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Petitioner: BABAR WAHEED VS Respondent: FEDERATION OF PAKISTAN through Secretary, Federal Board of Revenue, Government of Pakistan, Islamabad and 3 others
Court Name: Customs Appellate Tribunal Judge(s): Adnan Ahmed, Ghulam Ahmed Title:BABAR WAHEED vs FEDERATION OF PAKISTAN through Secretary, Federal
Board of Revenue, Government of Pakistan, Islamabad and 3 others Case No.: Customs Appeal No. K-286 of 2008 Date of Judgment:2013-12-09 Reported As: 2015 PTD (Trib.) 30 Result: Appeal dismissed Judgment ORDER GHULAM AHMED, MEMBER (TECHNICAL-II).---By this order, we dispose of Customs Appeal No. K- 286/2008 filed by the appellant against Order-in-Appeal No. 1020/2008 dated 2-5-2008 passed by Collector of Customs, Sales Tax and Federal Excise (Appeals, Karachi. 2. Brief facts of the case are that the Model Customs Collectorate of Exports received a credible information to the effect that an attempt was being made to deprive the public exchequer of its legitimate revenue by availing duty free import of raw material under the facilities of DTRE Scheme unlawfully and by evading Regular Duty chargeable on export of lead ingots by mis-declaring the description of goods to be exported. In pursuance to the information, eight consignments related to Goods Declarations Nos.25606, 25607, 25608, 25609, 25610, 25613, 26202 and 26203 all dated 26- 11-2007 were examined by a team comprised for this purpose. For the exportation of 8 consignments stuffed in four Containers No.PMLU-202044-3, PKLU-202341-6, PMLU-202 1 19- 9 and GESU-216966-9, six Goods Declarations were filed by Messrs Pakland Trading Corporation (CHAL No. 1507) and two Goods Declarations were filed by Messrs Freight Ship Services (CHAL No. 2027) on behalf of exporter Messrs Admiral Sanitary Fittings, Gujranwala. Detailed examination of all the eight (8) consignments was conducted in the presence of two witnesses namely Mr. Salamat Ali, Assistant Collector of Customs (Exports/QICT) and Mr. Rashid Minhas, Senior Operation Officer, QICT. Upon re-examination, Container No.PMLU-202044-3 was found to contain PVC Scrap and Lead Ingots instead of declared goods i.e. "Copper Coated Wire (20% Copper 80% Zinc based Alloy) besides mis-declaration of weight of goods in other three containers as per following details:--
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S. No. GD Date Declared Quantity and DescriptionAscertained Quantity and Description of goods 1 25610 26-11-2007 24000 Kg PVC Scrap24940 kp copper wire 2 25609 26-11-2007 2500 Kg lead ingots 3 26202 26-11-2007 24500 Kg PVC Scrap24515 kg lead ingots 4 26203 26-11-2007 2000 Kg lead ingots1370 kg PVC scrap 5 25607 26-11-2007 23500 kg PVC Scrap24975 kg lead ingots 6 25608 26-11-2007 3000 kg lead ingots1050 kg PVC scrap 7 25613 26-11-2007 Copper coated wire (20% copper 80% zine based alloy)24915 kg lead ingots 8 25606 26-11-2007 Copper coated wire (20% copper 80% zine based alloy)940 kg PVC scrap As a result of re-examination, the aggregate weight of PVC Scrap was ascertained to be 3,360 Kg, that of Lead Ingots to be 74,225 Kg and that of Copper Wire 24,940 Kgs. Representative samples were also drawn from the consignments and forwarded to Messrs Pakistan Steel Mills for ascertairmlent of composition of goods for which the benefit of DTRE scheme was claimed. Messrs Pakistan Steel confirmed vide their report No.PS/PL/2203/XRF-376 dated 14-12-2007 that the goods were 99.30% copper wire instead of '20% copper 80% zinc based alloy as claimed by the exporter. Keeping in view the outcome of examinations of consignments stuffed in Container Nos.PMLU- 202341-6, PMLU-202119-9 and GESU-216966-9 and re-examination of Container No. PMLU-202044-3, and the aforesaid laboratory report it was established that none of the consignments contained 'Copper Coated Wire' i.e. 20% copper 80% zinc based alloy which was to be exported under DIRE Scheme vide DIRE Approval No. STG/1676/06062007 dated 6-6-2007 issued by the Collectorate of Sales Tax and Federal Excise, Gujranwala under DIRE Scheme availing the concession of Customs Duty/taxes chargeable at import stage. The case was 'lodged before the Honourable Court of Special Judge (Customs and Taxation), Karachi and investigation of the case was carried out by Investigating Officer so designated for the purpose. During the course of investigation accused Babar Waheed, Proprietor of Messrs Admiral Sanitary and Fittings, Gujranwala was examined vis-a- vis material available on case file. As a result of this exercise it transpired that the above named accused established a firm viz; Messrs Admiral Sanitary and Fittings at Gujranwala in the year 1995 for the manufacturing of various products of Sanitary Fittings and in the year of 2007 obtained approval of DIRE for the importation of 500 tons of Zinc and reportedly made export of 275 tons of copper coated wire and different sanitary fittings. However, there is nothing on record which could
