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Petitioner: Messrs ABDUL AZIZ AND BROTHERS, KARACHI VS Respondent: DIRECTORATE GENERAL l&I and 2 others
Court Name: Customs Appellate Tribunal Judge(s): Muhammad Yahya Title:Messrs ABDUL AZIZ AND BROTHERS, KARACHI vs DIRECTORATE GENERAL l&I
and 2 others Case No.: Customs Appeal No.K-03 of 2015 Date of Judgment:2015-06-26 Reported As: 2016 PT D (Trib.) 925 Result: Appeal accepted Judgment ORDER MOHAMMAD YAHYA, MEMBER (TECHNICAL-I).---By this order I intend to dispose of the Customs Appeal No. K-03/2015 filed, under Section 194-A of the Customs Act, 1969, by Messrs Abdul Aziz and Brothers, Karachi against the impugned Order-in-Original No.199/2014-15 dated 07.11.2014 passed by the Additional Collector of Customs (Adjudication-I), Karachi. 2. Brief facts of the case as reported in Show Cause Notice No.ADJ-I/ADC/DIT/18/2013-14 dated (sic).05.2014 are that it has been reported by Directorate General of Intelligence and Investigation- FBR, Regional Office, Karachi that on 21.04.2014 the staff of Directorate intercepted a container No.YMLU-8165248(40') at Kohinoor Electronic Centre, Abdullah Haroon Road, Karachi imported by M/s. Abdul Aziz & Brothers (NTN: 3099660), which was cleared through MCC Appraisement (West), Karachi against GD No.KAPW-HC-134035-15042014. The container was brought to office of Directorate General, Intelligence and Investigation-FBR, for detailed examination. 3. Whereas, the container was examined on 23.04.2014 in presence of the importer and witnesses. On examination the goods were found grossly mis-declared as per detailed inventory and representative samples of found items were drawn. In order to ascertain correct HS Codes and assessable value of the found items, the representative samples and inventory of goods was forwarded to MCC Appraisement (West), Karachi. Based on the applicable HS Codes and values provided by the Collectorate, the total assessable value has been worked out to Rs.10,215,797/- against Rs.5,034,013/- assessed by the Collectorate. The total short-levied/evaded amount of duty/taxes has been worked out to Rs.2,512,824/- (CD Rs.896,106/-, ST/AST Rs.1,215,577/-, IT
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Rs.401,141/-) which is recoverable from the importer. The goods have been seized on 29.04.2014 under Section 168(1) of the Customs Act, 1969 after completion of legal formalities. 4. Whereas, Messrs Abdul Aziz and Brothers by clearing consignment of mobile accessories etc. Through mis-declaration of description, HS Code, quantity and value evading government's legitimate revenue of Rs.2,512,824/- have committed offence of misdeclaration and evasion of taxes under Sections 32(1) and (2), 25A, 79 and 80 of the Customs Act, 1969, read with Sections 3, 6, 33, 34 and 36 of the Sales Tax Act, 1990, and Section 148(1) of the Income Tax Ordinance, 2001, punishable under clause (14) of Section 156(1) of the Customs Act, 1969. 5. In the light of above reported facts the importer Messrs Abdul Aziz and Brothers were called upon to show cause as to why the goods should not be confiscated and penal action warranted under the aforementioned provisions of law may not be taken against him under the aforesaid provisions of law. 6. The importer Messrs Abdul Aziz and Brothers, Karachi, filed the written reply of Show Cause Notice on 22.05.2014. On the basis of reply of Show Cause Notice, the Additional Collector of Customs (Adjudication-I), Karachi passed an Order-in-Original No.199/2014-15 dated 07.11.2014. The operative part of this order is reproduced as under:-- "I have gone through the record and considered written/verbal arguments of both the sides As regards contention of the respondent that the legal position as far as the matter of exercise of investigation powers by the staff of the Directorate General is concerned in terms of S.R.O. 486(1)12007 dated 09.06.2007, the officers of Directorate General are competent to intercept, detain and seize the mis-declared goods at any stage. In this regard, reliance is placed on judgment reported as 2008 PTD 1365, passed by the Honorable Lahore High Court, whereby, regarding exercise of powers by the Directorate General it has been held that: "Where there is no doubt to the extent of misstatement, understatement and mis-declaration of goods low provides ample and wide powers to Directorate of Intelligence and Investigation to stop the clearance of any consignment even if the same was out of charge. Directorate of Intelligence and Investigation has full powers to investigate even after the process of appraisement by the Customs Collectorate if it has reasons to believe that the goods are mis-declared." I have examined the legal position and of the opinion that mis-declaration confirmed through by the staff of Directorate General in the presence of the importer. On examination the goods were found grossly misdeclared as per detailed inventory and representative samples (declared items 14 and found items were 36) were drawn after completion of legal formalities and of the opinion that mis- declaration was confirmed on the part of the importer from the time of filing of Goods Declaration and submission of relevant import documents to evade duty and taxes. Hence, the charge leveled in the Shqw Cause Notice stands established that the respondent by clearing