1998 PLP 2004 (MLD)

3. The dispute, however, arose when the customs authorities started calculating the value of the imported arms and ammunition on the basis of import trade price fixed by them on the basis of which not only the duty was charged but deductions were made out of the import licence. Similarly importers were also asked to pay separate duty on the magazines which were previously being treated as integral part of pistol.

4. By a circular issued by the Central Board of Revenue (being circular No. 1 of 1994) the Central Board of Revenue had conveyed its following decision to all Collectorates:

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(i) Controller of Valuation in consultation with the importers/associations will ascertain the value and fix the ITP of arms and ammunition in terms of section 25 B of Customs Act, 1969. (ii) Consignments presently held up due to excess import of arms and ammunition as compared to values shown in import licences may be released against redemption fine equivalent to 100 % of ascertained value. To eradicate the practice of under invoicing, in future, the excess quantities of arms and ammunition not covered under import licence as a result of assessment of value will be confiscated out right. (iii) Transhipment of consignments of arms and ammunition destined for upcountry dry-ports may be allowed subject to the following conditions:-- (a) Consignments shall be inspected 100% at Karachi port. (b) Each package shall be sealed by the agency engaged for the purpose of reaching containers bound to dryports. (c) Transhipment shall be allowed through Pakistan Railways only. 3.

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This circular has been assailed by the petitioners by filing this petition.

5. So far as the grievance of the petitioner's learned counsel that the direction of Central Board of Revenue that the consignments held up if in excess of the entitlement the same should be confiscated or released on equivalent to 100% redemption fine, Mr. A. Karim Malik, Advocate for the respondents has fairly stated that this bar of the circular was beyond the powers of the Central Board of Revenue as it is for the adjudicating officer to take any such decision on levy the penalty as the case may be under section 181 of the Customs Act, 1969.

6. Raja Haq Nawaz, petitioner's learned counsel has argued that the Central Board of Revenue could not fix the value of the imported goods as under section 25-A of the Customs Act, 1969 it is the function of the adjudicating officer alone. In this respect learned counsel has relied upon M/s. Eastern Rice Syndicate v. Central Board of Revenue and others (PLD 1959 SC 364).

7. This contention of the learned counsel is not well founded. After the decision of the Supreme Court in Eastern Rice Syndicate supra the Customs Act was amended and section 25-A was introduced which authorises Central Board of Revenue to fix the import value of a category of goods and as such the Central Board of Revenue was competent to fix the value of the arms and ammunition to be imported irrespective of the market value. 8: The validity of section 25-B of the Customs Act was examined by the Supreme Court of Pakistan in The Collector of Customs, Karachi v. M./s New Electronics (Pvt.) Limited and others (PLD 1994 SC 363). and Messrs Latif Brothers v. Deputy Collector, Customs Lahore. (1992 SCMR 1083) and was upheld. The judgment of Sindh High Court in Phassco Hardware Company v. Government of Pakistan and others (PLD 1989 Karachi 621) is also in point.

9. There is, however, much force in the contention of the learned counsel that the value fixed under section 25-B is notional value irrespective of its value in the country of origin and that the aforesaid value has relevance only for the purposes of Customs Act as provided by section 25-B. On the basis of this artificial value no deduction can be made from the import licence and it is the market value determined in terms of section-25 of the Customs Act, 1969 Which can form basis of such a deduction. This argument of the learned counsel for the petitioner is supported by the wording of section 25-B itself which clearly says that notwithstanding anything contained in section 25 the Board may fix value of the goods specified in the first schedule for the purposes of levy of customs duty under this Act or any other law for the time being in force. The fixation of the value by the Board has obviously reference to the payment of duties and has no application so far as other purposes are concerned. On the other hand section 25 of the Customs Act, 1969 requires the Customs Authorities to determine the normal price which is the price the goods would fetch on sale in open market by a seller or buyer independent of each other. It is that price which is to be deducted from the licence and not the artificial or the notional price worked out on the basis of import trade price issued by the Central Board of Revenue under section 25-B.

10. Normal price has been interpreted by the Supreme Court of Pakistan in Eastern Rice Syndicate case supra as meaning. "The normal price (as ascertained under section 30) is related to market value at the port of entry in Pakistan, and is of no relevancy in determining the true export price paid by the importer in the country of origin." It may also be mentioned that Ministry of Commerce which issues the licence has supported this stand of the petitioner by writing to the Customs Department as under:-- "Reference Appraisement Collectorate of Customs Fax Message dated 10th August, 1993, it may be pointed out that office of the CCI&E had not sought prior approval of this Ministry while responding to Custom's letter No. Si/Misc/447/92-VII dated 12th December 1992, on the above subject. Customs Division are advised to follow the past practice as there has no change in Government Policy on licensing for Arms and Ammunitions and that there has never been any linkage with import Trade Price with the value licensed. Regards."

6. The last question which remains is as to whether a spare magazine can be treated as a separate and independent from the pistol. The stand taken by the Department that magazine is independent and separate and not a part of the pistol is not countenanced. A pistol without a magazine is not complete and is not workable nor has the magazine any use independent of pistol. It is not denied by the respondent's learned counsel that according to the departmental practice magazine has always been treated as part and parcel of the pistol and has never been separately assessed, except for any compelling reason departmental practice which is binding upon respondents had to be followed and not departure can be made from it. In view of the above, the petition is allowed and it is directed that the valuation determined by the Central Board of Revenue shall be relevant only for the purposes of recovery of duty and the taxes while for deduction from import licence the department should work out the normal value. Keeping in view the law declared by the Supreme Court of Pakistan in Messrs Eastern Rice Syndicate v. Central Board of Revenue and others (PLD 1959 SC 364). It is further directed that no separate duty shall be charged on one spare magazine. No order as to costs C.M.A./G-95/ Petitions allowed,