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Petitioner: Messrs HASSAN INTERNATIONAL, FAISALABAD VS Respondent: The DIRECTORATE GENERAL OF INVESTIGATION AND INTELLIGENCE-F.B.R., KARACHI and 3 others
Court Name: Customs Appellate Tribunal Judge(s): Jehanzaib Wahlah Title:Messrs HASSAN INTERNATIONAL, FAISALABAD vs The DIRECTORATE GENERAL
OF INVESTIGATION AND INTELLIGENCE-F.B.R., KARACHI and 3 others Case No.: Custom Appeal No. K-250 of 2018 Date of Judgment:2018-12-20 Reported As: 2019 PTD (Trib.) 1129 Result: Appeal allowed Judgment ORDER JEHANZAIB WAHLAH, MEMBER (JUDICIAL-III).--- Through this order , I intend to dispose off Appeal No. K- 250/2018 directed against the Order-in-Appeal No. 813/2018 dated 22.11.2017 passed by Collector of Customs, Appeals, Karachi (Respondent No. 4) maintaining the Order-in-Original No. 321/20 16-17 dated 17.11.2016 passed by Deputy Collector of Customs, Adjudication-I, Custom House, Karachi. 2. Briefly facts of the lis are, the appellant imported a consignment of 23000 kgs of Asaliya Seed @ US$. 0.18/kg C&F Karachi from Messrs Ahmed Overseas Junagarh, Gujarat, India against invoice No. 57 dated 19.08.2016 and B/L No. IN80662505 dated 30.08.2016. Upon receipt of import documents, appellant prepared I-Form and submitted with his bank, who after obtaining permission from the State Bank of Pakistan approved that and uploaded the same in the reservoir of Custom Computerized System (CCS). Consequent to which appellant transmitted Goods Declaration (GD) with the MCC of PMBQ under the provision of Section 79(1) of the Customs Act, 1969. (Act) and Rule 433 of Custom Rules, 2001 and as per pre-requisite deposited upfront duty and taxes of Rs. 141,1 19.00 on 05.09.2016, which resulted in numbering of GD as KPPI-HC -14367 dated 05.09.2016. The Assessing Officer upon appearance of GD on his work station opted to get the goods examined in terms of the expressions of Section 198 and Rule 435 of the Act/Rules prior to passing of asses sment order under the provision of section 80 and Rule 438 of the Act/Rules. To proceed with adduced his opinion/reasoning and transmitted the GD on the work station of the Deputy Collector of Customs, Group-I, MCC of PMBQ (respondent No. 2), who gave his assent and transmitted the GD to the Deputy Collector Examination, QICT , who onward marked that to the examiner of his choice in accordance with the selection criteria, who carried out the examination in accordance with the Examination Manual, 1996 in compliance of the order of the Board incorporated in para 5 of CGO 12/ 2002 dated 15.06.2002 and found the goods as per declaration in all aspect i.e. description, quality , quantity and weight
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and report so prepared was uploaded in the reservoir of GD reading as "Exam ined the goods on the basis of GD/DA T retrieved to WeBOC system: description: Asaliya Seeds packed in p.p. bags............. each bag net weight 25 kgs........... checked weight 100% vide QICT receipt No. 3571 149 dated 05/SEP/2016, found weight 22860 kgs......... group to check pro Certificate, PCT, value and all other aspects. Images are attached." Upon receipt of examination report on his work station the competent authority defined in Section 2(a) of the Act transmitted view message under Rule 437 for uploading of Release Order of Plant Protection Department, which appellant complied with and the authority in exercise of the powers vested upon him through SRO 371(1)/ 2002 dated 15.06.2002 passed assessment order under the aforesaid sections/rule on the declared description and PCT with the exception of unit value, which he enhanced by US$. 0.2/kg i.e. @ US$.0.2 0 and transmitted view message for payment of additional amount of duty and taxes of Rs. 29,675.00, which he paid on 09.09.2016, consequent to which the inbuilt authority of CCS passed Clearance Order under the provision of Section 83 and Rule 442 of the Act/Rules. That after receipt of release order passed by the subordinate of respondent No. 2, wherein gate staff was intimated about the said fact and so the terminal operator , appellant representative after obtaining the delivery order from the shipping company approached the terminal operator for payment of demurrage/storage charges, official of which showed his inability to provide that on the plea that the officials of Directorate General of Intelligence and Investigation-FBR (Enfo rcement-Wing), Karachi (respondent No. 1) has put an hold on the GD/detained the consignment under Section 186 of the Act. The appellant repres entative upon knowing the said fact approached the official of respondent No. 1, who informed that it is their hunch that the value declared by the appellant is not correct as the value declared by the exporter of India in the Shipping Bill No. 9563019 dated 20.08.2016 available on the official website of Indian Customs www .icegate.gov .in is in contradiction of the declared value i.e. INR1902504/- (US$.25804.00, which is excess by US$. 21204.00, as against declared US$. 