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Petitioner: Messrs Ahmed Trading Company, Gujranwala VS Respondent: The Deputy Director, Director General Of I&I FBR and 3 others
Court Name: Customs Appellate Tribunal Judge(s): Muhammad Sajid Abbasi Title:Messrs Ahmed Trading Company, Gujranwala vs The Deputy Director,
Director General Of I&I FBR and 3 others Case No.: Custom Appeal No.K-762 of 2018 Date of Judgment:2020-09-03 Reported As: 2022 PTD (Trib.) 484 Result: Appeal allowed Judgment ORDER MUHAM MAD SAJID ABBASSI, MEMBER JUDICIAL (CHAIRMAN).---- Through this order , I intend to dispose of Appeal No.K-762/2018 directed against Order-in-Appeal No.1149/2018 dated 16-5-2018 passed by Collects of Customs (Appeals), (Respondent No.4) maintaining the Order-in-Original No.656/2016-17 dated 8-5-2017 passed by Deputy Collector , Collectorate of Customs, Adjudication-I, Karachi (Respondent No.3). 2. Briefly facts of the case are, the appellant is a commercial important, during the course of his business activities he imported a consignment of 25670 CBM/1988 lkgs of embossed MDF Board of different sizes from China @ US$ 50.30 per kg C&F. Upon receipt of documents delivered those to their clearing agent Messrs Khurram Brothers, Karachi for transmitting 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 Sub-Chapter III of Chapter XXI of Custom s Rules, 2001 (Rules), which he did and as per pre-requisite for availing the regime of Customs Computerized System (CCS) deposited upfront duty of Rs. 338,773.00 on 13.10.2016, conse quent to which GD was numbered KPPI-HC-23031 dated 13.10.2016. Upon appearance of which on his work station the nominated Appraiser opted to get the goods examined first prior to passing of assessment order under Section 80 and Rule 438 ibid., to proceed with he adduced his opinion/reasoning for getting the goods examined as enunciated in Section 198 and Rule 433 of the Act/Rules and transmitted that to the Deputy Collector Group-III, MCC of PMBQ (Respondent No. 2), who assented and routed the GD to the Deputy Collector of Customs, Examination, QICT , who nominated the examiner of his choice, who carried out the physical examination and confirm the declaration and report so prepared was uploaded in the reservoir of the GD for the perusal of nominated officer, who upon receipt of that on his workstation passed assessment order with the application of identical/similar goods value as defined in sections 25(5) and (6) and Rules 117 and 118 available in the data reservoir maintained by PRAL under Rule 110 of the period given in Rule
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107 of the Rules on 19.10.2016 while adducing remarks in assessment note reading as "10% loading due to embossing" and transmitted view message for payment of additional amount of duty and taxes of Rs. 40938.00 , which was paid by the appellant on 20.10.2016, consequent to which the inbuilt authority of Custom Computerized System (CCS) passed clearance order under the provision of Section 83 and Rule 442 of the Act. The appellant clearing agent accordingly after obtaining delivery order from the shipping compa ny obtain delivery of the goods from the terminal after payment of their dues and transported the goods to the appellant warehouse in Gujranwala. The Deputy Director , Directorate General of I&I, Karachi (Respondent No. 1) after lapse of 4 months from the date of clearance of the goods conducted audit under the provision of Section 20(2) of the Act of the GD of the appellant and thereafter framed contravention report for misdeclaration of value within the meaning of Section 32 of the Act alleging that the appellant obtain the delivery of the consignment without application of infield Valuation Ruling No.873/2016 dated 21.06.2016 (VR). Which resulted in short payment/evasion of duty and taxes amounting to Rs. 714937.00, hence contravened the provision of sections 25, 25A and 32(1) & (2) and 79(1) of the Act, sections 3, 6, 7A, 33 and 34 of the Sales Tax Act, 1990 STA and Section 148 of Income Tax Ordinance, 2001 (ITO) punishable under clause (14) of section 156 of the Act and forwarded the same through Director to Collector of Customs, Adjudication-I, who referred the same to the competent officer within the meaning of section 179 of the Act, who was the respondent no. 3, who issued show-cause notice dated 09.02.2017 based on narrated fact and contravening provision of the Act/ST A and ITO in the contravention report without even slightest change of comma and full stop. Appellant replied the same vide dated 06.03.2017, through which he challenged the power/jurisdiction of. respondent No. I under the provision of sections 25, 25A, 26(2) and 32 of the Act and in the matter of sales/income tax and so the respondent No. 3 in the matter of sales tax and income tax, in addition to the allegation of mis-declaration in material particular but of no avail