2010 PLP (Trib (PTD)

HUMAYUN KHAN SIKANDARI, MEMBER (TECHNICAL).--This appeal has been filed by Messrs Afridi and Company, Bara Khyber Agency (hereinafter called as the appellants) under section 194A(1)(d) of the Customs Act, 1969 against the Order/Direction/Letter No.Cus/DP/ Internal Audit/24/2006/4960, dated 24-3-2008 issued by the Deputy Collector of Customs, Dry-Port, Peshawar.

2. Precisely, the stated facts of the case are that the appellants filed the following Bills of Entry for clearance of China/Korea origin blankets, which were provisionally assessed to duty and taxes under section 81 of the Customs Act, 1969 and the differential amount of duty and taxes was secured through post dated cheque/pay order:-- Sr. No. Bill of Entry/GD No. Date GD filed through (Customs Agency) 1. 1128 26-11-2004 Messrs Lodhi Enterprises 2. 1129 26-11-2005 Messrs Ashraf and Co. 3. 1660 17-1-2005 Messrs Nishat Cus. Agency 4. 1789 1-2-2008 Messrs Nishat Cus. Agency 5. 1936 14-2-2005 Messrs Nishat Cus. Agency. 6. 2123 2-3-2005 Messrs Lodhi Enterprises 7. 2124 2-3-2005 Messrs Lodhi Enterprises 8. 2186 8-3-2005 Messrs Lodhi Enterprises 9. 2187 8-3-2005 Messrs Lodhi Enterprises 10. 2267 15-3-2005 Messrs Nishat Cus. Agency.

3. Accordingly, the cases were referred to the Valuation Department and PCA, Lahore for finalization/determination of value, who issued a valuation advice No.279, dated 19-3-2005 and No.2, dated 4-6-2005 for finalization of the case. A hearing opportunity was provided to the appellants on 14-6-2005 to explain their point of view and to submit their written contention, but neither the appellants nor their authorized representative or counsel put up their appearance. Since, the appellants failed to rebut the criteria of assessment determined by the Valuation Department and PCA, Lahore, the Assistant Collector of Customs, Dry-Port, Peshawar vide his Final Assessment Order C.No.BE No.912/04/5280, dated 28-6-2005, ordered for payment of the differential amount into Government Treasury, immediately.

4. Being aggrieved by the Demand Notice, dated 10-9-2007, issued in the wake of the final Assessment Order, dated 28-6-2006, the appellants filed an application dated 1-2-2008 before the Collector of Customs, Peshawar for re-opening of the case and the Deputy Collector of Customs, Dry-Port, Peshawar, vide his Order/Direction/Letter C.No.Cus/DP. Internal Audit/24/2006/4960, dated 24-3-2008 observed as under:- "

3. Perusal of the record indicates that Messrs Al-Imdad had filed an appeal and the Collector (Appeals), remanded the case for de novo consideration whereas in your case, the Final Assessment Order has been passed ex parte vide C.No.BE No.912/04/5280, dated 28-6-2005 and no appeal has so far been filed against the afore-said assessment order.

4. It is relevant to add that under section 195 of the Customs Act, 1969, the re-opening period is within two years whereas the final assessment has been passed on 28-6-2005, therefore, your request has been regretted by the competent authority. You are accordingly instructed to deposit the outstanding amount and furnish copy of receipted treasury challans immediately, failing which recovery proceedings for attachment of all the moveable/ immoveable properties will be initiated."

