Customs tribunal closes door for Valuation Guide Lines

KARACHI: A Special Customs Appellate Tribunal comprising Nadeem Qureshi, member Judicial and Muhammad nazim Saleem disposed of appeals filed by thirteen appellants / importers set aside Order in Revision passed by the Director General Valuation and directed the customs to re-assess the imported Buckram.

The appeals were filed by  Carewell Traders, Dawn Trading Company, Horizon Enterprises, A.A. Interlining, Royal Business International, Latif Bukram Store, Amir Brothers, Qadir Trading Company, Fine Traders, . Fine Industries, ALPHA Trading Company, SS International, Pak Fabric, Waris Sharif & Co and Ihsan & Sons against Order in Revision in Revision No.264/2016 dated 11.11.2016, passed by the Director General of Customs Valuation, Karachi against the Valuation Ruling No.926/2016 dated 08.09.2016 passed by the Director, Valuation, Customs House, Karachi.

The Director General, Directorate General of Customs Valuation and Director and Directorate General of Customs Valuation, Customs House, Karachi were respondents in the appeals.

According to the facts of the case the appellant are the importer of Woven & Non-Woven interlining Buckram material in Black & White colors classifiable under PCT Heading 5901 & 5603, respectively. The goods are being imported from China, Korea and other Countries, previously the goods have regularly been imported @ US $ 0.80/Kg to US$ 1.80/kg depending on the category/quality of the buckram.

The local manufacturers of the said item approached the officers of Directorate General of Customs Valuation Customs House, Karachi for enhancement of import value of said item to protect their industry. The Director General Valuation, Customs House, Karachi with the active collaboration of local manufacturers issued a Valuation Ruling No. 428/12 dated 13.02.2012 & revised the values with the pre-text that the international prevailing prices of the said item are on higher side

The Director Valuation again re-determined the values without proper consultation with stake holders & issued Valuation Ruling No. 926/16 dated 08.09.2016 between US $  4.41 and US $ 6.65 per kilogram.

As the revised values were not acceptable to the importers, they filed revision application before the Director General Valuation, Customs House, Karachi also seeking clearances under section 81 of the Customs Act, 1969 till the order-in-revision. The Director General Valuation, Customs House, Karachi allowed the request for provisional release, examined the case and while passing Order in revision, decreased the values up to approximately 5% to 10% on the grounds that the Valuation Ruling No 926/16 dated  08.09.2016  was issued after  fresh inquiry.  The appellants aggrieved by the order of DG Valuation, challenged the same before the Special Customs Appellate Tribunal. Ghulamullah Sheikh advocate, appearing for the appellants contended that, the Interlining Woven Buckram is based on various combinations ranging from 100% polyester to 100% cotton yarn plus HDPE/glue. The price of polyester yarn and cotton yarn used in prime quality of Interlining Woven Buckram is as low as about US $ 1/kg and US $ 2/kg in the international market, respectively. Whereas recycled polyester and cotton yarns are used in standard/ordinary Interlining Woven Buckram, which are available in half of the price of prime quality. The Non-woven Buckram is invariably manufactured from recycled Polyester Staple fiber or recycled cotton mixed with polyester fiber plus LDPE/glue. The price of polyester and cotton fibers used in Non-woven Interlining Buckram is as low as US $ 0.6/kg and US $ 0.4/kg, respectively in the international market therefore, the value determined in the Impugned Order-in-Revision is exorbitantly on higher side & without Justification hence are liable to be set aside. They further contended that, the Director General, Directorate General Valuation in the impugned Order-in-Revision has inter alia depended on Zauba Import data which pertains to the Indian import data and has no relevance with Pakistan and has no legal value in the light of section 25 of the Customs Act, 1969 and the rules for valuation made there under, therefore, the impugned Order-in-Revision is without any Justification which is liable to be set aside. The Valuation Ruling was issued by the Director Valuation without exhausting sub sections of section 25 of the Customs Act 1969, he contended.

