Full Judgment Text & Judicial Ruling

2018 P T D (Trib.) 1991 [Customs Appellate Tribunal] Before Tahir Zia, Member (Judicial-II) Messrs TRACKING WORLD (PVT.) LTD., LAHORE Versus COLLECTORATE OF CUSTOMS, MCC OF APPRAISEMENT-WEST, KARACHI and 2 others Customs Appeal No.K-1238 of 2016, decided on 24th May, 2017. (a) Customs Act (IV of 1969)--- ----S. 186---SRO No.371(I)/2002, dated 15-6-2002---Detention of the consignment---Consignment could only be detained under S.186 of the Customs Act, 1969, after payment of leviable duty and taxes and order of clearance by the authority defined under S. 186 or SRO No.371(I)/2002, dated 15-6-2002, if any adjudication order against the importer was in field and wherein fine/penalty had been imposed and which was not paid; or in the case wherein contravention report had been framed in an under-clearance consignment; for adjudication by the competent authority as defined in S.179 of the Customs Act, 1969 for imposition of fine or penalty---In the absence of the said conditions in the provisions, consignment, could not be detained under S.186 of the Customs Act, 1969---In the present case, no such order was available; wherein adjudicating authority had imposed any fine or penalty on the importer, nor any contravention report was prepared for the purpose of adjudication, prior to passing of assessment/clearance order under the respective provisions of the Act/Rules---Consignment, in the present case, had been detained by subordinates of the Director of Intelligence and Investigation, after passing of valid assessment/ clearance order by the adjudicating authority in exercise of the powers conferred upon him by S.R.O. No.371(I)/2002, dated 15-6-2002 on the premises that the goods so imported were under assessed on the basis of declared erroneous description, PCT and appreciation of incorrect value---Detention under such pretext was not permissible under the provisions of S.186 of the Customs Act, 1969---Officials of Director of Intelligence and Investigation or any other authority being not competent to detain the consignment on said pretext was in derogation of the express provision of S.186 of the Customs Act, 1969. [Case law referred]. (b) Customs Act (IV of 1969)--- ----S.168---S.R.O. No.486(I)/2007, dated 9-6-2007---Seizure of goods---Director of Intelligence and Investigations, and the officials derived powers for functioning by S.R.O. No.486(I)/2007, dated 9-6-2007 for thwarting the act of smuggling---Such authority would not mean that they had unfettered powers to intercept and detain the goods cleared by the officials of Clearance Collectorate after completion of codal formalities and realization of the leviable duty and taxes, for delivery to the importer through his representative; either in the terminal or their office---Jurisdiction of the said authorities, in fact, was only restricted to the areas falling outside the purview of Ss. 9 & 10 as expressed in S. 177 of the Customs Act, 1969 and S.R.O. No.188(I)/83, dated 12-12-1983---Without any allegation of smuggling, in the contravention report and invoking of the said jurisdiction in the show-cause notice, Collectorate of Customs, could not assume powers of seizing the goods under S.168(1) of the Customs Act, 1969---Directorate of Intelligence and Investigation was not empowered to exercise powers under the provisions of S.168(1) of the Customs Act, 1969, which could only be exercised by invoking the provisions of S.2(s) of the Customs Act, 1969---Goods, in question could not even be seized by said directorate---Unlawful act of the directorate of Intelligence and Investigation was an act of high handedness, abuse of powers being in violation of the law, void ab initio and coram non judice. [Case law referred]. (c) Customs Act (IV of 1969)--- ----Ss. 32, 79, 80 & 195---S.R.O. No.371(I)/2002, dated 15-6-2002---Untrue statement, error etc.---Assessment of duty---Powers of the Federal Board of Revenue or Collector of customs to pass certain orders---Federal Board of Revenue had not delegated powers to the Director of Intelligence and Investigation under the provision of Ss.32 & 79 of the Customs Act, 1969 which were incorporated in the contravention report and were invoked in the show-cause notice by Additional Collectorate of Customs; because S.32 provided about false statement, error etc. and S.79 (Declaration and Assessment of Home Consumption Warehousing) was a machinery section and defined the procedure for filing of goods declaration by the importer---For re-opening of the appealable order, powers under S.195 of the Customs Act, 1969 had been conferred either on the Collector of Customs or Federal Board of Revenue---Despite the fact that no powers under said sections