Commissioner of Customs and anr Vs. Bangladesh Traders, Dhaka

Commissioner of Customs and anr

 Vs.

Bangladesh Traders, Dhaka,

Supreme Court

Appellate Division

(Civil)

Present:

Mohammad Fazlul Karim J

Md. Hamidul Haque J

Md. Tafazzul Islam J

Commissioner of Customs and anr……Appellants (In all the cases)

Vs

Bangladesh Traders, Dhaka……………………Respondents (In all the cases)

Judgement

October 20, 2003.

Cases Referred to-

Mr. Ayub and others Vs. Collector of Customs and others, Writ Petition No. 1495 of 1996; Rahmania Vanaspati Product Ltd Vs Collector of Customs, 4 BLC 85; Sew Bishar Prasad vs. Collector of Customs 54 DLR 173; Collector of Customs Vs Ahmed Hossain, 48 DLR (AD) 199; Khairul Bashar Vs Collector of Customs, 50 DLR 225; 42 DLR (AD) 167; 48 DLR (AD) 199; Mustafizur Rahman’s Case, 51 DLR (AD) 40; Mizanur Rahman’s case 52 DLR (AD) 49.

Lawyers Involved:

A.J. Mohammad (In all the cases) Ali, Additional Attorney General, instructed by B. Hossain, Advocate -on-Record- For the Appellants  

Dr. M. Zahir. Senior (In all the cases) Advocate, instructed by Mrs. Azra Ali, Advocate

-on- Record- For the Respondent

Civil Appeal Nos. 133.134.135 of 2002.

Judgment

                Md. Tafazzul Islam J.- These three appeals by leave filed by the writ respondents are against the judgment and order dated 17.07.2000 passed by the High Court Division in Writ Petition Nos. 3773. 4490 and 4491 of 1999 by which the Rules were made absolute and the assessments of customs duties and other levies on the imported Hard Boards and MDF Boards on the basis of proportionate value were declared to have been made without lawful authority and of no legal effect and the writ respondents were also directed to return the bank guarantees furnished by the respondents.

2. The writ petitioner respondents in Civil Appeal Nos. 133 of 2002 filed Writ Petition No. 3773 of 1999 stating, inter alia, that they and other business firms previously imported Hard Boards of size 8’x4′ x 2.5′ mm declaring invoice value of those @ USS 2.10 per sheet and there being no fixed tariff value on Hard Boards of the above size, the customs authority assessed customs duty and other levies on the said imported Hard Boards on the basis of the declared invoice value that is @ US$ 2.10 per sheet and accordingly on the assumption that customs duty will also be assessed on such size on Hard Board in similar manner, that is fixing the value @ U.S of 2.10 per sheet, the writ petitioner respondent by opening Letter of Credit dated 13.07.1999, imported 5600 sheets of Hard Board of similar size that is 8′ x 4’x2. 5mm from Thailand and after the arrival of goods submitted bill of entry for assessment of customs duty and other levies but on the basis of a complaint made by some business rivals of the respondent lo the effect that the respondent was trying to evade customs duty by making False declaration regarding the thickness of the imported Hard Boards, an inquiry was made by the customs authority and after detailed inquiry the allegation made in the above complaint was found to be baseless but even then the customs authority illegally and arbitrarily fixed value on the above imported Hard Boards @ US$ 3.40 per sheet by applying the principle of proportionate value on the basis that tariff value @ U.S.$ 4.00 per sheet has been fixed on Hard Boards of size of 8’x4’x3′ mm by the Gazette Notification dated 19.5.1999. Being aggrieved the respondent filed appeal before the appropriate customs authority but since there was no response the respondent had to invoke writ jurisdiction. The writ petitioner respondent in Civil Appeal No. 134 of 2002 filed Writ Petition No. 4490 of 1999 more or less on similar facts except that 8400 sheets of Hard Boards of similar si/e were imported by them from Thailand by opening Letter of Credit dated 14.10.99 and though invoice value of those were @ US$ 2.05 per sheet, the customs authority, illegally fixed the value @ 3.34 per sheet applying the principle of proportionate value. The writ petitioner respondent in Civil Appeal No. 135 of 2002 filed Writ Petition No. 4491 of 1999 also on similar facts except that they imported 2880 sheets of MDF Board of size 8’x4’x2.25 from Singapore by opening Letter of Credit dated 6.10.99 invoice value of which was @ U.S$ 2.00 per sheet and for such MDF Board there being no fixed tariff value, assessment has to be rnade on the basis of invoice value @ US$ 2.00 per sheet and even if MDF Board is regarded as Hard Board even then there being no fixed tariff value for the imported size of 8’x4’x2.25 mm, assessment has to be made on the basis of invoice value @ U.S$ 2.00 per sheet but the customs authority arbitrarily and illegally fixed value @ USS 3.60 per sheet applying the principle of proportionate value.