consignment of mobile accessories, through mis-declaration of description, HS Code, quantity and value evading thereby government's legitimate revenue have committed offence of mis-declaration and evasion of duty/taxes under Section 32(1) and (2) read with Sections 25A, 79 and 80 of the Customs Act, 1969, read with Sections 3, 6, 33, 34 and 36 of the Sales Tax Act, 1990 and Section 148(1) of the Income Tax Ordinance, 2001, punishable under clause (14) of Section 156(1) of the Customs Act, 1969. I, therefore, order confiscation of the goods for violation of aforementioned provisions of law. However, an option is given to the respondents to redeem the confiscated goods on payment of 35% Redemption Fine in terms of S.R.O. 499(1)/2009 dated 13.06.2009 of the value determined by the department along with payment of duty and taxes livable thereon. A penalty of Rs. 200,000/- (Rupees Two Hundred Thousand) is also imposed on the importer. During the course of hearing the counsel of the respondent argued that the value of goods has been assessed by the department higher than the data available for valuation purposes. The
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department may examine their claim about the valuation of goods in the light of Valuation Ruling/available data. 7. Being aggrieved and dis-satisfied with the impugned Order-in-Original No. 199/2014-15 dated 07.11.2014, passed by the Additional Collector of Customs (Adjudication-I), Karachi, the appellant filed the instant appeal before this Tribunal on the grounds incorporated in the Memo of Appeal which are reproduced as under:-- (a) That prior to commenting upon the legal aspects of the case it is advantageous to state that indeed the respondent No. 1 are appointed and designated as "Officer of Customs" under Section 3A of the Customs Act, 1969 and they derived power for functioning from Notification No. S.R.0 486(1)/2007 dated 09.06.2007 within the Territory of Pakistan for thwarting the act of smuggling but this doesn't means that they can intercept and detain the goods transported within city or Territory of Pakistan and their jurisdiction in principle is restricted to the area not falling within the ambit of Sections 9 and 10 of the Customs Act, 1969 and beyond 5 kilometer of the border of India and Iran in terms of Section 177 of the Customs Act, 1969 to be read with notification SRO No. 188(1)/83 dated 12.12.1983. The goods of the appellant does not at all falls within the ambit of Section 2(s) and section 177 of the Customs Act, 1969, instead are lawfully imported and cleared after completion of all the codal formalities, hence, the act of detention/seizure and preparation of contravention report by the official of respondent No. 1 in the case of appellant is without lawful authority and as such void ab-initio and coram non judice. (b) The official of respondent No. 1 have no powers under Sections 16, 25, 25A, 32, 79, 80, 83 and 195 of the Customs Act, 1969 as notified in SRO 486(1)/2007 dated 09.06.2007 issued by the Board through which powers have been delegated. Intercepting consignment after clearance on the pretext of mis-declaration of description, PCT and value importability by the officials of respondent No 1 from lack of jurisdiction and power, rendering their act as transgression to the vested powers under the respective section otherwise not vested to them by the Board. In these circumstances the impugned detention/seizure notice, contravention report and show cause notice and all the subsequent proceeding there on deems to be illegal and void. Nobody is allowed to act beyond his jurisdiction and all the acts or deeds beyond the scope of jurisdiction are null and void in the eyes of law. Reliance is placed on the reported judgments 2002 PTD 2457, PLD 1971 Supreme Court 61, PLD 1973 Supreme Court 236, PLD 1964 'SC 536, 2001 SCMR 838 and 2003 SCMR 1505, In PLD 1996 Karachi 68, 2006 PTD 978 and PLD 1971 Supreme Court 184. (c) That the official of respondent No. 1 are indeed empowered to conduct examination under section 198 of the Customs Act, 1969 as notified in SRO No. 486(1)/2007 dated 09.06.2007 but within the premises of the port/terminal and that also after having approval of the Chief Collector (South) as clarified by the Board vide letter C.No. 2(2) L&P/2014 dated 29.12.2009. Which they failed to obtain in the instant case, resultant, the carried out examination is nullity to law and direction of the Board to be adhered by the field formation in terms of the expression of Section 223 ibid. It is imperative to state that outside the premises of the port/terminal the power vested under section 198 of the Customs Act, 1969 are not operative unless charge of smuggling is leveled against the person, which is nonexistent in the case of appellant as no such charges has been leveled in the show cause notice. In the cases not following within the ambit of Section 2(s), the respondent is not empowered to seize the goods under Section 168(1) and the cases therefore has to be dealt under the respective provision of C.P.C. Or Cr.P.C., rendering the examination of the goods after post clearance outside the premise of the port/terminal being in derogation of Section 198 of the Customs Act, 1969 and as such void ab-initio. Any case made on the strength of such examination report nullity to law and not to be relied upon. (d) The official of respondent No. 1 are not appointed/designated an "Officer of Inland Revenue" under Section 30A of the Sales Tax Act, 1990 and Section 230 of the Income Tax Ordinance 2001
