NUZZER PHARMACUTICAL AND NUTRITIONS VS DEPUTY COLLECTOR OF CUSTOMS, 2017 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 221 (2016)

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

----S. 25-A---Valuation Ruling---Scope---Validity of Valuation Ruling, issued by the Director, Directorate General Valuation under the provisions of S.25-A of the Customs Act, 1969, was only for 90 days.

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

----S. 81---Provisional assessment duty---Clearance of goods---Effect---When Customs Officer would allow clearance under S.81 of the Customs Act, 1969, it was mandatory for him to secure the difference of duty and taxes, between the declared and ascertained description/PCT, and value in the shape of pay order; or bank guarantee.

Messrs Reckitt Benckiser Pakistan v. Federation of Pakistan 2009 PTD 642 and Messrs P.M. International, Karachi v. Federation of Pakistan and 3 others 2010 PTD 1293 rel.

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

----Ss. 80 & 81---Re-assessment---Gate out of goods---Effect---Subordinate of Deputy Collector of Customs, after gate out of the consignment, took up the Goods Declaration, and re-assessed the same and recovery was created in isolation, without following the mandated requirement of law of issuance of show-cause notice and for pressurizing importer for payment of said amount, despite illegal, and not payable under law---Once the goods were gate out/out of the Customs, Officers of Customs would become functus officio---Plea of the importer that the Valuation Ruling, was not applied at the time of passing assessment order, was also without any substance, and legal effect, because, if the Valuation Ruling, was not applied at the time of passing assessment order, that could not be applied subsequently, when the goods were out of the charge, and not in custody of customs---Orders passed by Customs Authorities, were declared to be illegal, null and void and were set aside.

Messrs Paramount International (Pvt.) Ltd. v. FOP and others 2014 PTD 1256; Messrs Smith Kline French v. Pakistan 2004 PTD 3020; Messrs World Trade Corporation v. Central Board of Revenue 1989 MLD 4310; Edulji Dinshaw Ltd. v. Income Tax Officer 1990 PTD 155; Messrs Abdullah Traders, Gujranwala v. Collector of Customs (Appeal) 2015 PTD (Trib.) 1064; Messrs Sikander Enterprises v. Central Excise and Sales Tax Tribunal Karachi 2008 PTD 1968; Messrs S.T. Enterprises v. Federation of Pakistan 2009 PTD 467 and Sadia Jabbar v. FOP PTCL 2014 CL 537 ref.

Nadeem Ahmed Mirza (Consultant) for Appellant.

Ijaz Akhter, Principal Appraiser for Respondents.

Date of hearing: 25th January, 2016.

JUDGMENT

TAHIR ZIA, MEMBER (JUDICIAL-II).---Through this order, I intend to dispose of Appeal bearing No. K-1313/2015 filed against Order-in-Appeal No. 10500/2015 passed by Collector of Customs, Appeals (hereinafter to be referred as respondent No.2) maintaining the re-assessment order dated 01.06.2015 passed by the Deputy Collector of Customs, MCC of Preventive, Q.I.A.P., Karachi ( to be referred as respondent No.1).

