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Petitioner: GOOD LUCK COSMETICS, KARACHI VS Respondent: DEPUTY COLLECTOR OF CUSTOMS
2017 P T D (Trib.) 914 [Customs Appellate Tribunal] Before Tahir Zia, Member (Judicial-II) Messrs GOOD LUCK COSMETICS, KARACHI Versus DEPUTY COLLECTOR OF CUSTOMS and 2 others Customs Appeal No.K-970 of 2015, decided on 30th August, 2016. (a) Customs Act (IV of 1969)--- ----Ss. 2(a), 80, 83, 193, 193-A & 195---Customs Rules, 2001, Rr.438 & 442---S.R.O. No.371(I)/2001, dated 15-6-2001---Assessment of duty---Clearance for home consumption---Procedure in appeal---Powers of Federal Board of Revenue or Collector---After passing of assessment order under S.80 of the Customs Act, 1969 and under R.438 of Customs Rules, 2001 and clearance of goods under S.83 of Customs Act, 1969 and R.442 of Customs Rules, 2001 by adjudicating authority, in exercise of the powers vested upon him through S.R.O. No. 371(I)/2001, dated 15-6-2001; such order could not be disturbed by any authority for the purpose of preparing contravention report and adjudicating proceedings---Only course left for adjudicating authority, was to challenge the said order before the Collector of Customs (Appeals) under S.193 of the Customs Act, 1969---Collector Customs (Appeals), was empowered to incorporate in his order all the apprehensions, misreading of facts and contraventions of the provision of Act/Rules---Collector of Customs, upon receipt of the appeal and going through the facts and grounds, if would think that the contention of the Deputy Collector of Customs, Customs Intelligent Units, seemed to be correct and the duty and taxes had not been either levied or short paid on the basis of the goods already cleared, was empowered to issue show-cause notice to the importer, as expressed in second proviso to subsection (3) of S.193-A of the Customs Act, 1969---Deputy Collector of Customs, in the present case, instead of such prescribed method, reopened the assessment/clearance order under S.195 of the Customs Act, 1969---When the right of appeal had been accorded by the legislature in the provision of S.193 of the Customs Act, 1969, provision of S.195 of the Customs Act, 1969 was not operative and could not be exercised, by the authority defined therein---Act and commission of Deputy Collector of Customs, Customs Intelligence Unit, was in derogation of Ss.193 & 195 of the Customs Act, 1969 and being of no legal effect, was coram non judice. Case-law in referred. (b) Customs Act (IV of 1969)--- ----S. 179---Power of adjudication, exercise of---Scope---Section 179 of the Customs Act, 1969, had expressed, that power of adjudication had to be determined by authority on the basis of "amount of duty and taxes" involved excluding the conveyance---In the present case amount of duty and taxes involved were Rs.3,878,131 (Rs.597,103) were paid upfront, Rs.111,045 were paid as additional duty and taxes upon receipt of view message from adjudicating authority---Rupees 2,832,993 was shown in show-cause notice as evaded amount of duty and taxes---Case involving such amount fell within the powers of Collector of Customs---'Additional Collector, Collectorate of Customs (Adjudication)' in the present case, issued show-cause notice and passed order-in-original, while usurping the powers of his superiors, which was not permitted by law---No body was allowed to usurp the powers of defined authority in the statute---Order passed without powers/jurisdiction, was ab initio, null and void and coram non judice---Exercise of jurisdiction by an authority was mandatory requirement and its non-fulfilment would entail the entire proceedings to be coram non judice. Case-law in referred. (c) Customs Act (IV of 1969)--- ----Ss. 2(a), 80, 83, 193 & 194-A---Customs Rules, 2001, Rr.438 & 442---Notification No.371(I)/2002, dated 15-6-2002---Assessment of duty---Deputy Collector of Customs, (Customs Intelligence Units), in Second conducted examination report, which he termed valid and examination conducted earlier, on the basis of which assessment/ clearance orders under the provisions of Ss.80 & 83 of the Customs Act, 1969 and Rr.438 & 442 of the Customs Rules, 2001 were passed by adjudicating authority, in exercise of the power vested upon him through Notification No.371(I)/2002, dated 15-6-2002, were ignored---Rationale adopted by Deputy Collector of Customs and his subordinates during the course of conduction of second report for determining the quantity differently to the first examination report, was not understandable; as nothing was available in record validating the plea of Deputy Collector of Customs---Assessment made earlier, had to remain in field, unless not reversed by the appropriate authority defined in S.193 of the Customs Act, 1969 or the authority superior to him---Assessment order in field having not been challenged before the Collector of Customs (Appeals), within stipulated period of 30 days, had attained finality