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Petitioner: Messrs FORT TILES VS Respondent: ADDITIONAL COLLECTOR OF CUSTOMS, MCC OF PaCCS and another
Court Name: Customs Appellate Tribunal Judge(s): Adnan Ahmed Title:Messrs FORT TILES vs ADDITIONAL COLLECTOR OF CUSTOMS, MCC OF PaCCS
and another Case No.: Customs Appeals Nos.K-236 to 270 of 2012 Date of Judgment:2014-07-02 Reported As: 2016 PTD (Trib.) 384 Result: Appeal accepted Judgment ORDER ADNAN AHMED, MEMBER (JUDICIAL-II).-Through this ogler, I intend to dispose off 35 Customs Appeals Nos. K-236 to 270/2012 filed under Section 194-A of the Customs Act, 1969 against Order- in-Appeals Nos. 5883 to 5917 dated 15.03.2012 maintaining Order-in-Original Nos. 72462/2011, 72464/2011, 72532/2011, 72487/2011, 72488 dated 29.06.2011, 72588/2011, 72688/2011 to 72691/2011 dated 30.06.2011, 74089/2011, 74091 to 74093/2011 dated 14.07.2011, 74304/2011 dated 16.07.2011, 78217/2011, 78219, 78221, 78226, 78228 and 78294/2011 dated 18.08.2011, 79569/2011 dated 29.08.2011, 80388/2011 dated 10.09.2011, 81103/2011 dated 17.09.2011, 81533/2011, 81567, 81570 and 81571/2011 dated 20.09.2011, 83814/2011 dated 07.10.2011, 84955/2011 dated 20.10.2011, 85732/2011, 85748/2011, 85746/2011 dated 28.10.2011 and 85880/2011-85881/2011 dated 29.10.2011 passed by respondent No.l. By this order I intend disposing of 35 Appeals order containing similar facts and question of law and it is needless to reproduce facts of each case, therefore for reference the facts/grounds of Appeal No.K- 236/2012 is taken for decisions, which are:- 2. The appellant electronically filed Goods Declaration declared to contain Porcelain Polished Tiles etc at total declared invoice value of US$ 49940.5040. He sought clearance of the same under Section 79(1) of the Customs Act, 1969, by determining the liability of duty and taxes at his own. Subsequently the goods were released from the PaCCS in the light of the declaration. Meantime, a credible information was received in the Collectorate that appellant case in connivance with his clearing agent was actively involved in the fraudulent clearance of the under reference consignment by filing forged and fabricated under valued import invoice. On receipt of the above information, the Co Rectorate carried out a search of the office premises of the Clearing Agent
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under Section 163 of the Custom Act, 1969, which led to recovery of a number of original invoices mostly negotiated through various commercial banks. Subsequently the record was also obtained from the concerned banks. The invoice related to the instant consignment negotiated through Arif Habib Bank Karachi for US$ 97486.64, and the appellant has misdeclared the original value by feeding forged invoice showing a highly under invoiced value as US$ 499405040. It is pertinent to mention that while filing the online GD, it is mandatory for the importers/appellant to file correct relevant information/data as the Custom Duty and other taxes are paid in advance by the importer on his own, but the appellant deliberately deceived the automated environment by submitting wrong particulars/data of the case to evade duty and taxes. The appellant in active association with his customs agent has therefore, caused a colossal loss to the government exchequer. The evaded amount of customs duty and other leviable taxes for under reference case amounts to Rs.2925967/-. 3. That since the show cause notices were not served on the appellant in terms of sections 155Q and 215 of the Customs Act, 1969 due to blockage of his user ID in exercise of the power vested under Section 155F ibid, the appellant filed no reply to the show cause notice and the respondent No. 1 passed order dated 17.09.2011, which was also not served upon him, relevant paras reproduced here-in-below:-- Contravention report was prepared and SCN was issued to the importer/Clearing Agent through the PaCCS System. No one appeared nor was any reply received from the importer or the clearing agent. System generated hearing notices were issued in the importers ID i.e. (TrFor7071-1) but no response was received. Extension of 60 days in the time limit to decide he case were granted by the Collector of Customs PaCCS under section 179(3) of the Customs Act, 1969, to enable the importer and the Clearing agent to attend the hearings. Still no one appeared. Finally a manual hearing notice was issued on the given address of the importer through Leopards Courier Service (Pvt.) Limited; vide slip number 82992439 in 24/08111 but without any result. Undersigned is fully aware of the judicial dictum "audi alteram partem". No one should be condemned unheard, however the case cannot be kept pending indefinitely, on account of lack of interest of the importers/agents. In view of the above the case is decided ex-parte, on the basis of available record and on its merits. The department in this case was represented by Mr. Muhammad Naeem Afridi, Appraising/ Investigating Officer. He placed on record the following documents. (A) Declared LIC No. 121/ULO/CPU59/08 Dated:-08-02-2008 worth of US$ 49940.5040. Through Bank Al-Falah (B) Original Bill of Lading No. 