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Petitioner: MUBASHIR ENTERPRISES, KARACHI VS Respondent: COLLECTOR OF CUSTOMS, MODEL CUSTOMS COLLECTORATE APPRAISEMENT (WEST) CUSTOMS HOUSE, KARACHI
2018 P T D (Trib.) 460 [Custom Appellate Tribunal] Before Tahir Zia, Member Judicial-II and Muhammad Nazim Saleem, Member Technical-II MUBASHIR ENTERPRISES, KARACHI Versus COLLECTOR OF CUSTOMS, MODEL CUSTOMS COLLECTORATE APPRAISEMENT (WEST) CUSTOMS HOUSE, KARACHI and 2 others Customs Appeals Nos.K-988 to 992 of 2015, decided on 3rd January, 2017. Customs Act (IV of 1969)--- ----Ss. 25, 32(5)(e), 79, 80 & First Schedule, R.2(a)---Determination of customs value and classification of imported goods---Import of "Compact LCD/LED Display Panel 32 inch" and declaring same under PCT Heading 8529.9090 at the unit price US$ 29.00; whereas same were assessed by the department at the unit price US$ 72.00 under PCT Heading 8528.7212---Goods declaration was placed before the Classification Committee, which decided that the goods were classifiable under PCT Sub-Heading 8528.7212, in terms of R.2(a) to the General Rules for interpretation to First Schedule to Customs Act, 1969---Appeal filed by the importer against said decision of Classification Committee, had been dismissed by the Collector of Customs (Appeals)/Appellate Authority below---Contentions of importer were that; LED/LCD panels, could not display any image or video and even, could not amplify any sound, therefore those panels were used in the manufacturing of television sets; that importer itself was manufacturer of television sets and in order to develop aforesaid parts into television sets, importer separately imports built-in-system card (Receiving apparatus) back cover, speakers etc.---"Compact LCD/LED Panels" were always assessed and cleared by the Customs Authorities under PCT Heading 8529.9090, and that consignments of other importers were cleared under said PCT Heading---Stance taken by the Department was that in the light of R.2(a) of the General Rules for Interpretation to the First Schedule to Customs Act, 1969 "LCD/LED" had essential character of a television and was qualified to be classified under PCT Heading 8528.7212---Contradictory position taken by the department was incomprehensible---Importer was also importer-cum-manufacturer, who had been issued provisional certificate by Directorate of Input Output Co-efficient Organization to import "Compact Panel PDP/LCD/LED---Said provisional certificate was adequate evidence that the importer was a manufacturing unit and Department's contention that importer was not manufacturer, was incorrect---Two sets of classifications could not exist one for importers-cum-manufacturers and other for the commercial importers---Value was to be determined in the light of methods as prescribed under S.25 of the Customs Act, 1969---Department, in the present case, had not highlighted as to what were the basis of assessing of goods of the importer at value US$ 73.80 per piece---Held, value of US $ 73.80 per piece was arbitrary and without any legal basis---Discriminatory treatment had been meted out to the importer by the Department---If the "Compact LCD/LED Panels" imported by importers-cum-manufacturers, were classified under PCT Heading 8529.9090, there was neither any legal ground nor rationale as to why the same item imported by the appellant/importer should not be classified in the same PCT Heading---Article 10-A of the Constitution, guaranteed fair trial which also included non-discriminatory approach by the competent authority for the contesting parties---No doubt, preferential treatment was given to importers-cum-manufacturers in order to promote industry; however that could not be allocated by different classification headings in Pakistan Customs Tariff for the commercial importers and for the importers-cum-manufacturers---Imported "Compact LCD/LED Display Panels" were without television reception apparatus and were not television sets, hence, were classifiable under PCT Heading 8529.9090 as claimed by the importer---Impugned order being sketchy and non-speaking was set aside, in circumstances. 1989 SCMR 353 and 2011 PTD (Trib.) 110 ref. Atif Zia for Appellant. Masood Ahmed, A.O. for Respondents. JUDGMENT MUHAMMAD NAZIM SALEEM, MEMBER TECHNICAL-II.