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Petitioner: RADIUM SILK FACTORY, KARACHI VS Respondent: The DEPUTY COLLECTOR, GROUP-IV, MCC OF APPRAISEMENT-EAST CUSTOMS HOUSE, KARACHIHonorable Justice Jehanzaib WahlahNadeem Ahmed Mirza,Ghulam Muhammad Bhutto
2020 P T D (Trib.) 2172 [Customs Appellate Tribunal] Before Jehanzaib Wahlah, Member Judicial-III Messrs RADIUM SILK FACTORY, KARACHI and others Versus The DEPUTY COLLECTOR, GROUP-IV, MCC OF APPRAISEMENT-EAST CUSTOMS HOUSE, KARACHI and 2 others Custom Appeals Nos.K-638 to K-645 of 2019, decided on 26th November, 2019. (a) Customs Act (IV of 1969)--- ----Ss. 2(a), 83, 130,193, 193A & 205--- Customs Rules, 2001, Rr. 438, 442 & 450---Notification SRO No.371(I)/2002, dated 15-6-2002--- Clearance of goods--- Reassessment--- Despite payment of all duties and taxes levied by authorities, goods in question were not released by Customs Authorities---Validity---No appeal was filed either by authorities despite mandated under law, instead the Assessing authorities assumed powers under S.195 and reopened valid assessment / clearance order passed under the provisions of Ss.80 & 83 of Customs Act, 1969, and Rr. 438 & 442 of Customs Rules, 2001--- Assessing authorities were not empowered to reopen valid assessment order passed by authority defined in S.2(a) of Customs Act, 1969, in exercise of powers vested upon him through S.R.O. No.371(I)/2002, dated 15-6-2002---Assessing authorities acted without power/jurisdiction and their action was without any lawful authority and as such ab initio, null and void---Appeal before Appellate Authority was filed in terms of S.193A(3) of Customs Act, 1969 and order was to be passed within 120 days or within further extended period of 60 days in terms of its proviso by Appellate Authority upon availability of exceptional circumstances and recording of those after issuance of notice to taxpayer---Order was not passed by Appellate Authority on or before 20-2-2018 which he failed---No extension was given by Appellate Authority prior to lapse of initial period of 120 days--- Order passed by Appellate Authority was barred by 8 days---Re-assessment orders passed /transmitted by Assessing officer in Goods Declarations of importers and as well as the orders in appeal passed by Appellate Authority suffered from legal infirmities--- Customs Appellate Tribunal set aside the orders of re-assessment as the same were illegal, null and void--- Appeal was allowed in circumstances.
Central Insurance Co., v. Central Board of Revenue 1993 SCMR 1232; Messrs Lever Brother Pakistan Ltd. v. Customs Sales Tax and Central Excise Appellate, Tribunal, Karachi 2005 PTD 2462; Messrs Paramount International (Pvt.) Ltd. v. FOP and others 2014 PTD 1256; Collector of Customs and other's case CPLA No.105-K of 2014; Collector of Customs, MCC, Quetta v. Al-Habib Enterprises and Engineering and others 2019 PTD 1712; Forte Pakistan (Pvt.) Ltd., Karachi v. The Director General of Intelligence and Investigation (Customs and Excise), Karachi and another 2006 PTD 978; Assistant Collector of Customs, Dry Port Peshawar v. Messrs Khyber Electric Lamp MFG Co., Ltd. Peshawar 2001 SCMR 838; The State v. Zia-ur-Rehman and others PLD 1973 SC 49; 2009 PTD 1083; PLD 1963 SC 663; PLD 1971 SC 184; PLD 1976 SC 514; 1983 SCMR 1232; 1984 CLC 1517; PLD 1995 Kar. 587; PLD 1992 SC 486; 2001 SCMR 103; 2004 CLD 373; PLD 2004 SC 600; PLD 2005 SC 842; 2009 PTD (Trib.) 1996; 2009 PTD 1112; 2010 PTD (Trib.) 832; 2010 PTD (Trib.) 1636; 2011 PTD (Trib.) 2114; 2011 PTD (Trib.) 2557; 2010 PTD 465; 2014 SC 514; 2002 PTD 2457; PLD 1971 SC 61; PLD 1973 SC 236; PLD 1964 SC 536; 2003 SCMR 1505; Director General of Intelligence and Investigation and others v. Messrs. Al-Faiz Industries (Pvt.) Ltd. and others 2006 SCMR 129; PLD 1996 Kar. 68; Messrs S.T. Enterprises v. Federation of Pakistan and 4 others 2009 PTD 467; Sikander Enterprises v. Customs Excise and Sales Tax Tribunal, Karachi and 03 others 2008 PTD 1968; Khalid Mahmood v. Collector of Customs 2009 SCMR 1881; 2017 PTD 1756; Collector of Customs Sales Tax Gujranwala and others v. Super Asia Mohammad Deen & Sons and others 2017 SCMR 1427; Messrs