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Petitioner: Messrs ZUBAIR WALI AHMED ZIA LTD and another VS Respondent: The PRINCIPAL
Court Name: Customs Appellate Tribunal Judge(s): Tahir Zia Title:Messrs ZUBAIR WALI AHMED ZIA LTD and another vs The PRINCIPAL
JUDGMENT
Reported As: 2016 PTD (Trib.) 2463 Result: Appeals allowed Judgment JUDGMENT TAHIR ZIA, MEMBER (JUDICIAL-II)---Through this common order, I intend to dispose of two (02) Appeals bearing Nos. K-1310 and 1311/2015 filed against Order-in-Original No,137/2015-16 dated 13.08.2015 passed by Additional Collector of Customs, Adjudication-II (hereinafter to be referred as respondent No,2) in the capacity of Principal Appraiser. 2. Since, these 02 appeals are of importer of Afghanistan and Clearing Agent operating in Karachi and are based on similar facts and questions of law, therefore it is needless to reproduce facts of each case separately. Hence, being heard and dealt with and disposed off simultaneously through this common order in the light of the judgment of the honourable High Court of Sindh in Customs Reference. No,I57 of 2008, S. M. Naqi son of Syed Muhammad Hussain, Karachi v. Collector of Customs (Adj-I) and others. For reference the facts of Appeal No, K1310/2015 as reported by the Principal Appraiser, Directorate General of Transit Trade (hereinafter to be referred as respondent No,1) are taken into consideration, the appellant is a importing company and is registered with the Ministry of Commerce and Industry of Afghanistan (MOCA) in the said capacity, during the course of his business activities he imported a consignment of 1532 cartons, comprising of 96945 pcs stuffed in 1 x 40" container bearing No, PCIU8563551 of different items/articles namely. Slippers, shoes, radio and nails amounting to $. 6682.00 C&F. Karachi in transit to Afghanistan against invoice No, Zz-252-2015 dated 23.03.2015 and B/L No, NKHI15620358 dated 23.03.2015. Upon receipt of documents from the shipper, he delivered those to his clearing agent M/s Akmal Rafay International, Karachi (CHAL No, 2456) for transmitting Goods Declaration (hereinafter to be referred as GD) in transit under the provision of section 129 of the Customs Act, 1969 and Rule 472 of
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Sub-Chapter VII of Chapter XXI of Customs Rules, 2001 inserted in the Customs Rules through S.R.O. 121(1)/2014 dated 24.02.2014, with the Directorate General of Transit Trade (hereinafter be referred as DGTT) which he did on the strength of the documents supplied to him by the appellant. The information so transmitted was accepted and DGTT allotted number ITTK-AT-24068 on 08.04.2015 to the GD. After receipt of which on his desktop, the Appraiser concerned processed the Good Declaration under rule 473 and communicated the amount of Insurance Guarantee equivalent to leviable duty and taxes on the goods if cleared for home consumption under section 79(1) of the Customs Act, 1969. Which was submitted by the appellant and was found correct and therefore the Goods Declaration was out of charge of the customs control. The GD was subsequently assigned to carrier and the nominated official of DGTT fed the carrier information comprising of truck number, driver name and other particulars. The container along with carrier was subsequently presented to Customs Computerized Sealing Unit (CCSU), which affixed the seal on the container and fed the, said effect along with other information in the system in terms of Sub-Rule (7) of Rule 473 'ibid. Thereafter, the sealing staff verified the installation of the gadgets, inclusive of seal and uploaded the images of the "seal", "tracking devise", "vehicle" and "container in the system and generated the transport note on the prescribed format and handed over to the carrier, each copy of which was signed by the custom sealing staff and copy of which was handed over to the driver for submitting to the gate-in staff. The terminal operator and the custom office staff thereafter allowed gate out of the consignment as expressed in Sub-Rules (8) and (9) of Rule 473 ibid, while doing so the Terminal Operator also entered the weight of the container. At the time of "gate-out" for onward communication to the computerized system through EDT in