Al Wakeelo
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Petitioner: Messrs UNIQUE WIRE INDUSTRIES, KARACHI VS Respondent: ADDITIONAL COLLECTOR OF CUSTOMS, KARACHI and another
Court Name: Customs, Excise and Sales Tax Appellate Tribunal Judge(s): Muhammad Arshad, Muhammad Arif Moton Title:Messrs UNIQUE WIRE INDUSTRIES, KARACHI vs ADDITIONAL COLLECTOR OF
CUSTOMS, KARACHI and another Case No.: Customs Appeal No,K-628 of 2009 Date of Judgment:2011-02-24 Reported As: 2011 PTD (Trib.) 987 Result: Appeal allowed Judgment ORDER MUHAMMAD ARIF MOTON (MEMBER JUDICIAL-II).--- This order will dispose of Customs Appeal No, K-628 of 2009, filed by the appellant against Order-in-Appeal No, 2004 of 2009, dated 29-9-2009 passed by the Collector of Customs (Appeals), Karachi. 2. That brief facts of the case as reported are that the appellant electronically filed goods declaration declaring to contain steel wire rod in coils, at total invoice value of US$. 75,400. They determined their tax liability on their own and sought clearance thereof under section 79(I) of the Customs Act, 1969. However, in order to check as to whether the appellants had paid correct amount of duties/taxes the aforesaid GD was selected for scrutiny in terms of section 80 of the Customs Act, 1969. Scrutiny of the goods declaration in light of the examination report revealed that the appellants had miss-declared the actual value of the goods during the course of physical examination the examination staff had found original invoice from the container which indicated the total value of the goods as US$. 191,732, whereas the invoice filed indicated the total declared value as US$.75,400. The declared value was as low as 154.29% of the actual value as evident from the original import documents discovered from the container. The appellants had committed an offence by filing fake and forged documents/particulars of the goods besides making an attempt to clear imported goods at highly under invoiced value and attempted to defraud the government from its legitimate revenue amounting to Rs, 2,977,718.00. The appellants were accordingly charged under the relevant provisions of law and the adjudicating officer held that the charges against the appellants had been proved. The operative part of the impugned order reads as under:--
---
## Page 2
"I have examined the case read examination report carefully. In this case the importer electronically filed Goods Declaration bearing CRN-816434 declared to contain steel wire Rod in Coils, at total invoice value of US$. 75,400. Scrutiny of the goods declaration in light of the examination report revealed that importer has miss-declared the actual value of the goods. During course of physical examination the examination staff has found original invoice from the container which indicates the total value of the goods as US$. 191,732. Whereas the invoice electronically filed indicated the total declared value as US$. 75,400. The declared value is as low as 154.29% of the actual value as evident from the original import documents discovered from the container. The importer has therefore committed an offence by filing fake and forged documents/ particulars of the case besides making an attempt to clear imported goods at highly under invoiced value wilfully and with mala fide intention and have attempted to defraud the government from its legitimate revenue amounting to Rs,2,977,718.00, the contention of the importer that the fine should be charged on the differential of the values between the two invoices that is the one declared and the one found is not tenable as the prescribed pitch of fine in the relevant S.R.O. 487(1)/2007 is the total offending value of the goods in the case if valuation difference exceeds beyond 30% on the basis of direct evidence and in this case the invoice recovered is the direct one from the supplier to the importer and there is little discretion left for the adjudicating officer to change the pitch of fine. I hereby order confiscation of the goods. Moreover the values are the export sale price to Pakistan with reference to the time and transaction and the supplier has specifically supplied the correct invoice in the container. However, the importer is given an option under section 181 of the Customs Act, 1969 to redeem the goods on payment of fine equal to 50% on offending value of total consignment (Rs,1,55,48,403/30) along with duty and taxes leviable thereon. The allegation as leveled in the show-cause notice stand proved. In terms of clauses (14), (14-A), (45) to section 156(I) of the Customs Act, 1969 read with S.R.O. 487(1)/2007 dated 9th June, 2007. I also impose a penalty of Rs,5,00,000.00 upon the importer NTN holder." 