--This order disposes off five (05) Customs Appeals Nos. K-988 to 992/2015 directed against Orders-in-Appeals Nos. 10074 to 10077/2015 and No. 10073/2015 both dated 08.05.2015 passed by the Collector of Customs (Appeals), Karachi. All the appeals involve identical issues of law with slight variation in facts. In view of aforementioned position, the same were heard together and are being decided through this common order in the light of judgment of the Hon'ble High Court of Sindh in Customs Reference No. 157 of 2008 - S.M. Naqi son of Syed Muhammad Hussain, Karachi v. Collector of Customs (Adjudication-I) and others. In order to avoid any confusion, we would discuss facts of Customs Appeal No. K-989/2015. 2. Brief facts of the case as given in the impugned Order-in-Appeal, are that the Appellant imported a consignment of "Compact LCD/LED Display Panel" 32 inch and declared the impugned goods under PCT heading 8529.9090 at the unit price US $ 29.00, however, the same were assessed by the Respondent Department at the unit price US $ 72.00 under PCT heading 8528.7212. 3. The GD was placed before the Classification Committee. The Classification Committee decided the matter through Public Notice 13 of 2014 dated 18.11.2014 concluding that the impugned goods are classifiable under PCT sub-heading 8528.7212 in terms of rule 2(a) to the General Rules for Interpretation. The appellant feeling aggrieved filed an appeal before the learned Collector of Customs (Appeals), Karachi who passed order as under:-- "I have examined the case record. The appellants imported and declared the goods as Compact LCD/LED panels under heading 8529.9090, as TV parts, vide GD number KAPW-HC-63004, dated 28.10.2014. The subject GD was assessed provisionally on 06.11.2014 under section 81 of the Customs Act, 1969 as matter of classification was pending in the classification centre. The matter of classification was decided vide public notice 13/2014, dated 18.11.2014. Accordingly the assessment was finalized in the light of public notice under heading 8528.7212. The appellants have assailed this decision as arbitrary and claimed that it was change of practice retrospectively therefore not legally valid. It is on the face of record that another GD by the appellants, which is impugned in linked appeal i.e. KAPW-HC-28176 dated 26.08.2014 was assessed provisionally on 06.09.2014 and finalized on 11.09.2014, on the basis of report by committee of experts, two months before the issuance of Public Notice. Even otherwise the appellants have been collaborating and appearing before the classification committee. Therefore there was no abrupt change in practice, particularly after assessment of GD. No. 28176 on 11.09.2014 has attained finality therefore the question of retrospectively does not arise. The appellants have also challenged the decision of Classification Committee and the Public Notice 13/2014, on technical grounds, however this is not the relevant forum to review this decision. The appellants have further cited their three GD's i.e. KAPW-HC 26157, KAPW-HC-169335, KAPW-HC-123230, wherein identical goods were cleared under heading 8529.9090, however it is noted that all these are dated prior to finalization of GD, KAPW-HC-28176. In their rejoinder to parawise comments, the appellants cited some more GD's by other importers and stated that they are being discriminated and identical consignments are being released by the same Collectorate under heading 8529, 9090. The DR after examination of GD's No. KAPW-HC-64029, 122721, 104356, 140070, 121182, clarified that those GD's pertained to M/s. Unique, M/s HNC, who are approved importer-cum-manufacturers, who have been issued certificate by IOCO under S.R.O. 565(I)/2006. The parallel can not be drawn between imports by the appellants and those under S.R.O. 565(I)/2006 as the latter allows concession to importer-cum-manufacturers to import even SKD Kits for assembly of Plasma TV sets/LCD panel sets, (imported without packing materials, cartons, boxes, brochures and printed materials). In view of the afore-said discussion, it is held that there is no merit in the appeal, assessment finalized by respondents is upheld. This order shall apply mutatis mutandis on the following cases having the same facts, circumstances and points of law.
