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Petitioner: MUHAMMAD ILYAS VS Respondent: DIRECTOR GENERAL OF PCA, KARACHI and 2 others
Court Name: Customs Appellate Tribunal Judge(s): Adnan Ahmed Title: MUHAMMAD ILYAS vs DIRECTOR GENERAL OF PCA, KARACHI and 2 others Case No.: Cus. Appeal No. K-1606 of 2014 Date of Judgment:2015-02-25 Reported As: 2016P T D (Trib.) 843 Result: Appeal accepted
Judgment ORDER ADNAN AHMED, MEMBER (JUDICIAL-II).---The appeal, filed by the appellant, is directed against Order-in-Appeal No.9209/2014 dated 12.09.2014 passed by Collector of Customs (Appeals) (here- in-after to be referred as respondent No.3) maintaining the Order-in-Original No. 132/2013 dated 23.01.2012 passed by the Deputy Collector of Customs (Adjudication-II), MCC of PaCCS, Custom House, Karachi (here-in-after to be referred as respondent No. 2). 2. Briefly, facts of the case as stated in the show cause notice by the respondent No. 1 are that the appellant imported a consignment of H/T PPINJ Trolly Suit Cases and got the same cleared through MCC (Paccs) at declared value by filing GD CRN I-HC-1783987-11.04.2011. The clearance of subject HIT PPINJ Trolly Suit Cases at declared value is patently wrong as their prevailed a Vatuation Ruling 297 dated 12.03.2011, issued by Directorate General of Valuation under section 25-A of the Customs Act, 1969 at the time of clearance of the instant goods. There existed substantial difference between the declared value and the value notified vide aforementioned valuation ruling. The incorrect assessm ent of the subject imported goods has caused a revenue loss of Rs. 471,649.00. In view of the aforementioned, the appellant have intentionally and willfully caused loss of Government Revenue amounting to Rs. 471,649.00 by evading the leviable duty and taxes which tantamount to violation of the relevant provision of law and the respondent No. 2 held the charges against the appellant had been proved and passed the impugned order the operative part of the- impugned order read as under: "I have gone through the available record of the case. The reply of the importer to show cause notice has been examined carefully. They did not enclosed Annexures with their reply as they quoted in their reply. The claim that Valuation ruling No. 297 dated 12.03.2011 is not related to the
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description of the goods they imported has been perused the importer declared description of the goods "HIT PPINJ Trolly . Case/Suit Cases" and the description of goods given at S.No.7 to the said Valuation Ruling "Suit Case Hard Type". The comparison of the both description in the said ruling. Therefore the claim of the importers that the imported goods are not similar/identical to the valuation ruling is not correct and they have no plausible rebuttal to the aforesaid legal position. The stance of PCA regards the Valuation Ruling No.297 dated 12.03.2011 is plausible and accepted. Furthermore, the importer deliberately try to mention the date of good declaration as 11.01.2011 instead of 11.04.2011 in order to avoid the Valuation Ruling dated 12.03.2011. I do not find any reason to against the charges leveled in the show cause notice. Thus the charges leveled in the show cause notice are established. The act of importer attracts sections 32(1), 32(2) and 32(a) of the Customs Act, 1969. I, therefore order to recover the Government Duties and Taxes amounting to Rs. 471,649.00 along with surcharge in terms of Section 83(2) of the Act, failing which the short levied amount will be recover in terms of Section 202 of the Customs Act, 1969. I also impose a personal penalty of Rs. 25,000.00 on the importer/NTN holder." 3. The order was challenged before Respondent No.3 by the appellant vide Appeal No. 4339/2012 dated 23.11.2012, who also vide his order dated 12.09.2014 rejected the appeal by observing in para 5 that: "I have examined the record of the case. It is concluded that imported goods are Hard Suit Cases which come within the ambit of Valuation Ruling 297 dated 12.03.2011. Therefore charged leveled in the original order stand established. The appeal is also barred by limitation to the extent of approx. Nine (09) months the appeal is rejected." The appellant has challenged the order of the respondent No. 3 by way of the instant appeal the consultants/advocates argued on the strength of the grounds incorporated in the memo of appeal and which are inter alia: (i) The respondent No. 3 has stated in his order that the appeal filed by the appellant is time barred, the said observation is totally nullity to the fact and in derogation of Section 215 of the Customs Act, 1969, which explicitly enunciate that the order so passed has to be served on the person against whom the order has been passed. In the instant case of appellant order was not served and was hand delivered to the appellant on 07.11.2012. Upon receipt of which appeal was filed on 23.11.2012 well before the stipulated period of 30 days. (ii) In support of his stance the appellant states that, it is settled principle of law that it is not enough to pass an order or marked on that as issued, instead it has to be served as per the expression of Section 215 of the Customs Act, 1969. The respondent No. 2 deliberately and with mala fide intention has not dispatched the order-in-original to the appellant immediately after passing/issuing. This act of his nullity to the paramount requirement for the word "served". The same view was held by the High Court of Sindh in reported judgment PLD 1989 (sic) 518(2). Wherein, their Lordship of the High Court has held in categorical terms that "It is enough that the notice/order is merely issued; it service is mandatory in law. Unless notice is proven to have been served, within the prescribed period, the same would not be considered to be in accordance with the requirement of the Act. The said order came under judicious scrutiny of the Apex Court. Which through reported judgment 2002 UC 506 Supreme Court held that "that the requirement of section 32 as to the service of the show cause notice had been complied with. It was observed that the Board had failed to produce the copy of the notice or any evidence of the service of the notice in spite of the order of the Court and in spite of the order of the challenge made in the petition in paras 10 and 11, that no demand by the notice dated 29.06.1978 was ever made. There was also no evidence of service of notice dated 19.07.1978, within the period specified in section 32(3). Even otherwise, no evidence had been produced to the court, to show , that the notice was tendered to
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the importer, in accordance with the provisions of section 215 of the Customs Act, 1969. Whereas, the High Court of Sindh in reported judgment 2006 PTD 1207 held that "We are afraid such high handedness on the part of officer vested with the extensive powers for recovery of the public revenue has to be strongly discouraged No date of hearing was ever notified to the petitioner and nor the said order was communicated. Therefore as held by the superior judicial fora the order- inoriginal dated 23.12.2012 was not served on the appellant. (iii) That the respondent No. 1 (Directorate General of Post Clearance Audit) are not designated as officer of Inland Revenue under the provision Section 30 of Sales Tax Act, 1990 and under any provision of the Income Tax Ordinance, 2001 and as such are not empowered to carry out audit in respect of Sales Tax and Income Tax under the provision of Section 25 of the Sales Tax Act, 1990 and Section 177 of Income Tax Ordinance, 2001. Thus the whole exercise conducted by the respondent No. 1 in the case of appellant is coram-non-judice. (iv) That similarly the respondent No. 2 is not designated an officer of Inland Revenue under the provision of Clause (c) of subsection (3) of section 25 of the Sales Tax Act, 1990 and section 120 of the Income Tax Ordinance, 2001 and as such is not empowered to issue show cause notice and pass order-inoriginal in respect of matter relating to Income Tax under the provision of Section 36 of the Sales Tax Act, 1990 and Section 162(1) of Income Tax Ordinance, 2001. Hence, by issuing show cause notice and passing order-in-original the respondent No. 2 usurp the power of officer of Inland Revenue to which he is not vested, rendering the show cause notice and subsequent passed order-in-original without power/jurisdiction, hence void and ab-initio. (v) The appropriate adjudicating authority as per expression of Sections 2(a) and 2(b) of the Customs Act, 1969 after post importation audit is the officer of Directorate General of Valuation in terms of S.R.O. 495(1)/2007 dated 09.06.2007 and para 44 of Customs General Order 12/2002 dated 15.06.2002. Rendering the whole act of respondent No. 2 suffers from lack of powers/jurisdiction, hence the contravention report/show cause notice and order-in-original are ab-initio, null and void as held in the reported judgment Major Syed Walayat Shah v. Muzaffar Khan and 2 others ,(PLD 1971 SC 184), Omer and Company v. Controller of Customs, (Valuation); (1992 ALD 449(1) Karachi AAA Steel Mills Ltd v. Collector of Sales Tax and Central Excise Collectorate of Sales Tax (2004 PTD 624), PLD 1976 Supreme Court 514 Ali Muhammad v. Hussain Buksh and others and PLD 2001 SC 5-14 Land Acquisition Collector, Noshehra and others v. Sarfraz Khan and others 2006 PTD 2237, Pak Suzuki Motors Company Ltd., Karachi v. Collector of Customs, Karachi, 2009 PTD (Trib.) 1996 and 2010 PTD(Trib.) 832. (vi) That any order pass by the Adjudicating Authority as per the definition given in Section 2(a) of the Customs Act, 1969 under the provision of Sections 80 and 83 ibid and Rules 438 and 442 of the Customs Rules, 2001 can only be corrected by the revisional authority in exercise of the power of Section 195 of the Customs Act, 1969, which empowers the Board or Collector of Customs to examine su-motu the record of any proceeding under this act for the purpose of satisfying itself or the case may be, himself as to the legality or propriety of any decision or order passed by subordinate officer as has been done in the case of M/s. World Trading Communication and subsequent of that assessm ent order dated 13.01.2012 was passed. Meaning thereby that after reopening the existing order the Board or Collector may pass afresh order to as it or he may deem think fit after issuance of show cause notice to the effected person in exercise of the power vested under Section 195 of the Customs Act, 1969. Neither the respondent No. 1 nor respondent No. 2 are vested with the powers under Section 195 of the Customs Act, 1969. Both usurped the powers not vested with them. Resultant, the act of preparing contravention report and issuance of show cause notice and passing of order-in-original suffer from lack of power under the said provision rendering these void and ab-inito as held by Superior Court of Pakistan in umpteenth judgments e.g. PLD 1975 SC 331, S.T. Appeal No. 984/98, S.T. Appeal 72/04, S.T. Appeal 54/09, S.T. Appeal No.
