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Petitioner: Messrs TRACKING WORLD (PVT.) LTD., LAHORE VS Respondent: COLLECTORATE OF
Court Name: Customs Appellate Tribunal Judge(s): Tahir Zia Title:Messrs TRACKING WORLD (PVT.) LTD., LAHORE vs COLLECTORATE OF
JUDGMENT
Reported As: 2018 PTD (Trib.) 1991 Result: Appeal allowed Judgment JUDGMENT TAHIR ZIA, MEMBER (JUDICIAL-II).---Through this order, I intend to dispose off Appeals bearing No. K-1238/2016 directed against Order-in-Original No. 744/2015-16 dated 30.05.2016 passed by Additional Collector of Customs, Adjudication-I, Custom House, Karachi. 2. Briefly facts are appellant imported a consignment of 1 x 40" container No. TCLU-8334363 declared to contain 831 pieces of GPS navigational system with accessories. Upon receipt of import documents and arrival of the vessel at Karachi the appellant transmitted Goods Declaration (here- in-after to be referred as GD) under the provision of Section 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 Appraisement-West, and as per pre- requisite deposited upfront duty and taxes of Rs. 317,617.00 vide cash No. C-KAPW-008342, consequent to which GD was numbered as KAPW-HC-194357 dated 13.04.2016. Upon appearance of Goods Declaration on his desktop, the nominated Appraiser instead of completing the assessm ent on the basis of the declaration and scanned documents, opted to get the goods examined under Section 198 of the Act and Rule 435 of the Rules. He after adducing his opinion transmitted GD to the Deputy Collector of the Group, who ascended and transmitted GD to the Deputy Collector KICT, who marked that to the examiner for conduction of physical verification of the imported goods for determination of actual description, quantity and quality. The examiner concerned carried out the physical verification of the goods and found those in accordance with the declaration, report so prepared was posted by him in the reservoir of the GD. Thereafter, Assessing Officer on the basis of examination report completed the assessment and passed
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assessm ent order under the provision of Section 80 of the Act and Rule 438 of the Rules and transmitted view message for payment of additional amount of duty and taxes of Rs. 1,447,991.00, which were paid by the appellant on 20.04.2016 vide cash No. A-KAPW-006576, consequent to which inbuilt authority of the WeBOC passed Clearance Order in terms of Section 83 of the Act and Rule 442 of the Rules. Immediately, after passing of Clearance Order, the subordinate of Directorate General of Intelligence and Investigation-FBR (Enforcement) (here-in-after to be referred as respondent No. 2) blocked the delivery and thereafter detained the goods under Section 186 of the Act on the plea that the assessm ent order so passed is erroneous being passed on the basis of declaration and examination report, scanned documents/catalogues upon receipt of view message under Rule 437 of the Rules is contrary to the actual description and classification of the goods. The subordinate of respondent No. 2 subsequently examined the goods, which transpired that the appellant has obtained clearance of Car DVD Player with Navigational System, FM Radio with multiple functions like bluetooth, MP3, MPEG4, SD Card, GPS Memory, Rare View Camera, Surround Sound System, 8x480 HD Digital Screen and Remote Control, packed in cartons bearing importer logo 'Tracking World In-Dash-Navigation System', falling under PCT 8527.2910 attracting 35% custom duty as against 5% on declared PCT 8526.9100, beside excess quantity of pieces was also found in addition to two different models as against one model akin to the consignment of the appellant imported vide GD No. KAPW-HC-17391 dated 31.07.2015. This misdeclaration of description and PCT resulted in under assessment causing loss to the exchequer to the extent of Rs. 2,480,095.00 and the act of the appellant's falls within the ambit of Sections 32(1), (2) and 79(1) of the Act, Sections 3, 4, 6, 33 and 34 of the Sales Tax, 1990 and Section 148 of the Income Tax Ordinance, 2001, punishable under clause (14) of Section 156(1) and aforesaid Sections of the Sales Tax and Income Tax. As a result of the said finding, the official of respondent No. 2 seized the goods under Section 168(1) of the Act and a. notice under Section 171 was also served upon the appellant. Thereafter, contravention report was framed by respondent No. 2 and forwarded to Collector of Customs, Adjudication-I, who marked that to the authority of competent jurisdiction as expressed in Section 179 of the Act. On the strength of which the Additional Collector of Customs (Adjudication-I) (here-in-after to be referred as respondent No. 3) issued show-cause notice dated 10.05.2016, which was replied by the appellant, to which respondent No. 3 disagreed and passed Order-in-Original dated 30.05.2016 through which he held the charges as levelled in the show-cause notice as established and