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Petitioner: Messrs SUNRISE CORPORATION VS Respondent: DIRECTORATE GENERAL OF INTELLIGENCE
Court Name: Customs Appellate Tribunal Judge(s): Tahir Zia Title:Messrs SUNRISE CORPORATION vs DIRECTORATE GENERAL OF INTELLIGENCE
JUDGMENT
Reported As: 2017 PTD (Trib.) 244 Result: Appeal allowed Judgment JUDGMENT TAHIR ZIA, MEMBER JUDICIAL-II.---By this order, I, dispose of Customs Appeal No.K-1333/2015 filed by the appellant against the Order-in-Appeal No.10529 dated 25.08.2015, passed by the Collector of Customs, Appeal (here-in-after to be referred as respondent No. 4), maintaining the Order-in- Original No. 49/2015-2016 dated 16.07.2015 passed by Deputy Collector of Customs, Adjudication-1 (here-in-after to be referred as respondent No.3). 2. Briefly facts of the case are that the appellant imported a consignment of motorcycle part from China, upon receipt of shipping documents he delivered those to his clearing agent Messrs Khurram Brothers, Karachi for transmitting Goods Declaration (here-in-after to be referred as GD) under the provision of Sections 79(1) of the Customs Act, 1969 (here-in-after to be referred as Act) and Rule 433 of Sub-Chapter III of Chapter XXI of Customs Rules, 2001 (here-in-after to be referred as Rules) with the MCC of PMBQ and as per pre-requisite upfront duty and taxes of Rs.1219461.00 were deposited on 07.05.2615. Consequent to which GD was numbered as KPPI-HC-56357- 07052015. The nominated Appraiser opted to get the goods examined, under Section 198 and Rule 435 prior to passing assessm ent order. Officials posted at terminal after physical verification of the goods confirmed the declaration and uploaded the report in the system. Upon appearance of that on his desktop, the competent authority as defined in Section 2(a) of the Act in exercise of the power vested upon him through S.R.O. 371(1)/2002 dated 15.06.2002 passed assessment order under Section 80 and Rule 438 of the Act/Rules, on the basis of examination report and with the application of Valuation Ruling No. 685 dated 15.09.2014 and transmitted view message dated 19.05.2015 for payment of Rs.169,199.00 towards additional amount of duty and taxes leviable
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thereon, which were paid by the appellant on 19.05.2015. Consequent to which inbuilt authority in the system passed clearance order under section 83 and Rule 442 ibid. The clearing agent of the appellant thereafter obtained the delivery from the terminal and while he was exiting the gate of QICT, the Officials of Directorate General of Intelligence and Investigation-FBR (here-in-after to be referred as respondent No. 1) stopped-the container on the pretext that the duty and taxes have been paid short as against actual and put an hold on GD and goods were detained under Section 186 of the Act for conduction of re- examination, which transpired nothing. In spite of the said fact, the Officials of respondent No. 1 seized the consignment in terms of provision of Section 168(1) after serving notice wider section 171 of the Act. The Officials subsequently prepared contravention report stating inter-alia that the appellant in association with his clearing agent tried to obtain clearance of the goods under HS Code 7315.1190 as against actual, the said fact has been accepted by the appellant and they have agreed to pay the differential amount of duty and taxes of Rs.498,822/-. This inadvertent error on the part of the employee of the clearing agent was termed as an act of mis-declaration by the appellant attracting the provision of sections 32(1), (2) and 79 of the Act, Sections 3,6 and 7A of the Sales Tax Act, 1990 and Section 148(1) of the Income Tax Ordinance, 2001 punishable under clauses (14) and (45) of Section 156(1) of the Act and forwarded that to respondent No. 3, who issued show-cause notice dated 11.06.2015, which was replied by the consultant vide letter dated 17.06.2015, which fails to impress the respondent No. 3 and he passed order dated 16.07.2015, para 8 of the order is relevant and is re-produced here--in-below:-- "8- I have gone through the record of the case and consider the verbal and written submission of the importer clearing agent and the department, it is pertinent to mention that during preliminary investigation regarding mis-declaration of HS Code 7315.1190 instead of 7315.1110 and clearance of the consignment, the importer Messrs Sunrise Corporation, Karachi himself accepted the wrong implication of HS Code and assessme nt of the subject consignment @ 20% instead of 35%. In this connection the importer agreed to pay the differential amount of duty and taxes of Rs. 498,822/- leviable on the said consignment bearing GD No. KPPI-HC-56357 dated 07.05.2015. Thus the importer has deliberately and willfully attempted to clear the goods by mis-declaration HS