KARACHI: Sindh High Court (SHC) has ruled that Section 202 of Customs Act, 1969 does not extend its arms against a clearing agent acting in good faith without any collusion or negligence to cause financial loss to national exchequer.

A division bench of SHC gave this ruling in petition, which was filed by a custom’s clearing and forwarding agent challenging the impugned notice issued for the recovery of duties and taxes as assessed finally by the customs authorities.

According to a written order of the court, brief facts are that the consignee imported a vehicle. At the time of clearance the value declared was objected by the customs authorities and the value was consequently, in terms of ITP of older models was enhanced to 5% provisionally under Section 81 of Customs Act, 1969 followed by release of the vehicle, provisionally.

The matter was then referred to Director General Valuation and vide its advice dated 02.04.2014 the value of the vehicle in question was determined under Section 25(8) read with 9(9) of the Customs Act, 1969. Consequently an assessment order was issued and the provisional assessment was finalized and the importer was required to deposit additional amount of duties and taxes, as assessed.

In pursuit of such recovery, the petitioner, being a clearing and forwarding agent, received a notice dated 05.03.2018, after about four years of such assessment. The Bench observed that neither a show-cause was issued nor the assessment order declared such terms of recovery to be made against the clearing agent.

In fact the importer failed to substantiate his declared value in terms of Section 25 of the Customs Act, 1969 read with Rule 109 of the Customs Rules, 2001. Court maintained that the declared value may have varied with the advice of Director General Customs Valuation; however, the connivance of clearing agent to cause losses to national exchequer is missing and stated that not all such goods declarations be categorized as false or untrue statement and hence require a burden to be discharged by customs officials, if such is attributed separately against importer and clearing agent.

Not necessarily a declared value, which is objected by the customs officials be always considered to be a wilful act of causing losses to national exchequer in terms of duties and taxes; however, a mechanism is provided to levy duties and taxes in terms of transactional value i.e., price actually paid or payable for the goods under section 25 of Customs Act, 1969 when sold for export from Pakistan, subject to provisos therein, bench declared.

Bench stated that it went through the ibid rules in detail, which could only be given effect against the clearing and forwarding agent provided the prerequisites in terms of the ibid rules are available whereby the collusion, intention and negligence could be established without any shadow of doubt.

In the absence of such determination, notice for the recovery of outstanding duties and taxes against the clearing and forwarding agent (petitioner) is unlawful, the bench declared.

Copyright Business Recorder, 2021