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Petitioner: M.N. TRADING COMPANY, LAHORE VS Respondent: DIRECTOR GENERAL OF VALUATION, CUSTOM HOUSE, KARACHIHonorable Justice Adnan AhmedNadeem Ahmed Mirza,Ashfaq Ahmed and Stephen Alison
2016 P T D (Trib.) 876
[Customs Appellate Tribunal]
Before Adnan Ahmed, Member (Judicial-II)
M.N. TRADING COMPANY, LAHORE
Versus
DIRECTOR GENERAL OF VALUATION, CUSTOM HOUSE, KARACHI and 2 others
Cust. Appeal No. K-1605 of 2014, decided on 25th February, 2015.
(a) Customs Act (IV of 1969)---
----Ss. 19A & 33---Exemption and refund claim---Appellant/Importer submitted pay order as security deposit---Due to non-determination of finalization of value of goods within prescribed period by Department, appellant's declared value stood final---Appellant's request for return of pay order was termed as an application of refund filed under S. 33 of Customs Act, 1969, by Department and asked appellant to prove non-passing of incidence of duty/taxes as per expression of S. 19A and S. 33(1) of Customs Act, 1969---Validity---Held, that according to S. 33 of Customs Act, 1969, refund application had to be filed for duty/taxes paid by inadvertence, error or misconstruction---In order to claim refund, it is upon the appellant to prove that amount of duty/taxes levied had not been passed to the end consumer---If an adjustment of Sales Tax under S. 7 of Sales Tax Act, 1990 had been obtained, appellant would not be entitled for refund---Conditions laid down in S.33, Customs Act, 1969 were not applicable and refund filed was not governed by S. 33 of the Act with exception of S. 33(3)---Request/ application of appellant to return pay order did not in any manner fall within the ambit of a refund application under S. 33 of Customs Act, 1969.
Case Law referred.
(b) Customs Act (IV of 1969)---
----Ss. 19A & 81---Provisional assessment---Refund claim---Scope---Section 81 of Customs Act, 1969 had no nexus with S. 19A of the Customs Act, 1969---Under S.81, importer had asked for return of his pay order/back guarantee deposited as security---Importer was not supposed to file refund claim for paid amount of duty/taxes at the time of provisional determination of value by Department and if Department had encashed such security for meeting revenue target in absence of determination of value within stipulated period mentioned in S. 81(2) of the Customs Act, 1969, Department was duty bound to refund that amount without calling for an application for refund.
Case Law Referred.
(c) Customs Act (IV of 1969)---
----Ss. 80 & 81---Customs Rules, 2001, R.438---Provisional assessment---Finality, attaining of---Scope---Amount deposited as security could not be termed as paid duty/taxes while determining the value provisionally under S. 81 of Customs Act, 1969---Such an act will make S. 81 rendundant and the assessment made at time of clearance of goods under S. 81 would be deemed to be an assessment under S. 80 and R. 438 of Customs Rules, 2001---Such an interpretation denied the return of pay order to importer on pretext of S. 19A, which is against the intention of Legislature and expression of S. 81.
(d) Customs Act (IV of 1969)---
----S. 81---Final assessment---Encashment of bank guarantee by Department---Appellant deposited pay order with Department as Security subject to its encashment or return upon determination of final value within the stipulated period given in S. 81(2) of Customs Act, 1969---Encashment of such security by the Department was an usurpation of an "Amanah" which was not permitted under Customs Act, 1969---Such an act was in direct conflict with the Constitution, Islamic Moral standards and Tenets of Islam---Public servant held the amount of security deposit as an "Amanah"---Legislature had set a time limit of six months as provided in S. 81(2) of Customs Act, 1969, to ensure timely determination of value and if determination is not made within time, amount deposited as "Amanah" become refundable/returnable without any let, hitch and hindrance---Lapse on part of government servant cannot be attributed to a tax payer/importer under S.81 of Customs Act, 1969.
