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Petitioner: Messrs WAWA GARMENTS INDUSTRIES (PVT.) LTD., KARACHI VS Respondent: ADDITIONAL COLLECTOR OF CUSTOMS, KARACHI and an-others
Court Name: Customs, Excise and Sales Tax Appellate Tribunal Judge(s): Muhammad Arif Moton Title:Messrs WAWA GARMENTS INDUSTRIES (PVT.) LTD., KARACHI vs ADDITIONAL
COLLECTOR OF CUSTOMS, KARACHI and an-others Case No.: Customs Appeal No, K-293 of 2009 Date of Judgment:2011-02-15 Reported As: 2011 PTD (Trib.) 2557 Result: Appeal accepted Judgment ORDER ' MUHAMMAD ARIF MOTON (MEMBER JUDICIAL-II).--This order will dispose-of Customs Appeal No, K- 293 of 2009, filed by the appellant against Order-in-Appeal No,1603 of 2009 dated 4-3-2009, passed by the Collector of Customs, Sales Tax and Federal Excise (Appeals), Karachi. 2. The brief facts of the case are that Messrs Wawa Garments Industries (Pvt.) Ltd, Karachi exported a consignment of "Blended Bed Sheets " to Singapore vide GD No, KEXP-54329 dated .4-11-2003. Subsequently duty drawback claim was filed for an amount of Rs,467903.00 vide S.R.O. No, 65541 dated 10-5-2007 under S.R.O. No, 406(I)/2002. At the time of examination, it was observed by the examination staff that the declared value was on higher side. Since at the time of examination, the goods are physically available, the examination staff is in a better position to assess the value of the goods. Accordingly rebate Section was advised to process the duty drawback claims @ US$.0.60/100gms in the light of Additional Collector's Order No,SI/ MISC/01/2001/ADC-I (Export). Thus, while processing the claim, declared value was slashed down and duty drawback claim was processed on the assessed value and sanctioned for an amount of Rs,328,281.00 Messrs Wawa Garments filed supplementary claim for the balance amount i,e, Rs, 139,622.00 vide ID No, 99 dated 7-5-2008. In the light of endorsed examination report and Circular No, SI/MISC/01/ 2001-ADC-1 (Export) issued by the Additional Collector, the duty drawback amount was sanctioned correctly and the filed supplementary claim for the differential amount prima facie does not merit consideration. Resultantly the appellant was called upon to show-cause notice by the respondent No, 1 as to why their supplementary claim should not be rejected. The appellant replied to the show-cause notice but the same did not find the approval of the respondent No, 1 and she passed
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Order-in-Original No, 03/08.EXP dated 31-5-2008. The operative part of the impugned order read as under:- "The exporter's representative have failed to produce any documentary evidence in favour of his contention of fair declared value. It is a fact that Customs Staff at exporting station examined the goods physically. Abnormal values are specifically referred to the rebate groups. If exporter or his agent objects to such observation; representative sample is forwarded to price Check Committee for valuation check. Price Check Committee, being a legal body, in the presence of exporter/his representative, determines fair value. At many occasion declared value is ascertained to be fair in the Price Check Committee. Exporter at the time of export had this option available which he did not desire to opt. Now in absence of any representative sample, it is not possible to accept declared value as fair. Therefore, I conclude that the original claim was processed correctly at US$. 0.60 per 100 gms on the recommendations of examination staff and in the light of circular SI/MISC/01/ 2001-ADC-1 (Exports) dated 3-10-2003. Supplementary claim therefore, does not hold merit and is accordingly rejected." 3. The order was challenged before respondent No, 2 who also vide his order dated 4-3-2009 rejected the appeal by observing that:-- "I have examined the case record and given due consideration to the arguments made before me. It is evident from the record that customs, value of the exported goods involved in the instant case was reduced to US$. 0.6 per 100 grams in accordance with Circular dated 3-10-2003 issued by the Additional Collector of Customs (Exports), Customs House, Karachi as per practice and there is nothing on record to suggest that the appellants had raised any objection to that at the time of examination/export of the goods. Obviously, had the appellants objected to the above mentioned reduction in value of the exported goods, the Collectorate would have made necessary enquires to deal with the appellants' claim accordingly. It appears that the appellants avoided to confront any such situation: instead, they raised the issue when the goods had been exported and the department was not able to make any further enquiry with regard to valuation of the goods. This attitude itself indicates the not so-straight mindset of the appellants. Therefore, the learned counsel's objections regarding the Circular dated 3-10-2003 are