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Petitioner: Messrs Zahid Majeed Corporation, Karachi and another VS Respondent: The Deputy Collector, Group-Vi, Mcc Of Appraisement-East Customs House, Karachi and another
Court Name: Customs Appellate Tribunal Judge(s): Jehanzaib Wahlah Title:Messrs Zahid Majeed Corporation, Karachi and another vs The Deputy
Collector, Group-Vi, Mcc Of Appraisement-East Customs House, Karachi and another Case No.: Custom Appeals Nos.K-77, K-78 and K-79 of 2019 Date of Judgment:2019-11-23 Reported As: 2021 PTD (Trib.) 1062 Result: Appeal allowed Judgment ORDER JAHANZAIB WAHLAH, MEMBER JUDICIAL-III.---- Through this common order , I intend to dispose off 03 Appeals bearing Nos. K-77 to K-79/2015 directed against Orders-in-Appeals Nos.1705 to 1707 dated 19.12.2018 passed by Collector of Customs (Appeals), Karachi by maintaining the assessment orders dated 08.06.2018, 23.06.2018 and 08.06.2018 respectively passed by Deputy Collector , Group-VI, MCC of Appraisement-East, Karachi. 2. Since, all these appeals are based on identical fact and grounds, it is needless to reproduce separately facts of each case. Hence, facts and grounds of Appeal No.77/2019 are taken into consideration for deliberation/decision which are, appellant during the course of his business activities imported a consignment of 6900 kgs of motorcycle parts, upon receipt of shipping documents he delivered those to his clearing agent M/s. Khurram Brothers, Karachi for transmitting Goods Declaration (GD) tinder the provision of Section 79(1) of the Customs Act, 1969 (Act) and Rule 433 of Sub-Chapter III of Chapter XXI of Customs Rules, 2001 (Rules) with the MCC' of Appraisement-East, which he did and as per pre-requisite for availing the regime of Customs Computerized System (CCS) deposited upfront duty and taxes of Rs.550,458/-, consequent to which GD was numbered as KAPE-HC-59892 dated 29.09.2017. The consignment was selected for examination under the provision of Section 198 and Rule 435 of the Act/Rules. wherein, declaration was confirmed to the extent of all aspects and, report so prepared was uploaded in the reservoir of GD upon receipt of the same on his workstation the Assessing Officer opted to pass assessment order under the provision of Section 80 and Rule 438 for levy of duty and taxes with the application of Valuation Ruling No.967/2016 dated 16.11.2016 (VR), vires of which had already been challenged by the appellant through revision application under Section 25D of the Act before Director General, Directorate General of Valuation (DGV). Resultant, his goods were to be assessed provisionally as contemplated in Section 81 of the Act, in compliance of
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the order of the High Court of Sindh in reported judgment 2018 PTD 1746 and 2016 PTD 702 and order of the Supreme Court of Pakistan dated 04.08.2016 upon payment of additional amount of duty and taxes leviable on declared value and submission of securit y for the differential amount of duty and taxes of Rs.1,005.000/- with the Collector of Customs, MCC of Appraisement-East, compliance was made on 07.10.2017, consequent to which the inbuilt authority of the CCS passed clearance order under section 83 and Rule 442 of the Act/Rules . Irrespective of the fact that that the revision application is pending the DGV todate without any action, the respondent No.1 finalized the value and passed assessment orders dated 08.06.2018 under Section 80 and Rule 438 on the strength of circular dated 22.11.2017 issued by, Chief Collector Appraisement, Karachi, while adducing in the assessment note "The Directorate General of the Valuation referred back the tnatter with the following remarks "The Chief Collector of Customs, Appraisement (South) Circular No. ST/Misc/13/2014-CC(Appr .)/375 dated 22.11.2017 on the subject "VALIDITY OF VALUA TION RULING 967/2016 DATED 16.11.2016 AFTER AMENDMENT OF RULE 107 (A) OF THE CUST OMS RULES, 2001" may refer. The Circular is self-explanatory . Since, in this case Valuation Ruling No.967/2016 dated 06.11.2016 (Motorcycle Parts) read with Order-in-Original No.313/2017 dated 28.02.2017, is in field, therefore case is referred back to the Clearance Collectorate for necessary action in accordance with the law." The appellant challenged the vires of the orders before respondent No.2, who rejected the appeal on the basis of imported grounds and pre-determined formed opinion notions. Paras 6 to 8 are relevant, which are reproduced here-in-under: "6. From the above, it is clear that the provisional assessment under Section 81 of the Act was not made for any of the reason mentioned therein. Instead it was made to facilitate the appellant, who, then failed to persue his case of revision petition under Section 25-D of the Act ibid. As the respondent department not acceded to his request of provisional assessment, the goods would have been subjected to valuation Ruling even at the time of assessment. Therefore, his stance that the declared value stands final, after expiry of dine stipulated under Section 81(2) is not tenable. 