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Petitioner: M/s. INNO VATIVE TRADING COMPANY LIMITED, RAWALPINDI VS Respondent: APPELLATE JUDGMENT
Court Name: Lahore High Court Judge(s): Sardar Muhammad Aslam, Mansoor Ahmed Title:M/s. INNO VATIVE TRADING COMPANY LIMITED, RAWALPINDI vs APPELLATE
JUDGMENT
Reported As: PLJ 2004 Lahore 422 Result: Order accordingly. Judgment JUDGMENT Mansoor Ahmad, J.--Three custom appeals under Section 196 of the Customs Act, 1969 are preferred from judgment dated 21.3.2002 passed by Customs, Central Excise and Sales Tax, Appellate Tribunal, Islamabad. Appeal No, 40/2002 is filed by M/s. Innovative Trading Company Ltd., an importer. The Appeal No, 29/2002 is filed by M/s. Moon Enterprises, a clearing agent. Appeal No, 30 of 2002 is filed by M/s. Butt Agencies Custom Clearing Agents. Through this consolidated judgment, we decide all the three appeals. Appeal No, 40/2002 2. Appeal No, 40 alongwith Appeals Nos, 29 and 30 of 2002 were admitted to regular bearing to consider legal questions arises out of the judgment of the Appellate Tribunal and the questions raised by the appellant are enumerated as under :-- "(1) Whether the Respondent No, 1 having been constituted under Section 194 of the Customs Act 1969 and conferred appellate jurisdiction under Section 194-A thereof, can travel beyond the statute and disregard its provisions which are clearly and unambiguously attracted ? (2)Whether the Respondent No, 1 is a forum of limited powers and its powers do not include the powers of judicial review as are available to the Civil Courts in exercise of their plenary jurisdiction and the High Court or Supreme Court in exercise of their Constitutional jurisdiction ? (3) Whether the Respondent No, 1 could have entertained the appeal filed by the Respondent No, 3 after holding that the said appeal was not filed competently and in accordance with the provision of the Customs Act, 1969? (7) Whether the impugned order restoring the Order-in-Original passed with respect to show-
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cause notice may be limited to penal consequences without providing an opportunity to the person concerned to show-cause as to why the allegation on the basis of which penal consequences flow are unwarranted in law and illegal . (9)Whether valuation of goods under Section 25 of the Customs Act, 1969 be conducted behind the back of the appellant ? (10) Whether valuation of the goods under Section 25 of the Customs Act, 1969 be conducted without pro riding an opportunity to the appellant to lead its evidence in rebuttal ? (13) Whether the burden to prove an access value of goods other than the declared value in terms of Section 25 of the Customs Act, 1969 lies on the custom Authorities? (14) Whether in determing the value of goods under Section 25 of the Customs Act, 1969, the price at the country of purchase is irrelevant and the certificate of the price prevalent in such country may be ignored without any cogent or contradictory evidence? (15) Whether in determining the value of goods under Section 25 of the Customs Act, 1969, the kind of goods and the value of such goods accepted and adopted by the custom authorities in the past is irrelevant? (20) Whether the penalty imposed vide the Order-in-Original passed by the learned Respondent No, 3 .under Section 32(1)(b) of the Customs Act, 1969, without the said section being charged as having been contravened by the appellant could be sustained under law vide the impugned order ? (21) Whether the custom authorities are bound to disclose evidence and precise allegations on the basis of which notice under Section 32 of the Customs Act, 1969 is being issued in the show cause notices? (22) Whether in order to allege contravention of Section 32 of the Customs Act, 1969 it is mandatory that the person concerned-should make the false statement/submit false document with the knowledge that the same are false/incorrect? 3. Facts available in the case are that appellant is importer of auto parts. He has been importing auto parts of different vehicles namely Volvo, Renault and Mitsubishi from Dubai (UAE), at AFU, Islamabad Airport. These consignments were cleared by the Customs Department through M/s. Falcon Corporation, M/s. Enterprises and Butt Agencies, clearing agents, during the period December, 1995 to 16th August 1997. The appellant has been importing these parts for NLC (National Logistic Cell) of Pakistan Armed Forces and KRL (Kahuta Search Laboratories) and other Government Departments. 