ordered confiscation of the good subject to redemption of those upon payment of 35% redemption fine of the value of the goods, imposed penalty of Rs. 250000.00 in addition to evaded amount of duty and taxes of Rs. 2480095.00. Consequent to which the appellant on one hand assailed the vires of the order before the Tribunal, whereas on other hand for release of goods filed Constitution Petition No. D-2935/2016 before the High Court of Sindh vide order dated 03.06.2016 ordered release of the goods upon submission of pay order for the difference amount between the declared and assessed value, as well as fine and penalty through post dated cheques with the Collector of Customs, MCC of Appraisement-West, Karachi. The appellant complied the order and submitted pay order for Rs. 2480095.00 and post dated cheques for imposed fine and penalty, consequent to which the respondent No. 2 issued NOC and the Collector of Customs, Appraisement-West ordered delivery of the already released goods. 3. The appellant filed the subject appeal on the basis of grounds enumerated therein. No cross objection under subsection (4) of Section 194A has been filed within the stipulated period of 30 days by either respondents Nos. 1 and 2 themself or through their subordinate, instead comments were filed by Group-VII vide dated 14.02.2017, which are placed on record of the case for consideration and perusal. On the date of hearing the representative of the appellant further argued that:-- (i) That neither respondent No. 2 or his subordinates were empowered to detain the goods of the
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appellant under the provision of Section 186 of the Act after passing of assessment/ clearance orders under the provision of Sections 80 and 83 and Rules 438 and 442 of the Act/Rules to be read with reported judgments 2014 PTD 582 Amir Siddiqui v. Federation of Pakistan and 03 others and 2015 PTD 560 Messrs O.S. Corporation v. FOP and others. (ii) That neither respondent No. 2 or his subordinate are empowered to take cognizance of the matter corresponding to Sections 25, 32, 79 and 195 of the Act as enunciated in S.R.O. 486(1)/2007 dated 09.06.2007, rendering the seizure, preparation of contravention report without power/jurisdiction an as such void and ab-initio. (iii) That neither respondent No. 2 or his subordinates are being appointed as an officer of Inland Revenue under the provision of Section 30A of the Sales Tax Act, 1990 and Section 230 of the Income Tax Ordinance, 2001 and as such not empowered by the Board through S.R.O. 776(1)/2011 dated 19.08.2011 and section 207 of the Income Tax Ordinance, 2001, resultant, not empowered to act under any provision of the Sales Tax Act, 1990 and Income Tax Ordinance, 2001 for short payment of Sales/Income Tax Post Clearance. (iv) The duty and taxes involved in the case of the appellant are Rs.4255903.00, the power to adjudicate the case of said amount rest with the Collector of Customs in terms of clause (i) of Section 179(1) of the Act. To the contrary respondent No. 3 issued show-cause notice and passed order-in-original rendering it suffer from lack of power/jurisdiction, hence void and ab-initio and as such coram non judice. (v) The respondent No. 3 is as well not appointed as Officer of Inland Revenue under the provision of Section 30 of the Sales Tax Act, 1990 and any Section of Income Tax Ordinance, 2001, resultant not empowered to issue show-cause notice for either evaded or short paid amount of Sales Tax and Income Tax under the provision of Sections 11 and 162(1) ibid., rendering that and ordered so passed without lawful authority/jurisdiction, hence coram non judice. (vi) That it is settled proposition of law that at a time only one order has to remain in field, subsequent order is not permitted to pile upon that as held by the Superior Judicial Fora, for further elaboration referred to the assessm ent order passed by the competent authority defined in Section 2(a) of the Act under the provision of Section 80 of the Act in exercise of the power delegated upon him through S.R.O. 371(I)/2002 dated 15.06.2002. which is appealable, the proper course of action for either respondent No. 1 or 2 was to file an appeal against that under the provision of Section 193 of the Act, failing to do so the order so passed attain finality and it cannot be disturbed by any authority including respondent No. 3 even through issuance of show-cause notice and passing of Order-in-Original as this is tantamount to reopening the order under the provision of Section 195 of the Act, under which he is not empowered. (vii) That where the question of classification arise, provision of section 32 of the Act is not applicable, the dispute has to be resolved by putting the case before the classification committee after deliberation directed/ordered in para 2 of CGO 12/2002 dated 15.06.2002 and a public notice to the said effect after ascent of the Board as enunciated in CGO 09/2004 dated 20.08.2004 and thereafter insertion of the said classification in para 3 specifically meant for classification of CGO 12/2002 dated 15.06.2002. 