5. Being further aggrieved by the above Order/Direction/Letter of the Deputy Collector of Customs, Dry Port, Peshawar, the appellants have filed the instant appeal before this Tribunal, inter alia, on the following grounds:-- (a) that the impugned assessment order is erred both in law and facts; (b) that rejection of the appellant's application under section 195 of the Customs Act, 1969 to the Collector of Customs Peshawar is void ab initio as instead the learned Collector himself, the order has been passed by an incompetent authority which is against the provisions of law; (c) that rejection of the appellant's application under section 195 of the Customs Act, 1969 on the ground of limitation without prejudice was also illegal as the order dated 28-5-2005 came late in the knowledge of the appellant in January, 2008, therefore, rejection of the appellant application on the ground of limitation was highly misconceived as the limitation in view of the provisions of section 215 ibid be counted from the date of orders to the appellant; (d) that the impugned order is arbitrary, mala fide and based on misinterpretation of law, thus, based on conjectures and surmises, hence, liable to be set aside; (e) that under the facts and circumstances where after prima facie finding the valuation advice irrelevant, therefore, impugned order of assessment was passed at the back of the appellant; (f) that the assessing officers appear to have ignored basic mandatory provisions of law in that no opportunity was provided to the Importer for explanation or any required evidence; (g) that no evidence was shown by the Customs which may determine the basis on which the relative assessment was made, which is against the principles of natural justice. The customs authorities are under obligation by law to disclose the material evidence on the basis of which the, enhancement of value of the goods was made. In case such evidence is not disclosed, the higher value assessed is not sustainable by law; (h) attention is invited to prevalent Rule 109 of S.R.O.451(I)/2001, dated 18-6-2001, which is reproduced below in extenso:- "(1) Whereas the appropriate officer has reason to doubt the truth or accuracy of the particulars or documents produced in support of the declaration, such officer, may ask the importer to provide further explanation, including documents or other evidence. (2) If after receiving such information returned to in such rule 10 or in the absence of a response, the appropriate officer still as reasonable doubts about the truth or accuracy of the declared value, it may be deemed that the customs value of the imported goods cannot be determined under the provisions of subsection (1) of section 25 of the Act. (3) When a final decision is made, the appropriate officer shall communicate to the importer in writing his decision and the grounds." For complying with the relevant law, the respondents have blatantly/illegally exceeded their jurisdiction. (i) that prevalent rule 113 of S.R.O. 451(I)/2001 deals with primary methods of payment and states that the price actually paid by the importer is the price actually paid or payable. The assumption attached with the documents submitted by the importer is that they are authentic. In case the department suspects any illegality then in the following cases; amongst others, it has been held, that the burden of proving, that the declared values are not normal, lies on the Customs Authorities. Secondly, where the material was available with the Customs Authorities, the cases were remanded back for de-novo consideration; a) Mughal Tobacco C.C.O.C.'s case 1986 MLD 790; b) Mordia Corp Ltd. v. C.B.R. 1988 MLD 2420; c) Hussain Sons v. Federal Government 1988 MLD 2507; d) Indos Automobilies v. CBR PLD 1988 Kar.99; e) Azmat Bros v. Collector of Customs 1989 CLC 1639; f) Altaf and Sons v. Collector of Customs 1989 MLD 1451; g) Mor Bros v. Assistant Collector 1989 (sic) 370(2); h) Zulfiqar Brothers v. Member Judicial 1990 ALD 125(2); i) Sterling Phyworl v. Collector of Customs 1990 CLC 834; j) G. Arshad v. Federal Government ALD 138(2) (sic); k) Messrs Kagan Impex and others v. Deputy Collector 1993 CLC 1838. (j) that according to CGO 10 of 1999, clause (ii) reads: "Final assessment order shall be speaking one and shall also incorporate all the details and evidence on record, on the basis of which value has been fixed or assessed has been finalized. This is necessary to enable the importer to file appeal, with the appellate authority, if he is not satisfied with the assessment order so made." (k) that considering the Bill of Entry/Goods Declaration Form and their dates of submission, it is contended that the Valuation Advice No.2 of 2005 dated 4-6-2005 cannot be applied to the subject goods as this advice is for future imports `i.e. after 4-6-2005. Similarly, Advice No.279 of 2005 dated 19-3-2005 is for goods imported after 7-12-2004, thus not applicable to the appellant; (l) that there is an abundance of evidence that previously the same brand goods have been assessed on much lesser value; (m) that though appellant has not been confronted with the valuation advice, however, it appears that valuation advice was of the superior brand which was much of superior quality of the petitioner import; (n) that without prejudice to the submission, it is humbly submitted that the entire proceedings are against the principle laid dawn in 1990 MLD 2291; (o) that rejection by the respondent of value declared by importer was wholly arbitrary and no countenance by law as respondent failed to adhere to the provisions of section 25 of the Customs Act, 1969; (p) that the value ascertained by the respondent is not in accordance with the relevant provisions of the Customs Act, 1969 as no due consideration has been given to the facts such as the relevant market price, transaction between the buyer and the seller etc.; (q) that the respondent has failed to discharge their onus to prove that appellant value was under-invoiced as respondent failed to muster an independent evidence; (r) that it is clear from the above mentioned facts of the case that the Collectorate exceeded in their jurisdiction while arbitrarily enhancing the value and it is mala fide on their part; (s) that without prejudice to the other subsections, it is humbly submitted that demand without show-cause notice is arbitrary, patently illegal, thus, not sustainable in the eyes of law; (t) that the impugned demand is perverse, hence, not maintainable; (u) that the impugned demand is in violation of Articles 4, 18, 23, 24 and 25 of the Constitution,, thus, cognizable by this Honourable Court in constitutional jurisdiction.

