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Petitioner: Messrs DJN Corporation, Karachi VS Respondent: The Directorate General Of Intelligence
Court Name: Customs Appellate Tribunal Judge(s): Jehanzaib Wahlah Title:Messrs DJN Corporation, Karachi vs The Directorate General Of Intelligence
JUDGMENT
Reported As: 2021 PTD (Trib.) 418 Result: Appeal allowed Judgment JUDGMENT JAHANZAIB WAHLAH, MEMBER JUDICIAL III.----Through this common order , I dispose off Appeal No.1532/2019 filed against Order-in-Original No. 511/2018-2019 dated 10.12.2018 passed by passed by Additional Collector of Customs, Adjudication-I and Contempt Application No.635/2019 filed by the appellant for non- compliance of interim order dated 25.02.2019 of this Tribunal. 2. Brief facts of the case are, the appellant during the course of his business activity imported a consignment of 24561 kgs of iron and steel rim spokes of Malaysian origin against invoice No.K-5330-CI dated 29.06.2018 and B/L No. P AKMAL859 dated 13.07.2018, upon receipt of documents delivered pose to his clearing agent M/s. Khurram & Co., Karachi for transmitting Goods Declaration (GD) with the MCC of PMBQ, 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 Custom Computerized System (CCS) deposited upfront duty and taxes amounting to Rs.1,018,769/- in NBP on the basis of declaration. Consequent to which GD were numbered as KAPPI-HC5051-17072018 which was selected for examination in terms of Section 198 and Rule 435 of the Act/Rules, wherein declaration was confirmed and report so prepared was uploaded in the reservoir of the GD, on the strength of which the assessing officer passed assessment order dated 10.07.2018 under' Section 80 and Rules 438 of the Act/Rules. With the application of alien value of US$ 1.10/kg for levy of duty and taxes, against which appellant filed review under Rule 441 before Principal Appraiser , Group-VII, MCC of PMBQ (respondent No.2), who upheld the same and transmitted view message for payment of additional amount of duty and taxes of Rs.846,086/-, which were paid on 19.07.2018. Consequent to which the inbuilt authority of the CCS passed clearance order under section 83 and Rules 442 of the Act/Rules. Thereafter the clearing agent of the appellant after obtaining delivery order from the shipping
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company , obtained delivery from the terminal and as per the instruction of the appellant delivered those to M/s. Saleem Raza Goods Transport Station, Railway Station Karachi for transporting to his buyer in Lahore. Prior to transportation the officials of the Directorate General of Intelligence and Investigation (Enforcement-Wing), Karachi (respondent No.1) appeared at the office of the transporter and carried out the search under Section 163 of the Act and transported the appellant goods to their office. Where examination was conducted and an opinion was formed that the goods are in fact motorcycle spokes falling under PCT heading 8714.1020 chargeable to CD @ 35% instead of bicycle Rim spokes falling under PCT heading 8714.9200 chargeable to CD @ 20%. The appellant was pressurized to deposit the differential amount of duty and taxes of Rs.1,028,900/- as security failing to which threat of lodging of FIR was communicated. Since, the appellant was put into an ignoble situation; he has no other option except to scumb to the demand and deposited the requisite amount in the shape of pay order as security . Thereafter , the subordinate of respondent No.1 seized the consignment under the provision of section 168(1) of the Act and framed a contravention report with the allegation that the appellant mis-declared the description and PCT Heading, which resulted in loss of revenue to the exchequer to the extent of Rs.1,0 28,900/- and the said act of his falls within the ambit of contravention of sections 2(1), (2)(sic), 32A, 79(1) and 209 of the Act, Sections 6, 33, 34 and 36 of the Sales Tax. Act, 1990 (STA) and Section 148 of the Income Tax Ordinance, 2001 punishable under clauses 14, 14A and 19 of section 156(1) of the Act and forwarded that to respondent No.3, who issued show-cause notice dated 07.08.2018 containing the same fact and the contravening provision of the Act, STA and ITO as were narrated in the contravention report without even change of comma and full stop. The appellant advocate replied the allegation 'vide dated 03.09.2018, which was not considered and respondent No.3 passed order dated 04.12.2018, through which he held the charges levelled in the show-cause notice as established and ordered confiscation of the goods subject to redemption of those on payment of fine equivalent to 35% i.e. Rs.1,179,598/- and personal penalty of Rs.500.000/- in addition to -short paid/evaded amount of duty and taxes of Rs.1,028,900/-. Para 8 of the order is relevant, which is reproduced here-in-under: "I have gone through the record of the case as well as the verbal and written arguments of both the parties. The respondents have put forward a