Super Asia Muhammad Din Sons (Pvt.) Ltd. v. Collector of Sales Tax, Gujranwala 2008 PTD 60; Messrs Hanif Strawboard Factory v. Additional Collector (Adjudication) Customs, Sales Tax and Central Excise Gujranwala 2008 PTD 578, Messrs Tanveer Weaving Mills v Deputy Collector Sales Tax and 4 others 2009 PTD 762; Messrs Syed Bhai Lighting Limited, Lahore v. Collector of Sales Tax and Federal Excise, Lahore and 2 others 2009 PTD (Trib.) 1263; Leo Enterprises v. President of Pakistan and others 2009 PTD 1978; Innovative Impex, v. Collector of Customs, Sales Tax and Federal Excise (Appeal) 2010 PTD (Trib.) 1010; Fazal Ellahi v. Additional Collector of Customs, MCC of PaCCS 2011 PTD (Trib.) 79; Unique Wire Industries Additional Collector of Customs, MCC of PaCCS 2011 PTD (Trib.) 987; Kaka Traders v. Additional Collector of Post Clearance Audit 2011 PTD (Trib.)1146 and Pak Electron Ltd. v. Collector of Customs, Lahore and others 2012 PTD (Trib.) 1650 ref. (b) Customs Act (IV of 1969)--- ----S.80(3)---Re-assessment---Principle---Re-assessment under S.80(3) of Customs Act, 1969, after release of goods was permitted only after calling for documents--- Upon receipt of documents or information so transmitted / submitted or statement given by importer to Customs Authority if were found to be incorrect in respect of earlier assessment. (c) Customs Act (IV of 1969)--- ----S.205---Declared value of goods---Amendment---Principle---No amendment under S.205 of Customs Act, 1969, is allowed in the columns of declared value, quantity or description after removal of the goods from customs area for home consumption. Nadeem Ahmed Mirza, Consultant for Appellant. Ghulam Muhammad Bhutto A.O. for Respondents. Date of hearing: 21st October, 2019. JUDGMENT JAHANZAIB WAHLAH, MEMBER JUDICIAL-III.----Through this common order, I intend to dispose off 08 Appeals bearing Nos.638-645/2019 filed under Section 194A(1) of the Customs Act, 1969 (Act) against the Orders-in-Appeals Nos.1867-1874/2019 dated 03.05.2019 passed by Collector of Customs (Appeals) by maintaining the re-assessments orders dated 11.10.2018 and 18.10.2018 passed by the Assessing Officer, Post Release Verification (PRV), MCC of Appraisement East, Custom House, Karachi in Goods Declaration (GD) Nos.KAPE-HC-187235-26042018, KAPE-HC-1056-17072018, KAPE-HC-11056-17072018, KAPE-12506-17072017, KAPE-HC-20851-23052018, KAPE-HC-9750-11072018, KAPE-HC-8356-13072018, KAPE-HC-207953-30052018 and 203851-23052018 respectively. 2. Since, these appeals are based on similar facts and questions of law, therefore, it is needless to reproduce facts of each case separately. Hence, for reference the facts of Appeal No.K-638/2019 is taken into consideration for decision, which are the Appellant imported a consignment of 23500/kgs 100% Polyester Close Virgin Spun Yarn 30/S against confirmed letter of credit from China. Upon receipt of shipping document he transmitted Good Declaration (GD) under section 79(I) of the Act and Rule 433 of Sub-Chapter III of Chapter XXI of the Customs Rules, 2001 (Rules) and deposited upfront duty and taxes of Rs.396,752/- with the MCC of Appraisement East. Consequent to which GD was numbered as KAPE-HC-187235 dated 26.04.2018. Upon receipt of GD on his workstation, the assessing officer passed assessment order with the application of alien value, against which appellant filed 1st review under Rule 441 before Principal Appraiser, who agreed with the contention of the appellant and accepted the declared value and transmitted the GD to the Deputy Collector, Group-IV (respondent No.1) for assent, who on 10.05.2018 acceded the same and passed assessment order dated 10.05.2018 under the provision of section 80 and Rule 438 of the Act/Rules, while adducing remarks in assessment note reading as "Upheld the assessment. Cases has been referred to Valuation department regarding clarification, whether polyester spun yarn close virgin is included in Valuation Ruling (VR) or not. Importer has under taken to pay the additional duty if clarification against their declaration". Consequent to which the inbuilt authority of the WeBOC passed clearance order under Section 83 and Rule 442 ibid