KARACHI: Director General of Directorate General Customs Valuation Samaira Nazir Khan has rejected a review petition through Order in Revision No. 105/2015 under Section 25-D of the Customs Act, 1969 against Valuation Ruling No.709/2015dated 23-01-2015.
This Revision Petition along with other identical petitions (Nos. 162/2015; 163/2015; 164/2015 & 165/2015 were filed against Valuation Ruling No.709/2015 dated 23.01.2015. The petitioners were accorded a joint hearing on 09.04.2015, which was attended by Mr. Khalid Iqbal, Proprietor A.B. International Agency; Mr. Javed Khanani –J.K.Traders’ Mr Fawad Iqbal, IFH Enterprises; Mr. Furqan Iqbal of Furqan Enterprises.
These revision petitions were filed under section 25-D of the Customs Act, 1969 against customs value determined for Polyester Yarn vide Valuation Ruling No.709/2015 dated 23-01-2015 issued under section 25-A of the Customs Act, 1969 inter alia on the following grounds, as reproduced below;
“SECTION: [25D. Revision of the value determined. Where the customs value has been determined under section 25A by the Collector of Customs or Director of Valuation the revision petition may be filed before the Director-General of Valuation within thirty days from the date of determination of customs value and any proceeding pending before any court, authority or tribunal shall be referred to the Director-General for the decision.]
During the last meeting in your office before issuance of the valuation ruling your side not heard our view point concerning the next valuation ruling.
We had also raised the objection on formula being adopted for issuance of new valuation ruling.
We also pointed out to you that the way you adopted for the determination of this valuation ruling formula is against the section 25 of the custom act 1969.
The Valuation Ruling No.709/2015 issued on January 23, 2015, need to be reviewed, as the price reflects in the ruling is still 25% above the actual prices.
The current shipments of P-FDY Denier 150/48 at US$ 1.08 & US$1.10 while valuation ruling of this item is US$ 1.36/Kg which are 25% higher. We cannot pay 25% higher import duties & taxes.
We request to allow the release the goods u/s 81 of the Customs Act, 1969. We will give you the pay order for difference amount. You can keep it, until finalization of the review process.”
They referred to the arguments given in written memo of petition, and requested for review of impugned ruling. It was stated that the formula devised in the year 2008 for fixation of value of polyester yarn is outdated. They agitated that the actual prices should be matched with valuation ruling always with a maximum variation of 5%. The petitioners further stated that the valuation ruling should be issued once a month which should be linked with international trade prices.
- The respondent department was asked to furnish parawise comments on the arguments of the importers as contained in the memo of petition are given as under:
- “Denied. It is submitted that Customs values of Polyester Chain Items were determined as per agreed formula after taking price of raw material i.e. MEG & PTA. Meeting in this regard was held on 22-01-2015 wherein all the stakeholders including representatives of KCC&I, Pakistan Yarn Merchants Association and M/s. A. B. International Agency, Karachi were requested to participate in the said meeting.
- The representative of the importer agreed on the existing practice of formula based values.
iii. The importer did not submit any evidence to substantiate their contention.
- The Valuation Ruling was based on the import data of the raw material and no evidence contrary to the ruling value was submitted.
- No evidence was produced in support of the contention that the prices determined vide Valuation Ruling No.709/2015 is on higher side.”
“The Valuation Ruling No.709/2015, dated 23-01-2015 was issued as per the agreed formula on the request of the Pakistan Yarn Merchants Association. Initially import data of three months i.e. September, October and November, 2014 was taken for the determination of customs values; however, on verbal request of the Association data for the month of October, November and December was considered. The price determined is as per the agreed criteria and members of Association were also associated in the exercise. The difference in the customs value determined vide above-referred ruling and current import price i.e. 3.40% to 21.78% is nominal considering the downward trend of petroleum price.
Importer’s contention that price may be fixed on monthly basis does not merit consideration as determination of price require holding at least two or more meetings (varies case to case) with the stakeholders including representatives of concerned Association, FPCC&I, KCC&I, Importers and Manufacturers etc. Secondly, three months import data is required to determine the customs values as per the formula.”
In her order the Director General Customs Valuation Samaira Nazir Khan said that this Revision Petition along with other identical petitions (Nos. 162/2015; 163/2015; 164/2015 & 165/2015 were filed against Valuation Ruling No.709/2015 dated 23.01.2015. The petitioners were accorded a joint hearing on 09.04.2015, which was attended by Mr. Khalid Iqbal, Proprietor A.B. International Agency; Mr. Javed Khanani – J.K.Traders’ Mr Fawad Iqbal, IFH Enterprises; Mr. Furqan Iqbal of Furqan Enterprises. They referred to the arguments given in written memo of petition, and requested for review of impugned ruling. It was stated that the formula devised in the year 2008 for fixation of value of polyester yarn is outdated. They agitated that the actual prices should be matched with valuation ruling always with a maximum variation of 5%. The petitioners further stated that the valuation ruling should be issued once a month which should be linked with international trade prices.
- Responding to the petitioners’ arguments, the Respondents have defended the Valuation Ruling. In the comments offered by them, as reproduced in the preceding paragraph, it has been stressed that the determination of Polyester chain items was adopted on the agreed criteria, which was acceptable to all stakeholders.
- I have examined the petitioner’s arguments and have also gone through the facts of the case on record. It has been observed that the petitioners have raised objections against the widely acknowledged valuation criteria. This formula was adopted for assessment of imported goods as per the values worked out after due process which was never contested by the trade body. In the reply to the objections the Department has mainly focused on the point that the difference in the determined customs values and the current import price, as contested by the petitioners, was in the range of 3.40% to 21.78%. This was though on downward side but according to the Department’s version, it was nominal and ignorable in the wake of current variation in petroleum prices in the international market. Further regarding the petitioners’ contention that the valuation may be revised on monthly basis, it was viewed that in the varying situation, it was not appropriate to undergo revision exercise, until some stability in prices is recorded. It has also been observed that the goods under reference were being valued under the adopted methodology with the active participation and consent of traders body in broader sense and it has prevailed since a considerably much longer period without having any recourse to dispute or litigation. In the present scenario, it appears that a particular group of importers have sought revision of values to seek facilitation in the outcome of reduction in prices due to sudden variation. Otherwise, the decision held by the department is considered to be very transparent in nature, reflecting a price worked out on the analysis of basic raw material prices namely MEG & PTA (Mono Ethylene Glycol and Poly Tri Acetylene). This mutually agreed formula was since adopted with the importers’ consent and it has been applied to relevant imports, it is considered to represent quite a fair determination. The said basis of value drawn under substantial footing seems to have been suitably equated in the reply given by the Respondents.
- In view of the foregoing conclusion, I do not find any sustainability in the submissions made by the petitioners and the petitions are accordingly rejected found lacking on merit. However, in the event of abnormal price change in the international market, the petitioners are at liberty to approach the Director Valuation with convincing arguments and substantial evidence through representative trade body to revisit the impugned ruling for an appropriate consideration within the given parameters and in accordance with law. The petitions shall stand disposed of accordingly.
- Being identical on facts and law points, this order shall apply mutatis mutandis to the following (03) revision petitions. M/s IFH Enterprises DG (V)Val.Rev/163/2015, M/s J.K. Traders DG (V)Val.Rev/164/2015, M/s Furqan Enterprises DG (V) Val. Rev/165/2015, the order concluded.
