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Official Citation: 2024 SHC 704
Court / Jurisdiction: Sindh High Court
Year of Decision: 2023
Decision Date: 2023-12-31
Parties: Collector of Customs Model and others vs M/s Ahsan & Company and JUDGMENT
Ruling Summary: This decision was rendered by the Sindh High Court on 2023-12-31, officially reported as 2024 SHC 704. In this matter between Collector of Customs Model and others and M/s Ahsan & Company and JUDGMENT, the court adjudicated key questions of statutory construction, procedural regularity, and legal precedent under Pakistani law.
Core Holding: The honorable bench evaluated governing statutory provisions and judicial authorities to establish the rights of the parties, delivering the binding reasoning set out below.
Case cited as 2024SHC704
Court Name: Sindh High Court Judge(s): Muhammad Junaid Ghaffar, Jawad Akbar Sarwana Title:Collector of Customs Model and others vs M/s Ahsan & Company and
JUDGMENT
Reported As: 2024 SHC 704 Result: Reference Application Allowed Judgment
JUDGMENT Muhammad Junaid Ghaffar, J: Through all these Reference Applications, the Applicant Department has impugned Order dated 30.11.2010 passed in Customs Appeal No. 638 of 2010 & other connected matters proposing various questions of law, which according to the Applicant Department are arising out of the Order of the Tribunal; however, perusal of the record reflects that the Tribunal itself framed the following issues for adjudication of the matter, which read as under:- "Whether Valuation Rulings issued in terms of Section 25-A of the Customs Act, 1969 prior to 1st July 2009 are valid beyond period of (90) days in terms of the provisions of Section 25(1) read with Rule 107 (a) of Customs Rules 2001? ii) Whether Valuation Ruling can be applied to consignments which were cleared prior to their issuance through acceptance of their transaction values? iii) Whether the two methods of Valuation as envisaged under Section 25 of the Customs Act, 1969 namely Deductive Method under Section 25(7) and Fall Back Method under Section 25(9) have been lawfully and competently applied by the Directorate General of Customs Valuation for the determination of Customs assessed values in these cases? iv) Whether the market inquiry has been conducted by the respondents in terms of clause (a) of sub-section (7) of Section 25 of the Customs Act, 1969 while determining the Customs assessed values in review filed by the appellants under Section 25D of the Customs Act, 1969?
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v) Whether issuance of notice under sub-sections (2) or (3) of Section 32 of the Customs Act, 1969 for short levied amount of revenue was competent in these cases where assessments were provisionally made under section 81 of the Customs Act, 1969? vi) Whether the show cause notices issued in these cases are defective and deficient and hence ab initio null and void in material particulars for want of non-mentioning of sub- sections (3) and 3A of Section 32 of the Customs Act, by the adjudicating officer? vii) Whether show cause notice issued under sub- sections (1) & (2) of Section 32 of the Customs Act, 1969 and 32A ibid. can be adjudicated upon by the adjudicating officer under different sub- sections (3) and 32(3A) ibid. not mentioned in the show cause notice in terms of Section 180 (a) of the Customs Act, 1969 read with the judgment of the Honourable Apex Court in the case of Collector of Customs v. Rahim Din reported as 1987 SCMR 1840? viii) Whether the issuance of show cause notice, and subsequent adjudication under section 179 of the Customs Act, 1969 in those cases where assessments were completed in terms of Section 80 and 83 ibid. is a violation of law laid down by the Honourable Supreme Court in the case of E.A. Evans reported as PLD 1964 SC 536? ix) Whether the order-in-original and order-in-appeal are non-speaking, non judicial and perfunctory orders based on non-reading / misreading of the documents on record? x) Whether cases in which assessments have been finalized under Section 79 (1) & 80 of the Customs Act, 1969 and goods made out of charge under Section 83 ibid. can be adjudicated upon in terms of Section 179 ibid after issuance of the show cause notices?xi) Whether the order-in- original No.23/2010 dated 01.2.2010 is barred by limitation in terms of provisions of sub-Section 3 of Section 179 of the Customs Act, 1969 and umpteen numbers of judgments of the superior judicial fora in 22 cases in Appeal Nos.638 to 659/2010?" 2. Learned Counsel for the Applicant has contended that the Tribunal has seriously erred in law and facts while passing the impugned judgment; that the impugned Valuation Ruling was issued after fulfilment of all legal requirements, whereas the same remains valid till such time it is altered and/or modified; that the Tribunal's judgment is contrary in itself and is therefore liable to be set- aside. 