2020 PLP (Trib (PTD)

JAHANZAIB WAHLAH, MEMBER JUDICIAL-III.

Through this order, I intend to dispose off Customs Appeal No.K-891/2018 filed against Order-in-Appeal No.1257/2018 dated 21.06.2018 passed by Collector of Customs (Appeals) by maintaining the assessment orders dated 31.12.2017 passed by Deputy Collector, Group-VI, MCC, Appraisement-East, Karachi (Respondent No.1).

2. Briefly facts of the lis are appellant during the course of his business activities imported a consignment of 10565 kgs of motorcycle parts upon receipt of shipping documents he delivered those to his clearing agent Messrs Khurram Brothers, Karachi for transmitting Goods Declaration (GD) under the provision of Section 79(1) of the Customs Act, 1969 (Act) and Rule 433 of Sub-Chapter III of Chapter XXI of Customs Rules, 2001 (Rules) with the MCC of Appraisement-East, which he did and as per pre-requisite deposited upfront duty and taxes of Rs.664,796.00, consequent to which GD was numbered as KAPE-HC-78436 dated 31.10.2017. The consignment was selected for examination under the provision of Section 198 and Rule 435 of the Act/Rules wherein declaration was confirmed to the extent of all aspects and report so prepared was uploaded in the reservoir of GD, upon receipt of the same on his work station the Assessing Officer opted to pass assessment order under the provision of Section 80 and Rule 438 for levy of duty and taxes with the application of Valuation Ruling No.967/2016 dated 16.11.2016 (VR), vires of which had already been challenged by the appellant through revision application under Section 25D of the Act before Director General, Directorate General of Valuation. Resultant, his goods were to be assessed provisionally as contemplated in Section 81 of the Act, in compliance of the order of the High Court of Sindh in reported judgment 2018 PTD 1746 and 2016 PTD 702 and order of the Supreme Court of Pakistan dated 04.08.2016 upon submission of security for the differential amount of duty and taxes of Rs.704,500.00 with the Collector of Customs, MCC of Appraisement-East, which was done 06.07.2017. Irrespective of the fact that that the revision application is pending the Director General of Valuation to date, without any action, the respondent No.1 finalized the value and passed assessment orders dated 31.12.2018 under Section 80 and Rule 438 on the strength of circular dated 22.11.2017 issued by, Chief Collector Appraisement, Karachi. The appellant challenged the vires of the orders before respondent No.2, who rejected the appeal on the basis of imported grounds and pre-determined formed opinion/notions. Para 3 is relevant, which is reproduced here-in-under: "I have examined the case record and heard the arguments of the appellants and respondents. Admittedly at the time of filing Goods Declaration, a Valuation Ruling No.967/2016 dated 16.11.2016 was infield. The appellant had challenged the said Valuation Ruling and the review thereof was pending before Director General of Customs, Valuation-Karachi. The impugned goods were initially assessed to duty and taxes provisionally under Section 81 of the Customs, Act, 1969 owing to afore-stated status of Valuation Ruling. Later on pending decision in review, the provisional assessment was finalized as per Valuation Ruling 947/2016 dated 16.11.2016 the appellant has contended that the respondent department should have waited for the outcome of the review application and the goods should have been assessed as per revised Valuation Ruling, if any. This stance of the appellant is not tenable because the Federal Board of Revenue, vide SRO 564(I)/2017 dated 01.07.2017 amended Rules, 107(a) of the Customs Rules, 2001 by inserting following text. "except in case where Valuation Ruling under Section 25A exist, the Valuation Ruling shall remain in field unless rescinded, modified or replaced with a new Valuation Ruling". The impugned goods had been assessed by applying values under a Valuation Ruling which was not infield and not rescinded, held in abeyance or stayed by any court of law at the time of assessment this fact make the assessment legal and within four corner of law. The same is therefore upheld and appeal is rejected."

