M/S Test International, Peshawar Vs Federation of Pakistan through Secretary Revenue Division/Chairman FBR, Islamabad and others.

(JUDICIAL DEPARTMENT)

WP No.737-P12021

M/s Test lnternational

... .....Petitioner.

V/s

Federation of Pakistan Through Secretary Revenue Division/ Cahirman FBR, lslamabad and others.

.Respondents.

For the Petitioner: Mr, Aamir Bilal, Advocate For the Respondents: M/s Sanaullah DAG, Gul Nazir Azam & lshtiaq Ahmad (Junior), Advocates.

Date of hearing: 11.04.2023

JUDGMENT

SYED ALI. J:- Through the instant petition filed under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973 (*Constitution), the petitioner has approached this Court praying that:- 'frtview of the above, it is most respectfully prayed that writ under Article 199 (l) (a) & (c) may be issued to the following fficts:

i. It may very graciously be declared that the stipulated period given under Section 81(2) of the Act has expired at the end of six months of the date of provisional determination. And since there is no final determination within the six months, the provisional determination became final under Section 81@ of the Act. And since the petitioner had discharged his liabilities in terms of the provisional determination, no other amount was payable by him, with the result that any Bank a

Guarantee/Pay order given by the petitioner for s e c ur in g t he "addi t i on al am o unt' c annot b e e n- c as h e d and must be forthwith returned to him by the Respondents.

ii. Further writ may be issued against the respondents restraining them not to en-cash the Bank Guarantee/Pay Order furnished by the Petitioners till final decision of the instant petition and also not to take any coercive measures or actions against the petitioner.

iii. Any other relief which this Honourable Court may deem fit ond proper may also be granted in the interest ofjusticd'.

2.Brief facts of the case as stated in the petition are that IWs Test International, Rawalpindi, the petitioner had imported a unit of vehicle Range Rover p400E Autobiography Plug-in Hybrid (uvehicle') from u.K. through Bill of Lading dated 11.08.2019. On its arrival at Customs Dry port, Peshawar, the petitioner filed Goods Declaration dated 11.10.2019 (uGD') for its clearance through IWs zahoor corporation, customs Agency, Peshawar. For determination of valuation of applicable duties/taxes, as per practice in vogue, IWs Sigma Motors Ltd Karachi was approached to provide fair assessable value of the subject vehicle, however, they provided its two different values i.e. US$ 62,753 & US$ 71,550; therefore, the value of the said vehicle was searched through online portal showing US$ 135,000/-. Thus, the vehicle in question was assessed to duty/taxes @ US$ 87,750 after granting 30% discount on account of consumption tax and acquisition tax etc. The petitioner being aggrieved bf the aforesaid assessment filed complaint before the Federal Tax Ombudsman, Islamabad. During investigation, it was informed vide letter dated 28.02.2020 that the GD had been processed provisionally under Section 81 of the Customs Act, 1969 ("Act') after granting benefit of SRO 499(l)12013 dated 12.06.2013 and Part-II of the Income Tax Ordinance, 200I 4 ("Ordinance'); thus, the learned Federal Tax Ombudsman directed the Collector MCC (Appraisement & Facilitation), Peshawar to decide the request of petitioner for issuance of delay/detention certificate as per law vide order dated 16.04.2020. In compliance thereof the case was placed before the Assistant Collector MCC, Peshawar, who issued show cause notice to the petitioner, which was replied and thereafter, the worthy Assistant Collector MCC has passed the impugned final assessment order on 02.12.2020, which reads as under:- " In view of the above and powers conferred upon me under Section 8l of the Customs Act, 1969, I therefore, order the finalization of the provisional

assessment and the secured'. amount of duty/taxes \, omounting to Rs. 13,3j0,454/- (Rupees Thirteen Million Three Hundred Thirty Thousand Four Hundred Fifiy Four only) is hereby ordered to be recovered through encashment of the Bank Guarantee as submitted on 04.06.2020'.

Feeling aggrieved, the petitioner has filed the instant Writ Petition.

3.Respondents have furnished their parawise comments contesting the case of petitioner.

4.Arguments heard and record perused.

5.It is evident from record that the GD in respect of clearance of the vehicle was produced before the respondent on 11 .L0.20r9. The Assessing officer in order to determine the fair value of the vehicle approached IWs sigma Motors Ltd, Karachi, however, iWs Sigma Motors Ltd Karachi had provided two different values of the vehicle; hence, no final determination of the value of the vehicle was possible for the Assessing officer. The proceedings were also initiated by the petitioner before the Federal Tax Ombudsman complaining against the attitude of the respondents for not releasing the vehicle.

6.Be that as it may, the amount of duties and taxes were provisionally determined on 02.03.2020 in terms of Section 81 of the Act and on the basis of ascertained value and the differential amount of duties/taxes to the tune of Rs. 13,330,4541- was secured through bank guarantee No. 2020- BG-041 dated 04.06.2020 issued by IWs MCB Islamic Bank Ltd in terms of subsection (4) of Section 81 of the Act.