Case Law Referred.
(e) Customs Act (IV of 1969)---
----Ss. 193 & 193-A(3)---Order-in-appeal, passing of---Delay of 680 days---Appellant filed appeal before Department on 04-07-2012---According to S. 193A(2) of Customs Act, 1969, an order had to be passed by Department within 120 days from the date of filing of an appeal i.e. on or before 01-11-2012 (in the present case) or within further extended period of 60 days with reasons to be recorded for extension in writing---Department passed order after 800 days from the date of filing of an appeal---Effect---Held, no extension was accorded by Department prior to expiry of initial period of 120 days as per contents of order---Order passed by Department, in the present case, was barred by time, without jurisdiction and could not be enforced under law---Appeal was allowed accordingly.
Case Law Referred.
Nadeem Ahmed Mirza (Consultant), Obayd Mirza (Advocate) and Mirza Muhammad Abeer Nadeem for Appellants.
Ashfaq Ahmed and Stephen Alison - Principal Appraisers for Respondent No.1.
Amir Hussain for Respondent No.2.
Dates of hearing: 17th and 23rd December, 2014.
ORDER
ADNAN AHMED, MEMBER (JUDICIAL-II).---The appeal, filed by the appellant, is directed against Order-in-Appeal No. 9209/2014 dated 12.09.2014 passed by Collector of Customs (Appeals) (here-in-after to be referred as respondent No. 3) maintaining the Order-in-Original No. 132/2013 dated 23.01.2012 passed by the Deputy Collector of Customs (Adjudication-II), MCC of PaCCS, Custom House, Karachi (here-in-after to be referred as respondent No. 2).
2. Briefly, facts of the case as stated in the impugned order by the respondent No. 2 are that the appellant imported a consignment consisted of 03 items i.e. (i) Hair Accessories 15040 kgs of PCT heading 9615.9090 @ US$. 0.6123/kg (ii) Plastic/fabric Fashion accessories 1200 kgs of PCT Heading 3926.4090 @ US$. 0.5103/kg and (iii) Artificial Jewellery of assorted colors and design (983 Kgs) of PCT heading 7117.9000 @ US$. 0.5613/kg. the appellant filed their GD bearing I-HC-2030684-07012012, and after making payment of duty and taxes as per their self assessment in terms of Section 79(1) of the Act and sought release of same as per their declaration. The first two items were assessed @ US$. 0.80/kg as per data of Valuation, maintained in terms of section 25(13)(a) of the Act and item No. 03 i.e. artificial jewellery was assessed at 15.25 kg, in terms of Sections 80(3) and 25A(2) of the Act. The appellant shown their disagreement on the Valuation of item No.(iii) Artificial Jewellery and requested for assessment @ US$. 2.50 kg or to assess the goods provisionally under section 81(1) of the Act. Pending final decision by the Director (Valuation). Their request was acceded to and item No. (iii) of the GD i.e. Artificial Jewellery was assessed provisionally by securing the amount of Rs. 628,993.00, i.e. the difference of duty and taxes between the declared value i.e. @ US$. 0.563/kg of Artificial and the assessed value @ US$. 15.25/kg (Valuation Ruling No. 334/2011 dated 09.06.2011) vide pay order No. CM-0007609 dated 18.01.2012 and an indemnity bond was also submitted by the appellant with the undertaking that they will make payment of differential amount of duty and taxes immediately on demand from the Collector of Customs. Therefore the appellant paid Rs. 15496/- against item No. (iii) of GD i.e. artificial Jewellery was as per Valuation Ruling @ US$. 15.25 kgs and payable amount was Rs. 644,430.00. Subsequently, in compliance to the appellate Tribunal's order dated 30.12.2011 the director Valuation had issued a revised Valuation Ruling No. 423 dated 01.02.2012 read with its amendment dated 16.02.2012 and re-determined the values of different specification of Artificial Jewellery. Subsequently after issuance of aforesaid Ruling the appellant vide their letter dated 09.03.2012 approached the Collectorate to finalized the assessment @ US$. 3.75/kg and also requested to return the pay order/indemnity bond. After one month a hand written letter was received by the erstwhile Deputy Collector (PaCCS) Gr. III) on 09.04.2012 with different signatures and it was again requested that the assessment be finalized @ US$. 3.75/kg the respondent No. 2 regretted the appellant request and passed order in original dated 12.06.2012 the operative para of the order read as under:--