3. The appellant filed the instant appeal on the basis of grounds enumerated therein, the consultant/advocates on the date of hearing argued the case strictly in accordance with those and placed host of judgments in support of his stance. No cross objection under subsection (4) of Section 194A of the Act has been filed within the stipulated period of 30 days by the respondent No.1, which is tantamount to admission and deposition made by and on behalf of the appellant in the memo. of appeal and affidavit are therefore, deems to be true and correct and no controversy is left behind in regards to the fact of the case. Non submission of counter affidavit whether by will or default forfeit the respondent No.1 right to deny assertion made in the affidavit. This proposition of law stands validated from the following judgments of the Superior Judicial Fora reported as (1974) 94 ITR-I, PLJ 1979, 71 and 72, 1986 CLC 745 KAR. (1984) 146 ITR 140, 1986 PTD (Trib.) 119, 1986 CLC 1119, 1986 CLC 1408 KAR, 1991, MLD 1243, 1992 SC 317, 1993 SCMR 662, PLD 1996 Karachi 68, PLJ 197 (sic) Quetta 66 and 2003 PTD 2118.

4. Heard and case record perused and so the relied upon judgments, this appeal could be decided on a short point of limitation among others, which shall be deliberated subsequent to the instant. The appeal before respondent No.2 was filed by the appellant on 19.01.2018, in terms 193A (3) of the Act, order against which has to be passed within 120 days or within further extended period of 60 days in terms of its proviso by the Board, upon availability of exceptional circumstances and recording of those after issuance of notice to the subject as held by Hon'ble Supreme Court of Pakistan in reported judgment 2009 SCMR 1881, Khalid Mahmood v. Collector of Customs. In the instant case order should have been passed on or before 19.05.2018 which he failed, no extension whatsoever was given by the Board as evident from the order and the order has been passed after the expiry of initial period of 120 days. This vital illegality render the order passed by respondent No.2 barred by time by 33 days. Rendering it without power/jurisdiction hence void, ab-initio and not enforceable under law as held in the reported judgments 2017 PTD 1756 and 2017 SCMR 1427 Collector of Customs Sales Tax Gujranwala and others v. Super Asia Mohammad Deen & Sons others, 2008 PTD 60 Messrs Super Asia Muhammad Din Sons (Pvt.) Ltd. v. Collector of Sales Tax, Gujranwala and 2008 PTD 578 Messrs Hanif Strawboard Factory v. Additional Collector (Adjudication) Customs, Sales Tax and Central Excise Gujranwala, 2009 PTD 762 Messrs Tanveer Weaving Mills v. Deputy Collector Sales Tax and 4 others and 2009 PTD (Trib.) 1263, Messrs Syed Bhai Lighting Limited, Lahore v. Collector of Sales Tax and Federal Excise, Lahore and 2 others [(2009) 100 TAX 32 (H.C. Lah.)] Leo Enterprises v. President of Pakistan and others, 2010 PTD (Trib.) 1010 Innovative Impex, v. Collector of Customs, Sales Tax and Federal Excise (Appeal), 2011 PTD (Trib.) 79 Fazal Ellahi v. Additional Collector of Customs, MCC of PaCCS, 2011 PTD (Trib.) 987 Unique Wire Industries v. Additional Collector of Customs, MCC of PaCCS, 2011 PTD (Trib.)1146 Kaka Traders v. Additional Collector of Post Clearance Audit and 2012 PTD (Trib.) 1650, Pak Electron Ltd. v. Collector of Customs, Lahore and others.

