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Petitioner: Messrs Ihsan & Sons, Karachi VS Respondent: The Principal Appraiser (R&D) MCC, Appraisement (East) Custom House, Karachi and 2 others
Court Name: Customs Appellate Tribunal Judge(s): Jehanzaib Wahlah Title:Messrs Ihsan & Sons, Karachi vs The Principal Appraiser (R&D) MCC,
Appraisement (East) Custom House, Karachi and 2 others Case No.: Custom Appeals Nos.K-1533 and K-1534 of 2018 Date of Judgment:2019-10-05 Reported As: 2021 PTD (Trib.) 1162 Result: Appeal allowed Judgment ORDER JAHANZAIB WAHLAH, MEMBER JUDICIAL -III.--- Through this order , I intend to dispose off appeals bearing Nos.K-1533/2018 and K-1534/2018 directed against Orders-in-Original No. 1213983 and 1213971 dated 30.10.2018 passed by Additional Collector of Customs, (Adjudication-II), Karachi (Respondent No.3). 2. Since, these 02 appeals pertains to same appellant and are based on identical fact and grounds. Hence, it is needless to reproduce facts and so the grounds of each case separately . Therefore, facts of Appeal No.K- 1533/2018 are taken into consideration for deliberation/decision, which are, appellant is a commercial importer of motorcycle parts, who during the course of his business activities entered into contract with M/s. Chonguing Vehicle Imports and Exports Co., Ltd., China for import of 23900kgs of motorcycle parts, duly registered with Habib Metropolitan Bank, Karachi on 19.04.2018 vide No. HMBC/01 1/05/92. The benefic iary in fulfillment of that shipped those through invoice No. N356PK180410-3 dated 12.04.2018 and B/L No.COAU-7060740980 dated 09.052018 inscribing therein that the goods are packed in 1448 cartons and stuffed in 1x20" container . The appellant upon receipt of shipping documents delivered those to his clearing agent M/s. Khurram Brothers, Karachi CHAL' No.618 for transmitting Goods Declaration (GD) 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 for availing the regime of Customs Computerized System (CCS) deposite d upfront duty and taxes of Rs.2,366,252.00 vide cash No.C-KAPE-001768 on 04.07.2018, consequent to which GD was numbered as KAPE- HC-1978 of even date. The assessing officer upon receipt of GD on his workstation instead of completing the assessment under section 80 and Rule 438 of the Act/Rules, opted to get the good s examined first, to proceed with after adducing his opinion/reasoning for Obtaining physical verification, transmitted that to the Deputy Collector of Customs, Group-VII, MCC of Appraisement-East (Respondent No.2), who gave his assent and referred that to the
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Deputy Collector of Customs, Examination, who marked that to the Officials of his choice selected as per devised/adopted criteria, who carried out physical verification as contemplated in Section 198 and Rule 435 ibid. Wherein, the goods were found in accordance with the declaration in all aspects and report so prepared was uploaded in the reservoir of GD sans any contradictory observation. The Assessing Officer upon appearance of that on his workstation, cross-checked that with the declaration transmitted under Section 79(1) and Rule 433, uploaded documents forming part of the declaration as defined in section 2(kka). Since, he was confident that nothing contrary to the declaration is apparent, he passed assessment order dated 06.07.2018 by the assessing officer, being aggrieved, appellant filed 1st review under Rule 441 before Principal Appraiser , who rejected that and maintained the assessment made by assessing officer, with the application of infield valuation ruling / identical / similar goods value available in the data reservoir maintained by the PRAL under Rule 110 of the period given in Rule 107(a) of Rules, evident from his adduced observation reading as "Assessed as per VR 118, Vr 1135, VR 967 and Data", in 'assessment note of each imported/assessed items. Thereafter transmitted view message of even date for payment of Rs.1,295,356.00 towards additional amount of duty and taxes, for payment of which appellant clearing agent officials approach NBP, he was shocked to learn that an hold has been placed on the GD of the appellant by the Principal Appraiser R&D, MCC of Appraisement-East (Respondent No.1) which is also instrumental in detention of his consignment under the provision of Section 186 of the Act. The clearing agent of the appellant rushed to the office of respondent No.1, and asked him for reasoning for putting an hold after passing of assessment order for levy of duty and taxes and transmitting of view message for payment of those. His answer shocked the clearing agent, which was that he has a credible information that the appellant has committed an act of mis-declaration, not detected during the course of examination by the official and so by the assessing officer at the time of passing assessment orders. Hence, he is desires to get the goods re-examined, on which agitation was tendered in strongest possible manner that neither he is empowered to put an hold on GD /detained consignment, nor either order/ obtain re-examination of the consignment of the appellant, which has already been assessed for levy of duty and taxes after passing of valid assessment order under the provisio n of section 80 and Rule 438 of the Act/Rules by the authority defined in section 2(a) of the Act, in exercise of the powers vested upon him through SRO 371(1)/2002 dated 15.06.2002 in the absence of availability of enabling provision in the Act. The respondent No.1 put a deaf ear on the submission of appellant clearing agent and adamantly created re-examination, which was conducted and report so prepared was once again uploaded in the reservoir of GD, on the strength of which