were available with the Directorate of Intelligence and Investigation reopened the assessment order passed by the competent authority under the provisions of S.80 of the Customs Act, 1969---Mode and manner in which the said Directorate operated, was nothing more than creating a situation of anarchy---Detention/seizure and subsequently preparation of contravention report by the Directorate of Intelligence and Investigation and issuance of show-cause notice/ passing of order-in-original by collectorate of customs and putting thereupon order-in-appeal, were without powers/jurisdiction and lawful authority, as such, null, void ab initio and coram non-judice. [Case law referred]. (d) Customs Act (IV of 1969)--- ----Ss. 80, 179, 180 & 193---S.R.O. No.371(I)/2001, dated 15-6-2001---Assessment order---Assessment order by adjudicating authority under S.R.O. No.371(I)/2001, dated 15-6-2001, could not be disturbed by any authority for preparing contravention report, overlapping assessment order; for initiation of adjudication proceedings---Additional Collector of Customs, in the present case, issued show-cause notice and passed order-in-original---Only course available under the law for Collectorate of Customs and Directorate of Intelligence and Investigation was to challenge the assessment order before the Collector of Customs (Appeals) under S.193 of the Customs Act, 1969 in exercise of the powers delegated upon them---In the presence of an appealable order, fresh order could not be passed even in the shape of assessment order or through issuance of show-cause notice under S.180 while exercising powers either under provisions of S.80(3) or S.179 of the Customs Act, 1969---Detention/seizure notice and contravention report, was annulled, show-cause notice was vacated and orders passed by forums below, were set aside being illegal, void ab initio. [Case law referred]. Javaid Anjum, G.M. for Appellant. Saeed Ahmed Soomro P.A. for Respondent No.1. Saud ul Hassan I.O. for Respondent No.2. Date of hearing: 11th April, 2017. JUDGMENT TAHIR ZIA, MEMBER (JUDICIAL-II).---Through this order, I intend to dispose off Appeals bearing No. K-1238/2016 directed against Order-in-Original No. 744/2015-16 dated 30.05.2016 passed by Additional Collector of Customs, Adjudication-I, Custom House, Karachi. 2. Briefly facts are appellant imported a consignment of 1 x 40" container No. TCLU-8334363 declared to contain 831 pieces of GPS navigational system with accessories. Upon receipt of import documents and arrival of the vessel at Karachi the appellant transmitted Goods Declaration (here-in-after to be referred as GD) under the provision of Section 79(1) of the Customs Act, 1969 (here-in-after to be referred as Act) and Rule 433 of Sub-Chapter III of Chapter XXI of Customs Rules, 2001 (here-in-after to be referred as Rules) with the MCC of Appraisement-West, and as per pre-requisite deposited upfront duty and taxes of Rs. 317,617.00 vide cash No. C-KAPW-008342, consequent to which GD was numbered as KAPW-HC-194357 dated 13.04.2016. Upon appearance of Goods Declaration on his desktop, the nominated Appraiser instead of completing the assessment on the basis of the declaration and scanned documents, opted to get the goods examined under Section 198 of the Act and Rule 435 of the Rules. He after adducing his opinion transmitted GD to the Deputy Collector of the Group, who ascended and transmitted GD to the Deputy Collector KICT, who marked that to the examiner for conduction of physical verification of the imported goods for determination of actual description, quantity and quality. The examiner concerned carried out the physical verification of the goods and found those in accordance with the declaration, report so prepared was posted by him in the reservoir of the GD. Thereafter, Assessing Officer on the basis of examination report completed the assessment and passed assessment order under the provision of Section 80 of the Act and Rule 438 of the Rules and transmitted view message for payment of additional amount of duty and taxes of Rs. 1,447,991.00, which were paid by the appellant on 20.04.2016 vide cash No. A-KAPW-006576, consequent to which inbuilt authority of the WeBOC passed Clearance Order in terms of Section 83 of the Act and Rule 442 of the Rules. Immediately, after passing of Clearance Order, the subordinate of Directorate General of Intelligence and Investigation-FBR (Enforcement) (here-in-after to be referred as respondent No. 2) blocked the delivery and thereafter detained the goods under Section 186 of the Act on the plea that the assessment order so passed is erroneous being passed on the basis of declaration and examination report, scanned documents/catalogues upon receipt