UNIVERSAL AUTO ENGINEERING VS The DIRECTOR GENERAL
2019 P T D (Trib.) 800
[Customs Appellate Tribunal]
Before Muhammad Nadeem Qureshi, Member (Judicial -I) and Dr. Zulfiqar A. Malik, Member (Technical-I)
UNIVERSAL AUTO ENGINEERING
Versus
The DIRECTOR GENERAL and 2 others
Customs Appeal No.K-837 of 2018, decided on 23/10/2018.
(a) Customs Act (IV of 1969)---
----S. 25---Customs value---Determination---Sequential order---Scope---Customs value has to be determined after following the methods laid down in S. 25, Customs Act, 1969---Valuation methods are provided under subsections (1), (5), (6), (7) & (8) of S. 25 Customs Act, 1969, which are set out in a sequential order of application---Where the customs value cannot be determined under subsection (1) of S. 25 of the Act, it is to be determined by proceeding sequentially through the subsequent methods---If the importer does not request reversal of orders of methods under subsection (7) and subsection (8) of the said S.25, the normal order of the sequence is to be adhered to---Phraseology of the methods and the application thereof is so intertwined that there is no escape from sequential application---Slight leverage has provided under subsection (1) of S. 25 to choose a method of determination, however it cannot be applied at random. [p. 821] A
(b) Customs Act (IV of 1969)---
----S. 25---Customs Rules, 2001, Rr. 110 & 121---Customs value---Determination---Fall back method---Scope---Application of fall back method is not unbridled, first of all it has to be established that all the valuation methods when applied in sequential order could not yield result---Fall back method allows application of any of previous methods in a flexible manner---Under no circumstances fall back method suggests departure from scheme of determination of value provided under subsections (1), (5), (6), (7) & (8) of S. 25, Customs Act, 1969---Said method only permits reasonable degree of flexibility in application of a method chosen from the provided methods to determine customs value, however, the customs value so determined shall, to the greatest extent possible, be based on previously determined customs values of identical goods---In addition, the application of fall back method is subject to Rules---Explanation of reasonable flexibility provided in R. 121, Customs Rules, 2001, also pertains to only three methods that is identical goods, similar goods and deductive method which entails that there is no probability of reasonable flexibility under transaction value method and computed method---While determining customs value fall back method or for that purpose under any method, it is prohibited to apply arbitrary or fictitious value--Same is provided under R. 110 of Customs Rules, 2001.
(c) Customs Act (IV of 1969)---
----Ss. 25 & 25A---Customs Rules, 2001, Rr. 110 & 121---General Clauses Act (X of 1897), S. 24A---Customs value---Determination---Fall back method---Sequential order---Scope---Director of Customs (Valuation) determined customs value for Rear Engine Intercity CBU Buses---Revision filed against valuation ruling wasdismissed---Validity---Customs value of Rear Engine Intercity Buses had been determined under S. 25(9), Customs Act, 1969---Director Valuation brushed aside all methods of valuation and jumped over to subsection (9) of S.25, Customs Act, 1969 for determination of value---Valuation Ruling as well as the order-in-revision, revealed that transaction value method was found inapplicable---Valuation ruling ascribed, wide variation in values declared to customs as the only reason, whereas the revision order stated that relevant supporting documents were not provided by the importer---Director Valuation did not elaborate the reasons to reject the transaction value---In view of the presence of verifiable import data, coupled with load port GD's there was no reason to reject identical goods method and similar goods method in one sentence---Reason provided for such rejection was again wide variation in declared values of subject goods---No scope or concept of declared value existed under S. 25 or 25A of the Customs Act, 1969---Whole scheme of valuation of goods was based upon transaction value---If transaction value of imported goods could not be determined then the transaction value of identical or similar goods in that order would be the customs value---Valuation ruling must be a speaking order, as per mandatory requirement of S. 24-A, General Clauses Act, 1897---Valuation ruling and order-in-revision lacked the warrant of law, therefore, same was declared as void and illegal.
Shahzad Ahmad Corporation v. Federation of Pakistan 2005 PTD 23; 2002 PTD 2457; PLD 1971 SC 61; PLD 1973 SC 236; PLD 1964 SC 536; 2001 SCMR 838; 2003 SCMR 1505; Director General of Intelligence and Investigation and others v. Messrs Al-Faiz Industries (Pvt.) Ltd. and others 2006 SCMR 129; PLD 1996 Kar. 68; 2006 PTD 978; PLD 1971 SC 184 and Collector of Customs v. Abdul Majeed Khan and others 1997 SCMR 371 ref.
Sadia Jabbar v. Federation of Pakistan 2018 PTD 1746 and Triple M. (Pvt.) Ltd. v. Federation of Pakistan 2002 YLR 2792 ref.
(d) Customs Act (IV of 1969)---
----Ss. 25A & 25---Customs value, determination of---Predetermination of customs value---Transaction value---Group under-invoicing---Determination---Fixation---Scope---Section 25A permits but it does not mandatorily require, predetermination of customs value---Principal method of determining customs value is, and must remain with S. 25 of the Act---Section 25A of the Customs Act, 1969 is not intended to be a substitute for S. 25 of the Act nor can it be resorted to in such manner and with such frequency that it marginalizes the latter provision---Section 25A is merely an adjunct to S. 25 of the Act to be resorted to in particular circumstances and for an appropriate period---Intention of legislature in enacting S. 25A, was not to create a statutory bye-pass to the Valuation Agreement---Issuance of valuation ruling under S. 25A cannot be regarded as limited only to those cases where the Department concludes that there is group under-invoicing, the section also cannot be used for the wholesale determination of customs value---Such an approach would, in effect, transform the "determination" permissible under S. 25A to an impermissible "fixation" of value, which in essence would be violative to Valuation Agreement.
Muhammad Arif Moton and Muhammad Adnan Moton for Appellants.
Muhammad Aslam, Principal Appraiser Valuation along with M. Iqbal V.O. for Respondents.
Date of hearing: 16th October, 2018.
JUDGMENT
MUHAMMAD NADEEM QURESHI, MEMBER (JUDICIAL-I).---By this Judgment, we shall dispose of Appeal No.K-837/2018, filed by the Appellant against Order-in-Revision No.25/2018 dated 26.6.2018, passed by the Director General Valuation, Karachi with reference to Valuation Ruling No.1230/17 dated 8.12.2017 issued by the Director, Customs Valuation, Karachi.
2.Facts of the case on record are that the Appellant is a sole proprietor concern namely Messrs Universal Auto Engineering which is engaged in the business of import of higer brand buses and is also a distributor of higer brand buses in Pakistan from China. A distribution agreement between higer bus company Limited China and the Appellant had been effected on 05.04.2016 for distribution of (200) hundred higer brand buses within Pakistan at a promotional price of US$ @ 70,000/- per bus. The Copy of contract to this effect was produced by the Appellant and taken on record.
