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Petitioner: PAK ELEKTRON LIMITED, LAHORE VS Respondent: ADDITIONAL COLLECTOR OF CUSTOMS, LAHOREHonorable Justice Shahid Mehmood BhattiTariq Najib Choudhary,Ahmed Kamal and Masud Javed
2012 P T D (Trib.) 1650
[Customs, Federal Excise and Sales Tax Appellate Tribunal]
Before Shahid Mehmood Bhatti, Member (Judicial) and Muhammad Arshad, Member (Technical)
Messrs PAK ELEKTRON LIMITED, LAHORE
Versus
ADDITIONAL COLLECTOR OF CUSTOMS, LAHORE and others
Customs Appeal No. 322 of 2010, decided on 2nd August, 2011.
(a) Customs Act (IV of 1969)---
----Ss. 25, 26, 32 & 36---Assessment of imported goods---Submission of forged and untrue documents---Issues for consideration were as to whether the importer had submitted all the commercial/customs documents in respect of the subject importation of the consignment; that whether the goods declared by the importer in the commercial documents and goods declaration submitted before the Customs Authorities, matched with the description of goods as mentioned in the invoice retrieved from the container---Admitted position was that the importer had submitted before the Customs Authorities all the required commercial documents, viz. commercial invoice, packing list, letter of credit and bill of lading; transaction had been conducted in a transparent manner through normal Banking Channel; said documents sufficed the legal requirements of submission of prescribed documents by the importer to the customs at the time of importation; particulars mentioned in the invoice retrieved from the container, and the invoice submitted by the importer before customs were poles apart; number of major discrepancies existed between the particulars of both the invoices; comparison between the invoices retrieved from the container and the one submitted by the importer indicated a huge differential between the material particulars, viz. invoice numbers, dates of invoices, description of goods, selling dates, names of shippers---Invoice retrieved from the container was completely silent about the name of vessel, L/C No. and the issuing bank, which were considered very essential particulars to call the subject piece of paper on commercial invoice as understood in the general and commercial parlance---Issue with regard to submission of all commercial/Customs documents in respect of the import in question was answered in the affirmative while concerning the remaining matters was answered in the negative, in circumstances.
(b) Customs Act (IV of 1969)---
----Ss. 25, 26, 32 & 36---Assessment of imported goods---Description of goods---Issue for consideration was, whether the examination reports tendered by the Customs Authorities, supported the description of goods as given in the commercial documents presented by the importer before the Customs Authorities---Commercial documents, viz, commercial invoice, packing list, letter of credit, bill of lading, presented by the importer before the Customs Authorities, contained the same description of the imported goods as determined by the Customs Authorities in the examination report submitted by them or the back of the goods declaration---Same aspect was further substantiated by the Comparative Chart submitted by the Collectorate to the Tribunal---Only difference between both i.e. the invoice submitted to the Customs Authorities by the importer and the examination report tendered by the Customs staff, pertained to the number of units---Total quantity declared in the invoice presented before customs was 25,00 whereas the examination report had shown the quantity as 2525---Examination report tendered by the Customs Authorities, constituted in itself an independent piece of evidence which negated the departmental stance, and on the contrary fortified the view point of the importer---Issue in question was answered in the affirmative.
(c) Customs Act (IV of 1969)---
----S. 32---Allegation of misdeclaration---Application of S.32, Customs Act, 1969---Mandatory prerequisites---Issue for consideration was, whether allegation of misdeclaration levelled at against the importer, was factually and legally sustainable---Allegation of misdeclaration in terms of S.32 of Customs Act, 1969 had been levelled against the importer on the basis of an irrelevant, vague and incomplete invoice purported to be issued by another shipper---Retrieved invoices had neither been prepared by the importer nor those had been delivered by the importer to the Customs Authorities---Authorities had not been able to produce any evidence against the importer in respect of opening of letter of credit or remittance of foreign exchange for the purpose of importation of the subject goods at enhanced price against the "so called" invoice---Onus of proof lay on the customs---Case seemed to have been built up by the authorities on the basis of retrieved documents assumed to be commercial invoices, which were not to be relied upon for institution of a case of misdeclaration against the importer in terms of S.32 of the Customs Act, 1969---In order to attract the mischief of punitive provision of S.32 of the Customs Act, 1969, the mandatory prerequisite was that accused should have made or signed or declared or caused the same before Customs Authorities on the form of any declaration notices, certificate or any documents, or should have made any statement while replying the queries put to him by an officer of Customs, with knowledge and belief that such documents or statements were false in any material particular---In absence of any document, declaration notice made, signed or delivered to the Customs Authorities, the charge of misdeclaration, could not be framed against the importer---Said issue was answered in the negative.