We have examined the case record and given due consideration to the arguments put forth by both the parties, it has been noticed and observed that a vital and basic contention raised by both the parties in the subject appeal revolves around the issue whether the Director Valuation has travelled beyond his authority and jurisdiction and authorized under Section 25-D of the Customs Act, 1969 to determine the customs value of a new item which was not earlier determined in the valuation ruling impugned before him. Plain reading of Section 25-D and its interpretation under the legal prospective simply demonstrate that, the Director General Valuation can only deliberate with the value earlier determined in a ruling issued by the Director Valuation under Section 25A of the Customs Act, 1969. The revision petition may be filed before the Director General Valuation within 30 days from the day of determination of customs value. In presence of such legal and statutory obligations the Director General Valuation does not have any inherent power or jurisdiction to travel beyond his authority. The Director General   Valuation not authorized to re-determine or adjudicate the issue which was never been assailed before him against any valuation ruling. In this particular case, the Director General Valuation without any warrant of law added/inserted a new item i.e. ‘non-woven polypropylene spun-band fabric’ at sr. No.5 of the Table given in the impugned Order-in-Revision which was in fact not the integral part of the Valuation Ruling No.926/2016 dated 08.09.2016 issued by the Director of Customs Valuation under Section 25-A of the Customs Act, 1969. On the other hand the respondents representative strongly agitated the point that, the Director General of Customs Valuation has got the same powers under Section 25-A (3) as that of Director of Customs Valuation under Section 25-D of the Customs Act, 1969 read with SRO-495(I)/2007 dated 09.06.2007. This point also requires clarification as envisaged under the prescribed law and statute. Under the circumstances, question arises whether the Director General Valuation while sitting under the jurisdiction in terms of Section 25-D of the Customs Act, 1969 can exercise authority under the law by assuming jurisdiction under Section 25-A of the Customs Act, 1969 simultaneously. No doubt, SRO-495(I)/2007 dated 90.06.2007 specify the powers and duties of the officers of the Directorate General of Customs Valuation. At the S.No.1 of the table of SRO-495(1)2007 dated 09.06.2007, the Director General, Customs Valuation is empowered to exercise powers and discharge duties under Section 25-A and 32 of Customs Act, 1969, sub-section (3) of Section 25-A of the Customs Act, 1969 empowers the Director General of Customs Valuation to determine the “applicable customs value” of any imported goods in case of any conflict in the customs value determined under Section 25-A of the Customs Act, 1969. It is further observed that, the contents of Section 25-D envisage that a revision petition may be filed before the Director General within thirty days from the date of determination of customs value under Section 25-A, and in case of jurisdiction of Director General under section 25-A (3), he is competent to determine applicable value on his own motion on a reference from Collector of Customs or Director, Customs Valuation. The Director General only has the power or jurisdiction under sub section (3) of Section 25-A of the Customs Act, 1969, in case of any conflict in the customs values determined under sub-section (1) of Section 25-A, to determine the “applicable” Customs value. The intent and wisdom of the legislature by coining two distinct phases “applicable customs value” and “determination of customs value” is quite evident. Determination of customs values exclusively fall within the jurisdiction of Director, Customs Valuation and Collector of Customs only. But, jurisdiction with reference to“applicable customs values” is restricted to “conflict” arising out of application of customs value determined in terms of Section 25-A(1) of the Customs Act, 1969. In this particular case, only Revision Petition was filed before the Director General under Section 25D, and no Application or Reference under Section 25-A(3) was pending before the Director General at the time of passing the impugned Revision Order, as such, the act of Director General Valuation initiated in this case is illegal, void and without lawful authority. On the same proposition of law, this court has already passed the judgements in Customs Appeal Nos. K-2137/2016 to K-2141/2016, K-2185/2016 and K-2182/2016.