4,140.00 and assessed US$. 4,600.00. the Official of respondent No. 1 subsequently seized the goods under the provision of Section 168(1) of the Act and served notice on the appellant under Section 171 ibid and established FIR C. No. PQ-222/DGI/Hassan Intl/2016 dated 30.09.2016 with the facts/allegation narrated in the FIR, which instrumental in causing anticipated loss to the exchequer to the tune of Rs. 894,2 10.00 attracting the provision of Sections 25, 32(1), 2, 32A and 79(I) of the Act, Section 3, 6, 7A, 33 and 34 of the Sales Tax Act, 1990 (S.T.A.) and Section 148 of the Income Tax Ordinance, 2001 (ITO) punishable under clauses (14) and (14A) of Section 156(1) of the Act and aforesaid sections of the S.T.A. and I.T.O. The official of the respondent No. 1 thereafter framed contravention report and forwarded to Collector of Customs, Adjudication-1, who marked the same to respondent No. 3, who issued show-cause notice dated 26.10.2016 containing the same facts and contravening provisions and penal clauses of the Act, S.T.A. and I.T.O. to the appellant, the advocate replied to 'that, which failed to impress respondent No. 3 and she passed order vide dated 17.11.2016, through which she held the charges as levelled in the show-cause notice as established and ordered confiscation of the goods subject to redemption of those upon payment of redemption fine equivalent to 35% i.e. Rs. 969,381.00, imposed penalty of Rs. 100,000.00 in addition to alleged evaded/short paid amount of Rs. 894,210.00. Operative para of the order is reproduced here-in-under: "I have gone through the record of the case verbal and written submission of the department. The Directorate alleged that the relevant Bill of lading No.IN80662505 dated 19-.08.2016 issued by shipping Company M/s. CMA CGM, Mumbai (India) revealed that the consignment was exported from Mundr a, India against invoice No. 57 dated 19.08.2016. However , the relevant shipping Bill No., which is normally indicated on the B/L from shipment from India, was not indicated thereon. Hence, further probe was necessitated. Accordingly , the shipping company , M/s. CMA CGM Pakistan (Pvt) Ltd., Karachi was requested vide Directorate's letter C.No. PQ-221/DCl/Misc/2016 dated 26.09.2016 to supply relevant Goods Declaration (Shipping Bill filed by the Indian Importers with the Indian Customs for shipment of the under reference consignment from Mundra Port destined to Karachi vide aforesaid bill of lading. In response, M/s. CMA CGM Pakistan (Pvt.) Ltd., Karachi vide their letter dated 28.09.2016 supplied certified copy of shipping Bill No. 9563019 dated 20.08.2016 filed with Indian Customs at Mundra Sea Port India. Moreover , the scrutiny of shipping bill No. 9563019 dated 20.08.2016 provided by the shipping company , revealed that under reference consignment of 920 packs of Asaliya Seeds, weighing 23 MT were shipped from Mundra Indian against Invoice No.57 dated 19.08 .2016, wherein the FOB export value of the goods was indicated as INR
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1,902,504/- (US$. 25,804/-) which was also declared in the shipping bill, whereas Goods Declaration No. KPPI-HC- 14637- 05092016 filed by the accused importer indicate the C&F value of the consignment as US$. 4,140.00 (PKR: 437062/-). Likewise, manipulated/bogus export invoice bearing the same number and date i.e. 57 dated 19.08.2016 showed CAF value of under reference goods as US$. 4140/-. Online verification of shipping bill No. 9563019 dated 20.08.2016 from the official website of Indian Customs www .icegate.gov .in, further confirms the actual FOB of the consignment of INR 1905,504/-i.e. US$. 25,804/-. The consignment was assessed by the Collectorate at the unit value of US$. 0.20/kg total US$. 4,600/-equivalent to PKR. 485,613/-. On the basis of actual FOB value indicated in the relevant shipping bill filed at port of shipment, the total C&F value of the consignment comes to US$. 25980/-equivalent to Rs. 2769480/-. The leviable duty and taxes on actual transaction value are worked out to Rs. 894,210/- (CD: Rs. 83,084/-, ACD: Rs. 27695/-, ST: Rs. 489,644/- AST: Rs. 86408/- and WHT : Rs. 207,379/-), while evasion of duty/taxes through concealment/misdeclaration of value comes to Rs. 737,416/- (CD: Rs. 68516/-, ACD: Rs. 22839/-, ST Rs. 403788/- AST Rs. 71257/- and WHT Rs. 171,016/-), which are recoverable from the importer . Hence, the charges levelled against the importer of misdeclaration of value has been established in terms of Sections 25, 32(1) and (2), 32A and 79(1) of the Customs Act, 1969, punishable Sections 156(1) (14) and 14A) of the Customs Act, 1969, read with sections 3,6,7A, 33,34 of the Sales Tax Act, 1990 and Section 148(1) of the Income Tax Ordinance, 2001. However , an option under Section 181 of the Customs, 1969 is given to the importer to get his goods released/redeemed on payment of redemption fine 35% amounting to Rs. 969381/- of the value of offending goods amounting to Rs. 2769480/- along with a personal penalty of Rs. 100,000/- is also imposed with a warning to importer to be careful in future, if there is any recurrence in future the importer and his associates would be dealt with stern action. Furthermore, the assessing staff is required to finalized the assessment on the basis of this order and recover legitimate amount of duty and taxes and amount of redemption fine and penalty imposed after application of valuation ruling/criteria, data, which ever is applicable." 