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under which Directorate General Investigation Inland Revenue has been designated as officer of Inland Revenue and they had been delegated powers under different section of the Sales Tax Act, 1990 through Notification No.S.R.0.776(I)/2011 dated 19.08.2011 and Section 207 of the Income Tax Ordinance, 2001. Resultant, the official of respondent No. 1 acted without powers/jurisdiction, rendering their act of detention, seizure and subsequently preparation of contravention report, null, and void ab-initio, hence "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 Ali 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 and 2014 PTD 1733; Waseem Ahmed and others v. FOP and another. (e) Notwithstanding to the referred in above submission, it is added that the official of respondent No. 1 has formed opinion in the seizure/contravention report in regards to clearance of the goods under wrong description, PCT and non applicability of valuation ruling after clearance of the goods i.e. Post clearance, therefore their act falls within the ambit of term "audit". The legislature has inserted Section 3DD in the Customs Act, 1969 under which Directorate of Post Clearance Audit was created and the official of the Directorate were delegated powers under S.R.O. No. 500(1)/2009 dated 13.06.2009 for conducting audit of the importers record/Goods Declaration under, the provision of Sections 26A, 26B, 32 and 32(3A) of the Customs Act, 1969 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. The audit under Section 26A of the Customs Act, 1969 could only be conducted of the imported consignment post clearance by the Official of Directorate General of Post Clearance Audit and by none else. The official of respondent No. 1 while usurping the powers of DG-PCA infact conducted the audit of the appellant goods declaration, rendering their act in derogation of Section 3DD of the Act and neither in the Notification No. 500(1)/2009 dated 13.06.2009. 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. (f) That upon conclusion of transaction, under the provision of sections 80 and 83 of the Customs Act, 1969 and 418 and 442 of Customs Rules, 2001, the order so passed under the said provision of the Act became appealable order under Section 193 of the Customs Act, 1969 before Collector of Customs (Appeals) and the Director of respondent No. 1 is empowered under the said Section through Notification No. 486(1)/2007 dated 09.06.2007. If they had any reservation against the passed assessm ent orders, the appropriate course of action was to assail the said order 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) under Section 80 of the Customs Act, 1969 became final and cannot be disturbed by any authority. To the contrary, the Directorate General of Intelligence and Investigation-FBR detained, seized the goods, which is not permitted under law. (g) That upon filing of the appeal by the officials of respondent No.1 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. Who upon receipt of tile appeal as mandated upon him to go through the fact and ground of the appeal and thereafter if he think 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 notice under Section 32 of the Customs Act, 1969 to the respondent and after receipt of reply to the said notice the Collector of Customs will decide the appeal in the light
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of the issued show cause notice and reply. In the instant case no appeal has been filed by the Directorate General of Intelligence and Investigation-FBR despite mandated under law, instead assumed the powers under Section 195 of the Customs Act, 1969 and reopened a valid passed order under section 80 ibid. Neither the officials of respondent No. 1 nor respondent No. 3 are empowered to reopen an order, hence both acted without power/jurisdiction, rendering their act 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 Messrs Paramount International (Pvt.) Ltd. v. FOP and others. (h) That similarly respondent No. 3 is not designated an "Officer of Inland Revenue" under the provision of Section 30 of the Sales Tax Act, 1990 and Sections 207 and 230 of the Income Tax Ordinance, 2001 and as such is not empowered to issue show cause notice under Section 36, (which stood omitted from the Act" through Finance Act, 2012) and the appropriate Section is Section 11 and respective Section 162(1) not 148 of the Income Tax Ordinance, 2001. Therefore he also usurped the power not vested with, rendering the show cause notice and order-in- original to be passed 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 Ali Muhammad v. Hussain Buksh and others and PLD 2001 Supreme Court 514 Land Acquisition Collector, Noshehra and others v. Satfraz 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. (i) That in the matter relating to value attracting Section 25 misdeclaration of the imported consignment after audit falling within the ambit of Section 32 of the Customs Act, 1969 rest with Directorate General of Valuation under S.R.O. 495(1)/2007 dated 09.06.2007 read with para 44 of Customs General Order 