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C.A. No.205/LB of 2009, decided on 1st April, 2009.

----S.156(1), Cl.(90)---Seizure of non-smuggled goods---Absence of rival claimant---Effect---Possession of owner would be considered as lawful---Provision of Cl.(90) of S.156(1) of Customs Act, 1969 would not attract to such case.

----S. 25(5)---Valuation of goods seized not smuggled one---Non-production of evidence by owner in respect of transactional value of such goods---Effect---Such goods would be valued under S.25(5) of Customs Act, 1969. Mian Abdul Ghaffar and Malik Muhammad Arshad for Appellant. Saleem Ullah, I.O. for Respondent. Date of hearing: 9th March, 2009.

The appellant has assailed, in this appeal, the Order-in-Appeal No.288/09, dated 21-1-2009, passed by the learned Collector (Appeals), the respondents No.4, who had upheld the Order-in-Original No.16/08, dated 5-11-2008, passed by the learned Deputy Collector, Customs Lahore/Respondent No.3. 2. The brief facts, giving rise to this appeal, are that the Customs Intelligence and Investigation, Lahore apprehended a consignment of Electronic Goods 14,49,000 DVDRs from the premises of Messrs Hina Enterprises, Sheikhupura on 21-7-2007 and submitted the case for adjudication. The learned Additional Collector, Customs/Adjudicating Authority passed an Order No.116/2007, dated 29-11-2007. The learned Adjudicating Authority observed that these were not smuggled goods, however, had been concealed for evasion of duties and taxes, as contemplated in section 156(1) clause (90) of the Customs Act, 1990, and proceeded to confiscate the goods outright and imposed a penalty of Rs.50,000 upon Shamas-ud-Din, the claimant of the DVDRs and upon one Abdul Rehmad of Messrs Hina Enterprises in whose premises these non-duty goods were stored. Shamas-ud-Din, filed an appeal before the learned Collector (Appeals), who vide his Order No. 1-02/08, dated 17-1-2008, modified the Order-in-Original and gave an option to the appellant to get the goods released against payment of redemption fine equivalent to 30% of the assessed value of the goods in addition to the payment of duties and taxes leviable thereon. The appellant made an application to the Principal Appraiser that the goods be assessed. The Principal Appraiser assessed the goods in lump sum at Rs.45,64,350. The duties and taxes were reckoned as Rs.22,04,581, 30% fine as Rs.13,69,305 and the penalty remained as Rs.50,000 and the total demand raised was Rs.36;28,886. The appellant deposited this amount and made an application for the release of the goods. The Directorate of Intelligence and Investigation wrote a letter No.HB(Cus)Hina/Det/109/07/5938, dated 18-7-2008, to the learned Collector of Customs, Lahore, that the assessment was mala fide. Without any logic, overall value had been assessed as Rs.45,64,350 and keeping the then value of the dollar as Rs.64.14, the price per piece became US .049 only. It further wrote that as per Valuation Ruling No.Misc/6/08-VII-A-25A-75, dated 16-2-2008, issued by the Director Valuation and PCA, Karachi under section 25(A) of the Customs Act, 1969, the per piece value of the DVDR was US 0.16, this valuation/advice was further supported by KARPHC GD No.90793, dated 23-4-2008. The Principal Appraiser, had attempted to give undue benefit to Shamas-ud-Din. The learned Collector of Customs, Lahore ordered the reopening of the case on 26-7-2008 and directed the learned Deputy Collector, Customs (G-IV), Dry Port, Mughalpura, Lahore to make the assessment afresh under section 25 of the Customs Act, 1969. Meanwhile, the appellant filed a Writ Petition No.9602/2008, before the Hon"ble Lahore High Court, Lahore challenging the order of the respondent. The Hon"ble Lahore High Court, Lahore observed that the learned Collector could reopen the case. However, the reassessment should be in accordance with law. The operative part of the said order is reproduced as below:--