121/ULC//CPU59/08 dated 08-02-2008 worth of US$ 97486.64 through Arif Habib Bank (Summit Bank), Plot No. 8/C- 1, Mumtaz Hassan Road, Off. Chundrigar Road, Karachi (C) Bank provides a commercial Invoice number SD050808-FT1C dated 21-07-2008 shows total consignment of US$ 97486. All the above documents provide material evidence to show the actual transaction value of the instant goods. The importers file Goods Declaration under section 79(1) of the Customs Act, 1969, where they are required to assess/determine their liabilities of duties/taxes and other charges and file the Goods Declaration form. The GD is the true declaration of goods, along with the correct particulars of such goods, including description, Value, duty, taxes and origin etc, duly supported by the required documents, which are required for the re-assessment and checking/verification under section 80 of the Customs Act, 1969. It is, in fact a self assessment system wherein by opting to file GD the importer under takes upon him, all liabilities and responsibilities, which may accrue. I have gone through facts of the case, material evidence on record, heard importers reply and departments contention. It is proved that the importer in connivance with the Clearing agent have deliberately, knowingly and with mala fide intentions, made an untrue statement and submitted false documents. They have attempted to defraud the Government of its legitimate revenue by mis-declaring the value of the goods. The charges leveled in the Show cause notice therefore stand established. The imported
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goods were liable to be confiscated in terms of clauses (14) and (14A) of Section 156(1) of Customs Act, 1969, however since the goods have already been released therefore the entire amount is to be recovered as personal penalty from the importer. A personal penalty of Rs. 35,00000/- is imposed on the Importers/NTN holder under S.R.O. 499(1)/2009 dated 13th June 2009, along with duty and taxes leviable thereon. In addition a penalty of Rs. 10,00,000/- is imposed on the Clearing Agent M/S Kanwal Enterprises CHAL 1917. Total penalty = 35,00,000 + 10,00,000. 4. The appellant against Orders-in-Original filed appeal before respondent No. 2, who disposed off these through single common order dated 15.03.2012. Which is read as under:-- I have carefully considered the written as well as verbal submissions made by both the sides. In this case the appellants electronically filed Goods Declaration (GD) declared to contain Porcelain Polished Tiles etc at a total declared invoice value of US$ 49940.50. They determined their tax liability on their own and sought clearance thereof under Section 79(1) of the Customs Act, 1969. Subsequently, credible information was received to the effect that the appellants, in connivance with their clearing agent, had cleared the abovementioned consignments on the strength of fake and fabricated invoices. In pursuance of this information, the Collectorate carried out a search of the office premises of the Clearing Agents of the appellants under section 163 of the Customs Act, 1969 which led to recovery of a number of original invoices mostly negotiated through various commercial banks. These original documents were scrutinized and juxtaposed with those documents and information submitted by the appellants for clearance of their imported goods in. Terms of the Goods Declaration filed electronically. This comparison of the documents and information conclusively established that this was a blatant case of fraud committed by the appellants in active connivance with their Clearing Agents. They had submitted false and fabricated invoices and thus had succeeded in defrauding the public exchequer of a massive amount to the tune of Rs.2,925,967/-. The basic plea of the learned counsel for the appellants as elaborated in the grounds of appeal as well as verbal submissions is that the case has been made on the basis of alleged search under section 163 of the Customs Act, 1969 Act) on the office of the Custom Agent of the appellants and it has been held in the impugned order that the search was carried out in terms of section 163 of the Customs Act, 1969. However, no details of the search with date or any other particulars have been stated in the impugned order which makes the search illegal. It was further submitted by the learned counsel that search could only be carried out by the Deputy Collector if he believes that there is a danger that before a search could be carried out in terms of section 162 of the Act after obtaining a search warrant from the Magistrate, the documents or things or goods liable for confiscation would be removed from the said place, he after preparing a statement in writing of the grounds of his belief and of the goods, documents or things for which search is to be made, search or cause search to be made for such goods, documents or things in that place. However no such details of search were provided to the appellants nor any due process of law was ever disclosed to the appellants and hence the search on the basis of which the whole case has been made out was illegal and all subsequent acts of the respondent including