"I have gone through the record of the case and the submissions made by the importer/applicant and his counsel. The learned counsel's only arguments is that the provision of section 19-A of the Act, is not applicable on their provisional assessment case. In reply to this arguments the attention of the counsel was invited on the law settle by the Honourable High Court of Sindh in such identical situation, vide reported judgment (2011 PTD 1594) in the case of Messrs Orient Colour Lab (Pvt.) Ltd., v. The Director General, Custom Valuation, Karachi and 3 others wherein following has been held:--
"Clearance of such goods on furnishing of Bank guarantee for disputed customs duties and taxes---Return of Bank guarantee, prayer for validity---Word "paid" used in S.19-A of Customs Act, 1969 would include deferred payment by furnishing Bank guarantee---Provisions of Ss. 19A and 81 of Customs Act were not in conflict with each other---Failure of department to fulfill formalities prescribed under. S. 81 of Customs Act, 1969 would not entitled taxpayer to be assessed at declared value, if during pendency of matter before department or appellate court, he had passed on burden of customs duty to end consumer----statement of cost of such goods submitted in court by importer showed computation of total cost thereof by making addition of custom duty sales tax and income tax deducted at source and landing cost and advance cost estimated at 10%---Sale price of such goods finding mention in such statement when compared total cost thereof including customs duties and taxes then rate of profit was found to be ranging between 35% to 95%---Sale price of such price without inclusion of duties and taxes would range from 50% to more than 80%---Such statement and comparison would show that importer had passed on burden of customs duties and taxes to end consumer---importer had not discharged onus of proving that he had not passed on burden of custom duty and taxes to end consumer-----High Court dismissed constitutional petition in circumstances."
In view of the above judgment of the Honourable High Court it is clear that the provision of Section 19A of the Act, is also applicable on the cases where security has been obtained at the time of provisional assessment, therefore the learned counsel's arguments in this regard is incorrect and they are also bound to discharged their responsibility in terms of section 19A of the Act.
Secondly, without prejudice to above, the applicant/importer has also failed to substantiate as to how their imported Artificial Jewellery falls within the category (specification) of Sr. No. 1 of the Table of the revised Valuation Ruling. The applicant/ importer's declaration was "Artificial Jewellery Assorted colours and design quantity 980 gross/kgs" whereas the goods found at the time of examination was "Artificial Jewellery comprising of Rings, Neckless Sets, Tops and Earings of Assorted Designs, colours and Brands quantity 1500 kgs" it is pertinent to mention here that prior to issuance of Valuation Ruling amendment dated 16.02.2012 the detailed specification of Artificial Jewellery was not required for assessment purposes because of the fact that at that point of time there was no value difference on the point of specification the examination report clearly showing the difference between the declaration and physical examination and the words "Rings", "Tops", "neckless" "Colours", etc and the difference of weight suggests and give credence to the fact that the imported jewellery was of the specification mentioned in Sr. No. 3 of Table to the Valuation Ruling dated 16.02.2012.
In view of the position elucidated above and considering the Honourable High Court of Sindh's reported judgment I am convinced that there is neither any question of return of security nor any question to finalize the assessment @ US$. 3.75/kg for the imported artificial Jewellery. I therefore, hereby order for finalization of assessment of item No. 3 of the GD i.e. Artificial Jewellery @ US$. 15.25/kg. considering the provisions of Section 81(3) of the Act, the Deputy Collector (PaCCS Security) is advised to adjust the security accordingly.
