SPACE WORLD TRADERS, LAHORE VS COLLECTOR OF CUSTOMS (APPEALS), CUSTOMS HOUSE NABHA ROAD, LAHORE, 2018 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 1300 (2016)

(a) Interpretation of statutes---

----Statute was best interpreted when, it was known as to why it was enacted---Statute must be read, first as a whole and then section-by-section, clause-by-clause, phrase-by-phrase and word-by-word---If context of a statute was examined, keeping in mind the legislative intent, its scheme, the sections, clauses, phrases and words take colour and appear in clarity---No part of a statute, and no word of a statute could be rendered redundant and statute had to be construed so that every word had a place and everything was in its place.

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

----Ss. 25 & 25-A---Power to determine customs value of goods---Concept of 'transaction value'---Adaptability of---'Transaction value', envisaged under S.25, Customs Act, 1969 was adapted as a primary method for valuation during 1999 as part of Pakistan's commitment with the International Polity of Nations under the General Agreements on Tariffs and Trade (GATT)---Old system devised under S.25 of the Customs Act, 1969, stipulated mechanism prone to maintaining a uniform, fixed notional value for calculation of duties and taxes all over Pakistan---Subsequent to adaption of "transaction value", method under Article 'vii' of "GATT" the mechanism of valuation devised under S.25 of the Customs Act, 1969 was revamped/redrafted; which pivoted on the notion of determination of value of imported goods for customs purposes; based on the actual value of the imported merchandise; put simply the price actually paid or payable for the imported goods---System intended to provide a fair, uniform and neutral basis for the valuation of imported goods, as a part thereof, the Customs Department was bound to accept the value stated by the importer through the invoice, unless the department had additional information to substantiate under invoicing---Most of the importers while taking advantage of that legal situation, either undervalued their imports with false invoices or effectuated fraudulent re-invoicing in third countries, or double invoicing was done with the connivance of the foreign suppliers, or at some instances on basis of false invoices with assistance of customs staff---Said rampant fraudulent activity not only caused huge revenue losses to the State Exchequer, but also made related local industry unviable---Such an anomalous situation prompted "raison d'etre" for creation of a mechanism of oversight over the evidential data streams created under S.25 of the Customs Act, 1969 and consequently during the year 2007 S.25-A was included in the Customs Act, 1969.

PTCL 2014 CL 537 and 2012 PTD 1 distinguished.

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

----Ss. 25 & 25-A(4)---Customs Valuation Rules, 2001, R.107(a)---Power to determine the customs value---Section 25-A of the Customs Act, 1969 commenced with a non obstante clause embracing over S.25 of the Customs Act, 1969---When provision of any enactment was made 'notwithstanding' to some other provision, it would convey the idea that such clause was being used as a legislative device to give overriding effect to certain provisions over some contrary provisions; that could be found, either in the same enactment or some other enhancement, to avoid the operation and effect of all contrary provisions to which such non obstante provision had been given overriding effect---Harmonious reading of S.25-A of the Customs Act, 1969 and subsection (4) thereof, S.25-A and Customs Valuation Rules, 2001, enacted thereunder, revealed that the stipulation contained under S.25-A(4) of the Customs Act, 1969, was contrary to what had been envisaged under the Customs Valuation Rules, 2001---Subsection (4) of S.25 of the Customs Act, 1969, would prevail and operation period of 90 days, contained in R.107(a) of Customs Valuation Rules, 2001, would stand inapplicable to a value determined under S.25-A of the Customs Act, 1969---Any other reading of said law would render subsection (4) of S.25-A, redundant---Customs value of imported goods, determined under S.25-A of the Customs Act, 1969, would remain valid, unless revised or rescinded by the competent authority.

Maqbool Ahmad for Appellant.

Irfan Shaukat, Deputy Director for Respondents.

JUDGMENT

OMAR ARSHAD HAKEEM, MEMBER (JUDICIAL).---This judgment shall dispose of an appeal filed against Order-in-Original No.16/2013 dated 13.03.2013 passed by the learned Collector Customs, (Appeals) Lahore.