3. On the other hand, Respondents Counsel has supported the impugned judgment and has contended that the impugned Valuation Ruling was not relevant and applicable as the goods in question were released provisionally under Section 81 of the Customs Act, 1969, ("Act") on the orders of the Director General Valuation and therefore, no show cause notice could have been issued under Section 32 of the Act. He has further contended that the Orders in Original were time barred as they were passed after the stipulated period of 120 days as provided under Section 179(3) of the Act. 4. Heard learned Counsel for the parties and perused the record. Though the learned Tribunal has itself formulated above legal issues and has given an independent finding on them; however, perusal of the record reflects that insofar as the validity of the Valuation Ruling is concerned, a legal question has to be addressed first, that "whether while hearing Appeals against the order of Collector of Customs (Appeals) passed under Section 193 of the Customs Act, 1969, the Tribunal was competent to look into the validity of the impugned Valuation Rulings". In our considered view, if the answer to this question is in the negative; then other issues with respect to the Valuation Ruling need not be addressed. 5. The perusal of the facts available on record reflects that a Valuation Ruling was issued in respect of the impugned goods on 14.02.2008 under Section 25A of the Customs Act, 1969. It is not in dispute that when the goods in question were imported by the Respondents, the Valuation Ruling existed, and the assessm ent of these goods ought to have been made based on the said Valuation Ruling. However, for some unexplained reasons, the consignments in question were released
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without applying the said Valuation Ruling. Thereafter, Show Cause Notices were issued to the Respondents individually, under Section 32(3A) read with Sections 32(1) & (2) of the Act and Orders were passed against the Respondents. Such orders were then impugned by the Respondents before the Collector of Customs (Appeals), who vide common Orders in Appeal No. 3710 to 3731 of 2010 dated 26.04.2010 dismissed all the Appeals. Being aggrieved, Respondents preferred Appeals before the Tribunal and through impugned order, the Appeals have been allowed by setting aside the orders of the forums below. The operative part of the order passed by the Collector of Customs (Appeals), which appears to be more relevant for deciding the present controversy, reads as under: - "I have thoroughly examined the entire case record and given due consideration to the arguments advanced before me. Before taking up the law points raised by the appellants' counsel, it would be appropriate to examine whether, in light of the provisions of law, the valuation ruling dated 14.02.2008 was applicable to the goods imported by the appellants. As per the provisions of section 25-A of the Act, all goods imported in the country after issuance of the valuation rulings issued under this section are required to be assessed to duty taxes in terms of the customs value of the goods determined through the same and the provision of section 25 of the Act become non- existent to the extent of the goods in respect of which rulings under section 25-A are issued. It is also abundantly clear that the said valuation rulings are valid until the same are either reviewed by the Director General of Customs Valuation under section 25-D of the Act or revised by the issuing authority itself. Since the impugned goods had been imported after issuance of the ruling dated 14.02.2008, there is no doubt that the same had to be assessed to duty taxes in accordance with the terms of the said ruling and any amount discovered, as a result of post importation scrutiny, to have been short-levied as such is recoverable within the meaning of section 32 (3A) of the Act. Therefore, the arguments, (i) that some of the consignments had been imported after 90 days of the issuance of the ruling, (ii) that the ruling could not be applied after clearance of the goods and (iii) that the cases could only be re-opened within the meaning of section 195 of the Act are in contradiction of the clear legal position explained above. The precedents quoted by the learned counsel in this behalf are not strictly relevant to the facts and circumstances of the instant cases. The learned counsel has also pleaded that since the relevant sub-sections of the Act had not been quoted in the show cause notices, the whole adjudicating proceedings became null and void. From perusal of the show cause notices issued in these cases, it is apparent that the same contain complete details of how and under what provisions of law, the amount short-levied in these cases was recoverable from the appellants and in the impugned orders it has been clearly stated that the amount is recoverable under section 32(3A) of the Act, besides other provisions of law quoted therein. Thus, the substantial compliance of law has been made and I do not find any illegality in the impugned orders on this count the Hon'ble Supreme Court of Pakistan has held in the case reported as PTCL 2007 CL 260 that non-mention of specific sub-sections of law would not render an adjudication order invalid if substantial compliance of law has been made. The other plea of the learned counsel is that 10 of the 22 impugned orders (passed by the Assistant Collector) are time barred within the meaning of sub-section (3) of section 179 of the Act by few days because the same had not been dispatched to the appellants on the date mentioned on the said orders. In this respect, I observe that late dispatch of the impugned order by a couple of days would not render the whole proceedings null and void. Therefore, the proceedings would need to be finalized on merit: in its order dated 09.12.2003 in Civil Petition No. 775-K of 2003, the Hon'ble Supreme Court of Pakistan has held that "it is always considered desirable that such matters should be decided on merit, in accordance with law and not on sheer technicalities." I accordingly rule that the above- mentioned plea of the appellant's counsel is not tenable.