3. The order was challenged before Respondent No.3 by the appellant vide Appeal No. 4081/2012 dated 04.07.2012, who also vide his order dated 12.09.2014 rejected the appeal by observing in para 5 that:--
"I have examined the record of the case the appellants have principally contended that Valuation of goods assessed provisionally was not finalized within the stipulated time period and that the Valuation Ruling 423 dated 01.02.2012 has prospective application and cannot be applied retrospectively in their case. It is a matter of record that the importer had himself requested to assess the goods provisionally under section 81 of Act, pending final decision by the Director (Valuation). Since, importers request was acceded, therefore it should be deemed to be an adjournment by the importer and thus time taken on these proceedings should be excluded from the computation of period required for finalization under section 81(2) of the Act. The adjudicating officer has rightly applied the value at Sr. No. 3 of the Valuation Ruling 423/2012, as the description in the Ruling matches with the examination report of the imported goods. The question of prospective application does not apply as the proceedings were made provisionally for want of fresh Valuation Ruling at the request of the importer. The appeal is devoid of merit and therefore rejected."
4. The appellant Messrs M.N. Trading Company Lahore has challenged the order of the respondent No. 3 by way of the instant appeal the consultants/advocates argued on the strength of the grounds incorporated in the memo of appeal and which are inter alia:--
a. That neither provisional or final assessment under the provision of Section 81 or 80 of the Customs Act, 1969 can be made by the respondent No. 2 on the basis of Valuation Ruling No. 334/2011 dated 09.06.2011 on the date of provisional assessment i.e. 18.06.2011 or final assessment as the Ruling in question stood barred by limitation as per the expression of Rule 107(a) of the Customs Rules, 2001 and held by the Hon'ble Customs Tribunal in reported judgment 2011 PTD (Trib.) 2480 Messrs Malik Vetro and 25 others v. Collector of Customs (Appeals) and by the Hon'ble High Court of Sindh in C.P. No. 2673 of 2009 reported at PTCL 2014 CL 537 Messrs Sadia Traders, Karachi and 6 others v. FOP and 2013 PTD 825 Faco Trading and 45 others v. Member Customs FBR, 2014 PTD 176 Goodwill Traders, Karachi v. FOP.
b. That it is also imperative for the appellant to add further that despite of the fact that the Valuation Ruling No. 334/2011 dated 09.06.2011 was issued under Section 25A of the Customs Act, 1969 by the Directorate General of Valuation was declared ultra vires to the provision of Section 25 by the Hon'ble High Court of Sindh in reported judgment PTCL 2014 CL 537 and 2014 PTD 176 and simultaneously by the Hon'ble Customs Appellate Tribunal vide order dated 22.12.2011 in Customs Appeal No. K-915-919 of 2011, the same cannot be taken for finalizing the assessment under section 80 of the Customs Act, 1969. Contrary the same was applied in the case of appellant, rendering the order passed by the respondent No. 2 finalizing the assessment of the appellant as void and ab-initio and as such of no legal effect.
c. That the procedure for finalizing assessment of the goods released provisionally is given in subsection (3) of Section 81 of the Customs Act, 1969 read with direction contained in para 66 of CGO 12/2002 dated 15.06.2002 i.e. after determination of value by the respondent No. 1 and receipt of that by the respondent No. 2. It has been made mandatory for the respondent No. 2 to adhere the procedure devised in para 66 prior to finalization of assessment order. For ease sub paras (2) & (3) of para 66 is reproduced here-in-below:--
(i) All cases of provisional assessment shall be finalized within a period of four months. Where assessment cannot be finalized within four months, owing to exceptional circumstances beyond the control of Custom Houses or Valuation Departments, such period shall be extended by the Collectors of Customs or the Controller of Valuation, as the case may be, by a further period of two months recording reasoning in writing. Such extension shall also be intimated to the importers.
