Directorate General of Customs Valuation, Karachi has rejected a petition filed by an importer of goods ie Synthetic Rubber, Acrylonitrile Butadiene Rubber (NBR-6240) against its Valuation Ruling No 772/2015 dated 23-11-20 15. According to the order-in-revision 174 of 2016 issued by Syed Tanvir Ahmad Director General Directorate General of Customs Valuation, Karachi has rejected the petition filed by the said company.
Syed Tanvir Ahmad said that the record of the case has been examined and the arguments forwarded by the applicant, as well as departmental representative during the course of hearing have been considered. The advocates contended that the Department has used two methods ie similar and identical goods methods under Section 25(5) & (6) of the Customs Act, 1969, which is illegal and cannot be applied simultaneously. He claimed that the data relied on is more than 90 days old. The petitioner stated that the rubber is imported in 35 kgs bale form. Previous Valuation Ruling of (NBR) was at US $2.80/kg. The applicant contended that the prices of NBR have come down at US $1.15/kg to US $1.25/kg which needs revision.
The Respondent Department (Director Customs Valuation Karachi) submitted their written arguments that the Valuation Ruling No 772/2015 dated 23.11.2015 was issued after detailed discussion and analysing the valuation methods given in Section 25 of the Customs Act, 1969 to arrive at fair value of the Synthetic Rubber NBR. Transaction value method provided in Section 25(1) was found inapplicable due to absence of resources to verify genuineness of invoices submitted at the time of filing of Goods Declaration and mechanism to check the conditions given in Sub-Section (1) of Section 25 of the Customs Act, 1969 to accept declared value as transactional value. Identical / Similar goods value methods provided in Section 25(5) & (6) were examined for applicability to the valuation issue in the instant case. Import data has been checked which reflected various import prices from US $1.82/kg to US $1.90/kg. Also the prices from International Website Zauba has been checked which varies from US $1.67/kg to US $3.23/kg of South Korean origin Customs duty is only 2% whereas sales tax and income tax are adjustable. All the information so far gathered was evaluated and analysed for the purpose of determination of customs values. Consequently, the customs values of Nitrile Butadine Rubber (NBR) have been determined under Section 25(5) & (6) of the Customs Act, 1969. Previous Valuation Ruling No 579/2013 dated 13.09.2013 was issued for Synthetic Rubber "NBR" at US $2.80/kg which was revised after detailed deliberation to arrive at fair value vide Valuation Ruling No 772/2015 dated 23.11.2015 at US $1.90/kg on the basis of two valuation methods under Section 25(5) & 25(6) of the Customs Act, 1969.
The case record clearly manifests that the petitioner has failed to substantiate his case. Therefore, DG Valuation is of the view that the determined customs values are fair. The petition lacks merit as the petitioner could not substantiate his contention to disprove the validity of value determined in the impugned Valuation Ruling and is thus rejected accordingly. However, keeping in view the variation in prices, the Director Valuation may revisit the prices after 90 days, the DG Valuation added.
The order said that the revision petition was filed under section 25-D of the Customs Act, 1969 against customs value determined vide Valuation Ruling No 772/2015 dated 23-11-2015 issued under section 25-A of the Customs Act, 1969, inter alia, on the following grounds: "Being aggrieved by and dissatisfied with the impugned Valuation Ruling No 772/2015 dated 23-11-2015 issued by the Director. Directorate General of Customs Valuation, Karachi which is arbitrary, incorrect, unjust and illegal, the Petitioner being affected person who is importer of goods ie Synthetic Rubber (NBR) vide GD NO. KAPE-HC-70241-24-11-2015 file this revision petition and prayed that this authority would be pleased to call for the Records & Proceedings of the Respondent No I in exercise of revision powers u/s 25-D and set aside the impugned valuation ruling/ determination of customs value after examining the legality, propriety and correctness of the same on the following grounds as well as grant interim relief of provisional release of GD NO. KAPE-HC-70241-24-11-2015 u/s 81 in compliance of High Court order dated 10-11-2015 passed in C.P D-6918/2015:-
First, the petitioner is a registered person and importer of goods ie Synthetic Rubber, Acrylonitrile Butadiene Rubber (NBR-6240) who is an affected and aggrieve person from impugned Valuation Ruling No 772/2015 dated 23-11-20 15 wherein customs value of subject goods has been determined for assessment valuing Rs US $1.90, hence, this revision petition is being filed in exercise of Petitioner's right to challenge the Ruling/Determination made u/s 25A.
Secondly, in consequences of the impugned valuation ruling the actual declared transactional value of the imported goods US $1.42 is not being accepted and being enhanced to US $1.90 by the Respondents for assessment of duties & taxes which increased the cost of the said goods for the Petitioner and the other persons involved in its trade including the citizens of the country.