6. Dates of hearing in the instant appeal were fixed on 25-11-2008, 20-1-2009, 28-1-2009 and lastly on 29-1-2009. The appeal was partly heard on 20-1-2009 and 28-1-2009. Detailed arguments were advanced by the learned counsel for the appellants on 29-1-2009. He almost reiterated the same arguments as raised in the (sic) and he prayed that the impugned order of the respondent No.1 dated 24-3-2001 along with the Final Assessment Order may graciously be set aside and the appellants' declared value may kindly be accepted. On the other hand, the D.R. almost advanced the same arguments as contained in their parawise comments to the memo of appeal (placed on file) and submitted that the instant appeal may kindly be dismissed being non-sustainable in the eyes of law.

7. I have carefully perused the case record and have also anxiously considered the written as well as verbal submissions made by the learned counsel for the appellants and the Departmental Representative. At the very outset, it would be appropriate to reproduce section 195 of the Customs Act, 1969 in extenso for the sake of convenience: "195 Powers of Board or Collector to pass certain orders.

(1) The Board or the Collector of Customs or the Collector of Customs (Adjudication) may, within his jurisdiction, call for and examine the records of any proceedings under this Act for the purpose of satisfying itself, or, as the case may be, himself as to the legality or propriety of any decision or order passed by a subordinate officer and may pass such order as it or he may think fit: Provided that no order confiscating goods of greater value or enhancing any fine in lieu of confiscation, or imposing or enhancing any penalty, or requiring payment of any duty not levied or short-levied shall be passed unless the person affected thereby has been given an opportunity of showing cause against it and of being heard in person or through a counsel or other person duly authorized by him. (2) No record of any proceedings relating to any decision or order passed by an officer of customs shall be called for or examined under subsection (1) after the expiry of two years from the date of such decision or order."

8. The plain reading of section 195 of the Act, clearly stipulates that the Collector or the Board can exercise powers under this section for the purpose of satisfying himself or itself, as to the (a) correctness (b) legality or (c) propriety of any order passed by a subordinate officer. The Board or the Collector can, thereupon, pass any appropriate order. But any order which seeks to raise the level of punishment already sanctioned, can only be passed after affording an opportunity to the person affected, thereby. These suo motu powers, however, can only be exercised within a period of two years from the date of the impugned decision or the order. The power of revision is analogous to power of superintendence and is, sometimes, exercised without being moved by a party. The object of revision is to keep the authority subordinate to the revisional authority, within the bounds of their jurisdiction.

9. According to Black's Law Dictionary, the word "Revision" means a "re-examination or careful reading over for correction or improvement". As stated above, the provisions of section 195 of the Act invest a power in the Collector or the Board to re-open the proceedings, where such proceedings suffer from any "illegality" or "impropriety". According to Black's Law Dictionary; the word "illegal" means "unlawful in and of itself and not because of some extraneous circumstance". On the other hand, the word "improper" has been defined as "not suitable; unfit; not suited to the character, time and place. Not in accordance with fact, truth, or right procedure and not in accord with propriety, modesty, good taste or good manners". I am of the considered view that these two terms, therefore, have nexus with the abuse of power by the subordinate officers and otherwise the ethical moorings of a civil society, in relation to the relevant law. The revisional powers conferred vide section 195 of the Act do not authorize an officer to examine issues not falling with the scope of the terms "legality" and "propriety". Which means, that the powers under section 195 ibid are limited, compared to an appeal before a competent authority. In Council of Civil Service Union v. Minister for the Civil Service (1985) AC 374 and 410, it was said by Lord Diplock, that the Courts usually review an exercise of power to ensure that a public body:-- a) has not made an error of law. b) has considered all the relevant factors, and not taken into account any irrelevant factors. c) has acted for a purpose expressly or impliedly authorized by statute. d) has not acted in a way that is so : unreasonable, that no reasonable public body would act in that way. e) that the public body has observed statutory procedural requirements of the principles of natural justice or procedural fairness.