and the appellant obtained delivery of the goods from the Terminal. Subsequent after lapse of more than about 5 months, respondent No.2 passed reassessment order dated 11.10.2018 under the provision of Section 80(3) of the Act through which he created recovery of Rs.238032/- by amending the unit value to US$ 1.69 as against existing assessed US$ 1.10/kg vide assessment order dated 10.05.2018 passed under Section 80(1), while adducing remarks in the assessment note reading as "IN THE LIGHT OF ORDERS AT SERIAL# 3 OF N/S IN FILE# SI/MISC/305/2018-IV-East; the GD is assessed from the information of VR# 1276/2018 BEING SPUN YARN". The appellant challenged the vires of the reassessment order before respondent No.3 on 09.11.2018 vide Appeal No.Cus-/ 2971/2018/A-East, who rejected it vide order dated 03.05.2019 while observing in paras 3 to 6 reading as: "I have examined the case record and arguments of both the sides and have given careful consideration to the facts of the case the departmental representative has stated that certain GDs cleared through green channel, imported "Polyester Spun Yarn virgin grade" has declared the value at much lower side, although there was Valuation Ruling No.1276/2018 dated 26.03.2018. Hence, the Collectorate has conducted PRV and re-assessed the GDs as per Valuation Ruling and generated recovery. The appellant has argued that Collectorate cannot conduct reassessment notice under section 26 of the Customs Act, 1969 is given. And this is the job of PCA, hence, they should have adopted the proper procedure. The departmental representative has submitted that complaint forwarded by FBR and instruction from Chief Collector, to conduct the audit. Moreover, the importer were duly called by notices dated 24.08.2018 to explain their position. In view of this, it is concluded that department has rightly reassess the goods and empowered by law. The appeal is therefore found without merit and is dismissed" 3. The appellants filed the appeals on the basis of grounds enumerated therein, the consultant/advocates on the date of hearing argued the cases strictly in accordance with those. No cross objection under Section 194A(4) of the Act has been filed within the stipulated period of 30 days or not even to date by the respondent No.1. However, the representative of the respondent No.1 vehemently defended the passed reassessment orders and orders-in-appeal passed by respondents Nos. 2 and 3 respectively and prayed for maintenance of those, irrespective of apparent deficiencies /illegality. 4. Rival parties heard and case records perused and so the relied upon citations. Section 3DD of the Act has been framed and inserted by the legislature in the Act through which Directorate General of Post Clearance Audit (DGPCA) has been established and its officers have been delegated powers through SRO 500(I)/2009 dated 13.06.2009 for conducting audit of the importer books of account maintained under Section 211 of the Act under the provision of Section 26(2) after serving notice/summon under clause (a) of Section 26A of the Act, they are empowered to look into every aspects of the declaration made by the importer and assessment order passed by the competent authority of the Clearance Collectorate under Section 80 and Rule 438 of Act/Rules and prepare audit observation and forward that to the importer for clarification, if the reply fail to settle the issue, frames contravention report and forward it to the Collector of Customs of Clearance Collectorate who onward forward 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 by the authority defined in Section 179 ibid. The Collector of Customs, MCC of Appraisement-East in parallel to DGPCA established a cell/section namely PRV in the absence of availability of enabling provision in the Act, empowering him, to form/establish the said cell, when he is not empowered to form any section or cell on his own, similarly not empowered to delegate powers for functioning to the officers of the said cell/section for conducting audit, even for safe guarding of the interest of Government, proper mechanism for the said purpose is available i.e. DGPCA, who are empowered under law to proceed in the matter. 