7. Notwithstanding, as per second proviso to subsection (2) of Section 81, which read as "provided further that any period on account of stay order or for want of clarification from the Board or the time taken through adjournment by the importer , shall be excluded from the computation of aforesaid period." As discussed earlier , the importer had himself requested to assess the goods provisionally pending final decision of DG (Valuation). Since importer's request was acceded to, therefore, it should be deems to be adjournment by importer and time taken on these proceeding should be excluded from the computation of period required for finalization ander section 81(2) of the Act. 8. In view of the above discussion, I am let to conclude that the assessment officer has made a lawful order which is upheld. The appeal is devoid of merit and therefore, rejected." 3. The appellant filed the appeal on the basis of grounds enumerated therein, the consultant/advocates on the date of hearing argued the case strictly in accordance with those. No cross objection under subsection (4) of Section 194A of the Act has been filed within the, stipulated period of 30 days or not even todate by the respondent No.l. However , his representative vehemently defended the passed reassessment order and appeal by respondents and prayed for maintenance of those, irrespective of apparent deficiencies / Illegality . 4. Heard and case record perused and so the relied upon judgments, this appeal could be decided on a short point of limitation among others, which shall be deliberated subsequent to the instant. The appeal before respondent No.2 was filed by the appellant on 02.11.2019, in terms 193A (3) of the Act, order against which has to be passed within 120 days or within further extended period of 60 days in terms of its proviso by the Board, upon availability of exceptional circumstances and recording of those after issuance of notice to the subject as held by Hon'ble Supreme Court of Pakistan in reported judgment 2009 SCMR 1881 , Khalid Mahmood v. Collector of Customs . In the instant case order should have been passed on or before 02.11.2018 which he failed, no extension whatsoever was given by the Board as evident from the order and the order has been passed after the expiry of initial period of 120 days. This vital illegality render the order passed by respondent No.2 barred by time by 47 days. Rendering it without power/jurisdiction, hence void, ab-initio and not enforceable under law as held in the reported judgments 2017 PTD 1756 and 201 7 SCMR 1427 Collector of Customs Sales Tax Gujranw ala and others v. Super Asia
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Mohammad Deen and Sons and others , 2008 PTD 60 Messrs Super Asia Muhammad Din Sons (Pvt.) Ltd. v. Collector of Sales Tax Gujranwala , 2008 PTD 578 M/s. Hanif Strawboard Factory v. Additional Collector (Adjudication) Customs, Sales Tax and Central Excise Gujranwala , 2009 PTD 762 Messrs Tanveer Weaving Mills v. Deputy Collector Sales Tax and 4 others , 2009 PTD (Trib.) 1263 Messrs Syed Bhai Lighting Limited, Lahore v. Collector of Sales Tax and Federal Excise and 2 others . 2009 PTD 1978 Leo Enterprises v. President of Pakistan and others , 2010 PTD (Trib.) 1010 Innovative Impex v. Collector of Customs, Sales Tax and Federal Excise (Appeal), 2011 PTD (Trib.) 79 Fazal Ellahi v Additional Collector of Customs, MCC of PaCCS, 2011 PTD (Trib.) 987 Unique Wire Industries v. Additional Collector of Customs, MCC of PaCCS, 2011 PTD (Trib.) 1146 Kaka Traders v. Additional Collector of Post Clearance Audit and 2012 PTD (Trib.) 1650 Pak Electron Ltd. V. Collector of Customs, Lahore and others . 5. Notwithstanding, to the above grave illegality , the forthed opinion by the respondent No.2 in the order , that the appellant should had chased the revision application filed with the DGV under the provision of Section 25D of the Act against VR No. 967/2016 dated 16.11.2016 is without any substance and of no legal effect as it is for the DGV to fix the hearing in the revision application for issuance of decision. No enabling provision exist in the Act laying responsibility on the appellant to do so. The fact of matter is not only appellant challenged the vires of the VR, rather many other importers, whom hearing notices were issued as to the appellant and on each date advocate of the appellant appeared before her without any exception. Astonishingly , to this date despite conclusion of hearing DGV has not issued any order in revision applications the lapse is entirely on the part of DGV and cannot either be attributed or shifted upon/to the appellant. Resultant, respondent No.2 was not within his right to construe contrary to the factual position of the case This misstatement speaks about the working of respondent No.2, who leave no stone unturned in the course of recording decision in appeal for putting some sense in it but failed miserably and passed an absurd order having no nexus with the provision of the Act and even with the law laid down by the Superior Judicial Fora only for awarding premium to the department despite apparent illegalities and committed lapses. 