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rationalize imports under DIRE and exports of finished goods as required under aforesaid scheme. Taking into consideration the export documents, Goods Declarations, examination and re- examination of consignments it is established that the exporter deliberately Prepared untrue export documents and stuffed the goods as per his whims in all four containers except the goods to be exported under DIRE Scheme. It is thus prima facie established that the above named exporter misused and abused the facility of DIRE Scheme and attempted to deprive the public exchequer of Regulatory Duty amounting to Rs.2,504,872 chargeable on export of Lead Ingots besides evasion of duty/taxes amounting to Rs.1,273,935 payable on the import of raw materials claimed to be used in the export of finished goods, as per following break-up:-- S. No. GD No. Date Declared Quantity and DescriptionAscertained Quantity and Description of goodsEvasion of Regulatory Duty involved Rs. 1 25610 26-11- 200724000 Kg PVC Scrap24940 kg copper wire0 0 2 25610 26-11- 20072500 Kg Lead ingots 3 26202 26-11- 200724500 kg PVC Scrap24515 kg 827308 0
4 26203 26-11- 20072000 kg Lead ingotsLead ingots 5 25607 26-11- 200723500 Kg PVC Scrap24795 kg Lead ingots836757 0 6 25608 26-11- 20073000 kg Lead ingots1050 kg PVC scrap 7 25613 26-11- 2007Copper Coated wire (20%24915 kg Lead ingots840807 1273935 8 25606 26-11- 2007Copper coated wire (20% copper 80% zinc based alloy)940 kg PVC scrap0 0 Total 2504872 1273935 The material on file prima facie established that accused Amir Aijaz Malik and Zafar Iqbal Hajveri, Proprietors of Messrs Freight Ship Services (CHAL No.2027) and Messrs Pakland Trading Corporation (CHAL No. 1507) respectively were in league with the exporter and tried to pave way for materialization of his attempt to export goods chargeable under Regulatory Duty under the guise of DTRE Scheme with a view to deprive the public exchequer from its legitimate revenue to the tune of Rs.2,504,872 on account of export regulatory duty and Rs.1,273,935 on account of duty and taxes goods imported under DTRE cover (total Rs.3,778,807). Under the circumstances, it is established that both the above named clearing agents were having prior knowledge with regard to contents of goods stuffed in seized consignments thus are squarely responsible for the commission of offence. Accordingly the license issuing authority has been asked to initiate necessary action against these agents. The role of Customs staff is also being investigated to detemline their
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connivance with exporter and clearing agent in commission of the offence. On the basis of record available on file coupled with the outcomes of investigation carried out so far, it is established that the exporter with the connivance of clearing agents attempted to deprive the public exchequer of its legitimate revenue to the tune of Rs.3,778,807. Hence, they have committed an offence which attracts the provisions of sections 16, 32(1), 32A(1)(c) of the Customs Act, 1969, read with section 3(1) of the Imports and Exports (Control) Act 1950 and Sub-Chapter (7) of Chapter XII of Customs Rules, 2001 punishable under Clauses (1), (9), (10A), (14) and (14A) of section 156 of the Customs Act, 1969 read with section 3(3) of the Import and Export (Control) Act, 1950. 3. On the strength of above facts appellant was called upon to show cause vide No. SI/MISC/66/2007-Exp/PQ dated 14-2-2008, the advocate replied to the show-cause notice vide dated 23-2-2008, through which he controverted the allegation levelled in the show-cause notice and prayed for the vacation of the show-cause notice. The respondent No. 4 after consideration of the submissions, disagreed and passed Order-in-Original No. 02/2008 dated 22-3-2008, paras 13 to 16 of the order passed order- in-Original No.2 of 2008 dated 22-3-2008, para 13 to 16 of the order are relevant which states inter alia:-- In view of the position elucidated above it is established that the exporter Messrs Admiral Sanitary Fittings, Gujranwala and both clearing agents, Messrs Pakland Trading Corporation (CHAL No. 1507) and Messrs Freight Ship Services (CHAL No. 2027) were in league with each other and attempted to defraud the public exchequer by way of gross mis-declaration to evade regulatory duty leviable on export of lead ingots and duty/taxes on the imported Zinc ingots as raw material which was allowed free of import duty I taxes under DTRE Scheme which is otherwise chargeable to prevailing rate of taxes at import stage. Now, therefore, I am of the considered opinion that they have committed offence of mis-declaration under sections 16, 32, 32A(1)(c) of the Customs Act, 1969, read with section 3(1) of the Imports and Exports (Control) Act, 1950 and Sub-Chapter (7) of Chapter XII of Customs Rules, 2001 punishable under Clauses (1), (9), (10A), (14) and (14A) of section 156 of the Customs Act, 1969 read with section 3(3) of the Import and Export (Control) Act, 1950. I therefore, order confiscation of seized goods in terms of section 180 of the Customs Act, 1969. However, an option to redeem the goods is provided to the exporter in terms of section 181 of the Customs Act, 1969 on payment of chargeable duty/taxes and fine to the tune of 50% of the ascertained value of the goods subject to the permission of the Special Judge of the Customs and Taxation Court, Karachi. I also impose personal penalty of Rs.2,500,00 (Rupees twenty five lac only) upon the exporter and Rs.1,000,000 (Rupees ten lac only) each upon both the clearing agents. It is also recommended that the DTRE Approval No. STG/1676/06062007 dated 6-6-2007 issued by the Collectorate of Sales Tax and Federal Excise, Gujranwala under DTRE Scheme for availing the concession of Custom duty I Taxes chargeable at import stage to Messrs Admiral Sanitary Fittings, Gujranwala, may be cancelled forthwith to avoid further misuse of this facility and initiate recovery of Custom Duty I taxes, if any on the imported raw material for not manufacturing and exporting the goods as per the said DTRE approval." 