuation Ruling meant for China origin goods can be applied on the goods of Thailand origin?

(v)Whether assessment of motorcycle rim has to be made under valuation ruling No.397/2011?

7.That as regard to issue No. (i), upon logging on Google Search Engine and Wikipedia, the available definition of motorcycle is vehicle, just like car, bus, pick up etc., keeping in view the International definition the Federal Government in Chapter VI of Customs Rules, 2001 meant for "Temporary importation of Motor Vehicle for clarity define the vehicle at clause (d) of Rule 76 as "Motorcar, Motorcycle, Van, Microbus, Bus, Pick-up, Jeep, Truck, Self driven Carvans and Tractor with Trailer or Semi Trailer or Carvan". The said definition is binding on importer and field formation, to which appellant is not an exception, for the purpose of valuation and levy of duty and taxes. When a motorcycle is being defined as vehicle, its rims are to be termed as rims not part of vehicle. Therefore, valuation of these has to be done while considering those as rims not part and so the levy of duty and taxes under the respective PCT meant for rims not parts. Terming those by the appellant as part is nullity to the definition of vehicle and rims, which plays specific role in a vehicle and so motorcycle. Rims cannot be given any other name through any stretch of imagination because those are never ever called as part, instead are sold and bought as rims of motorcycle, which is a vehicle, giving any other meaning is absurdity. The issue No. (i) is answered in affirmative.

8.That as regard to issues Nos. (ii) (iii), that whenever, the Hon'ble High Court suspend any Valuation Ruling, notification, direction, orders, in a case filed by an importer/aggrieved party, it is not restricted to the extent of the said person or company, who challenged the vires of those. The said order is applicable in general on all the transactions made by the public during the conduction of their business activities. When any order is suspended, it is mandated upon the field formation to give effect of the said order to the general public not to be extent of the company, which impugned that , it is to be kept into mind that the Superior Judicial Fora never ever pass order, which is instrumental instrumental in giving differential treatment or discriminatory or in derogation of Article 18 of the Constitution of Islamic Republic of Pakistan. The interpretation adopted by the appellant of the order of High Court of Sindh of suspension of Valuation Ruling No. 685/2014 is applicable to the extent of Messrs Memon Motors (Pvt.) Ltd., Hyderabad is patently illegal to be precise absurd and fail the test of judicial scrutiny. In principal it was mandated upon the appellant to stop applying Valuation Ruling No. 685/2014 forthwith for the purpose of assessment of motorcycle parts of China origin, being mandated under Article 201 of the Constitution of Islamic Republic of Pakistan, any deviation is defiance beside contempt of court, a detailed deliberation in this context has been made by the learned Member-Judicial in reported judgment 2016 PTD (Trib.) 107 Qazi CNG Filling Station Gujrat and another v. Directorate General of Intelligence and Investigation-FBR and which is available at para 5(iv) supra. The issues Nos. (ii) and (iii) are answered in negative.

9.That as regard to issue No. (iv), the Valuation Ruling by the Director, Directorate General of Valuation under the provision of Section 25A of the Customs Act, 1969 has to be issued specifically for the "goods", "category of goods" and "country of import". The Valuation Ruling should be issued with the application of Section 25 of the Customs Act, 1969 in sequential manner and that should be specific to the PCT and the country of origin. Meaning thereby the Value determined for application for the purpose of assessment for levy of duty and taxes should prominently indicate the country of production/export or origin. The Valuation Ruling issued for specific country and i.e. made applicable with an insertion that in case of import of goods of any other origin certain percentage is to be added in the determined prices for the origin, for the purpose of assessment for levy of duty and taxes is not valid/legal under the Valuation Agreement and section 25 read with Chapter IX, it is only the prices in the country of export or the country of import (in Pakistan) that are relevant to the extent permissible. The prices prevailing in any other country are not relevant, the sub-section (13)(e) of section 25 expressly provides that "goods shall not be regarded as 'identical goods' or 'similar goods' unless they were produced in the same country as the goods being valued." and this has been held by the Hon'ble High Court of Sindh in reported judgment PTCL 2014 CL 537 Sadia Jabbar v. FOP. Therefore the Valuation Ruling No. 685/2014 is ultra vires of the section, with the application of which goods of Thailand origin cannot be assessed. The issue No. (iv) is answered in negative.

10.That as regard issue No.(v), that when motorcycle is defined as vehicle, valuation ruling meant for vehicle rims is applicable i.e. 397 of 2011, dated 03.11.2011 meant for all vehicle, in which motorcycle also falls. It is immaterial that the PCT heading therein is 8708.7010 or 8708.7020, which is for reference only, applicability is based on description, for reaching on the said conclusion, I drive strength from the explanation given in Note 1 to the Table I & II of the Sixth Schedule to the Sales Tax Act, 1990, which says "PCT classification of heading is provided for ease of reference and commodity classification purpose only and exemption under the said serial No. said to be admissible on the description of good as mentioned in column (2)". Notwithstanding, the appellants are regularly assessing the rims of motorcycles with the application of said Valuation Ruling 397/2011 and the respondent No. 1 have place on record plethora of GD's in support of their contention, reference is placed to GD No.KPPI-HC-44714-04032016 and KPPI-HC-18131-06.10.2015. Even if these evidences are ignored, the declared value of the respondent is also fair in the light of the data maintained by the PRAL under rule 110 of the period given in Rule 107(a) of Chapter IX of the Custom Rules, 2001, therefore their value is transaction goods value falling under section 25(1) of the Customs Act, 1969, order for which was given by respondent No.2. The issue No.(v) is answered in affirmative.

11.In view of the above, the appeals in hand are dismissed being devoid of any force and substance.

HBT/67/Tax(Trib.) Appeals dismissed.