P L D 1999 Lahore 84 (PLP)

4 The case of the petitioner is that the respondents deliberately excluding the invoices and the Bill of Entry containing the actual price of the automobiles imported by the petitioner under Personal Baggage Scheme established the import trade price on the basis of vehicles specially manufactured for local use in Germany or in other European Countries. It is stated that the automobiles imported by the petitioner being not fully loaded as compared to the automobiles to be used in Germany and Europe were not of standard vehicles and the respondents while proceeding arbitrarily fixed the price on the basis of irrelevant material and considerations, dislodging the import trade price given in the Bill of Entry and invoices.

5. Mr. Shahbaz Yar Khan, learned counsel appearing on behalf of the petitioner contended that the imposition and determination of import trade price without hearing the petitioner with proposal of penal action under section 32(1) read with section 156(1)(14) and section 202 of the Customs Act, 1969 was not legal. He contended that the import trade price having supplied through the bill of entry and invoices was consistently being followed by the department since 1988 and this long standing practice acquiring the statue of law could not be departed and discarded without reasonable grounds and providing sufficient opportunity to the petitioner to rebut the price supplied by Embassy of Pakistan and to establish the price of invoice as correct. Learned counsel placing reliance :)n the case of Messrs Radaka Corporation and others v. Collector of Customs and another 1989 SCMR 353, contended that the respondents on the basis of general information fixed the import trade price in violation of section 80 of the Customs Act, 1969, which rendered the show‑cause notice and the subsequent action in terms of section 32(1) read with section 156(1)(14) of the Customs Act, 1969 illegal and without lawful Authority. He has also attributed mala fide, unfairness and discriminatory treatment to the petitioner in the matter of assessment of import trade price of the automobiles.

6. Ch. Afrasiab Khan, learned Standing Counsel for Federal Government argued that the petitioner having undervalued the invoice in breach of section 32(1) of the Customs Act, 1969 has rendered him liable to a penal action. According to him, the respondents in exercise of the power under Customs Act, 1969 were authorised to determine the correct import value through a summary inquiry in absence of the petitioner and they having choosed to conduct a proper inquiry sought information from the concerned quarters, therefore, the participation of the petitioner in such inquiry was not required. He summing up his arguments contended that the petitioner with connivance of his Principal in Germany by showing less import trade price evaded Custom duty and other taxes causing huge loss to the treasury and, therefore, the action taken is not called for interference.

7. I have heard the learned counsel for both sides and also perused the relevant material in the nature of the invoices, Bill of Entry and other documents relied upon by the respondents and the correspondence made by the petitioner with the respondents on the subject. The invoice and the Bill of Entry contained the price of BMW 3161‑4 vehicles as DM 18,016, whereas the letter dated ?5‑5‑1993 of Embassy of Pakistan in Germany supplied the following :;formation:‑‑ "As explained on the phone, there are different prices existing in the export business: prices for our partners in the various countries reflecting the special country and competitor situation there, naturally they are to be treated as confidential. furthermore the sales prices of our partners in the various countries, which they will state upon request, the prices for Tourists (German List price without VAT) and prices for diplomats, which apply for orders placed directly with BMWAG in Munich from all over the work. Please find attached the actual price lists for Tourists and diplomats for the basic car, the freight charges for a single and direct order to Karachi are amounting at present to ca. DM 1.400,‑ If you should be interested in placing an order, we would suggest that our partner in Pakistan is contacted and asked for a quotation, because naturally his prices are reflecting the special market and country situation in Pakistan and, consequently, are without any doubt much more favourable. " The petitioner as importer claimed that the import trade price of the vehicles should be fixed as per his declaration through invoice and the bill of entry, which is the basic source and a direct evidence for determination of such value. The Customs Authorities, on the other hand, took the stand that the import trade price of the petitioner being muchless to that. of the actual price, a summary inquiry was conducted and during the investigation, the information supplied by the Embassy of Pakistan in Germany being more reliable and satisfactory was made the basis of the import value for the purpose of Custom duty and other taxes. The study of the abovereferred documents shows that the import trade price as mentioned in, the letter of the Embassy of Pakistan is based on the price list allegedly supplied by the manufacturer of B.M.W. in Germany. Consequently, the Customs Authorities making departure from the past practice directed for reassessment of the price of BMW in Germany supplied by the Embassy of Pakistan. Thus, the officials of the Customs Department respondents Nos.2 to 4 herein, while acting in their discretion unilaterally assessed the price of the automobiles in question on‑ported by the petitioner or, uniform rates without differentiating the specification and classification of B.M.W. Automobiles, for the purpose of section 80 of the Customs Act, 1969, which is reproduced as under:‑‑ "