very strong defense and have raised legal objection on the jurisdiction and authority of the Intelligence and Investigation with proper example of Supreme Court as well as Hon'ble Courts various judgments but Hon'ble Supreme Courts in its various judgment has pointed out that mere procedural lapse doesn't absolve oneself from the crime peiformed. (The importer himself paid the difference in duty and taxes so he himself admitted his mis-declaration). The jurisdiction of Intelligence and Investigation officers in this case is valid because they are officers of Customs Department they have rightly seized goods and the charges of mis- declaration and violation of section 32(1) & (2) of Customs Act, 1969 are proved Therefore in the interest of justice I ordered the respondent to part MI amount of duty and taxes involved as per in the Show-Cause Notice. Moreover I order for the confiscation of seized goods; however the importer can redeem them against under SRO 499(1)/2009 dated 13.06.2009 against fine of 35% which comes to Rs.1.179,598/- and penalty of Rs.500.000/- (five hundred thousand) each on importer as well as on the clearing agent." 3. The appellant filed application for urgent hearing and interim relief supported by affidavit with the main appeal on 13.02.2019, praying that his goods be ordered to be released upon submission of pay order equivalent to imposed fine of Rs.1179598/- and penalty of Rs.500,000/- as security deposit with the Director , Directorate General of Intelligence and Investigation, (Enforcement Wing), Karachi subject to their encashment/return upon decision in the main appeal. The Tribunal after allowing urgent hearing took up the application for interim relief and disposed of f the same on 25.02.2019 in the following manner . "Foregoing discussion and ratio decided by the Apex Court,. I have no ambiguity in my mind that passing of a interim order in part of working of a judicial system and at the same time being conscious of the issue while taking into consideration the application/implica tion of the order passed by respondent No.3, against which the instant appeal has been filed and decision in which has to be given after having a detail deliberation in the hearing, meanwhile it is just and fit to freeze the impugned order to the extent of consignment under consideration, which is lying in the terminal for clearance. Therefore, I hereby grant application for interim injunction and direct the respondent No.] to release appellant consignment upon deposit of pay orders for Rs.1,679,598/- against the
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imposed fine and penalty , subject to return/encashment upon decision of the main appeal. The application for interim relief is accordingly disposed off with no order as to costs." (Emphasis supplied) 4. The appellant consultant, upon receipt of the aforesaid order forwarded letter dated 01.03.2019 to respondent No.1 for prompt compliance of the order and for that purpose representation of the importer approached the respondent subordinate for confirmation that in whose name pay order has to be submitted, after two weeks he was informed that the pay order should be prepared in the name of Collector of Customs PMBQ, resultant pay order No. 21438568 dated 13.03.2019 amounting to Rs.1,679,600/- against imposed fine of Rs.1.179,600/- and penalty of Rs.500,000/- was furnished, which was not acknowledged on the pretext that the same is not accompanied with the covering letter , resultant, a letter dated 15.03.2019 was submitted. Despite of the said fact he was asked to run from pillar to post for many days. Thereafter the respondent No.1 and their subordinates, instead of keeping the pay order in safe custody as security forwarded that to the Collector of Customs PMBQ for depositing encashment despite protest in strongest word by the appellant representative that encashment of the security is tantamount to defiance of the order of the Tribunal beside usurpation, but of no avail and the pay order was en-cashed and deposited in the Treasury vide cash No. ABC-863 on 30.11.2019 and delivery of the goods was effected physically to the appellant on 22.04.2019 i.e. after 56 days of the order of the Tribunal. Being aggrieved from the high handedness and defian ce of the order of the Tribunal of/by the respondent No.1 and his subordinates, appellant filed a contempt application dated 20.05.2019 under the provision of Section 194C(8) of the Act to be read with sections 480 and 482 of the Code of Criminal Procedure 1898, which was numbered and respondent No.1 and his subordinates were put on notice for 18.06.2019. 