the show cause notice and the impugned order are liable to be set aside on this ground alone. It is now a well settled proposition of law the search carried out in terms of section 163 of the Customs Act, 1969 without recourse to the mandatory provisions of section 162 of the Act ibid, the same is illegal and any case made out on the basis of documents seized on the basis of such search cannot be used against the person from whose premises the same have been obtained. The following case law is reproduced in support of the above contention and therefore the whole case made out against the appellant is illegal, mala fide, tainted with colorful exercise of use of unfair discretion and hence liable to be set aside. The respondents on the other hand state that this is crystal clear case of criminal fraud which has been established beyond any doubt, since the search was made strictly in accordance with the relevant provisions of the
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Customs Act, 1969. Moreover, an FIR was also lodged by Customs against the appellant and their Clearing Agents which is pending before the Honourable Special Judge Customs. The appellants were just trying to confuse the matter by going into mere technicalities of the case which it appears because they did not have any thing whatsoever in their defense except trying to prove that search was illegal. I find the arguments of the appellants quite interesting in the legal sense. Firstly they state that they had no illegal nexus with their Clearing Agents. In the same breath they are indirectly trying to defend their Agents by citing various judgments of the Honourable Superior Courts which in my opinion bears no semblance with the facts and circumstances of this particular case. It is pertinent to mention here that the search was conducted on the premises of the Agent's office and not theirs. Thus, in my view, by trying to prove that the search was conducted illegally they are infact indirectly trying to prove their Agents innocence also since if it is assumed that the search is found to be illegal than logically their Agents would also benefit and would be free of conducting any fiscal fraud and the case would become infructuous ab initio. However, in all likelihood this might never occur since to me the vinculum between the two partners in fraud is beyond any doubt. Indeed it also appears that not only this action on the part of the appellants tantamount to "killing two birds with one stone" but also circuitously implies that both the appellants and their Clearing Agent have a definite association. In view of forgoing facts and circumstances of this case I am of the firm opinion that this is an evident and crystal clear case of fiscal fraud. The appellants adopted the modus operandi of misdeclaration of values of imported goods by submitting false and fabricated documents to the concerned Customs authorities in active connivance with their Clearing Agent. The written and oral arguments put forth by the learned appellant's counsel do not carry any weight whatsoever. I therefore, find no reason to interfere with the impugned Order-in-Original No. 81103 of 2011 dated 17.09.2011 and the same is upheld in toto. The appeal being devoid of any merit is rejected accordingly. This order shall apply mutatis mutandis on the following cases having exactly the same facts, circumstances and points of law on appeal No. Cus/2966/2011/PaCCS to Cus/3124/2011/ PaCCS. 5. The appellant has now challenged the above order by way of this appeal on the basis of the following grounds:-- (a) That the Learned Collector Appeals has miserably failed to apply his independent mind while passing the impugned order and has not considered the arguments put forth by the appellant in the memo of appeal as well as at the time of hearing of the appeal. Therefore the impugned order is not sustainable in the eyes of law. (b) That the Collector Appeal has failed to appreciate that it was never the case of the Appellant to defend the Custom Agent of the appellant as observed in the impugned order. What the appellant had submitted was, that without prejudice to the contention that the search was never carried out on the appellant's premises, and was done at premises of the Customs Agent, even then the same was not in accordance with law specially the provisions of sections 162 and 163 of the Customs Act, 1969, and hence, the very basis on which the case was made out was illegal and hence all subsequent acts of issuance of show cause notice and ONO were corum non judice and liable to be declared so. (c) That the Collector Appeals has failed to appreciate, that it is a trite law, that if the search is not carried out in accordance with law and the dictum laid down by the Honorable Supreme Court in a number of judgments,.' then the whole foundation of the case falls on the ground, and, here in the instant case no search was ever carried out on the appellant's premises, but on the premises of the Customs Agent, who in fact deals with number of other persons/Importer and hence the appellant cannot be burdened with any illegal activity, if so carried out by the Customs Agent in discharge of his business activity.