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. The respondent No.2 being non entity assumed the powers of officials of DGPCA and conducted the Audit Post Clearance of the GD of the appellant under Section 26(2) while exercising the powers specifically delegated to the officials of the DGPCA. Neither respondent No.2 nor his higher are empowered to encroach the sovereign jurisdiction of DGPCA under any circumstances, as this will render the formation of DGPCA by the legislature under Section 3DD of the Act, and the powers delegated through SRO 500(I)/2009 dated 13.06.2009 redundant. Additionally, the respondent No.2/superiors are also not appointed / designated as an "Officer of Inland Revenue" under Section 30 of the Sales Tax Act, 1990 (STA) and Section 228 of the Income Tax Ordinance, 2001 (ITO). Resultant, are not empowered to conduct audit in the matter of Sales/Income Tax under the provision of Section 25 of the STA and Section 177 of the ITO. Hence, respondent No.2 acted without power/jurisdiction, in conduction of audit of even sales tax and income tax as evident from the contents of reassessment sheet forming part of reassessment order dated 11.10.2018, rendering the act of conduction of audit and passing of reassessment order ab-initio, null, void. Carrying out such type of exercise is not permitted under law, if it is left to be perpetuated, anarchy will prevail within the different organs of FBR to encroach powers/jurisdiction of each other, despite having no lawful authority/jurisdiction. This type of intention/act cannot be validated under any circumstances and has to be crushed in the initial stages for maintaining the integrity and sanctity of the different sovereign organs of FBR. Therefore, the conduction of audit post clearance of the GDs of the appellants under Section 26(2) of the Act, Section 25 of the STA and Section 177 of the ITO by the respondent No.2, for determination of short levied /collected amount of Custom duties, Sales Tax, Additional Sales Tax and Income Tax on the imported goods is without lawful authority/jurisdiction. Hence, ab-initio null and void and as such corm-non-judice. The superstructure built thereupon ought to be crumble down no matter how strong it may be. 5. The respondent No.3, contrary to the observation made by me in para supra endorsed the act of conduction of audit and passing of reassessment order by respondent No.2 but fell short to spell out in the order the nature and content of the complaint forwarded by the FBR and the instruction of the Chief Collector for conduction of audit and the enabling provision of the Act, empowering the FBR and the Chief Collector to act contrary to the provision of the Act and those are deemed to be valid and prevailed over the statute and rules and regulation framed therein under, which was mandated for giving credence to his formed opinion/observation and validation to the impugned order. In the absence of availability of any enabling provision in the Act and authority nullifying the infield orders of the superior judicial fora in 1993 SCMR 1232 in the case of Central Insurance Co., v. Central Board of Revenue the Hon'ble Supreme Court of Pakistan held that "Board's view as to the interpretation of law do not have the force of law and the exception would be, where a fiscal statute is involved, that should be implemented with strict impartiality" and 2005 PTD 2462 Messrs Lever Brother Pakistan Ltd. v. Customs Sales Tax and Central Excise Appellate, Tribunal, Karachi that "CBR has no place to in the Scheme of Law, conferred with the jurisdiction to interpret any law, statutory or in exercise of any deliberate authority i.e. subordinate legislation". Hence, the formed opinion by the respondent No.3 in paras 5 and 6 of the order fails the test of judicial scrutiny and as such are declared to be ab-initio, null and void. 6. It is now a legal fiction that the consignment which has undergone the process of passing assessment order under the provision of Section 80 and Rule 438 of the Act/Rules for levy of duty and taxes, which were paid and thereafter valid clearance order dated 10.05.2018 