Al Wakeelo
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Petitioner: Messrs BUSINESS COMMUNICATION, KARACHI and another VS Respondent: The DEPUTY COLLECTOR, CUSTOMS INTELLIGENCE UNITS, MCC OF PMBQ, KARACHI and 2 others
Court Name: Customs Appellate Tribunal Judge(s): Jehanzaib Wahlah Title:Messrs BUSINESS COMMUNICATION, KARACHI and another vs The DEPUTY
COLLECTOR, CUSTOMS INTELLIGENCE UNITS, MCC OF PMBQ, KARACHI and 2 others Case No.: Customs Appeals Nos.K-950 and K-951 of 2017 Date of Judgment:2019-04-17 Reported As: 2020 PTD (Trib.) 172 Result: Appeal allowed Judgment ORDER JEHANZAIB WAHLAH (MEMBER JUDIC IAL-III). Through this common order , I intend to dispose off 02 Appeals bearing Nos.K-950/2017 and K-951/201 7 directed against the Order-in-Original No.699053 dated 12-6-2017 passed by Additional Collector of Customs (Ajudication I, Customs House, Karachi. Since, the both appeals have common facts and questions of law , therefore, it is needless to discuss facts of each appeal separately . 2. Briefly , facts and grounds of Custom Appeal No. K-950/2017 are that the appellant imported a consignment of 1225 kgs of flexible pipe from China, upon receipt of import documents delivered those to his clearing agent Messrs Muneeb Traders, Karachi (appellant No. 2) for transmitting Goods Declaration (GD), MCC of PMBQ under the provision of Section 79(1) of the Customs Act, 1969 (Act) and Rule 433 of Sub-Chapter III of Chapter XXI of Customs Rules, 2001 (Rules), which he did and as per pre-requisite deposited upfront duty and taxes of Rs.,633.528.00 on 11.05.2017, conseque nt to which GD was numbered as KPPI-H C-79191. The Assessing Officer (respondent No. 2) on receipt of GD on his workstation opted to get the goods examined first under the provision of Section 198 and Rule 435 of the Act/Rules, to proceed with after adducing his opinion, reasoning for conduction of examination , transmitted the GD to the Deputy Collector of Customs, Group-III MCC of PMBQ , who gave his assent and routed the GD to the Deputy Collector , examination , QICT , who mark ed the GD to the officials of his choice /selection, who conducted the desired physical verification of the imported goods and found the goods as per declared report so prepared was uploaded in the reservoir of the GD for the perusal of respondent No. 2, which read as "examined the goods in the light of GD retrieved through WeBOC System Description : - Flexible Pipe, Packed in assorted ctns Qty: 12310 Kgs....I/O not shown checked Weight 100% vide QICT Slip No. 5800744 dated 13.05.2017 found weight 13710 kgs group to check PCT value importability and all other
---
## Page 2
aspects. Images are attached." The respondent No. 2 upon appearance of the same on his workstation completed the assessment while enhancing the declared value to US$. 1.40/kg in terms of Serial No. 1 of Valuation Ruling No. 1010/2017 dated 12.01.2017 issued by Director , Directorate General of Valuation under the provision of Section 25A of the Act and passed assessment order in the capacity of authority defined in Section 2(a) of the Act under the provision of Section 80 and Rule 438 of the Act/Rules in exercise of the powers vested upon him through SRO. 371(1)/2002 dated 15.06.2002 and thereafter transmitted view message dated 18.05.2017 for payment of additional amount of duty and taxes of Rs. 358,814.00, which appellant No. 1 paid on 18.05.2017 vide Cash No.A- KPPI-001872- 18.05.2017. Consequent to which the competent inbuilt authority of Custom Computerized System (CCS) passed clearance order under Section 83 and Rule 442 ibid. and to the said effect view message dated 18.05.2017 was transmitted to appellants, wherein the GD of the appellant was send to the gate out staff for check out. On the strength of which the appella nt No. 2 obtained the delivery of the consignment from the Terminal. As soon as the transporter reached the exit gate, the Subordinates of the Deputy Collector of Customs, Customs Intelligence Unit, MCC of PMBQ (respondent No. 1) intercepted the container on the pretext that the goods have not been correctly determined/ assessed for levy of duty and taxes by respondent No. 2 and they desires to re- examine the goods and for that purpose they escort the container again to the terminal located in the vicinity of QICT . Since, the said act was completely unlawful, agitation was tendered by the appellants, but of no avail. The subordinates of respondent No. 1 thereafter carried out the re-examination and uploaded the same in the system and which read as "As per examination order , the examination is carried out by CIU Staff assessment alert (case of misdeclaration of description, PCT and value) documents not foun d inside the container , goods are examined on the basis of information retrieved from the system, documents scanned trader profile and destuffing of the cargo founds goods are as follows: Bathroom Accessories made of plastic, comprising of PVC drained Waste Flexible Pipe and Plastic Joints, Packed in Cartons Net Weight: 