Customs authorities

2025 PTD 112 QUETTA-HIGH-COURT-BALOCHISTAN Judicial Precedent

S. 195Customs authoritiesPowersFactual controversy

Any error in the assessment, which is disputed by the adversarial parties, obviously requires a thorough probe and inquiry which exercise cannot be the done by the High Court while adjudicating a Reference because it exclusively falls either in the domain of Additional Collector, Customs, during adjudication or by the Appellate Tribunal, which is the final and ultimate authority to determine error in assessment of duty or any disparity in the rate of freight or any other factual controversy.

2021 PTD 51 CUSTOMS-APPELLATE-TRIBUNAL-LAHORE Judicial Precedent

Ss.18, 26, 26A, 32(2)(3) & 202Federal Excise Act (VII of 2005), Ss. 3, 29 (2) & 42BIncome Tax Ordinance (XLIX of 2001), Ss. 148 & 228Sales Tax Act (VII of 1990), Ss.6 30, 31 & 32Constitution of Pakistan, Arts. 4 & 25Notification SRO No.371 (I)/2002, dated 15-6-2002, Sr.3(ii)Customs AuthoritiesAuditOther taxes, collection ofDiscrimination

Importer was aggrieved of show cause notice issued by authorities to recover Federal Excise Duty, Sales Tax and Income Tax

Validity

No official of Directorate of PCA was empowered to conduct audit in the matter of Federal Excise and Income Tax without powers / justification

Any such audit was void ab-initio and coram non judice

Clearance Collectorates did not have authority to collect Federal Excise Tax, Sales Tax and Income Tax at import stage in the capacity of collecting agent in terms of S.3 of Federal Excise Act, 2005, S.6 of Sales Tax Act, 1990 and S.148 of Income Tax Ordinance, 2001, sans recovery proceedings

Clearance Collectorates were empowered to recover escaped / short paid customs duty and regulatory duty levied on imported goods under S.18 of Customs Act, 1969, in exercise of powers conferred under S.202 of Customs Act, 1969, after due process of law but had no powers in any case to adjudicate cases of short recovery of Federal Excise Duty, Sales Tax and Income Tax under S.14 of Federal Excise Act, 2005, S.36 of Sales Tax Act, 1990 and S.162 of Income Tax Ordinance, 2001

No charges were levelled under S.32(2) of Customs Act, 1969, against those officials confirming the case in question was of inadvertence, error, omission or misconstruction falling within the ambit of S.32(3) of Customs Act, 1969

Appropriate authority to adjudicate such type of cases rested with Principal Appraiser in terms of Sr. 3(ii) of SRO No.371(I)/2002, dated 15-6-2002 and not Additional Collector Adjudication

Such show cause notices and order-in-original was without power / jurisdiction and the same was ab initio void and coram non judice

Importer was met out with partial treatment which was tantamount to discrimination not permitted under Arts. 4 & 25 of the Constitution

Customs Appellate Tribunal set aside the show-cause notice issued to importer as the orders passed by authorities were ab initio, null and void

Appeal was allowed, in circumstances.

2018 PTD 277 CUSTOMS-APPELLATE-TRIBUNAL-LAHORE Judicial Precedent

Ss. 2, 3, 4, 5 & 6Customs authoritiesJurisdictionScope

Exercise of jurisdiction or power of customs authorities in respect of any action which was proposed to be taken, or had been taken, was required to be determined with reference to the operative/functional sections, read with Ss.2, 3, 4 or 6 or other relevant sections of the Customs Act, 1969.

2015 SCMR 630 SUPREME-COURT Judicial Precedent

Ss. 25 & 25-BS.R.O. 356(KE) dated 29-10-1991Fixation of value of importsPrinciplesCustoms authoritiesDiscretion in valuation of goods, exercise ofScope"Import Trade Price"

Appellant-company entered into a contract with a foreign-company for the importation of sugar from Thailand at a price of US $ 292.50 per metric ton

Customs Department issued a notification, S.R.O. 356(KE) dated 29-10-1991 purportedly fixing the "Import Trade Price" (ITP) of sugar imported from Thailand at US $ 331 per metric ton

On arrival of the consignment the appellant-company filed Bill of Entry declaring the value of the consignment at the contract price

Customs authorities disregarded the claim that the duty should be fixed on the contract price and imposed duty on the "Import Trade Price" value of US $ 331 per metric ton

Legality

Section 25-B of the Customs Act, 1969 (as was in force then) authorized the Central Board of Revenue, or an officer authorized by it, to fix the price of imported goods at such rate as it deemed fit

On basis of said section, Customs Department had issued the notification in question purportedly fixing the "Import Trade Price" (ITP) of sugar imported from Thailand

Section 25 of the Customs Act, 1969 provided the basis on which the value of goods which were imported or exported had to be fixed

Said section (as was in force then) was based on the concept of "normal value" which, as defined, was the value of goods denoted by contracts between buyers and sellers which reflected arm's length transactions between independent buyers and sellers operating in the open market

Notwithstanding the very wide language used in S. 25-B of the Customs Act, 1969, the powers exercisable by the Central Board of Revenue thereunder were to be limited and constrained by S. 25 of the Customs Act, 1969, which was the substantive section of law for the fixation of prices

Central Board of Revenue did not have and could not be allowed to have unfettered discretion