Code of the goods in connivance with the clearing agent. Therefore, the charges leveled against the importer regarding mis-declaration of HS Code have been established in terms of Section 32(1) & (2) of the Customs Act, 1969, punishable under clause 14 of Section 156(1) of the Customs Act, 1969. The impugned goods are therefore liable to confiscation. However, an option is given to the importer to get the impugned goods redeems on payment of 20% redemption fine of the total value of the offending goods. A personal penalty of Rs. 75,000/- is also imposed on the importer under clause 14 of Section 156(1) of the Customs Act, 1969, with the warning to be careful in future. A penalty of Rs. 50,000/- is also imposed on the clearing agent Messrs Khurram Brothers, (CHAL No. 618), M-9, Mezzanine Floor, Umais Terrace, Karachi under clause 14 of Section 156(1) of the Customs Act, 1969 for violating the provision of law, further more the assessing staff is required to finalize the assessm ent on the basis of the order and recover legitimate amount of duty and taxes, redemption fine and penalty beside applied correct valuation ruling/criteria, data and necessary .Trade regulation, which ever is applicable. 3. The vires of the order was challenged before Respondent No.4 by the appellant vide Appeal No. Cus-7414/2015/DIT who also vide his order dated 25.08.2015 rejected that by observing in para 5 that: 5 I have examined the case record. The appellants contentions regarding jurisdiction have been adequately discussed by the Adjudicating Officer. There is no denying the fact that there was incorrect classification of one item and some items escaped application of valuation ruling. The Adjudicating Officer has aptly held the appellants /importer responsible for evasion of duty and
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taxes. The order is upheld to this extent. However, no grounds have been given to establish connivance of clearing agents, therefore, penalty imposed upon the agent is set aside." 4. Being aggrieved and dissatisfied with the impugned Orders the appellants filed the instant appeal before this Tribunal on the ground incorporated in the Memo of Appeal. Mr. Nadeem Ahmed Mirza and Mirza Muhammad Abeer (Consultants) and Obaydullah Mirza (Advocate) appeared and argued in line with those and are detailed herein-under:-- (i) The proceed with, it is appropriate for the appellant to comment on the quality of the judgment passed by respondent No. 4, wherein he has stated that the adjudicating officer has adequately addressed the question of jurisdiction of respondent No. 1 and his. This is entirely contrary to the fact, reference is placed to page 2 of the order containing nothing in this respect. Similarly, respondent No. 4 stated that "some item escaped application of valuation ruling". This is also nullity to the order dated 16.07.2015 passed/issued by respondent No. 3 containing no observation in this regard. The respondent No. 4 infact passed the order in vacuum beside beyond the scope of order of the respondent No. 3. Order so passed and the subsequent preceding are therefore palpably illegal, as held by the Hon'ble Supreme Court of Pakistan in reported judgment Collector of Customs v. Rahm Din 1987 SCMR 1840 holding that "any order passed on a ground not mentioned in the show-cause notice shall be palpably illegal on the face. This verdict of the Apex Court has been followed by a Division Bench of the Hon'ble High Court of Sindh (Karachi). In the case of Exide Pakistan (Pvt.) Ltd. v. Deputy Collector of Customs 2004 PTD 1449." (ii) That it is also appropriate for the appellant to state that the detention/seizure and preparation of contravention report by the official of respondent No.1. Indeed they are appointed and designated as "Officer of Customs" under Section 3A of the Customs Act 1969 and they derived power for functioning from Notification No. S.R.O 486(1)/2007 dated 09.06.2007 within the territory of Pakistan for thwarting the act of smuggling but this doesn't means that they can intercept and detain the goods transported within city or territory of Pakistan. Their jurisdiction in principle is restricted to the territory not falling within the ambit of Sections 9 and 10 of the Customs Act, 1969 and beyond 5 kilometer of the border of India and Iran in terms of Section 177 of the Customs Act, 1969 to be read with Notification S.R.O. No. 118(1)/83 dated 12.12.1983. 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. Resultant , these stood ousted from the area wherein the power has been delegated to the official of respondent No. 1, rendering their act as of no legal effect, hence void ab initio. (iii) The official of respondent No. 1 indeed have powers to detain the goods under Section 186 of the Customs Act, 1969 under the power vested upon them through notification No. 486(1)/2007 dated 09.06.2007 but these powers can only be exercised in the vicinity of the port/terminal not in any part of the city and the said fact stood validated from section 186, 1969 which read follows:-- 186: Detention of Goods pending paym ent of fine or penalty:---(1) When any 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 payment of such fine or penalty. (iv)Upon conscientious analysis of Section 186, it is abundantly clear 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 the authority held the charges established as leveled in the show-cause notice and impose fine and penalty, and the importer has not paid the leviable duty and taxes and impose fine. The appropriate officer is empowered to
