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Petitioner: Member (Judicial-I) and Ghulam Ahmed Member (Technical-II) Messrs DELTA AUTOMOBILES and another VS Respondent: ADDITIONAL COLLECTOR OF CUSTOMS
Court Name: Customs Appellate Tribunal Judge(s): Ch. Naimat Ullah, Ghulam Ahmed Title:Member (Judicial-I) and Ghulam Ahmed Member (Technical-II) Messrs
DELTA AUTOMOBILES and another vs ADDITIONAL COLLECTOR OF CUSTOMS Case No.: Customs Appeal No,K-653 of 2009 Date of Judgment:2013-06-12 Reported As: 2013 PTD (Trib.) 1809 Result: Appeal accepted Judgment ORDER ' GHULAM AHMED, MEMBER (TECHNICAL-II).---By this order, we will dispose of Customs Appeal No,K- 653 of 2009 filed by the appellant against Order-in-Appeal No,2028 of 2009 dated 29-9-2009, passed by the Collector of Customs (Appeals), Karachi. 2. Brief facts of the case are that Messrs Delta Automobiles, 5-Muhammad Ali Centre, Plaza Square, Karachi imported a consignment of Auto Bulbs vide IGM No,235 of 2001 dated 7-2-2001, Index No,196 and filed ex-bond bill of entry bearing Machine No,43333 dated 1275-2001 through their clearing agents Messrs Fair Business (CHAL No,572). On physical examination of the goods it was revealed that Item No,4 was declared as Miniature Bulbs (758000 pes) but during physical examination it was found that 295,000 pes were Auto Bulbs (S25 BA15S), 12V, 24W 25/8W and the rest 463,000 pes miniature bulbs were found as per declared description. The Into--bond bill of entry was processed after said examination by the concerned Group for warehousing of the goods with the endorsement on face of the bill of entry that the value will be checked at the time of ex-bonding. Accordingly as per said endorsement and examination report the goods were in-bonded. Subsequently two ex-bond bills of entry bearing Machine Nos. 43332 and 43333 dated 12-5-2001 were filed by Messrs Fair Business (C.II.A. L. No,572), both the bills of entry inter-alia carried the declaration of 379,000 pieces each of Miniature Bulbs (total 758,000 pieces). The entire quantity was declared on ex-bond bills of entry as Miniature Bulbs 295,000 pieces. The customs agent with the connivance of the importer had deliberately mis-declared the imported 295,000 pieces Auto Bulbs (S25/BA 15S) 12V, 24W 25/8W which were actually not Miniature Bulbs as per examination report. Auto Bulbs S25/BA15S,24W 258W are assessable at US$ 35/per 1000 pieces against
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assessm ent made at US$ 6/per 1000 pieces treating those 295.000 pes Auto Bulbs as Miniature Bulbs. Thus, Messrs Delta Automobiles, Karachi with the active connivance of the clearing agent Messrs Fair Business (C.H.A.L. No, 572) got the clearance of 295 cartons (295,000 pieces) of S25/BA 15S Auto Bulbs at suppressed value @ US$ 6 /pieces under the garb of Miniature Bulb, whereas the Halogen. Auto Bulbs were cleared @ US$0.25/piece vide bill of entry bearing Machine No,43332 dated 12-5-2001, and also the same item was assessed @ US$ 0.18/piece vide ex-bond bill of entry No,43333 dated 12-5-2001. The total values of offending goods has been ascertained at Rs,7,36,109 Due to the said wrong assessm ent and deliberate misdeclaration of physical description and suppressed value the government suffered a loss of revenue to the tune of Rs,1,85,651. 3. The Additional Collector of Customs, (Appraisement-I) Karachi, did not agree with replies of appellant and passed the Order-in-Original No, 1 of 2009 dated 9-1-2009 reproduced as under:-- "I have gone through the record of the case and considered verbal as well as written arguments submitted by the respondents and by the department representative and come to the conclusion that the subject case revolves around the following points/ question of law:-- (A) Whether or not after clearance of goods under section 80 of the Customs Act, 1969 Additional Collector is empowered to reopen the case and issue show cause notice? (B) Whether or not value of consignment has been assessed in accordance to the rules provided in section 25 of Customs Act, 1969? (C) Whether or not in terms of section 30 of the Customs Act, 1969, the value already determined at the in-bonding stage can be altered at ex-bond stage? (D) Whether or not the subject case is time barred for adjudication in terms of section 179(5) of the Customs Act, 1969? And ' The following position emerges regarding the aforesaid Points/questions. (A) First of all it is pertinent to mention here that as per section 79 of the Customs Act, 1969, a bill of entry can be filed for, home consumption and warehousing of the goods. Admittedly in the instant case the bill of entry was filed for warehousing of the goods subject to payment of duties and taxes at later stage of ex-bonding. It is also clear from the record that at import/inbonding stage the importers were not in a position to, supply the requisite information to determined the customs value for assessm ent purposes, that is why, to save the importer from the port/demurrage charges the warehousing of the goods was allowed subject to the