3. The order was challenged before respondent No, 2 who also vide his order dated 29-9-2009 rejected the appeal by observing that:-- "I have examined the case record and given the consideration to the arguments made before me. Admittedly an invoice was retrieved from the container which showed that the transaction value of the goods was US$.191,732.00 whereas the appellants had declared the value of the goods to be US$. 75400. Thus, there is no doubt that the actual transaction value of the goods imported in this case was US$ 191,732.00 and the appellants had under invoiced the same to the tune of whopping 154.29% on the strength of fabricated documents. The principal plea of the appellant's consultant is that since in another case (CRN-IHC-815094-0411,08) the Paccs had not taken penal action against the importer in similar circumstances the penal action taken in this case may also be waived. The aforesaid plea is untenable for the simple reason that if the departmental head not acted in accordance with law in one case it cannot be forced to extend the same illegality in another case. However, it is recommended that the management of the Collectorate may look into the case mentioned above with a review to taking remedial action. It also needs to be stated that consignments imported under the self-assessment system operative under Paces are cleared on the basis of the declaration made by the importers and only very few of them are picked for thorough scrutiny under the system managed selectivity criterion. Therefore, the appellants had self-assessed their tax liability and paid the duty/ taxes as per their (mis)declaration and had the instant consignment not been selected for thorough examination, the appellants would have got away with the miss-declaration and caused revenue loss of Rs,2977718.00 to the Exchequer. Therefore, the intention to commit fraud is clearly established. The arguments advanced by the learned counsel are clearly belied by the evidence available on record and the precedents quoted
---
## Page 3
by the learned consultant are not relevant to the fact of the instant case. The penal action taken against them is also in consonance with the parameters prescribed under notification S.R.O. 487(1)/2007 dated 9-6-2007 and the gravity of the offence committed in this case. Therefore, I hold that the impugned order is correct in law and on facts and there is no reason to interfere with the same. The appeal is rejected accordingly." 4. The appellant has now challenged the above order by way of this appeal. The consultant Nadeem Ahmed Mirza appeared on behalf of the appellant who reiterated the arguments incorporated in the memo of the appeal. And emphasized that:-- (i) That the instant appeal attracts the jurisdiction of bench sitting singly, by virtue of the expression of subsection (3) of section 194-C of the Customs Act, 1969, reading as: "Every appeal against a decision or order [deciding a case involving duty, tax, penalty or fine exceeding five million rupees] shall be heard by a Special Bench constituted by the Chairman for hearing such appeals and such Bench constituted by the Chairman for hearing such appeals and such Bench shall consist of not less than two members and shall include at least one Judicial Member and one Technical Member." (ii) That since, the expression of statute states in clear and in unambiguous terms that an appeal wherein involved duty, tax or fine exceeds five millions rupees has to be fixed before a double bench comprised of one Member (Judicial) and one Member (Technical), vice versa in case of below than Rs,5 million it has to be fixed before a bench sitting singly. That since in the instant appeal the amount of duty and penalty are not exceeding either individually or cumulatively Rs,5 million. Hence, the instant appeal fall within the jurisdiction of bench sitting singly. (iii) The appellant in support of his stance further states that when the meaning of the statute is clear, rule of interpretation does not apply. The principle of construction of statutes always draw upon first on the expressed language of the statute, where the context and the language resolve the meaning, resort to object and purpose is uncalled for. All rules of interpretation have been devised as aids to the discovery of legislative intent behind an enactment. Where the words are plain and unambiguous that intent can be best judge by giving full effect to the ordinary grammatical meaning of those words. The words of subsection (3) of section 194-C of the Customs Act, 1969, are plain and unambiguous, hence full effect to the ordinary grammatical meaning of those words has to be given by the