S. No.
Appeal No
Name of Appellant
GD No. and Date
1
Cus/6694/2015A- West
Messrs Mubashir Enterprises
KAPW-HC-28176 dated 26.08.2014
2
Cus/6695/2015A- West
Messrs Mubashir Enterprises
KA PW-HC-40969 dated 18.09.2014
3
Cus/6696/2015A- West
Messrs Mubashir Enterprises
KAPW-HC-56152 dated 17.10.2014
4. Feeling aggrieved, the Appellant filed an appeal before this Tribunal on the following grounds. That whether the rejection of declared value of goods and fixation of enhanced value without disclosing adequate material and without allowing opportunity of defense is arbitrary, whimsical, capricious and in complete disregard of Section 25 of Customs Act, 1969. That whether the rule 2(a) of General Rules of Interpretation to First Schedule to Custom Act, 1969 is validly applicable in the absence of essential character of TV Set and when devoid of equipment necessary for reception. That whether Public Notice 13 of 2014, dated 18.11.2014, based on invalid foundation, is contrary to law and of no legal effect. That whether the learned respondent is lawfully authorized to abrupt change in classification with retrospective effect in violation of Supreme Court directions in case law reported as 1989 SCMR 353, and disregard the directions contained in Para 74 of CGO 12 of 2002 to the effect that change if any shall be applicable from the date of notification, when misconstruction and misinterpretation of relevant law is not involved. That whether the finding of the learned respondent that the assessment on GD 2816 on 11.09.2014 (which is also under appeal) had attained finality even before the issuance of Public Notice No. 13 of 2014 dated 18.11.2014 is valid, when the assessment made on the said date was in the nature of provisional assessment, and the matter of determination of correct PCT rested on the later recommendation of said committee. That whether the directions of FBR in CGO is binding on the respondent under section 223 of Customs Act, 1969. It is therefore prayed in the interest of justice and fair play, the Honourable Tribunal may kindly order as under: 1. To declare that the rejection of appeal by respondent 3 is unlawful and not sustainable. 2. To declare that the rejection of declared value is inconsistent with the provisions of Section 25 of Customs Act, 1969. 3. That Rule 2(a) of General Rules of Interpretation to First Schedule is not applicable in the absence of essential character of transmission and reception equipment. 4. That the Public Notice issued 13 of 2014 is contrary to law and of no legal effect. 5. To declare assessment claimed under HS Code 8529.9090 as correct and per established past practice. 5. The respondent department filed para wise comments on the grounds of appeal which are detailed as under:-- Briefly, in the instant case the importer Messrs MUBASHIR ENTERPRISES imported a consignment declared to contain "Compact LCD/LED Display Panel Size 32" " with stand Model No. UA32EH4003 under PCT heading 8529.9090 at declared unit value US$ 297- vide G.D No. KAPW-HC-63004 dated 28.10.2014 with self-assessment under section 79(1) of the Customs Act, 1969. The GD was marked for scrutiny in terms of Section 80 of the Customs Act, 1969 and it was found that the imported goods were actually LCD 7 LED TV set a hence correctly classifiable under PCT heading 8528.7212 @ C.D 25% value US $ 73.80/PCS. On the request of the Appellant/Importer the assessing officer assessed the goods provisional under section 81 of the Customs Act, 1969 and the matter was referred to Classification Committee in terms of Section 81(2) of the Customs Act, 1969 read with Rule 440 of the Customs Rules, 2001. The PCT committee provided the hearing opportunity to the Importer. Accordingly, Classification Committee issued public notice bearing No. 13 of 2014 dated: 18.11.2014. The said public notice itself is self explanatory and provided the reason for classification of goods as required under Section 24A of the General Clauses Act, 1897. The goods were finally assessed after the decision of the Classification Committee vide Public Notice No. 13/2014 dated 18.11.2014. It is also mentioned that in compliance of the honorable Federal Tax Ombudsman order was issued. That in the light of submissions made above, the contents of para (1) of grounds of appeal are incorrect, hence, denied. It is submitted that the Classification Committee provided the hearing opportunity to the Appellant Importer as well as the department and after due hearing issue Public Notice No. 13/2014. No appeal has been filed before the FBR. That in the light of submissions made above, the contents of para (1) of grounds of appeal are incorrect, hence, denied. It is pointed out that PCT Committee decided the issue of classification considering the goods importer in the light of rule 2(a) of General Rules of Interpretation to First Schedule to Customs Act. That, in the light of submissions made above, the contents of para (1) of grounds of appeal are incorrect, hence, denied. That, in the light of submissions made above, the contents of para (4) of grounds of the appeal are incorrect, hence, denied. It is submitted that in the instant case the goods were assessed provisionally under Section 81 of the Customs Act, 1969 and the case was referred to PCT Committee hence the decision of the Committee is clearly applicable to this import. That in the light of submissions made above the contents of para (E) of grounds of appeal are incorrect hence, denied. In the light of submissions made above, it is respectfully prayed that the subject appeal may kindly be dismissed. As being time barred and devoid of merits. PRAYER It is therefore prayed in the interest of justice and fair play that the Honorable Tribunal may kindly order as under if deemed fit: 1. To declare that rejection of declared value is unlawful and contrary with the provision of Section 25 of Custom Act, 1969. 