6. Reverting back to the issue involved in the case in question primarily is as to whether assessment of the imported goods could be made with the application of VR, vires of which has been challenged by the appellant before the DGV under the provision of Section 25D of the Act. For reaching at a just conclusion one has to note that it is settled principle of law that when an order is challenged before higher forum, it became wide open and least remain in field for any purpose, application of that is no exception as per theory of merger . Since, the appellant goods were assessable with the application of VR No.967/2016 dated 16.11.2016, which was detrimental for his business, resultant, challenged the vires of that through revision application dated 19.01.2018 under the provision of Section 25-D of the Act befor e the DGV. Consequent to which VR to his extent stands abate by virtue of not attaining finality after crossing all the forums, where it can be challenged for decision as held by Hon'ble Supreme Court of Pakistan in reported judgments 1993 SCMR 39 CBR v. Chanda Motors and 2013 PTD 581 Ghulam Nabi v . FOP of the Honorable Supreme Court of Pakistan paras 17 to 22 are relevant and which are: "17. Word "finalized" is derived from the word "final" which is define in Chambers 20th Century Dictionary to mean "last decisive, conclusive: respecting the end or motive of a judgment ready for execution last of series". "Finality" is defined as state of being final completeness or conclusiveness. In Black's Law Dictionary Fifth Edition, word "final" is defined as, "last; conclusive, decisive, definitive; terminated; and completed." In it's used in reference to legal actions this word is generally contrasted with "inter-locatory". Viewed in the light of meanings of the word "assessment" and "finalized", it appears that assessment order as such do not have touch of finality unless all the forum are exhausted in which such orders can be challenged so that the order take the final decision". 18. Legally speaking order of assessmen t passed by Income Tax Officer is an order of original authority but is not final for the reason that it can be challenged in appeal or revision as the case may be and would be final only when it goes through all the forums and the finding of the last forum shall be binding as conclusive. 19. The question whether appeals and other remedies provided under the law formed part of proceedings or not came up for consideration before the Supreme Court of India in the case of Garikapati Veeraya v. N. Subbiah Choudhry and others reported in PLD 1957 Supreme Court (India.) 448 it is held as per majority opinion that
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legal pursuit of a remedy suit, appeal and 2nd appeal are really but steps in a series of proceedings all connected by an intrinsic unity and are to be regarded as one legal proceeding. Reference can be made to the case of Commissioner of Wealth Tax v. Vimblan Vadilal Mehta reported in (1984) 145 ITR 11, in which it is held that it is well settled that when an appeal is filed against assessment order before AAC the assessment is thrown open and Appellate proceeding constitute a continuation of a assessment proceeding." 20. In the case of F.A Khan v. The Government of Pakistan (PLD 1964 Supreme Court 520) question came up for consideration that in the case of dismissal of a Government servant for filing a declaratory suit whether limitation would start from the date of order of dismissal to be reckoned under Article 120 of the Limitation Act or from the date of order of Appellate Authority confirming the first order to be reckoned under Article 58 of the Limitation Act. It is held that such right accrued on the date of dismissal but, where there is an appeal on the date of Appellate order upholding dismissal. It is further held that the legislature when its provided a hierarchy of the Tribunal for the determination of a dispute it is really providing one complete procedure for such determination, proceeding before different Tribunal being only step in this procedure. 21. On the question construction, in the light of what is stated above, can be said without tear of contradiction that order passed in original proceedings is not final unless it crosses all the forums set up under that law in which it can be challenged and the order of the last forum would become final. Mr. Rehan Hassan Naqvi, learned counsel for the respondent has submitted before us that there is plethora of case law on the point that even within the frame work of Income Tax law, appeals and other remedies provided therein formed part of the same proceedings regarding assessment. In this context our attention is drawn to the case of Chatturam and others v. Commissioner of Income Tax, Bihar reported in (1947) 15 ITR 302. In the reported case assesses of partiall y excluded areas were served with the notices under section 