(i)That the Appellant during the course of hearing provided below the statement for declared and assessed values for commercial buses imported by different importers in Pakistan which was taken on record.
| Name and Models | Declared Value | Assessed Value |
| Higher Model 6128 K | 70,000 | 70,000 |
| Higher Model 6121 YR | 65,000 | 70,000 |
| Yutong VIP LCD Bus | 95,358 | 95,358 |
| Daewoo Express Explorer Shape | 75,000 | 75,000 |
| Zhong Tong Navigator | 57,600 | 70,000 |
| Zhong Tong Elegance | 55,600 | 70,000 |
| Sunlong | 66,000 | 70,000 |
| Yutong Master 6122 | 70,000 | 70,000 |
(ii)From the above table it transpires that various models of commercial buses are being imported into Pakistan and all the models are assessed @ US$ 70,000 except for one model Yutong VIP LCD Bus which is a luxury bus and only one unit of this model has so far been imported and that too by Messrs Master Motors Corporation (Pvt.) Limited (the complainant). It seems that this model was imported by the local assembler in CBU condition in order create evidence of higher value for unduly enhancing the value of the buses for Customs purposes.
(iii)The Appellant further provided detail below the summary of the import data of import of Chinese origin commercial buses for the year 2016-17 in order to provide a correct perspective:
| S# | Description of Goods | Brand | Qty | Origin | H.P. | Declared Value | Assessed Value |
| 1 | Bus Model KL Q6121YR | Higher | 2 | China | 300 | 65,000 | 70,000 |
| 2 | Bus Model KLQ6128K | Higher | 34 | China | 347 | 70,000 | 70,000 |
| 3 | Intercity Coach Bus. Model | Sunlong | 6 | China | 340 | 66,000 | 70,000 |
| 4 | Bus in CBU Condition Model ZK6122HL | Yutong | 11 | China | 340 | 70,000 | 70,000 |
| 5 | Bus LCK 6125 H Elegance | Zhongtong | 1 | China | 340 | 55,600 | 70,000 |
| 6 | Bus LCK 6129 H Navigator | Zhongtong | 1 | China | 340 | 57,00 | 70,000 |
| 7 | Luxury Coach Model XML 6139 with latest exclusive European explorer shape | Golden Dragon | 40 | China | 380 | 75,000 | 75,000 |
| 8 | New Yutong Luxury AC Bus Type ZK6121HL with individual LCD fitted to all seats | Yutong | 1 | China | 340 | 95,358 | 95,358 |
| 9 | City Bus Model No. ZK 6852HG | Yutong | 38 | China | | 52,700 | 52,700 |
| 10 | City Bus Model No. ZK6118HGA | Yutong | 162 | China | | 65,000 | 65,000 |
(iv)A bare perusal of the above statement reveals that value of import of intercity buses mentioned at serial Nos. 1 to 6 ranges from US$ 55,600 to 70,000. The Customs has all along been assessing the Chinese origin buses irrespective of their brand and HP @ US$ 70,000.
(v)Model mentioned at Serial No. 7 i.e. Golden Dragon has been imported by Daewoo Express under a contract with Premaval (Ltd.) Limited a subsidiary of VPL Limited @ US$ 75,000. This model contained some additional features like European explorer shape, 280 HP Yuchal 10.5 L Euro III compliant, 12.7 meter in length with 45 seats fitted therein. Number of units imported are 40. Import data along with news item was produced by the Appellant and taken on record.
(vi)Only one unit of model Yutong mentioned at Serial No. 8 above had been imported by Messrs Master Motors @ 95,358 which is a luxury bus and individual LCD fitted to all seats. Taking its price as reference prices and enhancing the values arbitrarily is quite unjustified and against the very spirit of Sections 25 and 25-A of the Customs Act, 1969.
(vii)In fact, the buses imported by the Appellant cannot be compared with the models mentioned at Serials Nos. 7 and 8. Buses at Serials 9 and 10 are not comparable as they are operated within a city.
(viii) It is pertinent to refer the online prices of various models of buses to check the veracity of the transaction values of the Appellant:
| Description | Online Price Range |
| Higher V92 KLQ 6129 Coach Bus | US$ 25,000-65,000 |
| Euro 4 China 50 Seats 13 M Bus VIP Coach | US$ 45,000-47,000 |
| High Quality China 50 Seats bus VIP Coach | US$ 45,000-47,000 |
| 12M China Luxury Coach 50 seats luxury bus | US$ 65,000-68,000 |
| 60 seats luxury bus rear engine 12 M length large bus 6 cylinder engine | US$ 50,000-60,000 |
| 12 M length Bus | US$ 65,000 |
| 12 M 60 seats luxury coach bus | US$ 37,200-38,000 |
| Combine Engine 12 M 50 seats passenger bus long distance coach | US$ 50,000-60,000 |
| 11 Meter European Passenger Coach bus ZK 61160 with free parts | US$ 30,000 |
| Luxury 11 M long coach 50 seats new passenger bus | US$ 58,000-68,000 |
| 10.5 M coach bus 50 seats VIP bus | US$ 43,500-56,000 |
| 12 M long luxury coach intercity bus | US$ 50,000-63,000 |
| 12 Meters 50 seats passenger bus King Long | US$ 60,000-65,000 |
| Durable 50 seats luxury 12 M long tour bus | US$ 68,000-72,000 |
| Public transport diesel 12 M long 50 seats coach bus | US$ 68,000-72,000 |
| 9.5 M strong quality tourist coach bus | US$ 30,000-38,000 |
| 10 Meter Euro III emission luxury intercity coach bus | US$ 34,000-38,000 |
(ix)It is crystal clear from above chart that the online offer prices in respect of all the models are below the transaction values of the Appellant which inversely support the transaction values since online prices are quotations and not negotiated prices. This further lends support to the argument of the Appellant that their transaction values are correct and are, therefore, acceptable under the provisions of Section 25(1) of the Customs Act, 1969. Therefore, determining a value of US$ 80,000 to US$ 82,000 per unit is unjustified and much higher than the prevailing prices of Chinese origin buses. Online printouts were produced by the Appellant and taken on record.
(x)Master Motors and Daewoo Express had imported 16 units of CKD buses from China @ 60,856 per unit and 20 units of CKD buses from Korea @ 64,746 per unit respectively. The landed cost after payment of duty taxes comes to around Rs. 8,502,330 and Rs. 8,977,272/- respectively whereas they are selling the buses @ Rs. 14,000,000 to Rs. 14,500,000/- with exorbitant profit margins. The perusal of CKD price of Chinese buses at imports was also provided by the Appellant and taken onrecord.
