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Petitioner: BADAR COMPUTER ENTERPRISES VS Respondent: The DEPUTY COLLECTOR OF CUSTOMSHonorable Justice Muhammad Sajid AbbasiNadeem Ahmed Mirza,Zakaullah
2019 P T D (Trib.) 1045 [Customs Appellate Tribunal] Before Muhammad Sajid Abbasi, Member (Judicial-II) BADAR COMPUTER ENTERPRISES Versus The DEPUTY COLLECTOR OF CUSTOMS and 3 others Customs Appeal No.K-1783 of 2016, decided on 5th September, 2018.
(a) Customs Act (IV of 1969)---
----Ss. 186, 179, 168, 180, 83 & 80---Customs Rules, 2001 Rr. 438 & 442---Import Policy Order, 2013, Appendix G---S.R.O. No. 371(I)/2002, dated 15-06-2002---Detention of goods pending payment of fine or penalty---Power of adjudication---Seizure of things liable to confiscation---Show-cause notice---Checking of goods declaration by Customs---Clearance of goods---Assessment---Release of imported goods---Scope---Appellant imported consignment comprising of several kinds of fabric---Appellant filed goods declaration, assessing officer examined the goods and passed assessment orders---Inbuilt delegated authority of Customs Computerized System (CCS) passed clearance order in terms of S. 83, Customs Act, 1969---Appellant approached the terminal operator for delivery of goods who showed his inability to deliver due to the fact that Deputy Collector of Customs (Appraisement) had blocked the goods declaration---Appellant approached Deputy Collector of Customs (Appraisement) who informed him that goods in question seemed to be of Indian origin and re-examination was required---Re-examination was conducted and it revealed the same result as that of earlier assessment order---Deputy Collector of Customs (Appraisement) framed contravention report and forwarded the same to the Assistant Collector of Customs (Adjudication) for issuance of show-cause notice---Assistant Collector of Customs (Adjudication) confiscated the goods and imposed penalty equivalent to the value of goods---Collector of Customs (Appeals) dismissed the appeal---Validity---Consignment of an import could be detained under S. 186, Customs Act, 1969 after payment of leviable duty and taxes and order of clearance, if any adjudication order against the said importer was in field and wherein fine/penalty imposed upon him, had not been paid or in a case where contravention report had been framed in an under-clearance consignment for imposition of penalty---In absence of availability of both the conditions of S. 186, Customs Act, 1969 consignment of an importer could not be detained---No such order was available in the present case to the contrary the consignment of the appellant was detained by Deputy Collector of Customs (Appraisement) after passing of valid assessment/clearance order on the premise that the goods so imported seemed to be of Indian origin as against China---Detention under the said pretext was not permissible under the provision of S. 186, Customs Act, 1969---Deputy Collector of Customs (Appraisement) was not empowered to detain the consignment of appellant for seizing subsequently under S. 168(1), Customs Act, 1969, for preparation of contravention report and initiation of adjudication proceedings---Illegal act of Deputy Collector of Customs (Appraisement) rendered the entire exercise right from detention till passing of Order-in-Original and Order-in-Appeal without lawful authority and jurisdiction---Appellate Tribunal vacated the show-cause notice and set aside the order passed thereon.
Messrs O.S. Corporation v. FOP and others 2015 PTD 560 ref.
Amir Siddiqui v. Federation of Pakistan and 3 others 2014 PTD 582 fol.
