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Petitioner: Messrs FRIENDS, LAHORE VS Respondent: DEPUTY COLLECTOR OF CUSTOMS (GROUP-VI)
Court Name: Customs Appellate Tribunal Judge(s): Muhammad Nazim Saleem Title:Messrs FRIENDS, LAHORE vs DEPUTY COLLECTOR OF CUSTOMS (GROUP-VI),
JUDGMENT
Reported As: 2018 PTD (Trib.) 1648 Result: Appeal allowed Judgment JUDGMENT MUHAMMAD NAZIM SALEEM, MEMBER (TECHNICAL-II)--This Judgment disposes of Customs Appeal No,K-1786/ 2015 filed by the Appellant against Order-in-Appeal No,10778/2015 dated 16.11.2015 passed by the Collector of Customs (Appeals), Karachi. 2. Brief facts of the case as reported in the impugned order-inappeal, are that the Appellant imported a consignment of "Upper Connecting Plate and Light Bracket Set Spare Parts for Motorcycle" and filed Goods Declaration bearing machine No,KCSI-HC-134056 dated 03.04.2013 and declared the unit value as US$ 0.90/K.G whereas the same was correctly assessable at the unit value of US$ 1.20/K.G. 3. On an Appeal filed by the Appellant against the assessment of goods finalized vide Goods Declaration No,KCSI-HC-134056 03-04-2013, by the Model Customs Collectorate of Appraisement- East, Custom House, Karachi, the Collector of Customs (Appeals), Karachi vide Order-in-Appeal No,10778/2015 dated-16.11.2015, passed the following order:- "I have examined the case record. It is evident that goods were re-assessed while the goods were still under customs charge and the Goods Declaration was being checked in terms of section 80 of the Customs Act. 1969. As such it was not past and closed transaction. There are no grounds to interfere. The appeal being without merit is rejected." 4. Feeling aggrieved and dissatisfied with the above order, the Appellant filed and Appeal before this Tribunal on the following grounds:- (i) That the appeal before respondent No,2 was filed on 16.05.2013 and order under subsection (3) of section 193A ibid has to be passed within 120 days i,e, 13.09.2013 or within further extended period
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of 90 days in terms of its proviso i,e, 12.12.2013 by the respondent No, 2, upon availability of exceptional circumstances and recording of those. In the instant case no extension was given by the respondent No, 2 prior to expiry of 13.09.2013 as evident from the Order-in-Appeal. In derogation of subsection (3) of section 193 A of the Customs Act, 1969, he passed order on 16.11.2015, rendering it barred by time by 794 days. Hence, it is not enforceable and so the reassessment order dated 17.04.2013 under law as held in reported judgments 2008 PTD 60 M/s. Super Asia Muhammad Din Sons (Pvt) Ltd v. Collector of Sales Tax, Gujranwala and 2008 PTD 578 M/s. Hanif Strawboard Factory v. Additional Collector (Adjudication) Customs, Sales Tax and Central Excise Gujranwala, 2009 PTD 762 M/s. Tan veer Weaving Mills v. Deputy Collector Sales Tax and 4 others 2009 PTD (Trib.) 1263, M/s. Syed Bhai Lighting Limited, Lahore v. Collector of Sales Tax and Federal Excise, Lahore and 2 others 2009 PM 1978, Leo Enterprises v. President of Pakistan and others 2011 PTD (Trib.) 79, 2011 PTD (Trib.) 987 and 2011 PTD (Trib.) 1010. (ii) The Directorate General, Post Clearance Audit has been delegated power by the FBR to conduct audit after clearance of the goods under the provision of sections 26A, 26B, 32 and 32(3A) of the Customs Act, 1969 read with Notification No, 500(1)/2009 dated 13.06.2009 and to issue audit observation and thereafter prepare contravention report for the purpose of adjudication by the competent authority empowered under the provision of Section 179 of the Customs Act, 1969. That figures in the provision of Section 3DD of the Act and neither in the Notification No, 500(1)12009 dated 13.06.2009, hence both acted in transgression of the powers vested with the DG PCA, hence without power jurisdiction, and as such of no legal effect, hence Void ab initio coram non Judice as held in umpteenth reported judgments of the superior judicial fora referred penultimate grounds. (iii)That on conclusion of transaction, under the provision of sections 80 and 83 of the Customs Act, 1969 and Rules 438 and 442 of Customs Rules, 2001, the order so passed under the said provision of the Act become appealable and can be assailed before Collector of Customs (Appeals) under section 193 of the Customs Act, 1969 and the respondent No, 1 & DC (R&D) are empowered under the said Section. If they had any reservation against the passed assessment orders, the appropriate course of action was to assail the said orders before the Collector of Customs Appeals. Which had not been done within the stipulated period and order so passed on 08.04.2013 by the competent authority defined in Section 2(a) under section 80 of the Customs Act, 1969 and that cannot be disturbed by any authority. To the contrary, the respondent No, 1 reassessed the goods under subsection (3) of the Customs Act, 1969 in the absence of any action prescribed in subsection (2) and mis-declaration or false documents, rendering