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detain the forthcoming goods of the same owner till the time fine or penalty is not paid. The case of appellant is that his goods were lawfully cleared by the competent authority and against him no case is pending wherein fine or penalty has been imposed , therefore his consignment could not be detained on any pretext under the provision of Section 186 of the Customs Act, 1969 and this stood validated from reported judgment 2015 PTD 560 O.S. Corporation , FOP and others in which it has been held in categorical terms that "where no fine or penalty has been imposed or is even under consideration the provisions of Section 186 are not relevant" and "the authorities acting on a hunch have detained goods at the exit gates even though taxes and duties have been paid and the goods have been released, detaining goods at the exit gate after having released them is totally contrary to the provision of the Act 1969." (v) That it is of vital importance to add that Officials of respondent No. 1 have no powers under Sections 16, 25A, 32, 79, 80, 83 and 195 of the Customs Act, 1969 through Notification No. 486(1)/2007 dated 09.06.2007 issued by the Board delegating the powers to the officers of DGI&I-FBR. Intercepting consignment after clearance on the pretext of misdeclaration of description, PCT and value by the officials of respondent No. 1 suffer from lack of jurisdiction and power, rendering their act as transgression to the vested powers under the respective sections. In the given circumstances of the case the impugned detention/ seizure notice, contravention report and show-cause notice, order-in-original and subsequent proceeding there on deems to be illegal and void. No body is allowed to act beyond his jurisdiction and all the acts or deeds beyond the scope of jurisdiction are null and void in the eyes of law. Reliance is placed on the reported judgments 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. (vi) That the officials of respondent No. 1 are also empowered to conduct examination under section 198 of the Customs Act, 1969 under Notification No. 486(1)/2007 dated 09.06.2007 but within the vicinity of the port /terminal and that also after having approval of the Chief Collector (South) as clarified by the Board vide letter C. No. 2(2) L&P/2014 dated 29.12.2009 which they failed to obtain in the instant case, resultant, the carried out examination is nullity to law and direction of the Board which has to be adhered by the field formation in terms of the expression of Section 223 ibid. (vii) It is also imperative to state that official of respondent No. 1 can examine the goods outside the premises of the port/terminal under the Civil Procedure Code not under section 198 of the Customs Act, 1969, which is not operative outside the port/terminal. While doing so they have to invoke the provision of Section 2(s) in the show-cause notice which they have not leveled against the appellant. Rendering, the examination report of the goods after post clearance outside the premise of the port/terminal being in derogation of Section 198 of the Customs Act, 1969 and as such void ab initio. Any case made on the strength of such examination report is nullity to law and not to be relied upon. (viii) The respondent No. 1 and his subordinate are not appointed/ designated an "Officer of Inland Revenue" under Section 30A of the Sales Tax Act, 1990 and Section 230 of the Income Tax Ordinance, 2001 under which Directorate General Investigation Inland Revenue has been designated as officer of Inland Revenue and they had been delegated powers under different sections of the Sales Tax Act, 1990 through Notification No.S.R.O.776(I)/2011 dated 19.08.2011 and Section 207 of the Income Tax Ordinance, 2001. Resultant, the respondent No. 1 and his subordinate acted without powers/jurisdiction, rendering their act of detention, seizure and subsequently preparation of contravention report, null, and void ab-initio, hence "coram non-judice" as held in reported judgment Major Syed Walayat Shah v. Muzaffar Khan and 2 others (PLD 1971 SC 184), Omer and Company v. Controller of Customs, (Valuation): (1992 A.L.D. 449 (1) Karachi AAA Steel Mills Ltd. v. Collector of Sales Tax and Central Excise Collectorate of Sales Tax (2004 PTD 624), PLD 1976 Supreme Court 514 Ali Muhammad v. Hussain Buksh and others and PLD 2001 Supreme Court 514