of view message under Rule 437 of the Rules is contrary to the actual description and classification of the goods. The subordinate of respondent No. 2 subsequently examined the goods, which transpired that the appellant has obtained clearance of Car DVD Player with Navigational System, FM Radio with multiple functions like bluetooth, MP3, MPEG4, SD Card, GPS Memory, Rare View Camera, Surround Sound System, 8x480 HD Digital Screen and Remote Control, packed in cartons bearing importer logo 'Tracking World In-Dash-Navigation System', falling under PCT 8527.2910 attracting 35% custom duty as against 5% on declared PCT 8526.9100, beside excess quantity of pieces was also found in addition to two different models as against one model akin to the consignment of the appellant imported vide GD No. KAPW-HC-17391 dated 31.07.2015. This misdeclaration of description and PCT resulted in under assessment causing loss to the exchequer to the extent of Rs. 2,480,095.00 and the act of the appellant's falls within the ambit of Sections 32(1), (2) and 79(1) of the Act, Sections 3, 4, 6, 33 and 34 of the Sales Tax, 1990 and Section 148 of the Income Tax Ordinance, 2001, punishable under clause (14) of Section 156(1) and aforesaid Sections of the Sales Tax and Income Tax. As a result of the said finding, the official of respondent No. 2 seized the goods under Section 168(1) of the Act and a notice under Section 171 was also served upon the appellant. Thereafter, contravention report was framed by respondent No. 2 and forwarded to Collector of Customs, Adjudication-I, who marked that to the authority of competent jurisdiction as expressed in Section 179 of the Act. On the strength of which the Additional Collector of Customs (Adjudication-I) (here-in-after to be referred as respondent No. 3) issued show-cause notice dated 10.05.2016, which was replied by the appellant, to which respondent No. 3 disagreed and passed Order-in-Original dated 30.05.2016 through which he held the charges as levelled in the show-cause notice as established and ordered confiscation of the good subject to redemption of those upon payment of 35% redemption fine of the value of the goods, imposed penalty of Rs. 250000.00 in addition to evaded amount of duty and taxes of Rs. 2480095.00. Consequent to which the appellant on one hand assailed the vires of the order before the Tribunal, whereas on other hand for release of goods filed Constitution Petition No. D-2935/2016 before the High Court of Sindh vide order dated 03.06.2016 ordered release of the goods upon submission of pay order for the difference amount between the declared and assessed value, as well as fine and penalty through post dated cheques with the Collector of Customs, MCC of Appraisement-West, Karachi. The appellant complied the order and submitted pay order for Rs. 2480095.00 and post dated cheques for imposed fine and penalty, consequent to which the respondent No. 2 issued NOC and the Collector of Customs, Appraisement-West ordered delivery of the already released goods. 3. The appellant filed the subject appeal on the basis of grounds enumerated therein. No cross objection under subsection (4) of Section 194A has been filed within the stipulated period of 30 days by either respondents Nos. 1 and 2 themself or through their subordinate, instead comments were filed by Group-VII vide dated 14.02.2017, which are placed on record of the case for consideration and perusal. On the date of hearing the representative of the appellant further argued that:-- (i) That neither respondent No. 2 or his subordinates were empowered to detain the goods of the appellant under the provision of Section 186 of the Act after passing of assessment/ clearance orders under the provision of Sections 80 and 83 and Rules 438 and 442 of the Act/Rules to be read with reported judgments 2014 PTD 582 Amir Siddiqui v. Federation of Pakistan and 03 others and 2015 PTD 560 Messrs O.S. Corporation v. FOP and others. (ii) That neither respondent No. 2 or his subordinate are empowered to take cognizance of the matter corresponding to Sections 25, 32, 79 and 195 of the Act as enunciated in S.R.O. 486(I)/2007 dated 09.06.2007, rendering the seizure, preparation of contravention report without power/jurisdiction an as such void and ab-initio. (iii) That neither respondent No. 2 or his subordinates are being appointed as an officer of Inland Revenue under the provision of Section 30A of the Sales Tax Act, 1990 and Section 230 of the Income Tax Ordinance, 2001 and as such not empowered by the Board through S.R.O. 776(I)/2011 dated 19.08.2011 and section 207 of the Income Tax Ordinance, 2001, resultant, not empowered to act under any provision of the Sales Tax Act, 1990 and Income