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2352/99, S.T. Appeal No. 106/03, 2002 CLC 705, 2004 PTD 624, 2004 PTD 3020, 2007 PTD 1895, 2009 PTD (Trib.) 1925, 2005 PTD (Trib.) 135, 2010 PTD (Trib.) 759, 2010 PTD Trib.) 1283, Customs Appeal No. K-44/2010 and Customs Appeals Nos. K-435/08 to 455/08, 2010 PTD (Trib) 2523 and K-638/ 2010- 727/2010. (vii) The audit observation issued by respondent No. 1 and show cause notice/order-in-original issued/passed by respondent No. 2 transpires that charges against the appellant has been held under the provision of sections 32(1), 32(2) & 32(A) of the Customs Act, 1969. Which are based on inapt interpretation of the provisions of the Act, as for holding charges under Section 32(1) of the Customs Act, 1969 no misdeclaration is found, whereas under Section 32(2) in element of "collusion" should be available and under the provision of Section 32-A the documents so submitted should had been concocted, altered, mutilated false, forged, tampered or counterfeit. Nothing in this regard have been proved in material particular as evident from the order. The stance of the appellant is supported by the observation of Hon'ble High Court of Sindh in judgment reported as PLD 1996 Karachi 68 that higher degree of proof is required for initiating penal provisions against the accused. (viii) That according to the show cause notice/order-in-original it was mandated upon the respondent No. 2 to construe in the light of the Act, for between a "declaration" or "a statement in answer to any question put" and a "claim". As regard declaration it means a communication by a person in relation to a business been conducted. The word "declaration" came to judicious scrutiny in the case of Withoba Cyamna v. Union of India reported as AIR 1957 Bombay 32. It was held in that case that the word "declaration" referred to the nature, description, PCT Heading and value of the goods so that assessing officer can apply appropriate tariff rate for assessment and charging. On the other hand the word "claim" means a demand for something supposed due to or demanded as a right. (ix) That the show cause notice does not speaks about any charge against the appellant in regards to misdeclaration or fiscal fraud falling under sections 32(1)(2) and 32(A) of the Customs Act, 1969 in material particular, instead speaks dereliction of duties and negligence on the part of the officials of MCC of PaCCS, who wrongly assessed the goods with the non application of valuation ruling. In the case of Eastern Rice Syndicate v. Collector of Customs (PLD 1959 SC 364) the Supreme Court had held that in order to attract penal provision of Section 39 (now Section 32), it must be established that the person who alleged to have made any statement in a document, submitted to the customs authorities must be false to his knowledge, and it would depend upon the circumstances of each case. It is not disputed here that the statement made in the Customs Documents by appellant regarding the nature of the goods imported were in any way wrong; rather that information was found correct and true. (x) That in the circumstance narrated above, the case of appellant utmost falls under Section 32(3) instead of 32(2) or 32(3A) of the Customs Act, 1969, whereas the demand raised against the appellant is by the respondents through audit observation, show cause notice and order-in- original. A demand under section 32(3) could only be raised by the Principal Appraiser being an appropriate officer as expressed in Section 2(b) ibid in exercise of the power vested upon him under S.R.O. 371(1)/ 2002 dated 15.06.2002. It is settled elementary principal of law that action of executive functionaries are to be restricted to specific sphere permitted by the statute. If the superior or subordinates authority started exercising powers of their subordinates/superiors, the hierarchy of distribution of jurisdiction explicitly provided by Section 179 of the Act and S.R.O. 371(I)/2002 dated 15.06.2002 shall be rendered redundant. Also the consequent result would be a total anarchy where the superior officers would be making all efforts to exercise the adjudication powers clearly conferred by law upon their. Subordinates. The powers of adjudication are specific and empowered by the statute and Rules and Regulation framed there under. It is an elementary
