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Petitioner: Messrs Afu International, Karachi VS Respondent: The Deputy Collector, Karachi and
Court Name: Customs Appellate Tribunal Judge(s): Jehanzaib Wahlah Title:Messrs Afu International, Karachi vs The Deputy Collector, Karachi and
JUDGMENT
Reported As: 2020 PTD (Trib.) 1517 Result: Appeal allowed Judgment JUDGMENT JEHANZAIB WAHLAH, MEMBER JUDICIAL-III .---Through this order , I dispose off appeal bearing No. K- 841/2018 directed against the Order-in-Original No. 328/2016-2017 dated 21.11.2016 passed by Additional Collector of Customs, Adjudication-I, Customs House, Karachi. 2. Briefly facts of the case are that the appellant during the course of his business activities imported a consignment of flavored fruit juices from Malaysia valuing to US$. 45,872.64 C&F , upon receipt of shipping documents he transmitted Goods Declaration (GD) under the provision of section 79(1) of the Customs Act, 1969 (Act) and Rule 433 of Sub-Chapter III of Chapter XXI of Customs Rules, 2001 (Rules) with the MCC of Appraisement-W est and as per pre-requisite deposited upfront duty and taxes of Rs.1,282,895.00, consequent to which his GD was numbered as KAPW -HC-206163 dated 23.06.2015. The consignment was selected for examination under the provision of section 198 and Rule 435 of the Act/Rules. Wherein, declaration was confirmed to the extent of all aspects and report so prepared was uploaded in the reservoir of GD, upon receipt of the same the Assessing Officer transmitted view message under Rule 437 for scanning of Health Certificate and Certificate of origin, which were accordingly uploaded consequent to which he passed assessment order dated 29.06.2015 under the provision of Section 80 and Rule 438 for levy of duty and taxes while adducing remarks in the assessment note reading as "SRO benefits 568(I)/2014-2e -RD t 0% not extended as claim not covered. Hence completed accordingly" and transmitted view message of even date for payment of duty and taxes of Rs.622,420.00 which were paid on 29.06.2015, on the strength of which inbuilt authority of WeBOC passed clearance order under Section 83 and Rule 442 of the Act/Rules and appellant obtained delivery from the terminal. After lapse of more than 02 years from the date of delivery appellant came to know about issuance of a recovery notice dated 24.11.2017 for which consu ltant forwarded letter dated 21.12.2017 to the respondent No.1 with the
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submission that neither impugned show-cause notice or order-in-original have been served upon appellant on his changed address and requested him to supply those along with covering letter . No compliance whatsoever was made, instead NTN of the appellant was blocked, for which letter dated 16.05.2018 was forwarded to Collector of Customs, MCC of Appraisement-W est, who refused to unblock the NTN as he himself ordered blocking of that even in the absence of availability of power/warrant of law. This act of his cons traint the appellant to approach Hon'ble High Court of Sindh through Constitutional Petition under Article 199, which vide ordered dated 29.05.2018 to unblock the NTN. In between the said exercise , appellant consultant, asked the Collector of Customs to order the respondent No. 1 to supply copy of the order-in-original and show-cause notice, enabling the appellant to exercise his right of appeal guaranteed under Section 194 of the Act and Constitution of Islamic Republic of Pakistan, the requisite was supplied by the respondent No. 1 to the appellant vide letter dated 29.05.2018, which was not legible, hence, request was made to supply legible copy, which he refused, resultant consultant in his office reproduced the order-in-original, on the strength of which instant appeal was filed with the Appellate Tribunal on 16.07.2018. In para 4 of the order respon dent No.2 held the charges as levelled in the show-cause notice against the appellant as established and ordered payment of short levied/paid amount of duty and taxes along with imposed penalty of Rs.200,000.00 which is reproduced here-in-under for easement: "I have examined the case record and considered the arguments put forth during hearing by the department. As stated earlier despite repeated hearing opportunities no reply to the show-cause notice was received in this office from the respondent's side nor anyone attended any of the several hearing on their behalf. The upshot of the department's case is that the importer / respondent wrongly availed the exemption of customs duty under SRO 1261(1)/2007 on the import of Fruit Juices from Malaysia by mis-declaring the HS Codes. The impugned goods were assessed under single HS Code 2009.1900 extending benefit of the said SRO despite the fact that juices of Apple, Red Grapes, Peach and Pine Apple respectively , fall under HS Code 2009.7100, 7900.2009, 6100.6900, 2009.8100/89000 and 2009.4100/4900, on which no exemption of custom duties available under SRO ibid. The D.R. stated during the course of hearing that exemption of customs duty was only available to Orange Juice (2009.1900) and Pine Apple Juice (2009. 