(ii) Final assessment order shall be speaking one and shall also incorporate all the details and evidence on record on the basis of which value had been fixed or assessment has not finalized. This is necessary to enable the importer to file appeal with the appellate authority if he is not satisfied with the assessment order so made.
(iii) Where on the basis of final assessment any refund is due to the importer, the final assessment order shall also contain order for refund of the said amount and the importers shall not be required to make fresh requests for the refund.
(iv) Keeping in view the time constraint indicated above, refundable amount shall be paid expeditiously.
(3) Collectors/Controller of Valuation shall ensure that these instructions are complied with in letter and spirit.
d. That as directed by the FBR in sub-para (5) of para 44 of the CGO 12/2002 dated 15.06.2002 the respondent No. 1 was duty bound to determined the value of the appellant goods accordingly, which was not done, resulting into not determination of value till the passing of the order by respondent No. 2 and even to this date. In the absence of that it was mandatory for the respondent No. 2 to determine the value of the appellant goods exclusively under the provision of Section 25 of the Customs Act, 1969 without any influence of any Valuation Ruling, whether it was stale or under any fresh Ruling or letter No. I/01/2012V/5660 dated 27.03.2012 issued by Deputy Director, Directorate General of Valuation issued subsequent to the clearance of appellant goods as stale Valuation Ruling cannot be applied whereas fresh Ruling has to take effect from the date of its issue not retrospectively as per settled proposition of law of Section 24 of General Clauses Act, 1897 as held by Superior Judicial fora in reported judgments 2673 of 2009 Messrs Sadia Traders, Karachi and 6 others v. FOP, Sales Tax General Order No.6/2003, PLD 1974 SC 180, 2004 PTD 2524, S.T. Appeal No.K-271/2008, 2009 PTD 1, 2009 PTD 16, 2009 PTD 1392, 2009 PTD 1112, 2010 PTD (Trib.) 1675, 2010 PTD (Trib.) 2406, 2010 PTD (Trib.) 1631 and 2010 PTD (Trib.) 1636.
e. As discussed above, there exist no Valuation advise of the respondent No. 1 of the appellant imported goods no cause or reason was available with the respondent No. 2 to finalize the assessment of appellant goods under the provision of Section 80 of the Customs Act, 1969 in the absence of determination of value by either respondents Nos. 1 and 2 and due to the said fact order so passed is silent rendering it in defiance of para 66 attracting section 223 of the Customs Act, 1969 and even pre- mature and nullity to law and as such fails the test of judicial scrutiny. Hence void and ab-inito.
f. That it is erroneous on the part of the respondent No. 2 to consider the case of the appellant of return of pay order after cancelation as refund falling under Section 33 of the Customs Act, 1969 as the amount deposited as security deposit for keeping as "Amanah" at the time of clearance provisionally under section 81 of the Customs Act, 1969 has to be returned after cancelation in case of non timely determination of value by the customs or has to refund that at their own as directed in clause (iii) of sub-para (2) of para 66 of CGO 12/2002, without submission of any refund application as such refund are not governed under the provision of Section 33 of the Customs Act, 1969 which only encompass refunds of paid duty and taxes by "inadvertent or error or misconstruction". The amount deposited as security under the proviso of subsection (1) of Section 81 of the Customs Act, 1969, cannot be considered through any stretch of imagination as an amount paid due to inadvertence or error or misconstruction.
g. That simultaneously applying 19-A of the Customs Act, 1969 on the case of appellant by the respondent No. 2 is erroneous as it is based on mis-construction rather inapt interpretation of sections 19-A and 81 of the Customs Act, 1969. The section 19-A express with clarity that "every person who has paid the custom duty and other levies on any good under this Act shall, unless contrary is proved by him, deem to have passed on full incidence of such custom duty and other levies to the buyer as a part of the such goods." The appellant paid an amount of Rs. 442,448.00 at the time of clearance under Section 81 of the Customs Act, 1969 as per the explanation given in footnote of section 81 of the Customs Act, 1969, which he did passed to the consumer, but not Rs. 628,993.00 submitted as security by him for meeting the condition given in proviso of subsection (1) of Section 81 of the Customs Act, 1969 and the said amount cannot be termed as the amount paid because in that case the proviso of Section 81 of the Customs Act, 1969 shall become redundant instead non existent and assessment made under section 81 of the Customs Act, 1969 deems to be an assessment under the provision of Section 80 of the Customs Act, 1969.