5. Despite multiple hearing between 18.06 .2019 to 17.10.2019 either representative of the respondent No.1 sought adjournment on one pretext and another , mainly on the plea that the person, who has to submit comment on the memo of appeal and contempt application is on leave/busy or the authority who has to sign those is engaged in some other important work and has not signed those and in such manner dragged the decision in the appeal and contempt for almost 04 months. However , on 17.10.2019 he submitted para-wise comments on the contempt application on behalf of the respondent No.1 signed by Deputy Director sans comments on memo of appeal. In the comments on contempt application, it has been submitted that Tribunal has no powers to take cognizance if any of the provisions of Sections 193, 196 and 228 of Cr.P.C. are contravened, nor he has submitted false evidence or had offered intentional insult or caused any interruption during the sitting in any stage of a judicial proceeding as contemplated in section 228. It has further been stated that the appellant had mis understood the whole matter due to misconception and that' respondent had no intention to bring Customs Appellate Tribunal into disrespect at any time as the respondent has high regard and respect for the Tribunal. In regards to the security submitted in the shape of pay order by the appellant categorical admission has been made that the same had been deposited, plea advanced for the said act in the comment s is that under section 202(4) of the Act for the recovery of duty and other levy, the appropriate officer has the same powers which under the Code of Civil Procedure, 1908 a Civil Court has for the purposes of the recovery of an amount due under the decree. Further stated that main appeal is still pending and yet to be decided by the Tribunal, fate of appeal obviously will be spelt out from the order of the Tribunal and averred that it is well settled proposition of law that the proceeding under the Act do not come to an end with the passing of an order . If a reference is filed under section 196 of the Act before the Hon'ble High Court of Sindh, the proceedings are kept alive and are to be regarded as single legal proce edings. For delay in compliance of the order of the Tribunal and delivery of the consignment reason advanced are completion of codal formalities, for deposit/encashment of security deposited as pay order , reason has been given that it is secured in the Government Treasury . 6. The appeal/application for contempt were heard jointly on 17.10.2019, the consultant of the appellant argued the case/application strictly in accordance with the ground enumerated therein and averment made in the application for contempt. No cross objections under Section 194A(4) of the Act have been submitted within the stipulated period of 30 days by the respondent No.1 as stated in para supra, resultant, lost right of cross appeal within the contemplation of section 194A(3) ibid. Non-submission of counter affidavit whether by will or default forfeit the respondent No.1 right to deny assertion made in the affidavit. This proposition of law stands validated from the
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following judgments of the Superior Judicial Fora reported as (1974) 94 ITR -- 1, 1980 PLC (C.S.) 350 and 1982 PLC (C.S.) 757, 1986 CLC 745 KAR. (1984) 146 ITR 140, (1985) 53 Taxation- I (Trib.), 1986 CLC 1119, 1986 CLC 1408 KAR, 1991 MLD 1243 , PLD 1992 SC 317, 1993 SCMR 662, PLD 1996 Karachi 68, 1986 PLC (C.S.) 560, 2003 PTD 2118. However , on the date of hearing the representative of respondent No.1 relied upon the para- wise comments submitted against application for contempt and averred that those are sufficient and to be considered as para-wise comments on the memo of appeal also, further stated that the order passed by respondent No.3 is correct in fact and law. Hence, same may be maintained and appeal along with application for contempt be dismissed being.devoid of merit/substance. 7. Argument heard and case record perused. Prior to deliberating on the merit on the main appeal for recording decision, it is act to decide application for contempt first and to proceed with it is apt to reproduce provision of section 194C(8) of the Act and sections 480 and 482 of the code of Criminal Procedure from 1898 under which instant application was filed: "194C(8):- Any proceeding before the Appellate Tribunal shall be deemed to be judicial proceeding within the meaning of sections 193 and 228 and for the purpose of section 196 of the .Pakista n Penal Code (Act XLV of 1860) and the appellate Tribunal shall be denied to be a court for all the purposes of sections 480 and 482 of the Code of Criminal Procedure, 1898 (Act V of 1898) 480" Procedure in Certain Cases of Contempt:--(1) When any such offence as is described in section 175, section 178, section .179, section 180 or Section 228 of the Pakistan Penal Code is committed in the view or presence of any Civil, Criminal or Revenue Court, the court may cause the offender to be detained in custody: and at any time before the rising of the court on the same day may, if it think fit, take cognizance of the offence and sentence the offender to fine not exceeding two hundred rupees and in default of payment to simple imprisonment for a term which may extend to one month unless such fine be sooner paid. 482:- Procedure where Court