241 invoices during the period were presented to the Customs Department and they had cleared the goods after the charge and payment of the custom duty and the sales tax etc. 4. On the basis of some information the Customs department entertained suspicion that the appellant has grossly mis-declared the values of goods imported. On receipt of an information that some parts which have already been cleared from AFU, Islamabad, by undervaluing the same by mis-declaration, were being transported from Rawalpindi to Gujranwala through a vehicle bearing Registration No, RPT-2070 for onwards delivery to NLC, Gujranwala. The Deputy Collector Customs Preventive, Rawalpindi constituted a raiding party and intercepted the vehicle. The vehicle was subjected to search and it was brought to the Headquarter office and it was seized alongwith goods vide seizure case No, 384/97. On the same day, a notice under Section 171 of the Customs Act, 1969 was served on the manager of the appellant company. Another notice under Section 26 of the Act was also served and in that record of the Company like Air Way Bills Register, Challan Register and Stock. Register were demanded and the same were provided by the appellant Company to the raiding party. A show-cause notice dated 21.10.1998 was issued by the Collector to the appellant and its sister concern company M/s. International Path Finders and three
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other Clearing Agents. In the show cause notice it was alleged that the appellant and its sister concern company M/s. International Path Finders committed gross mis-declaration and violated the provision of Section 16 & 32(1)(b) and 25 of the Customs Act, 1969 read with Section 3(1) of the Imports and Exports (Control) Act, 1950 punishable under Section 156(1)(9)(14) of the Customs Act. The appellant submitted reply to the show-cause notice and after hearing the Collector passed an order in original dated 26th of January, 2000 and held that the appellant in collusion with the clearing agents evaded the payment of the duty and taxes to the tune of Rs, 3,20,86,486/-, and the appellant was ordered to pay the same. A personal penalty equal to Rs, 3,70,70,967/- was also imposed in terms of Section 156(1)(14) of the Act and. the appellant was directed to pay the same. 5.The appellant challenged the Order in Original under Section 195 of the Customs Act by submitting the revision petition before the Central Board of Revenue. The revision of the appellant was accepted by Member Custom, Central Board of Revenue vide his judgment dated 6.5.2000. Vide this judgment the revision petition was allowed and the Order in Original passed by the Collector was set aside and it was hem that the clearance of the imported parts by the appellant between 1995 and 1997 were inconsonance with the practice in vogue in the Customs House, Karachi for the similar and comparable goods and the imports of the appellants were treated as cleared against fair value. 6. Collector of Customs, Rawalpindi on 3rd of July, 2000 filed an appeal against the order dated 3/6-5-2000 passed by the learned Member Custom of Central Board of Revenue, Islamabad under Section 194-A of the Customs Act, 1969. A Full Bench of CESTA, Tribunal, Islamabad heard the appeal and finally decided vide its judgment dated 26.2.2002 and the order passed by learned Member Custom, CBR, Islamabad under Section 195 was set aside and the Order-in-Original dated 26.1.2000 passed by the Collector Customs, Rawalpindi was restored subject to modification that the penalty imposed on the appellant was reduced from Rs, 3,70,70,967/- to Rs,' 1,00,00,000/- (one crore). Relevant it would be to point out that the Appellate Tribunal vide its judgment disposed of four appeals through a consolidated judgment and three other appeals related to the Clearing Agents. The judgment of the Tribunal was not unanimous. The Bench comprising Chairman and two members (one of them technical member) rendered a dissenting judgment but through the majority judgment the appeal of the Collector was allowed. 7. It is argued on behalf of the appellant that the Collector of Customs, Rawalpindi could not file an appeal under Section 194-A of the Act before the Appellate Tribunal from the order passed by the learned Member Customs Act, 1969. It is contended that Section 194-A of the Act was amended through Finance Act of 2000 which came into force on 19th of June, 2000, by virtue of this Finance Act the expression after the word "any person" "or an officer of Custom", was inserted in Section 194- A of the Act. The learned counsel thus submitted that before 19th of June, 2000 any officer of the Custom department had no right to file an appeal before the Tribunal. According to him the revision of the appellant company was decided on 3/6-5-2000 by Member Customs, CBR, and on the day or thereafter fill 19th of June, 2000 right of appeal to any officer of the Custom was not available. The amendment could not operate retrospectively and by judgment prior to 19th of June, 2000 it had become past and close transaction and the judgment of the Member Customs had attained finality. 8. Legal Questions Nos, 1, 2 and 3 raised by the appellant were argued on the premises and reasoning narrated in the preceding paragraph. Question. No, 7 was dropped and legal Question Nos, 9, 10, 13, 14, 15, 20, 21 and 22 were argued as discussed hereunder. 9.Next it was contended by the learned counsel for the appellant that Section 25 of the Customs Act, 1969 lays down the principle regarding the valuation of the goods and value of any imported goods had to be taken to be the normal price which would fetch as sale price in open market between buyer and seller, independent of each other. It was submitted that Section 25 of the
