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Petitioner: Messrs PAK ELEKTRON LIMITED, LAHORE VS Respondent: ADDITIONAL COLLECTOR OF CUSTOMS, LAHORE and others
Court Name: Customs, Excise and Sales Tax Appellate Tribunal Judge(s): Muhammad Arshad, Shahid Mehmood Bhatti Title:Messrs PAK ELEKTRON LIMITED, LAHORE vs ADDITIONAL COLLECTOR OF
CUSTOMS, LAHORE and others Case No.: Customs Appeal No. 322 of 2010, Date of Judgment:2011-08-02 Reported As: 2012 PTD (Trib.) 1650 Result: Order accordingly Judgment ORDER SHAHID MEHMOOD BHATTI, MEMBER (JUDICIAL-II).--- This order will dispose of Customs Appeal No.322 of 2010 filed by the appellant against Order-in-Appeals Nos.324-327/2010 dated 25-10-2010 passed by the Collector of Customs (Appeals), Lahore. 2. Brief facts of the case as reported by the Principal Appraiser Customs Examination, (Group-IV), Dryport Mughalpura, Lahore vide contravention report issued under endorsement C. No. V-CUS/MISC- 386(1V)/2010/901 dated 12-5-2010 are that Messrs Pak Electron Limited, Lahore imported a consignment from China declared to contain 2500 sets of Evaporators and Condensers for split air conditioner in 2x40" containers and 1x20' container with declared value as US Dollars 61,050 (FOB) vide Invoice No. HQDR3601071427-1 dated 1-3-2010 and filed GD through Messrs. Ranziq International (Pvt.) Limited, (CHAL No. 110/74) under the regime of ACP for clearance of the same. The goods declaration was registered vide No. LDRY-HC-12509 dated 29-4-2010 at Dryport Lahore Accordingly, assessm ent of the imported goods was completed on the declared value US Dollar 64,740 (C&F). The importer paid the duty and taxes on 4-5-2010 vide cash number HC-116. Before allowing delivery, the aforesaid containers were inspected to ascertain whether the documents i.e. Invoice and packing lists were placed inside the container as required under Rule 389(a) of the Customs Rules notified vide S.R.O. 450(1)/2001 dated 18-6-2001. On inspection, a commercial invoice showing value (worked out on the basis of unit value mentioned in the recovered invoice) as US Dollar 346,382 FOB [US Dollars 350,072 C&F] was recovered from the container. The consignment was also physically examined to Confirm actual description and quantity of the imported goods which
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resulted in recovery of 2525 sets as against the declared quantity of 2500 sets. The said fact confirmed that the importer has, willfully and deliberately, submitted forged and untrue documents declaring less than actual value and quantity of the imported goods in a bid to evade duties and taxes amounting to Rs.7,587,847 (Customs Duty Rs.1,845,447, Sales Tax Rs.4,259,417, Income Tax Rs.1,235,223 and Federal Excise Duty Rs.247,760), within the meaning of sections 32(1) and 32(2) of the Customs Act, 1969 read with section 36 of the Sales Tax Act, 1990 further read with section 148 of the Income Tax Ordinance, 2001, punishable under clause (14) of section 156(1) of the Customs Act, 1969 read with S.R.O. 499(1)/2009 dated 13-6-2009 further read with section. 33(5) of the Sales Tax Act, 1990. 3. Adjudication proceedings were initiated against the appellant and the Additional Collector of Customs (Adjudication), passed the Order-inOriginal No.34 of 2010 dated 21-5-2010. The extract of the concluding para of the order is enumerated below:-- ....................... In view of what has been discussed above, I have been left with no option but to conclude that the charges as mentioned in the contravention report are established against the importer. Accordingly, I hereby order as under:-- (i) The imported goods are confiscated under clause (14) of section 156(1) of the Customs Act, 1969; However, an option under section 181 of the Customs Act, 1969 read with clause (d) of S. No. 1 of the table in S.R.O. 499(1)/2009 dated 13-6-2009 is allowed and the confiscated goods are redeemed to its lawful owner on payment of redemption fine equal to 35% (thirty five percent) of the assessed value (US$ 350,072) of the goods in addition to payment of dutties and taxes leviable under the law. Needless to say that the amount of duties and taxes, already deposited against Goods Declaration No. LDRY-HC-12509 dated 29-4-2010 shall be adjusted accordingly. (ii) The respondent is hereby` warned to be careful in future. (i.e) The Additional Collector of Customs, Dryport Moghalpura, Lahore may like to examine the matter to discontinue the facility of ACP to the respondent." 