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Petitioner: TAYIABA KHATOON VS Respondent: The COLLECTOR, COLLECTOR OF CUSTOMS (APPEALS)Honorable Justice Ghulam AhmedSardar Muhammad Ishaque,Ghulam Yasin
2014 P T D (Trib.) 1
[Customs Appellate Tribunal, Karachi]
Before Ghulam Ahmed, Member (Technical-II)
Messrs TAYIABA KHATOON and others
Versus
The COLLECTOR, COLLECTOR OF CUSTOMS (APPEALS) and 2 others
Customs Appeals Nos.K-736 to K-740 of 2011, decided on 13th September, 2013.
(a) Customs Act (IV of 1969)---
----Ss. 32, 32-A, 131(i)(a) & 156(1), (14), (14-A)---Customs Rules, 2001, R.444---Show-cause notice---Mis-declaration---Fraudulent refund/ rebate---Appellant exported consignment of Adhesive Decorative Laminated Sheets in different sizes and colours and also received drawback amounts---Show-cause notice was issued to appellant alleging that the quantity of goods claimed to be exported was much higher than the quantity of identical goods normally being exported per container by other exporters---Appellant was found guilty of mis-declaration and non-genuiness of exports in order to get fraudulent refund and rebate---Additional Collector of Customs after serving show-cause notice found that rebate claimed by appellant was illegal, therefore ordered for recovery of drawback/rebate amount along with penalty---Appellant being aggrieved by order-in-original filed appeal before Collector of Customs (Appeals), the same was rejected---Contention of the appellant was that goods declared in the export goods declaration were allowed to be shipped by the MCC and PaCCS after terming the declaration as correct and examination of the goods---Appellant had not submitted any fake documents, even otherwise no objection with regard to documentation or description of the goods could be raised post exportation---Validity---Appellant was under obligation to transmit correct and complete particulars of the goods while transmitting "Goods Declaration" with PACCS---E-form submitted by the appellant along with "Goods Declaration" was not traceable by the Bank---Declaration of the goods exported by the appellant was vague---Appellant had not intentionally declared the sizes of laminated sheet in the declaration of goods exported, and so the square meter which was a must as stuffing of laminated sheet in the container was on the basis of CBM not on weight, for deceiving the system---Grammage of sheet had been incorrectly declared---Declaration with regard to description, quantity and value was false in material particular, the same had attracted proceedings under the respective applicable provisions of the Customs Act, 1969---Goods had not shipped physically as declared, therefore the appellant was not entitled for duty drawback---Impugned orders were upheld---Appeal was dismissed.
(b) Customs Act (IV of 1969)---
----Ss. 32, 32-A, & 156(1), (14), (14-A)---Customs Rules, 2001, Rr.459 & 460---Show-cause notice---Mis-declaration---Fraudulent refund rebate---Finalized case of duty draw back---Past and closed transaction---Scope---Appellant was found guilty of mis-declaration and non-genuiness of exports in order to get fraudulent refund and rebate---Customs authorities after serving show-cause notice, ordered for recovery of unlawful drawback along with penalty---Appeal by appellant before Collector of Customs (Appeals) was dismissed---Contention of the appellant was that the transaction was past and closed and had attained finality and as such the subject matter could not be re-opened, therefore the impugned orders were illegal---Validity---Customs authorities had power to reassess the goods declaration any time during five years of clearance of the goods for export along with a fine---Customs authorities had power to conduct audit of the finalized cases of duty drawback---Assessing officer had declined the application of duty drawback, to the contrary the duty draw back had been sanctioned fraudulently---Plea raised by the appellant was misconceived---Impugned orders were upheld---Appeal was dismissed.
(c) Administration of justice---
----One who seeks equity must have equity in his favour.
West Pakistan Tanks Terminal (Pvt.) Ltd., v. Collector of Customs Appraisement Karachi 2007 SCMR 1318 rel.
(d) Customs Act (IV of 1969)---
----S. 32---Show-cause notice---Practice of serving draft show-cause notice ---Scope---Additional Collector of Customs had signed the draft show-cause notice forwarded by the official of Post Clearance Audit or prepared on the strength of contravention report received by the Collectorate without going through the provisions of Acts/Rules---Practice of serving draft show-cause notice was depreciated and failed the test of judicial scrutiny.