terms of Sub-Rule (10) ibid., and the vehicle accordingly proceeded to its destination. That when the driver of the carrier was having tea in a hotel at Kathore, the Officials of DGTT intercepted it and brought it back to the terminal on the pretext that they had certain information in regards to description and quantity. The container thereafter was gate-in and re-examined, which transpired that the item available in the consignment are 17 in numbers as against 4, including Benz wheel Bolt, which are not allowed to import it for transit to Afghanistan under SRO 151(1)/2004 dated 10.03.2004. The respondent No,1, thereafter feed the goods and served notice under sections 158(1) and 171 of the Customs Act, 1969 on the appellant No,2. Subsequently, the respondent No, 1 framed contravention report and forwarded to respondent No, 2 stating inter alia that the appellant has mis-declared the quantity and description of the goods and as such he committed an offence of smuggling attracting 2(s) and an act of misdeclaration and as such has contravened the provision of sections 2(s), 16, 32A(1), 127, 128, 129, 192 and 209 of the Customs Act, 1969, section 3(I) of Import and Export Control Act, 1950 and Import Policy and Procedure Order in addition to sections 3, 6 and 11 of the Sales Tax Act, 1990 and section 148 of the Income Tax Ordinance, 2001, punishable under clauses 8, 9, 14, 14(A), 63,64 of section 156(1) of the Customs Act, 1969 and sections 33 and 34 of the Sales Tax Act, 1990 and section 148 of the Income Tax Ordinance, 2001. The respondent No,2 as reported by respondent No, 1 issued show cause notice dated 10.03.2014 to the appellant. The appellant submitted reply to the show cause notice dated 24.07.2015, on which comments by respondent No, 1 were submitted, controverted by the consultant, vide letter dated 05.08.2015. The reply and additional arguments failed to find acceptance of respondent No, 2 and he passed order dated 13.08.2015 paras 10 to 15 are relevant which are reproduced here in below for easement: 10- I have gone through the case record and considered the verbal/written submission put forth by the respondent. The case of the department is that M/s. Zubair Wali Ahmed Zai Ltd., Sarak-e-Koh Television Market, Shah Mahmood Khan, Kabul, Afghanistan based importer had filed a goods declaration bearing GD No, ITTK-AT 24068-08042015 to through their authorized clearing agent MIS. Akmal Rafay (Pvt.) Ltd., CHAL 2456, Karachi vide Import General Manifest (IGM) No, 123 dated
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09.04.2015, Index No, 346, B/L No, NKHI15620358 (1x40") container No, PCIU-8563551. Seeking clearance of the following items. (i) Slippers (ii) Radio (iii) Shoes (iv) Nail. 11. Later on, in pursuance of a credible information the container was intercepted by the staff of the Directorate General of Transit Trade, Karachi on Super Highway and brought back to East Wharf, Karachi Detailed examination of the Consignment was made and the following items were found as against the declared items as stated above. Declared ItemsUndeclared Items (i) Slippers (ii) Radio (iii) Shoes (iv) Nail(i) Electric Calculator (ii) Mega Phone (iii) LED Display (iv) Mens Vest (v) Cable Jointer (vi) TV Back Cable Pin (vii) Co-Axial cable (viii) Floor Hinge (ix) School Bags (x) Electric Cutting (xi) Machine (xii) Electric Plug (xiii) Benz Wheel Bolt (xiv) Magnet 12. Accordingly, the case was referred for adjudication wherein the value for the un-declared item has been reported as Rs, 47,41,836/- involving duty and taxes of Rs, 27,93,439.00 the counsel for the respondent has raised legal/factual objection . Which can be summarized as follows: a. This forum lack jurisdiction to adjudicate the case in terms of SRO 886(1)/2013 dated 18.07.2012. b The show cause notice has to be issued by the Learned Collector instead of this office as the amount involved is Rs, 5,413,139.00, which falls within the jurisdiction of Collector as per provisions of section 179 of the Customs Act, 1969. c. Provisions of section 32 of the Customs Act, 1969 are not attracted. 13- The above referred issues are analyzed to the light of law and rules as under: a. This forum lacks jurisdiction to adjudicate the case in terms of SRO 886(1)12012 dated 18.07.2012. Perusal of the case record and examination report reflects that it is not a case of technical violation but a case mis-declaration of description having revenue implication. Provision of section 32 of the Customs Act, 1969 have been invoked in the show cause notice besides as pointed out by the Directorate of Transit Trade duty and taxes amounting to Rs, 27,93,439.00 are involved. Thus, the objection raised by the counsel is not tenable. b. The show cause notice has to be issued by the learned Collector instead of this office as the amount of duty and taxes involved is Rs,