12310 Kgs approx I/O not shown Checked Weight vide QICT Weight Slip (attached found is : 13710 Kgs. Images are also attached for further information ....Group may checked all aspects including importab ility of the goods." Irrespective of the fact no mis-declaration in material particular was visible in the light of 1st examination report or the 2nd, the respondent No. 1 detained the container of the appellant and refused to release the same on the pretext that a contravention report is framed and same was forwarded to respondent No. 3 for issuance of show-cause notice and decision thereon. Who on the strength of the contravention report issued show-cause notice dated 02.06.2017 with the allegation that the appellant deliberately concealed and mis-declared the actual description, classification and value of the imported goods in order to get the assessment on suppressed value and tried to evade legitimate amount of duty and taxes to the tune of Rs.1505505.00, the said act of the appellant falls within the ambit of the provision of sections 32(1)(2)&79(1) of the Act, Section 6 of the Sales Tax Act, 1990 (STA) and Section 148 of the Income Tax Ordinance, 2001 ITO) punis hable under clauses (14) and (45) of Section 156(I) of the Act , cause 11(c)of Section 33 of the STA and Section 148 of the ITO to be read with SRO 499(1)/2009 dated 13.06.2009. The appellant replied to the show-cause notice vide letter dated 07.06.2017 throu gh which he controverted the allegation levelled in the show-cause notice well supported by Chapter Note of the Customs Tariff and Classification made by the World Customs Organization of the declared PCT and ascertain as per which the goods imported without any ambiguity falls within the declared description and PCT heading and are assessed @ US$. 1.40/kg. The Respondent No. 3 passed the impugned Order-in-Original dated 12.06.2017 through which he held the charges as levelled in the show-cause notice established and ordered confiscation of the goods subject to redemption of those on payment of 35% fine of Rs. 1380,501.00 , imposed penalty of Rs.200,000/- in addition to the worked out amount of duty and taxes as shown in the show-cause notice. Para 2 of the order is relevant, which is reproduced for easement/perusal. "I have gone through the case record and considered written/verbal arguments put forth by the respondent. The departments case is that the responden t imported the under reference consignm ent by declaring the goods as "Flexible Pipe under declared HS Code 3917.3990 and sought clearance of goods under self-assessment system. However , on physical examination by R&D Branch the goods were found bathroom accessories made of Plastic (flush tank seal covers, fitting drain waste pipe etc.). low ends brand assessable under HS Code 3922.9000 at
---
## Page 3
customs value US$. 3/kg instead of declared HS Code 3917.3990, The respondent argued that the goods Declaration (GD) was filed as per invoice , packing list and Bill of lading prescribed for automated clearance goods. The main heading HS Code 39.17 is for "Tubes, Pipes, Hoses and Fittings of plastic therefore, the goods were declared under HS Code 3917.3990 meant for others . Tubes , Pipes and Hoses. Further the goods being flexible pipes reinforced with other material with fittings , in either case, HS Code 3917.3990 or HS Code 3922.9000 attracts the same rates of duty and taxes . The arguments of the respondent are not acceptable as on examination of customs R&D Branch . the description of the goods were found "Bathroom accessories made of plastic comprising of PVC drain waste flexible pipes and plastic joints appropriately classifiable under PCT heading 3922.9000. It is evident that the respondent mis-declared the description , PCT heading and value to get the goods under suppressed assessable value to evade legitimate government revenue amounting to Rs.1,505,505/-. In view of the above, the charges levelled in the show-cause notice stand established. I, therefore, order confiscation of the offending goods under clause 14 of section 156(1), read with sections 32(1), (2) and 79(1) of the Customs Act, 1969. However an option under section 181 of the Customs Act, 1969 is given to the importer to redeem the confiscated goods on payment of Rs. 1,380,501/- (Rupees one million three hund red eight thousand five hundred and one only) as redemption fine @ 35% of the value of offending goods in terms, of SRO 499(1)/2009 dated 13.06.2009 in addition to payment of duty and taxes thereon. I also imposed a penalty of Rs. 200,000/- , (Rupees two hundred thousand only) on the importer and Rs. 50,000/- (Rupees fifty thousand only) on the clearing agent under Section 156(1) (14) of the Customs Act, 1969 for violation of above mentioned provision of law. To: (i) Business Communication (importer) (ii) M/s. Muneeb Traders (clearing agent)" 3. The appellant filed the instant appeal on the basis of grounds enumerated therein, the consultant/advocates on the date of hearing argued the case strictly in accordance with those. No cross objection under subsection (4) of Section 194A of the Act has been filed within the stipulated period of 30 days by the respondent No. 1, resultant, lost the right of cross appeal within the contemplation of subsection (3) of aforesaid section. Ergo, comments has been submitted, which least qualify the definition of cross objection. Hence, to be taken as opinion by virtue of having no legal sanction, placed on record of the case after perusing these. 