the assessing officer passed reassessment order dated 20.07.2018 for levy of duty and taxes, while adducing remarks in the assessment note of each item, available in column "' AO remarks in fact No. (vii) of the memo of appeal and in exhibits H to H17 at pages 42 to 77". On the strength of the same second view message for payment of Rs.1,91 1,866.00 towards further additional amount of duty and taxes was transmitted, which appellant was unable to pay alike earlier , amount worked out on the basis of assessment order dated 06 07.2018 due to hold on GD, which respondent No. 1 was not inclined to lift. Thereafter , respondent No., framed contravention report on the basis of the reassessment order dated 20.07.2018 stating inter alia that the appellant mis-declared, the description, quantity , PCT heading and value attractin g the provision of section 32(1)(2) of the Act, punishable under clause 14 of Section 156(1) ibid read with SRO No.499(I)/2009 dated 13.06.2009 which was transmitted through Deputy Collector (R&D), who referred that to Additional Collector , Law, who offer after assenting transmitted to the respondent No.3. On the strength of which, he issued show-cause notice dated 21.07.2018 containing the same facts and the contravening provisions of the Act, as were narrated in the contravention report. Appellant advocate submitted a befitting reply dated 01.08.2018, against which she sought comment from respondent No.1, subsequently received , no copy of that was supplied to the appellant for submitting rebuttal/ rejoinder despite mandated under law. The respondent No.3, thereafter passed order dated 30.10.2018 without properly appraising the fact and proposition of law, through which she held the charges established as levelled in the show-cause notice and ordered confi scation of the goods, subject to redemption of those on payment of 20% fine of Rs.734,798.00, imposed penalty of Rs.300,000.00 and the amount of duty and taxes worked out by the assessing officer vide reassessment order dated 20.07.2018 on the order of respondent No. 1. Paras 11 and 13 are relevant and are reproduced here-in-under for the purpose of easement:
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"11. After detail examination of the fact of the case, the undersigned is of the view that R&D being the watch dog of the Collectorate, has been vested with the powers to do any sought of inquiry and investigation in case of any credible information received, under sections 32, 80 and 186 of the Act read with Rules 109, 438 and 442 of the Customs Rules, 2001. Section 168 empower an appraiser or principal appraise d to detain any goods pending inquiry or investigation and Section 80(2) and (3) empowers the custom officer to check goods declaration filed by the respondent before as well as after release of the goods and can reassess the GD. In this particular case, though the automated system of WEBOC assigned the gate out role to the GD after reassessment but it was still not cleared by the R&D Section, of the Collectorate, which had applied a hold at terminal on the GD in fear of anticipated automated clearance. Since, importer had accepted the reassessment done by the group and R&D and paid the additional amount without any protest. In two other consignments of identical nature imported by him with this consignment vide GD No.KAPE-HC-217824 dated 12.06.2018 and GD No.KAPE-HC-217864 dated 12.06.2018, had practically accepted the mis-declaration and as such R&D was legally bound to detain the consignment and prepared contravention report against the importer , specially in the presence of 03 other consignments of the importer having exactly identical nature of mis-declaration. 12. The plea of the importer that the power of adjudication pertains to Collecto r stands no where as the word "involved in the section connotes amounts of duty and taxes short paid/evaded. The amount short paid/evaded by the importer on the offending goods mentioned in show-cause notice and assessat S.No.13-18 of the GD, in the instant case is Rs.19,1 1,866.00 which is within the jurisdiction of Additional Collector and therefore correctly sent to undersigned. It is also important to mention here that total amount of duty and taxes levied in this GD is Rs.5,000,922.00 out of which importer had paid an upfront duty of Rs.2,366,252.00 paid on 29.06.2018 while the remaining amount of Rs.2,634,670.00 is yet to be recovered while the balance amount of Rs.11,10,871.00 is yet to be recovered. The amount of duty and taxes of Rs.19,1 1,866.00 as shown in the show-cause notice is actually the amount of duty and taxes importer wanted to evade on the offending goods mentioned at S.No.13-18 of GD and have an offending value of Rs.2,099,422. 00 and on which redemption fine is to be levied under SRO 499(1)/2009 dated 13.06.2009, if the charge establishes. 13. Finally , the undersigned agree with the contention of the department that the importer has clubbed a bunch of different item with manipulated description under single assessable value i.e. US$ 1.45/kg weighing 9500 kg as a single item against PCT heading 8714.1090 as mentioned at Sr.No.5 of the GD. The detected item by virtue of actual description did not cover under the declaration of the importer and are classifiable under PCT heading, which attracts additional custom duty besides statutory customs duty and are assessable on much higher value as compare to the value of US $ 1.45/kg, weighing 9370 kg as a single item against PCT heading 8714.1090 as mentioned at S.No.5 of the GD and similarly under item No.10 of GD against PCT heading 7317.0090. The detected items by virtue of actual description did not cover under the declaration of the importer and are classifiable under PCT