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Customs Act as it stands now was substituted through Finance Act, 1999 with effect from 1st January, 2000, and doctrine of transaction value was introduced which is the price actually paid or payable for the goods when sold for export to Pakistan. Basing his argument on the provision of Section 25 of the Act, the learned counsel submitted that in both the events whether it was a case under Section 25 of the Act before amendment or after amendment the principle was that value has to be determined on the basis of sale in the open market between buyer and seller independent of each other or in the alternative on the transaction value. Reasoning the arguments, the learned counsel sought support from Section 80 of the Act and pointed out that clearly it is provided in said section that on the delivery of bill, the goods or such part thereof as may be necessary may, without undue delay, goods were to be examined or tested, and thereafter the goods shall be assessed to duty, if any, and owner of such goods may then proceed to clear the same. Adding to his arguments, the learned counsel submitted tilt if any dispute arises about the kinds of goods then the goods are to be identified for obtaining a proper value and in case the declared-value by the importer was not acceptable to the Customs department, the onus to disprove the value shown in the invoice was that of the department. The department in that event was required to identify the goods, its make nature and kind and thereafter proceed to assess its value under Section 25 of the Customs Act. Grievances of the appellant in the instant case were that Customs Department in the first instance have been releasing the goods after receiving custom duties and sales tax on the basis of the declaration made in the bill of entry and invoices. Later in 1997, seized one of the vehicles from Gujranwala carrying the imported auto parts. Although the parts seized were properly declared but were taken into custody when it were bound for supply to NLC, Gujranwala. These circumstances warranted an onus on the department to seek the identification of the goods and thereafter proceed to seek their transaction value or otherwise. Instead of doing this, the department relied on price-list of the .genuine parts. It is submitted that auto parts are of two major kinds; One known as genuine parts and other non-genuine. Genuine parts are those auto parts which are manufactured by the original Companies and non-genuine parts are those which are manufactured by other Companies under a license or franchise by the Companies. According to the learned counsel, the genuine parts are only used by the manufacturing Companies and for replacement or otherwise, non-genuine parts manufactured by other Companies are sold and purchased throughout the world and import of genuine parts are not normally made for use in repair of the second-hand vehicles. It is submitted that the appellant during all this period imported non-genuine parts which were lesser in value than the genuine parts. The import invoices clearly identify these imported goods, as such the same were cleared by the Customs Department after charging the custom duty and sales tax on non-genuine parts but latter the department at the behest of some other competitions intercepted some parts of the goods of the appellant after clearance and alleged mis-declaration against the appellant. Unfair and mala fide approach of the department was attributed from the fact, submitted by the learned counsel, that the goods seized were not identified whether these were genuine or non-genuine and without such an examination all the import of the appellant ranging from December, 1995 till August, 1997 was treated to be an import of genuine 'parts. It was valued on the basis of price list of the genuine goods and the appellant was saddled with huge liability of the custom duty as also of the huge penalty. 10. The learned' counsel next contended that for penalizing the appellant provisions of Section 32 of the Customs Act were invoked as is evident from the show-cause notice and the Order-in-Original. One of the pre-requisites in Section 32 is the mensrea and a proper proof that the invoices submitted earlier by the appellant which were accepted by the Customs Department, were false and incorrect and that the appellant contumaciously, deliberately, mis-declared the things with guilty intention. It is submitted by the learned counsel that total number of invoices were 241