4. The order was challenged before Collector (Appeal), who instead of deciding the appeal on merit while considering the fact of the case, provisions of the Customs Act, 1969 and Rules and Regulation framed there under, merely disposed of the appeal through a single order. The relevant extract of the order is reproduced herein-below:--- 'Considering the overall circumstances of the case, it is established that during the examination of the impugned consignment imported from China, the original commercial invoice showing value of US$ 350,072 (C&F) was recovered from the container as against the declared value US$ 64,740 (C&F). On the other hand, the prosecution department itself referred the matter to valuation department for determination of value of the subject component/parts of split air conditioner which is essential for the final determination of value. As the ease is to be decided within the time limit prescribed under section 193 of the Customs Act, 1969 and since no reply from the Valuation Department so far been received, the case cannot be kept pending for indefinite period. Therefore it is appropriate that the concerned custom authority finalize the value in terms of the mandatory provision of law. 5. The vires of the said impugned order has now been challenged through the instant appeal before the Customs Appellate Tribunal on the Following summary and grounds of appeal:-- (i)' That case relates to the Goods Declaration No.LDRY-HC-12509 dated 29-4-2010. (ii) The appellant filed Goods Declaration (G-D) supported by Commercial Invoice issued by L.G. Electronics Inc................. Korea, for import of Evaporators Enamelled and coated and Condensers for Split Type Air Conditioners (12000 BTU). Assessment of the goods was made on the declared value. The appellant paid the duties and taxes vide cash number I-IC-116 dated 4-5-2010. (i.e) According to the prosecution story the containers were inspected and commercial invoice showing value (worked out on the basis of unit value mentioned in the recovered invoice) as US
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Dollars 346,382-FOB (US Dollars 350,072 C&F) was recovered from the containers. (iv) At this stage it may be noted that it is alleged by the prosecution that commercial invoice was recovered. On the other hand value is being worked out on the basis of unit value. The so-called invoice did not give the value of the consignment. The consignment was examined which resulted in recovery of 2525 sets as against declared quantity of 2500 sets. (v) The prosecution has alleged that the appellant has contravened the provisions of sections 32(1) and 32(2) of the Customs Act, 1969 read with section 36 of the Sales Tax Act, 1990......................... Punishable under Clause (14) of section 156(1) of the Customs Act, 1969. (vi) The allegation is contravention of sections 32(1) and 32(2) of the Customs Act, 1969 which means that the appellant has done opposite to that which has been given in these provisions. Delay in the release of goods was injurious, therefore, the appellant requested for summary adjudication. ii) In para 4 of the order-in-original it has been observed that the appellant requested for summary adjudication of the case without issuance of a show-cause notice. The appellant did not request for adjudication without issuance of show-cause notice. (viii)Below para '4' of the order-in-original the contentions made in writing by the appellant have been reproduced which clearly show that appellant made request for "summary adjudication" only. (ix) The order-in-original is against the provisions of section 180(a) of the Customs Act, 1969. The appellant had declared 2500 units in the G.D. But 2525 units were found in the consignment. (x) The appellant had declared 2500 units on the basis of commercial invoice received through Bank. The supplier sent 2525 units to cover warranty on the basis of 1%. The commercial invoice gave 2500 units as consideration was received for 2500 units and 25 units were warranty. These are not to be counted as per trade custom. The amount of the letter of credit covered the whole consignment. (xi) The commercial invoice filed with G-D was issued by L.G. Electronics Inc. Korea and it gives the description of goods as: Evaporator/Condenser of Split Type Air Conditioner, TSC126LGA7, A Class-1 Tone 2500 sets, USD (12,000 BTU) 24.4200, G1050-00, Evaporator Enamelled and 2500 USD, coated 12.1400, Condenser 2500 USD, 12.2800 (xii) The so-called 3 invoices recovered from the containers purport to have been issued by L.G. Electronics TIANJIN Appliances.......................... China and give the description of goods as "Single Split Wall". There is no such description of goods in the H.S. Code. (xiii)In the first and second so-called invoices there are seven different rates of seven different goods each 2500 and total 17,500 in each of the two. In the 3rd so-called invoice there are 6 different rates of 6 different goods total 2400. In the invoice filed with G-D reference is made to purchase order of the importer, proforma invoice of the supplier, letter of credit H. S. Code No. 8415.9019 and 8415.9029 whereas in the so-called invoices these references have not been given. (xiv)The name of supplier in the invoice filed with G-D and the so-called invoices are different. In a similar case Order-in-Original No. 45 of 2010 was passed. (xv) In para 10(vi) of this order it has been observed that the Commercial Counselor Embassy of Pakistani soul, Korea has attested the invoice which has been presented before the Customs along with the Goods Declaration. This proves the contention of the appellant. The goods were supplied by the party in Korea, The onus of proof of the so-called invoice is upon the prosecution. GROUNDS OF APPEAL; (xvi) That the impugned orders are bad in law and wrong on facts. (xvii) That determination of value of goods is against the relevant provisions of law.