and could not be disturbed being past and closed transaction through limitation. Case-law in referred. (d) Customs Act (IV of 1969)--- ----Ss. 32, 80 & 80-A---Constitution of Pakistan, Arts.4 & 25---Mis-declaration---Deputy Collector of Customs and Additional Collector had termed the goods as nut bolts' and assessed in the first examination report and passed the assessment/clearance order as 'motor cycle parts' in the second examination report---No rationale or reasoning had been recorded by the Deputy Collector of Customs for terming the 'nut and bolts' as 'motorcycle parts'---Additional Collector also failed to adduce any reasoning in the order as to how nut bolts were held by him to be specifically meant for motorcycle, in absence of expert opinion of the dealers of motorcycle assembler, or dealers of its parts---Authorities, were of the opinion that since, the importer had not produced any manufacturers' brochure, presumption was that nut bolts imported were deemed to be construed as motorcycle parts---Authority levelling the allegation, had to prove the same; no onus would lie on the importer to prove that imported nut and bolts were not motorcycle parts---Authorities were to prove that the imported nut bolts were in fact not nut bolts, but were motorcycle parts, irrespective of their shape---Opinion and finding of the authorities, were without any substance; due to the fact that motorcycle parts and accessories fell within the ambit of Heading 8714.1020, under which certain components of the motorcycle were listed and those were eighteen in number, in any one of the number nut bolts were not included---Nut bolt imported by the importer had been termed as component of motorcycle by stretching the word component in accordance to the meaning adopted by the authorities for penalizing the importer, despite no fault or default on his part---Nut bolts being not component, same would not fall under PCT Heading 8714.1020, but fell under PCT Heading 73.18---Authorities, needlessly had created an issue on the one hand; while ignoring the specific PCT under which the imported nut bolts fell; on the other hand had dealt the importer differently, inspite of the fact that importer stood on the same pedestal---Said act of authorities would amount to giving a partial and differential treatment---Person placed at the same pedestal, could not be treated differently, as it would constitute negation of Arts.4 & 25 of the Constitution---Detaining of subject consignment for conducting of re-examination and for preparation of contravention report by the Deputy Collector of Customs was without lawful authority and jurisdiction---Issuance of show-cause notice and passing of order-in-original by the Additional Collector were declared to be illegal, null and void and were vacated/set aside---Appeal was allowed as prayed. Case-law in referred. Nadeem Ahmed Mirza, (Consultants) for Appellant. Kaleemullah, A.C. and Javed A.O. for Respondent. Date of hearing: 27th April, 2016. JUDGMENT TAHIR ZIA, (MEMBER JUDICIAL-II).---By this order, I dispose of Customs Appeal No.K-970/2015 filed by the appellant against the Order-in-Original No.368918 dated 25.05.2015, passed by the Additional Collector of Customs (Adjudication-I), Custom House, Karachi (here-in-after to be referred respondent No. 3). 2. Brief facts of the case are the appellant imported a consignment of (i) 224 cartons comprised of 5300 kgs of Glass Beads size 0.12mm & (ii) 1868 kgs of Glass Chitton & (iii) 723 cartons comprised of 16977 kgs of Nuts and Bolts from China. Upon receipt of shipping documents, he transmitted Goods Declaration (here-in- after to be referred as GD) under the provision of Section 79(1) of the Customs Act, 1969 and Rule 433 of Sub-Chapter III of Chapter XXI of Customs Rules, 2001 with the MCC of PMBQ and as per pre-condition deposited upfront duty and taxes on the basis of declaration amounting to Rs. 597,103.00 vide cash No. C-KPPI-001995 on 16.02.2015. consequent to which his GD was numbered as KPPI-HC-41546-16022015. The nominated Appraiser instead of passing the assessment order on the basis of declaration and scanned documents under the provision of Section 80 and Rule 438 ibid, opted to get the goods examined first as expressed in Section 198 to be read with Rule 435 ibid., transmitted the GD to the Deputy Collector of Customs, Group-IV MCC of PMBQ (here-in-after to be referred as respondent No. 1) with his opinion, who approved that and transmitted the GD to the Officials posted at QICT, who after physical examination of the goods uploaded the report reading as "examined goods in the light of GD retrieved through WeBOC System Description: (1A) Glass Beads Size: 0.12mm approx. weight 5300 kgs (1B) Glass Chitton approx. weight 1868 kgs. (2). Nuts and Bolts approx. weight 16977 kgs. I/O Not shown. Check Weight 100% vide QICT Slip No. 2703545 dated 17.02.2015 found weight 25745 kgs . Group to check PCT value and all other