"The onerous duty of the Appraisement Department of Customs is to determine the value by adopting the methods provided under section 25. The order of the First Appellate Court i.e. Collector was to release the goods after its appraisement as well as by charging 30% penalty additionally. It, however, does not provide any unbridled authority to make any assessment or to determine the value ignoring the provisions of law relevant to the issue. Not only that the provisions of section 25 were to be applied but even otherwise, the appraisement have to be justly, fairly and reasonably and for the advancement of law under which the same was to be done. This court, therefore, confirms the exercise of the jurisdiction by the Collector under section 195, but however, does not agree that the subsequent appraisement can be made on the basis of valuation ruling mentioned in the order. The Revising Authority, therefore, shall further proceed in the matter strictly observing the sequential order provided under section 25 of the Customs Act. This writ petition, therefore, stands accordingly disposed of." 3. The learned Deputy Collector, Respondent No.1 adjudicated the matter and passed an Order No.16/08, dated 5-11-2008. Paragraph Nos. 9 and 10 of the order of the learned Deputy Collector may be reproduced below for ready reference:--

"The seizure of goods in question took place on 21-7-2007, therefore, the relevant time period of 90-days, as per Customs Valuation Rules, 2001 would range between 20-4-2007 and 22-10-2007. The relevant data of this period has been checked and it has been found that DVDR of China origin were being assessed @ US 0.10/piece (bulk packing) to US 0.18/piece (individual packing) by Karachi Customs House. The evidential G.Ds in this regard are GD No.11353 dated 4-8-2007 and GD No.34872 dated 22-10-2007. As regards the contention of respondents counsel that similar DVD have been assessed US 0.5/piece by the Model Customs Collectorate, Lahore and, therefore, the value already assessed is fair is not tenable in the light of fact that the so called transaction value in their cases was not based on the price actually paid or payable as required for application under section 25(5) of the Customs Act, 1969. Gross under-invoicing in the declared value for DVDRs was taking place, therefore, the data of Model Customs Collectorate, Lahore is neither reliable nor applicable.

The seized goods in question are DVDRs in bulk packing and KAPRHC-11353, dated 4-8-2007, showing assessed value of DVDR @ US 0.10/piece (in bulk packing) is fully applicable to the instant case. Keeping in view the huge quantity of DVDRs seized, discount of 10% is allowed in order to account for the difference in commercial level of the two transactions. The seized goods are accordingly assessed @ US 0.09/piece, therefore, the total value comes to US 130,410." 4. The appellant filed an appeal before the, learned Collector (Appeals), who dismissed the appeal. The operative part of the order, contained in paragraph Nos.8 and 9, of the learned Collector (Appeals) may also be reproduced as below:--

(8) As far Collector Customs" action under section 195 for reopening of any decision or order of his subordinate, the appeal against such action of the Collector lies not to this forum but to the Appellate Tribunal under section 194-A, but such appeal lies only if Collector has himself passed final adjudication order in terms of proviso to section 195 of the Customs Act, 1969. His other administrative actions/ orders under section 195 are appealable neither before this forum, nor before any other specialized appellate forum,