Messrs Zeb Traders v. Federation of Pakistan 2004 PTD 369 rel.
Sardar Muhammad Ishaque (Advocate) for Appellant.
Ghulam Yasin (P.A.) for Respondent No.2
Faiz Mudassar (A.O.) for Respondent No.3.
Date of hearing: 10th September, 2013.
ORDER
GHULAM AHMED MEMBER (TECHNICAL-II).---By this order, I intend to dispose of above captioned (5) Customs Appeals filed by the appellants against Orders-in-Appeals Nos. 5288 to 5292 of 2011 dated 14-5-2011 passed by respondent No. 1. These appeals have identical issues of law and facts therefore, being heard, dealt with and disposed of simultaneously through this common order in the light of judgment of the Hon'ble High Court of Sindh in Custom Reference No. 157 of 2008 S.M. Naqi son of Syed Muhammad Hussain, Karachi v. Collector of Custom (Adjudication-1) and others, Karachi.
2. Brief facts of the case are that Directorate General of Post Clearance Audit, Karachi has reported vide its Contravention Report C. No. PCA/951/2009/453 dated 22-2-2010, that Messrs Tayiaba Khatoon, (NTN 2094960), A-200, Sector 11-B, North Karachi, have filed duty drawback claims vide Goods Declaration (GD) bearing CRN No.E-G-560037-060308 (one container), against the alleged expert of goods declared as Adhesive Decorative Laminated Sheets in Different Sizes and Colours and E-form Nos. ABL-9774, accordingly, the cheques bearing No. 157979 amounting to Rs.1517813 as drawback amounts were also received by Messrs Tayiaba Khatoon (NTN 2094960), A-200, Sector 11-B, North Karachi. The aforementioned claims however, revealed the following discrepancies in the referred claims: (i) that the concerned bank has confirmed that no remittance has been received against the referred E-forms, confirming mis-declaration and non-genuineness of exports. (ii) That the quantity of goods claimed to be exported i.e. 90,000 sheets is much higher than the quantity of identical goods normally being exported per container by other exporters leading to the conclusion that the quantity of goods was misdeclared. Similarly the declared values of the consignments, i.e. US $ 248,625 (GD 569937-060308) is much higher than normal export values of the goods per container (iii) That the claimant has attempted to deceive the computerized clearance system by adding nominal quantities of irrelevant items e.g. cotton dyed jean pants suits etc in the CRN. (iv) That the declared unit values are exorbitantly high and not in consonance with the value of the raw material used in the manufacture, both on per unit and per kg basis. (v) That the weight or the sheet is declared to be about 177 grams/sheet which is abysmally low for a decorative laminated sheet (vi) That the rebate claimed on Laminated Sheets was inadmissible because as per the declared weight per sheet, the grammage of sheets allegedly exported did not conform to the specification of the imported raw materials required to be used in the manufacture. (vii) That the cheque of duty drawback amount has been received by hand by Messrs Tayiaba Khatoon and not through AD post/courier at their business address as per Rules. (viii) That the address mentioned on the claims is found to be fictitious as Messrs Tayiaba Khatoon /her unit have been found non-existent at the given address upon physical verification.