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54,13,139.00, which fall within the jurisdiction of Collector as per section 179 of the Customs Act, 1969. The counsel of the respondent has raised legal objection in respect of assumption of jurisdiction by this forum on the pretext that the total amount of duty and taxes involved is Rs, 54,13,139.00, it has been observed that the department has referred the case for adjudication in respect of mis- declared banned items and has not included the value/duty and taxes involved in respect of the declared item. The amount of duty/taxes involved in respect of mis-declared item are Rs, 27,93,439.00 which falls within the jurisdiction of this forum. Further more, it will be appropriate to examine the provision of section 179 of the Customs Act, 1969. For reference the same is reproduced here-in-under: "179. Power of Adjudication: Subject to subsection (2) in cases involving confiscation of good or recovery of duty and other taxes not levied short levied or erroneous refunded, imposition of penalty or any other contravention under this Act or the Rules made there-under , the jurisdiction and power of the officer of Customs in terms of amount of duty and taxes involved excluding the conveyance, shall be as follows Since the duty and taxes not levied in this case have been reported by the Directorate General of Transit Trade reported as Rs, 27,93,439/-, which fall within the monitory limit of this forum. c. Provision of section 32 of the Customs Act, 1969 are not attracted A bare perusal of examination report reveals that the importer has mis-declared the contents of the consignments, the provision of section 32 of the Customs Act, 1969 are attracted and have been correctly invoked. Further more, the arguments of the respondent that the GD for transit is filed under section 129 of the Customs Act, 1969 and not section 79 of the Customs Act, 1969 is incorrect. It will be appropriate to examine the provision of both sections: 79. Declaration and Assessment for home consumption and warehousing:- (1) The owner of any imported goods shall make entry of such goods for home consumption or warehousing or for any other approved purposes within 15 days of the arrival of the goods by,-- 129 Transit goods across Pakistan to a foreign territory:-Where any goods are entered for transit across Pakistan to a destination outside Pakistan, the appropriate officer may, subject to the provisions of the rules, 'allow the goods to be so transited without payment of the duties which would otherwise be chargeable on such goods." Provided that the Federal government may, by notification in the Official Gazette prohibit the bringing into Pakistan by Sea, land or air in transit to a foreign territory any goods or class of goods. It is clear that section 79(1) requires the owner of any imported goods to make entry for:- (a) Home consumption (b) Warehousing (c) Any other approved purpose. Thus, the goods declaration filed for Transit falls under "any other approved purpose". Section 129 only empower the Officer of the Transit Trade to process the goods declaration in the light of relevant rules. Since the importer clearing agent has failed to discharge the liability by filing a true and correct declaration as required under section 79 of the Customs Act, 1969, furthermore, the counsel has argued that since no duty/taxes are involved, section 32 of the Customs Act, 1969 cannot be invoked. This contention is also in correct since the transit goods, duty/taxes are levied, however, the same are not paid sine the levy exist as per provision of Customs Act, 1969 read with Rules provision section 32 are attracted.