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Land Acquisition Collector, Noshehra and others v. Sarfraz Khan and others 2006 PTD 2237 Pak Suzuki Motors Company Ltd., Karachi v. Collector of Customs, Karachi, 2009 PTD (Trib) 1996 and 2010 PTD (Trib) 832 and [(2014 PTD 1733)] Waseem Ahmed and others v. FOP and another. (ix) That similarly respondent No. 3 is also not designated an "Officer of Inland Revenue" under the provision of Section 30 of the Sales Tax Act, 1990 and Sections 207 and 230 of the Income Tax Ordinance, 2001 and as such is not empowered to issue show-cause notice under Section 36, (which stood omitted from the Act through. Finance Act, 2012) and the appropriate Section is Section 11 and respective Section 162(1) not 148 of the Income Tax Ordinance, 2001. Therefore he usurped the power not vested with, rendering the show-cause notice and order -in-original without power/jurisdiction, hence void abinitio and coram non judice as held in reported judgment Major Syed Walayat Shah v. Muzaffar Khan and 2 others (PLD 1971 SC 184), Omer and Company v. Controller of Customs, '(Valuation): (1992 ALD 449 (1) Karachi AAA Steel Mills Ltd v. Collector of Sales Tax and Central Excise Collectorate of Sales Tax (2004 PTD 624), PLD 1976 .Supreme Court 514 All Muhammad v. Hussain Buksh and others and PLD 2001 Supreme Court 514 Land Acquisition Collector, Noshehra and others v. Sarfraz Khan and others 2006 PTD 2237 Pak Suzuki Motors Company Ltd., Karachi v. Collector of Customs, Karachi, 2009 PTD (Trib) 1996 and 2010 PTD (Trib) 832. (x) That on conclusion of transaction, under the provision of sections 80 and 83 of the Customs Act, 1969 and 438 and 442 of Customs Rules, 2001, the order so passed under the said provision of the Act becomes appealable order under Section 193 of the Customs Act, 1969 before Collector of Customs (Appeals) and the respondent No. 1 and his subordinate are empowered under the said Section through Notification No. 486(1)/2007 dated 09.06.2007. If they had any reservation against the passed assessm ent orders, the appropriate course of action was to assail the said order before the Collector of Customs Appeals. Which had not been done within the stipulated period and order so passed by the competent authority defined in Section 2(a) under Section 80 of the Customs Act, 1969 became final and that cannot be disturbed by any authority. To the contrary, the respondent No. 1 and his subordinate detained, seized the goods, which is not permitted under law. (xi) That upon filing of the appeal by the respondent No. 1 before the Collector of Customs Appeals under Section 193 of the Customs Act, 1969 emanating the facts of the case and the relevant provision of law. Upon taking up the appeal it is mandated on him to go through the fact and ground of the appeal and thereafter if he think fit that in the case under adjudication correct duty and taxes either have not been levied or short paid on the basis of found goods, is empowered to issue a notice under Section 32 of the Customs Act, 1969 to the respondent and after receipt of reply to the said notice the Collector of Customs will decide the appeal in the light of the issued show-cause notice and reply. In the instant case no appeal has been filed by the respondent No. 1 despite mandated under law, instead assumed the powers under Section 195 of the Customs Act, 1969 and reopened a valid passed order under section 80 ibid. Neither the respondent No. 1 nor respondent No. 3 are empowered to reopen an order, hence both acted without power/jurisdiction, rendering their acts and commission 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.. (xii) The expression of Section 179 of the Customs Act, 1969 is very clear in regards to determination of Adjudicating Authority on the basis of "amount of duty and taxes involved excluding the conveyance." Not "amount of evaded duty and taxes". In the instant case of appellant the involved amounts of duty and taxes are Rs.1,887,482.00 (upfront duty Rs.1219461.00 + Rs.169,199.00 + 498,822.00 shown in show-cause notice). Meaning thereby the competent authority to adjudicate the case in question under clause (ii) of Section 179(1) is Additional Collector. To the contrary, respondent No. 3 issued the show-cause notices and intend to pass order while usurping the