4. Rival parties heard and case record perused and so the relied upon judgments. Consequently framed the following issues for decision: (i) Whether respondent No. 1 and his subordinates are empowered to detain the imported goods under the provision of section 186 of the Act? (ii) Whether respondent No. 1 and his subordinates have the powers to intercept and detain the lawful legal cleared consignment by the subordinate of respondent No. 2 after completion of codal formalities i.e. passing of assessment/clearance order under the provision of sections 80 and 83 and Rules 438 and 442 of the Act/Rules in exercise of the powers vested upon them through SRO 371(1)/2002 dated 15.06.2002? (iii) Whether respondent No. 1 and his subordinates have been appointed as an officer of Directorate General of Post Clearance Audit (DGPCA) by the legislature under Section 3DD of the Act and are empowered to conduct audit the record and books of account maintained under Section 211 and Chapter XI of Act/Rules under the provision of Section 26(2) after serving a notice /summon under Section 26A of the Act post clearance of the imported goods as contemplated in SRO 500(1)/2009 dated 13.06.2009? (iv) Whether Sections 6,33 of STA and section 148 of the ITO are penal clauses to be invoked for the contravention of the charging /applicable sections of the STA/ITO and as to whether those were correctly invoked by the respondent No. 3 in the show-cause notice? (v). Whether respondent No. has been appointed as officer of Inland Revenue under Section 30 of the STA or any section of ITO and as to whether she is empowered to issue show-cause notice and pass order-in-original in the matter of sales/income tax? (vi) Whether respondent No. 1/his subordinates and respondent No.3 are empowered to reopen a valid assessment/clearance order passed by the authority defined in Section 2(a) under the provision of Sections 80 and 83 and Rules 438 and 442 of the Acts/Rules under the provision of Section 195 ibid, while ignoring the provision of Section 193, wherein, right of appeal have been extended to them by the legislatur e and as to whether respondent
---
## Page 4
No. 3 is empowered to pile upon anothe r order under the provision of Section 179 of the Act in the presence of existing infield assessment/clearance orders passed under the aforesaid provision of the Act by the authority defined in section 2(a) ibid? (vii) Whether classification of the goods imported in the light of conducted examination report in consonance with the Examination Manual, 1996 in compliance of the direction issued by the Board in para 5 .of CGO 12/2002 dated 15.06.2002 rest on the appellant in the presence of availability of provision of section 80 and Rule 438 of the Act/Rules? (viii) Whether any contravention of Section 79(1) of the Act has been committed by the appellant? (ix) Whether provision of Section 32 of the Act can be invoked on imported goods when duty and taxes leviable under declared and ascertained PCT heading are one and the same in negation of the direction issued by the Board in para B (ii) of para 101 of CGO 12/2002 dated 15.06.2002? (x) Whether charge of mis-declaration of value under the provision of Section 32 of the Act can be invoked on the strength of the value determined by the Director , Directorate General of Valuation under the provision of Section 25A of the Act and could be treated as direct evidence as enunciated in paras 78 and 101 of CGO 12/2002 dated 15.06.2002 and clause (d) of SRO 499(1)/2009 dated 13.06.2009? (xi) Whether flexible pipes imported by the appellant could be termed as sanitary ware as per the contemplation of PCT heading 3922.9000 and Chapter note of WCO? (xii) Whether appellant No. 2 acted contrary to defined duties in the respective provisions of the Act and Chapter VIII of the Rules? 