4. Conversantly, the representative of respondents Nos. 1 and 2 strongly supported the act of detention/seizure, framing of contravention report, issuance of show-cause notice and passing of order-in-original and jurisdiction and powers under the provision of Section 179 of the Act and under the Sales Tax Act, 1990 and Income Tax Ordinance, 2001 and opined that these are valid, legal in all aspect and as such should be maintained. 5. Heard, prior to dilating upon the merit of the case, it is beneficial for me to determine the question of detention of the consignment, which had undergone the process of passing of assessm ent/clearance order under the provision of Sections 80 and 83 and Rules 438 and 442 of
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the Act/Rules by Respondent No.2 or his subordinates under the provision of Section 186 of the Act. Under the expression of the said section a consignment of an importer can only be detained after payment of leviable duty and taxes and order of clearance by the authority defined in the said section or S.R.O 371(1)/2002 dated 15.06.2002, if any adjudication order against the said importer is in field and wherein fine/ penalty have been imposed upon him and which has not paid or in a case wherein contravention report has been framed in an under clearance consignment, for adjudication by the competent authority defined in Section 179 ibid for imposition of fine or penalty. In the absence of availability of both the referred conditions in the provisions, consignment of any importer cannot be detained under Section 186 of the Act. In the case under consideration no such order is available, wherein adjudicating authority imposed any fine or penalty on the appellant, nor any contravention report was prepared for the purpose of adjudication, prior to passing of assessm ent/clearance order under the respective Provisions of the Act/Rules. To the contrary the consignment of the appellant has been detained under Section 186 of the Act by subordinates of Respondent No. 2, after passing of valid assessment/ clearance order by the authority defined in Section 2(a) of the Act in exercise of the powers conferred upon him through Notification No. 371(I)/2002 dated 15.06.2002, on the premise that the goods so imported are under assessed on the basis of declared erroneous description, PCT and application of incorrect value. Detention under the said pretext is not permissible under the provision of Section 186 of the Act by the officials of Respondent No.2 or any other authority being in derogation of the expression of Section 186 ibid and this stands validated from the judgment 2014 PTD 582 Amir Siddiqui v. Federation of Pakistan and 03 others and 2015 PTD 560 Messrs O.S. Corporation v. FOP and others that "authorities could detained such goods in respect of which inquiry or investigation was pending and not the goods which had been or were been imported by a person. The subsequent imported goods belonging to a same owner can only be detained once a fine or penalty has been imposed in respect of any other goods and the same remained un-paid. By no stretch of imagination all subsequent import can be detained or withheld clearance on the premise that some inquiry or investigation is pending in respect of some other goods. In our opinion no such action is permitted under this provision. The Respondent are only authorized to take action for issuance of detention notice in terms of section 202 of the Act, once the amount alleged to have been evaded has been finally adjudicated and decided against the person. The procedure and mechanism provided Section 202 of the Customs Act, 1969 is entirely independent of any action taken in terms of Section 186 of the Act. It is not the case of respondent that any adjudication has been done either in respect of the goods allegedly cleared against fake GD's or even the goods covered by the instant petition and thereafter detention notices have been issued. With this the Hon'ble High Court of Sindh declared the detention of the consignment without lawful authority by holding that provision of Section 186 of the Customs Act, 1969 did not empowers the authority to do so." And "where no fine or penalty has been imposed or is even under consideration the provision 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 releases them is totally contrary to the provision of the Act 1969." By gaining strength from the expression of Section 186 and the law laid down, I, declare that Respondent No. 2 and his subordinates were not empowered to detain the subject consignment of the appellant for seizing subsequently under Section 168(1) for preparation of contravention report and initiation of adjudication proceeding under Section 180 of the Act. This illegal act renders the entire exercise right from detention till passing of order-in-original by Respondent No. 3 are without lawful authority and jurisdiction. Hence, void and ab-initio and as such coram non judice. 6. That as regard to the core issue of powers and jurisdiction, which is of vital importance for the health of the case. The respondent No. 2 and his subordinates drive powers for functioning within