aspects. Images are attached." The Appraiser concerned upon appearance of report on his desktop, in order to have clarity in declaration and uploaded report, transmitted view message in terms of Rule 437 for uploading of invoice, packing list and B/L, the appellant uploaded those being mandatory. The Appraiser concerned, thereafter while considering the uploaded documents as part of declaration in terms of section 2(kka) of the Customs Act, 1969 passed assessment order against each item with the remarks reproduced here-in-under as: Item# Description/Qty HS Code U. Price Remarks $/Kg 01. Glass Beads 7018.1000 0.72 Assessed as per ER/data 02. Nuts and Bolts 7318.1900 1.00 Assessed as per ER/data 03. Glass Chitton 7018.1000 1.09 Assessed as per ER/data The system on the strength of the assessment order transmitted view message for payment of duty and taxes of Rs. 444,045.00 against additional amount of duty and taxes, which appellant paid vide cash No. A-KPPI-001624 on 19.02.2015, consequent to which the inbuilt authority in the system passed clearance order under section 83 of the Customs Act, 1969 and Rule 442 of Customs Rules, 2001 and GD was transmitted to Gate staff for check-out. That when the appellant transporter approached the terminal operator after obtaining delivery order from the shipping company, they showed their inability to intimate the charges of terminal and so the delivery due to blocking of GD by the Deputy Collector of Customs, CIU, MCC of PMBQ (here-in-after to be referred as respondent No. 2). The appellant approached him and inquired that as to why his container has been blocked, to his utter surprise, The subordinate of respondent No. 2, informed him that it is opinion of respondent No. 2 and the higher authorities that in the consignment in question that duty and taxes are not being charged/paid correctly, therefore, hold is being placed for re-examination, to which appellant representative tender agitation, but that was ignored and re-examination was carried out and was uploaded in the system, reading as "the container re-examined by CIU Staff, report is as under. This is the case of mis-declaration (1) Glass Beads assorted size 0.4, 0.6, 0.8 and number 12/0 Net Weight 650 kgs and number 14/0 Net Weight 350 kgs., (2) found undeclared during re-examination adhesive plastic chitton/ resins approx net weight 2800 kgs (3) found during re-examination adhesive glass chitton 16/0 approx. net weight 1100 kgs., (4) declared net weights nuts and bolts however during re-examination found assorted motorcycle parts approx net weight 19500 kgs. I/O China and not shown, checked weight 100% vide QICT Slip No. 2703545 dated 17.02.2015. Found weight 25745kgs. Group to check PCT value and all other aspects images are attached." 3. The respondent No.2, on the basis of determination of difference between the two examination reports framed contravention report and transmitted to respondent No. 3 stating inter alia that the appellant as against declared and found in the 1st examination report/ passed assessment/clearance orders dated 19.02.2015 found as (i) Glass Beads assorted size 0.4, 0.6, 0.8 and number 12/0 Net Weight 650 kgs (ii) Glass Beads assorted size number 14/0 Net Weight 350 kgs (iii) adhesive plastic chitton/resins approx net weight 2800 kgs (iv) adhesive plastic chitton/resins number 16/0 approx net weight 1100 kgs (v) assorted motorcycle parts approx net weight 19500 kgs. This proves that the appellant deliberately concealed and mis-declared the actual description, classification and value of the imported goods for causing loss to the exchequer from the leviable duty and taxes amounting to Rs. 2832993.00, attracting the provision of Section 32(1) and (2) of the Customs Act, 1969 punishable under clause (14) of Section 156(1) ibid. and S.R.O. 499(I)/2009 dated 13.06.2009. The respondent No. 3, upon appearance of contravention report in her folder transmitted the same to the appellant with the direction to submit explanation to the leveled charges and to attend the hearing. The appellant consultant submitted the reply vide dated 19.03.2015 and through which the charges leveled in the show cause notice were denied in totality and respondent No. 3 was asked to vacate the show cause notice. Inspite of the said fact, the respondent No. 2 lodged FIR dated 20.03.2015 on the basis of allegation spelled out in the show cause notice. The appellant sensing the intention of the respondent No. 2 filed Suit No. 471/2015 for release of the goods. The Hon'ble High Court of Sindh allowed the same through order dated 26.03.2015 that the amount of differential duty and taxes as calculated by the respondent No. 2 be deposited with the Nazir of the High Court. The appellant approached respondent No. 2 after having NOC and certificate of the Nazir for release of the goods, the respondent No. 2 refused to release the goods on the plea that unless the appellant submits a post dated cheque equivalent