2.Brief facts of the case are that the appellant imported the consignment of 23424 kgs of Neo-lac Milk preparation from Netherland @ 3.45/kg C&F Karachi by Air against invoice No. 2015-HL/113 dated 29.04.2015 and AWB No. AMS-15017643 dated 05.05.2015. Upon arrival of the goods appellant delivered the documents to his clearing agent M/s. Have More Cargo Logistics, Karachi (CHAL No.2504) for transmitting Goods Declaration under the regime of WeBOC with the MCC of Preventive, which he did on the strength of the import document and while doing so he deposited upfront duty and taxes of Rs.2,458,951.00 vide cash No. C-KPFI-I-000027-14052015. Consequent to which GD No. KPFI-HC-27-14052015 was allotted by the system and was marked to the nominated Appraiser, who instead of passing the assessment order under section 80 of the Customs Act, 1969 and Rule 438 of Sub-Chapter III of Chapter XXI of Customs Rules, 2001 opted to get the goods examined first for the purpose of clarity of the declaration and transmitted the same to the respondent No. 1, who assent to the opinion and marked the GD to the Shed Staff, which conducted physical examination of the goods under the provision of section 198 of the Customs Act, 1969 and Rule 435 ibid. and thereafter confirms the declaration and posted the said examination report in the system in spite of appearance of report on the desktop the nominated Appraiser delayed the passing of assessment order. This compel the appellant to forward letter dated 15.05.2015 to the respondent No. 1 for early release of the goods as those were edible stuff having self life, beside imported by air and suffering huge demurrage/detention charges of the custodian. The respondent No. 1 on the application "allowed release on priority subject to securing of full duty and taxes" vide order dated 15.05.2015. The subordinate staff of the respondent thereafter completed the codal formalities required for release i.e. passing of assessment order, thereafter clearance order under the provision of Section 83 of the Customs Act, 1969 and Rule 442 of the Customs Rules, 2001 on 15.05.2015 and the consignment was assigned to SPO Gate of AFU, who in compliance of the order allowed gate out (out of charge) of the consignment. After clearance of the goods, the nominated Appraiser on 19.05.2015 reassess the Goods Declaration with the remarks "Assessed as per V Ruling S. No. 25-A-624/23/2012-2013/ European Union US$.7.50/kg". The appellant through review under Rule 441 challenged the reassessment before the Principal Appraiser as the same is not permitted once the goods are gate out. Instead of correcting the illegal act of the nominated Appraiser he rejected that with the remarks "As per v ruling" and transmitted the GD to respondent No. 1 for approval, which he did as evident from the word "ok". The appellant exercised his right of second review through which reiterated his stance once goods, the respondent No. 1 instead of acting within the parameter of law and rationally ignored the submission of the appellant and re-validated the illegal act of his subordinate on 01.06.2015 through order reading as "Assessed vide GD KPAF-HC- 33169-24022015". The appellant being aggrieved from the said order assailed its vires before respondent No. 2, who vide order dated 13.08.2015 rejected the appeal, para 4 is relevant , which is reproduced here-in-below:--

"4- I have examined the case record. The goods were assessed as per Valuation Ruling 624/2013. In pursuance of para 5 of the said Ruling certain amount was added on the account of differential between air freight and sea freight. The appellants challenged the addition of amount in the instant appeal. Later in additional grounds submitted by the appellants, they challenged the vires of Valuation Ruling itself. It is observed that appellant have no locus standi as the assessment made by the respondent Collectorate was in order. This is not appropriate forum to assail Valuation ruling issued under Section 25-A of the Customs Act, 1969. The appeal being without merit is rejected."

3.Being aggrieved and dissatisfied with the impugned Order-in-Appeal the appellant filed the these appeals before this Tribunal on the ground incorporated in the Memo of Appeal, on the date of hearing Mr. Nadeem Ahmed Mirza and Mirza Muhammad Abeer (Consultants) and Obaydullah Mirza (Advocate) appeared and contended that:--

(a)That after clearance of the goods under Section 83 of the Customs Act, 1969 and Rule 442 of Customs Rules, 2001 after passing valid assessment order on 15.05.2015 under Section 80 and Rule 438 ibid., neither respondent No. 1 or his subordinate are empowered to pass reassessment orders on 19.05.2015 and on 01.06.2015. This is not permissible by virtue of the fact that the assessment order has to be passed prior to passing of clearance order. The exercise under section 80 cannot be carried out on the goods which are already out of charged. Resultant, respondent No. 1 and his subordinate while passing reassessment order violated the provision of the Act/Rules. This renders the whole exercise of reassessment void and ab-initio.

(b)That upon conclusion of transaction, under the provision of sections 80 and 83 of the Customs Act, 1969 and 438 and 442 of Customs Rules, 2001, the order so passed under the said provision of the Act becomes appealable under Section 193 of the Customs Act, 1969 before respondent No. 2 and the respondent No. 1 is empowered to do so. If he had any reservation against the passed assessment orders on 15.05.2015, which had not been done within the stipulated period and order so passed by the competent authority defined in section 2(a) became final and that cannot be disturbed by any authority. To the contrary, the respondent No. 1 and his subordinate reassessed the Goods Declaration through (02) separate assessment orders dated 19.05.2015 and 01.06.2015, which is not permitted under law.