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principle of law that where there is a conflict between special and general provision of law, the special provision shall prevails (reference is invited to the case of Lt. General (Retd.) Shah Raft Alam v. Lahore Race Club, 2004 CLD 373. The power of adjudication, as already observed, is special in nature. This cannot be eclipsed by any other general provision. Even otherwise there is another settled principal of interpretation of statute i.e. That the courts can supply construction with a view to avoiding absurdity (reference is invited to the case of Khalid Qureshi v. UBL 2001 SCMR 103). Equally it must be kept in mind that if it is held that sections 4 and 179 occupy the same fields, there is likely to be redundancy in respect of powers conferred under. Section 179 and S.R.O. 371(1)/2002 dated 15.06.2002. The Supreme Court in the case of East West Steamship v. Queen Land Insurance PLD 1963 SC 663 has been pleased to hold that redundancy is to be avoided in respect of any provision of the statute and Rules and Regulation framed there under (reference is invited to the case of Sahibzada Shalfuddin v. Town Committee 1984 CLC 1517. Apart from this law favour actions of the authorities to be confined to their own spheres of jurisdiction conferred by the statute. An action taken by a state functionary beyond the ambit of his jurisdiction is nullity. In this respect the judgment reported as Abida Rashid v. Secretary. Government of Sindh PLD 1995 Kar. 587 is referred. Their lordship observed as under: "it is trite law that power vested in an authority should only be exercised by that authority, in default whereof, the exercise of power and authority becomes without jurisdiction, illegal, void , ab-initio and of no legal effect. The term "without jurisdiction" has been judicially interpreted to be include usurpation of power warranted by law (The Chief Settlement Commissioner Lahore v. Raja Muhammad Fazil Khan and others PLD 1975(sic) p.339) an act done which the person doing, it has no jurisdiction at all to do or which was clearly outside the scope of his activities (The State v. Zia-ur-Rehman PLD 1973 SC 49) and a judgment or order delivered by a court or a judicial or a quasi judicial authority not competent to deliver it (Muhammad Saleh and others v M/s. United Grain and Fooder Agencies PLD 1964 SC 97). The Constitution jurisdiction can thus be exercise when it is shown that the order is passed without jurisdiction or in excess of jurisdiction. As observed earlier the respondent No.1 has no jurisdiction to pass the impugned order. As such we declare the same to be of no legal effect. Accordingly, we allow this petition but leave the parties to bear their own cost". i) That while dealing with the powers of adjudication, it is needless to observe, that our Supreme Court has jealously guarded thesame. In Assistant Director v. B.R. Herman Mohata Ltd. PLD 1992 SC 485. A full bench of Supreme Court was pleased to observe that section 223 of the Customs Act, 1969 could riot be employed so as to interfere with the judicial or quasi judicial functionaries. It was clearly observed that the power of the CBR as to prescribed guideline were not relevant for the exercise of judicial function. To similar effect is the judgment of Supreme Court reported as Central Insurance v. CBR 1993 SCMR 1232. In this case the CBR issued direction for the reopening of Income tax Assessm ent under section 65 of the Income Tax Ordinance, 1979;It was held by the Supreme Court that the CBR did not figure in the hierarchy of the officer provided in the statute for the purpose of assessm ent and adjudication. On the basis of this it was held that the directions of the CBR to reopen the assessm ent was without jurisdiction and the adjudication officer was directed to apply its own mind. Reliance is placed on the order of the Tribunal in S.T. Appeal No. 176/2007 Messrs Muller and Phipps Pakistan (Pvt.) Ltd. V. The Collector of Sales Tax Enforcement LTU, Karachi and 2010 PTD (Trib.) 1787, 2011 PTD (Trib.) 2114 Collector of Customs, Peshawar v. Collector of Customs (Appeals) and another and 2011 PTD (Trib.) 2557 Messrs Wawa Garments Industries (Pvt.) Ltd. v. Additional Collector of Customs (Exports). (xii) That the order under subsection (3) of Section 193A has to passed by the respondent No. 2 within 120 days from the date of filing of appeal or within further extended period of 60 days in