Tribunal/Court. Beside neither practice of the court nullify the provision, which is not contained in the provision of that statute. Hence it has to be followed in its ordinary meaning and as per intention of the legislature as held by their Lordship of High Court of Sindh in 2004 PTD 901 Messrs Haswa ni Hotels Ltd. v. Government of Pakistan. (iv) That the appellant has not denied at any stage that he has not filed GD on the basis of invoice received after re-negotiation of the contracted prices and this stance was taken at the original adjudication stage and even at appellate stage. The respondent Nos.1 brushed aside the submission made, whereas the respondent No,2 asked to produce the correspondence wherein price was re-negotiated. Photocopies of e-mails were supplied. Contrary, the respondent No, 2 ignored those and not even felt appropriate to offer his comments in the order-in-appeal. The appellant submitted the respective correspondence about the price negotiated and re- negotiated, the seller acceptance of the revised unit value, the amount of price was actually paid for the consignment and the reason for re-negotiated prices. The whole exercise was done by the appellant prior to filing of GD electronically. Whereas, finding of invoice from the container stood ably diluted from the e-mail of the seller dated 2-10-2008. Which was ignored by the respondent for penalizing the appellant. (v) That in the given circumstances, sections 32(1), 32(2) or 32(3) are not applicable on the appellant by virtue of the fact that he was not knowing had reason to believe that the declaration or statement he was making electronically, which are the subject of the charges were false in
---
## Page 4
material particular by virtue of availability of invoice in the container and the said fact stood verified from the e-mail of the shipper, absolving the appellant from the charge of misdeclaration in material particular. The said fact stood fortified from the reported judgment 1988 PCr.LJ 891 Abdul Aleem v. The State. (vi) That the impugned orders of the respondent are discriminatory and violative of the principle of natural justice/mandatory provision of law due to the reason that in the same situation/ circumstances the respondent No, 1 opted for the adjudication instead of cancelling the contravention report and should have forwarded a view message for payment of additional amount of duty and taxes after assessing his goods on the value, wherein, the goods of similar/identical type of other importers were assessed (i,e, data of last three months available in the system of the PACCS) as was done by the respondent in the case of import of HDP FILM GA 3750 corresponding to CR No, I-HC-815094- 041108, wherein, initially goods were assessed on the basis of scan price of October 1, 2008. Subsequently, an invoice of higher value then declared and assessed was found from the container and a contravention report was prepared. Which was deleted by the respondent being competent authority with the direction to assess the GD on the scan prices as against the value shown in found invoice. (vii) The differential treatment given to the appellant is in violation of Article 25 of the Constitution as well as ruling of the superior Courts delivered in umpteenth numbers of judgments few of which are enumerated here-in-below. Wherein their lordship held with clarity that there is no power to target incident of tax in such a way that similarly placed persons are dealt with discrimination or facility allowed to one and denied to other, amounts to discrimination: (a) Messrs Zaman Cement Company (Pvt.) Ltd. v. C.B.R. 2002 SCMR 312. (b) Pakistan v. Muhammad Saleem PLD 1995 SC 396. (c) Messrs Gatron Industies Ltd. v. Pakistan 1990 SCMR P. 1072. (d) Pakistan v. Messrs Azhar Brothers Ltd., 1990 SCMR P. 1059. (e) Commissioner v. Makhdoom Syed Hussain Shah, 1975 SCMR P.352. (f) Collector v. Ms. Novartis Pakistan Ltd. 2002 PTD 976. (g) Messrs M.Y. Electronics, 1998 SCMR P.1404. (h) Messrs Elahi Cotton Mills Ltd. v. Pakistan, PLD 1997 SC 582. (1) Messrs Sandalbar Enterprises v. C.B.R. 1997 PLD SC 334. (j) Messrs Flying Craft Paper Ltd. v. C.B.R. 1997 SCMR 1874. (k) Government of. Pakistan v. Village Development Organization 2005 SCMR 492. .(viii) That regarding the valuation aspect, the order-in-original states in para.3 that evaluation has been done on the basis of similar kind of goods in terms of section 25 of the Customs Act, 1969 and Rule 107(a) of the Customs Rules, 2001. No evidence regarding the valuation has been brought on record in the form of invoice of contemporaneous goods of the same country and same contracted period or even 90 days data. The observations of respondents Nos. 1 and 2 regarding price paid or payable are based on misconception of transaction value. In fact transaction value envisaged concept of Real Value as against normal value which was prevalent under the Brussels System of Valuation. It was a notional concept where the value of the goods was determined in terms of the value of other identical/similar goods. The initial transaction value payable was US$. 