Thirdly, the impugned determination of value has been made and Valuation Ruling has been issued without examining the facts and the documents disclosing huge decline/down trend in the prices in the international market. Fourthly, it is apparently on record that the prices of subject goods prevailing in the international market from US $1.40 to US $1.50 but on the contrary the impugned custom value of NBR has been determined to US $1.90 which is arbitrary and unjustified.
Fifthly, in the impugned Valuation Ruling the Respondent No 1 has adopted two valuation methods simultaneously ie sub-Section (5) and sub-Section (6) of Section 25 which is not permissible under the Law and violative of judgements of Hon'able High court Sadia Jabbar v/s Federation of Pakistan (PTCL 2014 CL537) and Rehan Umer v/s Collector of Customs (2006 PTD 909).
Sixthly, the contentions and evidences submitted by the importer and their representative associations have been discarded by the Respondent without disclosing the reasons of their discard in the impugned Valuation Ruling, on the other hand, the evidences and material relied upon and employed by the Respondent in the determination and Valuation Ruling have not been disclosed which rendered the impugned Valuation Ruling as non-speaking order violative of Section 24A of the General Clauses Act, 1897 and contravention of law and guide lines given by the High court of Sindh, Karachi in its hall mark judgements court Sadia Jabbar v/s Federation of Pakistan (PTCL 2014 CL537) and Rehan Umer v/s Collector of Customs (2006 PTD 909).
Seventhly, the Customs Clearance Collectorates and their officers given discriminatory treatment and refused the request of the Petitioner for release of their goods provisionally u/s 81 on deposit of security of differential amount as per impugned VR No 722/2015 dated 23-11-2015 with the ratio of transactional value which causing severe injury and damage to the Petitioner on account of huge per day charges of demurrage, container's detention; port and other charges.
The petitioner said that the impugned Valuation Ruling has been issued without considering the facts and evidences which is not a speaking order and violative of Section 24A of the General Clauses Act, 1 897 which is completely mala fide, arbitrary, void ab-inition, illegal and without jurisdiction and of no legal effect.
The Respondent (Director Valuation Karachi) has not disclosed that what resources to verify authenticity of invoices were required which were found absent and not available with the respondent and why any effort has not been made to make them available to exercise proper jurisdiction of determination under Section 25 (1) read with section 25(A) of the Act, 1969.
The Director Valuation Karachi has not disclosed the reason of non-determination of value of under method provided under sub-Section (5) of Section 25 when it is apparent on customs record/data that transactional value of identical goods sold for export to Pakistan and exported at or about the same time as goods being valued was available with the Respondent which are US $402 US $1.50.
The Respondent has not disclosed the material or evidences on the basis of which the impugned value of NBR US $1.90 has been determined u/s 25A, the petitioner said. It is an admitted fact available on record even in the customs records that value of subject goods in the international markets have huge decline/downward trend, but, the impugned value have been determined on higher side US $1.90 whether then US $1.50 just on the basis of departmental favouritism preferring maximum revenue collection.
Under the law section 25A cannot be used for the wholesale determination of customs values which transform the "determination" permissible u/s 25A to an impermissible "fixation" of value. In the instant matter, the Respondent in contrary to the provision of section 25A has fixed the customs value of the impugned goods which is impermissible as held by the Hon'able Sindh High Court in reported judgement Sadia Jabbar v/s Federation Of Pakistan (PTCL 2014 CL537).
The impugned ruling is clearly contrary to the provision and mandate of section 25A, as it has been issued essentially on the basis of some understanding arrived at between the Customs Collectorates and some group of local manufacturers and without considering the facts and submissions of the Petitioner being aggrieved person. This method is not permissible under section 25A of the Act, 1969.
It is established principle of interpretation of the tax laws is that the plain language of the law is to be applied. A bare perusal of the section 25 shows that it is specifically provided in sub-section (1) of section 25 that the customs value of the imported goods, subject to the provisions of this section and rules shall be transaction value. Hence, the provisions contained in section 25(1) to (4) contain primary method of valuation and in the first stance the primary method of valuation is mandatory and required to be adopted in each case of valuation (PTCL 2014 CL537) (2006 PTD 909). But in the impugned ruling the Respondent admittedly has not applied this transactional value method on the basis of some assumption or presumption by stating that resources to verify geniuses of invoices/evidences of prices are absent and not available with the department. Hence, the impugned ruling is arbitrary, illegal, void ab-initio and without jurisdiction and authority, petitioner said.