2.Precise facts for deciding the core controversy involved in the instant appeal are that the appellant imported a consignment including padlocks of China origin and filed GD No.LPRN HC 531 dated 19.11.2012 through their clearing agent. The transactional value of impugned goods was rejected by the Appraising Staff and value of merhandise was enhanced on the basis of valuation ruling No.429 dated 15.02.2012.

3.Being aggrieved by the said order the appellant filed an appeal before the learned Collector of Customs (Appeals), Lahore who vide impugned order in appeal dismissed it and held that:--

"I have examined the case record, submission of the appellant and the department, and found that in the said High Court's order had only directed for disposal of appeal and is silent about the applicability of any Valuation Ruling. There is no confusion that the value assessed on the basis of Valuation Ruling No. 429 dated 15.02.2012 is actually higher than the appellant's declared value of the impugned goods. The impugned Valuation Ruling dated 15.02.2012 was issued by the learned Directorate General of Valuation under section 25(A) of the Customs Act, 1969 and issued the same after observing the laid down criterion for the determination of customs values which was in force at the time of import of the goods hence was rightly applicable on the goods-imported vide GD No. LPRN HC 531 filed on 19.11.2012 and assessed on 22.12.2012 well before the issuance of alleged revised Valuation Ruling No. 525/2012 dated 28.12.2012. Section 25(A) of the Customs Act, 1969 clearly states that values determined under section 25(A) shall be applicable until and unless revised and the Customs Assessing Officers had to apply the Valuation Rulings in vogue in case of imported goods. Therefore in case of the impugned goods imported by the appellants the values were rightly applied by the department as per Valuation Ruling No. 429 dated 15.02.2012.

The upshot of the above discussion is that the instant appeal fails on merits and is accordingly dismissed."

4.Being further aggrieved by the above said order of the learned Collector of Customs (Appeals), Lahore, the appellant has filed the instant appeal before this Tribunal.

5.At the outset the learned counsel for the appellant argued that the assessment of impugned merchandise was based on a valuation ruling which was more than 90 days old, therefore its application to the extent of appellant's case was barred in light of Rule 107(a) of the Customs Valuation Rules, 2001 and seeks a proclamation from this Court to the effect that the impugned valuation Ruling No.429 dated 15.02.2012 be declared expired/ineffective. While crystallizing his stance he relise two reported judgments, one of Hon'ble Sindh High Court at Karachi reported as PTCL 2014 CL 537 and the other of Hon'ble High Court, Lahore reported as 2012 PTD 1.

6.Conversely the Deputy Director, valuation representing the respondent department argued that the impugned valuation ruling had not expired or lost its validity and while citing on subsection (4) of section 25A of the Customs Act, 1969 he articulated that the customs value determined shall be applicable unless revised or rescinded by the competent authority.

7.We have carefully considered the arguments advanced by the rival parties, perused the records and discerned the relevant law our findings are as under:--

8.The crux of the instant controversy boils down to the question whether the valuation ruling issued under section 25A of the Customs Act, 1969 loses its validity subsequent to afflux of 90 days?

9.Prior to embarking upon the discussion for resolving the captioned controversy, we would most reverently advance our considered opinion that the judgment of Hon'ble Sindh High Court reported as PTCL 2014 CL 537 and Hon'ble Lahore High Court Lahore reported as 2012 PTD 1 are of no help to the appellant, as the period involved in both the said judgments was 2009 and April 2010 while during June 2010 there was a change in law and vide Finance Act, 2010 assented on 30th of June 2010, subsection (4) was added in section 25A of the Customs Act, 1969 which specifically relates to tenure of values determined under Section 25A of the Customs Act, 1969; Needless to emphasize that as the appellant has filed impugned goods declaration subsequent to the advent of Finance Act, 2010 therefore subsection (4) of section 25A applies squarely to the present case.

10.Now coming to the merits of the case it is sufficient for our purposes to state at the outset that statute is best interpreted when we know why it was enacted. With this knowledge, the statute must be read, first as a whole and then section by section, clause by clause, phrase by phrase and word by word; If context of a statute is examined, keeping in mind the legislative intent, its scheme, the sections, clauses, phrases and words take color and appear in clarity. Further it has been time and again held by the Hon'ble Apex Court that no part of a statute and no word of a statute can be rendered redundant and statutes have to be construed so that every word has a place and everything is in its place.

