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Petitioner: Messrs Bronx International, Karachi VS Respondent: The Deputy Director, Directorate General Of Pca, Custom House, Karachi and 3 others
Court Name: Customs Appellate Tribunal Judge(s): Jehanzaib Wahlah Title:Messrs Bronx International, Karachi vs The Deputy Director, Directorate
General Of Pca, Custom House, Karachi and 3 others Case No.: Customs Appeal No.K-713 of 2019 Date of Judgment:2019-11-28 Reported As: 2021 PTD (Trib.) 51 Result: Appeal allowed Judgment ORDER JEHANZAIB WAHLAH, MEMBER JUDICIAL-III .----Through this order , I intend to dispose off Appeal No. K- 713/2019 directed against Order-in-App eal No.1919/2019 dated 29.05.2019 passed by Collector of Customs (Appeals), Karachi by maintaining Order-in-Original No.95/2012 dated 07.05.2012 passed by Additional Collector (Adjudication), MCC of Appraisement-East, Karachi. 2. Briefly facts of the lis are that the appellant during the course of his business activity imported 21 (erroneously referred as 19) consignments of Aerated Water/Soft Drinks, upon receipt of shipping documents he transmitted Goods Declaration (GDs) with the MCC of Appraisement (East) erstwhile PaCCS under the provision of section 79(1) of the Customs Act, 1969 (Act) and Rules 433 of Sub-Chapter III of Chapter XXI of the Customs Rules, 2001 (Rules) and as per pre-requisite deposited upfront duty and taxes on the basis of declaration against those. Consequent to which GDs were numbered as CRN(i) I-HC-1395928-29042010 (ii) I-HC-1402608-06052010 (iii) I- HC-1408518-1 1052010 (iv) I-HC-1409223-12052010 (v) I-HC-1414479- 13052010 (vi) I-HC-1416780-19052010 (vii) I-HC-1424036-26052010 (viii) I-HC-1424033-26052010 (ix) I-HC-1435338 -08052010 (x) I-HC-1746794- 1003201 1 (xi) I-HC-1747863-1 103201 1 (xii) I-HC-1747523- 110320100 (xiii) I-HC-1747847-1 103201 1 (xiv) I-HC- 1748359-1203201 1 (xv) 176761 1-2903201 1 (xvi) I-HC-1767626-2903201 1, (xvii) I-HC-1771423-3103201 1 (xviii) I- HC-1772896-0104201 1 (xix) I-HC-1772903- 0104201 1 (xx) I-HC-1778398-0504201 1 and (xxi) I-HC-1784319- 1104201 1. Upon appearance of those on their workstation, the Assessing Officers subordinates of the Deputy Collector of Customs, Group-I (respondent No.2), they instead of passing assessm ent orders under the provision of Section 80 and Rule 438 of the Act/Rules on the basis of declaration opted to get the goods examined as per the contemplation of Section 198 and Rule 435 of the Act/Rules and to proceed with after adducing their opinion for obtaining examination prior to assessment forwarded the GDs to respondent No.2, who gave his assent and
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referred those to the Assistant/Deputy Collector of the Terminal, who marked those to the concerned examiners of his choice in accordance with the devised criteria, who carried out the requisite physical verification and the goods were found in accordance with the declaration to the extent of all aspects, reports so prepared were uploaded in the reservoir of the GDs, on the streng th of which the appropriate authorities defined in Section 2(a) passed assessment orders against each GD and transmitted view messages for payment of additional amount of duty and taxes, worked out on the basis of the assessment orders, which appellant paid on different dates and time. Consequent to which the inbuilt authority of the PaCCS passed clearance orders in terms of section 83 and Rule 442 ibid. The appellant representative thereafter after obtaining delivery orders from the respective shipping companies obtained deliveries of the consignments from the terminal after payment of their charges. After considerable lapse of time the Deputy Director , Directorate General of Post Clearance Audit (DGPCA) issued an audit observation to the appellant stating inter alia that appellants have obtained clearance of the goods namely aerated water under PCT Headings 2202.9000 as against actual 2202.1010 and 2201.1020, on which Federal Excise Duty (FED) on retail price of the goods is leviable Q of 12% under Table I of the First Schedule of the Federal Excise Act, 2005 (FEA). This resulted in short payment of Rs.3,333,829/- FED, Rs.1,237,387/- Sales Tax and Rs.424,378/-. Income Tax and is violation of Section 32(1) & (2) of the Custo ms Act, 1969 (Act) and section 3(1)(b) and Section 12(3) of FEA, Section 36 of the Sales Tax Act, 1990 (STA) and Section 148 of the Income Tax Ordinance, 2001 (ITO). Hence, FED is recoverable under section 14 together with default surcharge in terms of section 8 and penalty under Section 19 of FEA, Sales Tax along with default surcharge under Section 34 and penalty under section 33(5) of the STA and Income Tax under Section 148 of the ITO and imposed penalty for the violation of Section 32(1)(2) under Section 156(1) and (14) of the Act. Which was replied with the submission that the respondent No..1 has no power to conduct audit under section 26(2) unless compliance to the provision of Section 26A of the Act is made and he in the capacity of Deputy Director of PCA cannot conduct audit under Section 46 of the FEA, 2005, Section 177 of the Income Tax Ordinance, 2001 and Section 25 of the STA by virtue of non appointment of "Officer of Inland Revenue" under section 29 of the