2003 PLP 213 (PTD)

(i) The PSI Rules notified under S.R.O: 1108(I)/94 were not binding on the customs to the extent of accepting the CRF. (ii) PSI companies and no knowledge, no competence, and no authority to ascertain and report customs values. (iii) They had no customs experience and no professionals to report customs values. The Customs Authorities never accepted the values reported by the PSI companies. (iv) The Working Committee, under the proviso to clause (c) of sub rule (2) of rule 8 of the PSI Rules notified in 1994 actually came on ground only with the advent of C.G.O. 5/96. The complaint that the dispute was not referred to the Working Committee was therefore, nothing but an afterthought. (v) The superior Courts had given several rulings that no agency outside the Customs Department could be given the authority to determine the assessable values of the imported goods. (vi) The system of prescribing minimum assessable values was in vogue/operation for a long time, at least for the last 10 years. (vii) All imports of the items published in the Scan Magazine were assessed in accordance with the Scan‑based weekly circulars issued by the Collector and no imports were assessed at the CRF prices. (viii) There was no element of quantity/value discount or value reduction (as envisaged in the Circular 32/69). (ix) Seven refunds claim filed by the complainants were received in the Inward Register of the Assistant Collector's office which should have been filed in the central registry of the Custom House. The department had only the entry of receipt of seven refund claims on 25‑4‑1996 but the claims were not traceable. (x) He admitted that in the reply to the complaint at the original stage, the reference to the application of section 25B of Customs Act was not correct. (xi) While the original refund claims were not available with the department, action was initiated on the letters of the complainant received on 17‑2‑2001, hearing was conducted on 17‑4‑2001 and 25‑5‑2001 but the decision was not recorded on the file as the matter had been reported to the Federal Tax Ombudsman in‑the form of complaint. Messrs, Specialty Printers, the complainants, strongly contested the legality of Scan prices and urged that in the presence of the PSI rules, the customs had no legal authority to arbitrarily apply Scan prices, the action was totally devoid of law and they were entitled to assessment of their imports at the CRF prices. They made the following submissions on the Review Application (copy supplied by the Assistant Collector of Customs Group III):‑‑ (i) Under sub‑rule 8(2)(c) of the PSI Rules, the customs was to accept the values reported by PSI companies. (ii) The aforesaid sub‑rule provided that in case the customs viewed that the entries in the CRF or in the bill of entries were not correct the bill of entry should be referred to the designated committee for resolution of dispute. (iii) Federal Export Promotion Board (FEPB) decided in its meeting on 29‑1‑1996 that henceforth the values reported in CRF issued by the PSI. Company would be accepted. Where the customs had evidence of values higher that of the CRF, the cases would be placed before the Working Committee of the Collectorate for examination and decision. (iv) According to Custom House Circular No32/69, in the absence of evidence of actual imports reduction upto 30% over list price should be allowed. (v) The Scan price had no legal authenticity. When the Customs Authorities applied higher prices for HDPE and LLDPE, they did not provide to the importers positive or irrefutable price evidence. (vi) Application of Scan prices as minimum prices, not supported by evidence of invoice of actual imports, was violation of PSI Rules, 1994, (and section 25 of the Customs Act). If the customs had reliable evidence of value, they would not have relied upon the so‑called minimum assessable values. (vii) Under the Customs law, the authorities had two options; either to accept the CRF price reported by the PSI company, or if they had higher value evidence, to confront the importer with the evidence before applying higher value. (viii) Even if the Committee had come into being on 21‑3‑1996, it happened immediately after the goods were cleared on 25‑2‑1996 and 4‑3‑1996. (ix) The designated committee did actually exist before the clearance of goods and customs had opened two Files Nos. SI/MISC/UT/245/96‑III‑PSI and SI/MISC/UT/313/96‑III PSI for reference of the cases to the Working Committee. But the Customs officials did not present the cases before the Committee.

8. The ground of the review application, the additional supportive arguments and submissions made by the Deputy Collector of Custom have been stated at considerable length in paragraphs 2 to

5. It is important to mention at the outset, that none of these arguments was advanced by the Revenue Division or the Department (Collector of Customs) in reply to the Complaint No.C‑1743‑K of 2001. The respondent had then stated that (i) the assessment of goods was made under section 25B of the Customs Act (ii) the Federal Export Promotion yard's decision was merely advisory in nature, and (iii) due to a procedural lapse the valuation case was not referred to the Working committee. The legal points now raised in the review application were cat advanced in the reply to the complaint.

9. The Revenue Division/C.B.R. have claimed that the PSI Rules framed by them vide S.R.O. 1108(I)/94 had no legal validity for assessment on import of plastic moulding compound and only the Collector had the sole authority to determine the assessable values. The Collector has asserted that C.R.F. prices were advisory and became mandatory only after issuing of C.G.O. 5/96. In other words, the Rules notified by the C.B.R. had no legal validity and assumed legality under the umbrella of a general order. The Deputy Collec4or has not only nullified the PSI Rules but has struck at the very roots of the Customs law with the argument that various principles of valuation of goods under the old section 25 of the Customs Act (based on Brussles Definition of Value i.e. BDV), section 25B of the Customs Act, the Value Data Base (replacing the Valuation Manual for a brief period), and the GATT Code of Valuation now enacted under section 25 of the Act, neither had any legal validity nor were ever applied for the valuation of plastic moulding compound. The supreme authority to determine the value of the plastic moulding compound, on the basis of the Scan Magazine, rested only With the Collector. The price list issued by the Collector was and remains the only basis for assessment of duty and taxes in disregard of all Customs laws.

10. It is unbelievable that the Revenue Division would take the stand that its own notified rules were not legally valid and the Collector's Authority prevailed upon the existing laws and rules made thereunder. The views expressed by the Collector and the Deputy Collector frankly, forthrightly and in blunt terms lend considerable credence to the general perception that the field officers of the Tax Department do not comply with the provisions of laws, rules and regulation in force, and ignore the directives of the Revenue Department/C.B.R. as a matter of routine. In this particular case, the Revenue Division seems not only allowing defiance of law but also providing it full support to the contention that valuation of plastic moulding compound is the exclusive domain of the Collector. The review application not only lacks in substance but aims at justifying and supporting patent illegality and is accordingly rejected. C.M.A./512/FTO Application rejected.