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(xviii) That the impugned orders are against the provisions of section 180(a) of the Customs Act, 1969. (xix) That the action is against the provisions of section 80(4) of the Customs Act, 1969 (xx) That the process of appreciation of evidence is against law. (xxi) That there is no evidence to attract Clause (14) of section 156(1) of the Customs Act, 1969. (xxii) That evidence has not been appreciated with judicial mind. (xxiii) That Collector (Appeals) failed to consider points of law and points of fact and failed to give any finding on points of law or points of facts. That evidence has been misread. (xxiv) Lastly the appellant prayed that the impugned orders may be set aside. 6. The departmental representative filed para were comments on grounds of appeal which are as under:-- (i) Factual needs no comments. (ii) Admitted to the extent of the narrated facts. (i.e) Admitted to the extent that the assessable value was worked out on the basis of unit value declared on the recovered invoice and by addition of the freight cost to arrive at the C&F value. (iv) Factual needs no comments. (v) The importer presented fake invoice to the Customs on the basis of which the assessment was made. However, on physical examination of the container the original invoices were recovered showing much higher values. Therefore, the action of the importers attracts the provisions of sections 32(1) and 32(2) of the Customs Act, t969 punishable under clause (14) of section 156(1) ibid. (vi) The appellant have failed to appreciate the spirit of sections 32(1) & 32(2) of the Customs Act, 1969. (vii) The appellant willfully opted for summary adjudication. (viii)The option for summary adjudication automatically means that the appellant withdrew their right of issuance of show-cause notice. (ix) Needs no comments. (x) Not admitted the appellant themselves requested in writing for summary adjudication of the case without issuance of show-cause notice. (xi) Factual needs no comments. (xii) The importer declared 2500 sets in the invoice but on physical examination 25 sets were found in excess of the declared quantity and therefore, the importer misdeclare the quantity. Moreover, it was never mentioned in the presented invoice or Goods Declaration that these 25 sets are warranty parts. (xiii)Needs no comments. (xiv)The recovered invoice on the container shows the name of supplier as "LG Electronics Tianjin Appliances Co., Ltd. Xing Dian Road, Bei Chen Dist Tianjian, China, Tel 0086-22-269". Although the presented invoice shows the address of the supplier as "LG Electronics Inc., LG Twin Towers ... Korea" but the shipment was made from China and therefore, the recovered invoice showing the supplier address in China is the original and correct invoice. The description i.e. "Single Split Wall" as mentioned on the recovered invoice means that the imported items are meant for split type air conditioners wall type. (xv) That mere non mentioning H.S. Codes does not have any impact on the genuineness of the recovered invoice. (xvi) Admitted to the extent that the invoices recovered from the container show different rates of the evaporator and condenser with total quantity of 17500 and 2400. However, for assessment purpose minimum values have been taken from the recovered invoices.