and respondent No.3 passed order dated 25.05.2017, through which charges levelled in the show-cause notice were held to be established against the appellant and she ordered payment of short paid amount of duty and taxes along with imposed penalty of Rs.35,000.00. Vires of which was challenged by the appellant before respondent No. 1 under the provision of Section 193 of the Act, which he rejecte d vide order dated 16.05.2018 mainly in regards to power/jurisdiction of respondents Nos. 1 and 3 in the matter of Sales/income tax sans other arguments corresponding to charge of misdeclaration of value and power/jurisdiction of respondent No.1 under the provision of sections 25, 25A, 32 and 80 of the Act and of the respondent No.3 under the provision of Sections 179 and 32 of the Act and Sections 30, 11(3) of the STA and Sections 162(1) and 207 of the ITO. Paras 7 and 8 of which are relevant, hence reproduced here-inbelow for easement: "I have examined the case record and the arguments of both the sides and have given careful consideration to the facts of the case. The appellants have not contested the fact of application of Valuation Ruling on impugned goods. Instead legal points regarding power/jurisdiction of the Directorate General of Intelligence and Investigation, and powers of the customs officers to adjudicate cases relating to recovery of sales tax and income tax have been raised. The respondents have placed on record SRO 486(1)/2007 dated 09.06.2007 which specifies sections of the Customs Act, 1969, which, The Directora te General of Intelligence and Investigati on is authorized to exercise the powers of, Moreover , FBR, vide its letter C.No. 2(2)L&P/2004 dated 29.12.2009 has clarified that the Customs Intelligence can detain or seize goods are still lying in the custom area or are in the process of removal. Regarding powers of customs officer to adjudicate cases regarding recovery of sales tax and income tax, the respondent department proceed letter of FBR which says: Subject: LEGAL OPINION -- ADJUDICA TION OF CASES RELA TING TO LEVY AND COLLECTION OF FEDERAL EXCISE, DUTY , SALES TAX AND WITHHOLDING TAX ON IMPOR TED GOODS. I am directed to refer to the subject cited above and to enclose herewith a copy of a letter No. F.242/2012-Law-I, dated 11.07.2012, issued by the Ministry of Law and Justice, wherein it has been clarified that the Officers of Customs are competent to take cognizance of any short paid amount of Federal Excise duty at import stage and adjudge such cases in view of the provi sions of Section 3(2) of the Federal Excise Act, 2005, namely . "Duty in respect of goods imported into Pakistan shall be levelled and collected in the same manner and at the same time
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as if it were a duty of customs payable under the Customs Act, 1969 (IV of 1969), and the provisions of the said Act including Section 31A thereof shall apply ." 2. Since identical provisions sales exist in the Sales Tax and Income Tax laws, the officers of Customs are also competent to take cognizance of any short paid amount of Sales Tax and Withholding Tax pertaining to import stage. Accordingly , Board's earlier letters on the subject matter bearing C.No. 6(8)S/IR/Ops/2012-8259-R dated 16.01.2012 and C.No. 6(8)S/IR/Ops/2012 -8958-R dated 18.01.2012 issued by the SA to the Chairman FBR and Secretary (IR-Operations), FBR are no longer of any effect , being contrary to the legal provisions of law, as clarified by the law and Justice Division. 3. The relevant Officers of Customs may, therefore, continue the adjudication proceedings already initiated and take cognizance of all cases of FED, Sales Tax and Withholding 'fax pertaining to Import state in future as well. 4. This issues with the approval of Chairman, FBR. End: As above Sd/- (Raza) Secretary (T ariff-I)" 8. In view of aforesaid discussion, I do not find any cogent reason to interfere with the original order which is upheld. The appeal fails." 3. 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 either respondent No.1 or 2, instead comments were filed by respondent No. 1, which does not qualify in any manner memo. of cross objection resultant, could not be termed as cross appeal within the meaning of subsection (3) of Section 194A of the Act. Therefore, these are to be considered merely as opinion, having no binding force, nevertheless, placed on record of the case. The case was fixed for pre-admission on 24.07.2017, on which date it was admitted for regular hearing and was adjourned for 08.08.2018, on which date the consultant of the appellant argued the case threadbare and in support of his stance placed multiple citation of the superior judicial fora. Conv ersely , the representative of the respondent No.1 sought adjournment for preparation/deliberation, which was accorded, subsequently , despite seeking adjournment on 13 occasions i.e. from 28.08.2018 till 18.02.2019, attendance were made simply for seeking adjournments for one reason of no substance. This attitude proves lackluster approach in defending the case. 3.