(9) In view of the, foregoing discussion and conclusions, the instant appeal has no merit and is, therefore, dismissed. The impugned order in original is upheld as such. 5. Hence, this second appeal. 6. It has been urged in the memo of appeal that the learned Collector could reopen the case under section 195 of the Customs Act, 1990, but if the value was to be enhanced then a notice should have been issued to the concerned party as envisaged in the proviso to section 195(1) ibid. No such notice had been given. Further, the learned Collector, while reopening the case had not set aside the earlier assessment. Furthermore, the learned Collector should have himself decided the case rather than assigning the job to the Deputy Collector. Furthermore, the learned Adjudicating Authority, in the Order-in-Original No.16/08, had ignored the assessment made at Lahore Dry Port. The appellant has referred to GDs LDRY-HC-749, dated 15-7-2007, LDRY-HC-2837, dated 24-8-2007 and LDRY-HC-3S78, dated 11-9-2007, in this respect. It has been urged that since the learned adjudicating authority had himself cleared the goods in these GDs, so he had ignored the valuation made at Lahore Dry Port. The valuation of Model Customs Collectorate, Lahore remained as US 0:05/piece and 0.06/piece. Further under section 25(5)(d) ibid, the lowest value was to be considered. 7. The department furnished the comments. They submitted that the Collector of Customs was fully competent to remand the case for de novo consideration to the subordinate officer and this action had been upheld by the Hon"ble Lahore High Court, Lahore in Writ Petition No.9602/08, decided on 5-8-2008. The case has been reopened on the basis of the, elements of legality and propriety of the assessment order. The learned Collector (Appeals), after considering the evidence on record regarding higher value as advised by the detecting agency, rejected the appeal, keeping in view the fact that the determined value was already on the lower side as compared to the value of the similar goods referred to by the detecting agency. The impugned order was in accordance with law and facts. The appellant, during the course of proceedings before the learned Deputy Collector, relied on transactional value under section 25(1) ibid, but on demand, he could not produce any evidence in support of the contested value to be based on transaction value. 8. Arguments were heard. The learned counsel for the appellant canvassed the grounds urged in the memo of appeal as reproduced above. He contended that the transactional value should have been followed and if not then the lowest assessment under section 25(5)(d) ibid must have been followed. He further submitted that the Karachi Valuation Ruling dated 16-2-2008, had admittedly been set aside by the Hon"ble Lahore High Court, Lahore in Writ Petition No.2415/2007, dated 23-5-2008. 9. The Investigating Officer defended the impugned order. He submitted that the comments had been submitted in detail and may be perused. 10. I have gone through the record carefully. It has all along been admitted by the customs authorities that these were not smuggled goods. The possession is always considered as nine points of law viz. lawful ownership, particularly when there was no rival claimant, section 156(1) clause (90) of the Customs Act was, therefore, hardly attracted. The question of reopening of the case has already been decided by the Hon"ble Lahore High Court, Lahore in Writ Petition No.9602/2008, decided on 5-8-2008. The learned Adjudicating Authority had been directed to make the assessment/valuation under section 25 of the Customs Act, 1969. The subject valuation advice, as referred in letter No.HB(Cus) Hina Ent/Det/109/07/5938, dated 18-7-2008 by the Directorate of Intelligence, Lahore, had admittedly been set aside by the Hon"ble Lahore High Court, Lahore in Writ Petition No.2415/2007, dated 23-5-2008. The appellant had failed to provide any evidence in respect of the transactional value. The valuation, therefore, had to be made under section 25(5) of the Act, as observed by the learned Adjudication Authority. Clause (d) of section 25(5) ibid may be reproduced as below:--

25(5) [(d)---If, in applying the provisions of this subsection, there are two or more transaction values of identical goods that meet all the requirements of this subsection and clauses (b),(d),(c) and (f) of subsection (13), the customs value of the imported goods shall be the lowest such transaction value, adjusted as necessary in accordance with clauses (b) and (c).] 11. The learned Adjudicating Authority had spurned the assessment made at Model Customs Collectorate, Lahore without any logic. He could not have brushed aside this valuation wantonly. Clause (d) of section 25(5) of the Act had to be followed. The assessment made at Lahore Dry Port, out of the above referred GDs was US 0.06/piece. It need not be mentioned that the appellant had already deposited Rs.36,28,886; including Rs.50,000 as the penalty. With this discussion, the appeal is accepted and the impugned order in appeal and order in original are modified that" the valuation of the DVDRs would be read as US 0.06/piece and the appellant shall make the payment accordingly. The goods may be released on the payment of the same less already made. S.A.K./72/Tax(Trib.) Order accordingly.

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