This has reference to the news release that the Directorate General of Post Clearance Audit has detected cases involving loss of revenue to the tune of Rs 308 million during October, 2009 to February, 2010. Time and again similar news are released in order to mitigate the fabulous revenue collection target being fixed by the FDR.
Every time, Section 25-A of customs Act 1969 is brought into play. London Metal Exchange Prices are taken as the prices to assess the imported metal merchandise after the goods had been cleared on the basis of declared and negotiated product prices.
After clearance of the goods, the importers sell them on the prevailing market prices and after that big claims are put against the importers under the disguise of Section 25-A without taking into view that the importers were entitled to free trade under the right to free trade guaranteed under the Constitution of Islamic Republic of Pakistan and if the importers were asked to pay the demanded amount of the Customs claims, they will collapse and their business will be ruined because the importers cannot go to ask the ultimate buyers to reimburse them the amount demanded by the Customs as a result floodgates of litigation's are opened.
The superior courts have held in various judgement that valuation done by the authorities on the basis of valuation ruling was violative of the method, means and. procedure contemplated by Section 25 of the Customs Act 1969 was void, and of no legal effect.. It had also been held that transaction- value to be customs value' of imported goods' subject to the provisions of this' section an-d the rules.
THE SECTION 25 OF CUSTOMS ACT 1969 PROVIDED THAT: Transaction value, the customs value of imported goods, subject to the provisions of this section and. the rules, shall be the transaction value, that is the price actually paid or payable for the goods when sold for export to Pakistan and Section 25A provides to take over the imported goods if the value of imported goods declared in the bill of entry is understated and there is a buyer of imported goods.
All these provisions can only be applied at the time of entertaining the bill of entry that is pre-clearance stage and not after the goods have been cleared or ex-bonded that is at post-clearance stage. Even if the clearance is allowed under automated systems, there ought to have a specific tagging condition that such clearance shall be subject to post-audit.
London Metal Exchange published prices could not be a parameter to determine the import prices for the simple reasons that the prices fluctuate on demand and supply as well as other factors of recession and bearish trend and the sellers comes to agree to negotiated prices per se of prevailing market conditions.
The customs authorities are misconstruing the provisions of Sections 25 and 25A just to exhort extra revenue from the importers to fulfil their allocated revenue target at the cost of importers and that is not fair and just under the norms of fair business and revenue collections ethics.
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