considers that case should not be dealt with under section 480:- (1) Is the court, in any case considers that a person accused of any of the offences referred to in section 480 and committed in its view or presence should be imprisoned otherwise than in default of payment of fine, or that a fine exceeding 200 Rs. should be imposed upon him, or such Code is for any other reason of opinion that the case should not be disposed off under section 480, such Code, after recording the fact constituting the offence and statement of the accused as hereinbefore provided, may forward the case to a Magistrate having jurisdiction to try the same and may require security to be given for the appearance of such accused person before such Magistrate or if sufficient security is not given, shall forward such person in custody to such Magistrate. (2) The Magistrate to whom any case is forwarded under this section shall proceed to hear the complaint against the accused person in manner hereinbefore provided. 8. A bare reading of section 194C(8) of the Act contemplates that any proceeding before the Appellate Tribunal is a judicial proceeding within the meaning of Section 193 of Pakistan Penal Code Act (XLV of 1860) (PPCA) for punishment for recording false evidence and under the provision of Section 196 ibid for "Using evidence known to be false", whereas under section 228 of PPCA for intentionally causing insult or interruption to public servant sitting in judicial proceeding and it enjoys akin powers as the Civil Court and is empo wered to initiate proceeding for contempt alike to the Civil Court under the provisions of Sections 480 and 482 of the Code of Criminal Procedure, 1898 (Act V of 1898). Hence, no ambiguity exist in this regard that the Appellate Tribunal have the same power as of a Civil Court as expressed in Section 194C(8) of the Act. In the comments on the contempt application, the respondent No.1 has asserted that he and his subordinates are empowered to recover the amount of evaded/short paid duty and taxes etc., under the provision of Section 202 of the Act. The said opinion is based on mistaken belief, my finding in this regard is based on two aspects (i) no recovery by respondent No.1 and his subordinate could be made or proceeding for recovery be initiated under the provision of section 202 of the Act, being appointed under section 3A of the Act and delegated power through SRO 486(1)/2007 dated 09.06.2007, which least empowers respondent No.1 and his subordinates under the provision of Section 202 of the Act. (ii) The recovery proceeding under section 202 and Recovery Rules embodied in Chapter XI of the Rules could only be under taken by the authority defined in Rule 133(ix) upon referring by the authority defined in Rule 133(x), which
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should be equivalent to the rank of Assis tant Collector of Customs, appointed under section 3 of the Act and that also after crystallization of adjudged amount of duty and taxes, fine and penalty through an order-in-original passed by the competent authority under the provision of Section 179, after due process of law i.e. serving of show cause notice as per the contemplation of section 215 issued under the provision of Sectio n 180 and upon attaining finality of that after crossing all the forums where it can be challenged and the decisio n of the last forum i.e. Hon'ble Supreme Court of Pakistan as held in reported judgments 1993 SCMR 39 CBR v. Chanda Motors and 2013 PTD 581 Ghulam Nabi v. FOP of the Honorable Supreme Court of Pakis tan, paras 17 to 22 are relevant and which are : "17-. Word "finalised" is derived from the word 'final" which is defined in Chambers 20th Century Dictionary to mean "last decisive, conclusive, respecting the end or motive of judgment ready for execution-last of series". "Finality" is defined as state of being final completeness or conclusiveness, In Black's Law Dictionary Fifth Edition, word "final" is defined as, last conclusive, decisive, definitive; terminated; and completed." In its used in reference to legal actions this word is generally contrasted with "inter -locatory". Viewed in the light of meanings of the word "assessments" and "finalized", it appears that assessment order as such do not have touch of finality unless all the forums are exhausted in which such orders can be challenged so that the order take the final decision." 18- Legally speaking order of assessment passed by Income Tax Officer is an order of original authority but is not final for the reason that it can be challenged in appeal or revision as the case may be and would be final only when it goes through all the forums and the finding of the last forum shall be binding as conclusive. 19- The question whether appeals and other remedies provided under the law formed part of proceedings or not came up for consideration before the Supreme Court of India in the case of Garikapati Veeraya v. N. Subbiah Choudhry and others reported in PLD 1957 Supreme Court (India.) 