the reassessment void and nullity to law. (iv)That reassessm ent under subsection (3) of Section 80 of the Customs Act, 1969 is permitted after calling for the documents as expressed in section (2) ibid after release of the goods and the declaration or documents or any information or statement so furnished is found to be incorrect in respect of earlier assessm ent. In the absence of availability of any mis-declaration, misstatement false documents/statement, reassessment is not permitted. As evident from the reassessment orders, which is silent in this regard confirming that no mis-declaration in regards to any aspect i,e, declaration, documents, information or statement has been made by the appellant, rendering the assessm ent so made by the respondent No, 1 is nullity to the provision of section 80 of the Customs Act, 1969. Hence, null and void ab-initio. (v) The respondent No, 1 has not mentioned any reason or cause in the assessment note with the exception of referring a file of R&D, which has no power to dictate any authority equivalent to it, to reassess any goods declaration after passing of assessment/clearance order. In the light of the remarks it is apparent that the case in question is of error, omission or misconstruction and inadvertence against which recovery has been raised, which falls within the ambit of Section 32(3) of the Customs Act, 1969.
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(vi)That prior to passing an order for recovery of short paid amount of duty and charge under the provision of Section 32(3) it is prerequisite to issue a show-cause notice under the provision of Section 180 of the Act by the authority defined in Section 179 ibid because the main objective of show-cause notices is that the person to whom the notice is given is enable to fully know what are the charges levelled against him." It is mandated to issue show-cause notice under section 180 of the Customs Act, 1969. Even otherwise in cases where request for summary adjudication is made, in the words of Customs, Excise and Sales Tax Appellate Tribunal, Peshawar recorded in his judgment reported as 2004 PTD (Trib.) 1324. (vii) That irrespective of the above illegality, it is imperative for the appellant to add further that the assessm ent order passed through which demand was raised by the respondent under the provision of Section 32(3) of the Customs Act, 1969 as evident from assessment note. The respondent No, 1 has no power under section '32(3) ibid, instead the authority enjoying the powers under this section is Principal Appraiser as evident from Notification SRO No,371(I)/2002 dated 15.06.2002. Meaning thereby that he is the only authority to proceed in the matter instead of respondent because it is settled elementary principle of law that action of executive functionaries are to be restricted to specific sphere permitted by the statute. In SRO 371(1)/2002 dated 15.06.2002 respondent figure no where rendering the assessment order as ah-initio and void. If the opinion oftenly adopted by the authorities that Superior Authorities can exercise the powers of their subordinate under section 4 of the Customs Act, 1969 is considered valid for a while then the hierarchy of distribution of jurisdiction explicitly provided by section 179 of the Act and SRO 371(1)/2002 dated 15.06.2002, shall be rendered redundant. Also the consequent result would be a total anarchy where the superior officers would be making all efforts to exercise the adjudication powers clearly conferred by law upon their subordinates. The powers of adjudication are specific and empowered by the statute. It is an elementary principle of law that where there is a conflict between special and general provision of law, the special provision shall prevails (reference is invited to the case of Lt. -General (Retd) Shah Raft Alam v. Lahore Race Club (2004 CLD 373). The power of adjudication, as already observed, is special in nature. This cannot be eclipsed by any other general provision. Even otherwise there is another settled principal of interpretation of statute i,e, that the courts can supply construction with a view to avoiding absurdity (reference is invited to the case of Khalid Qureshi v. UBL (2001 SCMR 103). Equally it must be kept in mind that if it is held that sections 4 and 179 occupy the same fields, there is likely to be redundancy in respect of powers conferred under section 179 and S.R.O. 371(1)/2002 dated 15.06.2002. The Supreme Court in the case of East West Steamship v. Queen land Insurance PLD 1963 SC 663 has been pleased to hold that redundancy is to be avoided in respect of any provision of the statute. There is also plethora of cases law on the point that where there is a conflict between two provision of the statutes, the later provision prevails and has to be given precedents (reference is invited to the case of Sahibzada Sharfuddin v. Town Committee, 1984 CLC 1517. Apart from this law favours actions of the authorities to be confined to their own spares of jurisdiction conferred by the statute. An