5. That as regard to Issue No. (i). The power/ jurisdiction of respondent No.1 and his subordinates of putting an hold on the GD/ detention on the consignment under the provision of Section 186 needs to be determined, expression of which read as follows: 186: Detention of Goods pending payment of fine or penalty ;-(1) when any goods or fine or penalty has been imposed, or while imposition of any fine or penalty is under consideration, or pending any inquiry or investigation, in respect of any goods such goods shall not be removed by the owner until such fine or penalty has been paid or such inquiry and investigation has been completed. (2) when any fine or penalty has been imposed in respect of any goods the appropriate officer may detain any goods belonging to the same owner pending of such fine or penalty . Upon conscientious analysis of Section 186, it is observed that the said section comes into play during the course of imports, meaning thereby if any case has been adjudicated by the competent authority against an importer and through which he held the charges established as levelled in the show-cause notice and imposed fine and penalty , and the importer has not paid that or any inquiry or investigation in respect of any goods is under way and imposition of penalty is under consideratio n. The appropriate officer is empowered to detain the forthcoming goods of the same owner/importer till the time fine and penalty is not paid. The case of appellant is that against him no order is infield, through which fine/penalty has been adjudged against him and he has not paid that or assailed before the judicial forum, nor any inquiry or investigation in respect of any of his imported goods is under way for imposition of penalty . Resultant, his lawful cleared goods cannot be detained under any pretext by any officer of customs, as regard to the officials of respondent No. 1, they can detained the goods which are either smuggled or of the person involved in smuggling falling within the ambit of Section 2(s) of the Act sans imported goods, power to detain those under the provision of Section 186 of the Act is only available to the official of Clearance Collectorate upon availability of either of the 02 conditions available in subsection (1) of Section 186 of the Act, resultant, detention of the goods of an importer is not permitted even by the officials of the Clearance Collectorate in the absence of availability of any of the 02 conditions. The respondent No. 1 and his subordinates in any way even through stretch of imagination or inapt interpretation of the provision of the aforesaid provision of the Act are not empowered to put an hold on GD/detain the consignment of any importer , appellant is not an exception, due to the fact they are not empowered either to pass assessment/clearance order under the provision of Sections 80, 83 and Rules 438 and 442 against the imported goods, or pass order under the provision of Section 179 for imposing fine/penalty or even recover the adjudge d amount under the provision of Section 202 of the Act. Resultant, they
---
## Page 5
acted without lawful authority/jurisdiction in detaining the appellant goods on the Assumption/formed opinion of mis- declaration of value, rendering the detenti on as ab-initio, null and void and coram non judice as held by the Hon'ble High Court of Sindh in its judgments reported at 2014 PTD 582 Amir Siddiqui v. Federation of Pakistan and 3 others that "authorities could detained such goods in respect of which inquiry or investigation was pending and not the goods which had been or were been imported by a person. The subsequent imported goods belonging to a same owner can only be detained once a fine or penalty has been imposed in respect of any other goods and the same remained un-paid. By no stretch of imagination all subsequent import can be detained or withheld clearance on the premise that some inquiry or investigation is pending in respect of some other goods. In our opinion no such action is permitted under this provision. The respondent are only authorized to take action for issuance of detention notice in terms of section 202 of the Act, once the amount alleged to have been evaded has been finally adjudicated and decided against the person. The procedure and mechanism provided Section 202 of the Custom Act, 1969 is entirely independent of any action taken in terms of Section 186 of the Act. It is not the case of respondent that any adjudication has been done either in respect of the good s allegedly cleared against fake GD's or even the goods covered by the instant petition and thereafter detention notices have been issued. With this the Hon'ble High Court of Sindh declared the detention of the consignment without lawful authority by holding that provision of Section 186 of the Customs Act, 1969 did not empowers the authority to do so." and 2015 PTD 560 Messrs O.S. Corporation v. FOP and others, "where no fine or penalty has been imposed or even under consideration the provision of Section 186 are not relevant---the authorities acting on a hunch have detained goods as the exit gate, even though taxes and duties have been paid and the goods have been released, detaining goods at the exit gate after having releases them is totally contrary to the provision of the Customs Act, 1969". Hence, in categorical terms I hold that detention of appellant goods by the respondent No. 1 and his subordinates is not only without lawful authority even jurisdiction by virtue of being derogation Section 2(s) and Section 186 of the Act. The issue No. (i) is answered in negative. 