headings which attracts additional custom duty beside statutory custom duty and are assessable at much higher value as compare to value of US $ 1.45/kg and US $ 1.10/kg on which the item, were assessed as per initial examination report, thus the importer by manipulating the description , classification and weight of the. item attempted to deprived the government from its legitimate revenue to the tune of Rs.1,91 1,866/-, The payment of additional duty and taxes, after Assessment by the Group and R&D without any protest in two other consignments of identical nature imported by him along with this consignment vide GD No.KAPE-HC-217824 dated 12.06.2018 and GD No.KAPE-HC-217864 dated 12.06.2018 is a clear indication of the fact that the importer has confessed and accepted his crime. It is therefore, concluded that the charges levelled in the show-cause notice stands established. Accordingly , the offending goods are confiscated under clauses (14) and (14A) of Section 156(1) of the Customs Act, 1969 for violation of provision of Sections 32(1), 32(2) and 79(1) ibid. However , an option is given to the importer to redeem goods under section 181 of the Customs Act, 1969 on payment of a fine equal to 35% of the value of the offending goods to the tune of Rs. 734,798/- (ascertained value of impugned goods of Rs.2,099,422/- (subject to the condition that the same are otherwise importable as per Import Policy Order in vogue as prescribed under SRO 499(1)/2009 dated 13th June, 2009, in addition to any other leviable duty and taxes thereon. A penalty
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of Rs. 300,000/- (Rs. Three hundred thousand only) is also imposed under clause (14) of Section 156(1) of the Customs Act, 1969 on the importer ." 3. The appellant preferred 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 objections under Section 194A(4) of the Act have been filed within the stipulated period of 30 days by the respondent No.1, resultant, lost right of cross appeal within the contemplation of subsection (3) of aforesaid section. However , on the date of hearing representatives of respondents Nos.1 and 2 contended that the order passed by the respondent No.3 is correct in fact and law as evident from paras 11 to 13 of the order , which are self explanatory and proves the guilt of the appellant. Hence, same should be maintained an appeal be dismissed as of no substance and legal ef fect. 4. Rival parties heard and case record perused. It is just and proper to decide the vital aspects that as to whether respondent No.1 is empowered to put an hold on the GD /detain the consignment under the provision of Section 186 of the Act, which has been assessed for levy of duty and taxes, after passing of valid assessment order passed by the authority defined in section 2(a) under section 80 and Rule 438 of the Act/Rules, in exercise of the powers vested upon him through SRO 371(1)/20 02 dated 15.06.2002. The respondent No.3 in para 11 of the order held that, that the respondent No.1 and his subordinates are empowered to put an hold on GD/detain the consignment in terms of section 186, upon having credible information of mis-declaration falling within the ambit of section 32 of the Act. Upon perusal of the record of the case, show-cause notice and impugned order , alleged credible information, is not visible, instead confirmation to the effect is available that the consignment of the appellant was assessed for levy/payment of duty and taxes after completion of codal formalities, i.e. conduction of examination, uploading of requisite documents in compliance to view message transmitted to him under Rule 437 and assessment order dated 20.07.2018, these exercises were carried out by the custo ms functionaries independently without any interaction either with appellant or his clearing agent. The said fact leave no occasion for the respondent No.1 or his subordinate to put an hold on the GD/detain the consignment of the appellant under section 186 of the Act. Notwithstanding, to the formation of R&D, otherwise illegal, being formed in the absence of availability of enabling provision in the Act, empowering Collector of Customs, to form/establish the said cell, parallel to Directorate General of Intelligence and Investigation-FBR (watch dog) under the provision of 3A of the Act and delegation of power to its officials through SRO 486(I)/2007 dated 09.06.2007. When Collector of Customs is not empowered to form any section or cell on his own, similarly not empo wered to delegate powers for functioning to the officers of the said cell/section. For safe guarding of the interest of Government, proper mechanism is available in different relevant sections of the Act. Therefore, any action taken should and ought to be within the devised frame work, not on the basis of personal understanding/opinion having no warrant of law . 5. For detention of any consignment by the authority empowered under entry 92 of SRO 371(I)/2002 dated 15.06.2002, adherence of expression of Section 186 is mandatory , which read as: 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, i.e. if any case has been adjudicated by the competent authority agains t an importer and through which he held the charges established as levelled in the show-cause notice and imposes fine and penalty , which importer has not paid or any inquiry or investigatio n in respect of any goods is under way for imposition of fine and penalty . The empowered officer can detain forthcoming consignment of the same owne r/importer till the time fine and penalty are paid. The case of appellant is that against him, no order is infield throu gh which fine/penalty has been imposed upon him and that has not been paid or order so passed has not been assailed by him before the forum expressed in the Act. Neither any inquiry or investigation in respect of any of his imported consignment sans the instant is under way for decision for imposition of penalty . Resultant, his lawful assessed consignments for