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terms of its proviso upon availability of exceptional circumstances and recording of those after issuance of notice to the tax payer as held by Hon'ble 'Supreme Court of Pakistan in reported judgment 2009 SCMR 1881, Khalid Mahmood V. Collector of Customs. In the instant case the appeal was filed on 23.11.2012 and the order should have been passed by the respondent No. 2 on or before 23.03.2013. To the contrary he passed order on 12.09.2014 after lapse of 658 days and to cover up the delay he took the plea that the appeal filed by the appellant before him is time barred, irrespective of the fact that the same is without substance as no objection was raised by the office of respondent No. 3 at the time of filing of appeal nor by the respondent No. 1 representative during the course of hearing before the respondents Nos. 1 and 2, resultant, the appeal is deems to be filed within time and has to be decided on merit, rejecting the appeal on the said pretext is without any substance and nullity to law. Hence hold no grounds instead renders the order so passed as well as assessm ent order passed by respondent without power/jurisdiction , hence void, ab initio and are not enforceable under law as held in the reported judgments 2008 PTD 60 Messrs Super Asia Muhammad Din Sons (Pvt.) Ltd. v. Collector of Sales Tax,. Gujranwala and 2008 PTD 578 Messrs Hanif Strawboard Factory v. Additional Collector (Adjudication) Customs, Sales Tax and Central Excise Gujranwala 2009 PTD 762 Messrs Tanveer Weaving Mills v. Deputy Collector Sales Tax and 4 others and 2009 PTD (Trib.) 1263, Messrs Syed Bhai Lighting Limited, Lahore v. Collector of Sales Tax and Federal Excise, Lahore and 2 others 2009 PTD 1978, Leo Enterprises v. President of Pakistan and others 2010 PTD (Trib.) 1010 Innovative Impex v Collector of Customs, Sales Tax and Federal Excise (Appeal), 2011 PTD (Trib.) 79 Fazal Ellahi v. Additional Collector of Cugoms, MCC of PaCCS, 2011 PTD (Trib.) 987. Unique Wire Industries v. Additional Collector of Customs, MCC of PaCCS, 2011 PTD (Trib.) 1146 Kaka Traders v. Additional Collector of Post Clearance Audit and 2012 PTD (Trib.) 1650 Pak Electron Ltd. v. Collector of Customs, Lahore and others. Xiii) That irrespective of the above legal deficiencies, it is appropriate to state that the competent authority defined in section 2(a) of the Customs Act, 1969 correctly passed the assessment order after consulting the data of the import of identical/similar goods under Rule 110 of the period given in Rule 107 (a) of Customs Rules, 2001 in appellant case instead of the impugned much talked about Valuation Ruling which was for "Suit Cases" not "Bags". The Adjudicating Authority consciously made the assessment while not applying the ruling in accordance with the product of the appellant. If for the sake of arguments it is considered for a while that the ruling was not applied correctly as alleged it also hold no grounds as it cannot be applied subsequently after completion of assessment and allow of clearance under sections 80 and 83 of the Customs Act, 1969 read with Rules 438 and 442 of Sub-Chapter III of Chapter XXI of Customs Rules, 2001 as held by High Court of Sindh in its reported judgment 2008 PTD 1968 Messrs Sikander Enterprises v. Central Excise and Sales Tax Tribunal Karachi. Their lordship of the High Court held "Even otherwise after clearance of the goods and removal of consignment from the Custom Area Customs Authority were functus officio to reopen the case again it had become past and closed transaction---no specific provision has been quoted as to whether appellant had been guilty of offence under subsections (2) and (3) of section 32 of the Customs Act, 1969; it would thus be difficult to observed as to whether appellant has been guilty of mis-declaration" (xiv) In yet another reported judgment of Lahore High Court 2009 PTD 281 Sunny Traders v. Federation of Pakistan it was held "Valuation Ruling cannot be considered as a valid documents for cancellation of appraised value" and in reported judgment 2009 PTD 467 Messrs S. T. Enterprises v. Federation of Pakistan. Their lordship of High Court, Lahore held in clear and unambiguous terms that "Valuation Ruling are estimate, if the same are not followed at the time of earlier appraisement, it cannot be used against an importer which has already appraised and has been made out of charged by the Customs Authorities. On the basis of valuation ruling the provision of section 32 cannot be invoked and the notices issued are not lawful. Once a consignment is out of
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charged after due consideration of the relevant fact, it becomes a past and closed transaction. Relying on the above dictum of the Superior Courts the Hon ' ble Customs Tribunal allowed several appeal as evident from reported judgments 2011 PTD (Trib.) 2480 Malik Vetro Designi and 25 others v. Collector of Customs (Appeals) and 2012 PTD (Trib) 754 Messrs Naveed Enterprises, Faisalabad v. Collector of Customs Lahore and 2 others. (xv) That lastly, it is also felt imperative for the appellant to add that the respondents Nos. 2 and 3 committed a grave error while considering the abbreviation HIT as "Hard Type" instead of Hand…
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