2. Rule 2(a) of General Rules of interpretation to First Schedule is not applicable in the absence of establishing essential character of finished T.V. Hence the same has not been invoked correctly. 3. That there cannot be two different HS Codes for assessment of the same goods under the same law and Tariff Classification. 4. That the Public Notice 13 of 2014 is based on illegal foundation contrary to law, hence of no legal effect. 5. To declare assessment claimed under HS Code 8529.9090 is correct and in accordance with established practice and cannot be changed abruptly. 6. The Appellant also filed Rejoinder to comments filed by the respondent department as above. The Rejoinder is reproduced hereunder:-- The Appellant is a manufacturer and imported goods are meant for self consumption. The counter submissions in reply served upon us in the last hearing has been perused. The reply furnished is vague, non specific, general in nature, sketchy in a stereo typed manner, with no comments on the legal issues raised in the grounds of appeal like; 1. No comments on Application of rule 2(a) of GRI, when it is admitted by the respondent in Para 6 of P.N 13 of 2014, dated 18-11-2014, (the basic document giving rise to the controversy regarding assessment in question) that "The samples were consistent with LED/LCD television panels without built in system card, back cover, speakers and ribbon wires. On being asked about the built in system card and back cover, the importer replied that the same are also imported separately", whereas, rule 2(a) of GRI, categorically states "Any reference in a heading to an article incomplete or unfinished, provided that, as "presented", the incomplete or unfinished article has the "essential character" of complete or finished article. When the imported goods do not possess the essential character of finished T.V as presented, that is, it can neither transmit radio waves, nor reproduce on screen of visual images or sound due to missing parts, how it could come within the meaning and scope of Rule 2(a) of GRI, in the absence of reception apparatus. The P.N. 13 of 2014 is contrary to law and of no legal effect. 2. No rebuttal has been filed to refute application of established past Practice in the light of Supreme Court's decision. No abrupt change can be made with retrospective effect. The present as well as past practice is to classify such goods u/h PCT 85.29.9090 and not 85.28.7212, as alleged. Evidences of Past and present practice were duly provided. The matter has already been reviewed by Respondent in a similar case, upholding assessment u/h 85.29,9090. 3. No comments on application of Para 74 of CGO 12 of 2002 which firmly States that any change in practice is to take place from the date of notification and not retrospectively. In the instant case all the G.D are filed prior to the date of notification that is, P.N.13 of 2014 dated 18-11-2014. The learned Respondent has ignored the fact that non-compliance of directions issued by CBR (CGO 12), constitutes violation of section 223 of Custom Act, 1969 on one hand as supported by case law reported as 2011 PTD (Trib.) 110, and on the other against the settled principle of law by superior courts renders the impugned order not sustainable in the eyes of law. Copy enclosed. 4. Legality of rejection of declared value without disclosing adequate material or allowing opportunity of defense, and relying arbitrarily on 60% of Valuation Ruling No. 675/2014 dated 02-05-2014, when such ruling is for branded T.V Sets only, and not applicable and is in violation to rule 107(a) of Custom Rules, 2001. 5. The matter of correct classification and issues involved in these appeals have been decided by the learned Tribunal in favour of the Appellant in the case of this very importer involving the same goods. Ruled correct classification as PCT 85.29.9090, and in line with established past and present practice. No discrimination could be made. In view of the above, it is prayed on merits to declare P.N. 13 of 2014 as illegal, and void ab-initio, Panels imported as rightly classifiable and as claimed u/h 85.29.9090 as in accordance with established past practice and upheld by this Tribunal in a similar case, while rejection of value w/o opportunity or corroborative evidence as contrary to law and not sustainable. The impugned order is annulled accordingly. 7. The respondent department submitted cross-objections/para-wise comments on the points raised in the Rejoinder as under:-- 1. That before making para-wise comments, at the outset, it is respectfully submitted that according to the sub-paras (vi) to (ix) of Para-2 Chapter-II of the CGO No. 12/2002 (annex-A) read with "General Interpretation Rules" of the G.I.R (Annex-B), as envisaged in the preamble of Pakistan Customs Tariff (Act IV of 1969), the Classification Committee's decision on PCT Heading is final unless it is revoked by the Board. That is why, the learned Collector (Appeals) has very rightly pointed out, in paragraph (5) of the Order-in-Appeal, that the appeal before the Collector (Appeals) is not the right forum to assailed the decision of the Classification Committee. Thus, in view of the aforesaid provision of law the subject appeals are not maintainable and liable to be dismissed on this account alone. 