(sic) Heard and case record perused and so the relied upon judgments, for reaching at a just decision following issues are framed: (i) Whether respondent No. 1 and his subordinates have been appointed as an officer of Directorate General of Post Clearance Audit (DGPCA) 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(I)/2009 dated 13.06.2009? (ii) 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(I)/2007 dated 09.06.2007? (iii) 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 STA and ITO and been delegated powers under the different Sections of STA vide SRO 776(1)/201 1 dated 19.08.201 1 and Section 207 of the IT O? (iv) Whether respondent No. 3 was empowered to adjudicate the instant case under clause (ii) of Section 179 of the Act despite involved amount of duty and taxes of Rs.1,099,684.00? (v) Whether the respondent No. 3 has powers to adjudicate the case of value misdeclaration falling under the provision of Section 25 of the Act, read with SRO No. 495(I)/2007 dated 09.06.2007 further read with para 44 of CGO 12/2002 dated 15.06.2002?
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(vi) Whether Sections 3, 6, 7, 33 and 34 of STA and Section 148 of the ITO are penal clauses to be invoked for the contravention of the charging/applicable sections of the STA/ITO 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 STA 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 have been extended to them by the legislatur e 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 infield 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 charge of misdeclaration of value under the provision of Section 32 of the Act can be invoke on the strength of the valuation ruling 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(I)/2009 dated 13.06.2009? and as to whether valuation ruling can be applied on the imported goods which have already been cleared under the provision of Section 83 and Rule 442 after passing of valid assessment order for levy of duty and taxes under the provision of Section 80 and Rule 438 of the Act/Rules? (xi) Whether column of value appearing in GD could be amended under Section 205 after clearance of the imposed goods in derogation of the provision of Section 29 of the Act? (xii) Whether order passed by respondent No. 4 was within time specified in subsection (3) of Section 193A of the Act? (xiii) Whether orders passed by respondents Nos. 3 and 4 are speaking and well-reasoned and conform to mandated requirement of Section 24A of General Clauses Act, 1897? 4. That as regards to issue No. (i). The legislature has inserted Section 3DD in the Act, through which DGPCA has been created and its officials had been delegated powers through SRO 500(I)/2009 dated 13.06.2009 for conducting audit under Section 26(2), of the record/books of an importer maintained under Section 211 and Chapter XI of Act/Rules after serving notice/summon under Section 26A of the Act, wherein, they check all the aspects corresponding to the declaration made under section 79(1) based on defined documents in Section 2(kka) and assessment order passed by the competent authority under section 80 of the Act. Thereafter , upon finding discrepancy or any ambiguity in any context i.e. declaration or the contravention of the law, prepares audit observation and serves that on the importer for clarification, if the reply is not convincing as per their formed opinion, frames contravention report and forward that to the Collector of Customs of the respective Clearance Collectorate, which onward forwards it to the respective Collectorate of Customs, Adjudication for issuance of show-cause notice under section 180 of the Act and passing of order-inoriginal as per the expression of Section 179 ibid. The officials of 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), in the absence of availability of powers. Neither respondent No. 1 nor his subordinates are permitted under law to transgress the sovereign jurisdiction/powers of DGPCA and his subordinates under any circumstances as this will reader 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. The Tribunal has observed with great concern that the respondent No. 1 and his subordinates are running parallel department of the DGPCA which is in derogation of Section 3DD ibid, not warranted under law being instrumental in creating a situation of anarchy within the different organs of FBR, who will left no stone unturned for exceeding their jurisdiction while encroaching the powers/jurisdiction of the other sovereign organ of the FBR. These type of acts cannot be allowed to be perpetuated under any circumstances instead have to thwart from the very beginning for sustaining the integrity and independent of the different sovereign organs of FBR.
