Footwear valuation : SHC adjourns hearing 19 identical Special Customs Reference Applications indefinitely

KARACHI: A Special Customs Appellate bench of High Court of Sindh (SHC) comprising Justice Irfan Saadat Khan and Justice Arshad Hussain on Tuesday adjourned hearing of 19 identical Special Customs Reference Applications (SCRA’s) indefinitely for paucity of time.

Kashif Nazeer advocate represented the Customs Valuation while respondents/appellants were represented by Khalid Javed Khan advocate.

The SCRA’s were filed by Director, Customs Valuation challenging the common judgment passed by Special Customs Appellate Tribunal comprising Muhammad Nadeem Qureshi and Muhammd Nazim Saleem in as many as 19 identical appeals. The tribunal allowed the appeals and ordered release of consignments applying Valuation Ruling  (VR) 421 0f 2012.

The Customs Valuation maintains in the SCRAs that the entire proceedings before the tribunal were illegal and void as the alternate remedy of challenging the new/impugned VR 859 0f 2016 dated 25-5-2016 was available to the appellants. The impugned VR was issued strictly in accordance with the provisions of the section 25 and 25-a of the Customs Act 1969 and hence no interference was required from any judicial forum, the appellant Custom Valuation maintains praying to the court to set aside the order of the tribunal in these appeals.

A large number of traders and low-end footwear importers have challenged the Valuation Ruling No.859/2016 for being arbitrarily and with malafide intent as it determines the customs values of low-end footwear such as shoes, slippers, sandals, chappals and joggers at much higher side resulting in serious loss to importers/traders.

Earlier, import/valuation of unbranded shoes slippers, sandals, chappals and joggers was covered by the Valuation Ruling No.421 of 2012. Therein, categories for each type of footwear as per kind (i.e. shoes, slippers, sandals, etc.) and size (i.e. baby, children, boy/girl, gents or ladies’ sizes) were created, and for each such category values were determined individually as per their respective origins and in association with the relevant stakeholders.Besides there was a distinction of “branded” and “un-branded” items was also made.

The previous Valuation Ruling held field for a number of years, i.e. from 30.01.12 to the issuance of the present impugned Valuation Ruling, and was accepted by both the importers of footwear as well as the Customs, as being at or about the international market rate. Although the values in the previous Valuation Ruling were higher than the actual rate at which the unbranded footwear were available in the international market, such difference was not prohibitive nor exceptionally detrimental to the local trade, hence, was acceptable for the purposes of valuation.

Director Customs Valuation issued the impugned Valuation Ruling 859/2016 whereby the values of all items covered by the earlier Valuation Ruling No.421/2012 were increased at least two-fold, while the values of some items were increased even more so.

The procedure and the method conducted by the Customs Valuation at the time of preparation of subject impugned Valuation Ruling deliberately avoided to adopt the sequential method and procedure. Contrary to that, without any method and rational increased/enhanced the prevailing values up to 100 percent.

Directorate Customs Valuation contended that the subject valuation ruling 859/2016 enhanced the value accordingly determined after the due activity performed for market survey.

The Tribunal noted that Valuation Ruling 859/2016 was issued without giving the stakeholders proper opportunity of hearing and despite of the existence of an acceptable Valuation ruling No.421/2012. However, the values of branded shoes determined vide Valuation Ruling No.531/2013 imported from Thailand labeled as Aerosoft were not disturbed nor been modified.

Tribunal observed that on the representation of M/s Service Sales Corporation Pvt Ltd, the values of low end footwear were revised upwards without giving the stakeholders proper opportunity of hearing.

The Tribunal observed that there was bias and discrimination on the part of officials of Directorate of Customs Valuation in issuing Ruling No. 859/2016.

The appeals were filed by importers including M/s. Javed Garments, Karachi, M/s. Hadi International, Karrachi, M/s. International Trading Cu., Karachi, M/s. Ayan Enterprises, Karachi, M/s. Sober Collection, Karachi, M/s. Salma’s & Sons, Karachi, M/s. Syed Muhammad and Sons Trading Company, Karachi, M/s. Daniyal Enterprises, Karachi, M/s. WA Trading, Karachi, M/s. Warn Trading Company, Karachi, M/s. J.B. Shoes, Karachi, M/s. Jeans Junctions, Karachi, M/s Qasar ul Urooj Trading Co., Karachi, M/s. The Times, Karachi, M/s. S.A. Enterprises, Karachi, M/s. Miller Trading, Karachi, M/s. lqbal & Sons, Karachi, M/s. Muhammad Yusuf Traders, Quetta and M/s. Nafeesa Trading Co., Karachi.

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