80. Assessment of duty.‑‑(1) On the delivery of such bill, the goods or such part thereof as may be necessary may, without undue delay, be examined or tested, and thereafter the goods shall be assessed to duty, if any, and the owner of such goods may then proceed to clear the same for home‑consumption or warehouse them, subject to the provisions hereinafter contained. (2) Notwithstanding anything contained in subsection (1), imported goods prior to examination or testing thereof may be permitted by the appropriate officer to be assessed to duty on the basis of the statements made in the bill relating thereto and the information furnished under the rules and the documents produced under section 26; but if it is found subsequently on examination or testing of the goods or otherwise that any statement in such bill or document or any information so furnished is not correct in respect of any matter relating to the assessment, the goods shall, without prejudice to any other action which may be taken under this Act, be re‑assessed to duty." Section 81 of the ibid Act governing the provisional assessment of duty is read as follows:‑‑ "

81. Provisional assessment of duty.‑‑(1) Where it is not possible immediately to assess the Customs‑duty that may be payable on any imported goods entered for home‑consumption or for warehousing or for clearance from a warehouse for home‑consumption or any goods entered for exportation, for the reason that the goods require chemical or other test or a further Enquirer for purposes of assessment, or that all the documents or complete documents or full information pertaining to those goods have not been furnished, an officer not below the rank of Assistant Collector of Customs may order that the duty payable on such goods be assessed provisionally: Provided that the importer (save in the case of goods entered for warehousing) or the exporter pays such additional amount as security or furnishes such guarantee of a scheduled bank for the payment thereof, as the said officer deems sufficient to meet the excess of the final assessment of duty over the provisional assessment. (2) Where any goods are allowed to be cleared or delivered on the basis, of such provisional assessment, the amount of duty actually payable on those goods shall be finally assessed within one hundred and eighty days of the date of provisional assessment: Provided that the Collector of Customs may, under circumstances of exceptional nature, extend the period for final assessment by not more than ninety days, after recording such circumstances. (3) On completion of such assessment, the appropriate officer shall order that the amount already paid or guaranteed be adjusted against the amount payable on the basis of final assessment, and the difference between the two amounts shall be paid forthwith to or by the importer or exporter, as the case may be. (4) If the final assessment is not completed within the period specified in subsection (2), the provisional assessment shall become final." The comparative study of the provisions of law relating to the assessment of the duty reveals that the provisional assessment of the duty is I made only in cases where the final assessment of imported goods is not determinable on the basis of the material supplied by the importer. The Customs Authorities, undoubtedly, are empowered to ascertain the correct value, if actually invoice is undervalued. However, they having not possessed unlimited power to declare any transaction as under‑voiced in their discretion, the same is, necessarily, to be judged on the basis of material already available with them to show that the invoice was undervalue. The C&F value is not supposed to be assessed by the Customs Authorities on the basis of their own judgment and discretion without any prior information or material available with them contrary to the declared value. The provisional assessment of duty under section 81 of the Customs Act, 1969 may not, necessarily, differ to the duty payable under section 80 of the said Act. Therefore, primarily, the import value shown in the invoice and the Bill of Entry is to be accepted and treated as evidence of value unless it is shown through very strong and reasonable or credible information that the declared value is against the actual value available with the Assessing Officer. The respondents following this criteria and methodology, have been regularly accepting the value of BMW of the Bill of Entry in conformity with the value of the import documents in such transaction in the past but in case of consignment of 25 automobiles, they, making departure from the previous practice of determining the price on the basis of Bill of Entry and invoice, refused from accepting the declared value without assigning a convincing reason I for discontinuation of long practice of accepting the declared value. Apparently, the Custom Authorities being convinced by the price of vehicles given in the list supplied by Embassy of Pakistan in Germany established the import trade price, thus, the pivotal question would be whether the value of Bill of Entry and invoice is rejectable in summary manner on the basis of information supplied by a third quarter. The perusal of list in question statedly provided by the agent of BMW to the Embassy of Pakistan does not show that the price of vehicles 3161‑4‑RDH given therein was of the same specification which have been imported by the petitioner. The case of the petitioner is that the vehicles 3161‑4 RDH imported by him under gift scheme being not fully loaded and of not standard fitting was of less price to that of the vehicle standard fitted. The respondent obtained information about the price of car in question in Germany but did not bother to collect the evidence that the vehicle imported by the petitioner was of standard fitted and its purchase value was actually more than the declared value. The admitted position is that except the general information obtained through the Embassy of Pakistan in Germany, the respondents were not in possession of any evidence negating the value declared by the petitioner, as the B.M.W. agent in Dubai did not confirm that price of 3161‑4‑RHD given in the list in question was actually paid by the petitioner. He instead conveyed through his letter that the dealer of BMW in Pakistan (the petitioner) could offer more favourable price. This would show C that the sale price of the petitioner was muchless to the price given therein. The conclusion drawn by the respondents being lack of any evidence of payment of price by the petitioner other than that shown in the bill of entry and invoice, it is difficult to hold that he was guilty of misdeclaration arid, consequently, evasion of Custom duty.

