Md. Saiful Alam Vs. Customs, Excise and VAT & others, (Borhanuddin, J.)

Case No: Customs Appeal No. 159 of 2013

Judge: Borhanuddin, J And Sardar Md. Rashed Jahangir, J.

Court: High Court Division,

Advocate: Mr. Munshi Moniruzzaman, Advocate, Mr. Pratikar Chakma, D. A. G,

Citation: 2019(1) LNJ

Case Year: 2018

Appellant: Md. Saiful Alam

Respondent: Customs, Excise and VAT Appellate Tribunal, Dhaka and others

Subject: Customs Act

Delivery Date: 2019-11-26

HIGH COURT DIVISION

(SPECIAL STATUTORY JURISDICTION)

Borhanuddin, J

And

Sardar Md. Rashed Jahangir, J.

 

Judgment on

14.11.2018

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Md. Saiful Alam

. . .Appellant

-Versus-

Customs, Excise and VAT Appellate Tribunal, Dhaka and others

. . .Respondents

Customs Act (IV of 1969)

Sections 25 and 25A

Pre-shipment Inspection Rules (PSI)

Rule 22(3)

Valuation Rules

Rule 5 and 9

If there is more than one value of an identical good than the lowest value shall be the basis for assessment and rule 22(3) of the PSI rules mandate that to ignore the price certified by the PSI agency it is incumbent upon the customs authority to prove that the CRF certified price is not the actual transaction value. To discard PSI certified value, the customs authority must prove with authentic evidence that the value certified by the PSI agency is inconnivance with the importer to evade revenue. On plain recording of section 25A with section 25 of the Customs Act alongwith valuation rules and PSI rules, we find no earthly reason to discard the price certified by the PSI agency if customs authority cannot prove with sufficient evidence that the value determined by the PSI agency is not the actual transaction value and such burden of prove lies upon the custom authority. The importer under the PSI scheme has no obligation to prove authenticity of the actual transaction value when PSI agency certified the price under section 25A of the Customs Act. The customs authority should be refrained from assessing the PSI certified goods on pick and choose basis at the whims of assessing officials rather it is incumbent upon the authority to strictly follow the valuation rules and PSI rules if it is proved with sufficient and authentic evidence that the PSI certified price is not the actual transaction value. Accordingly, judgment and order of the Appellate Tribunal is set aside and the order of the Review Committee is restored directing the Commissioner to assess the goods on the banks of CRF certified price.          . . . (19, 20 and 24)

Mr. Munshi Moniruzzaman, Advocate

. . .For the Appellant

Mr. Pratikar Chakma, D. A. G

. . . For the Respondent no. 2

JUDGMENT

Borhanuddin, J: This appeal is directed against the judgment and order dated 05.05.2013 passed by the Customs Excise & VAT Appellate Tribunal, Dhaka, respondent no.1 herein.

2.             Brief facts are that the appellant as an importer opened Letter of Credit No. 161610010233 dated 02.09.2010 for importation of 15469kg “Laptop Bag” from China at the rate of US$ 0.75 per piece under the Pre-shipment, Inspection (PSI) scheme. Before shipment, Government nominated PSI agency after inspecting the goods issued clean report of findings (CRF) dated 22.11.2010 certifying, amongst others, price of the goods at US$ 2.86 per piece. After arrival of the goods, the appellant through his C&F agent submitted Bill of Entry No. C-160578 dated 06.12.2010 for releasing the goods on payment of duties and taxes as per CRF particulars. But the Customs Authority assessed the goods fixing US$ 2.86 per piece ignoring PSI certified price. Under compelling circumstances, the importer released the goods paying duties and taxes in cash on the CRF value and furnished a Bank Guarantee for the difference of duties and taxes between CRF value and value fixed by the Customs Authority. After releasing the goods, the appellant under rule 23 of the PSI Rules filed review application before the Review Committee. Upon hearing the stakeholders and perusing  relevant papers/documents, the Review Committee directed the Customs Authority to assess the goods on the basis of CRF value by its order dated 08.03.2011.