3. The High Court Division heard the above writ petitions analogously and made the Rules absolute holding that in the Gazette Notification dated  19.5.99  no tariff value being fixed on the sizes of Hard Boards and MDF Boards imported by the writ petitioners respondents and previously the customs authority having assessed customs duty and other levies similar sizes of Hard Boards fixing the value thereon on the basis of declared invoice value, the respondents acquired legal right to be assessed at that rate and the imposition of the proportionate value on the same kind of goods, otherwise in the absence of any tariff value, is without any lawful authority.

4. Leave  was  granted to consider as to whether  the  High Court Division in the respective writ petitions committed illegality in directing the customs authority to assess the customs duty etc, on the basis of invoice value that  was prevailing at  the  time of opening of letters of credit inasmuch as customs authority has the authority to determine normal value and realise duty thereon at the rale prevailing on the date of submission of the bill of entry and whether the High Court Division erred in holding that “the petitioner has acquired a legal right and equal protection of law and as such the respondents are estopped from claiming proportionate value and the same is against principle of natural justice” as there is no question  of acquiring  vested  right  in  the Invoice value under the Customs Act.

5.  Mr. A.J  Mohammad  Ali   the  learned Additional  Attorney General  appearing on behalf of the appellants, submits that the High Court Division was wrong in directing the customs authority to asses the customs duly on the basis of the invoice value because  in case of disagreement  with the invoice value, in terms of section 25(1) of the Customs Act the customs authority is to determine the normal value and realize customs duty and other levies thereon at the rate prevailing on the date of the submission of the bill of entry and  further the  High Court  Division erred in holding  that  the petitioner has acquired a  legal  right since there is no question of acquiring of legal or vested right in the invoice value under the Customs Act.

6. Dr. M. Zahir the learned counsel appearing on behalf  of the respondents, submits that the fixing of proportionate value on the goods, instead of declared invoice  value, is illegal and without any lawful authority because there is no mention of proportionate value either in the Tariff Code or in the Customs Act and that earlier the customs authority released Hard Boards of similar sizes  on the  basis of declared invoice value without raising any objection whatsoever and accordingly on the legitimate expectation that the Hard Boards would be assessed in the manner as assessed in the past, the respondents imported those and so the customs authority is now estopped from imposing proportionate value on the imported Hard Boards and further there being no tariff value for MDF Boards assessment on the same will also be made on the basis of invoice value.

7. The first question raised is whether the customs duly etc. on the imported Hard Boards and MDF Boards should be assessed on the basis of Invoice value as ordered by the High Court Division irrespective of the provisions of section 25 of the Customs Act.

Section 25(1) of the Customs Act provides that the value of any imported good shall be taken to be the normal price which they would fetch on the date referred to in section 30, that is the dale of submission of the bill of entry, on its sale in the open market between a buyer and a seller independent of each other. However where in exercise of power under section 25(7) of the Customs Act, tariff value is fixed by notification published in the official gazette the provision of fixing normal value under section 25(1) as above shall not be applicable.

8. Admittedly, the respondents in Civil Appeal No. 133 and 134 of 2002 imported from Thailand respectively 5600 and 8400 sheets of Hard Boards, sizes being 8’x4’x2.5 mm and the respondent in Civil Appeal No. 135 of 2002 imported 2880 sheets of MDF Board from Singapore size being 8×4’x2.5 mm and the invoice value of the above Hard Boards and MDF Boards are respectively US$ 2.10. 2.05 and 2.00 per sheet and by SRO No. 75 issued on 15.05.99 issued under section 25(7) of the Customs Act, Government fixed tariff value on Hard Board size 8’x4’x3’min, which comes under the Heading No. 4411.11.00 of HS Code, @US$ 4.00 per sheet and as it appears in the HS Code, no tariff value has been fixed on other sizes of Hard Boards and in the HS Code there is also no mention of MDF Board. However, even if MDF Board, falls within the category of Hard Boards, the position is that there is also no fixed tariff value on Hard/ MDF Boards of the sizes imported, that is 8’x4’x2.25 mm. It also appear that in the present case the customs authority fixed proportionate value @ US$ 3.40, 3.34 and 3.60 respectively per sheet instead of invoice value of US$ 2.10. 2.05 and 2.00 respectively taking into consideration the fact that for Hard Boards of size 8’x4’x3′ mm, the tariff value has been fixed @ USS 4.00 per sheet.

