Full Judgment Text & Judicial Ruling

2021 P T D (Trib.) 1401 [Customs Appellate Tribunal] Before Jahanzaib Wahlah, Member Judicial-III Messrs IHSAN & SONS, KARACHI Versus The PRINCIPAL APPRAISER (R&D) MCC, (APPRAISEMENT-EAST), CUSTOMS HOUSE, KARACHI and 2 others Customs Appeal No.K-1512 of 2018, decided on 5th October, 2019. (a) Customs Act (IV of 1969)--- ----S.179---Power of adjudication---Exercise of power---Principle---Authority defined in S.179 of Customs Act, 1969, has to exercise the powers---Neither superior nor subordinate is empowered to assume powers of his superior or subordinates, unless Federal Board of Revenue is desirous of fixing or varying jurisdiction and powers of any officer of customs or a class of officers through a notification in official gazette as per expression of S.179(2) of Customs Act, 1969, assign or transfer any case to any officer of customs, irrespective designation or territorial jurisdiction. (b) Customs Act (IV of 1969)--- ----Ss.32(2)(3), 79, 80, 83, 179 & 193--- Customs Rules, 2001, Rr. 433, 438 & 442---Constitution of Pakistan, Art.4, 18 & 25---Notification SRO No.371(I)2002 dated 15-6-2002, serial No.3 (ii)---Re-assessment---Mis-declaration---Proof---Assessing Officer instead of accepting Goods Declaration preferred to inspect the goods and found them as per Declaration---Principal Appraiser re-examined the goods and imposed additional duty and taxes on the plea of mis-declaration---Additional Collector Customs (Adjudication) passed an order to confiscate the goods subject to redemption on payment of 20% fine---Validity---Consignment which had undergone process of passing assessment order under the provision of S.80 of Customs Act, 1969, and R.438 of Customs Rules, 2001 for levy of duty and taxes, which were paid and thereafter valid clearance order as contemplated in S.83 of Customs Act, 1969, and R.442 of Customs Rules, 2001, was passed by competent authority in exercise of powers vested upon him through notification SRO No.371(I)/2002, dated 15-6-2002---Such order was appealable order and could not be disturbed by any other authority including Principal Appraiser, Assessing Officer and Additional Collector Customs (Adjudication), with the exception of preferring an appeal under the provision of S.193 of Customs Act, 1969---No mis-declaration in material particular in regard to description, quantity, weight and value of goods in question was on record---Neither provision of S.32(2) nor (3) of Customs Act, 1969, were applicable---Without any exception, there was error, omission or misconstruction, made/done by custom officers attracting under the provision of S.32(3) of Customs Act, 1969--- Show cause notice could be issued by Principal Appraiser only as notified in serial No.3 (ii) of notification S.R.O. No.371(I)/2002, dated 15-6-2002 and none else---Assessing Officer wrongly created recovery / demand through re-assessment order on the direction of Principal Appraiser and Additional Collector Customs (Adjudication) passed order by usurping powers of his subordinate which was not permitted under law---Goods of same description and under the same PTC Heading and value were cleared even after framing contravention report as against the consignment in question---By giving differential treatment to importer the authorities acted in derogation of Arts. 4, 18 & 25 of the Constitution---Customs Appellate Tribunal endorsed the earlier assessment order and set aside the orders passed by Principal Appraiser and Additional Collector Customs (Adjudication), as no illegality was committed by appropriate authority---Description of any goods could not be stretched other actual description, only for the purpose of squeezing duty and taxes despite not leviable---Appeal was allowed in circumstances. Amir Siddiqui v. Federation of Pakistan and 3 others 2014 PTD 582 and Messrs O.S. Corporation v. FOP and others 2015 PTD 560 ref. Messrs Paramount International (Pvt.) Ltd. v. FOP and others 2014 PTD 1256; Collector of Customs and others CPLA No.105-K of 2014; Collector of Customs, MCC, Quetta v. Al-Habib Enterprises and Engineering and others 2019 PTD 1712; Messrs Smith Kline French v. Pakistan 2004 PTD 3020; The State v. Zia-ur-Rehman and others PLD 1973 SC 49; 2009 PTD 1083; PLD 1963 SC 663; PLD 1971 SC 184; PLD 1976 SC 514; 1983 SCMR 1232; 1984 CLC 1517; PLD 1995 Kar. 587; PLD 1992 SC 486; 2001 SCMR 103; 2004 CLC 373; PLD 2004 SC 600; PLD 2005 SC 842; 2009 PTD (Trib.) 1996; 2009 PTD 1112; 2010 PTD (Trib.) 832; 2010 PTD (Trib.) 1636; 2011 PTD (Trib.) 2114; 2011 PTD (Trib.) 2557; 2010 PTD 465 and PLD 2014 SC 514 rel. (c) Customs Act (IV of 1969)--- ----Ss.80(2)(3) & 83---Re-assessment--- Principle--- Re-assessment under S.80(3) of Customs Act, 1969, is permitted only after calling for documents as contemplated in S.80(2) of Customs Act, 1969, after clearance of goods in terms of S.83 of Customs Act, 1969, & R.442 of Customs Rules, 2001---After examination, if declaration transmitted and uploaded documents at the time of transmitting Goods Declaration under S.79(1) and R.433 of Customs Rules, 2001 or any information or statement so furnished by importer is found to be incorrect in respect of earlier assessment---In absence of availability of such ingredients, reassessment is not permitted Nadeem Ahmed Mirza, Consultant for Appellant. Waqas Ishtiaq, A.O. for Respondents. Date of hearing: 2nd September, 2019. JUDGMENT JAHANZAIB WAHLAH, MEMBER JUDICIAL-III.