as contemplated in Section 83 and Rule 442 ibid has been passed by the competent authority in exercise of the powers vested upon him through SRO 371(I)/2002 dated 15.06.2002. Such order is an appealable order and can't be disturbed by any other authority including respondent No.2 or his superior with the exception of preferring an appeal under the provision of Section 193 of the Act as was/is invariably done by an importer, in case he felt the assessment order so passed is nullity to the fact/law. Similarly, if the respondent No.2/superior were of the view in the instant case of the appellant proper assessment has not been carried out, the only option left with them to adopt the Mechanism available in the Act, for the reopening of the impugned assessment order by filing an appeal before the Collector of Customs, Appeals under the provision of Section 193 of the Act either by him directly or through Superior in which they should had incorporated all of their apprehensions, opinions/findings, including contravening provisions of the Act and so the applicable penal clauses. Upon receipt of that the Collector of Customs, Appeal have to go through the facts and grounds of that, thereafter if he think fit that in the case under appeal correct duty and taxes have not been either levied or paid on the basis of found goods, is empowered to issue a notice under Section 32 of the Act as enunciated in 3rd proviso of Section 193A to the respondent (importer/appellant) and after receipt of reply to the said notice, the Collector of Customs has to decide the appeal in the light of the issued show-cause notice and reply. In the instant case no appeal has been filed either by the respondent No.2 or his superior despite mandated under law, instead respondent No.2 assumed the powers under Section 195 of the Act and reopened valid assessment/clearance orders dated 10.05.2018 passed under the provision of sections 80, 83 and Rules 438 and 442 of the Act/Rules. Neither respondent No.2 nor his superior are empowered to reopen valid assessment order passed by the authority defined in Section 2(a) of the Act, in exercise of powers vested upon him through SRO 371(I)/2002 dated 15.06.2002. All acted without power/jurisdiction, hence his action deems to be without any lawful authority and as such ab-initio, null and void as held by Superior Judicial Foras in umpteenth reported judgments e.g. 2014 PTD 1256 Messrs Paramount International (Pvt.) Ltd. v. FOP and others, wherein their lordship of High Court opined that "department or an Officer of Customs, if aggrieved, by any decision or order passed by an officer of customs below the rank of additional collector could prefer an appeal before the Collector (Appeals)--- 1st order-in-original passed in the subject matter was an appealable order for both the parties, therefore option to reopen and order pass under the adjudication hierarchy was not available to the Collector. Even the Collector of Customs Adjudication could not oversee or exercise any right of re-opening of any order which has been passed by an officer lower in rank but acting as an adjudicating authority. Impugned order was set-aside and Constitution Petition was allowed." The CPLA No.105-K of 2014 filed by Collector of Customs and others against the order of the High Court has been dismissed by the Hon'ble Supreme Court of Pakistan while refusing leave to appeal. Whereas, the High Court of Balochistan in 2019 PTD 1712 titled as Collector of Customs, MCC, Quetta v. Al-Habib Enterprises and Engineering and others, while dismissing the SCRA of the department held that "after assessment of leviable duty and taxes under section 80 of Customs Act, 1969 and payment thereof and after clearing the vehicle under Section 83 Customs Act, 1969, the available remedy of filing appeal under section 193 of the Customs Act, 1969 was not availed by the concerned officials of the Collectorate of Customs, Additional Collector of Customs, (Adjudication) had no jurisdiction under the provision of Customs Act, 1969 to issue show-cause notice and to pass order-in-original. No question of law having arisen out of the impugned of the judgment passed by Appellate Tribunal warranting interference by High Court under Section 196, Customs Act, 1969. Reference was dismissed in circumstances." 