(c)That upon filing of the appeal by the respondent No. 1 before the respondent No. 2 under Section 193 of the Customs Act, 1969 emanating the facts of the case and the relevant provision of law. Upon receipt of appeal in his office , it is mandated on the respondent No. 2 to go through the facts and grounds of the appeal and thereafter if he think fit that in the case under adjudication correct duty and taxes have not been either not levied or short paid on the basis of found goods, is empowered to issue a notice under Section 32 of the Customs Act, 1969 to the importer and after receipt of reply to the said notice the Collector of Customs will decide the appeal in the light of the issued show cause notice and reply. In the instant case no appeal has been filed by the respondent No. 1 despite mandated under law, instead passed 02 separate assessment orders dated 19.05.2015 and 01.06.2015, while reopening the assessment order dated 15.05.2015 passed by the competent authority in exercise of the powers vested, under the provision of Section 195 of the Customs Act, 1969. Neither the respondent No. 1 nor his subordinates are empowered to reopen the orders, both acted without power/jurisdiction, hence their action is without any lawful authority and as such ab-initio, null and void as held by Superior Judicial Foras in umpteenth reported judgments e.g. 2014 PTD 1256 Messrs Paramount International (Pvt.) Ltd. v. FOP and others.

(d)That since the consignment in question had undergone the procedure of passing of assessment/clearance order by the appropriate officer in the capacity of adjudicating authority defined in Section 2(a) of the Customs Act, 1969 in exercise of the powers vested upon him under Section 80 and Rule 438 of Sub-Chapter III of Chapter XXI of Customs Rules, 2001 and Notification No. 371(I)/2002 dated 15.06.2002 passed that after checking all the aspects and in consideration of the examination report, images attached, consequent to which the authority defined in Section 83 of the Customs Act, 1969 passed Clearance Order. The respondent No. 1 and his subordinate piled upon 02 subsequent assessment orders dated 19.05.2015 and 01.06.2015 on the existing order dated 15.05.2015. This is not permitted under law. A single order has to remain in field at a time as held by the Hon'ble High Court of Sindh in reported judgments Messrs Smith Kline French v. Pakistan reported as 2004 PTD 3020 held that "once an order is passed, which attains finality, the same cannot be subject to a show cause notice again, considering that no appeal or revision is filed against the first order. This was held by the learned High Court to be in derogation of the principles of administration of justice" and 2014 PTD 1256 Messrs Paramount International (Pvt.) Ltd. v. FOP and another in which it has been held that "1st order-in-original passed in the subject matter was an appealable order for both the parties therefore option to reopen an order passed under the adjudicating hierarchy was not available to the Collector,---Even the Collector of Customs Adjudication could not over see or exercise any right of reopening of an order, which has been passed by an officer lower in rank but acting as an adjudicating authority. Impugned order was set aside" and are squarely applicable on appellant case.

(e)That it is also imperative to add further that assessment order in the subject case have been passed by the competent authority on 15.05.2015 and the appeal against which could had been filed by the respondent No. 1 on or before 14.06.2015 but had not filed by either of them todate and the passed assessment orders attained finality and became closed and past transaction and cannot be disturbed or reopened by any authority or court as held in reported judgment 1989 MLD 4310 Messrs World Trade Corporation v. Central Board of Revenue that "if the order has attained finality through limitation. A fortiori; the Central Board of Revenue could not open up an order that had attained finality under the Sea Customs Act, 1878, and against which so suo motu revision lay under the Act" and 2004 PTD 3020, Glaxo Smith Kline Pakistan Ltd, Karachi v. Collector of Customs, Sales Tax Central Excise, Karachi "that department could not re-agitate which had been decided against him---said order could be assailed in appeal or revisional proceedings, which in the present case were not initiated and therefore the same held the field and in the presence of earlier order another order contrary to the said earlier order could not be allowed hold the field for the simple reason that two contrary orders could not exists at one and a same time"---in the light of the settled law the initial assessment order attain finality by virtue of expiry of stipulated period expressed in subsection (2) and as such hold field and no subsequent order on these to be allowed to be pile upon these as this is not permitted beside tantamount to double jeopardy barred under Article 13 of Constitution of Islamic Republic of Pakistan.