----Through this order, I intend to dispose off appeal bearing No.K-1512/2018 directed against Order-in-Original No.1213991 dated 30.10.2018 passed by Additional Collector of Customs, (Adjudication-II), Karachi (Respondent No.3). 2. Briefly fact of the case are that, the appellant is a commercial importer of motorcycle parts, who during the course of his business activities entered into contract with M/s. Chonguing Vehicle Imports and Exports Co., Ltd., China for import of 23900kgs of motorcycle parts, duly registered with Habib Metropolitan Bank, Karachi on 19.04.2018 vide No.HMBC/011/05/92. The beneficiary in fulfillment of that shipped those through invoice No.N356PK180410-2 dated 11.04.2018 and B/L No. COAU-706074996 dated 04.05.2018 inscribing therein that the goods are packed in 1448 cartons and stuffed in lx20" container. The appellant upon receipt of shipping documents delivered those to his clearing agent M/s. Khurram Brothers, Karachi CHAL No. 618 for transmitting Goods Declaration (GD) under the provision of Section 79(1) of the Customs Act, 1969 (Act) and Rule 433 of Sub-Chapter III of Chapter XXI of Customs Rules, 2001 (Rules), which he did and as per pre-requisite for availing the regime of Customs Computerized System (CCS) deposited upfront duty and taxes of Rs.2,251,431.00 vide cash No. C-KAPE-007529 on 12.06.2018, consequent to which GD was numbered as KAPE-HC-21786 of even date. The assessing officer upon receipt of GD on his workstation instead of completing the assessment under section 80 and Rule 438 of the Act / Rules, opted to get the goods examined first, to proceed with after adducing his opinion/reasoning for obtaining physical verification, transmitted that to the Deputy Collector of Customs, Group-VII, MCC of Appraisement-East (Respondent No.2), who gave his assent and referred that to the Deputy Collector of Customs, Examination, who marked that to the Officials of his choice selected as per devised/adopted criteria, who carried out physical verification as contemplated in Section 198 and Rule 435 ibid. Wherein, the goods were found in accordance with the declaration in all aspects and report so prepared was uploaded in the reservoir of GD sans any contradictory observation. The Assessing Officer upon appearance of that on his workstation, cross-checked that with the declaration transmitted under Section 79(1) and Rule 433, uploaded documents forming part of the declaration as defined in section 2(kka). Since, he was confident that nothing contrary to the declaration is apparent, he passed assessment order dated 19.06.2018 with the application of valuation ruling/value available in data base maintained by PRAL under Rule 110 of the period given in Rule 107(a), evident from his adduced observation reading as " ER & VR /assessed in the light of ER/VR/Data etc." in assessment note of each imported/assessed items. Thereafter transmitted view message of even date for payment of Rs.1,422,277.00 towards additional amount of duty and taxes, which were paid by the appellant on 05.07.2018, consequent to which inbuilt authority of the CCS passed clearance order dated 05.07.2018 under the provision of Section 83 and Rule 442 of the Act/Rules. When the clearing agent of the appellant approached terminal operator for obtaining delivery of the cleared goods, he was confronted with the fact that the Principal Appraiser (R&D) MCC of Appraisement-East (Respondent No. 1) has put an hold on the GD of the appellant, resulting in detention of the goods as per the contemplation of Section 186 of the Act. The clearing agent of the appellant rushed to the office of respondent No.1 and asked him for reasoning for putting an hold after out of charge of the consignment. His answer shocked the clearing agent, which was that he has a credible information that the appellant has committed an act of misdeclaration, not detected during the course of examination by the official and so by the assessing officer at the time of passing assessment orders. Hence, he is desirous to get the goods re-examined, on