5. Reverting back to the issue involved in the case in question, one has to note that it is settled principal of law that when an order is challenged before higher forum, it became wide open and least remain in field for any purpose as per theory of merger. The appellant goods were assessable with the application of VR No. 967/2016 dated 16.11.2016, which was detrimental for his business, resultant, he challenged the vires of that through revision application dated 19.01.2018 under the provision of Section 25D of the Act before the Dire, General of Valuation. Consequent to which VR to his extent stands abate by virtue of attending finality after crossing all the forums, where it can be challenged for decision as held by Hon'ble Supreme Court of Pakistan in reported judgments 1993 SCMR 39 CBR v. Chanda Motors and 2013 PTD 581 Ghulam Nabi v. FOP of the Honorable Supreme Court of Pakistan. paras 17 to 22 are relevant and which are: "17-. Word "finalized" is derived from the word "final" which is define in Chambers 20th Century Dictionary to mean "last decisive, conclusive: respecting the end or motive of a judgment ready for execution last of series". "Finality" is defined as state of being final completeness or conclusiveness. In Black's Law Dictionary Fifth Edition, word "final" is defined as, "last; conclusive, decisive, definitive; terminated; and completed." In it's used in reference to legal actions this word is generally contrasted with "inter-locatory". Viewed in the light of meanings of the word "assessments" and "finalized", it appears that assessment order as such do not have touch of finality unless all the forum are exhausted in which such orders can be challenged so that the order take the final decision ." 18- Legally speaking order of assessment passed by Income Tax Officer is an order-of-original authority but is not final for the reason that it can be challenged in appeal or revision as the case may be and would be final only when it goes through all the forums and the finding of the last forum shall be binding as conclusive. 19- The question whether appeals and other remedies provided under the law formed part of proceedings or not came up for consideration before the Supreme Court of India in the case of Garikapati Veeraya v. N.Subbiah Choudhry and others reported in PLD 1957 Supreme Court (India.) 448 it is held as per majority opinion that legal pursuit of a remedy, suit, appeal and 2nd appeal are really but steps in a series of proceedings all connected by an intrinsic unity and are to be regarded as one legal proceeding. Reference can be made to the case of Commissioner of Wealth Tax v. Vimlaban vadilal Mehta reported in (1984) 145 ITR 11, in which it is held that it is well settled that when an appeal is filed against assessment order before AAC the assessment is thrown open and Appellate proceeding constitute a continuation of a assessment proceeding." 20- in the case of F.A. Khan v. The Government of Pakistan (PLD 1964 Supreme Court 520), question came up for consideration that in the case of dismissal of a Government servant for filing a declaratory suit whether limitation would start from the date of order of dismissal to be reckoned under Article 120 of the Limitation Act or from the date of order of Appellate Authority confirming the first order to be reckoned under Article 58 of the Limitation Act. It is held that such right accrued on the date of dismissal but, where there is an appeal on the date of Appellate order upholding dismissal. It is further held that the legislature when its provided a hierarchy of the Tribunal for the determination of a dispute it is really providing one complete procedure for such determination, proceeding before different Tribunal being only step in this procedure. 21- On the question construction, in the light of what is stated above, it can be said without fear of contradiction that order passed in original proceedings is not final unless it crosses all the forums set up under that law in which it can be challenged and the order of the last forum would become final. Mr. Rehan Hassan Naqvi, learned counsel for the respondent has submitted before us that there is plethora of case law on the point that even within the frame work of Income Tax law, appeals and other remedies provided therein formed part of the same proceedings regarding assessment. In this context our attention is drawn to the case of Chatturam and others v. Commissioner of Income Tax, Bihar reported in (1947) 15 ITR

302. In the reported case assesses of partially excluded areas were served with the notices under section 22(2) of the Income Tax Act for furnishing returns. Subsequently Governor of Bihar by notification directed that India Income Tax (Amendment) Act, 1939, the Income Tax law Amendment Act, 1940 should be deemed to have been applied to the Chotanagpur Division containing partially excluded areas with retrospective effect. Subsequently Regulation 1 of 1941 was also issued by the Governor to remove doubts as to the retrospective applicability of the Act mentioned in the Notification. Assesses were assessed and their appeals were pending when Regulation 1 of 1941 was issued. It was contended that assessment proceedings initiated and completed against them were invalid and neither the notification nor the Regulation were competent in law to validate those proceedings, it was held by the Federal Court of India, inter alia, that appeals to the Appellate Assistant commissioner were an integral part of the machinery of assessment and therefore it could not be contended that assessment proceedings were over when Regulation 1 of 1941 was made and the Regulation could not apply to the proceedings covered by those appeals.