4. The appellant assailed the said order before Collector of Customs (Appeals) under the provision of section 193 of the Customs Act, 1969, who rejected the appeal vide order dated 2-5-2008 on the strength of opinion formed in paras 4 to 13 of the order reading as:-- I have considered submissions of both the sides and also examined the case record. Although all the main grounds agitated at the original stage were properly and adequately considered and discussed in the impugned order-in-original, yet the appellants have raised the same issues at this appellate level as well. Three core and main issues involved in the case, are highlighted and discussed as under:- (i) Whether or not the appellants had made correct and complete declaration of the goods on GD meant for export? (ii) Whether or not the appellants attempted to evade the legitimate public revenue by violating and misusing the facility of DTRE and Regulatory
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duty? (iii) Whether or not the time bar issue of the show-cause notice and other legal aspects were properly considered at the original level? The first and the foremost issue of serious proportion about mis-declaration of description of goods merits to be considered. Perusal of the appellants contention show that they have hardly denied the charge of mis-declaration. It is rather tacitly admitted. The Collectorate conducted in-depth examination and re-examination of the impugned items. Laboratory test was also got conducted from the Pakistan Steel Mills and the entire matter was properly ascertained and determined by sifting and segregating each and every item as per the graphic details provided in the charts in the impugned Orderin-Original. The appellants have advanced hardly any convincing or tangible arguments, hence their version is too weak to rebut the formidable and strong evidence produced by the department. The appellants have rather tried to side track the issue of misdeclaration. It is thus proved beyond a shadow of doubt that the appellants willfully resorted to massive mis-declaration of the description of the goods aimed for exports. Considering seriousness of the charges F.I.R. Was also registered against the exporters and the case is reportedly pending before the Special Judge of the Customs and Taxation, Karachi. The second issue of DTRE violation and evasion of regulatory duty is also examined. The appellants have failed to provide any evidence in support of their contention that they did not flout or misuse the DTRE facility. They were required to properly account for and establish that the raw material/goods imported by them without duty and taxes under the umbrella of DTRE concessions were fully used in the manufacture of the impugned export goods. This needed to be convincingly and thoroughly proved at the stage of exports. Even at this appellate stage they have, though raised various untenable other points but their appeal is devoid of serious and convincing explanation on this specific, main and important issue of DTRE misuse. In the absence of material evidence it can safely be held that the appellants attempted to evade the amount of duties and taxes involved in remissions against the DTRE facility accorded to them. This aspect is indeed too serious to be ignored even by the concerned Sales Tax Collectorate. The appellants contention that the lead ingot and other items are not subjected to the imposition of Regulatory duty on export is also in-correct. They have either not properly studied the S.R.O. 482(1)/2007 dated 9th June, 2007 or attempted to mislead the adjudication/appellate authorities. The impugned items liable to regulatory duty are enlisted in the two tables of the subject Notification. The lead ingots classifiable under HS Code 78.01 are also clearly placed at Sr. No. 14 of Table-II of the subject Notification S.R.O. 482(1)/2007. It can definitely be held that the appellants deliberately resorted to evade the regulatory duty on the impugned items as specified in the Order-in-Original by mis-declaration of the description of the goods. There is more than sufficient evidence to establish the charges of evasion of duties taxes in the case of DTRE besides the regulatory duty and has been correctly proved in the impugned Order-in-Original. The issue of show-cause notice, confiscation aspects of goods in terms of section 180 of the Customs Act, 1969 as per para 15 of the impugned Order- inOriginal referred by the learned Counsel are considered. Infact all the relevant provisions of the Customs law, rules made there under and sections of Import and Export (Control) Act, 1950 invoked and applied in the case have been adequately quoted at para-14 of the order. Section 180 of the Act mentioned at para-15 appears to be bona fide typographical error. This part of the order does not have any purpose and connotation other than confiscation of the goods ordered by the learned adjudicating officer. Moreover the goods became liable for confiscation owing to massive and complete mis-declaration and flouting of the provisions of sections 32, 32(1)(c) of the Customs Act, 1969. It is accordingly held that the impugned order-in-original did not on this account suffer any legal infirmity. The issue of show-cause notice needs in depth examination and consideration. The evidence produced in the case show that the containers were detained vide two letters 81/Misc/11/2005-Exp-PQ issued by the Principal Appraiser Customs (Export) on 5th December, 2007. While the date of occurrence has been reported as 6th December, 2007 in the F.I.R. No. 01 of 2008