not tenable. Similarly, the learned counsel's arguments regarding lack of jurisdiction of the adjudicating officer is not well founded the relevant provisions of law state that an Additional Collector of Customs is empowered to decide cases the amount involved certainly did not exceed Rs,1,000,000.00 and in this case the amount involved certainly did not exceed Rs,1,000,000.00, even otherwise under section 4 of the Customs Act, 1969 an officer of Customs has been authorized to exercise powers of the officers working under him. Therefore, even if the adjudicating officer (an Additional Collector) exercised the powers vested in an Assistant Collector working under her administration control she did not act unlawfully. All in all, I do not see any weight in the arguments advanced by the learned counsel. 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) The show cause notice issued to the appellant is silent about the allegation, the law that had been violated and penal clauses that are attracted meaning thereby that the appellant was not charged for any contravention of law/rules, rather he was asked by the respondent to justify the unilateral/arbitrary act of the Collectorate of Exports for slashing his original duty drawback claim, despite admissible under law. Since no charges have been leveled against the appellant the show cause notice and order-in-original issued/ passed by the respondent are ab-initio void as per the
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dictum laid down by Supreme Court of Pakistan in its reported judgment 2001 SCMR 838 wherein their Lordships of the honourable Supreme Court held:-- "It is well settled proposition of law that a thing required by law to be done in a certain manner must be done in the same manner as prescribed by the law or not at all. Since the show-cause notices are vague and not conformity with the law, therefore the same had no legal effect and as such the appeals have no merit and dismissed as the learned counsel of the appellant (which was Assistant Collector of Customs, Dry Port Peshawar and others) has not been able to point out any legal infirmity in the impugned judgment in as much as, notices are concerned." (ii) That the order-in-original has been passed- in excess of the jurisdiction of the authorities passing orders. For rejection of a supplementary claim a show-cause notice has to be issued under para 47 of CGO 12 of 2002 dated 15-6-2002 i,e, by competent sanctioning authority. Since the amount of the claim of appellant is 139,622.00 and the competent authority to adjudicate the subject case in terms of para 47 is Assistant Collector. Wherein, in the instant case the order-in- original was passed by the Additional Collector of Customs having power to adjudicate case of duty drawback not below to Rs,300,000.00 and above Rs,1,000,000.00. Simultaneously, under any section of the Act the respondent was not empowered to transgress the jurisdiction of her subordinates, as held by the Superior Courts of Pakistan. Resultantly, the instant show cause notice and order-in-original suffer from lack of powers and, are therefore, null and void ab initio. (iii) That the respondent No, 2 is at fault in interpreting the provisions of the Act in an absurd manner i,e, under section 4 of the Customs Act, 169 empowers the respondent No, 1 to issue show- cause notice and pass order-in-original, while encroaching the jurisdiction of her subordinates. If that is the essence of section 4 ibid, then there was no need for incorporating section 179 in the Act fixing monitoring limit of the customs officers for adjudication of the contravention cases and direction vide Para No, 47 of CGO 12 of 2002 dated 15-6-2002, wherein amount of claim was made the basis of rejection of claim by the authorities empowered under the said para to sanction/reject the claim. None of the officer empowered under section 179 or para 47 can transgress or encroach jurisdiction of their subordinates or higher authorities. The opinion formed by the respondent No, 1 is nothing more than forced construction of law. (iv) The appellant also derived strength from the reported judgment of Superior Court (Major Syed Walayat Shah v. Muzzafar 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 Supreme Court 514 Ali Muhammad v. Hussain Buksh and others and PLD 2001 Supreme Court 514 Land Acquisition Collector, Noshehra and others v. Sarfaraz Khan and others wherein, their lordships of Supreme Court of Pakistan held "that it is an element to principle that if a mandatory condition for the exercise of jurisdiction by a Court, Tribunal or authority is not fulfilled than the entire proceeding which follows become illegal and suffer from want of jurisdiction/powers. Any order passed in continuation of these proceedings in appeals or revisions equally suffers from illegality and are without jurisdiction" (v) That the respondent totally ignored the provisions of law and opined that the ADC can fix value of the exported goods for payment of duty drawback claim amount with the consideration of respective Associations of the exporters. The said contention is not valid, rather void ab-initio besides being unilateral and arbitrary, being done under the prohibited method of Rule 110 of Customs Rules, 2001. (vi) No assessm ent or valuation of the consignment can be made on the recommendation of any committee or association as the same is nullity in the eyes of law as held by Appellate Tribunal and High Court in their judgment Customs Appeal No,1048/99 (H.M. Abdullah v. Collector of Customs (Appeals), PLD 1996 Karachi 451 the Collector of Customs and another v. Abdul Razzak, 2004 PTD