PLD 1996 Kar. 68; Special Customs Appeal No.65 of 2001 dated 22-4-2008; 2006 PTD 1207; 2003 PTD 552 and Messrs A.R. Hosiery Works Karachi v. Collector of Export, Karachi and another 2004 PTD 2977; 2002 PTD 2215 = 2007 SCMR 1881 rel.
(d) Customs Act (IV of 1969)---
----S. 25---Customs Rules, 2001, R.107---Determination of customs value of goods---Scope and application of S.25 of the Customs Act, 1969---Issue to be determined was, whether the customs value of the subject goods had been determined in conformity with the provisions of S.25(1) of the Customs Act, 1969 and Customs Rules, 2001---Customs Authorities had disputed the value of the subject goods on the value of the goods jotted down on an invoice retrieved from the container; in doing so, authorities were saddled with the responsibility to produce cogent and admissible material to establish the genuineness, authenticity and credibility of the retrieved invoice and also to substantiate that the value of the goods had been misdeclared---Provisions enumerated in the relevant S.25 of the Customs Act, 1969 pertaining to the transaction value had to be followed in a sequential order as per the requirements of the statute and the judgments of superior courts---Authorities were also to bring on record the evidential invoices of the goods in question of the country of export and pertaining to the period of import into Pakistan as stipulated in R.107(a) of the Customs Rules, 2001---On the contrary, the authorities solely relied upon the retrieved invoice from the container which was neither relevant, nor complete, but was vague and poles apart when compared with the invoice presented to Customs Authorities with all other required documents as required under the Rules---Department in the present case, had failed in submitting any provision of the Act/Rules or any other notification nullifying the proposition of law, and did not rely upon any admissible or convincing material---Authorities had ignored their own Valuation Rulings which supported the declared prices of the imports of the importer beyond any shadow of doubt---Department had failed to discharge the onus of establishing that the prices declared by the importer of the imported goods, were not correct---Issue was answered in the negative, in circumstances.
1986 MLD 1990; PLD 1996 Kar. 68; 2002 PTD 2957; 2004 PTD 38; 2005 PTD (Trib) 617; 2006 PTD 909; 2008 PTD 1250 and 2008 SCMR 438 rel.
(e) Customs Act (IV of 1969)---
----S. 25---Customs Rules, 2001, R.113---Determination of customs value of goods---Admissible and conclusive evidence for enhancement of declared price---Issue to be considered was, whether the retrieval of disputed invoices from the container, would constitute an admissible and conclusive evidence for enhancement of the declared price---Invoice retrieved from a container, could not be treated as conclusive evidence of the transaction value agreed between the parties in terms of S.25(1)(b) of the Customs Act, 1969, read with Rule 113 of the Customs Rules, 2001---On the contrary the invoice retrieved from the container was completely different in material particulars and details---Invoice retrieved from the container was an incomplete, vague document and the particulars jotted therein had no nexus with the description of goods, quality, invoice dates etc., except the partial similarly of the model---All the particulars jotted down in the invoice presented to the customs were favourably compatible with the packing list, letter of credit and bill of lading submitted along with the commercial invoice presented to the customs by the importer---Main criteria for acceptance of those documents lay in the fact that those were bank retired documents and the transaction had been conducted in a very transparent manner---Invoice presented to the customs was a normal, regular admissible invoice in terms of S.2(kka) of the Customs Act, 1969 and was complementing the accompanying documents viz, letter of credit, packing list and bill of landing---Issue was answered in the negative, in circumstances.
Special Reference Applications Nos.191 and 192 of 2009 and Customs Appeal No.K-457 of 2009 dated 13-10-2009 rel.
(f) Customs Act (IV of 1969)---
----Ss. 25 & 180(a)---Summary adjudication---Issuance of show-cause notice---Issue to be determined was, whether mandatory requirement of issuance of show-cause notice prescribed in S.180(a) of the Customs Act, 1969 for the purpose of adjudication was dispensed with where the incumbent filed a request for summary adjudication---Order-in-original, had been passed by Additional Collector, without issuance of any show-cause notice to the importer on account of the plea that importer had requested for summary adjudication---Importer never requested the adjudicating Officer to summarily adjudicate the case without issuance of the show-cause notice---Request for summary adjudication implied in legal and common parlance for expeditious disposal of the matter by the adjudicating authority in face of entailing circumstances---Issuance of show-cause notice was a mandatory requirement for the adjudicating officers while adjudicating issues before them---Importers were not afforded any opportunity to put any meaningful defence at the time of hearing---Order-in-original issued by the Additional Collector of Customs, was ab initio null and void and the structure built upon that order had no legal value---Said issue was answered in the negative.