to fine and penalty anticipated to be imposed by the respondent No. 3 in the order-in-original. Resultant, appellant filed contempt application with the Hon'ble High Court of Sindh, on which order dated 24.04.2015 was passed in these words "in case orders are not complied with the same may be treated as a contempt of court." The respondent No. 2, released the goods, whereas respondent No. 3 passed order dated 25.05.2015 against the appellant, operative part of the order is reproduced as under:-- "I have gone through the case record and considered written/ verbal arguments of the counsel of the respondent and department. As per record the respondent imported a consignment declared to contain (i) Glass Beads Qty: 224 Ctns and (ii) Nuts and Bolts Qty: 723 Ctns. On examination the goods were found to be (i) Glass Beads 0.4, 0.6, 0.8 and No.12/0 net weight 650 kgs (ii) Glass Beads No.14/0 net weight 350 kgs (iii) Adhesive Plastic Chittons/resins net weight 2,800 kgs (iv) Adhesive Glass Chittons 16/0 net weight 1,100kgs (v) Assorted Motorcycle parts net weight 19,500 kgs. During the course of hearing the respondent argued that item No.(iii) is made of 'Glass' and not of 'Plastic', therefore, in order to verify actual description of goods representative samples were forwarded to Custom House Laboratory for test. The lab test report has confirmed that the samples were found to be of 'Plastic', which clearly proves that the contention of the respondent with respect to (undeclared) item No.iii i.e. 'Adhesive Plastic Chittons/resins' was not correct. The argument of' respondent with regard to item No. iv that the imported goods are 'Nuts and Bolts' and not parts specially meant for Motorcycles and of general use, classifiable under PCT heading 73.18 instead of 87.14. The respondent could not produce any manufacturer's catalogue/broacher in support of his claim that goods are not Motorcycle parts. I have seen/examined samples of the impugned goods which are clearly identifiable 'cable parts' meant for Motorcycle. The Department has correctly applied the Valuation Ruling in terms of Section 25-A(2) read with section 25-A(A) of the Customs Act, 1969 for assessment and appropriately classified the goods under PCT Heading 8714.1020. It is pertinent to mention that in terms of section 79(1) of the Customs Act, 1969 the importer is required to file true and complete declaration of goods, giving therein complete and correct particulars of such goods, duly supported by commercial invoice, bill of lading, packing list or any other document required for clearance of such goods. The respondent could not fulfill his legal obligation for correct declaration of imported goods i.e. 'Adhesive Plastic Chittons/resins' and 'Motorcycle parts'. It is evident that the respondent has mis-declared/concealed the actual description, classification and value of the imported goods in order to get the assessment on suppressed value to evade legitimate Government revenue amounting to Rs.2832,993/-. In view of the above, the charges levelled in the Show Cause Notice stand established. I, therefore, order for confiscation of the offending goods under section 156(1) clause 14, read with section 32 (1) &(2) of the Customs Act, 1969. However, an option under Section 181 of the Customs Act, 1969 is given to the importer to redeem the confiscated goods on payment of 35% Redemption Fine Rs.1,143,034/- (Rupees One million one hundred forty three thousand and thirty four) of the value of offending goods (as determined by the department) in terms of S.R.O. 499(I)/2009 dated 13.06.2009 in addition to payment of duty and taxes chargeable thereon. I impose a penalty of Rs.100,000/- (Rupees one hundred thousand) on the importer for violation of above mentioned provisions of law." 4. Being aggrieved and dissatisfied with the above Order-in-Original, the appellant has filed instant appeal before this Tribunal on the grounds which are reproduced as under:-- (i) That the respondent No. 2 was not empowered to stop the delivery of the consignment, which has undergone the process of examination, passing of assessment order under section 80 of the Customs Act, 1969 and Rule 438 of sub-chapter III of Chapter XXI of the Customs Rules, 2001 and clearance order by the competent authority under section 83 and Rule 442 ibid. after out of charge of the goods in the system the respondent No. 2 became functus officio as held by the Hon'ble High Court of Sindh in reported judgment 2008 PTD 1968 M/s. Sikander Enterprises v. Central Excise and Sales Tax Tribunal Karachi. Their lordship of the High Court held "Even otherwise after clearance of the goods and removal of consignment from the Custom Area,, Customs Authority were functus officio to reopen the case again it had become past and closed transaction-" (ii) 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 under Section 193 of the Customs Act, 1969 before Collector of Customs (Appeals) and the Respondents Nos.1 and 2 are empowered to do so. If they had any reservation against the passed assessment orders dated 18.02.2015. 