EXPO LANKA COMMODITIES (PVT) LTD. vs. DIRECTOR GENERAL OF CUSTOMS

044-SLLR-SLLR-2006-V-2-EXPO-LANKA-COMMODITIES-PVT-LTD.-vs.-DIRECTOR-GENERAL-OF-CUSTOMS.pdf


CA
Expo Lanka Commodities (Pvt.) Ltd. vs. Director General of Customs 353
EXPO LANKA COMMODITIES (PVT.) LTD.vs.
DIRECTOR GENERAL OF CUSTOMS
COURT OF APPEAL.
SRISKANDARAJAH. J.
CA 595/1999.
MAY 3,2006.
Customs Ordinance sections 51, 52 – Determination of the floor price of thecommodities imported – Assessment of the value of goods – Applicability ofSchedule E of the Customs Ordinance to ascertain the price of goods.
The petitioner imported certain consignments of onions, the unit price whichthe petitioner claimed as the normal price of Onions in the open market wasUS $ 250 per mt. the respondents however assessed the duties payable tothe said imports on a floor price of US $ 418 per mt. fixed by the PakistanCustoms for the export of onions from Pakistan.
The petitioner contended that, the assessment of import duty based on afloor price of US $ 418 p. m. t. is unlawful, arbitrary and unreasonable andsought a Writ of Certiorari to quash the said decision, and that the respondentsshould not have relief on a floor price fixed by Pakistan Customs. Therespondents contended that the invoice price did not correspond to the normalprice, and the petitioner had under invoiced the goods, and therefore theRespondent is entitled to ascertain the normal price in order to arrive at thevalue of the said goods..
HELD:
The respondent in arriving at the normal price has taken intoconsideration the price quoted in the invoice by imports of onions fromPakistan during the same period by the petitioner and other importersAccording to the invoices, the price for a metric ton of onions importedfrom Pakistan ranged between US $ 417 – US $ 430.
Merely because the customs valuation for the Onions falls with in thefloor price fixed by Pakistan Customs for the exportation of onions, thepetitioner cannot be heard to say that Sri Lanka Customs valued theprice of onions based on the floor price of the Pakistan Customs.
In terms of the Customs Ordinance, the price of goods would only beascertained in terms of section 51 and section 52 read with Schedule E
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(2006) 2 Sri L R.
of the Customs Ordinance. The assessment of valuation and the importduty is in accordance with provisions of law.
APPLICATION for a Writ of Certiorari/ Mandamus.
Cases referred to:
Tyre House (Pvt.) Ltd vs. Director General of Customs CA 730/99 – CAM5.6.1996 (distinguished)
Kuruvita Manchester Textile Mills Ltd. and Another vs. Director General ofCustoms 2003 3 SRi LR 158 at 160
Manohara R. de Silva for petitioner,
Ms H. N. B. Fernando DSG for respondent.
Cur.adv.vult.
19th June, 2006.
SRISKANDARAJA J.The Petitioner has been engaged in the business of importation of fooditems for almost a decade. The duty leviable for these items throughouthas been determined on the normal price of the food items, that is theprice which it would fetch at the time of importation on a sale in the openmarket, in March 1999 the Petitioner imported the following consignmentsof onions from Pakistan.
The Petitioner submitted that the normal price of onions in the openmarket at that time was approximately US$ 210 to US$ 250 p.m.t. But
On 05.03.1999 – 25 M/Tons -unit price US$ 255p.m.t. the invoice ismarked as (P1 A),
On 05.03.1999 – 50 M/Tons -unit price US$ 240p.m.t. the invoice ismarked as (P1B),
On 12.03.1999 – 25 M/Tons -unit price US$ 240p.m.t. the invoice ismarked as(P1C),
On 16.03.1999 – 25 M/Tons- unit price US$ 240p.m.t. the invoice ismarked as(P1D),
On 17.03.1999-12.5 M/Tons- unit price US$ 250p.m.t. the invoice ismarked as (P1E),
On 22.03.1999 – 25 M/Tons- unit price US$ 250p.m.t. the invoice ismarked as (P1F),
CA
Expo Lanka Commodities (Pvt.) Ltd. vs.
Director General of Customs (Sriskandarajah, J.)