(b) Customs Act (IV of 1969)---
----Ss. 3DD, 26A, 80, 179 & 180---Customs Rules, 2001, R. 438---S.R.O. No.500(I)/2009, dated 13-06-2009---Audit---Checking of goods declaration by customs---Power of adjudication---Jurisdiction---Procedure---Appellant imported consignment comprising of several kinds of fabric and filed goods declaration---Assessing officer examined the goods and passed assessment orders---Inbuilt delegated authority of Customs Computerized System passed clearance order in terms of S. 83, Customs Act, 1969---Appellant approached the terminal operator for delivery of goods who showed his inability to deliver on the ground that Deputy Collector of Customs (Appraisement) had blocked the goods declaration---Appellant approached Deputy Collector of Customs (Appraisement) who informed that goods in question seemed to be of Indian origin and re-examination was required---Re-examination was conducted which revealed the same result as that of earlier assessment order---Despite the very fact Deputy Collector of Customs framed contravention report and forwarded the same to the Assistant Collector of Customs (Adjudication) for issuance of show-cause notice---Assistant Collector of Customs (Adjudication) confiscated the goods and imposed penalty equivalent to the value of goods---Validity---Directorate General of Post Clearance Audit and its officers were delegated powers through S.R.O. No. 500(I)/2009, dated 13-06-2009 for conducting audit of import books of account which included every aspect of declaration made by the importer and assessment order passed by the competent authority---Directorate General of Post Clearance Audit could prepare audit observation and forward it to the importer for clarification and if the reply failed to settle the issue, frame contravention report and forward the same to the Clearance Collectorate which was to forward it to the respective Collectorate of Customs Adjudication for issuance of show-cause notice and passing of order-in-original---Deputy Collector of Customs (Appraisement) and Assistant Collector of Customs (Appraisement) in the present case, had assumed the powers of officials of Directorate General of Post Clearance Audit and conducted the post clearance audit of the goods declaration of importer---Preparation of contravention report by Deputy Collector of Customs (Appraisement) was without lawful authority and superstructure built thereon was void ab initio and coram non judice.
(c) Customs Act (IV of 1969)---
----Ss. 180, 32 & 32A---SRO No. 886(I)/2012, dated 18-07-2012---Show-cause notice---Jurisdiction---False statement---Fiscal fraud---Scope and imported consignment comprising of several kinds of fabric and filed goods declaration---Assessing Officer examined the goods and passed assessment orders---Inbuilt delegated authority of Customs Computerized System passed clearance order in terms of S. 83, Customs Act, 1969---Appellant approached the terminal operator for delivery of goods who showed his inability to deliver in view of the fact that Deputy Collector of Customs (Appraisement) had blocked the goods declaration---Appellant approached Deputy Collector of Customs (Appraisement) who informed that goods in question seemed to be of Indian origin and re-examination was required---Re-examination was conducted and it revealed the same result as that of earlier assessment order---Despite the very fact Deputy Collector of Customs (Appraisement) detained the consignment, framed contravention report and forwarded the same to the Assistant Collector of Customs (Adjudication) for issuance of show-cause notice---Assistant Collector of Customs (Adjudication) confiscated the goods and imposed penalty equivalent to the value of goods---Validity---Federal Government through SRO No. 886(I)/2012, dated 18-07-2012 had formed Collectorate of Customs Adjudication for adjudication of cases wherein revenue loss to the exchequer was visible---Present case fell within the domain of Collectorate of Customs Adjudication and contravention report was rightly forwarded by Deputy Collector of Customs (Appraisement) to the Collectorate of Customs Adjudication but Assistant Collector of Customs (Adjudication), in the present case, laid hands on the exclusive jurisdiction of Collectorate of Customs Adjudication---Said act of Assistant Collector of Customs (Adjudication) tantamounted to transgression which rendered the entire proceedings without jurisdiction, void ab initio and coram non judice.
Major Syed Walayat Shah v. Muzaffar Khan and 2 others PLD 1971 SC 184; Omer and Company v. Controller of Customs, (Valuation): 1992 ALD 449(1); Karachi AAA Steel Mills Ltd. v. Collector of Sales Tax and Central Excise Collectorate of Sales Tax 2004 PTD 624; PLD 1976 SC 514; Ali Muhammad v. Hussain Buksh and others PLD 2001 SC 514; Land Acquisition Collector, Nowshehra and others v. Sarfraz Khan and others 2006 PTD 2237; Pak Suzuki Motors Company Ltd., Karachi v. Collector of Customs, Karachi 2009 PTD (Trib.) 1996 and 2010 PTD (Trib.) 832 ref.