which agitation was tendered in strongest possible manner that neither he is empowered to put an hold on GD/detained consignment, nor either order/ obtain re-examination of the consignment of the appellant, which has already been cleared (out of charge) under the provision of section 83 and Rule 442 by the competent authority on the strength of valid assessment order passed under section 80 and Rule 438 by the authority defined in section 2(a) of the Act , in exercise of the powers vested upon him through SRO 371(I)/2002 dated 15.06.2002 in the absence of availability of enabling provision in the Act. The respondent No.1 put a deaf ear on the submission of appellant clearing agent and adamantly created re-examination, which was conducted and report so prepared was once again uploaded in the reservoir of GD, on the strength of which the assessing officer passed reassessment order dated 11.07.2018 for levy of duty and taxes, while adducing remarks in the assessment note of each item, available in column "AO remarks in fact No.(viii) of the memo. of appeal and in exhibits L to L17 at pages 50 to 84". On the strength of the same second view message for payment of Rs.1,734,398.00 towards further additional amount of duty and taxes was transmitted. The appellant restraint from paying that, in the light of the fact that in an identical case, where he paid the second communicated amount of duty and taxes, despite illegal and ab-initio, only for saving himself from the container detention/rental and terminal demurrage/storage charges accumulating mani-fold with each passing day. The respondent No.1, refused to lift the hold. Hence, appellant decided to wait for the next move of respondent No.1 adopt the policy of wait and see for waiting respondent No.1, which came into light, in the shape of contravention report framed by him on the basis of the reassessment order dated 11.07.2018 stating inter-alia that the appellant mis-declared, the description, quantity, PCT heading and value attracting the provision of Section 32(1)(2) of the Act, punishable under clause 14 of Section 156(1) ibid read with SRO 499(I)/2009 dated 13.06.2009 which was transmitted through Deputy Collector (R&D), who referred that to Additional Collector, Law , who offer after assenting transmitted to the respondent No.3. On the strength of which, he issued show-cause notice dated 16.07.2018 containing the same facts and the contravening provisions of the Act, as were narrated in the contravention report. Appellant advocate submitted a befitting reply dated 31.07.2018, against which she sought comment from respondent No.1, subsequently received, no copy of that was supplied to the appellant for submitting rebuttal/ rejoinder despite mandated under law. The respondent No.3, thereafter passed order dated 30.10.2018 without properly appraising the fact and proposition of law, through which she held the charges established as levelled in the show-cause notice and ordered confiscation of the goods, subject to redemption of those on payment of 20% fine of Rs.707,527.00, imposed penalty of Rs.300,000.00 and the amount of duty and taxes worked out by the assessing officer vide reassessment order dated 11.07.2018 on the order of respondent No.1. Paras 10 to 12 are relevant and are reproduced here-in-under for the purpose of easement: "10- After detail examination of the fact of the case, the undersigned is of the view that R&D being the watch dog of the Collectorate, has been vested with the powers to do any sought of inquiry and investigation in case of any credible information received under sections 32, 80 and 186 of the Act read with Rules 109, 438 and 442 of the Customs Rules, 2001. Section 168 empower an appraiser or principal appraised to detain any goods pending inquiry or investigation and Section 80(2) and (3) empowers the custom officer to check goods declaration filed by the respondent before as well as after release of the goods and can reassess the GD. In this particular case, though the automated system of WEEOC assigned the gate out role to the GD after reassessment but it was still not cleared by the R&D Section, of the Collectorate, which had applied a hold at terminal on the GD in fear of anticipated automated clearance. Since, the importer had accepted the reassessment done by R&D and paid the additional amount without any protest. It had practically accepted the mis-declaration and as such R&D was legally bound to detain the consignment and prepared contravention report against the importer, specially in the presence of 03 other consignments of the importer having exactly identical nature of mis-declaration. 