9. In the case of Mr. Ayub and others Vs. Collector of Customs and others.   Writ Petition No. 1495 of 1996, dispute arose when the  customs authority fixed the indicative value on the imported goods and the High Court Division held that such methods of determining the normal value with various adjectives such as indicative value, enhanced valuation price, recorded value, loaded value and commissioners value etc have no sanction in  law and accordingly the High Court  Division directed the customs authority not to use such attributes or any other adjectives so far the normal value is concerned.

10. In the case of Rahmania Vanaspati Product Ltd  Vs  Collector of Customs,  4 BLC 85 question arose as to whether the customs authority can make assessment of customs duty and other levies on the basis of indicative value. The High Court Division held as follows:-

“From a reading of the provision of sections 25(1),(2)(3) and section 30(1) of the Act it is very much seen that customs authority is authority to assess customs duties on imported merchandise at the value prevalent on the date the Bill of entry is presented for assessment of customs duties. The undenied position is that the customs authority fixed the indicative value for the purpose of assessment of customs duties of the imported CDSO and CPO, the kind of merchandises imported by the petitioners, much long before the presentation of the Bill of Entry. This being the factual position, the indicative value that has been fixed by the circular dated 03.06.1994 can not be considered to have been fixed in the light of the provisions of section 25(1),(2)(3) and section 30(1) of the Act.”

11. The High Court Division, in the case of Sew Bishar Prasad vs. Collector of Customs 54 DLR 173, also took similar view.

12. Further the terms of section 30A of Customs Act, which was incorporated in the Customs Act wef 1.7.1995, that is before opening of letters of credit in the present cases in the year 1999, provides that for the purpose of section 30, the value and the rate of duty applicable to any goods shall respectively include the value as determined under section 25 of the Customs Act.

Accordingly in terms of the provisions of section 25(1) and 30A of the Customs Act, there being no fixed tariff value on the Hard Boards and MDF Boards on the sizes imported, normal value has to be fixed on the basis of market value prevailing on the date when the bill of entry was submitted.

13. The second question of the leave granting is whether the respondents on the basis of previous assessment acquired a legal / vested right to be assessed on the basis of invoice value.

As it appears from the contents of the note sheet on the bills of entry annexed with the Writ Petition Nos. 3773 and 4990 of 1999, on earlier occasion the customs authority in case of similar size of Hard Boards fixed tariff value on the basis of invoice value and the case of the respondents is that it is their legitimate expectation that they will he dealt with similarly regarding assessment of the imported Hard Boards in question acquiring a vested right.

14. This question of vested right regarding payment of customs duty and oilier levies, as distinguished from fixation of the value of imported goods, at first came up for consideration in Hannan’s Case. 40 DLR 273. As it appears in the above ease in view of the acme shortage of sugar, notification was issued under section 19 of the Customs Act and section 4(1) of the Sales Tax Ordinance. 1982 declaring some exemption on imported sugar and relying on the same the petitioner opened letter of credit for import of sugar complying with all the terms and conditions as laid down in the above notification but after opening of the letter of credit, customs duty was enhanced by subsequent SRO. The High Court Division considering the special situation under which the above notification was issued under section 19 declaring exemptions held that customs duty and other levies cannot be levied on the basis of subsequent SRO enhancing customs duty because the importers acquired vested right to get the consignment cleared at a lower rale which was in force on the date on which letter of credit was opened and exemption of custom duty having been provided tinder section 19 of Customs Act, the same has no bearing with the rale of duty as contemplated in sections 18 and 30 of the Customs Act and section 30 will operate only in so far as rate of duty levied under section IS and has no reference to exemption under sections 19 of the Customs Act. On appeal, the Appellate Division (vide 42 DLR AD 167) apart from the question of vested right also considered the principle of promissory estoppel as the importer imported the goods on (he assurance of the Government which was notified in the public notice. As it appears although it was argued before the Appellate Division that notification under section 19 of the Customs Act is always subject to provision of section 30 and section 30 will prevail over the notification under section 19 of the Customs Act, the Appellate Division decided the ease only relying on the of principle of promissory estoppel.

15. In the case of Collector of Customs Vs Ahmed Hossain, 48 DLR (AD) 199. the Appellate Division also considered similar question of vested right so far payment of customs duty and other levies are concerned. In the above case, the order of the Deputy Collector of Customs dated 7.12.91 was impugned contending that section 19 of the Customs Act relates to exemption of customs duty and a notification (SRO) under that section is never subject to the provisions of section 30 of the Customs Act and the customs authority acted illegally in passing the impugned order taking a contrary view. The Appellate Division considering, the very important distinction which was made in Hannan’s case, held that notification under section 19 is independent of rate of duly as mentioned in section 30 and there is no connection between sections 19 and 30 of the Customs Act.