4900) under SRO 1261(l)/2007 dated 30.12.2007. The act of intentionally mis-declaring the PCT heading of Juices of Apple, Red Grapes, and Peach by clubbing them under the incorrect single PCT Heading of Orange Juice by the importer falls within the ambit of Section 32(1) and (2) of the Customs Act, 1969. In view of the above, it is evident that the respondent failed to file correct declaration under section 79(1) of the Customs Act, 1969 and on the basis of his mala fide action unlawfully claimed availed in admissible exemption under SRO 1261(1)/2007 dated 30.12.2007. Hence, the charges levelled in the show-cause Notice stand established. The importer is directed to deposit the evaded amount of taxes amounting to Rs.1,428,007/- (as determined by the department) into the Government Treasury in terms of Sections 32(1), (2) and 79(1) of the Customs Act, 1969 read with Sections 3, 6, 33 and 34 of the Sales Tax Act, 1990 and section 148 of the Income Tax Ordinance, 2001 (along with default surcharge to be calculated by the department at the time of payment) failing which action may be initiated against the respondents under section 202 of the Customs Act, 1969 read with Chapter XII (Recovery Rules) of the Customs Rules, 2001 notified vide SRO 450(1)/2001 dated 18.06.2001. A penalty of Rs.200,000/- (Rupees. Two hundred thousand) is also imposed on the respondents for violation of above mentioned provisions of law ." 3.The appellant filed appeal on the basis of grounds enumerated therein, the consultant/advocates, on the date of hearing, argued the case strictly in accordance with those. No cross objection under subsection (4) of section 194A of the Act were filed within the stipulated period of 30 days by the respondent No. 1, as expressed in aforesaid section. However , the representative of the respondent on the date of hearing forcefully defended the order passed by respondent No.2 as correct in fact and law, in addition to the submission that the appeal in question is barred by time by 541 days. Hence, same may be dismissed as not maintainable while maintaining the impugned order . 4. Rival parties heard and perused case record and so the relied upon judgments. Prior to proceeding in deciding the factual and legal grounds taken by the appellant, it is apt to decide the objectio n raised by the office in regards to !imitation of the appeal, which as opined by the Assistant Registrar is 541 days time barred, stress on the said fact has also been laid by the representative of the respondents for obtaining order merely on limitation. In the
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instant case the impugned show-cause notice forming root cause of the Order-in-Original No. 28/2016-17 dated 21.11.2016 passed by the respondent No. 2 was infact not issue as evident from the order , which is silent in this regards. Neither it had been served on the appellant as per the mandated requirement of section 215 of the Act. Prior to proceeding for adjudication either properly or summarily , it is pre-requisite to issue and serve statutory show-cause notice under section 180 ibid, enabling the person to whom it has been issued to know the levelled charges and the applicable contravened provision of the Act and the attracted penal clauses. The respondent No. 2 has no right to ignore the said mandated requirement of law. The FBR through Para 78 of Customs General Order 12/2002 dated 15.06.2002 laid emphasis on the said statutory provision. For further laying stress and compliance on the even date, FBR exclusively renewed the warrant of law vide letter C.No. 730-M(L)/2002. Sub-Para (iii) of Para 2 is relevant in this regard, which read as " show-cause notices should conta in the brief facts of the case, the offence(s) committed and the evidence (s) on the presumption of which the allegation are based, the law that has been violated and the penal clauses that are attracted. 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 Act. Even otherwise in cases where request for summary adjudication is made, issuance of show -cause notice is mandatory prior to proceeding summarily as held by Customs, Excise and Sales Tax Appella te Tribunal, Peshawar recorded in his judgment reported as 2004 PTD (Trib.) 1324 "It is not understood as to under what law such right, which is primarily the duty of the Adjudicating Officer under section 180 of the Customs Act, 1969 to issue show-cause notice before confiscation of goods or imposition of penalty , could be waived of by the owner of the goods or person, for imposition of penalty on him. Section 180 stipulates that three mandatory conditions are to be fulfilled step by step in chronological order and not simultaneously by the Adjudicating Officer before confiscation of goods or imposition of penalty . The provisions of section 180 of the Customs Act, 1969 does nowhere provide for the waiver of show-cause notice on the part of any person who has limited choice under it. The provisions of Section 180 of the Custo ms Act, 1969 do not absolve the Adjudicating Of ficer of discharging his responsibility to comply with the given charter ." 