8. The respondents in their comments in reply to para. 10 of the writ petition alleged under invoicing in the import of BMW vehicles with the collusion of their principal in Germany. The respondents drawn the inference of collusion of principal, a word‑wide reputed company without any evidence in support thereof. The Public Functionaries dealing with such sensitive matters should be very particular and careful about their opinion.

9. The next question relates to the release of goods and the provisional assessment of import trade price under section 81 of the Customs Act, 1969. Certainly a person cannot be held responsible for a penal action in case of enhancement in value at the time of final assessment by the Custom Authorities under section 80 of the Customs Act, 1969. The Assessing Authority is not required to act as a Judicial Authority but the appeal being provided against such orders, the Assessing Authority while proceeding as an administrative Authority still is required to give reasons for their decision on the basis of evidence as the said Authority is not above the law and if the very basis of assessment is illegal, a writ of mandamus can be issued restraining the Authority from enforcing the illegal order. Thus, ordinarily, the assessment of duty has to take place in terms of section 80 of the Customs Act, 1969 at the time of import on the basis of value given in the Bill of Entry and invoice, therefore, the initial assessment is to hold good and only in exceptional cases, it is assessed provisionally under section 81 of the ibid Act. The respondents, in the present case, have not been able to justify the final assessment different to the provisional assessment made on the basis of value declared by the petitioner.

10. A false declaration through a document or false statement in answer to any question made by an officer of Custom Department under section 32 of the Customs Act, 1969 must be established, as such, to the knowledge of the person who submitted the document. In the present case, the statement made by the petitioner through the documents (Bill of Entry and Invoice) regarding the nature and value of goods imported being based on facts was not definable as false. The untrue statement carries the source of falsity to the knowledge of the person concerned. Thus, if Custom Authorities for some reasons do not accept the declared value, it will not be an evidence of false knowledge unless it is proved that the value as per inference of Customs Authorities ought to be declared and the same was in the knowledge of importers at the time of making declaration. Reference may be made to cases Messrs Eastern Rice Syndicate v. Central Board of Revenue and others PLD 1959 SC (Pak.) 364 and Pakistan through the Secretary, Ministry of Finance, Rawalpindi and others v. Hardcastle Waud (Pakistan) Ltd., Karachi PLD 196.7 SC

1. The Customs Authority act in a quasi judicial character while refixing the value of goods for the purpose of assessment of Customs duty. Therefore, the respondents could not proceed against the petitioner without disclosing the material upon which they revalued the goods. The Customs Authorities are under legal obligation to give adequate opportunity to the importers to explain or rebut the evidence which has been obtained without the information and knowledge of importer and upon which the Authorities purported to act and failure to do so amounts to proceed in violation of principles of natural justice. In the circumstances identical to the present case, the apex Court in case of the Collector of Central Excise and Land Customs, West Zone, Chittagong v. Imdad Ali 1969 SCMR 708 held as under:‑‑ "In this case of affairs the conviction of the respondent, as has been rightly held by the High Court, was one which can well be described as having been based upon no evidence at all. The department cannot, therefore, claim that the respondent had either made an untrue statement knowing the same to be false or that he had imported goods in excess of the amount of the import licence. The valuation put by the Customs Authorities was clearly arbitrary and fanciful being based on no evidence at all."