determination of the customs value for charging duties and taxes at the time of ex-bonding and the said arrangement of determination of value was made with the consent of the importers/Customs Agent, that being so there was no objection on their side at the relevant point of time. Thus, it is clear that neither the customs value was determined finally nor the final assessment for charging of duties and taxes was made under section 80 of the Customs Act, 1969. Further the assessment under section 80 of the Customs Act, 1969, is an act of procedural requirement, and cannot be termed as an order or decision passed after adjudication. Further the assessment under section 80 of the Customs Act, 1969, is subject to post clearance audit/scrutiny and the provisions of section 32 ibid caters/covers all such subsequent acts. The assessm ent under section 80, unless provided under section 32 of the Customs Act, 1969, expired, cannot be termed as past and closed act. Therefore, it cannot be termed as a case of reopening in terms of section 195 of the Customs Act, 1969. More importantly the provisions of sections 32 and 195 are two distinct and separate provisions of law and having independent area of jurisdiction. In furtherance it is pertinent to mention, here that even the time limitation provided in section 32 (i,e, upto five years) and in section 195 (i,e, up to two years) itself proves that the provisions of section 195 does not have any over-riding effect on the provisions of sections 32, 80, 199 and other procedural provisions of the Customs Act, 1969, where no decision or order passed after the adjudication. That in the presence of provisions of section 32 of the Customs Act, 1969, read with the Apex Court's judgment in the case of Messrs Pfizer Laboratories v.
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Federation of Pakistan and others (PLD 1998 SC 358) no Goods Declaration/Bill of Entry can be termed as past and closed transaction, till the expiry of period provided under section 32(2) of the Customs Act, 1969, Secondly, it is reiterated that the provisions of section 195 of the Act, have neither any nexus with the provisions of section 32 nor it has any over-riding affect on section 32 of the Act. Both these provisions of law are distinct and have their independent jurisdiction. Further, it is confirmed that the provisions of section 195 have jurisdiction over an order/decision passed under section 179 or 193, as the case may be, and have no overriding effect on a notice issued under section 32 of the Customs Act, 1969. It is added that neither there was any question of closed transaction nor it is a case where reopening of the case was mandatory under section 195 of the Customs Act, 1969. Further, without prejudice to above, in the section 195 the words "may" and "passed" have been used. By using words "may" the intent of the legislations is very much clear that it is not mandatory for the Collector to re-open any procedural action/decision which the appropriate officer/official has done finally. The assessment of the imported goods was a procedural act instead of a decision on quasi-judicial proceedings. It is neither a decision passed on any application for refund, re-export, etc., nor the process of assessment can be termed as an order/passed issued under sections 179 and 180 of the Customs Act, 1969. (B) That no-where in the section 25 of the Customs Act, 1969, it has been stated that every declared value is to be accepted for the assessment purposes and rather the provision of subsection (1) of section 25 of the Customs Act, 1969, called for the acceptance of a payable transaction value (which is not in this case) as customs value on the following conditions:-- (a) subject to subsequent subsections of section 25 and rules (Le. Chapter, IX of the Customs Rules, 2001). (b) that the value paid by an importer must be in agreement with the "payable" value in the market of similar kind of goods. (i) First of all it is proved from the record of the case that no information or corroborative documents were provided and the appellant have failed to provide any corroborative documents i,e, L!C, etc, to prove the transaction of even their suppressed declared value, thus, the appellants have failed to substantiate their value which had been paid. (ii) Secondly, the Appropriate Officer, by virtue of powers conferred under subsection (11) of section 25 of the Customs Act, 1969, has a right to satisfy himself whether the "paid" value is true transaction value to be considered for assessment purposes. For this purpose, apart from other information/ documents, as required by the customs the importer should provide the information about the price adjustments, along with corroborative documents, as envisaged in subsection (2) of section 25 of the Customs Act, 1969. In the instant case the respondents have failed to provide the information/documents thus, in terms of clause (1) of section 25(2) of the Customs Act, 1969, there was no question to accept the declared value as customs value in terms of section 