SHC stays return of differential amount lying with Nazir on Special Reference by Customs

KARACHI:-A division bench of High Court of Sindh (SHC) comprising Justice Muneeb Akhtar and Justice Ashraf Jahan on Friday issuing an ad-interim order directed the Nazir to not to release the differential amount to the respondents/importers of Toilet Soap.

The order came in a Special Customs Reference Application filed by Director of Customs Valuation against A.K Business Link. The applicant filed under section 196 of the Customs Act 1969, challenged a decision by the Customs Appellate Tribunal Karachi (Bench-I)which allowed eleven identical appeals filed by regular importers of toilet soaps including Pakistan Soap Manufacturers Association.

The Appellate tribunal disposing of the appeals on June 20, 2015 directed the Director General Valuation to a issue a fresh Valuation Ruling strictly in accordance with the section 25 and 25-A of the Customs Act 1969. The DG Valuation was ordered to complete the exercise within one month and to submit a compliance report.

The importers/respondents seeking implementation of the order passed by the Customs Appellate Tribunal moved application before the SHC for return of differential amount they have deposited for securing release of the declared goods (imported consignment). The controversy aroused as the Custom Valuation revised the VR 496 of 2012 and issued a new VR 702/ 2014 increasing the duty.

The new ruling was given on the basis of the fact that value of finished goods (Soap) cannot be less than the value of raw material i.e. Soap Noodles.

The importers in their appeals maintained that DG Valuation has not complied with the mandatory procedure of determining the VR and they were not made party to the determination of the VR as “stake holders”. They alleged that DG Valuation keeping them out of the process of determination of the value, he determined the same, which is illegal and arbitrary.

The applicants/Customs Valuation defending the new VR 702 of 2014 which superseded VR 496 0f 2012 maintained that DG Valuation has the powers to determine a new VR under section 25-A of the Customs Act 1969.

The Customs in their Reference Application maintains that “Appellate Tribunal erred in law to declare Custom Values as fixation of value” as the concept of fixation of value exists no more under the Customs Act 1969. The Customs values are being determined under Section 25 read with Section 25-A of the Customs Act 1969, the Special Customs Reference application maintains.

The bench after hearing initial arguments by Masooda Siraj advocate, counsel for the applicant DG Customs, Valuation issuing notices for Nov 13 to the respondents allowing an application for stay, directed Nazir of the court to not to release differential amount to respondents till further orders.

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