(xi)It is important to mention here that Master Motors had imported ZK6122HL model Yutong buses in CBU condition vide GD's Nos. KAPW-HC-014112-2701206, KAPW-HC-025068-21062016, KAPW-HC-025069-21062016 and KAPW-HC-007905 dated: 24.10.2016 and declared the same @ US$ 70,000. The Customs had also assessed the same @ US$ 70,000. This fact is very crucial while referring to the complaint lodged by Masters Motors for the allegation of under invoicing of values of buses as the company itself has declared the value @ US$ 70,000 at which other the Appellant is importing and that too under a valid contract with the Chinese supplier and all transactions were made through banking channels. Thus the allegation of Master Motors for under invoicing is unwarranted as narrated above.
(xii)That the Appellant would like to highlight the fact that a number of other importers had imported similar buses from china at prices ranging between US$ 44,490 and 66,000 per unit whereas the Customs had assessed the same @ US$ 70,000-71,000 per unit. This evidence, too, corroborates the correctness of Appellant's declared transaction value. The same was produced by the Appellant and taken on record.
(xiii) That it is important to point out here that the local selling price of Higher brand bus in Pakistan is around 14,040,000/-. Calculation sheet containing detailed costing of the Higher Brand Bus Model No. KLQ 6128K which was produced by the Appellant and taken on record in order to check the veracity of the profit margins of the Appellants as well as the declared transaction values.
(xiv)That it is important to note that rate of duty on CBU buses is 20% and Sales Tax @ 20% whereas the rate of duty on CKD buses is 5% and reduced rate of Sales Tax @ 17% is applicable which give them market edge as well as higher profit margins as compared to the importers of CBU buses. In fact, there is no harm to the local industry in the present scenario where the assessed value is determined at the transaction value i.e. @ US$ 70,000. However, if the prices are set at @ US$ 80,000-82,000 it would severely harm the importers as the same would be translated into their cost and ultimately into their selling prices which would reduce their market share.
(xv)The Appellant would like to refer the LC document of one of the imports in Oman from Higher Bus Company Limited, China (the supplier of Appellant) whereby the four units of Higher Bus KLQ6123 (H92K) were imported into Oman @ US$ 291,200 (US$ 72,800/unit CFR). This also substantiates the argument of the Appellant with regard to correct transaction value of the buses and also rebuts the allegation of under valuation. Copy of Letter of Credit was produced by the Appellant and taken on record.
(xvi)That in order to substantiate the transaction value, the Appellant submitted a commercial invoice dated: 11.08.2016 with the proof of payment made through HBL where payment against import of two buses was made @ US$ 140,000 (US$ 70,000 per bus). Thus there remains no iota of doubt that transaction values are true and correct in all respects. Other evidence of proof of payment against imports effected in July 2018 and October 2018 were produced by the Appellants and taken on record.
(xvii) That the Valuation Ruling is vague in the sense that it is based only on 2 different categories of length of the vehicle whereas the following specifications are more important but haven't been taken into account.
a)Engine horsepower for each type
b)Seating capacity for each bus length
c)Intercity buses length is from 9-13 meters but the Valuation Ruling does not cover all ranges so it is not compre-hensive.
(xviii) That the Valuation Ruling has not followed the various methods of valuation and completely ignored the substantial import data of various models in CBU condition imported into Pakistan at a range below US$ 70,000.
(xix) That the provisions of Section 25(7) have not been followed stricto sensu for determining of value on aggregate quantity basis which is a major flaw in the impugned Ruling.
(xx)That the no basis whatsoever has been mentioned in the impugned Valuation ruling for determination of values @ US$ 80,000 and 82,000, which renders this Valuation Ruling void and inapplicable.
(xxi)That the Valuation Ruling does not discuss any of the points that were made by the Appellants during the meeting with the Director Customs (Valuation). In fact, all the information / data referred to above was furnished before the learned Director Valuation, however none of the substantive arguments / evidence presented to him was incorporated in the subject Valuation Ruling. The Ruling has been issued without taking into account the viewpoint of the Appellant who too were the major stakeholder in the subject matter.
(xxii) That the customs authorities rejected the declared transactional value of US$ 70,000/- of each bus declared by the Petitioner. They have instead applied the Valuation Ruling on the Appellant consignments and have assessed each bus to have a transactional value of US$ 82,000/-.
(xxiii) That the Appellant vehemently contested the subject review Petition dated 19.11.2017 filed before the Director General of Customs Valuation and also vide their letters dated: 26.12.2017, 02.03.2018, 07.03.2018, 22.03.2018 and 02.04.2018 along with various supporting documents and relevant import data which was not taken into consideration by the Director General of Customs Valuation who issued in haste the Impugned Order in Revision No. 25/2018 dated: 26.06.2018. Copies of various letters dated: 26.12.2017, 02.03.2018, 07.03.2018, 22.03.2018 and 02.04.2018 addressed to Director General of Customs Valuation were provided during the course of hearing by the Appellant and also taken on record.
(xxiv) That the Appellant's main contention before Respondent No. 1 was that Valuation Department did not follow the valuation methods properly and also objected to the market inquiry conducted by the department and stated that the values determined vide impugned Valuation Ruling in respect of Rear Engine Intercity Buses do not reflect the prevalent marketprices. They insisted on accepting their declared values as correct transaction value. On the other hand the Respondent No. 1 has malafidely stated in Impugned Order in Revision that no supportive documentary evidence wasproduced by the Appellant to substantiate their contention. The Respondent No. 1 has also mis-stated that the Departmental representative explained in detail the valuation methodologies adopted by them to arrive at the Customs values determined vide the impugned Valuation Ruling and in support of departmental contention, the Departmental Representative presented various details of the valuation exercise and working.
3.The final hearing in this case was conducted on 16.10.2018. The Appellant was represented by Mr. Muhammad Arif Moton (Advocate). Mr. Muhammad Aslam Principle Appraiser appeared on behalf of the Respondents. During the course of hearing for a better sense of comprehension, the Appellant's Advocate in the first instance initiated the arguments outlining the difference between the concept of Normal Value envisaged by Brussels Definition of Value BDV and concept of Transaction Value under GATT (General Agreement on Tariff and Trade). Under the notional concept of BDV the price of one commodity was determined in relation to another and the highest price of the import from the country of origin/exportation was determined as normal value for a particular commodity after allowing admissible deductions/ additions. Under the GATT System of Real Value or Transaction Value, every transaction is viewed separately on its own merits and until and unless Customs Administration has enough tangible evidence to prove the imported transaction value as tainted or colorable the transaction value of the imported commodity is accepted as such. Hence, under the GATT System there can be more than one transaction values for similar commodities imported from the same origin and the lower of such prices may be taken for assessment purposes.