25(1) of the Customs Act, 1969. The record and circumstances of the case proving that the customs value of the appellant's consignment cannot be determined on the basis of their declared value. (iii) Thirdly, the words "subject to the provisions of this section and rules", appeared in section 25(1) of the Customs Act, 1969, have a great importance while accepting any transaction value. The customs values in terms of Rule 107 of the Customs Rules, 2001 has significance and cannot be ignored. If the declared value is not in agreement with Rule 107 the same cannot be accepted as payable transaction customs value. It is clear from the record that at import/in-bonding stage the importers were not in a position to supply the requisite information to determine the customs value for assessm ent purposes, that is why, to save the importer from the port/demurrage charges the warehousing of the goods was allowed subject to the determination of the customs value for charging duties and taxes at the time of ex-bonding. The warehousing of the goods was allowed
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wherein the whole consignment was cleared as of miniature bulbs. Thus, with the mis-declaration and manipulation there is no question to accept the suppressed declared value as customs value. (C) As regards application of section 30 at ex-bond stage it has been gathered from the record that the value and assessm ent was not finally made at import/in-bond stage. As stated above the bill of entry was processed for warehousing of the goods subject to determination of customs value and assessm ent at ex-bond stage. The endorsement in this regard was clearly made on face of the bill of entry when the importer and his clearing agent accepted the bill of entry for further processing of warehousing of the goods. The respondent importers/customs agent failed to provide any corroborative documents to prove that there was any objection on their part while warehousing the goods with the aforesaid endorsement. Since the customs value was not finally determined at import/in-bonding stage hence there is no question that final value was changed/ altered at subsequent ex-bond stage. Without prejudice to above, it is, however, pertinent to mention here that even otherwise considering the spirit of sections 32 and 32A of the Customs Act, 1969, there is no bar to even re-determine the value at ex-bonding stage. Further in terms of sections 32 and 32(A) and section 80(2) of the Customs Act, 1969 any warehoused goods can be re-checked with reference to rate of duty and taxes, applicable on the date of presentation of an ex-bond bill of entry. Further, any assessment can be re-checking even at the time when the goods have been released by the customs. The respondents failed to mention any provisions of law which restrict the appropriate officer to check the assessment at the time of ex-bonding of the goods. (D) The subject case was remanded by the Appellate Tribunal for de novo consideration and cannot be termed as an-adjudication in terms of subsection (1) of section 179 of the Customs Act, 1969, for confiscation of the goods or imposition of fresh penalty. Thus in remand case the stipulation of time provided under subsection (5) of section 179 of the Customs Act, 1969, is not applicable. ' In the light of position elucidated above it is an established case of misdeclaration of physical description/specification with clear intent to deprive the government from legitimate revenue. Thus, I do not find any cogent reason to alter the Order-in-Original No,18 of 2002 dated 16-1-2002. The importer and the Customs Agent are, therefore directed to make the payment of adjudicated amount of duties/taxes (i,e, Rs,3,61,8351) and penalty together with surcharge in terms of section 83 of the Customs Act, 1969. The department is directed to calculate the amount of surcharge till the date of actual payment of the adjudicated amount. If the importer and the Customs Agent fails to make payment of the adjudicated amount, within 15 days from the date of issuance of this order the recovery should be made in terms of section 202 of the Customs Act, 1969 by adopting the procedure prescribed in subsections (1)(b) and (4) of section 202 of the Customs Act, 1969". 4. The appellant being aggrieved with Order-in-Original No,1 of 2009 dated 9-1-2009 filed an appeal before the Collector of Customs, (Appeals) Karachi. The Collector of Customs (Appeals) rejected the appeals vide Order-in-Appeal No,2028 of 2009 dated 29-9-2009 as under:-- I have examined the case record and given due consideration to the arguments made before me. Clearly, the appellants had suppressed vital information like wattage and art number in respect of a large quantity of the goods imported in this case: 295,000 pieces declared as miniature bulbs had been found as auto bulbs of various wattages and art number. Obviously, miniature bulbs are entirely different and of far less value as compared to auto bulbs and the appellants had made the aforesaid misdeclaration with the clear intention of getting the goods assessed at lower value and, as a consequence, cheating the Exchequer. In the light of the available evidence in terms of section 25(5) of the Customs Act, 1969 the impugned goods were finally assessed @US$35/1000 as against the manoeuvred assessm ent @US$06/1 000. On examination of the case record, I find that customs value of the goods has been correctly determined in line with the relevant provisions of law. The argument that value of the goods cannot be re-determined at the time of ex-bonding is