Tax Ordinance, 2001 for short payment of Sales/Income Tax Post Clearance. (iv) The duty and taxes involved in the case of the appellant are Rs.4255903.00, the power to adjudicate the case of said amount rest with the Collector of Customs in terms of clause (i) of Section 179(1) of the Act. To the contrary respondent No. 3 issued show-cause notice and passed order-in-original rendering it suffer from lack of power/jurisdiction, hence void and ab-initio and as such coram non judice. (v) The respondent No. 3 is as well not appointed as Officer of Inland Revenue under the provision of Section 30 of the Sales Tax Act, 1990 and any Section of Income Tax Ordinance, 2001, resultant not empowered to issue show-cause notice for either evaded or short paid amount of Sales Tax and Income Tax under the provision of Sections 11 and 162(1) ibid., rendering that and ordered so passed without lawful authority/jurisdiction, hence coram non judice. (vi) That it is settled proposition of law that at a time only one order has to remain in field, subsequent order is not permitted to pile upon that as held by the Superior Judicial Fora, for further elaboration referred to the assessment order passed by the competent authority defined in Section 2(a) of the Act under the provision of Section 80 of the Act in exercise of the power delegated upon him through S.R.O. 371(I)/2002 dated 15.06.2002. which is appealable, the proper course of action for either respondent No. 1 or 2 was to file an appeal against that under the provision of Section 193 of the Act, failing to do so the order so passed attain finality and it cannot be disturbed by any authority including respondent No. 3 even through issuance of show-cause notice and passing of Order-in-Original as this is tantamount to reopening the order under the provision of Section 195 of the Act, under which he is not empowered. (vii) That where the question of classification arise, provision of section 32 of the Act is not applicable, the dispute has to be resolved by putting the case before the classification committee after deliberation directed/ordered in para 2 of CGO 12/2002 dated 15.06.2002 and a public notice to the said effect after ascent of the Board as enunciated in CGO 09/2004 dated 20.08.2004 and thereafter insertion of the said classification in para 3 specifically meant for classification of CGO 12/2002 dated 15.06.2002. 4. Conversantly, the representative of respondents Nos. 1 and 2 strongly supported the act of detention/seizure, framing of contravention report, issuance of show-cause notice and passing of order-in-original and jurisdiction and powers under the provision of Section 179 of the Act and under the Sales Tax Act, 1990 and Income Tax Ordinance, 2001 and opined that these are valid, legal in all aspect and as such should be maintained. 5. Heard, prior to dilating upon the merit of the case, it is beneficial for me to determine the question of detention of the consignment, which had undergone the process of passing of assessment/clearance order under the provision of Sections 80 and 83 and Rules 438 and 442 of the Act/Rules by Respondent No.2 or his subordinates under the provision of Section 186 of the Act. Under the expression of the said section a consignment of an importer can only be detained after payment of leviable duty and taxes and order of clearance by the authority defined in the said section or S.R.O 371(I)/2002 dated 15.06.2002, if any adjudication order against the said importer is in field and wherein fine/ penalty have been imposed upon him and which has not paid or in a case wherein contravention report has been framed in an under clearance consignment, for adjudication by the competent authority defined in Section 179 ibid for imposition of fine or penalty. In the absence of availability of both the referred conditions in the provisions, consignment of any importer cannot be detained under Section 186 of the Act. In the case under consideration no such order is available, wherein adjudicating authority imposed any fine or penalty on the appellant, nor any contravention report was prepared for the purpose of adjudication, prior to passing of assessment/clearance order under the respective Provisions of the Act/Rules. To the contrary the consignment of the appellant has been detained under Section 186 of the Act by subordinates of Respondent No. 2, after passing of valid assessment/ clearance order by the authority defined in Section 2(a) of the Act in exercise of the powers conferred upon him through Notification No. 371(I)/2002 dated 15.06.2002, on the premise that the goods so imported are under assessed on the basis of declared erroneous description, PCT and application of incorrect