4.That the transaction values of the subject imported "Chinese Inter City Buses" of different brands were never a bone of contention between the importers and Customs Administration in the past. Mostly these buses were being imported in the price range of US $ 56000/- to US$ 66000/- per Passenger Bus, the seating capacity being 35 to 49 Passengers and Horse Power differing from 300 HP to 350 HP. The transaction value of the Appellants Buses was the highest being US$ 70000/- per passenger bus capacity being from 44 to 49 passengers for this category of intercity passenger buses imported from China. The controversy started when one of the previous commercial importers of CBU BUSES now turned a manufacturer namely Messrs Master Motor Corporation (Pvt.) Ltd., filed a complaint / representation with Directorate General of Customs Valuation Custom House Karachi about general phenomenon of under valuation by the commercial importers of these buses from China.
5.That to lend credence to his claim regarding rampant under valuation the Complainant enclosed an invoice of physical import of one single luxury model VIP Intercity Passenger Bus fitted with luxury seats, LCD TVs on every seat @US$95358/-.
6.That the Director Customs Valuation in his wisdom against the express and clear cut statutory provisions of Section 25 of the Customs Act, 1969 made the above referred to singular import of Luxury Model Bus as the basis for determination of Customs Value of other imported Inter City Buses after deducting the assumed values of passenger seats and LCD TVs which they thought were distinguishing features between the luxury Model and other normal Inter City Passenger Buses thereby ignoring other salient features of the V.I.P luxury models.
7.The above proceedings show that apprehensions by the Appellants are ill founded. The local manufacturers were not only invited to participate in the preparatory meetings but also their point of view was given precedence over the submissions made by the present Appellants. It has been held by the Honourable High Court of Sindh vide order in SCRA 744/2016 dated 19.3.2018 [2019 PTD 301] that local manufacturers cannot ask for determination or enhancement of custom value of any goods and that they have no standing to be involved in exercise of determining the customs value or to ask for any enhancement thereof. The local manufactures have no standing to ask for determination and /or enhancement of the customs value of any goods under Section 25A or Section 25D and for this purpose to file an application or petition under either section or intervene or be allowed or asked to particulate in any pending proceedings or to be made a party thereto, whether as "stakeholders", or otherwise. The interest of the local manufacturers is to have the value set at as high level as possible on the ground that the transaction value or the value set in the valuation ruling (as the case may be) is otherwise too low and is causing them injury. As correctly submitted by learned counsel for the importers, this matter is exclusively in the domain of the Anti Dumping Duties Act, 2015. The local manufacturers cannot be allowed to be circumvent and evade the requirements of the Anti Dumping Duties Act, 2015, by asking for a customs valued under Section 25A or any enhancement therein or being involved in the determination of the same. The position is likewise in relation to Section 25D. Any ruling or order determining or enhancing customs value under these sections on such basis or with such involvement must be regarded as fatally and irremediably tainted with illegality and cannot be allowed to stand. Questions stands answered accordingly.
Now coming to the methodology adopted for preparation of the impugned ruling, para (7), reproduced hereunder needs perusal:--
"Valuation methods given in Section 25 of the Customs Act, 1969 were applied sequentially to address the valuation issue at hand. Transaction value method provided in Section 25(1) of the Act ibid was found inapplicable because the required information was not available. Identical and Similar goods valuation methods provided in subsections (5) and (6) of Section 25 of the Customs Act, 1969 was examined for applicability to the issue in the instant case which provided some reference values of the subject goods. As the market of the subject goods is asymmetrical as only few specific sellers and buyers are engaged in the transaction of the goods. However, market inquires as envisaged under Section 25(7) of the Customs Act, 1969 were conducted as well. Computed method as provided in Section 25(8) could not be applied for valuation of the aforementioned goods as the cost of raw material and fabrication charges under Clause (a) and amount of profit and general expenses under clause (b) of Section 25(8) of the Customs Act, 1969, in the country of exportation could not be ascertained. Input and feed back by the importers and the manufacturers in the meetings was also considered. Online Prices were also obtained. All information so gathered was evaluated and analyzed for the purpose of determination of customs values. Consequently, the customs values of Rear Engine Intercity CBU Buses are determined under subsection (9) ofSection25oftheCustomsAct,1969.Para8tobeinserted".
Para(8). Customs values for Rear Engine Intercity CBU Buses: Rear Engine Intercity CBU Buses of Chinese origin hereinafter specified shall be assessed to duty / taxes at the following Customs Values:-
| Description of Goods | PCT Code | Proposed PCT for WeBOC | Origin | Customs Values C&F US$/Pc |
| (2) | (3) | (4) | (5) | (6) |
| Rear Engine Intercity CBU Bus with standard seats/ accessories Length: 11.80 Meter to 13 Meters | 8702.1090 | 8702.1090.1000 | China | 82,000 |
| Rear Engine Intercity CBU Bus with Standard seats/ accessories Length: 10.81 Meter but not exceeding 11.79 Meter | 8702.1090 | 8702.1090.1100 | China | 80,000 |
Note:
a.If imported with luxury seats without LCD on each seats up to 35 seats per bus, value to be enhanced by 06% of assessed value.
b.If imported with installed LCD on each seat, value to be enhanced by another 06% of the assessed value.
c.If imported with bathroom fitted in the bus further 03% may be added in the assessed value.
8.The Valuation Ruling was challenged before Director General Customs Valuation in terms of Section 25-D of the Customs Act, 1969. The Director General rejected the revision petition vide Order No. 25/ 2018, dated 22.6.2018. The operative paras reads as un The operative part of the impugned Order in Revision is reproduce below for ease of reference and better understanding of the Honourable High Court Sindh at Karachi:--
"After listening to the detailed discussions / arguments of respondents and perusal of the case record; it is evident that the Valuation Department had duly taken the stakeholders on board at the time of issuance of the impugned Valuation Ruling. They were given sufficient time and opportunity to give their inputs including documentary proof / evidence to substantiate their transaction value but they failed to provide any such proof or fact in support of their declared values which were low. The onus to prove that they have made correct declarations viz. their transaction values lies with the applicants which they failed to discharge. On the other hand, the DR presented details of comprehensive market inquiry reports as available on record to support the values determined by them.
As the Petitioners have not put forward any solid argument, therefore, I do not find any reason to interfere with the Customs values determined by the department vide Valuation Ruling No. 1230/2017 dated: 08.12.2017. Hence the revision petitions are hereby rejected".
9.That the impugned valuation ruling No.1230/2017 dated 8.12.2017 issued by Director of Customs Valuation Customs House Karachi is illegal, void and without any legal force thereby defying the law, procedure and principle of quasi judicial proceedings:--
(a)That by formulating the impugned valuation ruling the learned Director of Customs Valuation Custom House Karachi did not consider the reasons for revision of Valuation as well as did not bring forth any values of physical imports on record.
(b)That without any proper alignment with prices of Inter City Buses in International Market for export to Pakistan the subject Values @US$82,000/- and US$80,000/- were
determined under Section 25(9) of the Customs Act, 1969 being (Fall Back Method) thereby not citing any justifiable criteria for rejecting the values under Section 25 of the Customs Act, 1969.