7. For determination of validity of reassessment order, it is beneficial to reproduce Section 80(2)&(3) of the Act: (2) An officer of customs may examine any goods that he may deem necessary at any time after the import of the goods into the country and may requisition relevant documents as and when and in a manner deemed appropriate, during or after release of the Customs; (3) if during the checking of goods declaration it is found that any statement in such declaration or documents or any information so furnished is not correct in respect of any matter relating to the assessment, the goods, shall, without prejudiced to any other action which may be taken under this Act be reassesed to duty. Upon plain reading of subsection (3) of Section 80, it is observed that it is dependent on subsection (2), unless subsection (2) is not complied in letter and spirit no action can be taken under section 80(3) of the Act. Meaning thereby that re-assessment under Section 80(3) after release of the goods is permitted only after calling for the documents as expressed in Section (2) ibid. Upon receipt of documents or the information so transmitted/submitted or the statement given by the importer to the Customs Authority if are found to be incorrect in respect of earlier assessment. Upon perusal of the import documents, examination report and assessment order by appellant/passed by respondent No.1, it has been observed that description and quantity are the same as declared, nothing contrary, can be construed, even no notice was forwarded to the appellant dated 24.08.2018, which respondent No.3 inscribed in para 5 of the order, acknowledgement of which have been categorically denied by the appellants during the course of hearing, the representative of the respondent failed to place on record copy of the impugned notice, confirming that no notices whatsoever were served on the appellants. Moreover, no visible misdeclaration/misstatement in any aspect were made by the appellants in material particular nor any illegality has been committed by the respondent No. 1. Hence, no re-assessment was warranted under Section 80(3) of the Act. Even otherwise the remarks of the respondent No 2 speaks volumes about playing havoc with the provision of Section 80(3) of the Act , reading as "In the light of orders at serial # 3 of n/s in file # SI/Misc/305/2018-IV-East ; the GD is assessed from the information of VR# 1276/2018 being spun yarn." I fail to digest that from where the Board /Chief Collector derived powers, for issuing orders to the field formation to pass reassessment order under the provision of Section 80(3) of the Act, despite figuring no where in the provision of Sections 25 and 80 of the Act and SRO 371(I)/2002 dated 15.06.2002 and Sections 179 ibid and 223, which bars the Board from issuing any order/instruction/direction to the adjudicating authority. Hence, it was not mandated upon respondent No.2 or his superiors to comply with the order of the Board/Chief Collector issued without lawful authority / jurisdiction manifestly in nullity to the provision of Sections 80, 179, 193, 195 and 223 of the Act. He has to act independently without any influence and no authority can direct him to act contrary to the law. It is also amazing to note that how the Respondent No.2 reassessed the goods under section 80 of the Act despite being an officer of PRV, which is not an Appropriate Officer under Section 80 to be read with SRO. 371(I)/2002 dated 15.06.2002. However, the appropriate Officer is indeed empowered to re-assess the GD in case the called documents are proved to be false and so the declaration transmitted under Section 79(1) of the Act, 1969 and Rule 433 ibid after clearance of the goods but not in the absence of the basic mechanism defined in Section 80(2)&(3) ibid. 8. The respondent No.2 also acted in nullity to the provision of Section 29 of the Act. It is of vital importance for reaching at a just decision to visit and understand…
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