5. Issuance/serving of show-cause notice is a mandatory requirement and adherence to that has to be made by the adjudicating authority without exception, prior to proceeding in the matter placed before him for decision. Non- compliance of the same is violation of the principle of natural justice as held by Superior Courts in so many words in reported judgments that "(a) It is the first principle of natural justice to issue a show-cause notice to the person concerned. It is a mandatory requirement for crystallization of monetary liability against the taxpayer through stating of material particulars of the case along with applicable provisions of the relevant law. (b) It is a well settled proposition of law that if a thing is required by law to be done in certain specific manner must be done in the same manner as prescribed by law or not at all as per maxim "Expression Facit Cessare Taciturn " as observed by the Apex Court in their judgments reported as PLD 1964 SC 536, 2003 SCMR 1505 , 2006 SCMR 129. (c) Violations of principle of natural justice can be equated with violations of provisions of statutory instruments. (d) It is the common principle which governs the administration of justice in Islam that in case of liability with penal or quasi penal consequences and /or deprivation of basic rights, a notice as well opportunity of hearing is absolutely necessary . This by itself has to be recognized as a basic right as observed by Hon"ble Supreme Court, Shariat Appellate Bench in the case of Pakistan v. Public at large reported as PLD 1987 Supreme Court 304. (e) Even issuance of a proper show-cause notice to a person is an essential ingredient of the expression "audi alterm partem" which literally means that no man shall be condemned unheard. The right of being issue d with a show-cause notice and the right of being personally heard are inseparable and inalienable rights of the defendant and cannot be denied to the person concerned under any circumstances. (f) In one case, the suspension without issuance of a show-cause notice was quashed by Dhaka High Court and was later confirmed by the Supreme Court that the rule of natural justice applies though there may not be any positive words in the statute, for such requirements and such rules are minimum requirements of fairness as reported in the case of University of Dhaka v. Zakir Ahmed PLD 1965 Supreme Court 90). This has also been followed by the Honourable Supreme Court of Pakistan in their judgment reported as 1994 SCMR 2232 . As observed by the Honourable Supreme Court in the judgment M.D the Bank of Punjab v. Syed Shahzad Hussain reported as 2006 SCMR 1023 , it is also a settled principle of law that principle
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of natural justice must be read in each and every statute unless and until it was prohibited by the wording of the statute itself as the law laid down by this Court in Sir Edward Snelson's case PLD 1961 SC 237, Fazal-ur- Reham's case PLD 1964 SC 410, Zakir Ahmed's' case PLD 1965 SC 90, Pakistan Crome Mines' case 1983 SCMR 1208 and Pakistan's case PLD 1987 SC 304. In view of the provision of Customs Act, 1969 and above judgments of the Superior Courts and Article 10A (fair trial) of the Constitution, the order-in-original passed by the respondent No.1 is ab initio, null and void and the structure built upon this order has no legal value. 6. The order passed by respondent No.2 is mala fide and based on intellectual dishonesty , which stands proved from para 3 of the order which states "the case was fixed for hearings on 5.08.2016, 17-8-2016, 08.09.2016, 22.09.2016, 07.10.2016, 17.10.2016 and 02.11.2016 no one appeared on behalf of the respondent on any of the above mentioned dates of hearing nor any adjournment request was received". The Appellant states under oath that the respondent No. 2 did not dispatched/served either impugned show-cause notice nor hearing notices referred in the order to him, resultant the question of appearance does not arise at all. Non receipt of the show- cause and subsequent hearing notices by him fall within the expression of the words "not served" as per the provision of Section 215 of the Act. Mere preparing of show-cause and hearing notices are not enough, rather these had to be served on the effected person/registered tax payer as held by the High Court of Sindh in its reported judgment 1989 ALD 518 (2) in the case of Messrs Darbar Impex v. Central Board of Revenue ". "It is not enough that the notice/order is merely issued; its service is mandatory in law. Unless notice is proven to have been served, within the prescribed perio d, the same would not been considered to be in accordance with the requirement of the Act. Wherein, in yet another case, while declaring the impugned order as void and ab initio, their Lordship of the High Court of Sindh in its reported judgment 2006 PTD 1207 in the case of Sheikh Rashid Ahmed and another v. The Assistant Collector , Special Recovery Cell, Collectorate of Customs (Exports) Karachi and 4 others held that "We are afraid such high handedness on the part of officer vested with the extensive powers for recovery of the public revenue has to be strongly discouraged. No date of hearing was ever notified to the petitioner and nor the said order was communicated". 