Need to educate clients on changed legal position stressed: FBR notifies legal changes

Despite legal changes in Customs Act 1969 on valuation of imported goods, the Federal Board of Revenue (FBR) has found that the business community is unaware of the implications of the amendments introduced in budget 2007-2008.
This has been admitted in FBR instructions issued to the Director General Valuation, Karachi. According to the directive, despite amendment in budget 2007-2008, general perception of the 'valuation advice' and 'valuation ruling' remained unchanged. The DG Valuation, Karachi needs to educate clients on changed legal position. However, the department should also freely but judiciously exercise the powers, particularly those granted in budget 2007-2008, instructions added.
Sources said that some important changes were introduced in the last budget. Under amended section 25A, Directorate General of Valuation was empowered to determine and notify the values for different classes of goods. This is akin to old ITP system. In sub-section (2), the power to determine value of different goods has been given. Through sub-section (3), the notified values would have immediate effect without waiting for publication in the official Gazette. The values determined and notified under this section have been provided legal cover to avoid litigation.
Sources said that the customs value determined would be applicable customs value for assessment of the imported goods. The powers to determine and notify value of different categories of goods were given to customs to counter the menace of under-invoicing.
Through budget 2007-2008, a new section 25D was also included in the Customs Act, 1969. This is intended to end litigation in the courts whereby the values determined especially for some goods especially cloth was challenged in the courts. A window has been provided to take these disputes to the Directorate General of Valuation.
An amendment was made in section 81 of the Customs Act. The word "pay order" has been inserted as an additional instrument for the payment of differential amount in sub-section (1). In sub-section (2), in the proviso, the Director Valuation has also been empowered to extend the period for finalisation of provisional assessment.
Sources said that the importers could not obtain written reply from customs department for not accepting the 'declared value' of imported consignments for the valuation purposes for 2007-2008. The board had abolished this condition through Finance Act, 2007 applicable from July 1. For this purpose, the words appearing in sub-section (4) of section 25 of the Customs Act, the words "in writing" have been substituted due to non-practicability of application of this provision. Its binding nature has been diluted to overcome objections of the courts whereby recorded evidence is demanded by the courts in such disputes.
Sub-section 10 of Section 25 provides for sequence to be followed for determining the customs value. The words "under this Act" have been omitted and mandatory provision of the section for applying sequential order has been re-worded by inserting "may" to give it non-binding effect.
It is worth mentioning that the board had directed the collectors of customs to recover additional amount of Rs 5 billion through accurate valuation of imported goods for calculation of the levy in view of the change in prices at international level.
The Director General, Valuation would analyse the commodities to ensure that the valuation must be done on prevailing international prices. It has been observed that the impact of price increase has not been taken into account for imported goods by the customs department.