890/MT but the price paid ultimately due to nose-dived prices of the metal in the International Market, after re-negotiating was US$. 350/MT. All this process has been conducted in a very transparent manner through e-mails, starting from cancellation of order and subsequent re- negotiating from September 10, 2008 to October 2, 2008. Confirming that the appellant declared price after re-negotiation was the. Real Value and the stance of appellant stood fortified from the fact that subsequent to appellant consignment, not a single consignment was evaluated as US$. 890/MT of any importer for levy of duty and taxes. That his stance stood further fortified from the
---
## Page 5
judgments of Appellate Tribunal issued in Customs Appeal Nos. 92 of 2006 Junaid Enterprises v. Collector of Customs (Appeals) and others K-24/2006 Mushtaq and Company v. Collector of Customs (Appeals) and others and Noman Omar and Co. v. Assistant Collector of Customs MCC of PaCCs (ix) That under no circumstances the assessed value can also even be considered as lowest of identical/similar transaction value, available in data of import maintained under Rule 110 of the Customs Rules, 2001 as per expression of clause (d) of subsections (5) and (6) of Customs Act, 1969 read with Rules 117 and 118 of Chapter IX of Customs Rules, 2001 for the period given in Rule 107(a), because the assessm ent has been 'made in the instant case under section 25(1) as evident from the order-in-original/appeal. Resultant, mentioning of identical/ similar/goods value nullify the assessm ent made, because the MCC of PACCS regularly assess the goods with the application of lowest available assess value as per clause (d) instead of value of import as expressed in Rule 110 ibid of the goods imported by appellant from Indonesia and other companies/persons from Europe and China @ $.475.00 and 535.00, .303.00 and 404.80 and .278.30 PMT respectively as against declared S# CRN/Date Country of ImportD/Value A/Value 1 735447/110808 Indonesia $.404.80 $.470.00 2. 738861/130808 Indonesia $.404.80 $.535.00 1 754846/010908 Belgium 283.40 303.60 2 837020/271108 China 354.20 404.80 3 844176/051208 Belgium 278.30 303.00
(x) The appeal with the respondent was filed on 29-12-2008 and an order under the proviso of subsection (3) of section 193-A of the Customs Act, 1969 and the appeal should have been decided by the respondent within 90 days from the date of filing of appeal or within a further extended period of 90 days during the initial period of 90 days after serving a notice to the person concerned and thereafter the respondent has to record the reason for extension in writing for the extension of the stipulated period. In the instant case the order-in-appeal was passed on 29-9-2009 i,e, after the expiry of total stipulated period of 180 days. Rendering the order-in-appeal barred by time by 94 days. (xi) The narration of respondent No, 2 at para. 5 of the order-in-appeal that proceeding in this case could not be finalized within the stipulated time limit due to extended hearing and adjournment granted on the request of both parties, therefore the requisite extension in terms of 1st proviso to subsection (3) of section 193-A of Customs Act, 1969 was obtained from the board is without any substance as no adjournment was applied by the appellant or by the respondent No, 1. Hence, the extension granted if any by the board is unsubstantiated and cannot be considered as valid. Nullifying the stance of the respondent No, 2 that time was extended on the request of both the parties for adjournment. In the light of the narrated facts the order-in-appeal is hopelessly 'time- barred and as such is of no legal effect and cannot be enforced. Reliance is placed on the judgments reported vide. 2008 PTD 60 Messrs Super Asia Muhammad Din Sons (Pvt.) Ltd. v. Collector of Sales Tax., Gujranwala and 2008 PTD 578 Messrs Hanif Strawboard Factory v. Additional Collector (Adjudication) Customs, Sales Tax and Central Excise Gujranwala, 2009 PTD 762 Messrs Tanveer Weaving Mills v. Deputy Collector Sales Tax and 4 others and 2009 PTD (Trib.) 1263, Messrs Syed Bhai Lighting Limited, Lahore v. Collector of Sales Tax and Federal Excise, Lahore and 2 others and 2009 PTD 1978 Leo Enterprises v. President of Pakistan and others.