action taken by a state functionary beyond the ambit of his jurisdiction is nullity. In this respect the judgment reported as Abida Rashid v. Secretary, Government of Sindh PLD 1995 Kar. 587 is referred. (viii) That while dealing with the powers of adjudication, it is needless to observe, that our Supreme Court has jealously guarded the same. In Assistant Director v. B.R. Herman Mohata Ltd. PLD 1992 SC 485 a full bench of Supreme Court was pleased to observe that section 223 of the Customs Act, 1969 could not be employed so as to interfere with the judicial or quasi judicial functionaries. It was clearly observed that the power of the CBR as to prescribed guideline were not relevant for the exercise of judicial function. To similar effect is the judgment of Supreme Court reported as Central Insurance v. CBR 1993 SCMR 1232. In this case the CBR issued direction for the reopening of Income
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tax Assessm ent under section 65 of the Income Tax Ordinance, 1979. It was held by the Supreme Court that the CBR did not figure in the hierarchy of the officer provided in the statute for the purpose of assessm ent and adjudication. On the basis of this it was held that the directions of the CBR to reopen the assessm ent was without jurisdiction and the adjudication officer was directed to apply its own mind. Reliance is placed on the order of the Tribunal in S.T. Appeal No, 176/2007 M/s. Muller and Phipps Pakistan (Pvt.) Ltd. v. The Collector of Sales Tax Enforcement LTU, Karachi and 2011 PTD (Trib.) 2114 Collector of Customs, Peshawar v. Collector of Customs (Appeals) Peshawar and 2011 PTD (Trib.) 2557 M/s. Wawa Garments Industries (Pvt.) Ltd. v. The Additional Collector of Customs, Export, Karachi. (ix)That the respondent No,1 is even not designated an "Officer of Inland Revenue", under the provision of clause (c) of subsection (3) of section 25 of the Sales Tax Act, 1990 and section 120 of the Income Tax Ordinance, 2001 and as such is not empowered to pass any order in respect of matter relating to Sales Tax and Income Tax under the provision of Section 11 of the Sales Tax Act, 1990 and Section 162(1) of Income Tax Ordinance, 2001. Hence, by passing reassessment order for the purpose of short recovery of Sales Tax and Income Tax in the instant case deems to usurpation of the powers of "Officer of Inland Revenue" to which the respondent is not vested with, rendering the reassessm ent order without power/jurisdiction, hence void and ab initio and coram non judice as held in reported judgment Major Syed Walayat Shah v. Muzaffar Khan and 2 others (PLD 1971 SC 184), Omer and Company v. Controller of Customs, (Valuation) (1992 ALD 449(1), Karachi AAA Steel Mills Ltd. v. Collector of Sales Tax and Central Excise Collectorate of Sales Tax (2004 PTD 624), PLD 1976 Supreme Court 514 All Muhammad v. Hussain Buksh and others and PLD 2001 Supreme Court 514 Land Acquisition Collector, Noshehra and others v. Sarfraz Khan and others, 2006 PTD 2237 Pak Suzuki Motors Company Ltd, Karachi v. Collector of Customs, Karachi, 2009 PTD (Trib.) 1996 and 2010 PTD (Trib.) 832. (x) That the consignment in question had undergone the procedure of clearance as evident from the fact that the appropriate officer in the capacity of adjudicating authority defined in Section 2(a) of the Customs Act, 1969 in exercise of the powers vested upon him under Section 80 and Rule 438 of Sub-Chapter-III of Chapter-XXI of Customs Rules, 2001, passed that for levy of duty and taxes, which were paid by the appellant, consequent to which the authority defined in Section 83 of the Customs Act, 1969 passed Clearance Order. The respondent No, 1 in the presence of existing order passed yet another assessme nt order after reopening the case under Section 195 of the Customs Act, 1969 powers under which only vest with Board or Collector. Both usurped the powers not vested with them rendering the preparation of contravention report, show-cause notice and the impugned order-in-original without power/jurisdiction , hence void and ab initio and as such coram non judice and this stood validated from the reported judgment M/s. Smith Kline French v. Pakistan reported as 2004 PTD 3020 held that "once an order is passed, which attains finality, the same cannot be subject to a show-cause notice again, considering that no appeal or revision is filed against the first order. This was held by the learned High Court to be in derogation of the principles of administration of justice" and 2014 PTD 1256 M/s. Paramount International (Pvt.) Ltd. v. FOP and another in which it has been held that "1st order in original passed in the subject matter was an appealable order for both the parties therefore option to reopen an order passed under the adjudicating hierarchy was not available to the Collector, --- Even the Collector of Customs Adjudication could not over see or exercise any right of reopening of an order, which has been passed by an officer lower in rank but acting as an adjudicating authority. Impugned order was set aside." The cases referred are squarely applicable on the appellant case. (xi)That it is also imperative to add further that assessment orders in the subject case have been passed by the competent authority on 08.04.2013 and the appeal against which could had been filed by the respondent No, 1 or DC (R&D) on or before 07.05.2013 but had not filed and passed