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For the reasons recorded above, I rule that the arguments advanced by the learned counsel do not find any support from the evidence on record and the precedents quoted by him are not relevant to the facts and circumstances of the instant cases. I, therefore, hold that the impugned orders are correct in law and on facts and the do not warrant any interference. The appeals are rejected accordingly. This order consists of (15) pages and each page bears my initials and official seal." 6. From perusal of the aforesaid finding, it is clear that the Collector of Customs (Appeals) has dealt with all legal objections so taken on behalf of the Respondents, including but not limited to that the Valuation Ruling remained valid until it was altered; that it was not a case of reopening the assessm ent orders under Section 195 of the Act; that the relevant provisions of the Act were mentioned in the Show Cause Notices and so on and so forth. The other objection as to the Order- in-Original being time barred was also dealt with by the learned Collector (Appeals). 7. The position which emerges from the relevant facts on record is that, admittedly, the Valuation Ruling in question was never challenged by the Respondents under Section 25D of the Act. When confronted, learned Counsel appearing on behalf of the Respondents made an effort to argue that the Director General (Valuation) had passed certain orders for provisional release of the consignments; however, he could not show us or establish from the record that on what basis the said orders were passed when admittedly the Valuation Ruling was not under challenge before him under Section 25D of the Act. This fact of not impugning the Valuation Ruling is not in dispute, whereas, the Respondents, instead of doing so, which they could have done as soon as they were served through Show Cause Notices, contested the matter first before the Adjudicating Authority and thereafter before the Collector (Appeals) in terms of Section 193 of the Act. The Respondents, on their own, chose not to impugn the Valuation Ruling issued under Section 25A of the Act; but instead availed remedy of an Appeal before the Collector of Customs (Appeals) and then before the Customs Appellate Tribunal. In that case, the Tribunal, while hearing the Appeals in question, could not have varied or set-aside the said Valuation Ruling as the Tribunal was not hearing Appeals against an Order-in-Revision passed by the Director General (Valuation) under Section 25D of the Act. In the case of DG Valuation v A. A. Tyre[1], the question before this Court was whether the Tribunal, while hearing an Appeal under Section 194-A(f) of the Act, against an Order- in Revision passed under Section 25-D ibid, can pass an order of assessment by accepting the declared value as the true transactional value in terms of Section 25 of the Act, when there was neither any assessm ent order nor an order of the Collector Appeals was before the Tribunal. The court held as under:- 8. Having said that, at the same time, the finding of the Tribunal that the values declared by the Respondents cannot be discarded as they have provided complete data; hence same are directed to be accepted under Section 25(1) of the Act is concerned, we do not see any reason to sustain this as it is not supported by any material on record, nor is otherwise permissible in law. The jurisdiction being exercised by the Tribunal in hearing the Appeals in question emanates from Section 194-A(f) of the Act read with Section 194-B ibid. The same reads as under: [194A. Appeals to the Appellate Tribunal. - (1) Any person [or an officer of Customs] aggrieved by any of the following orders may appeal to the Appellate Tribunal against such orders:- [(a) Omitted.] [(a) a decision or order passed by an officer of Customs not below the rank of Additional Collector under section 179.] [ab) an order passed by the Collector (Appeals) under section 193;] [(b) Omitted]. (c) an order passed under section 193, as it stood immediately before the appointed day;