h. That in case the legislature were of the opinion as of respondent No. 2, they would had inserted a proviso in section 81 of the Customs Act, 1969 as had been done in Section 33, wherein proviso to subsection (1) was added through Finance Act, 2009. The opinion of the appellant stood vindicated from the judgments of the Hon'ble High Court of Pakistan reported as 2005 PTD 1968 Trade International v. Deputy Collector of Customs, 2007 PTD 2119 S. Fazal Ellahi and Sons v. Deputy Collector of Customs and others, 2008 PTD 1587 Clover Pakistan Ltd. v. FOP and others, 2010 PTD 900 Collector of Customs, MCC of Appraisement v. Pak Arab Refinery, 2011 PTD 235 Sus Motors (Pvt.) Ltd. v. FOP, 2011 PTD 2851 Messrs Crescent Art Fabric v. Assistant Collector and Customs and 4 others and 2011 PTD (Trib.) 2856 Trend International v. Deputy Collector, Dry Port, Multan and 4 others, 2006 PTD 1270 Dewaan Farooq Motors Ltd., Karachi v. Customs Excise and Sales Tax Appellate Tribunal, 2005 PTD 2116 Collector of Customs (Appraisement) v. Auto Mobile Corporation of Pakistan and 2004 PTD 795 Messrs Farooq Woolen Mills, Gujranwala v. Collector of Customs, Dry Port, Sambrial and others, 2012 PTD 980 Dawlance Electronic (Pvt.) Ltd. v. Collector of Customs, Karachi.
i. That in fact no determination of value was ever made by the respondent No. 1 in the case of appellant to this date. Resultant, the declared value of the appellant goods stood final under Section 81(4) by virtue of lapse of period given in subsection (2) of section 81 of the Customs Act, 1969 and the order passed by respondent No. 2 is of no legal effect, hence ab inito void and stood validated from the judgments of the Hon'ble High Court of Pakistan reported as 2005 PTD 1968 Trade International v. Deputy Collector of Customs, 2007 PTD 2119 S. Fazal Ellahi and Sons v. Deputy Collector of Customs and others, 2008 PTD 1587 Clover Pakistan Ltd. v. FOP and others, 2010 PTD 900 Collector of Customs, MCC of Appraisement v. Pak Arab Refinery, 2011 PTD 235 Sus Motors (Pvt.) Ltd. v. FOP, 2011 PTD 2851 Messrs Crescent Art Fabric v. Assistant Collector and Customs and 4 others and 2011 PTD (Trib.) 2856 Trend International v. Deputy Collector, Dry Port, Multan and 4 others, 2006 PTD 1270 Dewaan Farooq Motors Ltd., Karachi v. Customs Excise and Sales Tax Appellate Tribunal, 2005 PTD 2116 Collector of Customs (Appraisement) v. Auto Mobile Corporation of Pakistan 2004 PTD 795 and Messrs Farooq Woollen Mills, Gujranwala v. Collector of Customs, Dry Port, Sambrial and others, 2012 PTD 980 Dawlance Electronic (Pvt.) Ltd. v. Collector of Customs, Karachi.
j. That the order under subsection (3) of Section 193A has to be passed by the respondent No. 2 within 120 days from the date of filing of appeal or within further extended period of 60 days in terms of its proviso upon availability of exceptional circumstances and recording of those after issuance of notice to the tax payer 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 the appeal was filed on 04.07.2012 and the order should have been passed by the respondent No. 2 on or before 01.11.2012. To the contrary he passed…
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