2004 PTD (Trib.) 1324; PLD 1964 SC 536; 2003 SCMR 1505; 2006 SCMR 129; Pakistan v. Public at large PLD 1987 SC 304; University of Dhaka v. Zakir Ahmed PLD 1965 SC 90; 1994 SCMR 2232; M.D. The Bank of Punjab v. Syed Shahzad Hussain 2006 SCMR 1023; Sir Edward Snelson's case PLD 1961 SC 237; Fazal-ur-Rehman's case PLD 1964 SC 410 and Pakistan Crome Mines' case 1983 SCMR 1208 rel.
(g) Customs Act (IV of 1969)---
----Ss. 193 & 193-A---Appeal to Collector (appeal)---Limitation---Issue to be determined was, whether order-in-appeal passed by the Collector (Appeals) was barred by limitation---Appeal was filed on 21-6-2010 and order-in-appeal was issued by Collector after the initial period of 120 days beyond the limitation period prescribed in terms of S.193(A)(3) of the Customs Act, 1969---No extension was granted by the Appellate Authority as per contents of the order-in-appeal---Order-in-appeal had been passed beyond the period of limitation by 6 days, thereby rendering it ab initio null and void---Time extension given in such cases was akin to giving a new lease of life into dead entity and tantamount to flogging a dead horse, if an event or document had become dead on account of non timely extension of time period prior to expiry of entire stipulated period---Such was legally considered dead and new spirit could not be infused into it by any means, or on account of any reason whatsoever---Since the initial period of 120 days stood expired without any extension, order-in-appeal became barred by limitation period by 6 days rendering the appeal and preceding order as without power/jurisdiction, hence ab initio null and void and not enforceable under the law---Issue in question was answered in the affirmative.
2007 PTD 117; Messrs Super Asia Muhammad Din Sons (Pvt.) Ltd. v. Collector of Sales Tax Gujranwala and another 2008 PTD 60; 1999 SCMR 1881; Nagina Silk Mills Lyallpur v. The Income Tax Officer and the Income Tax Appellate Tribunal, Pakistan PLD 1963 SC 322; Pace International Rawalpindi v. Secretary, Revenue Division, Islamabad, the Federal Tax Ombudsman (FTO) 2006 PTD 340; SS Oil Mills Ltd. v. Secretary Revenue Division Lahore GST 2005 CL 592; PTCL 2005 CL 841; 1992 SCMR 1898; 2009 SCMR 1126; 2002 MLD 180; 2003 PTD 1354; 2003 PTD 1797; 2008 PTD 578; 2009 PTD 762; 2009 PTD Trib. 107 and (2010) 109 Taxation 221(sic) rel.
(h) Customs Act (IV of 1969)---
----Ss. 193 & 193-A---Appeal to Collector---Issue to be determined was whether order-in-appeal passed by the Collector was "definite" and "conclusive"---Collector in the operational part of impugned order, had remanded the matter to the Customs Department/Valuation Department for determination of customs value of the subject goods---Order of the Collector, in circumstances was not in conformity with the provisions enunciated in S.193(3) of the Customs Act, 1969---Directions for referring the matter to the Valuation Department was uncalled for in as much as it was discriminatory as well confiscatory as identical/similar goods had been released by the Collectorate at favourably compatible prices---Action of the Collector was appropriately and patently in derogation of the principles enunciated by relevant statute, case-law by superior courts as well as general principles and canons of natural justice, equity and fairplay---Impugned order was adverse to the vested rights as well as fundamental rights of the appellant and needed redressal/rectification---Issue, in question, was answered in the negative, in circumstances.
(i) Customs Act (IV of 1969)---
----Ss. 25, 193 & 193-A---Constitution of Pakistan, Arts.4 & 25---Determination of customs value of goods---Discrimination---Issue to be determined was, whether discriminatory treatment had been shown to the appellant---Counsel for appellant placed on record many copies of Goods Declaration for the confirmation that the price indicated in the retrieved invoice, did not reflect the prevailing prices of the goods imported by the appellant in the International market, instead those reflected the prices declared by the appellant---While ignoring the evidence of identical and similar imports of the goods in question, the customs had discriminated by way of preparation of contravention report and subsequently passing of order-in-original, despite the fact that appellant stood on the same pedestal---Treatment given to the appellant against the principles enshrined in Arts.4 & 25 of the Constitution violated the settled law, laid down by the Superior Courts in their judgments---Issue, in question was answered in affirmative, in circumstances.