6. That as regard to issue No. (ii), the respondent No. 1 and his subordinates are indeed appointed as "Officer of Customs" under Section 3 of the Act and they derives power for functioning vide S.R.O. 371(1)/2002 dated 15.06.2002 for thwarting the act of smuggling as defined in Section 2(s). Their jurisdiction in principle is restricted to the territory falling within the ambit of Sections 9 and 10 of the Act. The goods of the appellant were not brought into Pakistan from any other route, instead from the defined port after completion of all codal formalities i.e. passing of assessment/clearance orders under sections 80 and 83 and Rules 438 and 442 of the Act/Rules for levy/realization of the applicable duty and taxes by respondent No. 2 in exercise of the powers vested upon him through SRO 371(1)/2002 dated 15.06.2002. Resultant, the consignment in question stood ousted from the definition of the smuggled goods and cannot be detained under the provision of Section 186 of the Act, the plea of the representative of the respondent No. 1 that they also act as watch dog of the Collectorate, they are empowered to detain, seize any consignment cleared from the defined port by any official of the Collectorate, in case of mis- declaration of description, quantity , quality , weight, PCT, erroneous/non application of valuation ruling and claiming/allow of the exemption under the respective infield SROs. The said formed opinion/assertion of the respondent No. 1 and his subordinates is based on mistaken belief as any action by them has to be initiated only for the act of smuggling, which can be invoked on any importer/appellant even in case of evasion/short payment of duty and taxes on the cleared goods as evident from the definition of the word smuggle available in Section 2(s) of the Act reading as "means to bring into or take out of Pakistan, in breach of any prohibition or restriction for the time being in forced en-route pilferage of transit goods or evading payment of customs duties and taxes leviable thereon. ". Therefore, upon putting a hold on GD /detaining the consignment provision of Section 2(s) is mandatory to be invoked in the contravention report by the respondent No. 1 and his subordinates for availing powers of seizure under the provision of Section 168(1) of the Act, vested upon. Upon perusal of show- cause notice available at pages 29-30 as Exhibit M, I have observed that the provision of Section 2(s) have not been invoked by the respondent No. 1 and his subordinates on the appellant, resultant, they were/are even not empowered to seize the consignment notionally under the provision of section 168(1) of the Act. Non invoking of
---
## Page 6
Section 2(s) on the appellant is fatal and renders the detention, preparation of contravention report and the subsequent proceedings undertaken by respondent No. 3 as of no legal effects /jurisdiction and as such ab-initio, null/void and coram non judice as held by the superior judicial fora in their judgments reported at 2002 PTD 2457 , PLD 1971 Supreme Court 61, PLD 1973 Supreme Court 236, PLD 1964 SC 536, 2001 SCMR 838 and 2003 SCMR 1505 , In PLD 1996 Karachi 68, 2006 PTD 978 and PLD 1971 Supreme Court 184. The Issue No. (ii) Is answered in negative. 7. That as regards to Issue No. (iii). The legislature has inserted Section 3DD in the Act, through which DGPCA has been created and its officials had been delegated powers through SRO. 500(I)/2009 dated 13.06.2009 for conducting audit under Section 26(2), of the record /books of an importer maintained under Section 211 and Chapter XI of Act/Rules after serving notice/summon under Section 26A of the Act, wherein, they check all the aspects corresponding to the declaration made under section 79(1) based on defined documents in Section 2(kka) and assessment order passed by the competent authority under section 80 of the Act. Thereafter , upon finding discrepancy or any ambiguity in any context i.e. declaration or the contravention of the law, prepares audit observation and serves that on the importer for clarification, if the reply is not convincing as per their formed opinion, frames contravention report and forward that to the Collector of Customs of the respective Clearance Collectorate, which onward forwards it to the respective Collectorate of Customs, Adjudication for issuance of show-cause notice under section 180 of the Act and passing of order-in-original as per the expression of Section 179 ibid. The respondent No. 1 and his subordinates assumed the powers of officials of DGPCA and conducted the Audit Post Clearance of the GD of the appellant under Section 26(2), in the absence of availability of powers. The respondent No. 1 and his subordinates are not permitted under law to transgress the sovereign jurisdiction/powers of DGPCA and his subordinates under any circumstances as this will render the formation of DGPCA by the legislature under Section 3DD of the Act and the powers delegated under SRO.500(I)/2009 dated 13.06.2009 as redundant. The Tribunal has observed with great concern that the respondent No. 1 and his subordinates are…
Read the unabridged text and precedent citation network on Al Wakeelo Legal Research Platform.