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2993 Collector of Customs (Appraisement) v. H.M. Abdullah and another 2005 PTD 21 Yousuf Enterprises v. The Collector and 2006 PTD 674 Pakistan Dry Battery Manufacturers Association v. Federation of Pakistan. (vii) That only the C.B.R. Or any authorized officer can fix minimum customs value of goods specified in the, 1st schedule and 2nd schedule through a notification under subsection (14) of section 25 of the Customs Act, 1969 (as stood prior to omission through Finance Act, 2005). For ease of reference, the expression is narrated below: "Notwithstanding anything contained in subsections (1), (5), (6), (7), (8) and (9), if the board or such officer as is authorized by the Board in this behalf is satisfied that it is necessary or expedient so to do the board or the officer may, by notification in the official Gazette, for the purposes of levying customs duties under this Act or any other law for the time being in force, fix the minimum customs value of goods specified in the First Schedule and the Second schedule, having regard to the trend of value of such or like goods and subject to such conditions or limitations as the Board or such officer may deem fit. The Board or such authorized officer may fix different customs values for different classes or different description of the same type of goods. A notification issued under this subsection shall be effective from the day specified there in, notwithstanding that the officials Gazette in which such notification appears is published at any time after that day." (viii) The circular issued by the ADC vide No,SI/MISC/01/2007 fixing the maximum export price of bed sheets sets on the basis of per 100 grams is void ab initio as he was not empowered under section 25(14) of the Customs Act, 1969, unless he was empowered to do so through a Gazette Notification. Since he was well aware that he was not authorized, he intentionally and willfully fell short of mentioning his vested power under the Act in the said order. Therefore, the said circular is of no legal effect as, it was issued in the absence of availability of powers and to issue a show cause notice by the respondent on the strength of that is itself a serious illegality and appellant stands stood fortified from the reported judgments of Lahore High Court 2005 PTD 67 and 2005 PTD 86 in the cases of Messrs Sohrab Global Marketing (Pvt.) Ltd and Messrs Punjab Arms Co., Lahore v. Deputy Collector of Customs and 4 others. Their Lordship of the High Court while allowing the petitions held that "under the provision of subsection (14) of section 25 of the Customs Act, 1969, Central Board of Revenue or any other authorized officer can fix the minimum value of the goods specified in the 1st schedule and 2nd schedule through a notification. Since, the impugned advise/letter and any other further proceeding order passed their upon are held to be without lawful authority and of no legal effect.". (ix) That for determination of export price no alien method can be adopted, except the mechanism provided in the expression of section 25(15) of the Customs Act, 1969. Since the endorsed examination report in the case of appellant is silent in regards of determination of price under the provision of section 25(15) ibid, hence, the declared value is deemed to be fair and cannot be objected upon at belated stage i,e, at the time of processing/ sanctioning duty drawback claims. Resultant, deduction of duty drawback claim at the time of processing and sanctioning on the basis of a void order was erroneous and so the issuance of show cause notice against supplementary claim, which the appellant applied after deduction, to which he was entitled under the respective duty drawback notification from the day of departure of the vessel on which the captioned goods of the appellant were loaded. The opinion of the appellant was endorsed by the Customs, Excise and Sales Tax Appellate Tribunal while issuing judgfrent in Customs Appeals No, K- 322 of 2003 dated 26-9-2003 (Collector of Customs (Export) v. Bilal International) in the following words:- "The very preparation of contravention report is not only violation of the direction of C.B.R. But also is against the statuary provisions of section 25(15) of the Customs Act, 1969 which clearly specify the