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(d) [an order passed under section 195 by the Board or an officer of Customs not below the rank of an Additional Collector;] [***]: ( e ) [omitted] ( f ) [an order passed in revision by the Director-General Customs Valuation under section 25D, provided that such appeal shall be heard by a special bench consisting of one technical member and one judicial member.] [Omitted] 194B. Orders of Appellate Tribunal. - (1) The Appellate Tribunal may after giving the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit confirming, modifying or annulling the decision or order appealed against. The Appellate Tribunal may record additional evidence and decide the case but shall not remand the case for recording the additional evidence: Provided that the appeal shall be decided within sixty days of filing the appeal or within such extended period as the Tribunal may, for reasons to be recorded in writing, fix: Provided further that in cases, wherein the provisions of clause (s) of section 2 have been invoked, appeals shall be decided within a period of thirty days;] Provided further that the Appellate Tribunal may stay recovery of the duty and Sales Tax on filing of appeal which order shall remain operative for thirty days and during which period a notice shall be issued to the respondent and after hearing the parties, order may be confirmed or varied as the Tribunal deems fit but stay order shall in no case remain operative for more than one hundred and eighty days.] 8. From a perusal of the above provision, it reflects that there are various orders passed under different provisions of the Act which can be impugned by way of an Appeal before the Tribunal, including but not limited to, orders passed under Section 179, 193 and 195 of the Act. Similarly, an order passed under Section 25D of the Act can also be appealed, as is the case in hand. At the same time, an assessm ent order passed under Section 80 of the Act can be impugned before the Collector of Customs (Appeals) under Section 193 of the Act, and such order of the Collector (Appeals) can be further challenged before the Tribunal under Section 194A(ab) of the Act. The order of assessm ent under Section 80 of the Act can be an order in respect of determination of value in terms of Section 25 of the Act; but at the same time, any order of such valuation assessm ent based on a Valuation Ruling issued under Section 25A ibid cannot be impugned before the Collector of Customs (Appeals) and even if it is impugned, the very assessment order cannot be altered or modified till such time the Valuation Ruling remains in the field. In exceptional cases, it can be impugned to a very limited extent as to the very applicability of the Valuation Ruling on the imported product. However, for an aggrieved person, it is required that the said Valuation Ruling be challenged as provided in law, and only when such Ruling is affirmed, modified or even set-aside, the said assessment order can be altered or modified accordingly. This is because a valuation ruling is a statutory ruling that has the force of law. The Valuation Rulings issued under section 25A of the Act is a notified ruling, which is applicable and binding until revised or rescinded by the competent authority[2]. This is because once the Director General Valuation issues a Valuation Ruling, it has to be duly notified, as provided under the Customs General Orders, 2002. Subsection (2A) of section 25A categorically provides that where there is a conflict in the customs value, the Director General Valuation shall determine the applicable customs value[3]. Hence, section 25A of the Act itself provides for a dispute resolution mechanism where the Valuation Ruling for the purposes of assessed value is disputed[4]. 9. The jurisdiction being exercised by the Tribunal in the instant matter was in respect of Appeals against the orders passed by the Director General Customs (Valuation) under Section 25-D of the Act, which provides a Revision against a Valuation ruling issued in terms of Section 25A of the Act.
