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Customs Appeal No.323/LB of 2011, decided on 26th April, 2011.

----Ss.32(3A), 26(A) & 25A---Valuation Ruling No.Misc/08/2009-1/ 2476 25-A 191 dated 31-10-2009---Fiscal fraud---Powers to determine customs value---Recovery order was passed on the ground that GD was filed without proper application Valuation Ruling and non-application of Valuation Ruling had resulted in short payment of Government Revenue---First Appellate Authority observed that evidential data showed that the identical goods were being assessed at the relevant time @ US 2.71 per Kg, @ US 2.78 per Kg and @ US 2.9 per Kg; and goods were liable to be assessed not less than @ US 2.40 per Kg---Importer contended that observations of First Appellate Authority was neither based on the Valuation Ruling not evidential data and GD was filed on 26-10-2009 and the Valuation Ruling was issued on 31-10-2009; that the said Valuation Ruling could not be applied retrospectively ; that Valuation Rulings were estimates, if the same were not followed at the time of earlier appraisement, and that could not be used against an importer which had already appraised and had been made out of charge by the authorities---Validity---Record showed that GD was filed on 26-10-2009 and the Valuation Ruling under S.25A of the Customs Act, 1969 was issued on 31-10-2009---Valuation Ruling could not be applied retrospectively---Valuation Rulings were estimates, if the same were not followed at the time of earlier appraisement, same could not be used against an importer which had already appraised and had been made out of charge by the authorities---Valuation Ruling dated 31-10-2009 was not applicable as after proper assessment, the goods were made out of charge---First Appellate Authority erred in law by observing that goods were required to be assessed @ US 2.40 per Kg as such observation was neither based on valuation ruling nor on any evidential data--Evidential data discussed by the First Appellate Authority showed the assessed values of the identical goods as @ US 2.71 per Kg, @ US 2.78 per Kg and @ US 2.9 per Kg---Record had nothing to show that the identical goods were being assessed @ US 2.40 per Kg---Even otherwise show cause notice issued was based on the Valuation Ruling and not on evidential data and First Appellate Authority had travelled beyond the scope of show-cause notice---Orders of the authorities below were set aside and show cause notice was vacated by the Appellate Tribunal. Messrs S.T. Enterprises v. Federation of Pakistan and 4 others (in Writ Petitions Nos. 15767 to 15776 of 2008) rel. Khubaib Ahmad for Appellant. Dr. Aitzaz Ahsan, D.R. for Respondents. Date of hearing: 17th April, 2012.

--This judgment will dispose of Custom Appeal No.323/LB/2011 filed by the appellant against Order-in-Appeal No.409 of 2011 dated 20-8-2011 passed by the Collector (Appeals) Lahore. 2. Brief facts as narrated in the order-in-appeal are that during the course of post clearance audit of data of Cocoa Powder conducted under section 32(3A) read with section 26(A) of the Customs Act, 1969, it has been observed that the appellant imported a consignment of "Cocoa Powder under PCT heading 1805.0000" from Malaysia and succeeded in clearance of the same from Faisalabad Dry Port against GD No.175 dated 26-10-2009 filed by his clearing agent without proper application of Valuation Ruling No.Misc/08/2009-1/2476 25-A. 191 dated 31-10-2009. Non application of Valuation Ruling has resulted in short payment of Government revenue amounting to Rs.278377 and the adjudicating officer after adjudication of the matter passed the order-in-original for the recovery of the said amount. Feeling aggrieved by the order, the appellant filed the appeal before the Collector (Appeals), Lahore, who after hearing both the parties passed the order-in-appeal and ordered as such:-- "The upshot of the above discussion is that the departmental case does not succeed on the basis of Valuation Ruling but the value of goods imported in the instant case could not be lesser than US 2.40 per kg, keeping in view the normal assessment parameters applied by the department. The appellants are required to deposit the difference of duties and taxes after calculating their liability at unit value of US 2.40 per kg. The appeal is disposed of as above." Being dis-satisfied by the said order, the appellant filed the present appeal before this Tribunal. 