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customs value of the exported goods shall be the value at the prescribed time, on the sale in the open market for the exportation of the country to which the goods are consigned" (x) That in case of doubt in correctness of the declared value, the objection should be based on concrete evidence in the shape of evidential invoice of the same category of goods, exported to the country consigned by the exporter, whose consignment is under scrutiny, like the appellant and the said invoice has to be supplied to the effected person (appellant) in terms of para 78 of the CGO 12 of 2002 dated 15-6-2002, reading as: "In cases involving mis-declaration of value the precise basis on which the declared values are held to be mis-declared should be clearly stated and copy of the evidence on the basis of which it is so held should also be supplied to the party after omitting the names of the local importers of identical goods which are not required to be divulged to them." (xi) That in line with the directions contained in para 78 of CGO 12 of 2002 dated 15-6-2002, the Customs, Excise and Sales Tax Appellate Tribunal held in its judgment in Appeal-No,K-1281 of 2005 dated 22-0-2006 (Muhammad Farooq and Sons v. The Collector of Customs, Sales Tax and Central Excise (Appeals)Karachi-II) "The charge of misdeclaration. Of value cannot be leveled in the absence of any evidence as directed by Board in Sr. 78 of CGO 12 of 2002 dated 15-6-2002, and neither on the basis of value ascertained in another case through a Committee formed contrary to the provisions of section 25(5) of the Customs Act, 1969 and the rules and regulation framed there under". ' Whereas, the Supreme Court of Pakistan in its reported judgment 2007 SCMR 1357 = 2007 PTD 1858 Collector of Customs, (Valuation) and another v. Messrs Karachi Bulk Storage and Terminal Ltd. Held that:-- "Rejection of declared value of goods and fixation of its enhanced value without disclosing adequate material or reason is arbitrary, whimsical and incomplete disregard of section 25 of the Customs Act, 1969, which requires the relevant authorities to disclose evidence and adequate material for rejecting the declared value and enhancing the same." (xii) That as regards the observation of the respondent No, 2 that the appellant has not objected to the remarks at the time of shipment is patently out of context as the customs officials endorsed the opinion without consulting with either exporter or their clearing agent, resultant they are left high and dry in this regard. Irrespective of that, it is appropriate for the appellant to submit that he can assert his right that his exported goods has to be assessed in accordance with the legal requirement any mistaken belief as to amount payable will not preclude the petitioner for asserting such legal right despite of the fact whether he agitate at the time of assessment or not or received duty drawback amount voluntary as held by the, Lahore High Court in its reported judgment 2008 PTD 1481 (Messrs Shafique and Company v. Assistant Collector of Customs and 2 others their lordship of High Court observed that: "Learned counsel for the Department, states that the petitioner was a contributory in the whole matter. This assertion is made on the grounds that the payment of the enhanced amount of fiscal levies on the basis of the higher valued assessed by the Customs Department was made voluntarily and without protest. This contention does not have much force because the petitioner is entitled to all remedies under law. Even if it is, for a moment conceded that he made payment voluntarily, he can at any time, assert his right to be assessed in accordance with legal requirement. Any mistaken belief as to the amount payable will not preclude the petitioner from asserting such legal right." (xiii)That in terms of subsection (3) of section 193-A of the Customs Act, 1969,an appellate authority has to decide an appeal within 90 days or within such extended period as the Collector (Appeals) may for reasons to be recorded in writing, extend, confirms, modify or annual the decision or order