22(2) of the Income Tax Act for furnishing returns. Subsequently Governor of Bihar by notification directed that India Income Tax (Amendment) Act, 1939, the Income Tax Law Amendment Act, 1940 should be deemed to have been applied to the Chotanagpur Division containing partially excluded areas with retrospective effect. Subsequently Regula tion 1 of 1941 was also issued by the Governor to remove doubts as to the retrospective applicability of the Act mentioned in the Notification. Assesses were assessed and their appeals were pending when Regulation 1 of 1941 was issued. It was contended that assessment proceedings initiated and completed against them were invalid and neither the notification nor the Regulation were competent in law to validate those proceedings, it was held by the Federal Court of India, inter alia, that appeals to the Appellate Assistant Commissioner were an integral part of the machinery of assessment and therefore it could not be contended that assessment proceedings were over when Regulation 1 of 1941 was made and the Regulation could not apply to the proceedings covered by those appeals." 7. Since the value determined through VR of motorcycle parts by the Director , Directorate General of Valuation under the provision of Section 25A of the Act, was not applicable on the forthcoming consignments of the appellant, it was mandated upon respondent No.2 to allow clearance of those under the provision of Section 81 ibid., upon submission of copy of revision application. To the contrary , respondent No.2 invar iably refuses to allow clearance provisionally despite being only competent authority under the said section, on the plea that the appellant has to seek permission either from Additional Collector or Collector , who are non entity in the aforesaid Section. Amazingly , a communication to the said effect has also been circulated by one of the Clearance Collectorate, despite having no warrant of law. Keeping in view the said unlawful exercise this Tribunal in reported judgment 2016 PTD (Trib.) 1305 Messrs AFU International v. The Direct or General Valuation and another ordered in unequivocal terms that "respondent No.2 to issue direction to the Collectors of the Clearance Collectorate to withdraw the issued verbal/written orders in derogation of the Provision of Section 81 of the Customs Act, 1969 and let the authority enunciated in subsection (1) to exercise his powers independently , fairly , justly and in accordance with its expression and the law laid down by the Superior Judicial Fora." Similarly , the Hon'ble High Court of Sindh in 2018 PTD 1746 Sadia Jabbar v. FOP and others ordered/held that "in our view, a valuation ruling must therefore ordinarily be regarded as valid for a period of ninety days from the date of issuance . Subsection (4) of section 25A, added, by the Finance Act, 2010, of course now provides that a valuation ruling "shall be applicable until and unless revised or rescinded by the competent authority". In our view the proper interpretation and application of this
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subsection, in the light of the Principle stated in para 10 supra is that while the valuation ruling will continue to hold the field unless revised or rescinded, any aggrieved importer has the right to approach the concerned officers after ninety days period mentioned above and he would than have to give reason why the ruling has not been revised or rescinded ." (emphasis supplied). In derogation of the order of tile Tribunal/High Court of Sindh the officials of the Clearance Collectorate Ought to seek refuge on one pretext or another of not complying the order in its letter and spirit. Resultant, importer use to approach High Court for clearance of their consignment provisionally , in order to resolve the issue and thwarting filing of petition in the High Court of Sindh for release of their consignment provisionally , power of which has been expressly delegated to the Assistant/Deputy Collector in the provision of Section 81 of the Act, the Hon'ble High Court of Sindh passed order in C.P. No. D-6918 of 2015 reported at 2016 PTD 702 Danish Jehangir v. Federation of Pakistan through Secretary/Chairman and 2 others ordering that "In cases where proper revision application has been filed by an importer in terms of section 25D of the Customs Act, 1969, before the Director General Valuat ion, and pending such review /revision, a fresh consignment is imported than at the request of the importer who has filed such revision/review the consignment in question shall be released in terms of section 81 of the Customs Act, 1969 after securing the differen tial amount of duty and taxes in the shape of pay order /Bank Guarantee, without fail." Upon filing CPLA by the Director , Directorate General of Valuation before the Hon'ble Supreme Court of Pakistan, the order of High Court was amended vide dated 11.01.2017 as "by Collector of Custom of Clearance Collectorate as against existing, Director , Directorate General of Valuation" 8. That the Collector of Clearance