7. The appeal is not barred by time as order has been served on the Appellant's consultant by the respondent No.1 through covering letter dated 29.05.2018 as per the contemplation of Section 215 of the Act and date for filing appeal before the Tribunal has to be reckoned from the date of serving of the order, which was 29.05.2018 against which appeal has been filed on 16.07.2018 i.e. within 48 days i.e. 12 days earlier to the stipulated period of 60 days. Even otherwise, it is settled proposition of law that the specified limitation in the provision of the Act does not run against ab-initio void order , akin to the case of appellant as held in reported judgments 1986 SCMR 962 Rehmat Bibi and others v. Punno Khan and others , 1996 SCMR 2296 Syed Haji. Abdul Wahid and another v. Syed Sirajuddin and PLD 1976 Supreme Court 37, Ali Muhammad v. Hussain Bux and another , wherein it has been held that "On the question of limitat ion, the learned judges referred to a number of decision of this court and held that if an order is without jurisdictio n and void then it needs not to be formally set-aside. In Yousuf Ali v. Muhammad Aslam Zia and others in reported judgment PLD 1958 SC (Pak.) 104(1) it was said by this Court. Where the legislature clothes an order with finality , it always assume that the order which it declares to be final is within the power of the authority making it and no party can plead as final and order made in excess of powers of the authority making it, in the eyes of law, such order being void and non-existent". In PLD 1965 SC 68 Ch. Altaf Hussain and others v. The Chief Settlement Commissioner (2) it was said that an order without jurisdiction is a nullity in law and it does not require to be set aside formally . Again in PLD 1967 SC 294 Syed Ali Abbassi and others v. Vishan Singh and others (3) it was observed that where an authority has passed an order in excess of jurisdiction, the petitioner cannot be refus ed relief and penalized for not throwing himself again by way of revision or review on the mercy of the authority who were responsible for such excess this being the rule firmly established, the dismissal of writ petition by the learned single judge on finding that the appeal before the Additional Settlement Commissioner was barred by time and in dismissing it he had acted with jurisdiction was not warranted in law." In adherence the ratio decidendi the Hon'ble High Court of Sindh in reported judgment 2002 PTD 87 FOP v. Metropolitan Steel Corporation held that "when a Court or a Tribunal assume jurisdiction not vested by law or failed to exercise jurisdiction so vested its order may be void and in nullity to law. However , when its act illegally or
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material irregularity in the exercise of its jurisdiction the order is only voidable but not void and thereafter held that limitation does not runs against void order instead against voidable order ." In the light of the order of the Superior Judicial Fora the Tribunal in umpteenth reported judgment held that no limitation runs against the void order e.g. 2010 PTD (Trib.) 1636 and many other akin to the instant case as evident from the deliberation made by me in the penultimate paras. Therefore, I overrule the objection of the office and respondents and hold that the appeal is within time. 8. The legislature has inserted Section 3DD in the Act through which Directorate General of Post Clearance Audit (DGPCA) has been created and its official had been delegated powers through SRO 500(l)/2009 dated 13.06.2009 for conducting audit of the importer books of account maintained under Section 211 of the Act under the provision of section 26(2) after serving notice/summon under clause (a) of Section 26A of the Act, they are empowered to look into every aspects of the declaration made by the importer and assessment order passed by the competent authority of the Clearance Collectorate under Section 80 and Rule 438 of Act/Rules and prepare audit observation and forwarded that to the importer for clarification, if the reply fail to settle the issue, frames contravention report and forward it to the Clearance Collector which onward forward to the respective Collectorate of Customs Adjudication for issuances of show-cause notice under Section 180 of the Act, and passing of order-in-original by the authority defined in Section 179 ibid. The respondent No. 1 assumed the powers of officials of DGPCA and