FEA, Section 228 of the ITO. Beside have no power to reopen an order under the provision of Section 195 of the Act, rendering his act without power/jurisdiction. Instead of withdrawin g audit observation, the respondent No.1 framed contravention report C.No.PCA/2271/201 1/Audit/2183 dated 16.07.201 1 and forwarded the same through covering letter of even date to Collector of Customs, erstwhile PaCCS, who marked that to respondent No.3 who on the strength of which issued show-cause notice dated 13.01.2012 containing the same facts and contravening provisions and so the penal clauses of the Act, FEA, STA and ITO without even slightest change of comma and full stop. Subsequently he passed order-in-original dated 07.05.201 2 in the case of Messrs BiNees Bano, M-272, Jillani Centre, Mezzanine Floor , M.W. Tower , Karachi which was mutatis mutandi applied on the case of the appellant and he was ordered to pay the short paid amount of Rs.4995,594/- along with imposed penalty of Rs.2,500,000/-. Para 7 of the order is relevant, which is reproduced here-in-under: "7. This order also applies, mutatis mutandis to following identical case, in which the importer did not submit any defense despite provisions various opportunities the amount of duty and taxes to be recovered along with penalty imposed is as under;" S.No.Trader Name, and AddressAtraaunt Recoverable Duty and T axes (Rs.)Penalty (Rs.) Messrs Adnan Amin FED Rs.3,333,829.00Rs,2,500,000.00 (Bronx International) (NTN-1246056), 0-401,Sales Tax Rs.1,237,387.00 Al-Habib Apartment, Block-8, Clifton, Karachi.Income Tax Rs.424,378.00
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MCC/SCN/-29/0/A/2271Total: Rs.4,995,594.00 / Aerated Water Adnan Amin/ADC-ADI/PaCCS / 2012, dated 13-01- 2012. 3. Being aggrieved an appeal was preferred before respondent No.4 on 22.5.2012, against which no hearing memo. was forwarded to the appellant despite lapse of considerable time, which resulted in ordering attachment of moveable properties in addition to appellant accounts with the Messrs Al-Habib Bank Ltd, Karachi for recovery , which constraint the appellant to file Constitution Petition bearing No.D-71 12 of 2016 with the High Court of Sindh, wherein the respondent No. 4 took the plea that he has returned the appeal to the appellant advocate through covering letter dated 28.06.2012 on the pretext that the same was not accompanied with fee challan of Rs.1000/- in support of which he annexed certain photocopies of the diary sheets of its. The Hon'ble High Court of Sindh refused to buy the said arguments of respondent No. 4 and passed order dated 26.03.2019, relevant paras of Which are reproduced here-in-under: 3. We have heard the learned counsel for the parties, perused the record with their assistance and have also gone through the judgments relied by the learned Counsel for the petitioner . It will be advantageous to reproduce the relevant finding as recorded in para. 5 of the aforesaid judgment:- "5. We have heard the learned counsel for the parties, perused the impugned order passed by the Customs Appellate Tribunal and examined the case record, which reflects that. the appeal filed by the appellant before the Customs Appellate Tribunal was deficient to the extent that the applicant could not filed the certified copy of Order - in-Original along with memo. of appeal, however , record shows no objection was raised by the Registrar while accepting such memo. of appeal nor it appears that any opportunity was given to the applicant by the Customs Appellate Tribunal at the time of hearing the appeal to make out such deficiency , whereas, the appeal filed by the applicant has been dismissed on this account alone. It will be relevant to refer to provision of clause (d) of sub-rule (3) of Rule 5 of Customs, Excise and Sales Tax Appellate. Tribunal (Procedure)/Rules, 2006 which read as follows- -- '5(3) (d) to point out defect in such appeals and applications to the appellant or applica nts requiring them to rectify , the mistake by affording them a week's time and, if the defect are not rectified within the giving time to obtain the order of the Bench for the return of the Bench for the return of the appeals or applications, as the case may be to the appellant or applicants'. Above rules clearly requires the Registrar Appellate Tribunal to point out the defect and allow the appellant to rectify , the same, however , in the instant case, no such exercise has been under taken by the office of the Registrar . It will be equally relevant to refer to provision of Rule 12(3) which read as follows:- `12(3) The Tribunal may keeping in view the circumstances of the appeal, accept a memorandum of appeal , which is not accompanied by all or any of the documents referred to in these Rules. ' Above Rules clearly provides that Appellate Tribunal have the authority to accept the memorandum of appeal, which is not accompanied by all or any of the documents referred to in these rules, however , it appears that Customs Appellant Tribunal by ignoring such authority vested in it in terms of above Rule, has dismissed the appeal in, a cursory manner without assigning any reason as to why such discr etion could not be exercised in favour of the applicant. More particularly , when the appeal was filed in time and was also accompanied with all the relevant documents, except the certified copy of the Order-in-Original. It further appears that the applicant have not been given an opportunity to explain his position and to make out such deficiency , on the contrary , appeal has been dismissed on this account alone, instead of being disposed off on merits. In view of here-in-above facts and the circumstances of the case, the impugned order is here-by set aside and the matter is remanded back to the Customs Appellate Tribunal to decide the appeal of the applicant on merit after providing opportunity of being