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The Tribunal's jurisdiction in these matters is confined to this extent only and is not in respect of any assessm ent orders passed by the lower forums under Section 80 of the Act. In fact, the assessm ents in these matters were never a subject issue as they were statutorily based on the values determined and made applicable by way of a Valuation Ruling issued under Section 25A ibid. The Valuation Rulings can be impugned further under Section 25D of the Act through a Revision and then a further Appeal as above. This difference in conferment of jurisdiction upon the Tribunal is pertinent and vital when dealing with Appeals under this provision of the Act. All Courts and Tribunals constituted under the Constitution and the law, have only such jurisdiction that has been conferred upon them by the Constitution and the law[5]; and, no Court can exercise any jurisdiction in any matter before it unless such jurisdiction has been conferred to it by the Constitution or law[6]. Therefore, the Tribunal, while hearing Appeals under this provision of the Act, i.e. Section 194-A(f) ibid, cannot exercise any powers to make an assessment order accepting the declared values as transactional values under Section 25(1) of the Act. Once it is concluded that the Valuation Ruling issued under Section 25-A of the Act read with Order-in-Revision under Section 25-D of the Act cannot be sustained, it can only set-aside the Ruling; but cannot confer upon itself or assume any jurisdiction to exercise any powers under Section 25(1) of the Act and accept the declared values as transactional values. This is so because the Tribunal is not hearing an Appeal against an assessm ent order passed under Section 80 of the Act, but against an order passed under Section 25-D of the Act. 9. It has been held by the Court that the order of assessment under Section 80 of the Act can be an order in respect of the determination of value in terms of Section 25 of the Act; but at the same time, any order of such valuation assessment based on a Valuation Ruling issued under Section 25A ibid cannot be impugned before the Collector of Customs (Appeals) and even if it is impugned, the very assessm ent order cannot be altered or modified till such time the Valuation Ruling remains in the field. In exceptional cases, it can be impugned to a very limited extent as to the very applicability of the Valuation Ruling on the imported product. However, for an aggrieved person, it is required that the said Valuation Ruling be challenged as provided in law, and only when such Ruling is affirmed, modified or even set-aside, the said assessment order can be altered or modified accordingly. This is because a valuation ruling is a statutory ruling that has the force of law. The Valuation Rulings issued under section 25A of the Act is a notified ruling, which is applicable and binding until revised or rescinded by the competent authority[7]. This is because once the Director General Valuation issues a Valuation Ruling, it has to be duly notified, as provided under the Customs General Orders, 2002. Subsection (2A) of section 25A categorically provides that where there is a conflict in the customs value, the Director General Valuation shall determine the applicable customs value[8]. Hence, section 25A of the Act itself provides for a dispute resolution mechanism where the Valuation Ruling for the purposes of assessed value is disputed[9]. It has been further held that the jurisdiction being exercised by the Tribunal in the instant matter was in respect of Appeals against the orders passed by the Director General Customs (Valuation) under Section 25-D of the Act, which provides a Revision against a Valuation ruling issued in terms of Section 25A of the Act. The Tribunal's jurisdiction in these matters is confined to this extent only and is not in respect of any assessment orders passed by the lower forums under Section 80 of the Act. The Court has further held that this difference in conferment of jurisdiction upon the Tribunal is pertinent and vital when dealing with Appeals under this provision of the Act. All Courts and Tribunals constituted under the Constitution and the law, have only such jurisdiction that has been conferred upon them by the Constitution and the law[10]; and, no Court can exercise any jurisdiction in any matter before it unless such jurisdiction has been conferred to it by the Constitution or law[11]. Therefore, the Tribunal, while hearing Appeals under Section 194A(ab) of the Act against an order of Collector of Customs (Appeals) passed under Section 193
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of the Act, cannot alter or modify or even set-aside the Valuation Ruling duly issued under Section 25A of the Act. For that, the aggrieved person has to impugn the same in terms of Section 25D ibid and thereafter, if further aggrieved, before the Tribunal in terms of Section 194-A(f) ibid. In view of this position, in our considered view, the Tribunal has acted in excess of jurisdiction while dealing with all the above questions regarding the merits of the Valuation Ruling [barring questions Nos. (v), (vi), (vii), (viii), (x) & (xi) which are being decided separately hereinafter], and therefore, we need not attend to all the said issues / questions on their own merits and hold that the Tribunal in the instant matter had no jurisdiction to set-aside the Valuation Ruling in question as it was never challenged by the Respondents as required under the Act. Accordingly, all issues / questions framed by the Tribunal regarding the validity of the impugned Valuation Ruling are answered against the Respondents. Question / Legal Issue No.(v) Whether issuance of notice under sub-sections (2) or (3) of Section 32 of the Customs Act, 1969 for short levied amount of revenue was competent in these cases where assessments were provisionally made under section 81 of the Customs Act, 1969? 9. This issue is with respect to the issuance of a Show Cause Notice under Section 32(2) & (3) of the Act for goods which have been cleared provisionally under Section 81 of the Act. The Tribunal, while deciding this issue in favor of the Respondents, has primarily relied upon Abdul Aziz Ayoob[12] and has come to a conclusion that when goods have been provisionally released under Section 81 of the Act; neither subsection (2) nor subsection (3) of Section 32 of the Act would be applicable, and therefore, the notices issued to the Respondents were without…
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