3. The Appellant challenged the vires of the impugned order-in-original before the Respondent No. 3 vide Appeal No. Cus/1 186/ 2017/DIT which was dismissed vide order dated 22.12.2017 on the pre-determined notion, without controverting the grounds of memo. of appeal, para 6 is relevant, reproduced here-in-under: "I have examined the case record and the arguments of both the sides and have given careful consideration to the facts of the case. In the instant case, the appellants were charged to have under invoiced the value of impugned goods. The invoice was although not found in the container , the respondent department has detected the under invoicing through backward tracking of B/L, Shipping Bill at country of origin etc culminating in actual invoice value declared to Indian Customs at the time of export of impugned goods to Pakistan. The appellant has not been able to controvert the findings appearing through collected data by the respondent. No reason has been put forth to contest or justify why the value declared at exporting country is different and far more than what has been declared in Goods Declaration. The appellant, case therefore, is not tenable. In view of foregoing, I find no reason to interfere with the findings of the impugned order the appeal being without merit, fails." 4. The appellant filed the instant 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 has been filed within the stipulated period of 30 days by the respondent No. 1, instead comments, which are not in any manner qualify memo. of cross objection, deems to be termed as cross appeal filed under Subsection (3) by the department as expressed in aforesaid section. Therefore, these are to be considered merely as opinion, having no binding force, however , are placed on record of the case for perusal and consideration. 5. Rival parties heard and case record perused and so the relied upon judgments. Consequently framed the following issues for decision: (i) Whether respondent No. 1 and his subordinates are empowered to detain the imported goods under the provision of Section 186 of the Act? (ii) Whether respondent No. 1 and his subordinates have the powers to intercept and detain the lawful legal cleared consignment by the subordinate of respondent No. 2 after completion of codal formalities i.e. passing of
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assessment/clearance order under the provision of Sections 80 and 83 and Rules 438 and 442 of the Act/Rules in exercise of the powers vested upon them through SRO 371(I)/2002 dated 15.06.2002? (iii) Whether respondent No. 1 and his subordinates have been appointed as an officer of Directorate General of Post Clearance Audit by the legislature under Section 3DD of the Act and are empowered to conduct audit the record and books of account maintained under Section 211 and Chapter XI of Act/Rules under the provision of Section 26(2) after serving a notice / summon under Section 26A of the Act post clearance of the imported goods as contemplated in SRO 500(1)/2009 dated 13.06.2009? (iv) Whether powers has been delegated by the Board to the respondent No. 1 and his subordinates under the provision of Sections .25, 25A, 32,79, 80, 83 and 195 of the Act vide SRO 486(1)/2007 dated 09.06.2007? (v) Whether respondent No. 1 and his subordinates are being appointed as an officer of Directorate General of Intelligence and Investigations (Inland Revenue) under the provision of Sections 30A and 230 of S.T.A. and I.T.O. and been delegated powers under the different Sections of S.T.A. vide SRO 776(1)/201 1 dated 19.08.201 1 and Section 207 of the I.T .O.? (vi) Whether Sections 3, 6, 7, 33 and 34 of S.T.A. and Section 148 of the I.T.O. are penal clauses to be invoked for the contravention of the charging /applicable sections of the S.T.A./I.T .O. and as to whether those were correctly invoked by the respondent No. 3 in the show-cause notice? (vii) Whether respondent No. 3 has been appointed as officer of Inland Revenue under Section 30 of the S.T.A. or any section of ITO and as to whether she is empowered to issue show-cause notice and pass order-in-original in the matter of sales/income tax? (viii) Whether respondent No. 1/his subordinates and respondent No. 3 are empowered to reopen a valid assessment/clearance order passed by the authority defined in Section 2(a) under the provision of Sections 80 and 83 and Rules 438 and 442 of the Acts/Rules under the provision of Section 195 ibid, while ignoring the provision of Section 193, wherein, right of appeal has been extended to them