12/2002 dated 15.06.2002. The respondent No. 2 issued show cause notice and subsequently passed order-in-original based on the opinion that the Valuation Ruling was not applied correctly by the official of respondent No. 2 in the absence of availability, of powers. Nobody is allowed to usurp the powers of notified adjudicating authority as held by Superior Judicial Fora. That the respondent No. 3 acted in transgression of the powers vested with the officials of Directorate General of Valuation, therefore his act is without any power/jurisdiction, rendering the issued show cause notice and passed order-in-original void abinitio and as such coram non judice as held by umpteenth reported judgment, few of which are quoted in the referred in above grounds. (j) Needless to state that the expression of Section 179 of the Customs Act, 1969 is very clear in regards to appropriate Adjudicating Authority on the basis of "amount of duty and taxes involved excluding the conveyance." Not on the basis of "amount of evaded duty and taxes". In the instant case of appellant the involved amounts of duty and taxes are Rs.4019,449.00 (upfront duty Rs.1032071.00 + additional amount of duty and taxes + Rs.2512,824.00 shown in show cause notice). Meaning thereby the competent authority to adjudicate the case in question under clause (i) of section 179(1) is Collector. To the contrary, respondent No.3 issued the show cause notices and passed order-in-original while usurping the powers of his Superior (Collector), which is not permitted under law. Rendering both suffers from lack of powers/jurisdiction, hence, ab-initio null and void and coram non judice. (k) 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 Rafi Alam v. Lahore Race Club, 2004 CLD 373. The power of adjudication, as already observed is special in
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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. 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 case 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 favour actions of the authorities to be confined to their own spheres 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. Their lordship observe 4 as under:- "it is trite law that power vested in an authority should only be exercised by that authority, in default whereof, the exercise of power and authority becomes without jurisdiction, illegal, void, ab-initio and of no legal effect. The term "without jurisdiction" has been judicially interpreted to include usurpation of power warranted by law (The Chief Settlement Commissioner Lahore v. Raja Muhammad Fazil Khan and others PLD 1975 SC 331 at p.339) an act done which the person doing it has no jurisdiction at all to do or which was clearly outside the sphere of his activities (The State v. Zia-ur-Rehman PLD 1973 SC 49) and a judgment or order delivered by a court or a judicial or a quasi judicial authority not competent to deliver it (Muhammad Saleh and others v. Messrs United Grain and Fooder Agencies PLD 1964 Sc 97). The Constitutional jurisdiction can thus be exercise when it is shown that the order is passed without jurisdiction or in excess of jurisdiction. As observed earlier the respondent No. 1 has no jurisdiction to pass the impugned order. As such we declare the same, to be of no legal effect. Accordingly, we allow this petition but leave the parties to bear their own costs". (1) That while dealing with the powers of adjudication, it is needless to observe, that our Supreme Court has also 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 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 were 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 Messrs 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 Messrs Wawa Garments Industries (Pvt) Ltd. v. The Additional Collector of Customs, Export, Karachi. (m) That it is imperative for the appellant to invite the attention of the Honorable Appellate Tribunal that where order has been made without any powers/jurisdiction, irrespective of the merit of the case, such order is coram non-judice as held by High Court of Sindh in Customs Reference No. 101 and C.M.A No. 1281 of 2009 reported as 2010 PTD 465 Collector of Customs, Model Customs Collectorate v. Messrs Kapron Overseas Supplies Co., (Pvt.) Ltd. Filed on the question of law that
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whether passing of order without jurisdiction is a technical defect and does not render the proceeding as ab-initio void. The Hon'ble High Court dismissed the reference while holding that "any transgression of such jurisdiction for not being a technical defect would render entire exercise of authority to be ab-initio, void and illegal", without discussing the merit of the case, which relates to origin of imported goods and the Hon'ble High Court further held that "the exercise of jurisdiction by an authority is a mandatory requirement and its non fulfillment would entail the entire proceeding to be "coram non judice." The said defect render the show cause notice as well as order-in-original ab-initio, null and void by virtue of suffer of lack of power/jurisdiction. Hence coram non judice and needs to be struck down. (n) That the consignment in question had undergone the procedure of clearance as evident from the fact that…
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