355
the Respondent assessed the duties payable for the said imports on afloor price of US$ 418 p.m.t. fixed by the Pakistan Customs for the exportof onions from Pakistan by assessment Notice P2A to P2F. The Petitionercontends that the assessment of import duty based on a floor price ofUS$ 418 p.m.t. is unlawful, arbitrary and unreasonable. The Petitioneralso submitted that the Petitioner appealed to the Respondent and theappeal was rejected. The rejection of the appeal is arbitrary, unlawful andunreasonable. For these reasons the petitioner is seeking a writ of certiorarito quash the assessments of import duties referred to in P2A to P2F anda mandamus to direct the Respondent to assess the import duty inaccordance with schedule E of the Customs Ordinance.
The Respondent contends that the invoice price of the onions declaredby the Petitioner in the said consignments did not correspond to the normalprice. The value in relation to the imported goods should be determinedaccording to Schedule E of the Customs Ordinance. This schedule providesthat the value of goods is the normal price fetched at the time of importationon a sale in the open market between the buyer and a seller independentof each other.
The Respondent found that the Petitioner had under invoiced the saidgoods, Therefore the Respondent is entitled to ascertain the normal pricein order to arrive at the value of the said goods and accordingly the sixconsignment of onions in question imported by the Petitioner, during March1999 was adjusted by the Customs. The adjustment was to the effect thatthe quoted price declared by the Petitioner i. e. US$ 240 US$255 to beread as US$ 418 and calculated the import duty based upon the saidvaluation and submitted to Petitioner as P2Ato P2F.
The Petitioner contends that the Respondent relied on a floor pricefixed by the Pakistan Customs which was US$418 (P3) and theRespondent has erroneously considered this price as the normal price.
The Petitioner relied on the judgement of Tyre House (Pvt.) Ltd., vs.Director General of Customs!11 where Dr. Ranaraja, held:
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(2006) 2 Sri L R.
“In 1994 December the respondent decided to determine the value ofimported tyres for the purpose of levying duty by the addition of 10% of theinvoice price to the value of imported tyres. By notice P5 dated 30.03.94the respondent by decision published decided to impose a “Floor Price” inrespect of specific tyres and sizes of tyres, Thereby arbitrarily increasingthe price on such tyres for the purpose of obtaining the “value”in order tolevy import duty.
It is clear from clause*’* that what is intended as the normal price is thevalue the imported goods would fetch in the open market at the time ofimportation, that is not before or after importation but at the time the goodsarrive in the port, (vide clause 2.6). In the circumstances to publish a“Floor price” which would be applicable to goods that will be imported inthe future cannot clearly come within the definition in clause 1.
In view of the finding that P5 has been published by the respondentultra vires his powers”.
The Respondent submitted that in arriving at the normal price theRespondent has taken into consideration the price quoted in the invoiceby import of onions from Pakistan during the same period by the Petitionerand other importers. The Respondent filed the invoices of 21 importersR2(1) to R2(21), according to these invoices the price for a metric ton ofonions imported from Pakistan in March, 1999 ranges from US$ 417 toUS$ 430. The Petitioner himself imported from Pakistan two otherconsignments of onions in January 1999 ; the price of a metric ton wasUS$ 418 and US$ 432 the invoices are marked R3(1) and R3(2). ThePakistan supplier to the Petitioner of the 6 consignments in issue, suppliedother importers in January 1999, the price of these consignments of onionsranged from US$ 452 to US$ 428, the invoices are marked as R4(1) toR4(3). From these findings the Respondent came to the conclusion thatthe normal price of onions imported from Pakistan during the period inissue for a metric ton ranged between US $ 417 to US$ 432. TheRespondent for the purpose of valuation of the Petitioners consignment ofonions considered as the normal price of a metric ton of onions asUS$418.
The price quoted by the Petitioner in the invoices of the 6 consignmentsof onions in question imported during March 1999 was US$240 to US$255.
CA
Expo Lanka Commodities (Pvt.) Ltd. vs.
Director General of Customs (Sriskanc/arajah, J.)
357
As it was less than the normal price the customs adjusted the quotedprice declared by the Petitioner to the normal price to read as US$ 418 inaccordance with the valuation arrived at by the Respondent as statedabove.