3.             Being aggrieved, the respondent no.2 Commissioner of Customs, Customs House, Chittagong, filed appeal before the Customs, Excise and VAT Appellate Tribunal.

4.             Upon hearing the parties and perusing  papers/documents, Tribunal set aside the order passed by the Review Committee and thus confirmed assessment of the Customs Authority vide judgment and order dated 05.05.2013, which is impugned herein.

5.             Having aggrieved by and dissatisfied with the judgment and order, the importer as appellant preferred instant Customs Appeal under section 196D of the Customs Act, 1969.

6.             Mr. Munshi Moniruzzaman, learned advocate appearing for the appellant submits that the appellant imported the goods under the PSI scheme and Government nominated PSI agency issued CRF certificate under section 25A of the Customs Act certifying quality, quantity, price, description and classification of the goods but Customs Authority assessed the goods arbitrarily without following provisions of law as such impugned judgment and order is liable to be set aside. He also submits that Review Committee upon hearing the concern parties and perusing papers/documents and considering previous reference value of the identical goods directed the Customs Authority to assess on the basis of CRF certified price but the Tribunal without controverting findings of the review committee passed the impugned judgment and order which is liable to be set aside. By referring valuation report as contained in the paper book learned advocate submits that commercial description of the goods as described in the CRF certificate is ‘laptop bag,’ Nylon, Assorted size 832.92 dozen and price of the identical goods as shown in valuation report is US$ 0.73 per piece close to invoice value at the rate of US$ 0.75 per piece and Government nominated PSI agency after inspecting the goods certified price at the rate of US$ 1.30 per piece but the Tribunal without applying its judicial mind passed the impugned judgment and order ignoring the valuation report supplied by the Customs Authority and findings of the review committee as such impugned judgment and order is liable to be set aside. To substantiate his argument learned advocate refers Rule 5 and 9 of the Pre-shipment inspection (PSI) Rules.

7.             On the other hand, Mr. Pratikar Chakma learned Deputy Attorney General appearing for the respondent no.2 submits that from the valuation report as contained in the paper book it appears that price of the laptop bag is US$ 2.86 per piece and thus Customs Authority assessed the goods at the value found in data base which is confirmed by the Tribunal as such there is nothing to interfere with the impugned judgment and order. He also submits that finding of the review committee is not based on the observation of the committee as such Tribunal passed the impugned judgment and order after perusing price of the identical goods during contemporary period. Learned Deputy Attorney General further submits that Rule 22(3) of the PSI Rules empowers the customs authority to determine price of the goods as such Tribunal justly and legally passed the impugned judgment and order.

8.             Heard learned advocate for the appellant and learned Deputy Attorney General for the respondent no. 2. Perused the paper book and relevant papers/documents contained therein.

9.             It appears that invoice value of the imported goods is US$ 0.75 per piece and the PSI agency certified the price at US$ 1.20 per piece but the Customs Authority determined price of the goods at US$ 2.86 per piece. It may be mentioned here that PSI agency is nominated by the Government. The importer has no choice/option to appoint another PSI agency other than the one nominated by the Government. Section 25A of the Customs Act provides that the quality, quantity, price, description and classification certified by the PSI agency shall be the basis for assessment. In the case underhand, Government nominated PSI agency Bureau Veritas certified, amongst other, price of the imported goods.

10.         We have gone through the judgment and order passed by the review committee and the Tribunal. On perusal of the order passed by the Review Committee, it appears that in arriving its finding review committee considered contemporary reference value of the identical goods. Relevant portion of the order is quoted hereinunder:

ÔÔ¢fHpBC pwØq¡ a¡yl fËaÉ¡¢ua j§­mÉl üf­r ®lg¡­l›m ¢pBlHg c¡¢Mm L­lez a¡­a ­cM¡ k¡u, f§­hÑ L¡ógm q¡Ep LaªÑfr HLC fZÉ ¢pBlHg fËaÉ¡¢ua j§­mÉ öé¡ue L­l­Rez k¡l ®lg¡­l¾p ew ¢h¢f 1031 H 949 a¡¢lM 29.10.2010Cw ¢h¢XHCQ 2010 22650 1¢p a¡¢lMx 13.07.2010 CwzÕÕ