11. The material behind the inference drawn by the Collector that the petitioner in collusion with his principal in Germany (BMW) was guilty of underinvoicing having not mentioned in show‑cause notice, the petitioner has been deprived of a right to meet the allegations. The Customs Authorities must not proceed without evidence and should give full detail of the evidence contradicting the value declared to enable the party to reply to the charge. Thus, the case should be decided by the concerned officer after considering the evidence provided by the importer in rebuttal to the evidence collected by the Custom Authorities. This is noticeable that the charge against the petitioner was that of underinvoicing despite the fact that the value having declared by the petitioner earlier was assessed as correct for the purpose of assessment under section 80 of the Customs Act, 1969. The deviation from the previous practice was thus not an inadvertent mistake but it was an intentional act. The Custom Authorities being aware of previous practice changed the method of assessment without proving through the evidence that the value declared by the petitioner was below the actual price paid. The list of price in general obtained through the Embassy of Pakistan without collecting any evidence that the petitioner paid the price given therein, therefore, fixation of price on such information is arbitrary. Thus, determination of value even on the basis of mistaken judgment or incorrect belief or to the existence of a fact or a mistaken view of law in a case will furnish a ground for a review of proceedings upon a writ of error and consequently irregular application of law vitiating the proceedings will warrant reversal of the judgment. The essential conditions for invocation of provisions of section 32 of the Customs Act, 1969 being not fulfilled, the respondents were not justified to fix value different to that of the declared price of vehicles. The respondent No. l through letter dated 1‑12‑1993 (Annexure 'U') observed that 12 BMW 3161‑4 automobiles already arrived at port be released on declared value. Thus, the case was accordingly reopened on 17‑2‑1994 and the information sought was supplied through letter dated 1‑3‑1994 (Annexure 'W').

12. The departure from previous practice of accepting the invoice value having acquired the force of law in absence of any convincing material made available with the respondents in rebuttal to the price shown in the Bill of Entry and invoice was definitely with some unknown reasons or extraneous consideration not relevant to the matter or the transaction relating to the imported automobiles. It is an admitted fact that previously as long standing practice, the department regularly acting upon the invoices and Bill of Entry has been accepting the price given therein and this time suddenly departing from the previous practice declined to accept the invoices and Bill of Entry for the purpose of import value. It was held by the Apex Court in case Nazir Ahmad v. Pakistan and .11 others PLD 1970 SC 453, that "Where the departmental practice has followed a course in the implementation of the relevant rule whether right or wrong, it will be extremely unfair to make a departure from it after a lapse of many years and to disturb rights that have been settled by a long and consistent course by the practice". The department consistently following the practice of accepting the import value given in the invoice and the Bill of Entry has adopted this long standing practice as ‑a regular procedure as force of law. Thus, this practice was not supposed to be departed from in the normal course. The Apex Court upholding the earlier view taken in the abovesaid case further held in Messrs Radaka Corporation's case (supra) as under:‑‑ "This interpretation having been consistently followed by the department and it having become a long‑standing practice had almost acquired the force of law. The practice could not, therefore, be lightly departed from moreso because on its faith the appellants and other manufacturers of the re‑rolling material had imported goods under' specific licences granted by the Government of Pakistan for that purpose. "

13. The dispute raised by the department regarding the determination of import trade price of the automobiles being not in consonance with the provisions of sections 80 and 81 of the Customs Act, 1969 and the invoice and F the Bill of Entry being not in conflict to the previous practice of declaring the value, there could be no charge of misdeclaration under‑section 32 of abovesaid Act. Therefore, the subsequent proceedings and action being not lawful, the assessment of the duty of the imported vehicles is, necessarily, to be made on the basis of declared value. It is an established principle that if the price declared is based on proper source admissible in normal course, the Authorities should consider it as correct, declared value under section 80 of the Customs Act, 1969 and if the price declared by an importer is shown less than the actual price, the Customs Authorities, undoubtedly, can proceed in terms of section 32 of the said Act, but the Customs Authorities, in any case, cannot without joining the importer and providing him a reasonable opportunity reject the price declared by him. The notice under section 32 of the Customs Act, 1969 calling for penal action must follow proper inquiry with participation of the person being proceeded against. Thus, it was incumbent upon the respondents in the Customs Department to provide full opportunity to the petitioner to prove his case as per his version. The ex parte decision in violation of the principle of natural justice having no legal sanction behind it is not sustainable.

14. The upshot of the above discussion is that the vehicles (25 units) imported by the petitioner during the period December, 1992 to July, 1993, were entitled to be assessed on the basis of the invoiced value and the Bill of Entry and the assessment made by the respondents contrary to the legitimate method of determining the import trade price was not legal.

15. Resultantly, this petition is allowed, declaring the impugned action of determination of value of vehicles by the respondents unlawful and of no legal consequence. The respondents while accepting the import trade price of the automobiles declared on the basis of value given in the invoice and Bill of Entry as per specification of the automobiles will determine the price afresh. The parties are left to bear their own costs. H.B.T./R‑73/L Petition allowed.