7.In order to complete the final determination, the a Assessing Officer in her own style had issued a show cause <r notice to the petitioner relating to the issue. However, the Assistant Collector could not complete the final determination within a period of six months as provided under subsection (4) of Section 81 of the Act, therefore, through the impugned order, has directed the encashment of bank guarantee which was provided by the petitioner as stated above. The

respondents in their comments have also admitted the aforesaid fact that the respondenVAssistant Collector could not pass the final determination order as required under section g1 of the Act. Therefore, the crucial issue before this court is the consequence of not completing final determination as provided under Section 81 of the Act.

8.In order to effectively adjudicate this issue, we would like to refer briefly the gist of enabling provisions of the Act.

Section 25 of the Act deals with the determination of the custom value of imported and exported goods. This section has provided an exhaustive mechanism for determination of custom value of the imported goods which, inter alia, includes many factors fully elaborated in the said section, inter alia, including that in absence of actual custom value, the transactional value of identical goods and similar goods may also be considered.

Section 79 of the Act envisages that the owner of any imported goods shall make entry of such a good for home consumption etc within ten days of the arrival of the goods by filing a true declaration of goods, giving therein complete and corrected particulars ot' such goods, duly supported by commercial invoice, bill of lading or airway bill, packing list etc and assessing and paying his liability of duty, taxes and other charges thereon.

f Section 80 of the Act empowers the authorized officer of the custom to satisff himself regarding the correctness of the particulars of the imports, including declaration, assessment, payment of taxes and duties. He is empowered to examine any goods that he may deem necessary at any time after the import of the goods into the country and may requisition relevant documents, as and when and in the manner deemed appropriate during or after release of the goods by Customs. If during the checking of goods declaration, it is found that any statement in such declaration

or document or any information so furnished in terms of Section 79 ibid is not correct in respect of any matter relating to the assessment, the goods shall, without prejudice to any other action be reassessed to duty/taxes and other charges but after providing an opportunity to the importer.

9.The issue relevant to the present controversy is Section 81 of the Act. The said section reads as under:- "87, Provisional determination of liability,- (l) Where it is not possible for an fficer of Customs during the checking of the goods declaration to satisfy himself of the correctness of the assessment of the goods made under section 79 [or IjlJ, for reasons that the goods require chemical or other test or a further inquiry, an fficer, not below the ronk of Assistant Collector of Customs, may order that the duty, taxes and other charges payable on such gods, b e determined pr ovis ionally :

Provided that the importer, save in the case of goods entered for warehousing, pqys such additional amount on the basis of provisional assessment or furnishes bank guarantee [or pay orderJ [OmittedJ of a scheduled bank along with an indemnity bond for the payment thereof as the said fficer deems sfficient to meet the likely dffirential between the final determination of duty [, taxes and other chargesJ over the amount determined provisionally:

Provided further that there shall be no provisional assessment under this section ,f n, dffirential amount of duty and [taxes and other chargesJ is paid or secured against bank guarantee [or pay orderJ [OmittedJ.

tO Where any goods are allowed to be cleared or delivered on the basis ofsuch provisional determination, the amount of duty, taxes and charges correctly payable on those goods shall be determined within six months of the date of pr ovi s i onal de t erminati on :

Provided that the Collector of Customs or, os the case riay be, Director of Valuation, may in circumstances of exceptional nature and afier recording such circumstances, extend the period for /inal determination which shall in no cqse exceed ntnety days.

[Provided further that any period, during which the proceedings are adjourned on account of a stoy order or for want of clarification from the Board or the taken through adjournment by the importer, shall be excluded for the computation of aforesaid periods.J On completion of final determination, the amount already paid or guaranteed shall be adjusted against the amount payable on the basis of final determination, and the dffirence between the two amounts shall be paid forthwith to or by the importer, as the case may be.

(4)If the final determination is not made with the \-' period specified in sub-section (2), the provisional determination, shall, in the absence i7 ory nr* evidence, be deemed to be the final determination. t(5) On completion of final determination under sub-section (3) or (4), the appropriate fficer shall issue an order for adjustment, refund or recovery of amount determined, as the case may be.J Explanation.- Provisional assessment means the amount of duties and taxes paid or secured against bank guarantee or [pay orderJ.