6. Since the value determined through VR of motorcycle parts by the Director, Directorate General of Valuation under the provision of Section 25A of the Act, was not applicable on the forthcoming consignments of the appellant, it was mandated upon respondent No.1 to allow clearance of those under the provision of Section 81 ibid., upon submission of copy of revision application. To the contrary, respondent No.1 invariably refuses to allow clearance provisionally despite being competent authority on the plea that the appellant has to seek permission either from Additional Collector or Collector, who are non existent authority in the provision of Section 81 of the Act. Amazingly, a communication to the said effect has also been circulated by one of the Clearance Collectorate, despite having no warrant of law. Keeping in view the said unlawful exercise this Tribunal in reported judgment 2016 PTD (Trib.) 1305 Messrs AFU International v. The Director General Valuation and another ordered in unequivocal terms that "respondent No. 2 to issue direction to the Collectors of the Clearance Collectorate to withdraw the issued verbal/written orders in derogation of the Provision of Section 81 of the Customs Act, 1969 and let the authority enunciated in subsection (1) to exercise his powers independently, fairly justly and in accordance with its expression and the law laid down by the Superior Judicial Fora." Similarly, the Hon'ble High Court of Sindh in 2018 PTD 1746 Sadia Jabbar v. FOP and others ordered/held that "in our view, a valuation ruling must therefore ordinarily be regarded as valid for a period of ninety days from the date of issuance. Subsection (4) of section 25-A, added by the Finance Act, 2010, of course now provides that a valuation ruling "shall be applicable until and unless revised or rescinded by the competent authority". In our view the proper interpretation and application of this subsection, in the light of the principle stated in para 10 supra is that while the valuation ruling will continue to hold the field unless revised or rescinded, any aggrieved importer has the right to approach the concerned officers after ninety days period mentioned above and he would than have to give reason why the ruling has not been revised or rescinded." (emphasis supplied). In derogation of the order of the Tribunal High Court of Sindh the officials of the Clearance Collectorate ought to seek refuge on one pretext or another of not complying the order in its letter and spirit. Resultant, importer used to approach High Court for clearance of their consignment provisionally, in order to resolve the issue and thwarting filing of petition in the High Court of Sindh for release of their consignment provisionally, power of which has been expressly delegated to the Assistant/Deputy Collector in the provision of Section 81 of the Act, the Hon'ble High Court of Sindh passed order in C.P. No. D-6918 of 2015 reported at 2016 PTD 702 Danish Jehangir v. Federation of Pakistan through Secretary/Chairman and 2 others ordering that "In cases where proper revision application has been filed by an importer in terms of section 25D of the Customs Act, 1969, before the Director General Valuation, and pending such review /revision, a fresh consignment is imported than at the request of the importer who has filed such revision/review the consignment in question shall be released in terms of section 81 of the Customs Act, 1969 after securing the differential amount of duty and taxes in the shape of pay order /Bank Guarantee, without fail." Upon filing CPLA by the Director, Directorate General of Valuation before the Hon'ble Supreme Court of Pakistan, the order of High Court was amended vide dated 11.01.2017 as "by Collector of Custom of Clearance Collectorate as against existing, Director, Directorate General of Valuation."