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(d) That the case has been made on the basis of an alleged search under Section 163 of the Customs Act, 1969 on the office of the Custom Agent of the appellant and it has been stated in the impugned order that the search was carried out in terms of section 163 of the Customs Act, 1969. However no details of the search with date or any other particulars have been stated in the impugned order which makes the search illegal. It is further submitted that search could only be carried out by the Deputy Collector if he believes that there is a danger that before a search could be carried out in terms of section 162 after obtaining a search warrant from the Magistrate, the documents or things or goods liable for confiscation would be removed from the said place, he after preparing a statement in writing of the grounds of his belief and of the goods, documents or things for which search is to be made, search or cause search to be made for such goods, documents or things in that place. However no such details of search were provided to the appellants nor any due process of law was ever disclosed to the appellants and hence the search on the basis of which the whole case has been made out was illegal and all subsequent acts of the respondent including the show cause notice and the impugned order are liable to be set. Aside on this ground alone. It is now a well settled proposition of law that the search carried out in terms of section 163 of the Customs Act, 1969 without recourse to the mandatory provisions of section 162 of the Act ibid, the same is illegal and any case made out on the basis of documents seized on the basis of such search cannot be used against the person from whose premises the same have been obtained. The following case law is reproduced in support of the above contention and therefore the whole case made out against the appellant is illegal, mala fide, tainted with colorful exercise of use of unfair discretion and hence liable to be set aside. "2003 PTD 2037 M/s Ihsan Yousaf Textile Mills v. Federation of Pakistan, 2004 PTD 2952 N. P. Water Proof Textile Mills (Pvt.) Limited .v. Federation of Pakistan, 2005 PTD 1933 Collector of Sales Tax And Central v. M/s. Mega Tecch (Pvt.) Ltd., 2003 PTD 1034 Federation of Pakistan v. M/s. Master Enterprises (Pvt.) Ltd., PLD 1991 SC 630 Collector of Customs Preventive v. Muhammad Mahfooz, 2009 PTD 1083 A.M.Z. Spinning and Weaving Mills (Pvt.) Ltd. v. Federation of Pakistan." (e) That it is further submitted that the very issuance of show cause notice in the instant case is illegal, without jurisdiction and mala fide as the consignment in question was duly examined, assessed to duty and out of charge by the respective appropriate officers of the respondent and had attained finality and could only be reassessed once the same is Reopened in terms of section 195 of the Customs Act, 1969 for which the appropriate officer is the Collector of Customs. In the instant case the show cause notice has been issued without any such order being passed and the jurisdiction assumed by the Respondent is illegal and hence the whole case made out against the appellant is corum non judice and without any jurisdiction and liable to be set aside on this ground. (f) That the assessm ent order passed in the instant case is an order within the meaning of section 80 of the Customs Act, 1969 which is subject to appeal before the Collector of Customs in terms of section 193 of the Customs Act, 1969. Since admittedly no appeal has been preferred in terms of section 193 of the Act ibid, the only remedy under the law was to Re open the same in terms of section 195 of the Customs Act, hence the impugned order is illegal and tries to invade in to a passed and closed transaction. (g) That the without prejudice to the above it is submitted that the case has been made out on the basis of these documents and an inference has been drawn that untrue values were declared for assessm ent whereas different invoices were found from the office premises so raided and further the same have also been confirmed by the Bank. It is vehemently denied that any untrue declarations were made to the Customs, rather all the assessment have been made by the respondents on the basis of their own fixed values and at no occasion it was a case of the department to accept the Transactional Values since the fixed values were being applied across