(f)Notwithstanding, to what has been stated above no reason is visible, nor any suppression or concealment of any sort as evident from the Goods Declaration and the assessment notes. Resultant, reassessment is not permitted under law as held in reported judgment 1990 PTD 155 Edulji Dinshaw Ltd. v. Income Tax Officer, wherein their Lordship of the Supreme Court held that:--

"that the Income Tax Officer is seeking to reopen the passed assessment for the last 09 years under section 65 of the Ordinance acting beyond his jurisdiction because all material facts were already on record of the department his predecessor had held that the assessee was liable to be assessed as a property holding company i.e. accompany not carrying on the business of buying and selling properties there was no suppression or concealment of any facts but merely a change of opinion by the I.T.O., as to the inference to be drawn from the same facts, there was thus no legal basis for proceeding under section 65 of the Ordinance."

(g)That the respondent No. 2 is at fault to opine that the vires of Valuation Ruling can not be assailed before him, due to the fact that as the assessment order passed under the provision of Section 80 of the Customs Act, on the basis of Valuation Ruling stood merged in the assessment order and that order is appealable under Section 193 of the Customs Act, 1969 as held by the Hon'ble High Court of Sindh in reported judgment 2010 PTD 1293 Messrs P.M. International, Karachi v. Federation of Pakistan and 3 others. Their lordship of the High Court held that:--

"Order of dismissal of review for being ancillary and incidental to re-assessment has merged into the order of re-assessment passed by Customs officers---imported had a remedy of appeal against re-assessment order High Court dismissed constitutional petition in circumstances."

(h)That since, the valuation ruling stood merged in the assessment order, it is appropriate for the appellant to state the Valuation Ruling dated 23.12.2013 cannot be applied on the consignment of the appellant due to the fact that the same is stale being beyond the time stipulated in Rule 107(a) of Customs Rules, and a fresh ruling has to be issued by the Directorate General of Valuation. Till that time the transaction value has to be accepted. The time for applying the said ruling stood lapse on 23.03.2014. Hence, its application is illegal due to non existence and the any assessment made on the strength of the said ruling is nullity to law as held in judgments 2011 PTD (Trib.) 2480 Malik Vetro Designi and 25 others v. Collector of Customs, Appeals and 2013 PTD 825 Sadia Jabbar of Sadia Traders and PTCL 2014 CL 537 Goodwill Traders, Karachi and 2015 PTD (Trib.) 1064 Messrs Abdullah Traders, Gujranwala v. Collector of Customs (Appeal).

(i)The impugned valuation ruling dated 23.12.2013 is in contradiction of itself as evident from para 5, which states that in cases where declared transaction value are higher from the customs value determined in this ruling, the said value is to be applied being correct, confirming that the value determined through the instant ruling is not fair correct as the same does not at all reflect the true transaction value. That since the value is determined on the basis of C&F, it has to be applied on the goods of all importer, irrespective of the fact that as to whether their declared value is higher or lesser. This is in consonance with the spirit of section 25A of the Customs Act, 1969 and diminish any chance of discrimination, not permitted by Articles 4 and 25 of the Constitution of Islamic Republic of Pakistan.

(j)That likewise the direction contains in second part of the said para direct the assessing officer to take into account the difference between air freight and sea freight while applying the customs value determined in the ruling. The direction is self contradictory as it negates the veracity of the determined value as shown in column 6 being C&F with the exception of mode of transportation, therefore this has to be applied in its true letter and spirit. By mentioning the word "Air", the Director, discriminated the importers opting import of goods through land route or country craft, freight of which are much lesser than sea, no direction to the said fact has been given, rendering the said direction being discriminatory and in conflict with para 4 of the ruling, therefore not applicable and as such void.

(k)That it is also amazing to note that if an importer in order to meet the demand, imports the goods by air and pays excess amount of duty and taxes on the value determined through the Valuation Ruling dated 23.12.2013 as against the importer whose product arrived through sea and pays lesser amount of duty and taxes as directed in the Ruling. Meaning thereby that the goods selling price shall be equivalent to the price of the goods imported by a person by air. Rendering the said direction complete absurdity by virtue of the fact that the para is entirely irrational and devoid from the phenomena of business norms.