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Therefore, conduction of audit post clearance under section 26(2) by the subordinate of respondent No.1 of the GD of the appellant is without lawful authority as such without any power/ jurisdiction, hence, void and ab-initio and coram non judice as held in the relied upon judgments on the said point of law by the appellant in ground No. (i) available at pages 3 and 4 of the memo. of appeal. The issue No. (i) is answered in negative. 5. That as regard to Issue No. (ii). On perusal of contravention report prepared by the respondent No. 1 and his subordinates, on the strength of which respondent No. 3 issued show-cause notice and passed order-in-original, it has been observed that charges against the contravention of the provision of Sections 25, 25A, 32(1) and (2), 32A and 79 of the Act have been levelled against the appellant despite non availability of powers under these Sections in column 3 of SRO 486(1)/2007 dated 09.06.2007, rationale for that was under subsections (1) to (6) of Section 25 of the Act the competent officer of the Clearance Collectorate is empowered to determine /evaluate the declared value of the imported goods for levy/collection of duty and taxes after passing valid appealable assessment order under the provision of Section 80 and C Rule 438 of the Act/Rules but prior to passing of clearance order under Section 83 and Rule 442 ibid, whereas under Section 25A powers has been delegated to the Director , Directorate General of Valuation for determination of value of the goods and class of goods imported under the provisions of subsections (7) to (9) of Section 25 of the Act and to issue the ruling to the said effect for application on the goods, for levy of duty and taxes at the time of passing assessment order . Section 32 expresses that If any person, in connection with any matter of customs, ---- makes or signs or causes to be made or signed, or delivers or causes to be delivered to an officer of customs any declaration, notice, certificate or other document whatsoever , or (a) makes any statement in answer to any question put to him by an officer of customs which he is required by or under this Act to answer , Knowing or having reason to believe that such document or statement is false in any material particular , he shall be guilty of an offence under this section. (Emphasis Supplied). None of the importer including appellant make or sign or cause it to be made or signed or delivers or causes to be delivered to an officer of customs any decla ration for the clearance of their goods, which are not either respondent No. 1 or his subordinates, instead the entire declaration and subsequent proceeding is made/completed with/by the officials of Clearance Collectorate i.e. respondent No. 2. Section 79(1) of the Act speaks about filing/transmission of GD for the imported goods with the respective Clearance Collectorate, meaning thereby it is a machinery section not charging, if the GD was either auto selected or by the assessing officer for examination under the provision of Section 198 and Rule 435 of the Rules, its stands ousted from the said section and falls under the provision of section 80 and Rule 438, which lays inbuilt duty on the officer of the clearance Collectorate to check all the aspect of the case and so the levy of duty and taxes and claimed exemption, evident from their expression reading as: "Section 80 Checking of goods declaration by the Customs ---- (1) on the receipt of goods declaration under section 79, an officer of customs shall satisfy himself regarding the correctness of the particulars of imports, including declaration assessment, and in case of the customs computerized system payment of duty, taxes and other charges thereon." and "Rule 438---Assessment by Customs Authorities: Where any declaration has been filed under Rule 433 or additional documents have been submitted under Rule 437 the Customs shall satisfy itself as to their correctness including its value, classification claim of exemption, payment of duty and taxes and may reassess the goods during or after clearance". Section 195 of the Act empowers the Collector of Customs or Board