The value determined as US$ 418 for a metric ton of onions based onthe normal price for the onions imported from Pakistan at the relevant timetallied with the floor price fixed by the Pakistan Customs for the export ofonions from Pakistan. Merely because the customs valuation for the onionstallies with the floor price fixed by the Pakistan Customs for the exportationof onions, the Petitioner cannot be heard to say that the Sri LankanCustoms valued the price of onions based on the floor price of the PakistanCustoms. The basis on which the “value" was determined in Tyre House(Pvt.) Ltd. Director General of Customs (supra)is different from thedetermination of the value of onions in this case. The value of onions inthis case was determined by ascertaining the market value of onions atthe time the goods arrived in the port.
Kuruwita Manchester Textile Mills Ltd. and Another v Director Generalof Cusoms<2> at 160 Thilakawardenaj (P/CA) held with Wijeyaratne Jagreeing:
“The only matter that is in issue in this case is whether the DirectorGeneral of Customs had correctly assessed the value of these goods andwhether the value placed by the petitioners was an under valuation of thegoods. In terms of the Customs Ordinance the price of goods could onlybe ascertained in terms of section 51 and 52 read with Schedule E of theCustoms Ordinance. These sections read as follows.
Section 51 :
“ In all cases when the duties imposed upon the importation of articlesare charged according to the value thereof, the respective value of eachsuch article shall be stated in the entry together with the description andquantity of the same, and duly affirmed by declaration by the importer orhis agent, and such value shall be determined in accordance with theprovisions of Schedule E, and duties shall be paid on a value shall bedetermined in accordance with the provisions of Schedule E, and dutiesshall be paid on a value so determined.”
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Section 52:
“Where it shall appear to the officers of the Customs that the valuedeclared in respect of any goods is not in accordance with the provisionsof Schedule E, the goods in respect of which such declaration has beenmade shall be forfeited together with the package in which they arecontained. Where such goods are not recoverable, the person makingsuch false declaration shall forfeit-either treble the value of such goodsor be liable to a penalty of two thousand rupees, at the election of theDirector – General”.
In terms of these provisions of the Customs Ordinance the value thathad been placed on these un – exportable goods which were sought to besold in the local market could not be valued merely on the market value ofthese goods but had to consider the input of the imported value that hadbeen placed upon this. This position was based on section 51 where itcategorically and specifically stipulated that “such value shall be determinedin accordance with the provisions of schedule E and duties shall be paidon a value so determined”. So the position of the respondents was thatvalue could not be determined except with reference to Schedule E.Mere non-compliance with such provisions of section 51 would attract theprovisions of section 52 of the Customs Ordinance and date of the forfeitureof such goods which had not been valued in accordance with the provisionsof Schedule E and the law referred to above. For a consideration of ScheduleE, Clause 1 and Clause 2.7 are relevant.
Clause 1 states as follows :
“The value of any imported goods shall be the normal price, that is tosay, the price which they would fetch at the time of importation on a salein the open market between a buyer and a seller independent of eachother as indicated in paragraphs 2.7”.
Claue 2.7 states as follows:
“That a sale in the open market between a buyer and a seller independentof each other presupposes”
In interpreting these provisions it is important to observe that the Customsduty is paid on value and not on costs although it could be observed thatcost is one of the elements of value.
Therefore in terms of the aforesaid Customs Law whereas it is clearthat the respondents are empowered by the aforesaid Customs Ordinance
04
Associated Newspapers of Ceylon Ltd. Vs.
Felicia Karlyakarawana
359
to determine the value of all items with reference to Schedule E, clearlyhad the powers, vested in under the Customs Ordinance to make a decisionregarding the value of the goods that were under their purview.
In these circumstances such powers to determine the value, thepetitioner could not invoke the writ jurisdiction of this Court upon groundsthat the respondents were precluded from determining the value as it wasultra vires their powers’.
The Respondent under the Customs Ordinances is entitled to assessthe valuation of the onions imported and accordingly the Respondent hadassessed the import duty as stated in documents marked P2A to P2Fand as the assessment of valuation and the import duty is in accordancewith the provisions of law this court is not inclined to issue a writ of certiorarito quash these assessments. Therefore this application is dismissedwithout costs.
Application dismissed.