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heard. It may be clarified that the aforesa id appeal shall stand restored, and shall be decided preferably within a period of two months from the date of receipt of this order . 4. Keeping in view the ratio of above cited judgment and while examining the facts and circumstances of the instant case, it appears that the petitioner has discharged the burden of proof to show that an appeal was filed on 22.05.2012 under acknowledgment before the Collector of Customs, (Appeals) against Order-in-Original, along with its annexures as shown in the index. Whereas, no objection was raised from the office of the Collector of Appeals regarding any deficiency or short documents respondent have not been able to show that such appeal was returned to the petitioner vide letter dated 22.06.2012, as nothing has been produced by the respondents to show that such letter was ever served upon the petitioner . The office copy of letter dated 28.06.2012 filed along with comments does not contained any acknowledgement of receipt by the petitioner or his counsel nor there is any endorsement on the dispatched register to this effect, which could support the version of respondents relating to the return of appeal to the petitioner . Moreover , we are of the considered opinion that in case of any deficiency of documents relating to appeal filed before the Collector of Customs (Appeals), the same could have been pointed out on the same date, when such appeal was being presented in the office of the Collector of Customs, (Appeals), or could have pointed out at a subsequent stage, within a reasonable time, however , before expiry of such period as may be available to the appellant, so that such deficiency if any could be remo ved within the stipulated period, instead of returning the appeal to the petitioner . In the afore cited case, this court has examined this aspect of the matter , and has decided that an opportunity , should had been provided to make out the deficiency , if any and the appeal should had been decided on merits. Accordingly , we hold that under the above facts and circumstances of the instant case, the appeal of the petitio ner is still pending before the Collector of Customs, (Appeals), whereas, attachment proceedings initiated by the Customs Authority without providing opportunity of being heard to the petitioner or without deciding the appeal of the petitioner on merit are without lawful authority , therefore the attachment notices issue to the petitioner are hereby set aside. 5. Collector of Customs (Appeals), Karachi, is directed to decide the appeal of the petitioner on merit after providing opportunity of being heard to the petitioner preferably within the period of two months from the receipt of this order , which shall be communicated by the petitioner to the Collector of Customs, (Appeals) within 07 days. However , if the record of appeal is not available in the office of Collector of Customs, (Appeals ), Karachi, petitioner is directed to supply the requisite memo of appeal along with annexures to the Collector of Customs, (Appeals), Karachi within seven days, where after, appeal of the petitioner shall be decided on merits. However , after providing opportunity of being heard to both the parties, however , till decision either on the stay applicatio n or in the main appeal, which ever is earlier , respondents shall not enforce recovery of the impugned demand subject matter of appeal before Collector of Customs (Appeals). 4. The appellant advocate in compliance with the order of the Hon'ble High Court of Sindh, supplied photocopy of the appeal dated 22.05.2012 to the respondent No.4 through covering letter dated 28.06.2012. Thereafter , respondent No.4 conducted hearings on multiple occasions, the advocate of the appellant in addition to the arguments incorporated in the memo. of appeal, also informed respondent No.4 that all identical cases of other importer have been decided by the Customs Appellate Tribunal reported at as 2019 PTD (Trib.) 615 with the exception of the subject appeal. Hence, order in the present appeal has to be passed on the same footing. To the contrary , the respondent No.4 after lapse of 07 years from the date of the receipt of the appeal, on the order of the Hon'ble High Court of Sindh passed order dated 29.05.2019 through which he rejected the appeal on the basis of his predetermined formed opinion, while keeping aside the valid and legal objections of powers/jurisdiction and order of the Tribunal in identical cases, which is holding field firmly . Paras 5 and 6 of the order are relevant, which read as: "5 I have examined the case record and arguments of both the sides and have given careful consideration to the facts of the case. The perusal of the Customs Tariff's heading 2202.1000 and 2202.9000 shows that the "aerated water/Drinks" are rightly classified in heading 2202.1010 which also attracts FED @ 12% Hence, audit has rightly observed that the Goods Declaration should be amended to the extent of PCT, thereby generating recovery of extra amount."