7. The Collector of Clearance Collectorate in the light of the aforesaid orders should have issued direction to the competent authority defined in Section 81 of the Act to allow clearance of the consignment of the importer who has filed revision application, to the contrary devised a cumbersome procedure of obtaining verification from the Directorate General of Valuation in regards to filing of revision application. Provisional assessment/release of consignment was allowed only upon confirmation to the said effect. In the instant case provisional release of the consignment of the appellant was allowed upon receipt of confirmation vide letter dated 13.01.2017 of the Additional Director Valuation, despite of the fact that submission of revision application was sufficient. Assessment order for finalization of value in the instant case could only be passed by the respondent No.1 either upon receipt of revision order passed by DGV/order of the Tribunal against the revision order or valuation advice of the imported goods against the subject GD issued by Assistant/ Deputy Director DGV in exercise of the clause (b) of Serial No. 3 of SRO 494(I)/2007 dated 09.06.2007 reading as "to issue advises and VRs on the cases referred by the field formations including the determination of values involving provisional assessment under Section 81 of the Act ", as evident from the supplied emphasis to the part of clause (b), Assistant/Deputy Director Valuation are empowered to exercise powers for determination of value of any consignment for issuance of advise, corresponding to the goods or class of the goods imported, only when respondent No.1 allow release of the consignment under the provision of Section 81 of the Act and refer the GD online to Directorate General of Valuation (DGV) as expressed in Rule 439(a) of the Rules the Assistant/Deputy Director Valuation are however, barred to determine value of any goods or class of goods and to issue advices, where a VR of the goods in question is infield, which has been issued by the Director Valuation under the provision of Section 25A, with the application of different subsection of Section 25 of the Act in sequential manner. In the case under consideration VR No. 967/2016 dated 16.11.2016, against which appellant filed revision application dated 19.01.2018, which is pending todate in dormant, no decision whatsoever has been taken in that, resultant no occasion was available with the respondent No.1 to pass final assessment order under the provision of sections 80 and 81(5) and Rule 440 of the Act/Rules. To the contrary, he passed assessment order dated 31.12.2017 on the strength of a circular dated 22.11.2017 issued on behest of Chief Collector, Appraisement-South, verbatim of which reproduced here-in-under : GOVERNMENT OF PAKISTAN OFFICE OF THE CHIEF COLLECTOR OF CUSTOMS APPRAISEMENT-SOUTH, 8TH FLOOR, CUSTOM HOUSE, KARACHI. No. SI/MISC/13/2014-CC(Appr)/375 Dated 22.11.2017 CIRCULAR SUBJECT: VALIDITY OF VALUATION RULING AFTER AMENDMENT OF (A) THE CUSTOMS RULES, 2001. Rule 107(a) of Chapter IX of Customs Rules, 2001 has been amended vide SRO 564(I)/2017 dated 01.07.2017 whereby the Valuation Ruling (VR) issued under section 25A of the Customs Act, 1969 shall remain valid unless rescinded, modified or substituted with a new VR. As such, mere filing of request for revision of an existent VR or an application of review under section 25A(4) of the Act shall not entitled the applicant/importer for provisional assessment under Section 81 ibid. The assessment in such cases shall be made in accordance with the prevailing VR till the same is rescinded, modified or replaced as stipulated above. This is for information and compliance of all concerned. Sd/- (Muhammad Saeed Wattoo) Additional Collector SA to Chief Collector

8. The respondent No.1 acted in a very casual manner as evident from the fact that he destroyed the fabric of law and justice and spoiled the merit of the case without determining the validity/legality of the circular, as to whether it was supported by a legal sanction? And as to whether the Chief Collector South was empowered to interpret the provision of statute/rules and as to whether Board was empowered to amend the Rule for undoing the effect of the 'Sadia Jabbar and Danish Jehangir reported as 2018 PTD 1746 and 2016 PTD

702. The fact of matter is that the act of issuing circular by the Chief Collector is an act of transgression, through which he issued directions about the validity of the VRs, such directions are perverse in the light of laid down statutory obligations and interpretation made therein by the Superior Court, inclusive of observation made by Hon'ble Supreme Court in case of Sadia Jabbar. In presence of these legal obligations, amendment made in Rule 107(a) by the Board, followed by interpretation made by the Chief Collector, through sub-para (a) are basically in contradiction to the provisions of section 25-A(1)(2)(3)&(4) of the Act. In the given circumstances impugned circular issued by Chief Collector Appraisement purposely is nothing except overriding/encroaching judicial powers of the courts. It is important to observe that, the Chief Collector, Appraisement has no power or authority under any provision of the Act to issue a circular directing the competent authority enunciated in the provision of Section 81 not to exercise their powers expressed in Section 81 nor is empowered to interpret the provision of Section 81 ibid and the Order of the Hon'ble High Court of Sindh in the case of Danish Jehangir v. FOP and 2 others reported as 2016 PTD