(l)Notwithstanding, to the deliberation made here-in-above, in similar nature of cases it is settled law that if the ruling is not applied by the Customs officials at the time of assessment, it cannot be used subsequently after clearance of the consignment as held by High Court of Sindh in its reported judgment 2008 PTD 1968 Messrs Sikander Enterprises v. Central Excise and Sales Tax Tribunal Karachi. Their lordship of the High Court held:--

"Even otherwise after clearance of the goods and removal of consignment from the Custom Area, Customs Authority were functus officio to reopen the case again it had become past and closed transaction---"

(m)In yet another reported judgment of Lahore High Court 2009 PTD 281 Sunny Traders v. Federation of Pakistan it was held "Valuation ruling cannot be considered as a valid documents for cancellation of appraised value" and in reported judgment 2009 PTD 467 Messrs S.T. Enterprises v. Federation of Pakistan. Their lordship of High Court, Lahore held in clear and unambiguous terms that "Valuation Ruling especially in the manner that they are being prepared are still estimate and, if the same are not followed at the time of earlier appraisement, it cannot be used against an importer which has already appraised and has been made out of charge by the Customs Authorities. Once a consignment is out of charged after due consideration of the relevant fact, it becomes a past and closed transaction.

(i)The appellant carves his right to add any fresh grounds at the time of hearing beside placing any valid incriminating evidence/documents

4. No cross objection under subsection (4) of Section 194-A of the Customs Act, 1969 has been submitted by the respondents to this date, instead comments were submitted in stereo typical manner, having no nexus with the grounds taken by the appellants, for validation verbatim of those are reproduced here-in-below:--

(i)Denied. No assessment order was passed on 15.05.2015 under Section 83 of the Customs Act, 1969. However, goods were released on the request of the importer dated 15.05.2015, subject to securing of full duty and taxes but the appellant hoodwinked the department without paying the full duty and taxes. The respondent No. 1 is fully empowered by the law under Section 80 of the Customs Act, 1969 to assess the value and to check properly the GD filed under section 79 of the Customs Act, 1969. The goods were allowed release subject to the conditions which the importer failed to comply with.

(ii) Denied. Same as at para (a) above.

(iii) The matter relates to respondent No. 2 and needs no comments.

(iv)Vehementally denied. On 15.05.2015, the goods were not assessed in terms of Section 80 of the Customs Act, 1969 and no assessment order was issued. The appellant referred to their attached Annex (Exhibit "I") is not an assessment order but it is an examination report which has been recorded in urgent release cases as per law.

(v)Denied. Same as above para (d)

(vi)Denied. The importer has certainly tried to conceal the facts while the GD was in assessment in WeBOC System and tried to gain undue advantage of department facilitation of allowing conditional release.

(vii)The matter relates to respondent No. 2 and needs no comments.

(viii) Denied. The validity of Valuation Ruling is clearly mentioned in the said ruling that "The customs values determined in this Ruling shall continue to be applicable customs values for the aforementioned goods till the time this Valuation Ruling in rescinded or revised by the competent authority in terms of Section 25A of the Customs Act, 1969."

(ix)Valuation Ruling always takes into account the FOB values added by freight whether by road, sea or air. This is an important principle in assessment under Section 25 or 25A of the Customs Act, 1969, since the freight charges vary for the mode of transport and have considerable impact on the value of the goods under assessment.

(x)Denied. Same as at (i) above.

(xi)Denied. Same as at (i) above.

(xii)The Goods Declaration was still in process as an unfinished agenda while the goods were released on the application of the importer keeping in view the hardship they might have faced due to heavy demurrage. It was thus not closed transaction in the case law cited by the appellant do not apply in this case accordingly.

(xiii) Denied. The GD was finalized by DC Assessment on the importer's own cleared GD at Euro 7.38 kgs for the same product at almost the same commercial quantity vide GD KPAF-HC-33169-24022015 Cash No. C-KPAF-3061-24022015 (copy enclosed at Annex-A). In the referred GD the importer himself has accepted the assessment on valuation ruling without any protest whatsoever. In the face of such strong evidence as well as the law, the argument that the valuation has been incorrectly applied is whimsical.

5.Rival parties heard and the case record perused along with the citation relied upon.

6.That prior to dilating upon the merit of the case and the core issue, it is of vital importance to settle the formed opinion of respondent No.2, that for the veracity of Valuation Ruling by the Director, Directorate General of Valuation under Section 25A of the Custom Act, 1969, Collector of Customs (Appeal) is not appropriate forum. The said opinion/observation of respondent No.2 is placed on mistaken belief and inapt interpretation of the provision of the Act and the law laid down by the Judicial Fora. When any assessment order is being passed under the provision of Section 80 of the Custom Act, 1969 and Rule, 438 of Custom Rules, 2001 with the application of Valuation Ruling, the Valuation Ruling stood merged in the assessment order and becomes an integral part of the said order as per theory of merger, which could be assailed before respondent No.2 and he has to decide the merit of the case and so the validity of legality of the Valuation Ruling no matter whether it was issued by an authority equivalent to him in the capacity of Director, Directorate General of Valuation Ruling, for reaching at the set conclusion, I am indebted from the Judgment of the Hon'ble High Court of Sindh reported as 2009 PTD 642 Messrs Reckitt Benckiser Pakistan Ltd. v. Federation of Pakistan. Their lordship of High Court held:--