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the territory of Pakistan from Notification No. 486(1)/2007 dated 09.06.2007, for thwarting the act of smuggling, this does not means that they have unfettered powers to intercept and detain the goods cleared by the . Officials of Clearance Collectorate after completion of codal formalities and realization of the leviable duty and taxes, for delivery to the importer through his representative either in the terminal or their office. Their jurisdiction in fact is only restricted to the areas falling outside the purview of Sections 9 and 10 of the Customs Act, 1969 and beyond 5 kilometers of the border of India and IRAN as expressed in Section 177 of the Customs Act, 1969 and Notification No. 188(1)/83 dated 12.12.1983. By not levelling allegation of smuggling as defined in Section 2(s) of the Act in the contravention report and invoking of the same in the show-cause notice, the officials of respondent No. 1 cannot assume powers of seizing the goods under the provision of Section 168(1) of the Act. Since, in the instant case allegation of smuggling as defined in Section 2(s) "smuggle" means to bring into or take out of Pakistan in breech of any prohibition or restriction for the time being in force, B or evading paym ent of customs duties or taxes leviable thereon", has not been levelled. The official of respondent No. 2 are not empowers to exercise powers under the provision of Section 168(1) ibid, which could only be exercised upon invoking the provision of Section 2(s) ibid. In the given circumstances of the case, the goods in question could not even be seized by the respondent No.2 or his subordinates. The respondent No. 2 and his subordinates stretched their powers beyond the allotted sphere and applicable provision of the Act and the Notification No. 486(1)/2007 dated 15.06.2007. This is not permitted unless enabling provisions to the said effect is available in the Act or notification. This unlawful act of the Officials of respondent No. 2 is an act of high handedness, abuse of powers being in violation of the provision of law, hence, void and ab- initio and as such coram non judice. For reaching at the said conclusion I am indebted from the observation available in reported judgments PLD 1971 SC 184, PLD 1976 Supreme Court 514, PLD 1991 Supreme Court 630, 1992 ALD 449(1) Karachi, PLD 2001 Supreme Court 514, 2004 PTD 624, 2005 PTD (Trib.) 135, 2006 SCMR 129, 2010 PTD (Trib.) 1636, 2010 PTD 465, 2010 PTD (Trib.) 2158, 2011 PTD (Trib.) 1010, 2011 PTD (Trib.) 1680, 2011 PTD (Trib.) 2086, 2014 PTD (Trib.) 1566.(Emphasis supplied by me) 7. The Board has not delegated powers to the respondent No. 2 C under the provision of Sections 32 and 79 of the Customs Act, 1969, which are incorporated in the contravention report and were invoked in the show-cause notice by respondent No. 3 because Section 32 speaks about (false statement, error etc.) and Section 79 (Declaration and Assessment for Home Consumption Warehousing) and is a machinery Section and define the procedure for filing of GD by the importers. Whereas, for reopening of an appealable order, powers under Section 195 of the Customs Act, 1969 have been conferred on either the Collector of Customs or Board. Despite of no powers under Sections in discussion, the Officials of respondent No. 2 reopened the assessment order passed by competent authority under the provision of Section 80 and Rule 438 of the Act/Rules. The mode and manner in which the respondent No. 2 and his subordinates operates is nothing more than creating a situation of anarchy, which cannot be endorsed under any circumstances because this will encourage the other organs of the FBR to encroach the jurisdiction of another independent organ and exercise their powers despite non availability under the provision of the Act and the Rules and Regulation framed there-under. This blatant act of respondent No. 2 is nothing more than transgression of the powers of the authorities, powers to whom are vested under Sections 32 and 195 of the Customs Act, 1969 and notification No. S.R.O. 371(I)/2002 dated 15.06.2002. Therefore, detention/seizure and subsequently preparation of contravention report by respondent No. 2 and issuance of show-cause notice/passing of order-in- original by respondent No. 3 and piling there upon order-in-appeal by respondent No. 4 are without powers/ jurisdiction and lawful authority and as such null, void ab-initio and coram non judice. 8. Upon perusal of Section 30A of the Sales Tax Act, 1990 and Section 230 of the Income Tax