value. Detention under the said pretext is not permissible under the provision of Section 186 of the Act by the officials of Respondent No.2 or any other authority being in derogation of the expression of Section 186 ibid and this stands validated from the judgment 2014 PTD 582 Amir Siddiqui v. Federation of Pakistan and 03 others and 2015 PTD 560 Messrs O.S. Corporation v. FOP and 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 been 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 Customs Act, 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 empowers the authority to do so." And "where no fine or penalty has been imposed or is even under consideration the provision of Section 186 are not relevant" .. and "the authorities acting on a hunch have detained goods at the exit gates 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." By gaining strength from the expression of Section 186 and the law laid down, I, declare that Respondent No. 2 and his subordinates were not empowered to detain the subject consignment of the appellant for seizing subsequently under Section 168(1) for preparation of contravention report and initiation of adjudication proceeding under Section 180 of the Act. This illegal act renders the entire exercise right from detention till passing of order-in-original by Respondent No. 3 are without lawful authority and jurisdiction. Hence, void and ab-initio and as such coram non judice. 6. That as regard to the core issue of powers and jurisdiction, which is of vital importance for the health of the case. The respondent No. 2 and his subordinates drive powers for functioning within the territory of Pakistan from Notification No. 486(I)/2007 dated 09.06.2007, for thwarting the act of smuggling, this does not means that they have unfettered powers to intercept and detain the goods cleared by the Officials of Clearance Collectorate after completion of codal formalities and realization of the leviable duty and taxes, for delivery to the importer through his representative either in the terminal or their office. Their jurisdiction in fact is only restricted to the areas falling outside the purview of Sections 9 and 10 of the Customs Act, 1969 and beyond 5 kilometers of the border of India and IRAN as expressed in Section 177 of the Customs Act, 1969 and Notification No. 188(I)/83 dated 12.12.1983. By not levelling allegation of smuggling as defined in Section 2(s) of the Act in the contravention report and invoking of the same in the show-cause notice, the officials of respondent No. 1 cannot assume powers of seizing the goods under the provision of Section 168(1) of the Act. Since, in the instant case allegation of smuggling as defined in Section 2(s) "smuggle" means to bring into or take out of Pakistan in breech of any prohibition or restriction for the time being in force, or evading payment of customs duties or taxes leviable thereon", has not been levelled. The official of respondent No. 2 are not empowers to exercise powers under the provision of Section 168(1) ibid, which could only be exercised upon invoking the provision of Section 2(s) ibid. In the given circumstances of the case, the goods in question could not even be seized by the respondent No.2 or his subordinates. The respondent No. 2 and his subordinates stretched their powers beyond the allotted sphere and applicable provision of the Act and the Notification No. 486(I)/2007 dated 15.06.2007. This is not permitted unless enabling provisions to the said effect is available in the Act or notification. This unlawful act of the Officials of respondent No. 2 is an act of high handedness, abuse of powers being in violation of the provision of law, hence, void and ab-initio and as such coram non judice. For reaching at the said conclusion I am indebted from the observation available in reported judgments PLD 1971 SC 184, PLD 1976 Supreme Court 514, PLD 1991 Supreme Court 630, 1992 ALD 449(1) Karachi, PLD 2001 Supreme Court 514, 2004 PTD 624, 2005 PTD (Trib.) 135, 2006 SCMR 129, 2010 PTD (Trib.) 1636, 2010 PTD 465, 2010 PTD (Trib.) 2158, 2011 PTD (Trib.) 1010, 2011 PTD (Trib.) 1680, 2011 PTD (Trib.) 2086, 2014 PTD (Trib.) 1566.(Emphasis supplied by me) 7. The Board has not delegated powers to the respondent No. 2 under the provision of Sections 32 and 79 of the Customs Act, 1969, which are incorporated in the contravention report and were invoked in the show-cause notice by respondent No. 3 because Section 32 speaks about (false statement, error etc.) and Section 79 (Declaration and Assessment for Home Consumption Warehousing) and is a machinery Section and define the procedure for filing of GD by the importers. Whereas, for…

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