(c)That the impugned valuation ruling No.1230/2017 dated 8.12.2017 is wrongly based on the premise that value could not be determined under Section 25(1) of the Customs Act, 1969, whereas the Appellant provided Letter of Credit of similar (4) four buses imported into Oman @US$72800/- per passenger bus, Oman being a duty/tax free Middle Eastern Country. Ignoring of this hard core, irrefutable and internationally admissible evidence is contrary to basic principles of Customs Valuation incorporated in Section 25 of the Customs Act, 1969 and the Customs Valuation Rules.
(d)That the concept of transaction value as envisaged in Article VII to Agreement of Implementation of GATT is not bound by any influence of fair or normal value considerations by Respondents. In addition Sections 25 and 25-A of the Customs Act, 1969 both are replica of WTO Customs Valuation Agreement. Therefore, the basic spirit of Section 25 of the Customs Act, 1969 has been ordered to be followed while implementing Section 25 of the Customs Act, 1969.
(e)That the scheme of arriving at Customs Valuation through Section 25A of the Customs Act, 1969 is not based on any concept of "fixation of value" for imported goods. Rather it is a scheme of well thought out plan for "determination of customs value" following the principle of transaction value incorporated in Section 25 of the Customs Act, 1969 coupled with Customs Valuation Rules and dictates of the Superior Courts of the country in shape of case laws.
(f)That Honourable Sindh High Court in case of Sadia Jabbar v. Federation of Pakistan [2018 PTD 1746] reflect the following parameters to be kept in view while issuing any ruling under Section 25A of the Customs Act, 1969.
(a)On arbitrary fixation of customs values the Honourable Court order that:
"The exercise carried out under Section 25A is a "determination" and not a mere "fixation" [as was the cases e.g. under Section 25B, or subsection (14) of Section 25, both omitted from the act in 2004 and 2005 respectively]. The "determination" is a multi-step exercise, at each stage of which there has to be a proper application of mind by the concerned officer. It is therefore appropriate that the ruling should contain sufficient details to show that Section 25A has been properly applied. Furthermore, the fact that the determination is subject to revision by the Director General Valuation under Section 25D and the latter's decision is now appealable to the Appellate Tribunal under Section 194A(1)(c), also making it necessary that the valuation ruling should be a speaking order."
(g)That the impugned valuation ruling No.1230/2017 dated 8.12.2017 is defective in so far as its contents and mode of formulation are concerned. It neither takes into consideration the relevant data of similar Inter City Passenger Buses nor it abides by the parameters stipulated for issuance of Customs Valuation Rulings deliberated and issued by Superior Judicial Fora. That it is an admitted position that the principal method of valuation is Section 25 which the concerned customs authorities abandoned without any legally sustainable reasons by outrighlty rejecting the verifiable data of imports and accepting irrelevant import price of a dissimilar product. The Honourable High Court of Sindh at Karachi has given its verdict vide para (g) of their order in the case of Messrs Sadia Jabbar v. Federation of Pakistan reported as 2018 PTD 1746. To elaborate that Section 25A is not a substitute of Section 25 in the following words;--
"Before concluding section 25A, one general observation must also be made, section 25A is only enabling section. It permits, but does not mandatorily require, a predetermination of customs value in terms as explained above. The principal method of determining customs value is, and must remain, section 25; section 25A is not intended to be a substitute for section 25, nor can it be resorted in such manner and with such frequency that it marginalizes the later provisions. It is merely an adjunct to section 25, to be resorted to in appropriate circumstances and for an appropriate period".
(h)That non adherence to the dictates of Superior Court in the case of Messrs Sadia Jabbar v. Federation of Pakistan reported as 2018 PTD 1746 case advocating the following of a specific procedure while issuing a valuation ruling under Section 25A of the Customs Act, 1969 also attracts violation of dictates of Honourable Supreme Court of Pakistan in the case of Messrs Shahazad Ahmad Corporation v. Federation of Pakistan 2005 PTD 23 wherein it has been ordered to do a think in a prescribed manner by the law.
"If any procedure has been prescribed for any legal business, then that legal business will only be transacted under the prescribed procedure only. The clear and plain meaning of law will always prevail over the implied meaning". The exercise of powers by the authority has to be within the expressed provision of the Act/Ordinance as per laid down principle by the Honourable Supreme Court of Pakistan in 2002 PTD 2457 that "the thing should be done as they are required to be done, or not at all", PLD 1971 Supreme Court 61 "neglect of plane requirement of an absolute statutory enactment prescribing how something is to be done, would invalidate thing being done in some other manner", PLD 1973 Supreme Court 236 "it is now well established that where an inferior Tribunal or Court has acted wholly without jurisdiction or taken any action "beyond thesphereallottedtotheTribunalbylawandthereforeoutside the area within which to law recognizes a privilege to err" then such action amounts to a "usurpation of power warranted by law" and as such an act is a nullity that is to say the result of a purported exercise of authority which has nolegal effect whatsoever" in such a case, it is well establishedthat a Superior Court is not bound to give effect to it." Thesaid ratio was maintained, in the case of E.A Avans reported asPLD 1964 SC 536 "where it has been unambiguoulsly and categorically held that if the doing of a thing is made lawful in a manner than doing of the thing in conflict with the manner prescribed will be unlawful." The Honourable Apex Court in 2001 SCMR 838 and 2003 SCMR 1505 held that "while considering the impact of violation or non-observance of the method prescribed by law for doing an act in a particular manner or mode, such provision of law is to be followed in letter and spirit and achieving or attaining the objective of performing or doing of a thing in a manner other than provided by law would not be permitted. The same observation has been made by the Honourable Supreme Court of Pakistan in the Civil Petition filed by Director General of Intelligence and Investigation and others v. Messrs Al-Faiz Industries (Pvt.) Ltd., and others reported as 2006 SCMR 129 "if the law had prescribed method for doing of a thing in a particular manner, such provision of law is to be followed in letter and spirit and achieving or attaining the objective of law would not be permitted." The super structure built on such foundation no matter how strong it is has to fall. Refer to PLD 1996 Karachi 68, which laid down that "where the initial order or notice was void all subsequent proceedings, orders or super structure built on it were also void. In reported judgment 2006 PTD 978 it is held that "the entire proceeding initiated by the Adjudicating authority and further super structure thereon including the order passed by the learned Tribunal are without jurisdiction void and in-operative." The Apex Court in PLD 1971 Supreme Court 184 held that "order of a Tribunal found to be without jurisdiction---all successive orders based upon it illegal and liable to be quashed.