3. The Additional Collector of Customs, MC of PaCCS Karachi, did not agree with replies of respondent and passed the Order-in-Original No. 14 of 2011 dated 12-2-2011 reproduced as under:--
"I have gone through facts and record of the case and the submissions made by both the sides. The respondents have raised some technical issues which need to be discussed here. I do not agree with the contention of the respondents that the export of goods in question is a past and closed transaction are cannot by reopened. The section 32 specifically empowers the customs officers to raise the demand in cases of finalized assessment where due duties and taxes were not deposited or undue refund was allowed. Moreover, reference to section 29 of the Customs Act, 1969 is also irrelevant as the same relates to amendment of Goods Declaration (GD) by the importer and does not rule out raising of demand by the department after clearance of goods as a result of short payment of duty and taxes or payment of refund which was not due. The respondents contest the issuance of show-cause notice under section 32 of the Customs Act, 1969, and maintain that the assessment finalized under section 83 of the Customs Act, 1969, can only be reopened under section 195, ibid. The contention is not admitted on the ground that section 195 does not preclude any other action which could be taken under law for recovery of unpaid or short-paid amount of duty or tax or refund not due. Section 32 of the Customs Act, 1969, is to be invoked once the assessment has been finalized and goods have been cleared. If the contention of the respondents is accepted, section 32 would become redundant and such interpretation of laws is not acceptable. It is thus held that the show-cause notice has been validly issued under section 32 of the Customs Act, 1969. The respondents also maintain that section 32 of the Customs Act, 1969, is not attracted as no case for mis-declaration is made out. This is not correct. The sections 32 and 32A relate to cases where false and forged document are submitted before Customs. In this case fake E-form was submitted. Moreover, various particulars of goods such as weight have been found to be incorrect. Therefore, both sections 32 and 32A are relevant. In this case, mis-declaration of classification was of material nature and calls for action under section 32(1) and (2) and imposition of penalty. The respondents' contention that the audit report of Post- Clearance Audit has not been provided is also baseless as the all relevant details have been provided in the show-cause notice and contravention report which was part of the show-cause notice and can also be treated as audit report. They also maintain that in some cases the refund/rebate WHS allowed on the directives of Honourable Federal Tax Ombudsman. It is observed that Honourable Federal Tax Ombudsman deals with cases of maladministration and usually orders to expedite rebate/ drawback cases on merit. The office of Federal Tax Ombudsman does not decide issues of admissibility in refund/rebate cases. This contention, therefore, does not establish the correctness of the rebates/drawbacks obtained. The other contentions of the respondents on technical grounds have been found irrelevant to the facts of the case. Coming to the merits of the case, it is noted that the departmental case is/mainly based on bank reports regarding incorrectness of the E-forms declared by the respondents. In this case, Messrs Emirates Global Islamic Bank vide letter dated 25-11-2009 and Messrs Habib Metropolitan Bank Ltd. vide letter dated 23-12-2009 have intimated about the incorrectness of the E-forms involved. After taking into consideration the factual and legal motion , I am convinced that the exporter has forged/mis-declared the value of Form-E on the Goods Declarations involved in order to get fraudulent refund and rebate. This fact supported by other corroborative facts such as excessive value and quantity as compared to averages as mentioned in para 2 above, leads to the conclusion that the drawback/rebate obtained in this case was not admissible. Therefore, it is ordered the demand of Rs.4,858,994 is established and the same is ordered to be recovered from the respondents. A penalty of Rs.50,000 is also imposed on the importer under Clauses, 14 and 14A of section 156(1) of Customs Act, 1969."
4. Being aggrieved and dissatisfied with the Order-in-Original No.14 of 2011 dated 12-2-2011, the appellant filed an appeal before the Collector of Customs (Appeals) Karachi, who rejected the same on the following grounds:--
I have thoroughly examined the entire case record and given very careful consideration to the arguments advanced before me. In terms of the provisions of law contained in section 195-B of The Act, the Collector (Appeals) is not allowed to proceed with an appeal unless the appellant deposits the adjudged amount of duty/taxes and/or penalty or the Collector (Appeals) himself dispenses with such deposit. The aforesaid provisions of law are reproduced as under:-
"195-B. Deposit, pending appeal, of duty demanded or penalty levied. Where, in any appeal under this Chapter, the decision or order appealed against relates to any duty demanded in respect of goods which are not under the control of the customs authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, pending the appeal, deposit with the proper officer the duty demanded or the penalty levied:
[Provided that where in any particular case the Collector (Appeals) or the Appellate Tribunal is of the opinion that the deposit of duty demanded or penalty levied would Cause undue hardship to such person, the Collector (Appeals) or, as the case may be, the Appellate Tribunal may dispense with such deposit subject to such conditions as he, or it, may deem fit to impose so as to safeguard the interest of revenue.]
[Provided further that an order dispensing with such deposit shall, without effecting the appeal, cease to have effect on the expiration of a period of six months following the day on which it is made unless the appeal is finally decided earlier and nothing in the order dispensing with such deposit which as ceased to have effect shall debar the appropriate officer to recover the amount of the duty demanded or penalty levied.]
