KARACHI: The Customs Appellate Tribunal has set aside the Valuation Ruling 618/2013 and all orders passed during the hierarchy of this Ruling as it was passed in shear violation of the methods of valuation and ordered the Valuation Department to determine the value of Gas hobs strictly in accordance with Section 25 of the Customs Act, 1969.

According to the details, several importers imported Gas Hobs g from one-burner to five-burners from China and declared unit value as 10 for 5-Burners, $7 for 3-Burners, $5 for 2-Burners and $2.5 for 1-Burner.However, the Customs assessed their values in terms of Valuation Ruling 618/2013 as5-Burner at $42/Unit; 3-Burners at $28/Unit; 2-Burners at $22/Unit and 1-Burner at $16/Unit.

Chronology of the event is that a Valuation Ruling No.607/2013 dated 07.11.2013 was issued indicating values at Gas Hobs imported from China. The values indicated in the Ruling were $20/Unit, $25/Unit, $30/Unit, $40/Unit and $45/Unit respectively from 1 to 5 burner sets.

A corrigendum dated 13.11.2013 was issued through which the origin mentioned in the Valuation Ruling No. 607/2013 was substituted from China to Italy meaning thereby unit values indicated vide Valuation Ruling No. 607/2013 were meant for imports from Italy and not from China. Simultaneously, on 13.11.2013 a provisional Valuation Advice No. 12/2013 was issued indicating values of Gas Hobs as $5, $8, $10, $15 and $19 respectively for Gas Hobs/Stoves fitted with 1 to 5 burners.

Subsequently, on 06.12.2013 impugned Valuation Ruling No.618/2013 dated 06.12.2013 was issued fixing values of Gas Hobs as $16, $22, $28, $36 and $42 respectively for Gas Hobs/Stoves fitted with 1 to 5 burners.

The importers including M/s Crown Engineering Company, M/s Weldon Electronics Corporation, M/s Cannon International, M/s Fotile Kitchen & Home Appliances, M/s Sohail Traders and M/s General Marketing Services challenged the Valuation Ruling No.618/2013 before Directorate General of Customs Valuation on the grounds that the values so fixed were at par with those of the European origin prices and as such make the goods incompatible in the local market. Furthermore, there is a huge difference between the prices fixed in the Valuation Advice 12/2013 vis-à-vis Valuation Ruling No. 618/2013.

The importers submitted that according to law the valuation of imported goods shall be transaction value that is the price actually paid or payable for the goods sent or exported to Pakistan. Unless it is proved that the transaction value, is based on fake documentation or it is a result of any relationship between the buyer and the seller, the Customs Authorities are under a legal obligation and are bound to accept the transaction value in terms of Section 25(1) of the Customs Act, 1969 for assessment of duties and levy of taxes. The refusal on their part to do so without adhering to the Valuation Rules and proper reasoning is patently illegal and violation of the mandatory provisions of law.

The Director General of Customs Valuation rejected the review petitions of the importers and passed order-in-Revision No.33/2014.

The Tribunal observed that a bare perusal of Oder-in-Revision, Valuation Ruling No.618/2013 and No.607/2013, its Corrigendum and the Valuation Advice No.12/2013 in general, reveals that there was a confusion even amongst the Valuation authorities in determining the values of Gas Hobs of Chinese and other origins. Initially a Valuation Ruling No.607/2013 was issued fixing values of Chinese origin Gas Hobs and subsequently origin was changed from China to Italy vide corrigendum and a Valuation Advice was issued which fixed the values much nearer to the one declared by the importers.

On 06.12.2013 a fresh Valuation Ruling was issued which determined the prices of Chinese origin and brought them at par with those of the European origin. There is a lack of consistency and transparency in the entire process of determination of values.

The Tribunal noted that DG Customs Valuation in the Review Older had admitted the position that difference between China and Europe origin prices had always been considered to be much more than what had been adjudged in the disputed No.618/2013 and that the market prices of European/USA origin goods considerably higher as compared to the goods of Chinese origin.

The Order also mentioned that the Directorate of Customs Valuation could not give any satisfactory answer to low margin between the prices of Gas Hobs of Chinese vis-a-vis European/USA origin Stoves.

It had also been mentioned in the Review Order that the current market prices of Gas Stoves of European origin goods ranged between $100 to $116/Unit for five burners as against $45/Unit determined in the Valuation Ruling No.618/2013.