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appealed against, meaning that in any case an order-in-appeal has to be passed and issued within maximum 180 days. (xiv) That appeal was filed by the appellant on 9-6-2008 and order-in-appeal was issued by the respondent No, 2 on 4-3-2009 i,e, after the expiry of initial 90 days and the period to be extended i,e, further 90 days (no extension was made in the instant appeal by the respondent No, 2 as evident from the contents of the order-in-appeal), meaning order was passed after the expiry of maximum stipulated period of 180 days rendering the order-in-appeal is time barred by 88 days and as such cannot be enforced as held in the judgments of High Court of Lahore 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. Wherein, their Lordship of High Court held that the prescribed limit for adjudication and appeal under the respective section of the Act are mandatory not directory while observing that:-- ' Provision of law prescribing time limit for revenue to create liability against taxpayer would, be deemed to be mandatory--Principles. ' Where inaction on the part of a public functionary within the prescribed time is likely to affect the rights of a citizen, the prescription of time is deemed directly. However, where a public functionary is empowered to create liability against a citizen 'only within the prescribed time, it is mandatory. When the prescribed limit is beneficial for the citizen and restrict the executive power to touch the pocket of a tax payer thereby creating certainty, then after its expiry, even if there was a good case for creation of liability, he will not be dragged in." (xv) That it is now well settled principle of law that whereas statute prescribes a particular mode or mechanism to do an act, the same is to be done in the same manner and within the frame work of relevant legal provisions. As such the issuance of show cause notice by an in competent authority would be in act lacking jurisdiction to do so in the case of Chittaranjan Cotton Mills Ltd. v. Staff Union reported as PLD 1971 SC 197, their lordship of the Supreme Court had observed:-- "Whereas the court is not properly constituted at all the proceeding must be held to be coram non judice and, therefore, non-existent in the eyes of law. There can also be no doubt that in such circumstances "it could never be too late to admit and give effect to the plea that order was a nullity", as was observed by the Privy Council in the case of Chief Kwame Asante, Treahon v. Chief Kwame Tawia" ' In Raunaq Ali's case (PLD 1973 SC 236), their lordships of the Supreme Court did observe in the following terms:-- "It is now well established that where an inferior tribunal or Court has acted wholly without jurisdiction or taken any action "beyond the sphere allotted to the tribunal by law and, therefore, outside the area within which the law recognizes a privilege or err", then such action amounts to a "usurpation of power unwarranted by law" and such an act is a nullity; i,e, to say, "the result of a prescribed exercise of authority which has no legal effect whatsoever". In such a case, it is well established that a superior court is not bound to give effect to it, particularly where the appeal is to the later discretionary jurisdiction. The courts would refused to perpetuate, in such circumstances, something which would be patently unjust or unlawful." (xvi)That irrespective of the above fact, it is not out of place for the appellant to submit further that the respondent Collectorate on one hand deducted duty drawback claim of the appellant at the time of sanction of original claim and subsequently 'opted to issue show cause notice upon filing of supplementary claim as against to the vital fact that bulk of claims of the bed sheet of various exporters were sanctioned on the price indicated by the appellant in their invoices or more than that without any let, hitch and hindrance an in case any amount was sanctioned, on submission of supplementary claim e.g. Export effected by Messrs the Export Company; Karachi against GD No, 121607 dated 9-0-2003 against which a claim was filed vide S.R.O. No,5289 dated 29-5-2003 for Rs,
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368,777.00 which was paid to the extent of Rs,180,373.00 and deduction was made for Rs,188,404.00 against which a supplementary claim bearing ID No, 17 dated 15-12-2005 filed and the same was sanctioned and was forwarded to bank for payment of the sanctioned amount. The differential treatment of the Collectorate with the appellant amounts to discrimination, which is not permitted under the articles of Constitution of Islamic Republic of Pakistan. 5. The departmental representative Mr.Hyder Pirwani, Appraiser, appeared on behalf of the respondent and furnished their comments on above cited grounds of appeal inter-alia as under:-- (a) That the show-cause notice is quite exhaustive as it contains view point and based on facts of the shipment and the status of filing supplementary claim. It is a valid and legal documents issued under section 180 of the Customs Act, 1969, therefore, having no comments thereon. (b) That the Additional Collector was competent to issue show cause notice and to pass order-in- original subsequently in the subject case by exercising powers of his subordinate as per expression of section 4 of the Customs Act, 1969 stating that an officer of Customs is also competent to exercise all powers and discharge all duties…
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