11.         Though the Tribunal observed that CRF certified price is not tallied with the contemporary price of identical goods but did not elaborate its observation by referring any particular case. From the valuation report supplied by the customs authority contained in the paper book it appears that price of the LAPTOP BAG ADDEL: ACB-CB27 released through bill of entry dated 05.10.2010 was US$ 2.86 per price and in the same valuation report price of the ‘LAPTOP BAG’ NYLON ASSORTED SIZE B325, 382 released through bill of entry dated 06.12.2010 was US$ 0.73 per price.

12.         National Board of Revenue under Section 219 read with section 25A of the Custom Act made ‘Valuation rules’ to determine value of the imported goods subject to condition specified in the rules.

13.         Rule 5(4) of the Valuation Rules relating to identical goods runs as follows:

ÔÔHC ¢h¢dl Ad£e A¢iæ f­ZÉl HL¡¢dL ¢h¢eju j§mÉ f¡Ju¡ ®N­m Eq¡­cl j­dÉ phÑ¡­fr¡ Lj ¢h¢eju j§­mÉl ¢i¢Ë­a Bjc¡¢eL«a f­ZÉl j¤mÉ ¢edÑ¡lZ L¢l­a qC­hzÕÕ

         Again, Rule 9(2) of the Valuation Rules provides that,

9 (2) HC BC­e k¡q¡ ¢LR¤C b¡L¥L e¡ ®Le, ¢ejÀh¢ZÑa ®k ®L¡e ¢ho­ul ¢i¢J­a ®L¡e Bjc¡¢eL«a f­ZÉl j§mÉ ¢edÑ¡lZ Ll¡ k¡C­h e¡, kb¡ x-

(L)---------------------------------

(M) j§mÉ ¢edÑ¡l­Zl E­Ï­nÉ c¤C¢V ¢hLí j§­mÉl j­dÉ p­h¡Ñ”P j§mÉz

(M) .....................................

(N) .....................................

(O) .....................................

(P) .....................................

(Q) .....................................

14.         Commercial description of the imported goods described in the CRF certificate is ‘LAPTOP BAG, NYLON ASSORTED SIZE, 832, 92 DOZ’. Which is almost identical with the description of the goods described in the valuation report released through bill of entry dated 06.12.2010 at a price of US$ 0.73 per piece.

15.         Learned Deputy Attorney General emphasis much on Rule 22(3) of the PSI Rules which is as follows:

ÔÔ22z cÖZ¨qbc‡Îi hÉhq¡l

(1)-------------------------------

(2)-------------------------------------------

(3) fË¡ç p¤Øfó abÉ fËj¡­Zl ¢i¢Ë­a öé¡ueL¡­m k¢c Hj­jÑ ¢e¢ðr qJu¡ k¡u ®k, f¢lcnÑe pwØq¡ La«ÑL fËaÉ¡¢ua j§mÉ f­ZÉl ¢h¢eju j§mÉ eq, a¡q­m j§mÉ¡ue ¢h¢dj¡m¡ Ae¤k¡u£ pqL¡l£ L¢jne¡­ll ¢e­jÀ e­qe Hje LjÑLaÑ¡l Ae¤­j¡ce p¡­f­r kb¡kb ¢h¢eju j§mÉ ¢edÑ¡lZ f¤hÑL öé¡ue Ll­a q­hzÕÕ

16.         Above provision clearly states that before ignoring price certified by the PSI agency, the Customs Authority must arrive at a clear finding on the basis of definite information based on authentic evidence that the value certified by the PSI agency is not the actual transaction value.

17.         The Government appoints pre-shipment inspection agencies under section 25A of the Customs Act. Sub-section (2) of Section 25A clearly provides that:

“The Government may, by notification in the official gazette, declare that the quality, quantity, price, description and customs classification of any goods verified and certified in the prescribed manner by a pre-shipment inspection agency shall be accepted as the basis for assessment.’’