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14. It has been observed that the clearing agent has also failed to discharged his liability by filing an incorrect declaration of the goods further more item No, (xii) Benz wheel Bolt being autopart are not importable in terms of SRO 151(1)/2014 dated 10.03.2014, the authorized representative has contested that these are ordinary nuts/bolts, whereas the departmental representative has produced literature/photograph which clearly depict that the same are Mercedes Benz Wheel Bolts and Nuts. Accordingly, the same are not allowed to be imported under SRO 151(1)/2014 dated 10.03.2014. In addition the departmental representative has submitted that the same are specifically mentioned as nuts/bolts of vehicle in Chapter 73 of the Pakistan Customs Tariff. 15 In the light of afore stated facts, the charges leveled in the show cause notice stands established. In exercise of the powers conferred upon me under section 156(1)(14) of the Customs Act, 1969, I order for confiscation of undeclared item i.e, (i) electronic calculator, (ii) Mega Phone, (iii) LED Display (iv) Men's Vest, (v) Cable Jointer, (vi) TV Back Cable Pin, (vii) Co-axial Cable, (viii) Floor Hinge (ix) school bags (x) Electric cutting Machine (xi) Electric Plug (xii) Magnet (xiii) whereas item No, (xiii) Benz Wheel Bolt is outrightly confiscated for violation of Rules 473 and 484Q of SRO 121(1)/2014 dated 24.02.2014 and SRO 151(1)/2004 dated 10.03.2004 read with sections 16, 32(1), 32A(1), 127, 128, 129, 192 and 209 of Customs Act, 1969. Section 3(i) of Imports and Exports (Control) Act, 1950 and Import Policy and Procedure Order in vogue. Sections 3, 6 and 41 of the Sales Tax Act, 1990 and section 148 of the Income Tax Ordinance, 2001. However, the importer is given an option to redeem the same (excluding item No, xii Mercedes Benz Wheel Bolt that has been out-rightly confiscated). On furnishing of customs security as per Afghan Transit Trade Rule in respect of undeclared item and payment of redemption fine equivalent to 35% of the value of the undeclared item (offending goods) in terms of clause (1C) of SRO 499(1)/2009 dated 13.06.2009 read with section 181 of the Customs Act, 1969 subject to the condition that the same are otherwise importable under relevant provision of the Transit Trade Rules and legal provision of the Act. Provision of Law a penalty of Rs, 300,000/- (Rs, three hundred thousand only), is imposed on the importer for mis-declaration of description, under section 156(1)(14) of the Customs Act, 1969. A penalty of Rs, 25,000/- (Rs, Twenty Five thousand only) is imposed on the clearing agent) M/s. Akmal Rafay International, clearing agent office. (CHAL 2456) Karachi for active connivance with the importer under section 156(1)(14) of the Customs Act, 1969. 3. Being aggrieved and dissatisfied with the impugned Orders-in-original the appellant No, 1 filed the appeal before this Tribunal on the ground incorporated in the Memo of Appeal, on the date of hearing Mr. Nadeem Ahmed Mirza Consultants appeared and contended that: (i) That for obtaining WeBOC user ID for filing transit trade GD with the DGTT, by the importer/trader of Afghanistan as expressed in Rule 424 of Sub-Chapter II of Chapter XXI of Customs Rules, 2001, an application has to be filed by him with the Ministry of Commerce and Industry of Afghanistan (MOCA), annexed with the documents prescribed therein by the Pakistan Customs, which after scrutinizing of those, register him under Rule 424 and allocate him unique user identification under Rule 427, to which MOCA has been authorized by the Pakistan Customs to create user IDs of the Afghan traders. Subsequent to that, the nominated officer of MOCA, to whom a specific user ID has been allocated by the Pakistan Customs for the said purpose for logging in the software of WeBOC, intimate the allocated unique user identification to the Assistant Collector (MIS) of the Collectorate of Appraisement (East) along with user ID of the trader and form submitted for the said purpose on the registered email address. This confirms that Pakistan Customs/DGTT has no interaction with the trader of Afghanistan right from registration with WeBOC, till filing of GD for home consumption at the Dry port of Afghanistan for clearance of the goods imported by a trader of Afghanistan in Karachi for transit to Afghanistan, for levy of duty and taxes as prescribed in the Afghanistan Customs Tariff, by the Custom department of the Government of Afghanistan, any contravention of