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the board by them to all the importers and hence no case of mis-declaration is made out against the appellants. (h) That at no stage it was determined by the customs staff that under what provisions of law, the assessm ent/valuation of the subject goods was being done. At present the concept of transactional value as notified vide section 25 (amended) of the Customs Act, 1969 is in vogue and there are 7 different methods adopted in this section to make assessment/valuation of goods. In the instant case the authorities have not given any express opinion that under which subsection the assessm ent of the goods was being done. The Show Cause Notice, and, neither the order in original, indicates the rule under which the valuation of the subject goods was sought to be fixed, which raises doubts and is liable to be set aside. It is pertinent to note that the assessment of goods in terms of section 25 (amended) has to be done in a sequential order, that is, if the same could not be done in terms of subsection (1), only then the provisions of subsection (2) could be invoked and so on and so forth. It is submitted that in the instant case the assessment was already done on the basis of agreed/fixed values and therefore the same attained finality and cannot be re-opened in terms of Section 32 of the Custom Act 1969 and could have only be re-opened in terms of Section 195 of the Custom Act, 1969 by the Collector of Customs. Hence the action of the Respondent in terms of Section 32 is wholly without jurisdiction and is liable to be set aside. (i) That the case of the department is based on section 32 of the Customs Act, 1969, for alleged mis-declaration of value whereas in the impugned order the provisions of section 25 of the Customs Act, 1969 has not been alleged to have been violated which in fact has not been mentioned in the show cause notice and there is no allegation to that effect. Hence the impugned order has traveled beyond the scope of the show cause notice and is not maintainable on this ground alone. (j) That the Respondent has not enforced any demand of duty and taxes in the impugned order as required in terms of section 32(4) of the Customs Act, 1969 and hence the same is liable to be declared to be in favour of the appellant in so far as recovery of duty and taxes are concerned. It is further submitted that the learned respondent has erred in law by imposing penalty in terms of SRO 499(1)/2009 dated 13-6-2009 as penalty cannot be imposed under this SRO which relates to redemption fine on confiscated goods. Since the goods were also not available, neither confiscation could be done nor fine could be imposed, hence the imposition of penalty in terms of SRO issued for minimum fine is illegal and liable to be set aside. (k) That the learned adjudicating authority has miserably failed to apply the correct law in as much as even fine for redemption has been imposed in various order, although the goods were neither available nor could have been confiscated, and hence imposition of or option of redemption fine does not arise. Hence the impugned orders are liable to be set aside on this ground as well. (1) That the appellants craves leave of the Honorable Collector (Appeals) to alter, add, modify and submit any further arguments at the time of hearing. 6. No cross objection under subsection (4) of Section 194-A of the Customs Act, 1969 has been submitted by the department within the stipulated period, instead filed comments dated nil, which are taken for consideration in order to meet the ends of justice and are reproduced herein below:-- (a) That the contents of para (1) of Grounds of the appeal are incorrect, hence, denied. (b) That, without prejudice to the above and for arguments' sake, even if the "search" was not in accordance with the manner prescribed in law, as interpreted by the appellants, in that situation too the bank's documents are substantiating the deliberate mis-declaration of value, submissions of wrong invoice and inflicting/caused loss to the public exchequer, hence, proving the mala fides and wrong doing on part of the appellants. Thus, the contents of para (2) of Grounds of the appeal are incorrect, hence, denied.
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(C) That in the light of submissions made above and considering the established facts and circumstances of the case the contents of para (3) of Grounds of the appeal .Are incorrect, hence, denied. It is further submitted that the whole appeal is based on the "technical" arguments, instead of merits, and the merits are confirming that it is a clear case of fraud and mis-declaration. Further the law settled by the apex Court the merits of the case cannot be scrapped merely on sheer technicalities. (d) That in the light of submissions made above and considering the established facts about mis- declaration of value, the contents of para (4) of Grounds of the appeal require no further comments, hence, denied. (e) That the contents of para (5) of the Grounds of the appeal are incorrect, hence, vehemently denied. It is respectfully submitted that the amended provision of Section 32 and…
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