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Ordinance, 2001, I have observed that in the matter of Sales Tax and Income Tax, the legislature has established a separate watch dog authority namely Directorate General of Intelligence and Investigation -Inland Revenue. Officer of which have been delegated with the powers for exercising under the different provision of Sales Tax, 1990 and Income Tax Ordinance, 2001, through S.R.O. No. 776(I)/2001 dated 19.08.2011 and Section 207 of the Income Tax Ordinance, 2001. Despite having no powers under the provision of Sales Tax and Income Tax, the respondent No. 2 and his subordinate invariably encroach the jurisdiction of Director General of Intelligence and Investigation- Inland Revenue, which is an act of usurpation / transgression and renders the whole exercise right from detaining the goods till passing of order-in-original as without lawful authority and jurisdiction, hence void and ab-initio and of no legal effect and this has also been held by Superior judicial fora in countless reported judgments, reference is made to 2014 PTD 1733 Waseem Ahmed and others v. FOP and another, where it has been held in clear terms that "unless the officer of DGI&1)-FBR are not appointed and an officer of Inland Revenue, powers under the different subsection of the Sales Tax Act, 1990 can not be delegated through any SRO with that the Hon'ble High Court of Sindh declared Notification No. 775(1)/2011 ultra vires to the Sales Tax Act, 1990". 9. I have also noticed that the respondent No. 3 in the show-cause notice has invoked Sections 3, 4, 33 and 34 of the Sales Tax Act, 1990 and Section 148(1) of the Income Tax Ordinance, 2001 and that also intentionally, while ignoring the fact that although Section 3 of the Sales Tax Act, speaks about scope of tax and when that has to be paid and by whom, Section 4 denotes "zero rating" section 33 contains penal clauses applicable upon invoking of charging/relevant section of the Sales Tax Act, 1990 and Section 34 "Default Surcharge". none of the section are relevant in the case in question, being either machinery or out of context. Even otherwise, to take cognizance of the contravention of these section rest with the appropriate authority of Inland Revenue Services. Simultaneously, the invoked Section 148 of the Income Tax Ordinance, 2001 is also a machinery section by virtue of containing procedure for collection of Income Tax levied at import stage on the value determined either under Section 25 or with the application of valuation ruling issued by the Director, Directorate General of Valuation through express under Section 25A of the Act by the authorities expressed in subsection (8) of Section 148 of the Income Tax Ordinance, 2001.Therefore, no charges under these sections can be invoked, issuance of show-cause notice on the basis of irrelevant sections, renders it void and ab-initio and of no legal effect as held in reported judgment judgments Asst. Collector v. Khyber Elec. Lamps 2003 PTD 1275, D.G. Khan Cement v. Collector of Customs 2005 PTD 480, Caltex v. Collector 2003 PTD 1593, Union Playing Card Company v. Collector of Customs 2002 MLD 130, Atlas Tyres v. Addl. Collector 2002 MLD 180, State Cement v. Collector PTCL 2001 CL 558, Kashmir Sugar v. Collector 1992 SCMR 1898, Rose Color v. Chairman, CBR and 2013 PTD 813 Sarwar International v. Addl. Collector of Customs. 10. That it has also been contended that Respondent No. 3 has no mandate to issue show-cause notice in the matter of Sales Tax/Income Tax. Whereas, Respondents are of the view that incorporation of the word "tax" in Section 32(2) and (3) and 179 of the Act and the clarification issued by the Board vide. C.No.3(32)Tar-1/90 dated 06.08.2012 and legal opinion of Ministry of Law vide No. F.242/2012- Law.I dated 11.07.2012 is sufficient for assuming powers under the charging Sections of Section 11 of the Sales Tax Act, 1990 and 162(1) of Income Tax Ordinance, 2001. Upon perusal of Section 32(2) and (3) of the Customs Act, 1969, I have observed that although the word "tax" is available, this does not empowers the Respondent No. 3 to assume powers under the provision of Section 11(2) & (3) of the Sales Tax Act, 1990 and 162(1) of the Income Tax Ordinance, 2001 unless Legislature appoint him as "Officer of Inland Revenue/Commissioner of Income Tax", who have powers under these Sections to take cognizance in the matter relating to Sales Tax and Income Tax, it is to be noted that the word 'tax" used in Section 179 of the Act is for exercising powers on the basis of involved amount of duty and taxes by the appropriate adjudicating
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authority defined in subsection (1). Therefore despite of insertion of the word taxes, the adjudicating authority including the Respondent No. 3 has to issue show-cause notice within the respective applicable provision of the Customs Act, 1969 and not under the charging provision of Section 11 of the Sales Tax Act, 1990 and Section 162(1) of the Income Tax…
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