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levy/payment of duty and taxes on the strength of assessment order passed by the authority under Section 80 and Rule 438 of the Act/Rules cannot be detained under any pretext by any officer of customs, respondent No.1 is not exception 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 importe d 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 adjudica ted and decided against the person. The procedure and mechanism provided Section 202 of the Customs Act, 1969 is entirely independent of any actio n taken in terms of Section 186 of the Act. It is not the case of respond ent that any adjudication has been done either in respect of the goods 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) M/s. 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 totall y contrary to the provision of the Act, 1969". Hence, in categorical terms I hold that putting an hold on GD/detaining of consignment of the appellant by the respondent No. 1 is not only without lawful authority even jurisdiction and patently in derogation of Section 186 of the Act and the law laid down by the Superior Judicial Fora. 6. Under the provision of Section 179 of the Act an adjudicating authority assume powers in a case, on the basis of involved amount of duty and taxes, evident from its expression, which read as "amount of duty and taxes involved excluding the conveyance." Not "amount of evaded duty, and taxes" which means that assumption of powers is to be made on the basis of total amount of duty and taxes i.e. paid upfront + paid additional amount of duty and taxes on the basis of assessment order +short paid/evaded worked out by the contravention framing authority , not evaded, as read/interpreted by respondent No. 3 in para 12 of the order , in case the intention of the legislature would had been as opined by respondent No.3, the legislature would had incorporated the word "evaded" or "involved evaded" instead of existing word "involved" in the expression, which means the entire amount of duty and taxes involved without any exception. It is settled proposition of law that "in interpreting the taxing statute the customs must look to the words of the statute and interpret in the light of what is clearly expressed. It cannot imply anything which is not expressed, it cannot import provision in the statute so as to support assumed deficiency . There is no room for intendment. There is no equity about a tax. There is no presumption as to tax nothing is to be read in, nothing is to be implied. One only look fairly at the language used nothing else to be done". In the case under decision, the involved amount of duty and taxes is Rs.5573474/- (paid upfront on 04.07.2018 Rs.2,366,252/- + additional amount of duty and taxes levied and communicated on the basis of assessment order dated 06.07.2018 Rs.1295356/- + short paid/ evaded amount of duty and taxes incorporated in show-cause notice Rs.1,91 1,866/-. The competent authority to adjudicate the case of said amount under clause (i) of Section 179(1) of the Act rest with Collector of Customs. To the contrary , Respondent No.3 issued show-cause notice and passed order-in-original while usurping the powers of Collector . This is not permitted under law, not a single word has been uttered by the representative of the respondents Nos.1 and 2 on the said issue during the course of hearing, which is tantamount to admission and confirms that the Respondent No.3 usurped the powers of the Collector in derogation of the explicit provision of Section 179(1) of the Act, verbatim of the same is reproduced for perusal: 179 Power of adjudication:- (1) Subject to subsection (2) in cases involving confiscation of goods or recovery of duty and other taxes not levied, short levied or erroneously refunded, imposition of penalty or any other
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contravention under this Act or the rules made there-under , the jurisdiction and powers of the officers of Customs in terms of amount of duties and other taxes involved , excluding the conveyance, shall be as follows, namely:- (i) Collector No limit (ii) Additional Collector not exceeding three million rupees (iii) Deputy Collector not exceeding three million rupees (iv) Assistant Collector not exceeding three million rupees (v) Superintendent not exceeding three million rupees (vi) Principal Appraiser not exceeding three million rupees [Provided that in cases of goods to be exported, the above officers of customs shall have their jurisdiction and powers in terms of FOB value and twice their respective monetary limit.] (2) Notwithstanding the provisions of subsection (1), the Board may by notification in the officials Gazette, fix or vary the jurisdiction and powers of any officer of Customs or a class of officers, and may also assigns or transfer {by an order} any case to any {of ficer} of customs, irrespective of the territorial jurisdiction. (emphasis supplied) For lending clarity to the issue, upon perusal of Section 179(1) of the Act, it is abundantly clear that the authority defined therein has to exercise powers, neither superior nor subordinate is empowered to assume the powers of his superior or subordinates, unless Board is desirous of fixing or varying the jurisdiction and powers of any Officer of Customs or a class of Officers, through a notification in official Gazette as per the expression of Section 179 (2) assign or…
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