11.It is seen that the concept of 'transaction value' envisaged under the current section 25 was adopted as a primary method for valuation during 1999 as part of Pakistan's commitment with the international polity of nations under the General 'Agreements on Tariffs and Trade (GATT); The old system devised under section 25 of the Customs Act, 1969 stipulated mechanism prone to maintaining a uniform, fixed notional value for calculation of duties and taxes all over Pakistan. Subsequent to adoption of "transaction value" method under article 'vii' of GATT the mechanism of valuation devised under section 25 of the Customs Act, 1969 was revamped/redrafted which pivoted on the notion of determination of value of imported goods for customs purposes based on the actual value of the imported merchandise: put simply, the price actually paid or payable for the imported goods. The system intended to provide a fair, uniform and neutral basis for the valuation of imported goods, as a part thereof, the customs department is bound to accept the value stated by the importer through the invoice unless the department has additional information to substantiate under invoicing. Most of the importers while taking advantage of this legal situation, either undervalued their imports with fake invoices or effectuated fraudulent re-invoicing in third countries or double invoicing was done with the connivance of the foreign suppliers or at some instances on basis of fake invoices with assistance of black sheep amongst the relevant customs staff. This rampant fraudulent activity not only caused huge revenue losses to the state exchequer but also made related local industry unviable; Such an anomalous situation prompted "raison d'etre" for creation of a mechanism of oversight over the evidential data streams created under section 25 of the Act and consequently during 2007 section 25A was included in the Customs Act, 1969;

12.Coming to the captioned question we have adverted to section 25A for the purpose of deciphering its true intent meaning in order to test the legality of appellant's standpoint.

13.Section 25A as is relevant for instant case is transposed below for ease of reference;

25A. Power to determine the customs value.---(1) Notwithstanding the provisions contained in section 25, the Collector of Customs on, his own motion, or the Director of Customs Valuation on his own motion or on a reference made to him by any person or an officer of Customs, may determine the customs value of any goods or category of goods :imported into or exported of Pakistan after following the method laid down in section 25, whichever is applicable.

(2) The Customs value determined under subsection (1) shall be the applicable customs value for assessment of the relevant imported or exported goods.

(3) In case of any conflict in the customs value determined under subsection (1), the Director-General of Customs Valuation shall determine the applicable customs value.

Finance Act, 2010

(4) The customs value determined under subsection (1) or, as the case may be, under subsection (3), shall be applicable until and unless revised or rescinded by the competent authority.

14.We have perused section 25A of Customs Act, 1969 and it is manifest that the same commences with a non obstante clause embracing over section 25 ibid; The effect of any provision containing non-obstante clause, is by now well established; It has been settled by the Superior Courts that when a provision of any enactment is made 'notwithstanding' to some other provision, it conveys the idea that such clause is being used as a legislative device to give overriding effect to certain provisions over some contrary provisions that may be found either in the same enactment or some other enhancement that is to say, to avoid the operation and effect of all contrary provision, to which such non-obstante provision has been given over-riding effect.

15.With the above clarity a harmonious reading of preamble of section 25A and subsection (4) thereof ibid section 25 and the Customs Valuation Rules, 2001 enacted thereunder reveals that the stipulation contained under section 25A(4) is contrary to what has been envisaged under the Customs Valuation Rule, therefore in view of the legal position we are of the considered opinion that subsection (4) of section 25A shall prevail and there operation period of 90 days contained in Rule 107(a) (Customs Valuation Rules, 2001) stands inapplicable to a value determined under section 25A due to the overriding effect of section 25A over section 25 of the Customs Act, 1969, any other reading of law would render subsection (4) of section 25A redundant.

16.In view of what has been discussed the captioned question is answered in negative and we hold that the customs value of imported goods determined under section 25A of the Customs Act, 1969 shall remain valid unless revised or rescinded by the competent authority; Consequently this customs appeal being devoid of merits is dismissed with no orders as to costs.

HBT/148/Tax(Trib.) Appeal dismissed.