10. In my opinion, the concept of the Revisional Authority is that it examines the original order, for determining whether it ought to have been passed in accordance with the law, that was applicable. However, in some exceptional cases, an order may be passed by the Revisional Authority, in view of some facts, which had occurred, after the original order was passed. It is not empowered to pass an order on any ground, on the basis of which the original forum could not have proceeded. The words "for the purpose of satisfying itself of the legality or propriety of the order" are of common occurrence in provisions relating to revisional jurisdiction, where such jurisdiction is not confined to illegality or irregularity. The word "propriety" in this context has reference to the propriety of the order in the light of the law, which was applicable and is not intended to grant general and unlimited jurisdiction to the Revisional Authority to set aside the order on any ground, whatsoever: The use of the word "propriety" in provisions relating to revisional jurisdiction is not unnecessary. If the word "propriety" did not exist, there would be no jurisdiction in the Revisional Authority to upset a finding of fact, where the obvious intention of the legislature was that the Revisional Authority should be entitled, even to upset a finding of fact. In this' behalf, the judgment of the Superior Court in the case of M.M. Isphahani Ltd. v. Haji Muhammad Sultan, reported in PLD 1961 SC 76, lends credence to my afore-said observations.

11. It is thus, observed that an adjudication per se implies an original decision on the merits of a case both legal as well factual. A revisional jurisdiction on the other hand is vested in an authority higher in the hierarchy and the purpose of such jurisdiction is to supervise the functions performed by a lower authority. This section in fact, provides a peculiar procedure which is sui generis. The powers conferred under the said section are more or lees analogous to the powers conferred upon the High Court and the Court of Session, under the Code of Criminal Procedure. I am of the opinion that the Revisional Authority while considering the legality, propriety or correctness of a finding, does not normally dwell at length upon the facts and evidence of the case. The materials are considered only for the purpose of satisfaction about the legality, propriety or correctness of the findings etc. The Revisional Authority would, thus, refrain from substituting its own conclusion on an elaborate consideration of evidence, if recorded in accordance with the prevalent law. In Bakulbai v. Gangaram (1988)1 SCC 537, the Supreme Court of India found that the findings of the inferior Courts on disputed questions of facts, if recorded after full consideration of the evidence, should not be disturbed in revision. However, where a revisional power is conferred, the Revisional Authority is entitled to examine the legality and propriety of the order and to pass such suitable orders as it may think fit in the circumstances of the case. When actually interfering, the Revisional Authority is entitled to hold an enquiry or direct enquiry to be held and for that purpose admit additional evidence. In this behalf, I gain support from the judgment in the case of Swastik Oil Mills Ltd. v. H.B. Munshi (1968), reported in 21 STC 383 (SC).

12. The learned counsel for the appellants has contended that rejection of the appellants' application under section 195 of the Act, by the Collector of Customs, Peshawar is, void ab initio as instead the learned Collector himself, directions have been issued by the person who is not competent authority under the law to do so and the same action on the part of the subordinate authority passing directions on behalf of the learned Collector of Customs under section 195 ibid is against the law. I am constrained to be dragged to make an irresistible observation that giving reasons' is an essential element of administration of justice. A right to reason is an indispensable part of judicial review; reasoned decision shows that the aggrieved person has received justice and the Revisional Authority has functioned with discipline. The duty to record reasons also includes the duty to communicate such reasons to the affected party. It is now well-settled principle in law that the Revisional Authority must give a speaking order. However, if the original authority gives reasons in detail, and the Revisional Authority passes its order; without specifying any reasons, it would not be termed as speaking and judicious order. In this behalf, I also gain strength from the judgment in the case of Chowgule and Co. v. Union of India, reported in AIR 1971 SC 2021.