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the Afghanistan Customs Act/Afghanistan Customs Tariff, rest with the Government of the Islamic Republic of Afghanistan and none else, .Respondents are no exception. (ii) That the respondent No, 2 has issued show cause notice to the appellant, who is operating in the Islamic Republic of Afghanistan without consulting to the instruments, through which Transit Trade is governed, namely (i) Revised Kyoto Convention Agreement 1999 (ii) Afghan Pakistan Transit Trade Agreement, 2010 (APTTA) (iii) Notification S.R.O. No,121(I)/2014 24.02.2014 and even the Customs Act, 1969 Preliminary of section 1 of Chapter, read as "short title, extend and commencement" and clause (1) says as "This Act may be called the Customs Act, 1969 and Clause (2) as "it extent to the whole of Pakistan" The appellant failed to find any phrase, Article, condition and Rule, inclusive of Customs Act, empowering the respondent No, 2 to issue show cause notice to an Importer/Trader of Afghanistan and this is due to the fact that they are non entity, stood validated from clause (2) of the Act, which says it is applicable to the extent of whole of Pakistan not beyond that. Meaning thereby that Customs Act is not applicable on the importer of Afghanistan. Hence, the respondent No, 2 has no mandate to issue show cause notice to an importer of Afghanistan. It is for the Custom Officials of the Government of Islamic Republic of Afghanistan to proceed against the appellant under the Customs Act of Afghanistan after receipt of report, contrary to declaration from the Officials of DGTT along with import documents and Goods Declaration, copies of the same had to be dispatched separately by courier through Ministry of Commerce of Pakistan to Ministry of Commerce and Industries of Afghanistan (MOCA) for information and proceeding by the Revenue division of Afghanistan. Acting in derogation of Section 1 the Customs Act, 1969. Render the act of respondent No, 2 without lawful authority/jurisdiction by virtue Qf having no locus standi. Hence, void and ab initio. (iii) That upon conclusion of transaction under the provision of section 129 of the Customs Act, 1969 and Rules 473 to 476 of Notification No, 121(1)/2014 dated 24.02.2014, it became past and closed transaction. The consignment so out of charge after obtaining insurance guarantee cannot be subject to reexamination, detention, seizure for the purpose of adjudication, by virtue of the fact that the Officer who allowed the gate out and the preceding formalities became functus officio. In the instant case of appellant the Customs Codal Formalities were completed under Rules 472 to 474 ibid and the goods were out of charged and the consignment was gate out. The official of DG T&T intercepted the carrier at Kathore, Super highway and brought it back to the terminal, which is a blatant illegal act, as none of the Article of APTTA, 2010 and Rules embodied in Notification No, 121(1)/2014 dated 24.02.2014 empowers them to do so, rendering the detention under section 186, Seizure under section 168(1), issuance of show cause notice under section 180 while assuming power under section 179 of the Customs Act, 1969 inspite not applicable as abuse of power. Since, the goods of appellant were gate out, resultant the respondent became fictitious as hell in reported judgment 2008 PTD 1968 Mls. Sikander Enterprises v. Central Excise and Sales Tax Tribunal Karachi. (iv) The subordinate of respondent No, 1 intercepted the consignment of appellant at Kathore at 18 hours on 16.04.2015 and put an hold for proceeding to destination. Such hold tantamount to notional seizure as held by High Court of Sindh in reported judgment 2003 PTD 2821 Syed Muhammad Razi v. Collector of Customs (Appraisement), Karachi