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(xvii) The recovered invoices were issued by the manufacturer in China whereas, L/C was opened in Korea. Therefore, the recovered invoices has no mention of purchase order, proforma invoice, L/C or H.S codes. (xviii) Not admitted. It is incorrect to say that the name of supplier on the presented invoice and the recovered invoice are different. In both the cases supplier names has been mentioned as LG Electronics but only the addresses are different. (xix) Admitted that the confirmation bearing the signature of Mr. Faud Hashim Rabbani, Commercial Counseller, Embassy of Pakistan, Seoul Korea was received whereby the invoice dated 10-2-2010 as presented by the respondent along with Goods Declaration has been attested. However, the confirmation was required from the Commercial Counseller, Embassy of Pakistan in China as the recovered invoice was issued from the supplier in China. Moreover, in the presence of actual invoice recovered from the container, no further proof is required. GROUNDS OF APPEAL: ' (xx) The order-in-original and order-in-appeal were issued but the competent authorities after giving ample opportunity of hearings to the appellant and after fulfilling all the legal requirements. Therefore, the said orders are lawful in all respect. (xxi) No determination of value has been made by the department but the actual invoices recovered from the container have been relied upon. (xxii) Not admitted the appellant themselves requested in writing for summary adjudication of the case without issuance of show-cause notice. (xxiii) Not admitted. Section 80(4) of the Customs Act. 1969 deals with Customs Computerized System which is operative only at PaCCS, Model Customs Collectorate, Karachi. (xxiv) Not admitted. The direct evidence recovered in the shape of original invoice from the container cannot be denied. (xxv) In the light of facts of the case. It is established that the importer presented a fake invoice along with Goods Declaration and therefore, misdeclare the value just to evade the legitimate government revenue. This offence attracts clause (14) or section 156(1) of the Customs Act, 1969. (xxvi) Not admitted. Due consideration has been given to the arguments both verbal and written presented by the appellant at adjudication and appellate stage. (xxvii) Not admitted. The Collector (Appeals) considered the view point of the importer as well as department at length. (xxviii) Not admitted. No question of misreading of the evidence arises as the original invoice was recovered from the appellant's container. (xxix) That the importer by submitting forged and untrue import documents, misdeclaring value, quantity and misusing the facility of ACP has attracted the provisions of sections 32(1) and (2) of the Customs Act, 1969, therefore, liable to be punished as per law. 7. The advocate of the appellant also filed submissions in response to the reply of the Department which is as under:-- (i) That the case relates to Goods Declaration No. LDRY-HC12509, dated 29-4-2010. (ii) That the case of the respondent is on the basis of 3 papers allegedly recovered from 3 containers. These are alleged as invoices recovered from the containers. (i.e) That an invoice is a document issued by seller to a buyer listing the goods supplied and stating the sum of money due. (iv) That it is undisputed that 2525 Evaporators and 2525 condensers for split type Air Conditioners were recovered from the containers the total number of goods is 5050. (v) That in the summary of the case the appellant had asserted that in the first and second so- called invoices there are seven different rates of seven different goods each 2500 and total 17,500
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in each of the two (total 35,000). It was also asserted that in the 3rd so-called invoice there are 6 different rates of 6 different goods total 2400 thus total comes to 37,400. (vi) That in para 16 of the reply the department has stated "It is admitted to the extent that invoices recovered from the container show different rates of the evaporator and condenser with total quantity of 17500 and 2400". It is submitted that the words "evaporator" and "condenser" do not appear in the so-called invoices. (vii) In para "7(i.e)" of the order-in-original it has been observed that two of the invoices, recovered from the containers indicate dispatch of 35000 piece of product as against the quantity of 2525 sets which has been found in the containers. (viii) That so-called invoices indicate 37400 pieces in 3 containers whereas 5050 pieces were recovered from the 3 containers. (ix) That it is thus clear that the so-called invoices cannot be considered invoices of the consignment. (x) That description of goods in the First Schedule to Customs Act, 1969 is in consonance of the H.S. Code and throughout the world in relation to import and export the invoices are issued in consonance of the H.S. Code. (xi) That the so-called invoices give the description of goods as "single split wall". This is not in consonance with the H.S. Code. (xii) That in para "17" of the reply of the department it has been contended that L/C was opened in Korea, and the recovered invoices were issued by the manufacturer in China, therefore, the recovered invoices has not mentioned the purchase, order, proforma invoice, L/C or H.S. Codes. (xiii) It is submitted that the so-called invoices cannot be treated as invoices of the consignment. The appellant contracted with the party in Korea and not with any party in China. (xiv) That in para '19' of the reply by the department it has been admitted that "confirmation bearing the signature of Mr. Faud Hashim Rabbani, Commercial Counseller, Embassy of Pakistan, Seoul Korea was received whereby the invoice dated 10-2-2010 as presented by the appellant along with Goods Declaration has been attested. However the confirmation was required from the Commercial Counseller, Embassy of Pakistan in China as the recovered invoice was issued from the supplier in China". (xv) It is submitted that the invoice relied upon by the appellant has been verified whereas the alleged so-called invoice relied upon by the department has not been verified. (xvi) That a perusal of the contents of para '14' of the reply along with other facts of the case proves beyond any doubt that the party in Korea is the supplier though the shipment was made from China. (xvii) That contents of para '10' of the reply and those of para '4' of the order-in-original regarding request of appellant for adjudication of case without show-cause notice are disproved by the request of the appellant reproduced in para '4' of the orderin-original. (xviii) That section 180 of the Customs Act, 1969 lays down that no order under this Act shall be passed unless the owner of the goods "is informed in writing (or if the person consents in writing, orally) of the grounds on which it is proposed to confiscate the goods or to impose penalty". (xix) That in the show-cause notice it was alleged that the appellant had contravened the provisions of sections 32(1) and 32(2) of the Customs Act, 1969. It clearly means that the appellant has done opposite to that which has been given in these provisions. (xx) That it has been explained that the appellant had declared 2500 units on the basis of the invoice. The commercial invoice gave 2500 units as consideration was received for 2500 units and 25 units were warranty. The amount of the letter of credit covered the whole consignment including the warranty units.