to call for the record of the order/decision passed by subordinate officer for determination of their legality or propriety , in case any illegality or impropriety apparent from the passed order/decision, are empowered to reopen the same and pass a fresh order as he/it deems fit after issuance of show-cause notice, enabling the importer or the person concerned to assail the same before the forum outlined in the provision of Section 194A(1) of the Act. In the light of the adumbration made here-in-above it is established in unequivocal terms that neither respondent No. 1 or his subordinates are empowered to initiate action of detention, seizure preparing of contravention report against the imported goods despite availability of the contravention of the invoked provision in the contravention report, as this is tantamount to reopening of assessment order under Section 195 of the Act, where in respondent No.1 and his subordinates figures nowhere, likewise in the application and implication under the provision of Sections 25, 25A, 32, 79, 80 and 83 of the Act/Rules as deliberated above, rendering their act as transgression to the vested powers of the appropriate authority defined in
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Section 2(b) under the aforesaid sections of the Act, consequent result of which is that the entire proceeding right from detention to passing of order-in-original is without lawful authority/jurisdiction . Hence, ab-initio, null and void by virtue of the fact that it is settled principal of law that no body is allowed to act beyond the scope of their allotted sphere, jurisdiction and powers as held by the superior judicial fora in their judgments reported at 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. The issue No.(ii) is answered in negative. 6. As regard the issue No. (iii) , upon perusal of amended Section 30A of the STA by Finance Act, 2012 and insertion of Section 230 of the" ITO by Finance Act, 2012, I found that the respondent No. 1 has not been appointed/designated as Officer of Inland Revenue by the legislature, instead Directorate General of Intelligence and Investigation-Inland Revenue which has been delegated powers under SRO. 776(1)/201 1 dated 19.08.201 1 for exercising under different section of the STA referred in column 3 of the notification and under section 207 of the ITO and for overseeing the collection of withholding Tax, Directorate General of Withholding Taxes has been established under Section 230A of the ITO, meaning thereby that the respondent No. 1 and his subordinates are not at all appointed /designated as officer of Inland Revenue. Rendering the entire act of preparation of contravention report in the matter relating to sales tax and income tax by the official of respondent No.1 without powers/jurisdiction and as such coram non judice and this stood validated from the latest reported judgment 2014 PTD 1733 Waseem Ahmed and others v. Federation of Pakistan and another , where it has been held in clear terms that "unless the officer of DGI&I FBR are unappointed as an officer of Inland Revenue, powers under the different subsection of the Sales Tax Act, 1990 cannot be delegated through any SRO with that the Hon'ble High Court of Sindh declared that the act and commission taken by the respondent No.1 in the presence of existing section 30A of the Sales Tax Act, 1990 and Notification No. SRO 776(1)/201 1 the act and commission done by the respondent No.1 in the matter of Sales Tax beyo nd the date of substitution of section 30A and date of notification is without any lawful authority". The issue No.(iii) is answered in negative. 7. That as regard to issue No. (iv). Section 179 of the Act expresses that the powers of adjudication have to be determined by the authority adjudicating the case on the basis of amount of duty and taxes involved (not evaded or short paid) excluding the conveyance. In the instant case the amount of duty and taxes involved are Rs.1.099,684.00 (paid upfront) on 13.10.2016 Rs.338.773.0 + paid additional amou nt on 20-10-2016 Rs.45,938.00 upon passing of assessment order unde r Section 80 and Rule 438 +…
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