Collcctorate in the light of the aforesaid orders should have issued direction to the competent authority defined in Section 81 of the Act to allow clearance of the consignment of the importer who has filed revision application, to the contrary devised a cumbersome procedure of obtaining verification from the Directorate General of Valuation in regards to filing of revision application. Provisional assessment/release of consignment was allowed only upon confirmation to the said effect. In the instant case provisional release of the consignment of the appellant was allowed upon receipt of confirmation, despite of the fact that Submission of revision application was sufficient. Assessment order for finalization of value in the instant case could only be passed by the respondent No. 2 either upon receipt of revision order passed by DGV/order of the Tribunal in appeal against revision order or valuation advise of the imported goods against the subject GD issued by Assistant/ Deputy Director DGV in exercise of the clause (b) of Serial No. 3 of SRO 494(1)/2007 dated 09.06.2007 reading as "to issue advises and VRs on the case s referred by the field formations including the determination of values involving provisional assessment under section 81 of the Act", as evident from the supplied emphasis to the part of clause (b), Assistant/Deputy Director Valuation are empowered to exercise powers for determination of value of any consignment for issuance of advise, corresponding to the goods or class of the goods imported, only when respondent No.2 allow release of the consignment under the provision .of Section 81 of the Act and-refer the GD online to Directorate General of Valuation as expressed in Rule 439(a) of the Rules.. The Assistant/Deputy Director Valuation are however , barred to determin e value of any goods or class of goods and to issue advises, where a VR of the goods in question is infield, which has been issued by the Director Valuatio n under the provision of Section 25A, with the application of different subsection of Section 25 of the Act in sequential manner . In the ' case under consideration VR No.967/2016 dated 16.11.2016, against which appellant filed revision application, which is pending todate in dormant, no decision whatsoever has been taken in that, resultant no occasion was available with the respondent No.1 to pass final assessment order under the provision of sections 80 and 81(5) and Rule 440 of the Act/Rules. To the contrary , he passe d assessment order dated 23.01.2018 on the strength of a circular dated 22.11.20.17 issued on behest of Chief Collector , Appraisement-South, verbatim of which reproduced here-in-under : GOVERNMENT OF P AKIST AN OFFICE OF THE CHIEF COLLECT OR OF CUST OMS APPRAISEMENT -SOUTH, 8TH FLOOR, CUST OM HOUSE, KARACHI. No. SUMISC/13/2014-CC(Appr)/375 Dated 22.1 1.2017
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CIRCULAR SUBJECT : VALIDITY OF V ALUA TION RULING AFTER AMENDMENT OF (A) THE CUST OMS RULES, 2001 Rule 107(a) of Chapter IX of Customs Rules, 2001 has been amended vide SRO 564(1)/2017 dated 01.07.2017 whereby the Valuation Ruling (VR) issue d under section 25A of the Customs Act, 1969 shall remain valid unless rescinded, modified or substituted with a new YR. As such, mere filing of request for revision of an existent VR or an application of review under section 25A(4) of the Act shall not entitled the applicant / importer for provisional assessment under Section 81 ibid. The assessment in such cases shall be made in accordance with the prevailing VR till the same is rescinded, modified or replaced as stipulated above. This is for information and compliance of all concerned. Sd/- (Muhammad Saeed W attoo) Additional Collector SA to Chief Collector 9. The respondent No.2 acted in a very casual manner as evident from the fact that he destroyed the fabric of law and justice and spoiled the merit of the case without determining the validity/legality of the circular , as to whether it was supported by a legal sanction? And as to whether the Chief Collector South was empowered to interpret the provision of statute/rules and as to whether Board was empowered to amend the Rule for undoing the effect of the 'Sadia Jabbar and Danish Jehangir' reported as 2018 PTD 1746 and 2016 PTD 702. The fact of matter is that the act of issuing circular by the Chief Collector is an act of transgression, through which he issued directions about the validity of the VRs, such directions are perverse in the light of laid down statutory obligations and interpretation made therein by the Superior Ccurt, inclusive of observation made by Hon'ble Supreme Court in case of Sadia Jabbar . In presence of these legal obligations, amendment made in Rule 107(a) by the Board, followed by interpretation made by the Chief Collector , through sub-para (a) are basically in contradiction to the provisions of section 25-A(1)(2)(3)&(4) of the Act. In the given circumstances impugned circular issued by Chief Collector Appraisement…
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