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"6 The appellant has mainly focused on pleading that the Directorate of Post Clearance Audit (Customs Officer) has no jurisdiction in this case as they are not designated as "Inland Revenue Officer" under the relevant provision of FEA, STA and Income Tax Ordinance, 2001. This issue has already been discussed and settled by Hon'ble Appellate Tribunal vide Customs Appeal No.K-928/2013, wherein the Hon'ble Tribunal has opined that the relevant provision of these Acts provide that duty and taxes in respect of goods imported into Pakistan shall be levied and collected in the same manner and at the same time as if it were a duty of customs payable under the Customs Act, 1969. Furthermore, on a reference from FBR, Ministry of Law, Justice and Human Rights has also opined that, "in terms of Section 7 read with Section 3(2) of Federal Excise Act, 2005. The Officer of Customs to take cognizance of any short paid amount of FED pertaining to import stage and to adjust /recover the same." In view of above, the appeal has no merit and is dismissed." 5. The appellant filed the present appeal on the basis of grounds enumerated therein, the consultant/advocates on the date of hearing argued the case strictl y in accordance with those and placed host of judgments in support of his stance. No cross objection under Section 194A(4) of the Act has been filed within the stipulated period of 30 days by the respondent No.1, which is tantamount to admission and deposition made by and on behalf of the appellant in the memo. of appeal and affidavit are therefore, deems to be true and correct and no controversy is left behind in regards to the fact of the case. Non submission of counter affidavit whether by will or default forfeit the respondent No.1 right to deny assertion made in the affidavit. This proposition of law stands validated from the following judgments of the Superior Judicial Fora reported as (1974) 94 ITR-I, 1980 PLC (C. S.) 350, 1982 PLC (C.S.) 757, 1986 CLC 745 KAR. (1984) 146 ITR 140, (1985) 53 Taxation-1 (Trib.) 1986 CLC 1119, 1986 CLC 1408 KAR, AIR 1991 MLD 1243 , PLD 1992 SC 317, 1993 SCMR 662, PLD 1996 Karachi 68, 1986 PLC (C.S.) 560 and 2003 PTD 2118. Similarly , respondent No.2 also has not filed any cross objections within stipulated period of 30 days or even till the date of hearing. However , on the date of hearing representatives of the respondents supported the orders passed by respondents Nos.3 and 4 being correct in fact and law and be maintained. 6. Heard and case record perused and the relied upon documents/judgments by the appellant's. Prior to dilating upon other factual and legal aspect of the case, it is noted that no online procedure for conducting audit under the provision of Section 26(2) and Section 155M of the Act of the consignment cleared through CCS (erstwhile PaCCS) through Rules as contemplated in Section 26A(1) ibid. in the framed Rules, incorporated in Chapter XXI of Rules. Resultant, any audit desired to be conducted should and ought to be as per the enunciation made in Chapter XVIA inserted in the Act with the caption reading as "Provision relating to the Customs Computerized System and Audit and access to documents" . Section 155M(1) expresses that a notice in writing to be served on the importer . The emphasis is in writing, which means that it should be in writing, section 26A further validate the said mechanism of conducting audit under section 26(2), verbatim of which is reproduced here-in-under: 26A. Conducting the Audit:- (1) the appropriate officer of Customs conducting any audit under this Act shall proceed in the manner as the Board may by rules prescribe. (2) Where any audit or inquiry or investigation is to be conducted for the purpose of ascertaining the correctness of any declaration or documents or statement, for determining the liability of any declaration or document or statement, for determining the liability of any person for duty, taxes fees surcharge fines and penalties, or for ensuring compliance with all other laws administered by the Customs, an appropriate of ficer of Customs may;- (a) Examine, or cause to be examined upon reasonable notice, any record or any statement or declaration or document described in the notice with reasonable specificity , which may be relevant to such audit, inquiry or investigation: (b) Summon, by giving a notice and reasonable time,- (c) The person who imported, or exported or transported or stored or held under customs bond, or file the goods declaration, drawback or refund claim, (d) Any of ficer, employee or agent of any person described in clause (a); and (e) Any person having possession custod y or care of records and documents required to be kept under the Act and any other person , as deemed proper , to appear before him at a reasonable time and to produce such records and documents as specified in.