(i) That even on the merits of the subject case the subject Chinese buses are classified as per Pakistan Customs Tariff under relevant Chapter 87 PCT Heading / HS Code 8702.1090. It describes such Motor Vehicles for transport of ten or more persons including the driver. It nowhere refers to the length of the bus which has been inserted into column (2) of the impugned valuation ruling under the heading description of goods at the instance of the Complainant Manufacturer. This is an assumed deficiency which has been imported into the impugned valuation ruling to lend credence to the claim of the Complainant Manufacturer. Reliance is placed upon the judgment of the Honourable Apex Court in the case of Collector of Customs v. Abdul Majeed Khan and others reported as 1997 SCMR 371. Even otherwise, the Motor Vehicles imported into Pakistan are by and large assessed on their engine capacity. That the impugned Order in Revision No. 25/2018 dated: 26.06.2018 read with Impugned Valuation Ruling No. 1230/2018 dated: 08.12.2017 being on higher side and in complete contradiction to Para (1) of Customs General Order No. 14/2005 dated: 06.06.2005 which is still valid and in field for all practical and legal purposes. Para (1) of Customs General Order No. 14/2005 dated: 06.06.2005 is reproduced below for ease of reference and better understanding of this Honourable Forum:--
Customs General Order No. 14/2005
Subject: ASSESSMENT OF MOTOR VEHICLE
The Central Board of Revenue is pleased to prescribe the following procedure for assessment of motor vehicles in order to ensure its uniform application at all Customs Stations throughout the Country:-
i)The FOB Value of a Motor Vehicle at the time of its manufacture, as certified by the manufacturers or their authorized local agents shall be accepted. Copy of Customs General Order No. 14/2005 dated: 06.06.2005 which was produced by the Appellant and taken on record.
ii)That even the Respondent No. 3 has issued a circular No. SI/MISC/KAPE/13/2017-VIII dated: 27.03.2017 which was produced by the Appellant and taken on record with the subject assessment of vehicles which categorically states that assessment of vehicles is governed by procedure prescribed under CGO-14/ 2005 dated: 06.06.2005 which has been completely ignored by Respondents Nos. 2 and 3 while issuing Impugned Order in Revision No. 25/2018 dated: 26.06.2018 read with Impugned Valuation Ruling No. 1230/2017 dated: 08.12.2017, whereby following guidelines have been incorporated to ensure uniformity in assessment of vehicles:-
i)The FOB value of a motor vehicle at the time of its manufacturer, as certified by the manufacturers or their authorized local agents shall be accepted.
ii)In case of domestic models, for which the FOB values are not provided by the manufacturers, the FOB values certified by the manufacturers or their authorized agents in case of export models of similar vehicles shall be loaded by 5% on the C & F value.
In view of the above CGO No. 14/2005, there is no need for Directorate General of Customs Valuation to issue a Valuation Ruling in respect of vehicles where there is a local agent / distributer present in Pakistan and where the manufacturer is issuing the requisite certificate of value. The manufacturers of Toyota, Honda, Suzuki etc have never been burdened with such Valuation Rulings.
(j)That it was further deposed by the Appellant's Advocate that the Complainant / local manufacturer previously submitted a Higher Value Luxury Intercity Bus Yutong Brand from China @US$95358/ per unit for determination of Valuation Ruling to disturb imports of other commercial importers. However, the same Complainant/ Manufacturer has recently imported a luxury model Yutong Brand Intercity Passenger Bus @US$85,000/ per unit from his same supplier with a 15% decrease in import value. He is marketing this luxury Model No. ZK6127HS as an elite business class luxury passenger bus. He got this passenger bus cleared from the MCC Appraisement East Custom House Karachi declaring that its value was more than the existing Valuation Ruling. The bottom line from the above discussion reflects a downward trend in the import prices of the Chinese origin Intercity Passenger Buses in the international market for the Complainant/Manufacturer only whereas the same Complainant/ Manufacturer is advocating a price increase for the normal Intercity Passenger Buses imported by other commercial importers including the Appellant. This is a crucial point and may kindly be taken into consideration by this August Forum while adjudging the Appellants declared transaction value.
(k)That the Respondent No. 1 namely Director of Customs Valuation of the Impugned Valuation Ruling No. 1230/17 dated 08.12.2017 observed that valuation methods given in Section 25 of the Customs Act, 1969 were applied sequentially to address the valuation issue at hand. The transaction value method provided in Section 25(1) of the Act ibid was found inapplicable because the required information under the law was not available. That identical and similar goods valuation methods provided in subsections (5) and (6) of Section 25 of the Customs Act, 1969 were examined for applicability to the re-valuation issue in the instant case which provided some references values of the subject goods but the same could not be exclusively relied on due to wide variation in declared values of the subject goods. Thereafter, market inquiries as envisaged under Section 25(7) of the Customs Act, 1969, were conducted. The prices of subject goods varied depending on model and type of vehicle input and feedback by the importers and manufacturers in the meetings was also considered. However, no detail working was incorporated in the said Impugned Valuation Ruling and no details were provided about the online prices which were obtained by the valuation department before the issuance of Impugned Valuation Ruling. Further the valuation method as provided in Section 25(8) of the Customs Act, 1969 could not be apply on the grounds that the value of the raw material and fabrication cost and amount of profit was not available in the country of export. Lastly value under section 25(9) of the Customs Act, 1969 was determined on the basis of analysis of data and online information. However no detail about the working was provided before the issuance of the Impugned Valuation Ruling and also not reflecting in the Impugned Valuation Ruling No. 1230/2017 dated: 08.12.2017. However, no valuation method as stipulated under Rules Nos. 113 to 121 of the Customs Rules, 2001 as notified vide SRO 450(I)/2001 dated: 18.06.2001 was applied. The use of such breathtakingly contradictory expressions by the respondent in the Impugned Valuation Ruling which tantamount to mala fide and ulterior motive which renders the impugned VR is to be outright illegal read with impugned Order-in-Revision No.25/2018 dated 26.6.2018 received by the Petitioner on 3.7.2018.
(l)It is further stated that no lawful market enquiry was ever conducted by the Respondent No. 2 namely Director Customs Valuation. The market inquiry, as per SOP 01/05 and Rule 119, Customs Rules, is to be conducted in line with strict rules laid down therein which inter alia, includes in line with strict rules laid down therein which, inter alia, includes inclusion of all the stakeholders in such a market inquiry. Any market inquiry conducted behind the back of the stakeholders is unlawful and void.