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 by the competent authority defined in section 2(a) became final and that cannot be disturbed by any authority. To the contrary, the officials of Respondent No.2 detained, seized the goods which is not permitted under law. (iii) That upon filing of the appeal by the Respondent No.1 or 2, before the Collector of Customs Appeals under section 193 of the Customs Act, 1969 emanating the facts of the case and the relevant provision of law. Upon receipt of appeal in his office, it is mandated on the Collector of Customs, Appeals to go through the fact and ground of the appeal and thereafter if he thinks fit that in the case under adjudication correct duty and taxes has not been either not levied or short paid on the basis of found goods, is empowered to issue a show cause notice under section 32 of the Customs Act, 1969 to the respondent in the appeal so filed after receipt of reply to the said notice the Collector of Customs will decide the appeal in the light of the issued show cause notice and reply. In the instant case no appeal has been filed by either respondent No. 1 or 2 despite mandated under law and respondent No. 3 issued show cause notice and passed order-in-original while reopening the assessment order passed by the competent authority while exercising the powers of the authority expressed in Section 195 of the Customs Act, 1969. Neither of the respondents are empowered to reopen the orders. Both acted without power/jurisdiction, hence their action is without any lawful authority and as such ab initio, null and void as held by Superior Judicial Foras in umpteenth reported judgments e.g. 2014 PTD 1256 M/s. Paramount International (Pvt.) Ltd. v. FOP and others. (iv) That in the case under consideration in spite of lodging FIR no notice under sections 168(1) and 171 has been served on the appellant in spite mandated under law as no confiscation can be ordered in the absence of serving of mandated notices. Even otherwise it is a settled proposition of law that non serving the notice render the whole proceeding infested from legal infirmity and as such of no legal effect as held by Superior Judicial Fora in umpteenth reported judgment e.g. PTCL 1994 CL 22, 1983 PCr.LJ 620, 1983 PCr.LJ 623, 1983 CLC 786, PTCL 1983 CL 47, 1987 PCr.LJ 1413, PTCL 1987 CL 328, 2004 PCr.LJ 1958. (v) The expression of section 179 of the Customs Act, 1969 is very clear in regards to determination of Adjudicating Authority on the basis of "amount of duty and taxes involved excluding the conveyance." Not "amount of evaded duty and taxes". Which are Rs.597,103.00 paid upfront on 16.02.2015 + paid Rs.444,045.00 on 19.02.2015 in compliance of view message dated 18.02.2015 + the shown evaded amount of Rs.2,832,993.00 in the show cause notice). Meaning thereby that the involved amounts of duty and taxes is Rs.3,874,131.00 in appellant case and the competent authority to adjudicate the said case under clause (i) of section 179 (1) is Collector. To the contrary, respondent No. 3 issued the show cause notice and passed order-in-original while usurping the powers of the Superior, which is not permitted under law. Rendering both suffers from lack of powers/jurisdiction, hence, ab initio null and void and coram non judice as held in Order in Sales Tax Appeal No. 444/03, S.T.A. 465/07 and judgments reported at PLD 1971 SC 184, PLD 1976 Supreme Court 514, 1992 ALD 449, 2004 PTD 624, PLD 2004 Supreme Court 600, PLD 2005 Supreme Court 842, 2009 PTD 1112, 2010 PTD 465 and 2010 PTD (Trib.) 1636. (vi) That the respondent No. 3 in the show-cause notice has invoked subsection (2) of section 32 of the Customs Act, 1969, in the absence of any mis-declaration in material particular, or "deliberate act" of the appellant as evident from the 1st examination report, assessment order and the second examination report, wherein the goods declared were found in accordance with their generic name, quantity, weight and PCT, or even connivance with the official of the Customs in getting the goods examined in accordance to his requirements and so the completion of assessment dated 18.02.2015, stood validated from the fact that neither examining officials nor the assessing officer have been charged for any wrong doing as alleged. By virtue of the said fact, the respondents Nos. 1 and 2 confirmed in categorical terms that section 32(2) is not applicable. Therefore, the case of the appellant squarely falls within the ambit of inadvertence, error and mis-construction falling under the provision of section 32 (3) of the Customs Act, 1969. The power to adjudicate cases under the provision of Section 32(3) rest with the Principal Appraiser in terms of S.R.O. 371(I)/2002 dated 15.06.2002 (Exhibit "T") and none else. To the…
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