(d) Customs Act (IV of 1969)---
----Ss. 179 & 180---S.R.O. No.371(I)/2002 dated 15-06-2002---Power of adjudication---Show-cause notice---Pecuniary jurisdiction---Scope---Assistant Collector of Customs issued show-cause notice and confiscated appellant's imported goods---Validity---Expression of S. 179, Customs Act, 1969, was very clear in regards to determination of the powers of the Adjudicating Authority on the basis of amount of duty and taxes involved excluding the conveyance and not the amount of evaded duty and taxes---Present case involved amount of Rs. 22,00,880, competent authority was Additional Collector of Customs to adjudicate the case of said amount under clause (ii) of S. 179(1), Customs Act, 1969---Assistant Collector of Customs had issued the show-cause notice while usurping the powers of his superiors, show-cause notice, in circumstances, was issued without lawful authority and jurisdiction.
(e) Customs Act (IV of 1969)--- ----Ss. 80, 2(a), 4 & 180---Import Policy Order, 2013, Appendix-G & para 5(B)(iii) Sr. Nos. 357 & 358,---S.R.O. No.371(I)/2002, dated 15-06-2002---Import of goods of Indian origin---Checking of goods declaration---Adjudicating Authority---Powers and duties of officers of Customs---Show-cause notice---Scope---Assistant Collector of Customs issued show-cause notice and confiscated appellant's imported goods---Validity---Cases of goods of Indian origin had to be dealt with by competent authority at the time of passing assessment order---Principal Appraiser had the jurisdiction in terms of S.R.O. No. 371(I)/2002, dated 15-06-2002 to adjudicate such cases---Show-cause notice issued by Assistant Collector of Customs was usurpation of the powers of his subordinate, the Principal Appraiser, which he could only exercise under S. 4, Customs Act, 1969, during the course of administrative work and not for the purpose of adjudication---Show-cause notice was held to have been issued without lawful authority and jurisdiction.
Messrs Paramount International (Pvt.) Ltd. v. FOP and others 2014 PTD 1256; Izhar Alam Farooqi Advocate v. Sheikh Abdul Sattar Lasi and others 2008 SCMR 240; Sardar Ahmed Yar Khan Jogzai v. Province of Balochistan 2002 SCMR 1022; Faqir Abdul Majeed Khan v. District Returning Officer and others 2006 SCMR 1713; Ali Muhammad v. Chief Settlement Commissioner 2001 SCMR 1822 rel.
(f) Customs Act (IV of 1969)---
----Ss.180, 156, 25 & 25A---Sales Tax Act (VII of 1990), S. 33(11)(c)---Income Tax Ordinance (XLIX of 2001), S. 148---Show-cause notice---Confiscation of goods---Transaction value---Power to determine customs value---Collection agent---Scope---Assistant Collector of Customs issued show-cause notice and confiscated appellant's imported goods---Assistant Collector of Customs invoked S. 11C of Sales Tax Act, 1990 and S. 148, Income Tax Ordinance, 2001---Validity---No Section by the number 11C was available, instead clause 11(c) was present in S. 33 of Sales Tax Act, 1990, which was a machinery section---Likewise, S. 148, Income Tax Ordinance, 2001 was also a machinery section as it contained procedure for collection of Income Tax levied at import stage on the value determined either under S. 25, Customs Act, 1969 or with the application of valuation ruling issued by the Directorate General of Valuation---No charge under said sections of the Sales Tax Act, 1990 and Income Tax Ordinance, 2001, could be invoked---Show-cause notice was held to be void ab initio and of no legal effect.
Asstt. 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 and Sarwar International v. Addl. Collector of Customs 2013 PTD 813 ref.
(g) Customs Act (IV of 1969)---
----Preamble---Federal Board of Revenue and Ministry of Law and Justice could only give opinion and have no mandate to interpret the provision of an Act or amend its provisions---Judicial fora could only interpret the provisions of statute.