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not tenable because no provision of law bars from such re-assessment of goods, particularly when the earlier assessm ent had been done on the basis of an incorrect information by the importer. The other arguments advanced by the learned counsel, reproduced at para 3 above, are similarly untenable and one gets a clear impression that all of them are aimed at confusing the (sic). The penal action taken in this case vide Order-in-Original No, 18 of 2002 dated 16-1-2002, subsequently confirmed through the impugned order, is also in consonance with the gravity of offence committed in this case. Therefore, I hold that the impugned order is correct in law and on facts and there is no reason to interfere with the same. The appeal is rejected accordingly. 5. Being aggrieved and dissatisfied with the Order-in-Appeal, the appellant filed the instant appeal before this Tribunal on the grounds as under:- (a) That the impugned order has been passed without following the principles of natural justice as the same has been passed in total negation of the remand order which was passed with specific directions as submitted above and hence the impugned order is bad in the eyes of law and is liable to be set aside. (b) That the learned Collector Appeals has failed to appreciate the fact that the Honorable Tribunal had remanded the matter to the Adjudication authority with certain conditionality's and once it is admitted that the order-in-original has been passed by the respondents ignoring such restrictions contained in the remand order, rightly or wrongly, the said order-in-original was liable to set aside at the very outset as it tried to over-rule the authority of a superior forum under the Customs Act, 1969 and hence the impugned order is liable to be set aside on this ground alone. (c) That the learned Collector Appeals has also erred in law and fact by making the observation that the so called re-assessm ent has been done in terms of section 25(5) of the Customs Act, 1969 as no such evidence of identical or similar goods was brought on record and neither the same has any mention in the order-in-original and the impugned order. Therefore, the impugned order is bad in law and is liable to be set aside. (e) That the learned Collector also erred in law and fact by observing that the Order-in-Original 1/2009 passed on the basis of Order-in-Original 18 of 2002 was correct in as much as the said Order-in-Original 18 of 2002 already stood set aside by the Honorable Tribunal and was no more in field and hence any discussion or reliance on the same is illegal and without any lawful authority and based on the same the impugned order is liable to be set aside. That the, learned respondent while passing the order-in-original has tried to justify the act by saying that in fact there was no assessm ent made by the department at the time of In To bonding of goods in terms of section 80 of the Customs Act and rather, impliedly it was a provisional assessment in terms of section 81 of the Customs Act, 1969 and hence could have been open to reassessment at any stage without recourse to section 195 of the Customs Act, 1969 and section 32 was rightly invoked. In this regard it is respectfully submitted that the said Bill of Entry was processed under the 1st appraisement system and without touching the merits of the endorsement recorded on the Bill of Entry to the effect that Into Bond allowed subject to check value at the time of Ex-Bonding, it is humbly submitted that the same has no sanctity in the eyes of law as the same is violative of the provisions of section 30 read with section 104 of the Customs Act 1969, made effective through S.R.O. 1375(1)/99 dated 28-9-1999, w,e,f, 1st January 2000, whereby the rate of value on any imported goods... Stands omitted. This has been done to implement the concept of Transactional Value and not the valuation of goods on Ex Bond Bill of Entry cannot be altered or changed from the value assessed at the time of In Bonding in terms of section 25 of the Customs Act, 1969. Therefore the exercise of re-assessm ent of value at the time of Ex Bonding of goods, is illegal and without any lawful authority and is a result of wrong Practice being prevalent in the department against the explicit provisions of law. This submission of the appellant gathers further support from the recent directive of CBR dated 6-12-2008 in which the FBR while dilating upon the identical issue