10.When the officer of the Custom during the checking of the goods declaration is unable to satis$, himself of the correctness of the goods declaration made under Section 79 of the Act, he may undertake an inquiry for final determination of the liability (taxes and duties) in respect of any goods, however, during the said period, he may order that all the applicable duties, taxes and other charges payable on such goods be determined provisionally. The Assessing Officer may if deem appropriate direct the importer to pay such additional amount on the basis of provisional determination or provide/furnish a bank guarantee or pay order equivalent to the said amount so asked by the Assessing Officer which could likely be a differential amount on eve of final determination of duties (taxes and other charges). Subsection (2) of Section 81 of the Act envisages that where any goods are allowed to be cleared or delivered on the basis of such provisional determination the amount of duty, taxes and other charges payable on the said goods shall be determined within six moths of the date of provisional determination. However, the same period can be extended in exceptional circumstances which would be recorded in - writing. The extended period for final determination which 4 shall in no case exceed ninety days, however, the time spent on adjournment or on account of stay order shall be excluded for the computation of aforesaid period.

1 1. Subsection (4) of Section 81 of the Act says that if the final determination is not made within the period specified ibid the provisional determination shall, in the

absence of any new evidence, be deemed to be the final determination and on completion of final determination under subsection (3) ibid or deemed final determination as provided under subsection (4) the appropriate oflicer shall issue an order for adjustment, refund or recovery of amount determined, as the case may be.

12.In the present case, the appropriate officer has herself admitted that since she had failed to complete the final determination within six months, therefore, as a consequence thereof she has passed the impugned final assessment order by holding that the amount determined through provisional assessment order has become final and as a result thereof, the security instrument i.e. bank guarantee for differential amount should be encashed. In our humble view this approach of the appropriate officer is not in consonance with the purpose, mandate and clear language of subsection (4) of Section 81 of the Act. Probably the appropriate officer while passing the impugned order was misled by the explanation. At the end of section 8l of the Act explaining therein that the provisional assessment means the amount of duties and taxes paid or secured against bank guarantee, however, the provisional determination of the duty as provided under subsection (1) of Section 81 of the Act does not include the additional amount determined on the basis of provisional assessment and the said differential amount is indeed a speculated amount of duty which could ultimately be the actual amount of duty and taxes and other charges after a complete probe and inquiry leading to the final determination of duties and taxes etc. It is only ) when there is actual final determination within the stipulated <- period the additional amount is then relevant and is adjustable in terms of subsection (3) of Section 81 of the Act. SUS Motors (Pvtt Ltd vs. Federation of Pakistsn, Islamabad and 2 others (PTCL 2011 CL. 575).

13.As we have stated above, that this differential amount secured through bank guarantee in terms of subsection

(l)of Section 81 of the Act is not part of the provisional determination, therefore, when the appropriate officer fails to pass an order of final determination as per inquiry envisaged under the enabling provision of Section 81 of the Act, then the amount only determined as a provisional assessment shall be deemed as a finaI determination and as a consequence thereof, the differential amount if already paid then it shall be refunded or if it is secured through an instrument (pay order/bank guarantee) then the said instrument shall be returned to the importer.

14.Moving on to the objection raised by the learned counsel for the respondents that the impugned order could be challenged before the next higher forum in terms of Section 193 of the Act. For ready reference, Section 193 of the Act is reproduced as under:-

[193. Appeals to Collector (Appeals.- [(l) Any person including an fficer of Customs aggrieved by any decision or order passed under sections 33, 79, 80 [,13LJ [,J 179 [and l95J by an fficer of Customs below the rank of Additional Collector may prefer appeal to the Collector (Appeals) within thirty days of the date of communication to him of such decision or order:

Provided that an appeal preferred after the expiry of thirty days may be admitted by the Collector (Appeals) f he ,s satisfied that the appellant has sfficient cause for not prefening the appeal within that period.J

(2)An appeal under this section shall be in such form and shall be verified in such monner as may be prescribed by rules made in this behalf.

(3)An appeal made under this Act shall be accompanied by a fee of one thousand rupees ot be paid in the manner that may be prescribed by the Board.

The perusal of Section 193 of the Act would show that it has provided specifically an order passed by any officer of the Customs under different provisions of the Act to be appealable. Section 8l of the Act does not figure in the said order which are appealable before the next higher forum. Indeed, it is settled law that appeal is a creation of statute and in absence of any provision of law envisaging for filing appeal against an order, the appeal cannot be entertained by the upper

forum as a matter of course. Hussain Bakhsh vs. settlement commissioner, Rawaloindi and others (pLD rg70 supreme court 1) and M/s Aloha chemicals vs, Federation of Pakistan snd 4 others (PTCL 2014 CL. 103).

16.In view of the above, we are of the determined view that the findings of the appropriate officer vide impugned order dated 02.L2.2020 are not based on corect appreciation of subsection (4) of Section 81 of the Act; thus, the same is accordingly set aside and the respondents are directed to return the bank guarantee through which the differential amount was secured to the petitioner.

This Writ Petition is allowed accordingly.

/R

ANNOUNCED.

LL.04.2023

S

Judge

Judse

Nawab Shah CS (DB) Justice Abdul Shakoor & Justice Syed Arshad Ali