Messrs Lever Brother Pakistan Ltd. v. Customs Sales Tax and Central Excise Appellate Tribunal, Karachi 2005 PTD 2462 and Qazi CNG Station, Gujrat and another v. Directorate General of Intelligence and Investigation-FBR, Karachi and 2 others 2016 PTD (Trib.) 107 rel.
(h) Customs Act (IV of 1969)---
----Ss. 179, 202 & 180---Sales Tax Act (VII of 1990), Ss. 11 & 48---Income Tax Ordinance (XLIX of 2001), Ss.140 & 162---Show-cause notice---Recovery of government dues---Recovery of arrears of sales tax---Recovery of tax from persons holding money on behalf of a taxpayer---Collection agents---Power of adjudication---Scope---Customs Collectorates do not have the power to collect Sales Tax and Income Tax as duty at import stage---Customs Collectorates can recover the amount of Sales Tax and Income Tax upon receipt of notice from the Officer of Inland Revenue and Commissioner of Income Tax, in terms of S. 48 of Sales Tax Act, 1990 & S. 140 of Income Tax Ordinance, 2001 for recovery of the adjudged amount of Sales Tax and Income Tax after due process of law---Clearance Collectorates have the authority to collect Sales Tax and Income Tax at import stage in the capacity of collecting agents and can recover escaped/short paid customs duty and regulatory duty levied on the imported goods but do not have the powers to adjudicate cases of short recovery of Sales Tax and Income Tax.
Messrs AGP (Pvt.) Ltd. v. Additional Collector of Customs, Karachi 2011 PTD (Trib.) 110; Messrs Global Marketing Services and another v. Model Customs Collectorate and another 2010 PTD (Trib.) 2086; Collector of Customs, Islamabad v. Global Marketing Services and another, v. Model Customs Collectorate and another SCRA No. 01/2010; Al-Haaj Industrial Corporation (Pvt.) Ltd., Peshawar v. Collector of Customs (Appraisement) 2004 PTD 801; Messrs Lucky Cement Ltd. v. Federation of Pakistan and others C.P. No. D-216/2013; Shujabad Agro Industry (Pvt.) Ltd. v. Collector of Customs and 8 others 2014 PTD 1963; Muhammad Measum and others v. FOP and 2 others 2015 PTD 702; Asif Textile Trading v. Directorate General I&I-FBR 2016 PTD (Trib.) 969; Phillip Morris (Pakistan) Ltd, Karachi v. Additional Collector of Customs 2016 PTD (Trib.) 1008; Al-Fajer Associates v. Directorate General of Intelligence and Investigations-FBR 2016 PTD (Trib.) 2125; Pepsi Cola Export Corporation, Karachi v. Directorate General of Post Clearance Audit and 2 others Appeal No.K-1635/2014; Messrs M.R. Sons, Karachi v. Directorate General of Intelligence and Investigations-FBR Appeal No. K-1029/2016; Messrs Muhammad Imran, Karachi v. Directorate General of Intelligence and Investigations-FBR Appeal No. K-1030/2016; Messrs Rightway Trading Company, Karachi v. Deputy Collector of Customs, MCC of Appraisement-West and 3 others Appeal No. K-1343/2015; Messrs Zubair Wali Ahmed Zai Ltd. v. The Principal Appraiser, Directorate of Transit Trade and others 2016 PTD (Trib.) 2463; Singer Pakistan Ltd. v. Collector of Customs and 2 others 2017 PTD (Trib.) 481; 1994 CLC 1612, 1990 PTD 29, 2005 PTD 23; 2007 PTD 250; XEN Shahpur Division v. Collector of Sales Tax (Appeal), Collectorate of Customs, Federal Excise and Sales Tax, Faisalabad 2008 PTD 1973 and DGI&I and others v. Al-Faiz Industries (Pvt.) Ltd. and others 2006 SCMR 129 ref.