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spread over during the period of December, 1995 to August, 1997. There was no mean with the department to substantiate their allegations because of the imported consignment had already been supplied by the appellant to various Government Departments and Organizations particularly NLC and KLR. The department intercepted consignment which was bound for NLC, Gujranwala and it was a negligible part of the import made by the appellant. In any case, the department did not embark upon the exercise of identification of the seized parts as genuine or non-genuine. So without having determined the basic fact the application of price of the genuine parts could not be made as the first basic step was omitted by the department. According to learned counsel it was deliberately done by the department because the fact was that the imported parts were of the non-genuine kind. This is clearly mentioned in the invoices, order of the learned Member Customs, CBR, and dissenting judgment rendered by the technical Member of the Tribunal. 11. In support of his contention the learned counsel for the appellant referred to and placed reliance on a large number of judgments particularly cases of M/s. Latif Brothers vs. Deputy Collector of Customs, Lahore (1982 SCMR 1083), Punjab Beverages vs. Appellate Tribunal (Customs, Excise and Sales Tax) (2002 PTD 2957), Irfan Tayyab vs. Collector Customs, (2003 PTD 890), M/s. Abdul Aziz Ayoob vs. Assistant Collector, Customs (PLD 1997 Kar. 378), Kausar Trading vs. Government of Pakistan (1986 CLC 612), Saleem. and Co. vs. Deputy Collector, Customs (PLD 2001 Lahore 5), Farooq International vs. Chief Controller Imports and Exports (1985 CLC 1781), Dawood Cotton Mills vs. Central Board of Revenue (1985 MLD 1610), Ali Muhammad vs. Deputy Collector Customs (1986 MLD 1429), M/s. Sasta Autos vs. Government of Pakistan (1991 MLD 1582), Capital Supports Sialkot vs. Government of Pakistan (1989 MLD 999), Indus Auto Mobile Ltd. vs. CBR (PLD 1988 Karachi 99), Commercial Pipes Ltd. vs. Federal Government of Pakistan (PLD 1989 Lah. 89) and Haji Abdullah Jan vs. The State (2003 SCMR 1063). 12.On the other hand, the learned counsel representing the Revenue submitted that the appeal filed by the Collector before the Tribunal was competent. He referred to the provision of Section 194-A (3) and pointed out that every appeal before the Tribunal was required to be filed within 60 days from the date of the decision. The order assailed was passed on 3/6-5-2000, therefore, 60 days were to expire on 6th July and the appeal was filed on 3rd July. His argument is that by virtue of sub-clause (3) right to file an appeal was 60 days and during this period by virtue of Finance Ordinance the right to file an appeal was conferred by law on the Collector who was one of the officers of Customs, therefore, it was properly constituted appeal and was competently filed under the provision of Section 194-A. Replying to the next legal question under Section 25 it was submitted that the value of the imported goods was worked out on the basis of the price-list of the Company of the genuine goods. He referred to CGO of 1985 and submitted that in respect of auto parts price of non-genuine parts had to be 80% of the price of genuine parts. According to him, the parts imported by the appellant were genuine in kind, therefore, Customs Department were justified in finding a mis-declaration against the appellant and determining its value on the basis of the price-list of the genuine parts. The judgment of the Tribunal was supported by the learned counsel. 13.We have considered the' arguments of learned counsel for the parties. Firstly the question raised by the learned counsel for the appellant relates to the competency of filing of the appeal by the Collector of Customs. We would take up this question first. Section 194-A, of the Customs Act, as amended finally by Ordinance 2000, reads as under:-- "194-A (1) Any person or an officer of Customs aggrieved by any of the following orders may appeal to the Appellate Tribunal against such orders:- (a)a final decision or order passed by an 'officer of customs as an adjudicating authority under Section 179; (ab) an order passed by the Collector (Appeals) under Section 193;
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(b)* * * (c)an order passed under Section 193, as it stood immediately before the appointed day; (d)an order passed by the Board or the Collector of Customs under Section 195 (***): (i)* * * (ii)Every appeal under this section shall be filed within sixty days from the date on which the decision or order sought to be appeal against is communicated to the Board or the Collector of Customs, or as the case may be, the other party preferring the appeal. 