702. The interpretation of the statute and subordinate legislation rests with the Supreme/High Courts as has been held in 1993 SCMR 1232 in the case of Central Insurance Co., v. Central Board of Revenue the Hon'ble Supreme Court of Pakistan held that "Board's view as to the interpretation of law do not have the force of law and the exception would be, where a fiscal statute is involved, that should be implemented with strict impartiality" and 2005 PTD 2462 Messrs Lever Brother Pakistan Ltd. v. Customs Sales Tax and Central Excise Appellate Tribunal, Karachi that "CBR has no place to in the Scheme of Law, conferred with the jurisdiction to interpret any law, statutory or in exercise of any deliberate authority i.e. subordinate legislation". The circular issued is without any lawful authority and jurisdiction and even in derogation of reported judgment 2018 PTD 1746 Sadia Jabbar v. FOP and others passed by the Division Bench of the Sindh High Court despite availability of Section 25A(4) of the Act, as has been inserted through Finance Act, 2017 in Rule 107(a) of the Rules reading as "the Customs value determined under subsection (3) shall be applicable until and unless revised or rescinded by the competent authority". No drastic change has been made in the said Sub Section by the insertion in Rule 107(a), as evident from its expression "except in the cases where Valuation issued under Section 25A exist, the Valuation Ruling shall remain in field unless rescinded, modified or replace with the New Valuation Ruling". Board by amending Rule 107(a) and by issuing circular, the Chief Collector Appraisement-South infact wanted to undo the effect of the 'Sadia Jabbar and Danish Jehangir' reported as 2018 PTD 1746 and 2016 PTD 702 despite of no significant difference in the word as adumbrated above , not permitted under law as held by the Hon'ble Supreme Court of Pakistan in reported judgment 2019 SCMR 46 Government of Khyber Pakhtunkhwa and others v. Lucky Cement. Even otherwise, Rules being subordinate legislation cannot undo the provision of statute, it has to prevail on the subordinate legislation, and in case of any conflict between the two former has to prevail as held in 2000 PTD 399 Superior Textile Mills Ltd. v. FOP that where rules were in-conflict with parent Act, the former must yield to the later and the rules to the extent of inconsistency would be void. The said opinion is further fortified by the Supreme Court in its reported judgment 1982 SCMR 522 Messrs Arjun Salt Chemical v. UC Gharo, wherein their lordship of Supreme Court settled the ratio while observing that "It is now well established principal or statute that rule which are merely subordinate legislation cannot override or prevalent on the parent statute and whenever there is inconsistency b/w the rule and statute the later must prevail".

9. In the Appeal No.K-1430/2017 vires of circular was challenged before this Tribunal and through C.P. No. D-8281 of 2017 before the High Court of Sindh. The Tribunal declared that vide judgment reported as 2018 PTD (Trib.) 2500 Nice Traders, Gujranwala v. Director, Directorate General of Valuation and 2 others as ab-initio void and being issued without lawful authority while observing "circular dated 22.11.2017 issued by Special Assistant to Chief Collector, appraisement (South) does not have any adherence with the statutory requirements, also derogatory to the contemplation of Sections 25, 25A, 25D and 81 of the Act, therefore, declared without authority, void and infested with patent illegalities, hereby set aside". Whereas, the Hon'ble High Court of Sindh through a comprehensive judgment dated 14.11.2018 also held that as illegal, without lawful authority, while observing that "Chief Collector of Customs and / for such purpose the Federal Board of Revenue has no authority to issue any circular and administrative direction of the nature , which may interfere with the judicial or quasi judicial function entrusted to the various functionaries under Statute. Any circular or instructions issued by the F.B.R or by any other officer performing function under the administrative control of F.B.R relating to interpretation of any statutory provision, rule or regulation cannot be treated as judicial interpretation, hence, not binding on authorities performing judicial ad/- or quasi-judicial function". Passing of assessment order under the provision of Sections 80, 80(5) and Rule 440 of the Act/Rules while adducing slip-shot opinion based on the circular, which reads as "The Chief Collector of Customs Appraisement (South) Circular No. S1/MISC/13/2014-CC(Appr)/375 dated 22.11.2017 on the subject VALIDITY OF VALUATION RULING AFTER AMENDMENT OF RULE 107(A) OF THE CUSTOMS RULES, 2001 may refer. The circular is self explanatory. Since in this case Valuation Ruling No. 967/2016 dated 16.11.2016 (Motorcycle Parts), is in field, therefore assessment finalized accordingly." Renders it without lawful authority having no warrant of law, fatal for the health of the case, can be reversed through any mechanism in the absence of availability of enabling provision in the Act for acting in accordance with Section 81(2) and its proviso, by virtue of laid down limitation, which already stands lapsed.

10. What has been discussed hereinabove, particularly the interpretation of law, legal propositions and observations made thereon and to follow the ratio decidendi observed by the Superior Courts, I set aside the orders passed by respondents in totality being illegal, void and ab-initio, appeal is allowed accordingly with no order as to cost. MH/ 132/ Tax (Trib) Appeal allowed.