2. That on merit of the case and considering the provision of Section 195-B of the Customs Act, 1969, the subject appeals are otherwise not maintainable until and unless the appellants make the payment of duties and taxes as per final assessment. PARAWISE COMMENTS ON THE REJOINDER:-- (a) That the appellant's contention with reference to the status of manufacturer of T.V Sets is incorrect, hence, denied in the absence of any corroborative documents like monthly Sale Tax Returns, EDB's approval, etc. confirming the manufacturing of T.V Sets. Further, without prejudice to the above even otherwise there is no separate procedure or law for classification of the imported goods for commercial importer or the manufacturers. There is no such discrimination. (b) That the goods imported by the appellants having essential characteristics of T.V sets, therefore, considering the Classification Committee's decision and Rule 2(a) of G.R.I the appellants' goods are/were correctly classifiable under PCT Heading 8528.7212. (c) That keeping in view the contents of the Decision of the PCT Classification Committee and the Assessment Order, the Contents of para (3) of the Rejoinder are incorrect, hence, denied. (d) That keeping in view the contents of para (5) of the Assessment Order and the contention placed before the learned F.T.O. the contents of para (4) of the Rejoinder with reference to "Past-practice" are incorrect, hence vehemently denied. Even otherwise there was no past practice and the recovery proceedings, in terms of section 32(3A) read with section 32(5)(e) of the Customs Act, 1969, are being initiated for all such isolated GDs where less payment of duty/ taxes has been made by the importers. Without prejudice to the above, even otherwise it is a cardinal principle of law that two (2) wrong cannot make one right. (e) That in the light of submissions made above there is no question of application of Para 74 of CGO 12/2002 on the appellant's case, hence, the contents of para (5) of the Rejoinder are incorrect, hence denied. (f) That in the absence of any Revision /Review Application on part of the appellants, there is no question to assess the goods at less than the "Customs Value" determined for the T.V. sets (i.e. LED/SMD, etc). Without prejudice, even otherwise the appellants have failed to substantiate their declared value as transaction value within the meaning of subsection (2) read with subsection (1) of Section 25 of the Customs Act, 1969. Further, the issue of valuation is a past and closed matter because the appellants have never pressed the said issue at original assessment stage, neither at F.T.O. stage nor even say anything against the Valuation Ruling No. 657/2014 in the appeal. In the absence of Review application, in view of the recent order dated: 10.11.2015 of the Hon'ble High Court, in the case of C.P No. D-6918/2015 (Danish Jahengir v. Federation of Pakistan and others), the appellants have no case against the V.R. (g) That the Order dated: 03.12.2015, in Appeals Nos. K-533 and 534/2015, is neither identical on facts nor related to this Collectorate. Even otherwise it is an Order-in-Persona, which cannot be applied as a settled law. Further as per information gathered from the MCC-Appraisement (East), they are going to assail the said order before the Hon'ble High Court, in terms of Section 196 of the Customs Act, 1969, therefore the said order has so far not attained the finality in terms of section 194-B(4) of the Act. (h) That in view of the submission made above, it is prayed to dismiss the subject appeals as the decision of classification committee is correct and on merits and falls out said the jurisdiction of the Appellate Tribunal. 8. We have heard both the contesting parties as well as examined the relevant record. The central issue involved in the whole controversy is classification of the "Compact LCD/LED Display Panels" imported by the Appellant. The Appellant classified the same under PCT heading 8529.9090 in their Goods Declaration KAPW-HC-63004 dated 28.10.2014, whereas the Respondent Department classified under PCT heading 8528.7212. The unit price declared by the Appellant is US $ 29.00 whereas the Respondent department has assessed the same to US $ 72.00. Before proceeding further, it would be adviseable to examine the main heading of both the aforementioned PCT headings, as such, the same are reproduced hereunder:-- 85.28: Monitor and projectors, not incorporating television reception apparatus; reception apparatus for television, whether or not incorporating radio-broadcast receivers or sound or video recording or reproducing apparatus. 8528.7212: - - - - Other 85.29: Parts suitable for use solely or principally with the apparatus of heading 85.25 to 85.28. 9. Technically speaking, the Appellant rely on rule No. 1 of General Interpretation of Rules (G.I.R) to First Schedule to Customs Act, 1969 whereby classification of imported items is determined according to terms of the PCT heading and those of relevant section or chapter notes. Therefore, they emphasize that "reception apparatus for television, whether or not incorporating radio-broadcast receivers or sound or video recording or reproducing apparatus" means that it must contain some instrument/appliance or…
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