KARACHI: Directorate General of Customs Valuation issues Order-in-Revision against Valuation Ruling No.869/2016 dated June 10, 2016 under section 25-D of the Customs Act, 1969.
M/s Ashfaq Brothers and others filed a petition against Customs Valuation director. The revision petitions was filed under section 25-D of the Customs Act, 1969, challenging the customs value determined vide Valuation Ruling No.869/2016 issued under section 25-A of the Customs Act, 1969.
According to the details, the petitioner is engaged in the regular import of gasoline (petrol) generators of various brands, including ‘Loncin’, from China.
That the respondent director has been entrusted by the legislature, through the enactment of Section 25A of the Customs Act, 1969, to diligently, efficiently and properly exercise the powers contained therein for the lawful determination of customs values of goods imported into Pakistan. The petitioner is seriously aggrieved by the acts of the director, whereby it has unlawfully, arbitrarily, and in contradiction with the dictates of Sections 25 and 25A of the Customs Act, 1969, determined the value of generators of China origin vide Valuation Ruling No. 869 of 2016. The director has acted in grave violation and excess of the powers conferred thereupon and, through its actions, is causing serious harm and loss to the petitioner.
It is submitted that the impugned Valuation Ruling has been issued in purported super-session of the Valuation Ruling No.569 of 2013 dated July 12, 2013 (hereinafter ‘VR 569/13’). Although the values in the previous valuation ruling were higher than the actual rate at which the generator sets imported by the petitioner were available in China, such difference was not prohibitive nor exceptionally detrimental to the local trade, hence, was accepted by the Petitioner for the purposes of valuation.
All previous valuation rulings, including VR 569/13 and Valuation Ruling No. 356 of 2011, values of generator sets had been determined on the basis of power generation capacity and origin, whereas no distinction between brands was drawn. Without prejudice to the legality of discriminating between brands, it is submitted that no distinction between brands was made due to the reason that, in fact, generator sets manufactured are usually unbranded, and the branding is done for commercial sale purposes only. As such, brand is not indicative of quality and, hence, value. As stated above, this was also accepted in the previous valuation rulings, which consciously referred to generator sets as ‘unbranded’ and all brands were deemed to be included there under.
It was submitted that during the market survey it has been observed that the Chinese origin petrol generators are being sold in different prices and prices depending upon their brands. The customs values have been determined under section 25 (9) of the Customs Act, 1969 which covers the primary method of valuation i.e. 25(1) to 25(8) in a flexible manner.
Valuation ruling was determined strictly keeping in view the method laid down in Section 25 of Customs Act, 1969, association of all stakeholders by convening meeting, by conducting local market inquiries as well as information gathered from the different suppliers of China.
The Directorate General of Customs Valuation in the order stated, “I have gone through the arguments of the importers given during the course of hearing and documents submitted by them in respect of description of different generators having various capacities / KVAs. The importers are of the view that Table-A of the impugned valuation ruling No. 869/2016 dated June 10, 2016 read with its Amendment dated June 15, 2016 does not reflect the fair customs values in respect of given description. They further explained that in the valuation ruling values have been fixed for various description/ranges e.g. value for 1.1 to 2 KVA is $224/set (piece) for category-A. For next range of 2.1 to 3 KVA value is $336/set (piece). Their contention is that for 2 KVA set the value is $224/pc and for 2.1 KVA it jumps to $ 336/set (by increasing 0.1 KVA), as it goes in next range. They requested to fix value on the basis of KVA so that importers may pay duty according to capacity of the generator. The contention of the importers is genuine. The importers also expressed its reservations against the categories (A, B & C) given in column (6) of the Table-A of the impugned valuation ruling whereby a limited number of brands are mentioned. Moreover low end Chinese brands are mentioned in category-B instead of category-C”.
The departmental representative was of the view that the generator of different KVA were basically categorized in order to address the under invoicing and mis-declaration. In terms of section 25 of the Customs Act, 1969, all valuation method were followed sequentially and all the information so gathered was evaluated and the customs values were determined under section 25(9) of the Customs Act, 1969. Therefore, the ranges given in column (2) of Table-A for Chinese origin Generators reflect the fair customs values of different categories. However, the department also agreed that values should be fixed on KVA basis and Chinese brands should be placed in Category-C (low end).
After examining the record of the case and arguments put forward by the petitioners and respondent during hearing and it was observed that the customs values determined on the basis of “set” 0r piece instead of KVA has created vast variation in prices / customs values, therefore, the customs values of petrol/diesel generators of Chinese origin enumerated in Table-A of impugned valuation ruling No. 869/2016 dated June 10, 2016 read with its Amendment dated June 15, 2016 are hereby determined on the basis of ‘KVA’ instead of ‘Set’ or piece in order to levy the legitimate duty and taxes on the true declaration. The second contention in the review application is regarding the categorization of different brands A, B and C i.e. higher to lower brands. After thorough consultation with the stakeholders and the market survey a number of missing brands have been incorporated and categorized accordingly.
Keeping in view above, market inquiry and work back method the values are fixed and Table-A in the impugned valuation ruling No. 869/2016 dated June 10, 2016 read with its amendment dated 15-06-2016 is replaced as the customs values determined under section 25A (3) of the Customs Act, 1969 as Annex-A.
The values so determined in this revision petition shall be applicable with immediate effect and on the goods declarations not finalized/out of charged as yet and on all cases provisionally assessed under section 81 of the Customs Act, 1969.