10.We have gone through the connected record of the case including the written memo. of Appeal along with Memorandum of Cross Objections as well as the verbal arguments deposed by both sides. The main objection recorded by the Respondents in their impugned valuation ruling and impugned order-in-revision relates to non submission of relevant documents to the Directorate General of Customs Valuation Custom House Karachi. The various documents substantiating the transaction value of the intercity passenger buses were produced before us and have also been submitted to the Respondents as per Directorate General of Customs Valuation Custom House Karachi receipt on the face of the documents. Among the record so produced the Appellants have provided Exclusive Distribution Agreement executed between Higer Bus Company Limited China and the above named Appellant dated 05.04.2016, Price Confirmation Certificate of the Manufacturer namely Higer Bus Company Limited China confirming the price of US$70,000/- per vehicle, Prices of Similar Buses of various brands of Chinese origin, Letter of Credit of import of 4 similar Higher Buses into the Sultanate of Oman @ US$ 72,800/- per bus Oman being a Duty / Tax Free Country. The Appellants have also brought on record the market price of the subject Higer bus on the "Analytical Basis of Valuation" along with Sales Tax Invoices and Sales Tax Returns which are incontrovertible and irrefutable evidence of the transactional value of the subject Intercity Buses imported by them. Inspite of submission of the above authentic and verifiable record of the subject buses, the Respondent department for reasons best known to them chose to ignore this record and which is reflected in both the impugned valuation ruling as well as impugned order-in-revision.
11.The respondent department did not submit Memorandum of Counter submissions within the stipulated statutory time limit. However, they submitted parawise comments on the main appeal before the Customs Appellate Tribunal on 10.10.2018 which were taken on record and copy supplied to the learned Advocate of the Appellant.
12.Also the methodology adopted for determination of customs value was examined in the light of relevant provisions of law. Section 25-A of the Customs Act, 1969, mandates certain officers of Customs to determine customs value of any goods or category of goods. For ease of reference the said section is reproduced hereunder:--
[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 out of Pakistan, after following the methods 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.]
(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.]
13.As is evident in subsection (1) above, the Customs value is to be determined after following the methods laid down in section 25 ibid, whichever is applicable. The methods of valuation are provided under subsections (1), (5), (6), (7) and (8) of section 25 of the Customs Act, 1969. These methods are set out in a sequential order of application. Where the customs value cannot be determined under subsection (1) of section 25, it is to be determined by proceeding sequentially through the subsequent methods. If the importer does not request reversal of orders of methods under subsection (7) and subsection (8), the normal order of the sequence is to be adhered to. The phraseology of the methods and the application thereof is so intertwined that there is no escape from the sequential application. There is slight leverage provided under sub-section (10) of section 25 to choose a method of determination, however it cannot be applied at random.
14.The learned Director Valuation, while preparing the impugned Valuation Ruling adopted the methodology provided under subsection (9) of section 25 of the Customs Act, 1969. The said subsection reads as follows:--
(9) Fall Back Method; If the customs value of the imported goods cannot be determined under subsections (1),(5),(6),(7) and (8), it shall, subject to the rules, be determined on the basis of a value derived from among the methods of valuation set out in subsections (1),(5),(6),(7) and (8), that, when applied in a flexible manner to the extent necessary to arrive at a customs value.
15.The application of fall back method is not unbridled. First of all it has to be established that all the valuation methods when applied in sequential order could not yield result. The fall back method allows application of any of previous methods in a flexible manner. Under no circumstances fall back method suggests departure from scheme of determination of value provided under subsections (1), (5), (6), (7) and (8). This method only permits reasonable degree of flexibility in application of a method chosen from the provided methods to determine customs value, however, the customs value so determined, shall to the greatest extent possible, be based on previously determined customs values of identical goods. In addition the application of fall back method is subject to rules. The explanation of reasonable flexibility provided under rule 121 of Customs Rules, 2001, also pertains to only three methods i.e. identical goods, similar goods and deductive method. This entails that there is no probability of reasonable flexibility under transaction value method and computed method. A caveat which requires emphasis here is that while determining customs value under fall back method or for that purpose under any method, it is prohibited to apply arbitrary or fictitious value. The same is provided under rule 110 of Customs Rules, 2001.
16.Keeping in view the aforesaid provisions of law, methodology adopted to determine customs value in the impugned Valuation Ruling was evaluated. The customs value of Rear Engine Intercity Buses has been determined under section 25(9) of the Customs Act, 1969. The learned Director Valuation brushed aside all methods of valuation and jumped over to subsection (9) for determination of value. The impugned Valuation Ruling as well as the Order-in-Revision, hold that transaction value method was found inapplicable. The Valuation Ruling ascribes wide variation in values declared to customs as the only reason, whereas the Revision Order states that relevant supporting documents were not provided by the importer. The Act and the rules have defined the circumstances, where Transaction value cannot be taken as customs value, the learned Director did not elaborate the reasons to reject the Transaction Value. In view of the presence of verifiable import data, coupled with load port GD's, there was no reason to reject Transaction Value of the appellants. The impugned Valuation Ruling rejects identical goods method and similar goods method in one sentence. The reason provided for such rejection is again wide variation in declared values of subject goods. The learned Director is perhaps not aware of the provisions of statute. There is no scope or concept of declared value under section 25 or 25-A of the Customs Act, 1969. The whole scheme of valuation of goods is based upon Transaction Value. If Transaction Value of imported goods cannot be determined, then the transaction value of identical or similar goods in that order shall be the customs value. There is no nexus or even reference to declared value. The subsequent methods are also used to determine customs value independent of declaration. The impugned Valuation Ruling, later rejects deductive value method and computed value method, before taking re-course to fall back method.
17.It has been held above that as per provisions of law, value of imported goods determined under fall back method shall to the greatest extent possible be based on previously determined customs values of identical goods assessed within ninety days. It is worthwhile to recapitulate here that the learned Director Valuation has not only summarily rejected the customs value of identical goods but also cast a serious doubt over their authenticity. The outright rejection of customs value of identical goods practically renders the fall back method as fruitless. The same is true with reference to similar goods. In utter disregard of the above provisions of law, the impugned ruling is silent as to what method of valuation was applied and how reasonable degree of flexibility was adopted.
18.We, therefore, hold that customs value determined vide the impugned Valuation Ruling are arbitrary and fictitious. The Director General of Customs Valuation failed to appreciate that the provisions of sections 25 and 25A of the Customs Act, 1969 were not applied properly. The respondents did not keep in view that guiding principles laid down by Hon'ble High Court in Saadia Jabbar v. Federation of Pakistan (2018 PTD 1746) and ignored the concept of Transaction Value altogether. Instead of depending upon factual Transaction Values, the impugned customs Valuation Ruling was based on hypothetical data. The Director General ignored the directions of superior courts, as well as guidelines provided by this Tribunal. Being custodian of law, purpose of administration of justice is to hold and not thwart appellant rights. The aforesaid Valuation ruling and Order-in-Revision lack the warrant of law, therefore, the same is declared as void and illegal. The Order-in-Revision passed within hierarchy of customs is non-speaking, ignoring facts and laws. We hereby declare the same as null and void. The appellants have demonstrated that Transaction Values for import of Rear Engine Intercity Buses from China are correct. The Goods Declarations filed at country of export, sales tax returns are indicative of true declaration. The examination of analysis certificates in juxtaposition with international prices of ingredients further supports the Transaction Value.