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has categorically said that there is no concept of assessing the goods lying in the Bonded Warehouse on current values as section 25 does, not provides any mechanism in this regard. Therefore the impugned order is liable to be set aside on this legal proposition as the goods of the appellant were assessed at the time of In Bonding and could not have been re-assessed after the clearance of the same. (f) That the learned respondent has also failed to appreciate the fact that the assessment order in terms of section 80 of the Customs Act is an order which is directly appealable before the Collector of Appeals in terms of section 193 of the Act ibid and is no more a mere ordinary assessment of the Bill of Entry and in fact is an assessment order with complete sanctity of law and as such an observation is not maintainable in the eyes of law and liable to be set aside. (g) That the learned respondent is trying to blow hot and cold at the same time by observing that the assessm ent made at the time of In Bonding of goods was not done under section 80 of the Act, then the question arises as to under what section the same was done. The only section left for such assessm ent is section 81 of the Customs Act, 1969, and the observations in the impugned order impliedly lead to the conclusion that it was made under section 81 of the Customs Act, 1969, but even if this argument is accepted then the same is also without any lawful authority as the assessm ent in the instant case was done by the Appraising officer who is the relevant authority under section 80 of the Act and not under section 81 of the Customs Act, 1969, as under section 81 it is the Assistant Collector who is authorized for ordering such assessment provisionally. Therefore, the impugned order is illegal and a nullity in the eyes of law. (h) That the learned respondent in the impugned order has observed that I do not find any cogent reason to alter the Order-in-Original 18 of 2002, which in fact already stands set aside and there is no question of any alteration. The respondent was required to pass a reasoned order on the basis of the remand order specifically and under no authority was supposed to revive the earlier Order- in-Original 18 of 2002 which is no more existent and is not in field; hence the impugned order is liable to be set aside on this ground alone. (i) The perusal of Show Cause Notice reveals that the same has been issued in terms of section 32 of the Customs Act 1969 and punishable under clauses 14, 77 and 86 of subsection (1) of section 156 of the Custom Act 1969. Here it is pertinent to note, that the Show Cause Notice has been intentionally issued without mention of any of the subsections of section 32 of the Customs Act, 1969. This has been done so, just to avoid specific allegations against the appellants as this act of the respondents has denied the appellants to rebut the same specifically. It is pertinent to note that, all the subsections of section 32 of the Customs Act, 1969, contemplates different situations/ circumstances under which short recovery of duty can be demanded. Subsection (1) is a sort of a mandatory section as it is in this subsection, the word untrue and mis-declaration or false document has been defined. Subsection (2) then stipulates a situation, wherein, by reason of such an untrue statement/ documents or by reason of some collusion, any duty has not been levied or short levied, is defined, and, lastly in subsection (3) the short levy due to inadvertence, error or misconstruction has been defined. From the bare reading of the above condition prescribed in subsections (2) and (3) read with subsection (1) it can be easily concluded that the situations defined therein are altogether distinct, different and dissimilar in nature. Both these subsections contemplate two different situations with different periods of limitations as well. Therefore, it is incumbent upon the respondents to first establish that, whether any such document, declaration or statement has been submitted or made which can be termed as untrue within the mischief of subsection (1) of section 32 of the Customs Act, 1969. It has been alleged in the Show-Cause Notice that on physical examination, a quantity of 295,000 Pcs of auto bulbs was found instead of miniature bulbs, and the rest of the goods were found as per declared description and quantity. However, it is pointed out that if the copy of B/E (Annexure `B-1') is perused, it is conclusively proved
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that no such observation has been made by the Appraising Officer on the face of B/E (except the remark that value will be checked at the time of Ex-Bonding) which establishes that when the Into- Bond B/E was presented to the Group for completion, all the aspects pursuant to examination of goods, were checked, and accordingly the B/E was out of charged for In-Bonding subject to check of valuation only at Ex-Bonding. Therefore, even if it is supposed that, there was a mis-declaration as alleged, then why…
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