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powers of Additional Collector, which is not permitted under. Law. Rendering both suffer from lack of powers/jurisdiction, hence, ab initio null and void and coram non judice as held in Order in Sales Tax Appeal No. 444/03, S.T.A. 465/07 and judgments reported at Major Syed Walayat Shah v. Muzaffar Khan and 2 others (PLD 1971 SC 184), Omer and Company v. Controller of Customs, (Valuation): PLD 1976 Supreme Court 514 Ali Muhammad v. Hussain Buksh and others (1992 ALD 449 (1) Karachi AAA Steel Mills Ltd. v. Collector of Sales Tax and Central Excise Collectorate of Sales Tax, PLD 2001 Supreme Court 514 Land Acquisition Collector, Noshehra and others v. Sarfraz Khan and others, 2004 PTD 624), PLD 2004 Supreme Court 600, All Pakistan News Paper Society and others v. FOP, PLD 2005 Supreme Court 842 Khyber Tractors (Pvt.) Ltd v FOP. 2006 PTD 2237 Pak Suzuki Motors Company Ltd., Karachi v Collector of Customs, Karachi, 2009 PTD (Trib.) 1996 and 2010 PTD (Trib.) 832, 2009 PTD 1112, 2010 PTD 465 and 2010 PTD (Trib.) 1636 and 2015 PTD (Trib.) 1469. (xiii)That the consignment in question had undergone the procedure of clearance as evident from the fact that the appropriate officer in the capacity of adjudicating authority defined in Section 2(a) of the Customs Act, 1969 in exercise of the powers vested upon him under Sections 80 and Rule 438 of Sub-Chapter III of Chapter-XXI of Customs Rules, 2001 and Notification No. 371(1)/2002 dated 15.06.2002 passed that for levy of duty and taxes, which were paid by the appellant , consequent to which the authority defined in Section 83 of the Customs Act, 1969 passed Clearance Order. The respondent number 1 and its subordinates detained the goods and later on seized and framed a contravention report for adjudication under section 179 of the Customs Act, 1969 by respondent No. 3 by issuing show-cause notice and subsequently passing of order in original i.e. Piling of fresh order on the existing order, while reopening of the order of assessment, in exercise of the power under the provision of Section 195, specifically vested with the Board or Collector. Neither the respondent No. 1 nor respondent No. 3 are empowered to do so. Both usurped the powers not vested with them rendering the preparation of contravention report, show-cause notice and the impugned order in original without power/jurisdiction, hence void and ab-initio and as such coram non judice and this stood validated from the reported judgment Messrs Smith Kline French v. Pakistan reported as 2004 PTD 3020 held that "once an order is passed, which attains finality, the same cannot be subject to a show-cause notice again, considering that no appeal or revision is filed against the first order. This was held by the learned High Court to be in derogation of the principles of administration of justice" and 2014 PTD 1256 Messrs Paramount International (Pvt.) Ltd. v. FOP and another in which it has been held that "1st order-inoriginal passed in the subject matter was an appealable order for both the parties therefore option to reopen an order passed under the adjudicating hierarchy was not available to the Collector,- Even the Collector of Customs Adjudication could not over see or exercise any right of reopening of an order, which has been passed by an officer lower in rank but acting as an adjudicating authority. Impugned order was se? Aside." The cases referred are squarely applicable on the appellant case. (xiv)That it is also imperative to add further that assessment orders in the subject case has been passed by the competent authority on 19.05.2015 and the appeal against which could had been filed by the respondent No. 1 or its subordinate on or before 20.05.2014 but had not filed by the respondent No. 1 to this date and the passed assessment order attained finality and became closed and past transaction and cannot be disturbed or reopened by any authority or court a's held in reported judgment 1989 MLD 4310 Messrs World Trade Corporation v. Central Board of Revenue that "if the order has attained finality through limitation. A fortiori; the Central Board of Revenue could not open up an order that had attained finality under the Sea Customs Act, 1878, and against which so suo motu revision lay under the Act" and 2004 PTD 3020, Glaxo Smith Kline Pakistan Ltd., Karachi v. Collector of Customs, Sales Tax Central Excise, Karachi "that department could not re-agitate which had been decided against him --- said order could be assailed in
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appeal or revisional proceedings, which in the present case were not initiated and therefore the same held the field and in the presence of earlier order another order contrary to the said earlier order could not be allowed hold the field for the simple reason that two contrary orders could not exists at one and a same time" --- in the light of the settled law the initial assessment order attain finality by virtue of expiry of stipulated period expressed in subsection (2) and as such hold field and no subsequent order on these to be allowed to be…
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