16. However, the claim of vested right, so far it relates lo fixation of value of the ‘imported goods, came up for consideration in the case of Khairul Bashar Vs Collector of Customs, 50 DLR 225. As it appears in the above case at the time of opening of the letter of credit, the rate of customs duty as well as the tariff value of the imported goods was much lower and both customs duty as well as tariff value were increased by SRO issued after opening of the letter of credit and question arose as lo whether an importer in entitled to pay customs duly etc at the rate which was in operation on the date of opening of the letter of credit and on the basis of tariff value which was also in operation on the date of opening of the letter of credit. ‘The High Court Division, considering the fact that tariff value is imposed to keep the value of imported goods in conformity with the price of similar good in the international market so that importer can not in collusion with (he exporter undervalue the goods to be imported to evade the payment of proper customs duty, declined to follow 42 DLR (AD) 167 and 48 DLR (AD) 199 for fixing value of the imported goods as in the aforesaid decisions the provisions of I he section 25 of the Customs Act were not interpreted and the High Court Division held that customs duty is payable by the importer on the basis of tariff value in force on the dale of presentation of bill of entry and not on the basis of invoice or tariff value which was in existence at the time of opening of the letter of credit and further there is no question of importer acquiring vested right in the invoice value or the tariff value prevailing at the time of opening of the Idler of credit.

17. Then in Mustafizur Rahman’s Case, 51 DLR (AD) 40 the claim of vested right, so far it relates to fixation of tariff value on the imported goods, came up for consideration and question arose as to whether by a notification the tariff value could be enhanced giving retrospective effect specially when the tariff value at the lime of

opening the respective letters of credit was much lower. The petitioner of the above case relied on 42 DLR (AD) 167 and 48 DLR (AD) 199. As it appears during argument of the above case, the learned Attorney General could not make any distinction between the facts of the above case and facts involved in 42 DLR AD 167 and 48 DLR AD 199 and on that consideration the Appellate Division allowed the appeal holding that the petitioner acquired vested right to get the tariff value fixed at the rate which was prevalent at the date of opening of the letter of credit.

18. But subsequently in Mizanur Rahman’s case 52 DLR (AD) 49 this issue was finally settled. In this case, the importer imported galvanized plain sheets and at the time of opening of the  letter of credit,  (he  tariff value in respect of galvanized plain sheets as fixed by SRO was much lower but by the time bill of entry was submitted, the tariff value was raised by SRO and relying on 42 DLR (AD) 167, 48 DLR (AD) 199 and also Mostafizur Rahman case, that is 51 DLR (AD) 40, it was argued that the goods were imported taking into account the tariff value which existed at the time of opening of that letter of credit.

19. The Appellate Division explained under what circumstance’s decision was given in 51 DLR (AD) 40, which was a case under section 25(7) of the Customs Act. The Appellate  Division after discussing the implications of sections 18 and 19 as well as such 30 of the Customs Act held that no vested right has been acquired by the importer to pay customs duty etc, on the basis of tariff value declared by notification (SRO) in force on the dale of opening of the letter of credit and the importer has to pay tax and duty on the basis of tariff value in force on the date of presentation of the bill of entry and the argument of acquiring vested right may be tenable in case of exemption case granted in special circumstance as in Hannan’s case and thus the principle laid down in the cases reported in 42 DLR AD 167 and 48 DLR AD 199 were distinguished. The Appellate Division also found it difficult to understand as lo how an importer could acquire vested right in the invoice value or the tariff value prevailing at the time of opening letter of credit.

20. In the present cases, the writ petitioner respondents claim legal / vested right on the ground that on earlier occasions on import of Hard Boards of similar size by the respondents the customs authority assessed customs duty etc, on the basis of invoice value. In 52  DLR AD 49, the Appellate Division held that no vested right accrued even though at the time of opening of the letter of credit there was a notification (SRO) providing for lesser tariff value. In the present cases on previous occasion the customs authority made assessment on the basis of invoice value. So there is no question of acquiring vested right by the respondents merely on the basis of earlier assessment.

21. Further, in view of adding of section 30A in the Customs Act w.e.f. 1.7.95, which is long before the opening of the letter of credit in the present cases, the provisions of section 30 have been  made applicable to section 25 also and so the position regarding acquiring  vested  right  has  also  been completely changed.

So, in the present cases, in terms of the provisions of sections 25(1) and 30A of the Customs Act, normal value has to be fixed on the imported Hard Boards as well as MDF Boards.

22. In the result the appeals are allowed without any order as to cost. The impugned judgment and order dated 17.07.2000 making the rules absolute declaring the assessment of Customs duties and other levies on the imported Hard Board and MDF Boards to have been made without any lawful authority and of no legal effect and further directing the writ respondents to return the bank guarantees furnished by the writ petitioners are hereby set aside.

Ed.

Source: 2006, (AD)

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