Director Valuation Karachi has to show that invoice price of the goods is not genuine and did not state the real price paid or payable by the Petitioner. Provision contained in Section 25 of Customs Act, 1 969 and rules framed thereunder are code in themselves, so far, the customs valuation of the imported goods is concerned, which are required to be applied and acted upon strictly in the manner and method contained therein and no room exists for any deviation from these rules on the part of Customs Authorities.
The declining the right of provisional release provided U/S 81 by the respondent No 2 and its officer is illegal and an action of contempt of Sindh High Court order dated: 10-11-2015 passed in UP D-6918/2015 when the petitioner is willing to deposit security of differential amount.
It is accordingly prayed that the directorate may set aside or modify the impugned Ruling 772/2015 to the extent of goods (NBR) and declare the impugned determined value US $1.90 being illegal, arbitrary, invalid and without jurisdiction and lawful authority. The respondent department was asked to furnish comments to the arguments submitted by the petitioner in the case.
Director Valuation Karachi responded that while determining the Customs values of Synthetic Rubber "NBR" & "SBR", under Section 25 read with Section 25-A of the Customs Act, 1969, all the stakeholders were invited to participate in the meeting fixed for 20-11-2015. Previous Valuation Ruling No 579/13-09-2013 was issued and value of Synthetic Rubber "NBR" was US $2.80/Kg and for 'SBR' @ US $2.50/Kg. however, in Valuation Ruling No 772/23-11-2015, values for both types of Synthetic Rubber 'NBR" & 'SBR" was notified on lower side in comparison to the previous ruling ie for NBR @ US $1.90/Kg and for SBR @ US $1.60/Kg. But still the under reference petitioner is aggrieved with the same. After the issuance of Valuation Ruling No 772/2015, dated 23-11-2015, the claim of the appellant for the revision of the determined Customs values are not justified.
In response to the contents of the petition, Director Valuation Karachi said that the previous Valuation Ruling No 579/13-09-2013 was issued and value of Synthetic Rubber "NBR" was @ US $2.80/Kg and for "SBR" @ US $2.50/Kg. However, in Valuation Ruling No 772/23-11-2015, values for both types of' Synthetic Rubber "NBR" & "SBR" were notified on lower side in comparison to the previous ruling ie for NBR & US $1.90/Kg and for SBR @ US $1.60/Kg. But still the under reference petitioner is aggrieved with the same. After the issuance of Valuation Ruling No 772/2015, dated 23-11-2015, the claim of the Appellant for the revision of the determined Customs values are not justified. The declared transaction value cannot be accepted as the petitioners has not submitted relevant corroboratory import documents to justify his claim.
The said Valuation Ruling has correctly and lawfully been issued in terms of Section 25-A of the Customs Act, 1969, after exhausting all valuation methods as envisaged under Section 25 of the Act ibid and after properly holding meeting with all stakeholders. As such the same is justified as per law.
The Customs value has not been notified arbitrarily or unjustified rather the same have been determined after proper exercises and going through the relevant import data in terms of sub-section (5) & (6) of the Customs Act, 1 969 accordingly, Director Valuation Karachi said.
It is submitted that the Customs value have been correctly and lawfully been notified as these two valuation methods ie Section 25(5) and 25(6) are collectively applied while determining the value under these both valuation methods. It is submitted that the methods adopted for the determination of Customs values has been mentioned at Para-(4) of the said Valuation Ruling No 772/2015, dated 23-11-2015 stating the reason applied for the determination of customs values.
It is submitted that the customs values are to be determined under Section 25-A of the Customs Act, 1969. After detailed deliberations valuation methods stipulated in Section 25 of the Customs Act, 1969, were sequentially followed and thoroughly exhausted to arrive at fair value of Synthetic Rubber NBR & SBR.
The customs value has not been fixed but determined under Section 25 read with Section 25-A of the Customs Act, 1969. The concept of fixation of values no more exists in the Customs Act, 1969. It is submitted that after detailed deliberations, valuation methods stipulated in Section 25 of the Customs Act, 1969, were sequentially followed and thoroughly exhausted to arrive at fair value of under reference goods, Director Valuation Karachi said.
The petitioner did not provide relevant corroboratory import documents to justify their transaction values in terms of Sub-Section (1) of Section 25 of the Customs Act, 1969, as such the same cannot be accepted as correct and fair value. As far as provisional assessment is concerned, the same relates to the concerned clearance Collectorate, Director Valuation Karachi said.
As the said Valuation Ruling No 772/2015 has been issued after proper exercise as per law the same may be allowed to hold field for assessment purposes. There is no need to revise the said valuation ruling to (e) No 772/2015 as the same has considerably been issued on lower side in comparison with the previous Valuation Ruling No 579/13-09-2013. As such the same may be allowed to hold field for assessment, Director Valuation Karachi added.
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