11- The plea of the importer that the power of adjudication pertains to Collector stands no where as the word "involved in the section connotes amounts of duty and taxes short paid/evaded. The amount short paid/evaded by the importer on the offending goods mentioned in show-cause notice and assess at S.No. 13-18 of GD , in the instant case is Rs. 17,34,398.00 which is within the jurisdiction of Additional Collector and therefore correctly sent to undersigned. It is also important to mention here that total amount of duty and taxes levied in this GD is Rs.47,89,579.00 out of which importer had paid an upfront duty of Rs.2,251,431.00 paid on 12.06.2018 + 1st additional amount of Rs.14,27,277.00 paid on 05.07.2018 while the balance amount of Rs. 11,10,871.00 is yet to be recovered. The amount of duty and taxes of Rs.17,34,398.00 as shown in the show-cause notice is actually the amount of duty and taxes importer wanted to evade on the offending goods mentioned at S.No. 13-18 of GD and have an offending value of Rs.2,021,507.00 and on which redemption fine is to be levied under SRO 499(I)/2009 dated 13.06.2009, if the charge establishes. 12- Finally, the undersigned agree with the contention of the department that the importer has clubbed a bunch of different item with manipulated description under single assessable value i.e. US$. 1.45/kg weighing 9500 kg as a single item against PCT heading 8714.1090 as mentioned at Sr. No. 5 of the GD. The detected item by virtue of actual description did not cover under the declaration of the importer and are classifiable under PCT heading, which attracts additional custom duty besides statutory customs duty and are assessable on much higher value as compare to the value of US$ 1.45/kg, thus the importer by manipulating the description, classification and weight of the item attempted to deprive the government from its legitimate revenue to the tune of Rs.1734,398/-. The payment of additional duty and taxes by the importer after assessment by the Group and R&D without protest is a clear indication of the fact that the importer has confessed and accepted his crime of mis-declaration and evasion of duty and taxes. It is therefore, concluded that the charges levelled in the show-cause notice stands established. Accordingly, the offending goods are confiscated under clauses 14 and 14A of Section 156(1) of the Customs Act, 1969 for violation of provision of Sections 32(1), 32(2) and 79(1) ibid. However, an option is given to the importer to redeem goods under section 181 of the Customs Act, 1969 on payment of fine equal to 35% of the value of the offending goods to the tune of Rs.707,527/- (ascertained value of impugned goods of Rs.2,021,507/- (subject to the condition that the same are otherwise importable as per Import Policy Order in vogue as prescribed udder SRO No. 499(I)/2009 dated 13th June, 2009, in addition to any other leviable duty and taxes thereon. A penalty of Rs.300,000/- (Rs. Three hundred thousand only) is also imposed under clause 14 of Section 156(1) of the Customs Act, 1969 on the importer." 3. The appellant preferred the instant appeal on the basis of grounds enumerated therein, the consultant/advocates on the date of hearing argued the case strictly in accordance with those. No cross objections under Section 194A(4) of the Act have been filed within the stipulated period of 30 days by the respondent No.1, resultant, lost right of cross appeal within the contemplation of subsection (3) of aforesaid section. However, on the date of hearing representatives of respondents Nos.1 and 2 contended that the order passed by the respondent No.3 is correct in fact and law as evident from paras 10 to 12 of the order, which are self explanatory and proves the guilt of the appellant. Hence, same should be maintained an appeal be dismissed as of no substance and legal effect. 4. Rival parties heard and case record perused. It is just and proper to decide the vital aspects that as to whether respondent No.1 is empowered to put an hold on the GD /detain the consignment under the provision of Section 186 of the Act, which has been allowed to be released after passing of valid clearance order under the provision of Section 83 and Rule 442 on the strength of assessment order passed by the authority defined in section 2(a) under section 80 and Rule 438 of the Act/Rules, in exercise of the powers vested upon him through SRO 371(I)/2002 dated 15,06.2002. The respondent No.3 in para 10 of the order held that, that the respondent No.1 and his subordinates are empowered to put an hold on GD/detain the consignment in terms of section 186, upon having credible information of mis-declaration falling within the ambit of section 32 of the Act. Upon perusal of the record of the case, show-cause notice and impugned order, alleged credible information is not visible, instead