448 it is held as per majority opinion that legal pursuit of a remedy , suit, appeal and 2nd appeal are really but steps in a series of proceeding connected by an intrinsic unity and are so be regarded as one legal proceeding. Reference can be made to the case of Commissioner of Wealth Tax v. Vimlaban Mehta reported in (1984) 145 ITR 11, in which it is held that it is well settled that when an appeal is filed against assessment order before AAC the assessment is thrown open and Appellate proceeding constitute a continuation of a assessment proceeding. " 20- in the case of F.A. Khan v. The Gover nment of Pakistan (PLD 1964 Supreme Court 520), question came to for consideration that in the case of dismissal of a Government servant for filing a declaratory suit whether limitation would start from the date of order of dismissal to be reckoned under Article 120 of the Limitation Act or from the date of order of Appellate Authority confirming the first order to be reckoned under Article 38 of the Limitation Act. It is held that such right accrued on the date of dismissal but, where there is an appeal on the date of Appellate order upholding dismissal. It is further held that the legislature when it provided a hierarchy of the Tribunal for the determination of a dispute it is really providing one complete procedure for such determination, proceeding before different T ribunal being only step in this procedure. 21- On the question of construction, in the light of what is stated above, it can be said without fear of contradiction that order passed in original proceedings is not final unless it crosses all the forums set up under that law in which it can be challenged and the order of the last forum would become final. Mr. Rehan Hassan Naqvi, learned counsel for the respondent has submitted before us that there is plethora of case law on the point that even within the frame work of Income Tax law, appeals and other , remedies provided therein formed part of the same proceedings regarding assessment. In this context our attention is drawn to the case of Chattur am and others v. Commissioner of Income Tax, Bihar reported in (1947) 15 ITR 302. In the reported case assesses of partially excluded areas were served with the notices under section 22(2) of the Income Tax Act for furnishing returns. Subsequently Governor of Bihar by notification directed that India Income Amendment Act, 1939, the Income Tax Law Amendment Act, 1940 be deemed to have been applied to the Chotanagpur Division containing partially excluded areas with retrospective effect. Subsequently Regulation 1 of 1941 was also issued by the Governor to remove doubts as to the retrospective applicability of the Act menti oned in the Notification. Assesses were assessed and their appeals were pending when Regulation I of 1941 was issued. It was contended that assessment proceedings initialed and completed against them were invalid and neither the notification nor the Regulation were competent in law to
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validate those proceedings, it was held by the Federal Court of India, inter alia, that appeals to the Appellate Assistant Commissioner were an integral part of the machinery of assessment and therefore it could not be contended that assessment proceedings were over when Regulation 1 of 1941 was made and the Regulation could not apply to the proceedings covered by those appeals. 9. In the present case of the appellant the impugned order is the first order passed by respondent No.3 within the hierarchy of customs, which has been assailed by the appellant before this Tribunal under the provision of Section 194A(1) of the Act. Hence, that became wide open as per law laid down by the Hon'ble Supreme Court of Pakistan and cannot be construed by any definition/standard as an order , which attained finality against which recovery proceeding could be initiated, resultant not even the officer of Customs, appointed under section 3 of the Act can proceed for the recovery , nor appropriate officer is empowered to refer the case of the appellant to recovery officer for initiating recovery proceeding as contemplated in section 202 and Chapter XI of the Rules. As adumbrated I am in full agreement with the respondent No.1 that upon filing of reference under the provision of section 196 of the Act before the Hon'ble High Court, the order of the Tribunal stand wide open and to be construed as single legal proceeding. However , I failed to unders tand the said line of arguments in the present case it seems that the respondent No.1 is under impression that immediately upon filing reference the order of the Tribunal stand automatically abate, this understanding of the respondent No.1 and his subordina te is based on mistaken belief, section 196 of the Act least expresses as understood interpreted by the respondent No.1 and his subordinate, the order of the Tribunal remain in the field and had to be complied, unless Hon'…
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