In the instant case, it was verbally communicated to the learned counsel that since the appellant did not have any case on merit, the requirement of deposit of the adjudged of fraudulently drawn amount of duty drawback and penalty could not be dispensed with. It is, however, reiterated that the goods on which duty drawback to the Rs.15,17,813 was drawn by the appellant had been exported against fake Form and sale proceeds of the same had also not been realized. The learned counsel appearing on behalf of the appellant could not produce the requisite BCAs (i.e. the evidence of realization of the sale proceed of the purportedly exported goods) despite his categorical commitment. Moreover, significant mis-declaration with regard to weight value and specifications of the goods had surfaced on scrutiny of the case record. It is, therefore, evident that the amount of Rs.15,17,813 had been unlawfuly drawn from the Exchequer by using fraudulent means by the appellant. Under the circumstances, the learned counsel's plea of strong case on merit is belied by the evidence on record and his consequent plea for non-deposit of the adjudged amount is untenable. In such a situation, I am of the considered view that dispensing with the requirement of deposit of the aforesaid amounts, stipulated under section 195-B of the Act, would cause hardship to the Exchequer. Therefore, I reject the appeal for non-compliance of the provisions of section 195-B of the Act.
5. Being aggrieved and dissatisfied with the Order-in-Appeal, the appellant filed the instant appeal before this Tribunal on the grounds as under:--
(1) That the appellant is a businessman by professional in a legal manner and running his business in a lawful manner accordingly, the appellant has never indulged in activities in derogation of law, they supply their product to maintain all the prescribed record of the Customs and Sales Tax, properly and on of liable Duty and Taxes without fail, honestly, diligently and regularly pay, for the last many years.
(2) That the appellant is a registered person, duly registered with the Sales Tax Department and regularly filing monthly Sales Tax Return-cum-Payment Challan within due date. Since the date of registration no audit objection or any other irregularity has been communicated by the department up-till now.
(3) That the appellant has not violated the provisions of the Customs, Sales Tax Act and Rules issued thereunder, the appellant are discharging their taxes liabilities in accordance with the provisions of the Acts and contributing revenue to the public exchequer but the respondent with their mala fide intention and with their ulterior motives tried to involve the appellant in the unlawful case of evasion of duties and taxes.
(4) That the objection raised by the respondents are illegal, wrong, unconstitutional, vague, absurd, unlawful, unjust, absolutely incorrect, baseless, is null and void in the eyes of law, in all regards and wastage of precious time of this Honourable Authority, hence the same is liable to be vacated the show-cause notice, waived the penalty and set-aside the impugned orders, passed by the respondents, in the best interest of justice.
(5) That the learned respondents has passed the impugned orders just being an EXECUTIVE OFFICERS and NOT BEING A JUDICIAL OFFICERS, therefore, the impugned orders being styero type/non-speaking order and devoid of reason same is not substantiated in law as laid down by the Superior Court. Furthermore the respondent failed to apply his judicial mind to the submissions made by the appellant. The decision of the learned respondent; is therefore, capricious, arbitrary, unjust and illegal, it is against the law; it is liable to be vacated the show-cause notice and set-aside the impugned order, passed by the respondent, following identical cases:--
d. 1984 SCMR P-1014 b. PLD 1970 SC 158
c. PLD 1970 SC 173 a. PLD 1959 SC 2721
(6) That the allegation the appellant unit have been found nonexistent, it is illegal and against the law, therefore, this allegation is denied, because the appellant is available on own address, and received the FTO letters/decision, others letters, Bills, and the appellant received all respondents letters i.e. show-cause notice, hearing notices and Order-in-Original, thorough courier at the appellant registered address, the appellant is found and existent the given address, therefore, may kindly check the record thoroughly and withdraw this allegation, in the best interest of justice. (Photocopies are enclosed) as.
7. That the appellant as per their business routine has purchased the goods, through various Sales Tax Invoices from other registered persons, which imported the raw materials by the other registered persons, the same was mentioned in the Purchased Registered, filed the monthly Sales Tax Return-cum-payment challan within due date by the appellant and other registered persons. The same was supplies/consumed as exports the consignments, through Bill of Export, along with complete supporting documents, the EG was filed/submitted by the Exporter, as required under relevant Rules with the Model Collectorate of Customs (PaCCS), declaring therein complete, correct and true particulars of the goods, without concealing actual goods, duly supported by Commercial Invoice, Packing List, Bill of Lading, required for clearance as export of such goods in such form and manner as the Board may prescribe. (Photocopies are enclosed) as. The Customs concerned staff process/ examination/scrutiny the relevant documents and physical examination of the goods, the EG and shipping bill are also cleared, release/allowed for export the same and out of charge the EG, as per under sections 37 and 41 of the Customs Act, 1969, read with Notification S.R.O. 931(I)/07, during the said periods, under sections 37, 40 and 41 of the Customs Act, 1969, read with section 3 as under:--
Section 37.