---
## Page 6
(xii) The appellant carves his right to add any fresh ground at the time of hearing, beside placing any valid incriminating evidence/ document. 5. The departmental representative Mr. Ghulani Yasin, Appraiser, appeared on behalf of the respondent and furnished their comments on above cited grounds of appeal inter alia as under:-- That in terms of proviso to subsection (3) and subsection (6) of section 194C of the Customs Act, 1969, the Chairman, Appellate-Tribunal has powers to constitute Special Benches irrespective of monitory limits. Thus, the contents of para. (i) of Grounds of appeal is incorrect, hence, denied. (ii) That in the light of submissions made above the contents of para. (ii) of grounds of appeal require no comments. (iii) That the contents of para (iii) of Grounds of appeal are incorrect, hence, denied. The facts and circumstances of the case are proving that the purported documents placed as "E.- Mails" are fabricated and afterthought. (iv) That the contents of ground (iv) are incorrect, hence, denied. It is pertinent to mention here that the case of Petro Chemical products is entirely different from the case of steel products. Further as evident from the assessm ent remarks (annexed as "0" at pages 43 of the appeal) in the plastic cases also the date of actual contract was the bench mark for re-ascertaining the values. In the said case the assessm ent was not made on declared value. Further in the case the higher value invoice was found but in that case the importer was able to prove that the price was renegotiated according to the Scan prices prevalent on the date of contract L/C. Whereas here in this case the appellant has failed to substantiate with any corroborative documents that there was any difference/decline of price between the date of contract i,e, 22-9-2008 and the date of shipment i,e, 15-10-2008, i,e, within three weeks how it is possible that the price has been fallen from US$. 890/PMT to 0 USS 350/PMT. Thus, in the light of circumstances faced by the traders of petroleum products an importer of steel item cannot be equated at par with the genuine importers of petro chemical products. (v) That the contents of ground (v) are incorrect, hence, denied. First of all in the presence of invoice of actual .Payable transaction value there is no question to adopt any other method of evaluation, hence, the appellants consignment was correctly assessed as per supplier's invoice value in terms of section 25(1) of the Customs Act, 1969. Secondly as clarified in the preceding paras in the "Plastic" cases referred by the appellant the appellants had substantiated the reduction of price through the amended L/C and the "SCAN" prices whereas in the instant case of the Steel Wire Rods the appellant has failed to substantiate that the L/C was amended and the "LME" shows drastic reduction in prices of the Steel Wire Rods between the date of contract and the date of export/ amendment in L/C. (vi) That the contents of ground (vi) are incorrect, hence, denied. It is respectfully submitted that all such cases where importers concealed the values deliberately Without any cogent reasons are dealt accordingly, hence there is no discrimination with the appellant and due to deliberate gross miss-declaration of value the ` appellant deserves no relief. (vii) That in the light of submissions made above the contents of para. (vii) of grounds of appeal are incorrect, hence, denied. Under the 'GATE CODE OF TRANSACTION VALUE SYSTEM" the first method of determination of value is to determine the customs value after ascertaining the "paid or payable " transaction value. As evident from the page of B/L. i,e, page 25 of the appeal, the goods in this case were imported against the L/C, thus , the actual value of the goods was paid through L/C, thus when the L/C was not amended, prior to shipment/export, then there is no question to accept other value than the one mentioned on the L/C. The appellant's arguments, based on an afterthought e-mails , are not only against the provisions of section 25(1) of the Customs Act, 1969, but also against the principle set out by the honourable High Court in the case of Rehan Umer (2006 PTD 909).
---
## Page 7
(viii) That in the light of submissions made above the contents of para (viii) of grounds of appeal are incorrect denied. As stated above in the presence of an evidence of true transaction value i,e, L/C of the same consignment, there is no question to make assessment other than the method prescribed in section 25(1) of the Customs Act, 1969. (ix) That after the amendment, through Finance Act, 2009, the period in terms of section 193-A(3) of the Customs Act, 1969, has been extended to 120 days and as per section 193-A(3) read with first proviso thereof the Collector (Appeals) himself is authorized to extend the period for further 60 days and there is no mandatory requirement to make a notice of hearing specifically for extension of period. Without prejudice to above even if an Order-in-Appeal has been issued after the stipulated period in that case to the order-in-original, passed under section 179 of the Customs Act, 1969, shall remain intake and hold the field. (x) That in the light of submissions made above the contents of para (x) of grounds of appeal require no further comments, hence denied. 6. The consultant of the appellant during the course of hearing further argued that:-- (i) That as per law and as per provision of section 25(1) read with Rule 389 of the Customs Rules, 2001 the retrieved invoice from the container depict the transaction value of the goods to the contrary the respondent Collectorate official opt to re-assess the imported goods on the basis of available data of import of identical/similar goods, despite not warranted under the provision of section 25(1) ibid and Rule 389 of the Customs Rules, 2001. The said attitude confirms that the retrieved invoice is of no significance and neither depict the transaction value as per absurd opinion of the respondent officials and in support of his stance, the appellant provided the copies of the following GD's annexed with respective import documents showing that:-- CRN/Date Value of Retrieved Invoice Assessm ent Completed I-FS-1091244-300709 US$.541.40/MT US$.590.00/MT…
Read the unabridged text and precedent citation network on Al Wakeelo Legal Research Platform.