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From bare reading of the provision of Section 26A 'of the Act, it is abundantly clear that the appropriate designated Officer of Customs empowered by the Board, which are officials of Directorate General of PCA /respondent No.1 for conducting audit of the record of the importer under Section 26(2) is in the manner prescribed by the Board in Rules. Since, no rules to this date are framed /issued by the Board despite insertion of Section 26A in the Act through Finance Act, 2006, resultant, the audit of an importer accounts/record maintained by him under the provision of Section 211 and Chapter XI of Act/Rules, has to be conducted by the Officials of Directorate of Post Clearance Audit or respondent No.1 as per the mechanism provided in the Section itself, wherein appropriate officer of Customs is empowered to conduct audit or inquiry or investigation of an importer for the purpose of ascertaining the correctness of any declaration or documents or statement, for determining the liability of any declaration or document or statement, for determining the liability of any person for duty, taxes, fees, surcharge, fines and penalties, or for ensuring compliance with all other laws. However , prior to proceeding with the said exercise, the appropriate officer appointed under Section 3DD of the Act for the said purpose and empowered through SRO 500(I)/2009 dated 13.06.2009. Respondent No.1 has to either summon or give a notice and reasonable time to an importer for the conduction of audit and for the said purpose production of accounts and record as per the expression of Clause (b) of subsection (2) of Section 26A of the Act. The first ground taken by the appellant in memo of appeal is that the respondent No.1 has not either issued any notice or served summon to/upon him for the purported exercise of audit despite mandated under law. This lapse renders the audit so conducted which is the root cause of the impugned show-cause notice as of no legal effect. Since, no notice is annexed with the memo of appeal, the representative of respondent No.1 was asked to place the copy of the notice/summon, forwarded/served to the appellant, as the copy of the same would had been available with him in the case file. The query was replied in negative, which flabbergasted me and another query was put to him that how the audit was conducted, without asking for the accounts and record of the import, the answer was on the basis of GD's available in the data reservoir maintained by PRAL under Section 155G and Rule 110 of the Act/Rules, upon this the representative of respondent No.1 was asked to read out the passage available in Section 26A, wherein audit of any importer is perm itted on the basis of the record available in the CCS Module, to this the answer was given in negative, confirming that audit of the importer accounts/book could only be conducted upon presentation of those after receiving notice/summon to do so. In the absence of that conduction of audit on the basis of the record available on the CCS Reservoir is not permitted as it is settle d proposition of law that a thing has to be done as it has been prescribed to be done, in case of doing the same in any other manner render it illegal B and as such void and ab-initio and this have been held in countless reported judgments, reference is 2002 PTD 2457 that "the thing should be done as they are required to be done, or not at all". The apex Court held in judgment PLD 1971 Supreme Court 61 "neglect of plane requirement of an absolute statutory enactment prescribing how something is to be done, would invalidate thing being done in some other manner" and in PLD 1973 Supreme Court 236 "it is now well established that where an inferior Tribunal or Court has acted wholly without jurisdiction or taken any action "beyond the sphere allotted to the Tribunal by law and therefore outside the area within which to law recognizes a privilege to err" then such action amounts to a "usurpation of power warranted by law" and as such an act…
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