by the legislature and as to whether respondent No. 3 is empowered to pile upon anothe r order under the provision of Section 179 of the Act in the presence of existing in field assessment/clearance orders passed under the aforesaid provision of the Act by the authority defined in Section 2(a) ibid? (ix) Whether any contravention of Section 79(1) of the Act has been committed by the appellant? (x) Whether shipping bill of the exporting country is defined document in Section 2(kka) of the Act for submitting/transmitting declaration under the provision of Section 79(1) of the Act and can be construed as a declaration on the part of importer (appellant) through any stretch of imagination? (xi) Whether charge of misdeclaration of value under the provision of Section 32 of the Act can be invoked on the strength of the value available in the shipping bill of export available in Indian Customs Website www .icegae.gov .in and could be treated as direct evidence as enunciated in paras 78, 101 of CGO 12/2002 dated 15.06.2002 and clause (d) of SRO 499(1)/ 2009 dated 13.06.2009? (xii) Whether order passed by respondent No. 4 was within time specified in subsection of Section 193A of the Act? (xiii) Whether orders passed by respon dents Nos. 3 and 4 are speaking and well reasoned and conform to mandated requirement of Section 24A of General Clauses Act, 1897? 6. As regard to issue No. (i). The power/ jurisdiction of respondent No.1 and his subordinates of putting an hold on the GD/ detention on the consignment under the provision of Section 186 needs to be determined, expression of which read as follows: 186: Detention of Goods pending payment of fine or penalty;-- (1) when any goods or fine or penalty has been imposed, or while imposition of any fine or penalty is under consideration, or pending any inquiry or investigation, in respect of any goods such goods shall not be removed by the owner until such fine or penalty has been paid or such inquiry and investigation has been completed. (2) when any fine or penalty has been imposed in respect of any goods, the appropriate officer may detain any goods belonging to the same owner pending of such fine or penalty . Upon conscientious analysis of Section 186, it is observed that the said section comes into play during the course of imports, meaning thereby if any case has been adjudicated by the competent authority against an importer and
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through which he held the charges established as levelled in the show-cause notice and imposed fine and penalty , and the importer has not paid that or any inquiry or investigation in respect of any goods is under way and imposition of penalty is under consideratio n. The appropriate officer is empowered to detain the forthcoming goods of the same owner/importer till the time fine and penalty is not paid. The case of appellant is that against him no order is in field, through which fine/penalty has been adjudged against him and he has not paid that or assailed before the judicial forum, nor any inquiry or investigation in respect of any of his imported goods is under way for imposition of penalty . Resultant, his lawful cleared goods cannot be detained under any pretext by any officer of customs, as regard to the officials of respondent No. 1, they can detained the goods which are either smuggled or of the person involved in smuggling falling within the ambit of Section 2(s) of the Act sans imported goods, power to detain those under A the provision of Section 186 of the Act is only available to the official of Clearance Collectorate upon availability of either of the 02 conditions available in subsection (1) of Section 186 of the Act, resultant, detention of the goods of an importer is not permitted even by the officials of the Clearance Collectorate in the absence of availability of any of the 02 conditions the respondent No. 1 and his subordinates in any way even through stretch of imagination or inapt interpretation of the provision of the aforesaid provision of the Act are not empowered to detain the goods of any importer , appellant is not exception, due to the fact they are not empowered either to pass assessment/clearance order under the provision of Sections 80, 83 and Rules 438 and 442 against the imported goods, or pass order under the provision of Section 179 for imposing fine/penalty or even recover the adjudged amount under the provision of Section 202 of the Act. Resultant, they acted without lawful authority/jurisdiction in detaining the appellant goods on the presumption/formed opinion of misdeclaration of value, rendering the detention as ab-initio, null and void and coram non judice as held by the Hon'ble High Court of Sindh in its judgments reported as 2014 PTD 582 Amir Siddiqui v. Federation of Pakistan and 3 others that "authorities could detained such goods in respect of which inquiry or investigation was pending and not the goods which had been or were imported by a person. The subsequent imported goods belonging to a