3. It is stated by the learned counsel for the appellant that a consignment of Cocoa Power under PCT heading 1805.0000 executed through Contract No. CSLC 7969/090036 dated 9-9-2009 was imported by the appellant. Thereafter the GD No.FDRY-HC-175 dated 26-10-2009 was filed through the clearing agent by declaring the value of the goods @ US 1.6 per Kg on the basis of valuation ruling dated 18-4-2008. The goods were assessed accordingly. Thereafter the appellant paid the duty and taxes accordingly and got the goods released. It is further submitted that the respondents after conducting the audit issued a show-cause notice dated 9-2-2011 stating therein that the appellant got the goods released without application of Valuation Ruling No. Misc/08/2009-1/2476 dated 31-10-2009 issued under section 25A of the Customs Act, 1969. Consequently evaded leviable duty and taxes amounting to Rs.278377. The learned adjudicating officer maintained the charges levelled in the show cause notice. The appellant being aggrieved by the said order filed the appeal before the learned Collector (Appeals), who was pleased to hold that the said valuation ruling is not applicable. At the same time it was observed by the learned Collector (Appeals) that evidential data shows that the identical goods were being assessed at the relevant time @ US 2.71 per Kg, @ US 2.78 per kg and @ US 2.9 per Kg. Therefore, the impugned goods are liable to be assessed not less than @ US 2.40 per Kg. The said observation passed by the learned Collector (Appeals) is liable to be declared illegal as the same is neither based on the valuation ruling nor evidential data. It is further pleaded that the GD was filed on 26-10-2009 and the valuation ruling was issued on 31-10-2009. Therefore, the said valuation ruling cannot be applied retrospectively. It is also asserted by the learned counsel for the appellant that the valuation rulings are estimates, if the same are not followed at the time of earlier appraisement, it cannot be used against an importer which has already appraised and has been made out of charge by authorities. 4. On the other side the learned departmental representative rebutted the contentions raised by the learned counsel for the appellant and defended the impugned order. It is submitted by the learned D. R. that the appellate authority is empowered in terms of section 193-A (3) of the Customs Act, 1969 to confirm, modify any order appealed against. Therefore, the impugned order-in-appeal is well within the four corners of law. It is also pleaded that the goods were released against Cash No.08 dated 3-11-2009 whereas the valuation ruling was issued on 30-10-2009 meaning thereby that the goods were cleared after the issuance of the valuation ruling. Hence there was no retrospective application of valuation ruling. Moreover the clearance data of identical goods also confirmed that the impugned goods should have been assessed at or about US 2.4 per Kg. Therefore, the impugned order being without any illegality is liable to be maintained. 5. Arguments have been heard. Record has been perused. It is evident from the record that the GD was filed on 26-10-2009 and the Valuation Ruling No.191 under section 25A of the Customs Act, 1969 was issued on 31-10-2009. It is well settled principle that the valuation ruling cannot be applied retrospectively. Even otherwise it has been declared by the Hon"ble High Court, Lahore, in the case titled "Messrs S. T. Enterprises v. Federation of Pakistan and 4 others" in Writ Petitions Nos. 15767 to 15776 of 2008, that the valuation rulings are estimates, if the same are not followed at the time of earlier appraisement, it cannot be used against an importer which has already appraised and has been made out of charge by authorities. Therefore, the contention of the appellant that Valuation Ruling No.191 dated 31-10-2009 is not applicable in the present case as after proper assessment, the goods were made out of charge being forceful is accepted. The next contention that the learned Collector (Appeals) while observing that the impugned goods are required to be assessed @ US 2.40 per Kg has erred in law is also forceful as the observation passed by the appellate authority is neither based on valuation ruling nor any evidential data. The evidential data discussed by the learned Collector (Appeals) shows the assessed values of the identical goods as US 2.71 per Kg, US 2.78 per kg and @ US 2.9 per Kg. There is nothing on record to show that the identical goods are being assessed US 2.40 per Kg. Even otherwise the show cause notice issued by the respondent was based on the valuation ruling and not on evidential data. Therefore, it is observed that the learned Collector (Appeals) has travelled beyond the scope of show cause notice. Keeping in view discussed above, the impugned orders are set aside and the show cause notice is vacated. No order as to costs. Parties be informed by post or through UMS. CMA/122/Tax(Trib.) Appeal accepted.