Federal Tax Ombudsman (FTO) former Justice Munir A Sheikh has directed the Customs authorities to give reasons to the exporters for reducing the declared value of their goods as per instructions contained in serial No 78 (1) of CGO 12/2002 issued by the Federal Board of Revenue (FBR).
He gave these instructions while disposing of a complaint of the International Apparel, West Wharf Road, Karachi, manufacturers and exporters of leather garments. The brief facts of the complaint are that the said exporter forwarded a consignment for export of 460 pieces of leather women jackets to Johannesburg and the unit price of such goods was declared at $ 74 per piece.
However, after completing the formalities, when the GD (goods declaration) was presented for allowing shipment, the concerned appraiser evaluated the value of the goods for $ 65 per piece.
The complainant contended that he is a regular exporter and that during earlier period of February 2006 to May 2006, the declared value of the same product ranged between $ 69 and $ 75 per piece and the Customs authorities never objected to such valuation.
Replying to this complaint, the Collector Customs, in his written report, stated that the declared value of the complainant was found to be on the higher side compared to the values given in circular No 184/26 dated 26.05.2006 by the Pakistan Leather Garments Manufacturers & Exporters Association (Plgmea).
He said that prices given by the association are being applied to and accepted by other exporters and the Price Control Committee is constituted by the FBR to facilitate the exporters with the assistance of their representative associations to avoid lengthy litigation.
In his findings, the FTO said after the perusal of the record which shows that the consignment in question relates to the period of May 2006 and in the immediately preceding period from February 2006 to May 2006, the value of the similar goods declared by the complainant between $ 69 and $ 71 per piece was being accepted.
He said that even in regard to a shipment in August 2006, the value of the similar goods at $ 75 per piece was accepted as against the value fixed at $ 65 per piece by Plgmea vide letter issued in May 2006.
The FTO observed that the value suggested by Plgmea can be taken as a factor for the purpose of appraisement but if the complainant was disputing such value, then in terms of the provisions of section 199 of Customs Act-1969, the Customs authorities could have taken a sample of the goods for ascertaining the value thereof, and if it was found to be different from the value declared by the complainant then he should have been confronted with the necessary material and thereafter made the appraisement in accordance with law.
The FTO said no such exercise was undertaken and thus the reduction in the declared value of the goods was made without sufficient basis and without affording an opportunity of hearing to the complainant which is violation of the principle of audi partem alteram which tantamount to mal-administration.
He asked the FBR to direct the concerned Collector of Customs to re-examine the matter and if it is found that the value declared by the complainant is not correct, then after providing reasonable opportunity of hearing to the complainant, a speaking order should be passed disclosing the basis and giving specific findings therein.