13. The learned counsel for the appellants has also contended that the rejection of the appellants' application under section 195 of the Act on the ground of limitation without prejudice was also illegal as the Assessment Order dated 28-5-2005 came to the knowledge of the appellants somewhere in January, 2008, therefore, rejection of the appellants' application on the ground of limitation was highly misconceived as the limitation in view of the provisions of section 215 ibid be counted from the date of receipt of order by the appellants. As already discussed above, the Suo Motu powers under section 195 of the Act can only be exercised within a period of two years from the date of the impugned Order/Direction. However, it is well settled principle in law that a notice/order will be deemed to have been served/dispatched, as soon as it is sent by the registered post. The actual delivery is not the essence of the Act, and where the assessment order cannot be dispatched through post, it can be served by fixation of the same on the notice board of the Custom House. Accordingly, the assessment order shall always be considered to have been served as soon as it is sent by a registered post to the concerned person or duly displayed on the notice board. I gain support in this behalf from the judgment in the case of Mannoo Gul v. Government of Pakistan, reported in PLD 1989 SC

605. Thus, the Custom Authorities can produce postal receipts available on record to show that the assessment order was properly sent to the importer by a registered post at the given address in the custom documents and the assessment order so dispatched will be a sufficient compliance of the law. In this behalf, I also gain strength from the judgment in the case of Abid Khan v. Additional Secretary, Government of Pakistan, reported in PLD 1994 Pesh.264. Furthermore, in the Custom Appeal No.2068 of 2001, reported in 2003 PTD (Trio.) 2527, it has been held by the Tribunal that the service of notice or dispatch of order etc., under section 215 of the Act must be proved from the records of the Custom Authorities. In absence of any, record regarding service of notice/dispatch of order, it cannot he presumed that the assessment order was dispatched to the appellants through a registered post or courier service at the last known address of the appellants. Thus, the issue needs to be properly examined in .the wake of the afore-said dicta of the superior Courts.

14. The learned counsel for the appellants has also contended that no evidence was shown to him by the Customs Authority, which may determine the basis on which the relevant assessment was made, which, according to him, is against the natural justice as the Customs Authority was under obligation by law to disclose the material evidence on the basis of which the enhancement of value of the impugned goods was made. In case such evidence was not disclosed, the high value assessed will not be sustainable in the eyes of law. He also invited attention of this Tribunal to the prevalent Rule 109 of S.R.O. 451(I)/2001, dated 18-6-2001 and has stated that the Customs Authority has blatantly/ illegally exceeded on their jurisdiction. He has also relied on Clause (ii) of CGO 10 of 1999, which reads as under:-- "Final assessment order shall be speaking one and shall also incorporate all the details and evidence on record, on the basis of which value has been fixed or assessed has been finalized. This is necessary to enable the importer to file appeal, with the appellate authority, if he is not satisfied with the assessment order so made."

15. The learned counsel for the appellants has also asserted that the prevalent Rule 113 of S.R.O. 451(I)/2001, deals with primary methods and the price actually paid by the importer is the price actually paid or payable. He also referred to a number of citations, wherein it has been held that in case the department suspects any illegality that the burden of proving that the declared values are not normal, then lies on the Customs Authority and where the material was available with the Customs Authority, the case is remanded back for de novo consideration. Thus, this issue also needs to be properly examined in the wake of the dicta of the superior Courts.

16. In view of the above stated position, the extenuating circumstances of the case and the dicta of the superior Courts, I am inclined to set aside the Order/Direction/Letter dated 24-3-2008, issued by the Deputy Collector of Customs, Dry Port, Peshawar, being non-sustainable in the eyes of law, and the matter is remanded back to the learned Collector of Customs, Peshawar for a fresh consideration of the points factually and legally urged before him by the appellants by also providing an opportunity of hearing and production of material evidence before him and then he should pass speaking and judicious order in accordance with the law.

17. This judgment consists of nine (9) pages and each page bears my official seal and signature.

18. Accounted on 9-6-2009.

19. Attested copy of this judgment be dispatched to the concerned parties within (10) days of passing of the same. H.B.T./190/Tax(Trib.) Case remanded.