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vide No. SI/Misc/ 66/2007/Exp-PQ lodged by the MCC Exports Custom House, Karachi. Although the appellants have seriously referred the dates on which the goods were actually examined as the relevant date for counting the limitation period. This contention is not acceptable as reasonable time period was genuinely consumed in the process of examination, re-examination of the impugned goods. The date of occurrence reported as 6th December, 2007 by the Collectorate would be the crucial date to start reckoning of the two months period needed for issuance of the show-cause notice in terms of section 168 of the Customs Act, 1969. The show-cause notice was issued on 1 1 th Febuary, 2008 which undoubtedly crossed the bar envisaged under section 168 of the Act. Two months period is the mandatory requirement which essentially needed to be fulfilled. In case of unavoidable situation extention could be obtained from the Collector in terms of first proviso to subsection (2) of section 168 of the Act. The Order-in-Original is however, silent on this issue. There is also no explanation or discussion in the impugned order about the aspect of delay in the show-cause notice. This was very important case warranted even registration of F.I.R. How could the critical period of two months was allowed to cross or lapse without timely issuance of the notice. The Collectorate may like to look into it. There is more than sufficient evidence produced on the issue of time barred show-cause notice. Several judgments of different for as have been referred whereby lapse of non-issuance of the show-cause notice within the mandatory period was seriously considered. In case of only one day exceeding the limitation period the Honorable Supreme Court of Pakistan did not allow the Review Petition filed by the Collector and it was dismissed (PTCL 2003 L. 723). There is an other judgment of the Honorable Sindh High Court in Constitutional Petition No. D-713 of 2003 wherein the delay of just 2-3 days in issuance of show- cause notice was not accepted and the case decided against the Collector of Customs (Appraisement). An other judgment of the Honourable Sindh High Court passed in Constitutional Petitions Nos. D-646, D-647, D-648, D-649 and D-650 of 2006 is also equally applicable in this case. The case is accordingly hit by the limitation specified in section 168(2) of the Customs Act, 1969. It is thus very strong, compelling and un-ignorable evidence. The judgments are binding and quite applicable in this case. The extent of repercussions and implications on the case emanating from the situation of the time barred show-cause notice merit to be considered. The appellants contention that owing to the proven time bar aspect the goods should be returned in terms of section 168(2) of the Customs Act, 1969 as held in the above referred judgments. The learned counsel also forcefully argued against imposition of the fine and penalty in the case. According to him, legally and as per the judgments of the Honourable Supreme Court, the Sindh High Court and section 168(2) of the Act will have no legal benefit until and unless the unlawful confiscation and imposition of fine and penalty are not done away with the counsel added. The appellants above contention surpasses the limits and scope of the judgments. The non-issuance of the show-cause notice within the mandatory period of two months would not vitiate or invalidate the entire proceedings. The judgments of the honourable Superior Courts and section 168(2) of the Act are confined and related to the issue of the goods only. Legally, the issue revolves and the discussion hovers around the vires of section 168 of the. Customs Act, 1969 only. The appellants, cannot be absolved from their legal responsibility of the impugned violations, which are proved and established beyond a shadow of doubt. The appellants shall only be entitled for the benefit permitted by the law. In view of the above facts, circumstances and principles of law the amount of fine is waived but the penalty is reduced to fifty percent only against the appellants. The order about duties and taxes determined and ascertained against the DTRE misuse and the Regulatory Duty evasion by the learned adjudicating officer in the case/Order-in-Original is upheld. The appellants are allowed to export the goods subject to payment of the full and total amount of duties and taxes plus the re-adjudged penalty. Few samples of the impugned goods may be retained, as modified to the above extent only and the appeal is disposed of.