(i) Customs Act (IV of 1969)---
----Ss. 2(a), 32, 80, 83, 193, 193A & 195---Customs Rules, 2001, R. 438---S.R.O. No. 371(I)/2002, dated 15-06-2002---Adjudicating authority---Assessment---Checking of goods declaration by Customs---Clearance of goods---Appeal---Procedure---Show-cause notice---Jurisdiction---Past and closed transaction---Scope---Appellant imported consignment comprising of several kinds of fabric---Appellant, importer filed goods declaration; Assessing Officer examined the goods and passed assessment orders---Inbuilt delegated authority of Customs Computerized System passed clearance order in terms of S. 83, Customs Act, 1969---Appellant approached the terminal operator for delivery of goods who showed his inability to deliver due to the fact that Deputy Collector of Customs (Appraisement) had blocked the goods declaration---Appellant approached Deputy Collector of Customs (Appraisement) who informed that goods in question seemed to be of Indian origin and re-examination was required---Re-examination was conducted and it revealed the same result as that of earlier assessment order---Despite the very fact Deputy Collector of Customs (Appraisement) detained the consignment under S. 186, Customs Act, 1969 on the basis that the goods were of Indian origin and as such were not importable under Appendix G to the Import Policy Order, 2013---Deputy Collector of Customs (Appraisement) framed contravention report and forwarded the same to the Assistant Collector of Customs (Adjudication) for issuance of show-cause notice---Assistant Collector of Customs (Adjudication) confiscated the goods and imposed penalty equivalent to the value of goods---Collector of Customs (Appeals) dismissed the appeal---Validity---Once an assessment order was passed, it could not be disturbed by any authority by preparing contravention report---Only course available to the Deputy Collector of Customs (Appraisement) was to challenge the assessment order before Collector of Customs (Appeals)---Collector of Customs (Appeals) could issue show-cause notice to the appellant/importer under S. 32, Customs Act, 1969---Instead of adhering to the prescribed method, Deputy Collector of Customs (Appraisement) reopened the assessment/ clearance order under S. 195, Customs Act, 1969, under which no powers were vested either with Deputy Collector of Customs (Appraisement) or Assistant Collector of Customs (Adjudicated)---By virtue of non-filing of appeal against the assessment order, transaction attained finality and became past and closed transaction which could not be disturbed---Appellate Tribunal vacated the show-cause notice and set aside the order passed thereon.
Messrs Paramount International (Pvt.) Ltd., Karachi v. Secretary Revenue Division 2014 PTD 1256; Messrs Smith Kline French v. Pakistan 2004 PTD 3020 and Messrs World Trade Corporation v. Central Board of Revenue 1989 MLD 4310 rel.
(j) Customs Act (IV of 1969)---
----S. 180--- Show-cause notice--- Issuance--- Scope--- Orders of adjudication having been passed outside the charter of show-cause notice were declared to have been passed without lawful authority.
Collector Excise and Land Customs and others v. Rehm Din 1987 SCMR 1840; Adam v. Collector of Customs, Karachi PLD 1969 SC 446; Muhammad Sadqain v. Collector of Customs (Appraisement) 2006 PTD 2742 and Messrs Exide Pakistan Ltd. v. Deputy Collect of customs (Adjudication-III), Karachi 2004 PTD 1449 ref.
Nadeem Ahmed Mirza for Appellant.
Zakaullah, A.O. for Respondents.
Date of hearing: 15th August, 2018.
JUDGMENT MUHAMMAD SAJID ABBASI, MEMBER (JUDICIAL-II): Through this order, I, intend to dispose off Appeal bearing No. K-1783/ 2016 directed against Order-in-Appeal No. 857/2016 dated 25.08.2016 passed by Collector of Customs (Appeals), Karachi (maintaining the Order-in-Original No. 509605 dated 21.04.2016 passed by Assistant Collector of Customs, Adjudication, MCC of Appraisement-West, Karachi.