"We have also perused the judgments of the learned single Judge of this Court in the case Aluminum Processing Industries International (Pvt.) Ltd. quoted supra relied on by the learned counsel for the respondent and have seen that the learned Judge has specifically held that the powers under section 45-A cannot be exercised to examine the legality or the propriety of an order passed either by the Appellate Tribunal has passed the order referred above, all the orders of the authorities below have merged in the order of the Tribunal and as held by the learned single Judge no power exists under Section 45-A to examine the order of the Tribunal".

The Hon'ble High Court of Sindh in the similar nature of case, wherein the petitioner approached for the decision in regards to application of valuation ruling while passing assessment order for orders with the plea that he has no forum available in the law for challenging the vires of valuation ruling as on that time provision of Section 194(e) of the Custom Act, 1969 was not available, under which order passed by Director General, Valuation under the provision of Section 25D could be assailed. The Hon'ble High Court refused to buy the argument and dismissed the petition, while holding in reported judgment 2010 PTD 1293 Messrs P.M. International, Karachi v. Federation of Pakistan and 3 others that: "Order of dismissal of review for being ancillary and incidental to re-assessment which has merged into the order of re-assessment passed by Customs officers---importer had a remedy of appeal against re-assessment order". I therefore, hold that the opinion of respondent No.2 is to devoid of legal plane and in derogation of the provision of Section 193 of the Custom Act, 1969 and theory of merger in the law laid down referred herein above.

7.That it is now settled law that the validity of Valuation Ruling issued by the Director, Directorate General of Valuation under the provision of Section 25A of the Custom Act, 1969 is only 90 days, the period expressed in Rule 107 (a) of Chapter IX of Custom Rules, 2001 and this has been held time and again by the Hon'ble High Court and this Tribunal. In PTCL 2014 CL 537 Sadia Jabbar v. FOP and 2016 PTD 702 Danish Jehangir v. FOP and 02 others revalidated in that "a valuation ruling issued under Section 25A can, in our view, only apply for a certain period and no more. The reason for this lies in the fact that the valuation ruling must be determined using one of the methods of Section/25 the Valuation Agreement. Now at least three of those methods, the identical goods method, the similar goods method and the deductive value method, require the value to be determined "at or about the same time" as the goods being valued. This expression has been defined in Chapter IX of the Rules (in Rule 107) as meaning "within ninety days prior to the importation or within ninety days after the importation of the goods being valued" in the same judgment the Hon'ble High Court nullified para 5 invariably available in all ruling that "in cases where declared/transaction value are higher than the Custom values determined in the ruling, the assessing officer shall apply those value in terms of subsection (1) of Section 25 of the Custom Act, 1969," while holding "that any valuation ruling issued with the said direction is ultra virus to Section 25A because it contemplates and permits a predetermination of Custom Value. It is impermissible to apply Transaction value in terms of Section 25A". The Director, Directorate of Valuation while issuing ruling also insert in para 5 subsequent to the above discussed in many cases, that in case of shipment by air, the assessing officer should add the difference between air freight and sea freight in the value determined by him at the time of applying the valuation ruling for passing assessment order under Section 80 and Rule 438 ibid. This insertion is also ultra virus to the provision of Section 25 of the Customs Act, 1969 and discriminatory not permissible under Articles 4 and 25 of the Constitution of Islamic Republic of Pakistan. All importer are to be treated equally whether they imports the goods by air, sea, country craft or land and their consignments should be assessed with the application of the value determined in the valuation ruling irrespective of amount of freight, due to the fact that they are sold in the local market in the same price irrespective of their cost of import whether it is higher or lesser due to the freight difference. The novel mechanism adopted by the Director in the Valuation Ruling with the insertion of the said phrase on the face of it devoid of phenomena of business norms, irrational and absurd, as it provide an edge to the importers of goods through sea or country craft or land, upon the goods imported through air, this is tantamount to given a differential treatment by rendering the prices of the goods imported by air costlier in comparison to the goods imported by other routes, thus the Director, infact became instrumental in raising the profit margin of the importer of the goods other than air as against other routes. This is not permissible under any provision of subsection of Section 25 of the Customs Act, 1969 and Chapter IX of Customs Rules, 2001 to the agreement on implementation of Article VII of General Agreement on Trade and Tariff 1994 known as "Valuation Agreement" to which Government of Pakistan is a signatory and above all Article 18 of the Constitution of Islamic Republic of Pakistan, 1973.