14. Vide insertion made through the Finance Ordinance, 2000, the expression an officer of Customs" was made after the expression any person". This insertion was made on 19th of June, 2000 and it was made effective from the said date. Prior to this an officer of the Customs was not competent to file an appeal under Section 194-A. The jurisdiction to file an appeal by any officer of the Custom was thus conferred on 19th of June 2000 a and before that although right to file appeal was available to any person aggrieved but it was not within the competency of any of the officer of Custom to file such appeal. In the present case order under Section 195 was passed by the Member of Custom, Central Board of Revenue in exercising his revisional jurisdiction on 3/6-5-2000. On the said date when the decision was made and when it was conveyed on 19-5-2000 to the Collector Customs, he was not competent to file any appeal. As such the order passed by the revisional authority had attained finality. Subsequent amendment in law clothing the Collector with the right to file an appeal on 19th of June 2000, would not tend to destroy the right of the appellant acquired by it before 19th of June, 2000. It is a settled principle in the domain of fiscal law that the amendment touching upon and dealing with substantive right could not be given retrospective effect until and unless it is specifically intended to be so by the Legislature. Conferring a right of appeal is one of the substantive rights which was thus provided to the officers of the Custom on 19th of June, 2000. Conversely, it also abridge the right of the other party to claim immunity against any order passed in their favour by revisional forum. We are not persuaded to agree with the learned counsel of the revenue that the amendment brought under Section 194-A by virtue of Finance Ordinance, 2000 was merely procedural in nature. In case Haji Abdullah Jan vs. The State (2003 SCMR 1063) Section 417 (2A) of the Criminal Procedure Code was examined by the Apex Court. Section (2-A) was added under Section 417, Cr.P.C. through an Amending Act No, XX of 1994 on 28.10.1994 and it was gazetted on 14.11.1994. On 31.10.1994, learned Sessions Judge passed a judgment of acquittal and an appeal was preferred by the Deputy Attorney General of Pakistan on behalf of the Federal Government. In that case, it was held that the appeal was not competently filed. It was further observed that sub-clause (2A) was enforced after the judgment of acquittal. Therefore, on examining the various provisions of law we find that, the right to file an appeal by any officer of the Custom was not available before 19th of June 2,000/- and the appellant acquired a valuable right through the judgment dated 6-5-2000 and this right could not be taken away by construing the amended provision retrospectively. On 6-5-2000, when the Revisional Authority passed a judgment in favour of the appellant, as it was non-appealable order, therefore, it had attained the finality and it had become a past and close transaction. Admittedly, the Finance Act; 2000 came after 50 days of the above judgment and conferred right on any officer of the Customs to file the appeal, which could not be used by the Collector Customs. Rawalpindi to challenge the order dated 6-5-2000 passed by CBR in its revisional jurisdiction. Even sub-clause (3) which deals with the limitation of 60 days did not confer any right as the question of limitation is dependent on the competency to file appeal. sub-clause (3) could not be interpreted in a manner so as to give retrospectivity to the amended provision of sub-clause (1). The argument raised on behalf of the Revenue that under sub-clause (3) because of the limitation of 60 days was available and computing the 60 days from 6-5-2000, the date of revisional order, the right of appeal was available to the Collector upto 6th of July and the 3rd July was .a day within when he had a right to
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file the appeal, therefore, he argued that the appeal was competently filed. We are afraid that this argument is not well taken. Computation would be dependant on a kind of order described under sub-clause (1) and the competency to challenge the said order under the law. In the absence of any competency, the procedural provision related to limitation would not confer any substantive right on the Collector to file an appeal. We, therefore, hold that the appeal filed by the appellant before the Tribunal was not competent as the Collector Custom was not conferred any jurisdiction to file the appeal and the order dated 6th of May, 2000 had attained finality and it was past and close transaction in the instant case. 15. Next question raised relate to the Section 25 of the Customs Act, 1969. In Latif Brothers' case the Hon'ble Supreme Court authoritatively interpreted the provision of Section 25 of the Act and the principal. enunciated was consistently followed by all the Courts and hierarchy. In that judgment Para 8 is illuminated and it is reproduced here-in-below:-- - "8. Section 25 of the Act deals with the determination of the value of the imported goods and is so far as relevant for the purposes of this appeal reproduced below-- "the value of any imported goods shall be taken to be the normal price, that is to say, the price which they would fetch (on the date referred to in Section 30), on a sale in open market between a buyer and a seller independent of each other." According to Section 30, the value and rate of duty leviable on the imported goods are those which…
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