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(xxi) That in the order-in-appeal it has been observed: "considering the overall circumstances of the case, it is established that during physical examination of the impugned consignment imported from China, the original commercial invoice showing value of US$ 350,072 (C&F) was recovered from the container". It is submitted there is no such invoice. (xxii) That in the order-in-appeal the contentions of the appellant have been reproduced but these have not been considered in the order-in-appeal. (xxiii) That the adjudicating authority misapprehended the contention of the appellant and observed that it is clarified that the imported goods even if for the purpose of warranty are not exempt from leviable duties and taxes. The contention of the appellant was to the effect that the quantity found in excess is 1% of the quantity shown in the invoice. This was supplied to meet with the warranty obligation. The amount paid as consideration to the supplier covered this warranty also. That duty etc. Is with reference to the consideration paid. Without prejudice to the above it was also submitted that S.R.O. 499(1)/2009 (Sr. No.1(a) of the Table) lays down that no penalty is attracted if the excess quantity is less than 5% of the quantity shipped/ declared. (xxiv) That the observations in the order-in-original with reference to so-called invoices are biased and unreasonable. (xxv)That observation in the order-in-original given in para 6(iv) are unintelligible. That there is no case against the appellant. GROUNDS OF APPEAL: (xxvi) That in the Order-in-Appeals Nos. 324-327 of 2010 against Order-in-Original No. 34 of 2010 in para "11" it has been observed: "considering the overall circumstances of the case, it is established that during the physical examination of the impugned consignment imported from China, the original commercial invoice showing value of US$ 350,072 C & F was recovered from the containers". This is disproved by para '3' of the reply by the department to summary of the case. (xxvii) Contentions of the appellant reproduced in order-in-appeal have not been considered by the Collector (Appeals). The orderin-original was passed without show-cause notice. The contentions made by the appellant have not been considered. The inferences are against principles of appreciation of evidence and application of law. (xxviii) That so-called invoices are not invoices of the consignment. These do not give required particulars in accordance with the legal provision. This is against section 25 and section 25-A of the Customs Act, 1969. (xxix) That the appellant did not make any request for adjudication without show-cause notice. Section 180(a) of the Customs Act, 1969 expressly lays down issuance of show-cause notice. The duty cast on the adjudicating authority is inviolable. The right given to the appellant is inalienable. That the principle is applicable. (xxx)That the so-called invoice is not invoice. It does not relate to the consignment. It does not conform to the invoice for the purpose of export and import. It does not relate to the contract. It was not issued by the exporter. That the invoice presented by the appellant is true. (xxxi) That contentions of the appellant reproduced in order-inoriginal and order-in-appeal have not been considered. The reason's assigned are unreasonable. Most of the reasoning is unintelligible. (xxxii) That the Collector (Appeals) merely observed that "it is established that during physical examination the original commercial invoice showing value of US$ 350,072 (C&F) was recovered from the container". This is incorrect. That the evidence has been misread. 8. The department filed comparative chart showing details of actual invoice, retrieved invoice and the examination on the directions given by this Tribunal, which are as under:-- Actual invoice FOB XINGANG SEAPORT, CHINA
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AS…
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