KARACHI, June 25: The Sindh High Court has set aside a demand of Rs 57.635 million in customs duty and sales tax from an importer and laid down the principle for regulating trade count given by a foreign supplier to a ‘related’ or ‘associated’ concern in Pakistan.

A progressive automobile manufacturer imported 11,280 CKD components from their principals in Japan, with whom the manufacturer also had a joint venture, from August 1999 to September 2000. The kits were supplied at a discounted price and an assistant collector for import processing at Bin Qasim Port issued a demand for Rs 57.635 million payable in customs duty and sales tax in August 2002, two years after the release of the consignment. The demand was upheld by the customs collector for appeals and the customs, excise and sales tax appellate tribunal and the importer approached the SHC to assail it.

Appearing for the appellant, Advocate Aziz A Shaikh argued that the discount was allowed because the transaction involved the import of a large number of vehicles in CKD condition. It was allowed through an agreement between the appellant company and its principals in Japan as the importer was a progressive motor vehicle manufacturer and there was no other importer in the same category in Pakistan. Comparison could be made only among identical things.

The counsel also spoke about jurisdiction of the assistant collector and referred to a notification empowering officers of the customs valuation department to adjudicate post-import value and pass an order in respect of the short-levied amount. The impost processing officer had no power to determine the value of imported goods and make the demand, he contended.

An appellate bench comprising Justices M. Mujibullah Siddiqui and Syed Zawwar Hussain Jaffery, citing the relevant provisions of the Customs Act, held by a detailed judgment on Friday that the appellant was entitled to claim the discount and reduce the same for the purpose of declaring customs valuation. The appellant has fully demonstrated that the circumstances surrounding the sale of the imported goods were such that the discount allowed by the exporter could not be treated as ‘outcome of influence caused by relationship’ but an instance of commercial expediency. The quantum and level of the import made by the appellant cannot be compared with any other importer in the country, the judgment declared.

As for the issue of jurisdiction, the bench observed that the customs general order of 2002 was very clear and fully supported the argument advanced by the appellant’s counsel.