8.That in Customs Act, 1969 two (02) types of mechanism/ methods are available for release of imported goods (i) Section 80, which is meant for clearance for home consumption and warehousing upon payment of leviable duty and taxes in full on either declared or ascertained, description, quantity, PCT and value with the application of Valuation Ruling issued by the Director, Directorate General of Valuation or on the basis of identical similar value available in the reservoir data maintained by PRAL in terms of Rule 110 of the period given in Rule 107 (a) of Chapter IX of Customs Rules, 2001 and (ii) section 81, under which assessment has to be completed provisionally subject to determination of description through test, want of clarification from the Board or any authority in regards to exemption or applicability of the notification, determination of actual value of the goods so imported by the Directorate General of Valuation after clearance. When a Custom Officer allows clearance under section 81 of the Customs Act, 1969, it is mandated upon him to secure the difference of duty and taxes between the declared and ascertained description/PCT and value in the shape of pay order or bank guarantee as expressed in 1st proviso of section 81 ibid. The Goods Declaration under discussion is not, where clearance was allowed by the respondent No. 1 under the provision of section 81. Therefore, it is needless to deliberate upon. The appellant in the instant case has filed Goods Declaration under the provision of section 79(1) of the Customs Act, 1969 and Rule 433 of Sub-Chapter III of Chapter XXI of Customs Rules, 2001.Which was selected for examination as expressed in section 198 and Rule 435 ibid, prior to passing assessment order, which answer their declaration, which read as follows:--

"At Royal ICG NEO-LAC Infant Formula Powder (400gx24) Mode of packing = (400gx24x40x61) Total 4220 cartons 58560 Tins Mfg 09.03.2015 Exp-09.03.2018 Batch No. 1503060140068w031764 Brand Ly pack I/O Netherland Quarantine Certificate REQUIRED Group may be checked at the time of completion of GD. Total Gross weight 31781 kgs."

The said report was uploaded in the system and Goods Declaration appeared on the desktop of the nominated Appraiser, who was delaying the assessment for one reason and another as against urgency on the part of the appellant to obtain clearance because the goods were perishable and delay in clearance is detrimental for the quality of the goods. He forwarded a representation dated 15.05.2015 to the Additional Collector, AFU with the submission that they had uploaded the required documents in the system upon receipt of view message under Rule 437 ibid and had already deposited leviable duty and taxes of Rs. 2458951.00 on declared value upfront vide cash No. C-KPFI-00027 dated 14.05.2015, in addition to the charges of Rs. 60,000.00 to the cargo shed. Therefore their consignment be allowed gate-out todate i.e. 15.05.2015. The Additional Collector of Customs, allowed acceded to the request subject to securing of full duty and taxes. Upon receipt of the order, it was mandated upon the respondent No. 1 and his subordinate to pass an assessment order under Section 80 of the Customs Act, 1969 and Rule 438 of Customs Rules, 2001 in case and communicate the amount of additional duty and taxes if any to the appellant for the payment, in case their value is not correct and the goods are to be assessed with the application of valid Valuation Ruling infield as held by the High Court of Sindh in reported judgment PTCL 2014 CL. 537 Sadia Jabbar v. FOP and others and 2016 PTD 702 Danish Jehangir v. FOP and 2 others. Since, no valid Valuation Ruling was in field the subordinate of respondent No. 1 passed the assessment order under Section 80 and Rule 438 on the declared value and simultaneously the competent defined authority in Section 83 and S.R.O. 371(I)/2002 dated 15.06.2002 passed clearance order and the SPO posted at Cargo Shed allowed the consignment gate out on 15.05.2015.