2002 PTD 976; 1990 SCMR 1072; 1990 SCMR 1059; 1975 SCMR 352; PLD 1995 SC 396; 1998 SCMR 1404; PLD 1997 SC 582; PLD 1997 SC 334 and 1997 SCMR 1874 rel.
(j) Administration of justice---
----If the law required something to be done in a particular manner that thing was to be done in the manner as prescribed under the law, otherwise should not be done at all.
Messrs Al-Faiz Industries (Pvt.) Ltd.'s case 2006 SCMR 129 rel.
(k) Interpretation of statutes---
----Statutes, which enabled person to take legal proceedings under certain specified circumstances, demanded that those circumstances must be accurately obeyed, notwithstanding the fact that the provision thereof were expressed in merely affirmative language---No universal rule could be laid down as to whether a mandatory enactment would be construed directory only or obligatory with an implied nullification for disobedience---Statutes which enabled person to take legal proceedings under certain specified circumstances, as a general rule, demanded that those circumstances must be accurately obeyed notwithstanding the fact that the provision thereof were expressed in affirmative language---If the law had prescribed method for doing of a thing in a particular manner such provision of law was to be followed in letter and spirit; and achieving or attaining the objective of performing or doing of a thing in a manner other than provided by law, would not be permitted.
Liverpool Borrough Bank v. Turner (1848) 13 OS 30 rel.
(l) Customs Act (IV of 1969)---
----S. 196---Reference to High Court---Scope---Section 196 of Customs Act, 1969, specified a particular office to initiate legal proceeding on behalf of the Customs Department---Demands of Section 196 were to be accurately and strictly obeyed---High Court was not to question the propriety, motive, prudence of object of the Legislature in conferring the power or right to file an appeal under S.196 of the Customs Act, 1969 on a particular or specified officer.
Punjab Province v. Malik Khizar Hayat Khan Tiwana PLD 1958 Federal Court 200 and Khalid Saeed v. Shamim Rivan and others 2003 SCMR 1505 rel.
(m) Customs Act (IV of 1969)---
----Ss. 179, 193 & 193-A---Order-in-original and order-in-appeal---Impugned order-in-original and order-in-appeal issued by the Adjudicating and Appellate Authorities were not speaking orders wherein all the issues raised by appellant had not been discussed and dealt with properly---Such orders were to be deemed to be without jurisdiction in which the Competent Authorities had not discussed question of fact and question of law---Operational portion of the subject order-in-original contained inherent legal infirmities, deficiencies and substantive illegalities discussed therein other issues dealt in by that forum in the judgment---Judicial order must be a speaking order manifesting by itself that the court had applied its judicial mind to the issues and the points of controversy invoked in the case---When the reasons would not be forthcoming, the Appellate Court would be deprived of the views of the subordinate court---Impugned orders which were not speaking orders and devoid of reasons, were not sustainable in law being contravention of settled law.
1994 CLC 2181; 2005 YLR 1019; 2007 PTD 2500; 2004 PTD 1973; 2005 YLR 1719; 2003 PTD 777; 2003 PTD (Trib.) 2369; 2002 MLD 357; 1983 CLC 2882; 2005 PTD 2519; 2005 PTD 1189; PLD 1995 SC (Pak.) 272; PLD 1970 SC 158; PLD 1970 SC 173 and 1984 SCMR 1014 rel.
Tariq Najib Choudhary for Appellant.
Ahmed Kamal D.R., and Masud Javed for Respondents.
ORDER
SHAHID MEHMOOD BHATTI, MEMBER (JUDICIAL-II).---This order will dispose off Customs Appeal No.322 of 2010 filed by the appellant against Order-in-Appeals Nos.324-327/2010 dated 25-10-2010 passed by the Collector of Customs (Appeals), Lahore.