conducted the Audit Post Clearance of the GD of the appellant under Section 26(2) while exercising the powers specifically delegated to the officials of the DGPCA. Neither respondent No.1 nor his higher officials are empowered to encroach the sovereign jurisdiction of DGPCA under any circumstances as this will render the formation of DGPCA by the legislature under Section 3DD of the Act, and the powers delegated under SRO 500(1)/2009 dated 13.06.2009 as redundant. I have observed with concern that the respondent No. 1 and his higher officials are running a parallel department to the DGPCA in derogation of Section 3DD ibid, This is not permitted under law , if it is left to be perpetuated, anarchy will prevail within the different organs of FBR to encroach powers/jurisdiction of each other , despite having no lawful authority/jurisdiction. This type of intention/act cannot be validated under any circumstances and has to be crushed in the initial stages for maintaining the integrity and sanctity of the different sovereign organs of FBR. Therefore, the conduction of audit post clearance under section 26(2) by the respondent No.1 of the GD is without lawful authority/jurisdiction. Hence, ab-initio null and void and as such coram non judice. The superstructure built thereupon ought to be crumble down no matter how strong it may be. 9. The expression of Section 179 of the Act is unambiguous in regards to determination of the powers of the adjudicating authority on the basis of "amount of duty and taxes involved excluding the conveyance." Not "amount of evaded duty and taxes". In this case the amount involved is Rs.3,333,331.00 (paid Rs.1,282,895.00 for obtaining clearance on 23.06.2015 + paid additional amount of duty and taxes of Rs.622,429.00 paid on 29.06.2015 + revenue loss shown in show-cause notice Rs.1,428,007.00. The competent authority to adjudicate the case of said amount under clause (ii) of Section 179 (1) of the Act rest with Collector of Customs. To the contrary , Respondent No.2 issued show-cause notice while usurping the powers of his superiors. This is not permitted under law. Not a single word has been inscribed in the comments , which is tantamount to admission and confirms that the Respondent No.2 usurped the powers of Collector and issued show-cause notice in derogation of the explicit provision of section 179(1), for better appreciation verbatim of the same is reproduced here-in-under: 179. Power of adjudication:- (1) Subject to subsection (2) in cases involving confiscation of goods or recovery of duty and other taxes not levied, short levied or erroneously refunded, imposition of penalty or any, other contravention under this Act the rules made there-under , the jurisdiction and powers of the officers of Customs in terms of amount of duties and other taxes involved , excluding the conveyance, shall be as follows, namely:- (i) Collector no limit (ii) Additional Collectornot exceeding three million rupees (iii) Deputy Collector not exceeding one million rupees.
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(iv) Assistant Collector not exceeding five hundred thousand rupees (v) Superintendent not exceeding five hundred thousand rupees (vi) Principal Appraise not exceeding five hundred thousand rupees [Provided that in cases of goods to be exported, the above officers of customs shall have their jurisdiction and powers in terms of FOB value and twice their respective monetary limit.] (2) Notwithstanding the provisions of sub section (1), the Board may, by notification in the officials Gazette, fix or vary the jurisdiction and powers of any officer of Customs or a class of officers , and may also assigns or transfer {by an order} any case to any {of ficer} of customs, irrespective of the territorial jurisdiction. (emphasis supplied) 10. From conscientious study of Section 179(1) of the Act, it is abundantly clear that the authority defined therein has to exercise powers, neither superior nor subordinate is empowered to assume the powers of his superior or subordinates, unless Board is desirous of fixing or varying the jurisdiction and powers of any Officer of Customs or a class of Officers, through a notification in official Gazette as per the expression of subsection (2) of Section 179 assign or transfer any case to any Officer of Customs irrespective of designation or territorial jurisdiction. In the instant case no notification of the Board has been presented empowering Respondent No. 3 for exercising powers of his superior . He assumed the powers of the Board himself in negation of Sub Section (2) of Section 179 ibid., which he could not assume under any pretext/circumstances. This defect renders the show-cause notice without lawful authority and jurisdiction. It is to be noted that no mis-declaration in material particular is available in the declaration of the appellant submitted under Section 79(1) and Rule 433 of the Act/Rules , followed by uploading of the documents…
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