confirmation to the effect is available that the consignment of the appellant was cleared after completion of codal formalities, i.e. conduction of examination, uploading of requisite documents in compliance to view message transmitted to him under Rule 437 and assessment order dated 19.06.2018, these exercises were carried out by the customs functionaries independently without any interaction either with appellant or his clearing agent. The said fact leave no occasion for the respondent No. 1 or his subordinate to put an hold on the GD/detain the consignment of the appellant under section 186 of the Act. Notwithstanding to the formation of R&D, otherwise illegal, being formed in the absence of availability of enabling provision in the Act, empowering Collector of Customs, to form/establish the said cell, parallel to Directorate General of Intelligence and Investigation-FBR (wateh dog) under the provision of 3A of the Act and delegation of power to its officials through SRO 486(I)/2007 dated 09.06.2007. When Collector of Customs is not empowered to form any section or cell on his own, similarly not empowered to delegate powers for functioning to the officers of the said cell/section. For safe guarding of the interest of Government, proper mechanism is available in different relevant sections of the Act. Therefore, any action taken should and ought to be within the devised frame work, not on the basis of personal understanding/opinion having no warrant of law. 5. For detention of any consignment by the authority empowered under entry 92 of SRO 371(I)/2002 dated 15.06.2002, adherence of expression of Section 186 is mandatory, which read as: 186: Detention of Goods pending payment of fine or penalty;-(1) when any goods or fine or penalty has been imposed, or while imposition of any fine or penalty is under consideration, or pending any inquiry or investigation, in respect of any goods such goods shall not be removed by the owner until such fine or penalty has been paid or such inquiry and investigation has been completed. (2) when any fine or penalty has been imposed in respect of any goods, the appropriate officer may detain any goods belonging to the same owner pending of such fine or penalty. Upon conscientious analysis of Section 186, it is observed that the said section comes into play during the course of imports, i.e. if any case has been adjudicated by the competent authority against an importer and through which he held the charges established as levelled in the show-cause notice and imposes fine and penalty, which importer has not paid or any inquiry or investigation in respect of any goods is under way for imposition of fine and penalty. The empowered officer can detain forthcoming consignment of the same owner/importer till the time fine and penalty are paid. The case of appellant is that against him, no order is infield, through which fine/penalty has been imposed upon him and that has not been paid or order so passed has not been assailed by him before the forum expressed in the Act. Neither any inquiry or investigation in respect of any of his imported consignment sans the instant is under way for decision for imposition of penalty. Resultant, his lawful imported/declared consignments after payment of leviable duty and taxes on the strength of assessment order passed by the authority under Section 80 and Rule 438 of the Act/Rules cannot be detained under any pretext by any officer of customs, respondent No. 1 is not exception as held by the Hon'ble High Court of Sindh in its judgments reported at 2014 PTD 582 Amir Siddiqui v. Federation of Pakistan and 3 others that "authorities could detained such goods in respect of which inquiry or investigation was pending and not the good 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 out 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 CA, 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 of 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 2015 PTD 560 Messrs O.S. Corporation v. FOP and others, "where no fine or penalty has been imposed or even under consideration the provision of Section 186 are not relevant --- the authorities acting on a hunch have detained goods as the exit gate, 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". Hence, in categorical terms I hold that putting an hold on GD/detaining of consignment of the appellant by the respondent No.1 is not only without lawful authority even jurisdiction and patently in derogation Section 186 of the Act and the law laid down by the Superior Judicial Fora. 6. The legislature through a money bill formed/established the Directorate General of Post Clearance Audit (DGPCA) by inserting 3DD in the Act and…

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