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assessm ent order attained finality and became closed and past transaction and cannot be disturbed or reopened by any authority or court as held in reported judgment 1989 MLD 4310 M/s. World Trade Corporation v. Central Board of Revenue that "if the, order has attained finality through limitation. A fortiori; the Central Board of Revenue could not open up an order that had attained finality under the Sea Customs Act, 1878, and against which suo motu revision lay under the Act" and 2004 PTD 3020 Glaxo Smith Kline Pakistan Ltd, Karachi v. Collector of Customs, Sales Tax Central Excise, Karachi "that department could not re-agitate which had been decided against him -- said order could be assailed in appeal or revisional proceedings, which in the present case were not initiated and therefore the same held the field and in the presence of earlier order another order contrary to the said earlier order could not be allowed hold the field for the simple reason that two contrary orders could not exists at one and a same time --- in the light of the settled law the initial assessment order attain finality by virtue of expiry of stipulated period expressed in subsection (2) and as such hold field and no subsequent order on these to be allowed to be pile upon these as this is not permitted beside tantamount to double jeopardy barred under Article 13 of Constitution of Islamic Republic of Pakistan. (xii) That the respondent No, 1 and DC (R&D) failed to abide the provision of law that if the assessm ent has been made on the basis of Valuation Ruling issued by Director Valuation, under the Provision of Section 25A of the Customs Act, 1969 or with the application of lowest value in terms of clause (d) of section 25 of the Customs Act, 1969 and Chapter-XI of Customs Rules, 2001 of the data maintained under Rule 110 of the period given in Rule 107(a) by the officer passing the earlier assessm ent order at the time of clearance of the goods is valid and that cannot be disturbed on any pretext including that the proper Serial No, of Valuation Ruling was not applied or wrong Valuation Ruling has been applied or a non existent Valuation Ruling as the same has been declared as ab-initio void and of no legal effect by the Hon'ble High Court and Appellate Tribunal or relevant data of higher side is not applied (as the same is nullity to law" i,e, clause (d) of Section 25(5) & (6) of the Customs Act, 1969 and Rules 117 and 118 of Chapter IX of Customs Rules, 2001 as held by High Court of Sindh in its reported judgment 2008 PTD 1968 M/s. Sikander Enterprises v. Central Excise and Sales Tax Tribunal Karachi. (xiii) That irrespective of above grounds, it is of vital importance for the appellants to add further that no amendment is permitted in the Goods Declaration after clearance of the goods from the Terminal or once Custom Reference Number is allotted to Goods Declaration under Section 29 of the Customs Act, 1969 and amended the Goods Declaration under section 205 of the Customs Act, 1969 and it is of vital important to visit and understand the Constitutional and legislature construct of Section 29 containing expression "restriction on amendment of goods declaration". (xiv) The rational construction of the above expression is that no amendment under section 205 of the Customs Act, 1969 is allowed in the column of the declared value, quantity or description after removal of the goods from the customs area or the Customs Reference Number is allotted to the goods declaration electronically. A cap has been laid on the importer for obtaining amendment post filing of Goods Declaration and after clearance of the goods. Similarly, the word "assessed for duty" used in the expression lays restriction on the Customs not to amend itself the contents of Goods Declaration after clearance under Section 83 of Customs Act, 1969 and Rule 442 of the Customs Rules, 2001 on the strength of valid assessment order for levy and duty and taxes by the appropriate authority under Section 80 and Rule 438 ibid and Notification No, 371(1)/2002 dated 15.06.2002. That while making reassessment of the appellant's Goods Declaration after clearance of the goods the respondent No, 1 infact amended the Goods Declaration under Section 205 of the Customs Act, 1969 which is in derogation of Section 29 and as such not valid because it is void and nullity to law and fail the test of judicial scrutiny. (xv) That it is settled proposition, of law that a thing should be done as it is required to be done or