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5. The appellant has now challenged the above order by way of this appeal. Mr. G.A. Khan Advocate appeared on behalf of the appellant and emphasized in the arguments incorporated in the memo. Of appeal reading as:-- (i) That the appellant is engaged in the manufacturing of "Sanitary fittings" for the past more than ten years and has deployed about 150 skilled and unskilled workforce. The appellant is also making exports of various waste and scrap of alloy metals and is also a regular Exporter of Copper Wire and has exported 225 MT during Nov-Dec, 2007 alone. Besides, the appellant is regularly exporting copper coated wire of zinc and sanitary fittings under temporary import facility of raw material for subsequent export in finished form under DTRE i.e. Duty and Tax Remission scheme. (ii) That in the normal course of his business, the appellate submitted documents for export of eight consignments of PVC Scrap, Remeltable lead ingot and copper coated wire as detailed in the following G.Ds. Interestingly it may be recorded that none of these export items involve any rebate claim. 1. GD 25610/26-11-2007 24000 kg PVC Scrap 2. GD 25609/26-11-2007 2500 kg Remeltable scrap Ingot 3. GD 26202/29-11-2007 24500 kg PVC Scrap 4. GD 26203/29-11-2007 2000 kg Remeltable Lead Ingot 5. GD 25607/26-11-2007 23500 Kg PVC Scrap 6. GD 25608/26-11-2007 3000 kg Remeltable Lead Ingots 7. GD 25613/26-11-2007 12500 kg Copper Coated Wire 8. GD 25606/26-11-2007 12500 kg Copper Coated Wire Total PVC Scrap 72000 kgRemeltable Lead Ingot 7500 kgsCopper Coated Wire Under DTRE 25000 Kgs (iii) That the containers of the six consignments of S. Nos. 1-6 were not readily traceable for examination whereas consignments of S. Nos. 7 and 8 stuffed in Container No. GESU-216966-9 were available and examined by Customs Examination officers on 3-12-2007 and after being satisfied with the declaration, recorded their findings on the GD and subsequently the container was also allowed loading on 4-12-2007. Copies of eight G.Ds. With Invoice are annexed and marked as Annexures "A" "B" "C" "D" "E" "F" "G" & "H". (iv) That when the appellant's Clearing Agent went to Port Qasim on 6-12-2007 to get the other six consignments at S. Nos. 1 to 6 examined, he came to know that the two earlier out of charged consignments consisting of Copper Coated Wire of Zinc stuffed in Container No. GESU 2169669 of S. Nos. 7 and 8 were seized by Customs Authorities. Besides it was also known that the same examination staff had also examined the six consignments of PVC scrap and Remeltable lead ingot of S. Nos. 1 to 6 of preceding Para 3 and these were also seized. Thus all the eight consignments were seized illegally without determination whether or not the goods are liable to confiscation more particularly when the goods of the six GDs of S.Nos.1 to 6 were yet to be examined under first appraisement. It is a matter of record that entire proceeding of seizure was conducted in absence of appellant or his Agent. (v) That reportedly the goods of the eight seized consignments were examined by Examination Staff detailed by respondent No. 4, who furnished a consolidated report of all the eight consignments stating that they consist of PVC Scrap, Lead Ingot and Copper Wire. The import status and tariff classification of the three items stand a under:- 1 PVC Scrap 3360 Kgs 3916.9000 Not leviable toNo export restriction
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Regulatory Duty 2 Legal Ingot 94225 kgs 7801.9900 Not leviable to Regulatory DutyNo export Restriction 3 Copper Wire24940 kgs 7408.2100 Not leviable to Regulatory DutyNo export Restriction (vi) That Federal Government has levied Regulatory Duty at 25% ad. Val on some wastes and scraps but none of the aforesaid items are subjected to levy of Regulatory Duty under the Notification. Similarly all the three items are also exportable and are not banned or restricted for export. Copies of S.R.O. 482(1)/2007 dated 9-6-2007 and…
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