2. Brief facts of the case are that the Appellant imported a consignment comprising of (i) 7800 kgs of Polyester Grey Unfinished Fabric (ii) 1500 kgs Polyester Shirting Fabric and (iii) 1200 Kgs of Viscose Blended Fabric of China origin @ US$ 3 and 4/kg respectively C&F, Karachi from Messrs Bello and Grasso General Trading LLC Dubai, UAE on credit i.e. remittance to be made 60 days after the clearance of the goods. The seller in accordance with the terms and conditions of the contract, ordered the goods from the exporter in China namely Messrs Shoaxing Changfang Textile Co. Ltd., with the direction to get the goods manufactured as per specification and thereafter ship those directly to Appellant in Pakistan and the documents corresponding to those to him for onward dispatching by him to the Appellant for remitting the contracted amount, the direction was complied with and the seller thereafter dispatched the invoice, packing list, B/L and Certificate of origin to the Appellant. On the strength of which the Appellant transmitted Goods Declaration, (The GD) to the MCC of Appraisement (West) under Section 79(1) of the Customs Act, 1969 (The Act) and Rule 433 of Sub-Chapter III of Chapter XXI of Customs Rules, 2001 (The Rules) and as per pre-condition for availing the regime of Customs Computerized System (CCS), deposited upfront duty and taxes of Rs. 883,581.00 in National Bank of Pakistan, consequent to which GD was numbered KAPW-HC-103545-09122015. Upon appearance of the GD on his desktop, the nominated Assessing Officer, instead of completing the assessment on the basis of the declaration and scanned documents, opted to get the goods examined first under the provision of Section 198 and Rule 435 of the Act/Rules and to proceed with, adduced his opinion and referred it to the Deputy Collector, Group-IV, MCC of Appraisement (West), Karachi (Respondent No. 2), who assented and routed it to the Deputy Collector of Customs, KICT of MCC of Appraisement (West), who marked it to the examining official on selection criteria basis. Who verified the declaration and posted the report in the reservoir of the GD. Upon receipt of which the nominated Assessing Officer for further confirmation transmitted view message under Rule 437 to the appellant for uploading of invoice and packing list, in compliance to the direction Appellant uploaded those in the reservoir of GD. Thereafter, the competent authority defined in Section 2(a) of the Act, in exercise of the powers vested upon him through S.R.O. 371(I)/2002 dated 15.06.2002 completed the assessment with the application of Valuation Rulings and passed assessment orders under the provision of Section 80 and Rule 438 of the Act/ Rules and transmitted view message for payment of additional amount of duty and taxes of Rs. 355,694.00, which appellant deposited on 17.12.2015, consequent to which the inbuilt delegated authority of the CCS passed clearance order in terms of proviso of Section 83(1) reading as "when the owner of any goods entered for home consumption and assess under Section 80 has paid the import duty and other charges, if any in respect of the same the appropriate officer, if he is satisfied that the import of the goods is not prohibited or in breech of any restriction or condition applying to the import of such goods, may make an order for the clearance of the same" and Rule enunciating "Customs release message will be electronically communicated to the importer, his agent and the Terminal Operator. The goods will be release by the terminal operator subject to fulfilling of any condition specified Customs in electronic message to the terminal operator. The Terminal Operator shall submit all collected documents requisitioned through electronic message to the customs at the end of the day" of the Act/Rules. The clearance order view message dated 17.12.2015 with clarity validated the fact that the entire duty and taxes levied on the consignment in accordance with the assessment order passed under Section 80 of the Act have been collected and delivery/gate out been allowed without any condition i.e. subject to condition of collection of any document as contemplated in Rule 442 ibid. That on the strength of the said message appellant's representative, after obtaining delivery order from the shipping company, approached the Terminal Operator for payment of their charges, who displayed their inability to do so on the plea that the Deputy Collector of Customs (R&D), MCC of Appraisement (West) (Respondent No. 1) has blocked the GD. The Appellant thereafter rushed to him, who informed the Appellant that it is his apprehension that the duty and taxes are not being paid correctly due to an erroneous assessment and that the goods in question seem to be of Indian origin instead of Chinese, for which re-examination is desired upon, which Appellant agitated against forcefully but of no avail. The Respondent No. 1 conducted 2nd examination, which revealed the (same results as of earlier examination, for which GD was blocked and consignment was…
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