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not at all as held by Superior Court of Pakistan in umpteenth reported judgements. The Hon'ble High Court of Sindh held in 2002 PTD 2457 that "the thing should be done as they are required to be done, or not at all". Whereas, the Apex Court held in judgment PLD 1971 Supreme Court 61 "neglect of plane requirement of an absolute statutory enactment prescribing how something is to be done would invalidate thing being done in some other manner". In PLD 1973 SC 236 "it is now well established that where an inferior Tribunal or Court has acted wholly without jurisdiction or taken any action "beyond the sphere allotted to the Tribunal by law and therefore outside the area within which law recognizes a privilege to err" then such action amounts to a "usurpation of power warranted by law" and as such an act is a nullity that is to say the result of a purported exercise of authority which has no legal effect whatsoever" in such a case, it is well established that a Superior Court is not bound to give effect to it." The said ratio was maintained, in the case of E.A. Avans reported as PLD 1964 SC 536 "where it has been unambiguously and categorically held that if the doing of a thing is made lawful in a manner than doing of that thing in conflict with the manner prescribed will be unlawful." The Hon'ble Apex Court in 2001 SCMR 838 and 2003 SCMR 1505 held that "while considering the impact of violation or non-observance of the method prescribed by law for doing an act in a particular manner or mode, such provision of law is to be followed in letter and spirit and achieving or attaining the objective of performing or doing of a thing in a manner other than provided by law would not be permitted. The same observation has been made by the Hon'ble Supreme Court of Pakistan in the Civil Petition filed by Director General of Intelligence and Investigation and others v. M/s. Al-Faiz Industries (Pvt) Ltd and others reported as 2006 SCMR 129 "if the law had prescribed method for doing of a thing in a particular manner, such provision of law is to be followed in letter and spirit and achieving or attaining the objective of performing or doing of a thing in a manner other than provided by law would not be permitted". The super structure built on such foundation no matter how strong it is has to fall. Refer to PLD 1996 Karachi 68, which laid down that "where the initial order or notice was void all subsequent proceedings, orders or super structure built on it were also void. In reported judgment 2006 PTD 978 it is held that "the entire proceeding initiated by the Adjudicating authority and further super structure thereon including the order passed by the learned Tribunal are without jurisdiction void and in-operative." The Apex Court in PLD 1971 Supreme Court 184 held that "order of a Tribunal found to be without jurisdiction all successive orders based upon it illegal and liable to be quashed". In the light of law laid down, the reassessm ent orders transmitted by respondent No, 1 on the direction of respondent No, 2 are ab initio, illegal and void and needs to be struck down as of no legal effect. It is therefore prayed that the Appellate Tribunal may please order/ declare as: The act and commission of respondent Nos, 1 and 2 and the impugned reassessment orders and view message dated 17.04.2013 and Order-in-Appeal dated 16.11.2015 are as unmindful, whimsical without power/jurisdiction. Hence void and ab-initio. 5. The Respondent Department has submitted counter-objections/ para-wise comments on the Memo of Appeal filed by the Appellant in terms of section 194A(4) of the Customs Act, 1969, which are reproduced as under:-- (i) That considering the Section 25-A(2) of the Act, the answering respondents are required to charge the duties and taxes as per customs values determined by the Director (Valuation) in terms of Section 25-A(1) of the Act, the judgment cited by the appellant are not relevant in the instant case, therefore the contents of the Grounds (i) of the appeal are incorrect, hence, vehemently denied. (ii) That in the light of submission made above, the content of para (ii) of the grounds of the appeal is incorrect hence, denied. (iii)That in the light of submission made above, the content of para (ii) of the grounds of the appeal is incorrect hence, denied.
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(iv)That in the light of submissions made above and considering the provisions of Section 25-A of the Act, the contents of para (iv) of Grounds of the appeal are incorrect, hence, denied. (v)That in the light of submission made above, the content of para (v) of the grounds of the appeal is incorrect hence, denied. (vi)That in the light of submission made above, the content of para (vi) of the grounds of the appeal is incorrect hence, denied. (vii) That in the light of submissions made above and considering that the Valuation Rules (Chapter-IX) have been issued in 2001 for Section 25 are not applicable on section 25-A(2) of the Act, which was promulgated in the year 2006, the contents of para (vii) of Grounds of the appeal require…
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