and 2 others. By virtue of notional seizure the provision contained in sections 171 and 168(1) of the Customs Act, came into operation. Meaning thereby in the case of seizure of goods under section 168 the reason are to be recorded under section 171 and communicated to the person from whose possession the things are seized and the notice under section 180 of the Customs Act, 1969 by the authorities vested with the powers under section 179 ibid is also required to be issued within 2 months of the seizure of the goods subject to extension for further two months based on exceptional circumstances by the Collector of Customs after giving notice to the respective person as per law laid down by the
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Supreme Court of Pakistan in reported judgment 1999 SCMR 1881 Khalid Mahmood v. Collector of Customs, Custom House, Lahore and recording of those exceptional circumstances, failing which the owner or the person from whose possession they were seized earn a right for the return of the goods and the order/act of seizure become illegal and invalid. (vi) That in the instant case of the appellant the initial period of 2 months stood lapsed on 15.06.2015 from the notional seizure dated 16.04.2015 and the show cause notice by the Respondent No, 2 has been issued on 07.07.2015, no extension granted by the competent authority due to the fact that no exceptional circumstance were available with him. Rendering the show cause notice time barred and as such without powers/jurisdiction and the order so passed is as well void and ab initio as held by Superior Court in umpteenth judgment e.g. 1998 MLD 650, 2005 PTD 23, 2003 PTD 2821 and 2007 PTD 2092. (vii) That in the show cause notice section 33 of the Sales Tax Act, 1990 and section 148 of the Income Tax Ordinance, 2001 have been invoked without realizing to the fact that section 33 is not a charging section instead a penal synonymous to section 156(1) of the Customs Act, 1969 and section 148 is equally not a charging section instead inserted in the Ordinance empowering the officer of Customs, to collect the leviable income tax at import stage. No show cause notice can be issued under the said sections, rendering the show, cause notice and order-in-original void and ab initio and of no legal effect as held in reported judgment judgments Asst. Collector v. Khyber Elec. Lamps 2003 PTD 1275, D. G. Khan Cement v. Collector of Customs 2005 PTD 480, Caltex v. Collector 2003 PTD 1593, Union Playing Card Company v. Collector of Customs 2002 MLD 130, Atlas Tyres v. Additional Collector 2002 MLD 180, State Cement v. Collector PTCL 2001 CL 558, Kashmir Sugar v. Collector 1992 SCMR 1898, Rose Color v. Chairman, CBR and 2013 PTD 813 Sarwar International v. Additional Collector of Customs. (viii) That even otherwise respondent No, 2 is not appointed as Officer of Inland Revenue under section 30 of the Sales Tax Act, 1990 and section 207 of the Income Tax Ordinance, 2001 and as such is not empowered to issue show cause notice and pass order-in-original relating to matters of Sales Tax and Income Tax under section 11 of the Sales Tax Act, 1990 and section 162(1) of the Income Tax Ordinance, 2001. Hence, by issuing show cause notice with the inclusion of amount of Sales Tax and Income Tax, your authority usurped the power of Officer of Inland Revenue to which he is not vested, Rendering the issuance of show cause notice and order-in-original being in flagrant violation of law and as such coram non judice as held in Order in Sales Tax Appeal No, 444/03, STA 465/07 and judgments reported at PLD 1971 SC 184, PLD 1976 Supreme Court 514, 1992 ALD 449, 2004 PTD 624, PLD 2004 Supreme Court 600, PLD 2005 Supreme Court 842, 2009 PTD 1112, 2010 PTD 465 and 2010 PTD (Trib.) 1636. (ix) That it is also imperative to state that the expression of section 179 of the Customs Act, 1969 is very clear in regards to determination of Adjudicating Authority on the basis of "amount of duty and taxes involved excluding the conveyance." Not "amount of evaded duty and taxes". In the instant case of appellant the…
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