We have examined the case record and given due consideration to the arguments put forth by both the parties, it has been noticed and observed that a vital and basic contention raised by both the parties in the subject appeal revolves around the issue whether the Director Valuation has travelled beyond his authority and jurisdiction and authorized under Section 25-D of the Customs Act, 1969 to determine the customs value of a new item which was not earlier determined in the valuation ruling impugned before him. Plain reading of Section 25-D and its interpretation under the legal prospective simply demonstrate that, the Director General Valuation can only deliberate with the value earlier determined in a ruling issued by the Director Valuation under Section 25A of the Customs Act, 1969. The revision petition may be filed before the Director General Valuation within 30 days from the day of determination of customs value. In presence of such legal and statutory obligations the Director General Valuation does not have any inherent power or jurisdiction to travel beyond his authority. The Director General   Valuation not authorized to re-determine or adjudicate the issue which was never been assailed before him against any valuation ruling. In this particular case, the Director General Valuation without any warrant of law added/inserted a new item i.e. ‘non-woven polypropylene spun-band fabric’ at sr. No.5 of the Table given in the impugned Order-in-Revision which was in fact not the integral part of the Valuation Ruling No.926/2016 dated 08.09.2016 issued by the Director of Customs Valuation under Section 25-A of the Customs Act, 1969. On the other hand the respondents representative strongly agitated the point that, the Director General of Customs Valuation has got the same powers under Section 25-A (3) as that of Director of Customs Valuation under Section 25-D of the Customs Act, 1969 read with SRO-495(I)/2007 dated 09.06.2007. This point also requires clarification as envisaged under the prescribed law and statute. Under the circumstances, question arises whether the Director General Valuation while sitting under the jurisdiction in terms of Section 25-D of the Customs Act, 1969 can exercise authority under the law by assuming jurisdiction under Section 25-A of the Customs Act, 1969 simultaneously. No doubt, SRO-495(I)/2007 dated 90.06.2007 specify the powers and duties of the officers of the Directorate General of Customs Valuation. At the S.No.1 of the table of SRO-495(1)2007 dated 09.06.2007, the Director General, Customs Valuation is empowered to exercise powers and discharge duties under Section 25-A and 32 of Customs Act, 1969, sub-section (3) of Section 25-A of the Customs Act, 1969 empowers the Director General of Customs Valuation to determine the “applicable customs value” of any imported goods in case of any conflict in the customs value determined under Section 25-A of the Customs Act, 1969. It is further observed that, the contents of Section 25-D envisage that a revision petition may be filed before the Director General within thirty days from the date of determination of customs value under Section 25-A, and in case of jurisdiction of Director General under section 25-A (3), he is competent to determine applicable value on his own motion on a reference from Collector of Customs or Director, Customs Valuation. The Director General only has the power or jurisdiction under sub section (3) of Section 25-A of the Customs Act, 1969, in case of any conflict in the customs values determined under sub-section (1) of Section 25-A, to determine the “applicable” Customs value. The intent and wisdom of the legislature by coining two distinct phases “applicable customs value” and “determination of customs value” is quite evident. Determination of customs values exclusively fall within the jurisdiction of Director, Customs Valuation and Collector of Customs only. But, jurisdiction with reference to“applicable customs values” is restricted to “conflict” arising out of application of customs value determined in terms of Section 25-A(1) of the Customs Act, 1969. In this particular case, only Revision Petition was filed before the Director General under Section 25D, and no Application or Reference under Section 25-A(3) was pending before the Director General at the time of passing the impugned Revision Order, as such, the act of Director General Valuation initiated in this case is illegal, void and without lawful authority. On the same proposition of law, this court has already passed the judgements in Customs Appeal Nos. K-2137/2016 to K-2141/2016, K-2185/2016 and K-2182/2016, the tribunal held.

Before the court of law it is mandatory for the department to show some material to justify the observations caused and imposed by the Director General of Valuation in the impugned Order-in-Revision. In case of such lacking and legal lacunae and such disclosures discredit the impugned action. The impugned Order-in-Revision ruling and its perfunctory and sketchy revision by the Director General of Customs are devoid from the foregoing attributes and are, therefore, declared without lawful authority, void and illegal hereby set-aside up to the extent of present appellants only. The respondents are further directed to re-assess the impugned goods of the appellant in accordance with the value as declared in terms of Section 25 (1) (5) (d) of Customs Act, 1969 read with Rule 107 (a) of Customs Rules 2001. The Appeals are allowed in the above terms, the tribunal said parting with the judgment.

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