9.The subordinate of respondent No. 1 after gate out of the consignment on 15.05.2015 took up the Goods Declaration on 19.05.2015 and reassessed it with the application of Valuation Ruling No. 686/2014 dated 23.12.2013 and through which recovery was created in isolation without following the mandated requirement of law of issuance of show-cause notice and for pressurizing the appellant for payment of the said amount inspite illegal and not payable under law directed DC Administration of Karachi Air Freight Unit to block the NTN of the appellant which he did as evident from Annexure "K" available at page 22 of Memo of Appeal reading as "This NTN is blocked by AC/DC Administration of Karachi Air Freight Unit (ICG)". Since the appellant was left with no other option he challenged the vires of the reassessment orders passed by the respondent No. 1 before the respondent No.2, who rejected that on the basis of his observation available in para 2 supra. The documents annexed with the appeal does not support the contention of the respondent No. 1 that no assessment order was passed under the provision of Section 80 and Rule 438 of the Act/Rules, instead examination was carried out on 14.05.2015 and assessment order have yet to be passed is without substance because a final assessment order under Section 80 of the Customs Act, 1969 and Rule 440 of Sub-Chapter III of Chapter XXI of Customs Rules, 2001 upon receipt of either test report, clarification of the Board/concerned department or decision of classification centre in regards to determination of correct PCT or upon loading of Valuation Advise by the Directorate of Valuation through which value of the imported goods was determined post clearance. As deliberated in para 7, the subject case is not of provisional clearance falling under the provision of Section 81 instead is a case of Section 80 and Rule 438 ibid, where clearance order cannot be passed under the provision of Section 83 and Rule 442 ibid., unless leviable duty and taxes under law are not paid/recovered after passing of assessment order, which the respondent No. 1 and his subordinate passed on 15.05.2015 and this stood validated from the signature of SPO dated 15.05.2015, allowing gate out after having order of the Principal Appraiser of clearance in exercise of vested powers through Notification No. 371(I)/2002 dated 15.06.2002 under the provision of Section 83 and Rule 442 ibid., reading as "when the owner of any goods entered for home consumption and assessed under section 80 or 81 has paid the import duty and other charges, if any, in respect of the same the appropriate officer, if he is satisfied that the import of the goods is not prohibited or in breach of any restriction or conditions applying to the import of such goods, may make an order for the clearance of the same." and "Customs release message will be electronically communicated to the importer, his agent and the Terminal Operator. The goods will be release by the terminal Operator subject to fulfilling of any condition specified by customs in electronic message to the Terminal Operator. The Terminal Operator shall submit all collected documents requisitioned through electronic message to customs at the end of the day". Relying upon the Goods Declaration of the appellant bearing No. KPAF-HC-33169-24022015 by the respondent for justifying their illegal act least lends no support as the goods imported against the said Goods Declaration were allowed clearance under section 83 and Rule 438 of the Act/Rules, after payment of all leviable duty and taxes on the basis of assessment order passed by the competent authorized officer under section 80 and Rule 438 ibid. Therefore, that is independent transaction and cast no influence on the GD under scrutiny having distinguishable facts.

10.Now it is well settled law that Once the goods are gate out/out of charge of the customs, the officers of customs became functus officio as held in reported judgment 2008 PTD 1968 Messrs Sikander Enterprises v. Central Excise and Sales Tax Tribunal, Karachi "Even otherwise after clearance of the goods and removal of the consignment from the customs area. Customs authority was functus officio to reopen the case again when it had become past and closed transaction." Likewise, the plea of the respondent that the Valuation Ruling was not applied, at the time of passing assessment order is also without any substance and legal effect because if the Valuation Ruling is not applied at the time of passing assessment order that cannot be applied subsequently, when the goods are out of charge and not in the custody of customs and this stood validated from the decision given by the Hon'ble High Court of Lahore in 2009 PTD 467 Messrs S.T. Enterprises v. FOP that "Valuation Ruling are estimate , if the same are not followed at the time of earlier appraisement, it cannot be used against an importer which has already appraised and has been made out of charged by the Customs Authorities. Once a consignment is out of charged after due consideration of the relevant fact, it becomes a past and closed transaction.".

11.To what have been stated/discussed herein above, particularly the observations made thereon and in the light of above said judgments of appex Courts. I hold that the passing of orders by the respondents are declared to be illegal, null and void and hereby set-aside and appeal is allowed accordingly.

HBT/69/Tax(Trib.) Appeal allowed.