Drawback on goods used in the manufacture of goods which are exported. Where it appears to the Board that in respect of goods of any class or description manufactured in Pakistan and exported to any place outside Pakistan, a drawback of customs duties should be allowed on any imported goods of a class or description used in the manufacture of such exported goods, the Board may, by notification in the Official Gazette, direct that drawback shall be allowed in respect of such imported goods to such extent and subject to such condition as may be provided in the rules.
Section 40.
Time of payment of drawback.---No such payment of drawback shall be made until the vessel carrying the goods has put out to sea or other conveyance has left Pakistan.
Section 41.
Declaration by parties claiming drawback.---Every person or his duly authorized agent, claiming drawback on any goods duly exported, shall make and subscribe a declaration that such goods have been actually exported and have not been re-landed and are not intended to be re-landed at any place in Pakistan and that such person was at the time of entry outwards and export and continues to be entitled to drawback thereon.
(8) That the appellant has actually exported the consignments and have not been re-landed and are not intended to be re-landed at any place in Pakistan. The Federal Board of Revenue is pleased to authorize repayment of customs duties to the extent specified in FOB value, vide S.R.O. 611 and 931(I)/2007 dated 11-9-2007, paid on the importation of the raw materials specified in the exported goods, used in the production or manufacture of the goods and exported, that such person was at the time of entry outwards and exported the same, the appellant is entitle for refund the rebate claim as per S.R.O. 931(I)/2007, the processing authority rightly all documents verified and all calculation of weight, grams, qty, value checked and ten process the rebate claim and sanction the refund claim, therefore, may kindly vacate the show-cause notice and set-aside the impugned orders, passed by the respondents, in the best interest of justice. (Photocopy of the S.R.O. No.931(I)/2007 is enclosed) as.
(9) That the appellant actually exported the goods through relevant documents and Form-E No.ABL-0009774, value of US$.2,48,625 may kindly verified the Form "E" from concerned bank and the appellant, export the some nominal quantities of cotton dyed jean pants suits etc., for sampling the same and the examiner, examine the same and then release the same. If any value or weight problem, the competent authority is accepted the declared value by the appellant at the time of export, now why this objection made after the goods are exported, therefore, it is illegal and against the law and they are now made out the objection on the basis of presumption, it is against the law, the allegation of bogus from "E" numbers raised by the respondents, his false, none of the form "E" numbers as mention in the show-cause notice are bogus in fact those form "E" were obtained by the appellant from concerned bank, through proper channel, form "E" or exports are the format of State Bank of Pakistan and after the release of Goods Declaration, it can be lodge in any of the banks were the appellant maintain bank account as per the rules of State Bank of Pakistan. Furthermore, the appellant filed Complaint No. C-1217-K, before the Honourable FTO, the Honourable FTO, finding/decision, relevant para 13 is reproduced as under:--
"(i) to examine the pending duty drawback claim, decide it on merits after ascertaining the export value of Laminated Sheets,-----------"
The Honourable Collector of the respondent; informed to the FBR, through letter No.MCC/FTO/25/2008 dated 8-8-2008, "the compliance of decision in respect of disposal of pending duty drawback claims of the complainant is being made. Honourable FTO may be informed accordingly," and the FBR already informed to the Honourable FTO, vide letter C.No.1(1217)S(TO-II)/08 dated 16-8-2008. (Photocopies are enclosed as Annex J and K). The refund was sanction by the respondent, after Honourable FTO, order, neither they are challenge the Honourable FTO Order, before the Honourable President of Pakistan nor file the review, before the FTO, therefore, Honourable FTO order is now finalized and now the Customs Department objection raised by the respondent's is incorrect, illegal, wrong, unconstitutional and vague, absurd, unlawful, unjust, absolutely incorrect, baseless, is null and void in the eyes of law, in all regards and wastage of precious time of this Honourable Authority, hence the same is liable to be vacated the show-cause notice and set-aside the impugned order, passed by the respondent, in the best interest of justice.
(10) That the word "order" was interpreted in Noor…
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