         Again, Sub-section (3) of section 25A provides that:

“For the purposes of this section, “price” means value of the goods determined in accordance with sub-section (1) and (2) of section 25.

18.         From the above, it is clear that section 25A in an unequivocal language declares that the price certified by the PSI agency shall be accepted as the basis for assessment and sub-section (2) of section 25A provides that the price of the goods is to be determined in accordance with the rule made in this behalf.

19.         In appointing pre-shipment agencies, the Government divided the globe in six parts and nominated one PSI agency of its choice for each part and thereby compelled the importer to collect certificate from the PSI agency nominated by the Government. The importer has no choice/option but to collect the CRF certificate from the Government nominated only PSI agency for that part of the globe from where the importer intends to import. In consideration of the same, Sub-section (2) of section 25A mandate that the price certified by the PSI agency shall be basis for the assessment and section 25(2) provides that in respect of imported goods price of the goods shall be determined in accordance with the valuation rules made by the National Board of Revenue.

20.         From the provisions of rule 5 and 9 of the valuation rules it is clear that if there is more than one value of an identical good than the lowest value shall be the basis for assessment and rule 22(3) of the PSI rules mandate that to ignore the price certified by the PSI agency it is incumbent upon the customs authority to prove that the CRF certified price is not the actual transaction value. From the note sheet supplied by the learned Deputy Attorney General at the time of hearing without filing any affidavit, it is evident that the customs authority determined value of the imported goods on the basis of valuation report as quoted above but there is nothing in the note sheet that the customs authority had definite information based on authentic evidence that the value certified by the PSI agency is not the actual transaction value.

21.         To discard PSI certified value, the customs authority must prove with authentic evidence that the value certified by the PSI agency is inconnivance with the importer to evade revenue but it appears from the valuation report supplied by the customs authority as well as from the order of the Review Committee that the customs authority determined value of the goods ignoring CRF certificate by taking the recourse of pick and choose, in other words at the whims of the concern assessing officials with an ulterior motive which is also apparent from the valuation report supplied by the customs authority contained in the paper book. On plain recording of section 25A with section 25 of the Customs Act alongwith valuation rules and PSI rules, we find no earthly reason to discard the price certified by the PSI agency if customs authority cannot prove with sufficient evidence that the value determined by the PSI agency is not the actual transaction value and such burden of prove lies upon the custom authority. The importer under the PSI scheme has no obligation to prove authenticity of the actual transaction value when PSI agency certified the price under section 25A of the Customs Act. The customs authority should be refrained from assessing the PSI certified goods on pick and choose basis at the whims of assessing officials rather it is incumbent upon the authority to strictly follow the valuation rules and PSI rules if it is proved with sufficient and authentic evidence that the PSI certified price is not the actual transaction value.

22.         A citizen of the country cannot be taxed on the whims of a section of unscrupulous assessing officials. We believe that most of the officials are honest and perform their duties diligently in accordance with law.

23.         Under the facts and circumstances of the case and for the reasons stated above, we are inclined to allow the appeal.

24.         Accordingly, the appeal is allowed.

25.         Judgment and order dated 05.05.2013 passed by the Customs, Excise and VAT Appellate Tribunal, Dhaka, under Nothi No. CEVT/Case (Cus)-473/2011 is set aside and the order dated 08.03.2011 passed by the Review Committee is hereby restored.

26.         The respondent no.2 Commissioner of Customs (import), Customs House, Chittagong, is directed to assess the goods on the basis of CRF certified price and refund the Bank Guarantee No.01/2011 dated 10.01.2011 issued by the NCC Bank, Agrabad Branch, Chittagong, to the appellant within 45 days from the date of receipt of this order.

27.         Send down records to the Customs, Excise and VAT Appellate Tribunal, Dhaka, alongwith a copy of this judgment at once.

28.         Communicate a copy of this judgment to the commissioner of Customs (Import), Customs House, Chittagong, at once.

Ed.