same owner can only be detained once a fine or penalty has been imposed in respect of any other goods and the same remained un-paid, By no stretch of imagination all subsequent import can be detained or withheld clearance on the premise that some inquiry or investigation is pending in respect of some other goods. In our opinion no such action is permitted under this provision. The respondent are only authorized to take action for issuance of detention notice in terms of section 202 of the Act, once the amount alleged to have been evaded has been finally adjudicated and decided against the person. The procedure and mechanism provided Section 202 of the C.A., 1969 is entirely independent of any action taken in terms of Section 186 of the Act. It is not the case of respondent that any adjudication has been done either in respect of the goods allegedly cleared against fake GD's or even the goods covered by the instant petition and thereafter detention notices have been issued. With this the Hon'ble High Court of Sindh declared the detention of the consignment without lawful authority by holding that provision of Section 186 of the Customs Act, 1969 did not empower the authority to do so." and 2015 PTD 560 Messrs O.S. Corporation v. FOP and others, "where no fine or penalty has been imposed or even under consideration the provision of Section 186 are not relevant---the authorities acting on a hunch have detained goods as the exit gate, even though taxes and duties have been paid and the goods have been released, detaining goods at the exit gate after having releases them is totally contrary to the provision of the Act, 1969". Hence, in categorical terms I hold that detention of appellant goods by the respondent No. 1 is not and only without lawful authority even jurisdiction by virtue of being derogation Section 2(s) and Section 186 of the Act. The issue No. (i) Is answered in negative. 7. As regard to issue No. (ii), the respondent No. 1 and his subordinates are indeed appointed as "Officer of Customs" under Section 3A of the Customs Act, 1969 and they derived power for functioning from S.R.O 486(1)/2007 dated 09.06.2007 within the territory of Pakistan for thwarting the act of smuggling. Their jurisdiction in principle is restricted to the territory not falling within the ambit of Sections 9 and 10 of the Act and beyond 5 kilometers of the border of India and Iran as contemplated in Section 177. ibid and SRO No. 118(1)/83 dated 12.12.1983. The goods of the appellant were not brought into Pakistan from any other route, instead from the defined port after completion of all codal formalities i.e. passing of assessment/ clearance orders under sections 80 and 83 and Rules 438 and 442 of the Act/Rules for levy/realization of the applicable duty and taxes by the authority
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defined in Section 2(a) in exercise of the powers vested upon him through SRO 371(1)/2002 dated 15.06.2002. Resultant, the consignment in question stood ousted from the definition of the smuggled goods and cannot be detained under the provision of Section 186 of the Act, the plea of the representative of the respondent No. 1 that being watch dog of the Revenue Division they are empowered to detain, seize any consignment cleared from the defined port by the officials of the Clearance Collectorate, in case of misdeclaration of description, quantity , quality , weight, PCT, erroneous/non-application of valuation ruling and claiming/allow of the exemption under the respective infield SROs. The said formed opinion/assertion of the respondent No. 1 and his subordinates is based on mistaken belief as any action by them has to be initiated only for the act of smuggling, which can never be invoked on any importer/appellant in case of evasion/short payment of duty and taxes on the cleared goods as evident from the definition of the word smuggle available in Section 2(s) of the Act reading as "means to bring into or take out of Pakistan, in breach of any prohibition or restriction for the time being in forced en-route pilferage of transit goods or evading payment of customs duties and taxes leviable thereon ." Therefore, upon putting a hold on GD/detaining the goods, provision of Section is mandated to be invoked in the FIR, contravention report by the respondent No. 1 and his subordinates for availing powers of seizure under the provision of Section 168(1) of the Act, vested upon them through SRO 486(1)/2007 dated 09.06.2007. Upon perusal of FIR and show-cause notice available at pages 41-45 as Exhibit M and N, I have observed that the provision of Section 2(s) have not been invoked by the respondent No. 1 and his subordinates on the appellant, resultant, they were not empowered to seize the goods under the provision of section 168(1) of the Act of the appellant. Non invoking of Section 2(s) on the appellant is fatal and renders the seizure, preparation of contravention report and the subsequent proceedings…
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