19.At this juncture we may reiterate with particular emphasis that in the light of FBR's Directives regarding assessment of motor vehicles in terms of CGO 14 of 2005 dated: 06.06.2005, the FOB value of motor vehicle at the time of its manufacture as certified by its manufacturer or local agent shall be accepted. It was even circulated by the Collectorate for implementation by all concerned vide circular No. SI/Misc/KAPE/13/2017VIII dated: 27.03.2017 for strictly and hearing to the procedure outline in the aforesaid CGO. Issuance of a Valuation Ruling against the express provisions of CGO 14/2005 dated: 06.06.2005 is a blatant transgression of authority vested in the Directorate General of Customs Valuation and is tantamount to a violation of FBR's unqualified directives by the said department it is an exercise in isolation and is a departure from the existing law and procedure constituting discrimination to the detriment of the Appellant. Even otherwise it makes the whole exercise illegal unlawful without jurisdiction and ab-initio null and void. The evidence produced by the Appellant in the form of price of their imported bus arrived on work back method, sales tax invoices, sales tax returns and its price comparison with the local market price of the complainant's bus imported in CKD condition with lower tariff rates is proof enough to substantiate their transaction value.
20.Now coming towards the vires and disputes attributed against the impugned Valuation Ruling and Order in Revision passed by the Director General Valuation. It is a settled principle that customs value has to be arrived at by exhausting the methods depicted in section 25 of the Customs Act, 1969, one by one even for the purpose of issuance of Ruling under section 25A of Customs Act, 1969, vide section 25(9) itself states that "If the customs value of the imported goods cannot be determined under subsections (1), (5), (6), (7) and (8), it shall, subject to the rules, be determined on the basis of a value derived from among the methods of valuation set out in subsections (1), (5), (6), (7) and (8), that, when applied in a flexible manner to the extent necessary to arrive at a customs value". The learned Director Customs Valuation without any respect to dictates of law applied the methods of section 25(7) and section 25(9) simultaneously which militates the law itself and defies many case laws.
21.In presence of aforesaid requirements and observations therein, the determination of customs value without mentioning the specific reason for rejection of the provisions of subsection of sections 25(1), 25(5) and 25(6) read with 25(13) of the Customs Act, 1969, and values are determined under subsection 25(9) of Customs Act, 1969, has no legal value and issuance of such ruling has resulted an equally void legal instrument as per superior courts verdicts. Reliance is placed on Triple M (Pvt.) Ltd. v. Federation of Pakistan 2002 YLR 2792. The circumstances of the case clearly indicate that the Director, Directorate General of Customs Valuation has failed to provide clear and tangible evidence for the value depicted in the impugned Customs Ruling. The use of irrelevant and inadmissible data in the impugned Valuation Ruling by the Respondent makes it illegal and upholding such void ruling in a way proceeding would also amount to ignoring the substantive law and rules. The impugned ruling does not indicate any mention of "flexibility" in use of Sections 25(1), (5), (6), (7) and (8) of the Customs Act, 1969.
22.Before further conclusion, general observation must also be made on Section 25A which is only an enabling section. It permits, but does not mandatorily require, a predetermination of customs value in terms as explained. The principal method of determining customs value is, and must remain, with section 25. Section 25A is not intended to be a substitute for Section 25, nor can it be resorted to, in such manner and with such frequency that, it marginalizes the latter provision. It is merely an adjunct to Section 25, to be resorted to in particular circumstances and for an appropriate period. In our view, in enacting Section 25A, the legislatures' intent was not, nor could be for the reasons stated above, to create a statutory bye pass to the Valuation Agreement. While issuance of valuation ruling under section 25A cannot be regarded as limited only to those cases where the Department concludes that there is group under-invoicing, the section also cannot be used for the wholesale determination of customs values. Such an approach would, in effect, transform the "determination" permissible under section 25A to an impermissible "fixation" of value, which, in essence would be violative of Valuation Agreement. This is an important point which must be kept in mind, and may be relevant in particular cases when considering the vires of a valuation ruling.
23.All observations and relevant references along with the Judgements passed by the Superior Courts are preferably to maintain and to follow the proper interpretation of law, more importantly for the Customs officers having discretion in preparation of Valuation Ruling. It is not so difficult to follow the legal dictum prescribed under the law by the concerned authorities or officials at the time of preparation of valuation ruling. The words 'look-in', provided the link, how principle of sequential application of subsections defined under structure of Section 25 of the Customs Act, 1969. For example, if in any particular case, the Customs officers/authorities want to jump over from non-obstinate clause without referring any specific reasons that would amount to override the provisions of Section 25. The concerned Customs officers are limited or restricted only to the methods set forth in Section 25 of the Customs Act, 1969, not to act otherwise. If, some method other than that specified in Section 25 is complied, that would clearly be ultra vires the powers conferred under Section 25A of the Customs Act, 1969. The Department has no justification about such increase which clearly reflected against the statutory obligations, prescribed under Sections 25 and 25A of the Customs Act, 1969. The determination of value under Section 25-A of the Customs Act, 1969, is not a simple thing. It is, therefore, appropriate that the ruling should contain sufficient details to show that the provisions of Section 25 have been properly applied while invoking Section 25-A. Therefore, it is imperative that the Valuation Ruling must be a speaking order, as per the mandatory requirement of Section 24-A of the General Clauses Act, 1897. In the present case, the authority/Director General, Customs Valuation ignored the directions of the Superior Courts and made observations in contradiction of provisions of Section 25-A of the Customs Act, 1969. Such ignorance is violative of law.
24.On the basis of ably deliberations, and by getting the strength, what has been stated and observed herein above particularly the interpretation of law and legal prepositions, in the light of prescribed law and to follow the ratio decidendi as observed by the superior courts, along with our additional observations made therein, we are led to conclude that the impugned Valuation Ruling No. 1230 of 2017 dated 08.12.2017 and Order-in-Revision No. 25/2018 dated 26.06.2018, passed by the Director and Director General, Customs Valuation, respectively do not have any adherence to the statutory requirements, sub-ordinate legislation, CGO and rules framed there under besides being derogatory to specific provision of Sections 25, 25-A and 25-D of the Customs Act, 1969. We hereby set aside the above mentioned Impugned Valuation Ruling No. 1230 of 2017 dated 08.12.2017 and Order-in-Revision No. 25/2018 dated 26.06.2018 being void ab-initio and without lawful authority to the extent of the present Appellant. All the securities furnished in the shape of pay orders at the time of provisional release of the subject consignments and the amount paid in cash under protest vide Goods Declaration Nos. KEWB-HC-2986 dated: 06.08.2018 and KEWB-HC-2988 dated: 06.08.2018 under the Impugned Valuation Ruling and Order in Revision shall be released / refunded to the Appellants by the Respondent Collectorate within 30 days of the receipt of this Order under compliance report to the registrar.
25.Judgement passed and announced accordingly.
SA/109/Tax(Trib.)????.