2. Brief facts of the case as reported by the Principal Appraiser Customs Examination, (Group-IV), Dryport Mughalpura, Lahore vide contravention report issued under endorsement C. No. V-CUS/MISC-386(IV)/2010/901 dated 12-5-2010 are that Messrs Pak Electron Limited, Lahore imported a consignment from China declared to contain 2500 sets of Evaporators and Condensers for split air conditioner in 2x40" containers and 1x20' container with declared value as US Dollars 61,050 (FOB) vide Invoice No. HQDR3601071427-1 dated 1-3-2010 and filed GD through Messrs Ranziq International (Pvt.) Limited, (CHAL No. 110/74) under the regime of ACP for clearance of the same. The goods declaration was registered vide No. LDRY-HC-12509 dated 29-4-2010 at Dryport Lahore Accordingly, assessment of the imported goods was completed on the declared value US Dollar 64,740 (C&F). The importer paid the duty and taxes on 4-5-2010 vide cash number HC-116. Before allowing delivery, the aforesaid containers were inspected to ascertain whether the documents i.e. invoice and packing lists were placed inside the container as required under Rule 389(a) of the Customs Rules notified vide S.R.O. 450(I)/2001 dated 18-6-2001. On inspection, a commercial invoice showing value (worked out on the basis of unit value mentioned in the recovered invoice) as US Dollar 346,382 FOB [US Dollars 350,072 C&F] was recovered from the container. The consignment was also physically examined to Confirm actual description and quantity of the imported goods which resulted in recovery of 2525 sets as against the declared quantity of 2500 sets. The said fact confirmed that the importer has, willfully and deliberately, submitted forged and untrue documents declaring less than actual value and quantity of the imported goods in a bid to evade duties and taxes amounting to Rs.7,587,847 (Customs Duty Rs.1,845,447, Sales Tax Rs.4,259,417, Income Tax Rs.1,235,223 and Federal Excise Duty Rs.247,760), within the meaning of sections 32(1) and 32(2) of the Customs Act, 1969 read with section 36 of the Sales Tax Act, 1990 further read with section 148 of the Income Tax Ordinance, 2001, punishable under clause (14) of section 156(1) of the Customs Act, 1969 read with S.R.O. 499(I)/2009 dated 13-6-2009 further read with section 33(5) of the Sales Tax Act, 1990.
3. Adjudication proceedings were initiated against the appellant and the Additional Collector of Customs (Adjudication), passed the Order-in-Original No.34 of 2010 dated 21-5-2010. The extract of the concluding para of the order is enumerated below:--
" In view of what has been discussed above, I have been left with no option but to conclude that the charges as mentioned in the contravention report are established against the importer. Accordingly, I hereby order as under:--
(i) The imported goods are confiscated under clause (14) of section 156(1) of the Customs Act, 1969; However, an option under section 181 of the Customs Act, 1969 read with clause (d) of S. No. 1 of the table in S.R.O. 499(I)/2009 dated 13-6-2009 is allowed and the confiscated goods are redeemed to its lawful owner on payment of redemption fine equal to 35% (thirty five percent) of the assessed value (US$ 350,072) of the goods in addition to payment of duties and taxes leviable under the law. Needless to say that the amount of duties and taxes, already deposited against Goods Declaration No. LDRY-HC-12509 dated 29-4-2010 shall be adjusted accordingly.
(ii) The respondent is hereby warned to be careful in future.
(iii) The Additional Collector of Customs, Dryport Moghalpura, Lahore may like to examine the matter to discontinue the facility of ACP to the respondent."
4. The order was challenged before Collector (Appeal), who instead of deciding the appeal on merit while considering the fact of the case, provisions of the Customs Act, 1969 and Rules and Regulation framed there under, merely disposed off the appeal through a single order. The relevant extract of the order is reproduced herein-below:---
"Considering the overall circumstances of the case, it is established that during the examination of the impugned consignment imported from China, the original commercial invoice showing value of US$ 350,072 (C&F) was recovered from the container as against the declared value US$ 64,740 (C&F). On the other hand, the prosecution department itself referred the matter to valuation department for determination of value of the subject component/parts of split air conditioner which is essential for the final determination of value. As the ease is to be decided within the time limit prescribed under section 193 of the Customs Act, 1969 and since no reply from the Valuation Department so far been received, the case cannot be kept pending for indefinite period. Therefore it is appropriate that the concerned custom authority finalize the value in terms of the mandatory provision of law.
5. The vires of the said impugned order has now been challenged through the instant appeal before the Customs Appellate Tribunal on the following summary and grounds of appeal:--
(i) That case relates to the Goods Declaration No.LDRY-HC-12509 dated 29-4-2010.
(ii) The appellant filed Goods Declaration (G-D) supported by Commercial Invoice issued by L.G. Electronics Inc..... Korea, for import of Evaporators Enamelled and coated and Condensers for Split Type Air Conditioners (12000 BTU). Assessment of the goods was made on the declared value. The appellant paid the duties and taxes vide cash…
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