Exercise of any discretionary power must be rational and have a nexus with the objective of the underlying legislation

Customs authorities had fixed the "Import Trade Price" of sugar imported from Thailand by relying on an invoice for sugar imported from another country of origin

For carrying out valuation of imports on a realistic basis it must be founded on the prevalent price at the place of origin of the goods, and not on the basis of prices prevalent in another country

Said criterion had clearly been violated in the facts of the present case

Determination of the "Import Trade Price" should have nexus not merely with the price at the place of the origin of goods but also with the relevant time

International prices of commodities varied hugely with the passage of time

Customs authorities in the present case had based the "Import Trade Price" of sugar based on prices prevailing nine months prior to the arrival of the consignment, which was clearly defective

More realistic and reasonable time period should have been utilized for such purpose

Impugned notification, S.R.O. 356(KE) dated 29-10-1991 purportedly fixing the "Import Trade Price" (ITP) of sugar imported from Thailand at US $ 331 per metric ton was not valid in such circumstances and was struck down

Supreme Court remanded the case to the concerned department for fixation of price afresh in terms of S. 25-B of the Customs Act, 1969 as it was prevalent at the relevant time

Appeal was disposed of accordingly.

2015 PTD 1100 SUPREME-COURT Judicial Precedent

Ss. 25 & 25-BS.R.O. 356(KE) dated 29-10-1991Fixation of value of importsPrinciplesCustoms authoritiesDiscretion in valuation of goods, exercise ofScope"Import Trade Price"

Appellant-company entered into a contract with a foreign-company for the importation of sugar from Thailand at a price of US $ 292.50 per metric ton

Customs Department issued a notification, S.R.O. 356(KE) dated 29-10-1991 purportedly fixing the "Import Trade Price" (ITP) of sugar imported from Thailand at US $ 331 per metric ton

On arrival of the consignment the appellant-company filed Bill of Entry declaring the value of the consignment at the contract price

Customs authorities disregarded the claim that the duty should be fixed on the contract price and imposed duty on the "Import Trade Price" value of US $ 331 per metric ton

Legality

Section 25-B of the Customs Act, 1969 (as was in force then) authorized the Central Board of Revenue, or an officer authorized by it, to fix the price of imported goods at such rate as it deemed fit

On basis of said section, Customs Department had issued the notification in question purportedly fixing the "Import Trade Price" (ITP) of sugar imported from Thailand

Section 25 of the Customs Act, 1969 provided the basis on which the value of goods which were imported or exported had to be fixed

Said section (as was in force then) was based on the concept of "normal value" which, as defined, was the value of goods denoted by contracts between buyers and sellers which reflected arm's length transactions between independent buyers and sellers operating in the open market

Notwithstanding the very wide language used in S. 25-B of the Customs Act, 1969, the powers exercisable by the Central Board of Revenue thereunder were to be limited and constrained by S. 25 of the Customs Act, 1969, which was the substantive section of law for the fixation of prices

Central Board of Revenue did not have and could not be allowed to have unfettered discretion

Exercise of any discretionary power must be rational and have a nexus with the objective of the underlying legislation

Customs authorities had fixed the "Import Trade Price" of sugar imported from Thailand by relying on an invoice for sugar imported from another country of origin

For carrying out valuation of imports on a realistic basis it must be founded on the prevalent price at the place of origin of the goods, and not on the basis of prices prevalent in another country

Said criterion had clearly been violated in the facts of the present case

Determination of the "Import Trade Price" should have nexus not merely with the price at the place of the origin of goods but also with the relevant time

International prices of commodities varied hugely with the passage of time

Customs authorities in the present case had based the "Import Trade Price" of sugar based on prices prevailing nine months prior to the arrival of the consignment, which was clearly defective

More realistic and reasonable time period should have been utilized for such purpose

Impugned notification, S.R.O. 356(KE) dated 29-10-1991 purportedly fixing the "Import Trade Price" (ITP) of sugar imported from Thailand at US $ 331 per metric ton was not valid in such circumstances and was struck down

Supreme Court remanded the case to the concerned department for fixation of price afresh in terms of S. 25-B of the Customs Act, 1969 as it was prevalent at the relevant time

Appeal was disposed of accordingly.

2014 PTD 894 KARACHI-HIGH-COURT-SINDH Judicial Precedent

S.12Payment for exported goodsIncorrect value of goodsCustoms authoritiesJurisdiction

Customs authorities figure nowhere and it is only the State Bank of Pakistan and concerned bank and that too only to the extent of holding shipping documents

State Bank of Pakistan can raise objection in respect of consignment being exported and if the Bank feels that value declared in Form-E is not correct or true, then it can ask corresponding bank in Pakistan to withhold documents and that is all

No mechanism has been provided whereby any penal action can be initiated against such exporter nor it devolves or delegates any authority to Customs authorities to initiate any action in case of violation of provisions of S. 12(5) of Foreign Exchange Regulation Act, 1947.

2014 PTD 1677 CUSTOM,EXCISE-AND-SALES-TAX-APPELLATE-TRIBUNAL Judicial Precedent

Ss. 26 & 168Import documents tallying with the seized goodsCustoms authoritiesBurden of proof

On production of import documents tallying with the seized goods, the burden of proof stood shifted to the seizing agency to prove that the goods in question were not lawfully imported and instead thereof brought into the country without payment of duty and taxes.