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Petitioner: Messrs EASTERN CONSTRUCTION COMPANY VS Respondent: ADDITIONAL COLLECTOR OF CUSTOMS, MCC OF APPRAISEMENT-WEST, CUSTOM HOUSE, KARACHI
Court Name: Customs Appellate Tribunal Judge(s): Tahir Zia Title:Messrs EASTERN CONSTRUCTION COMPANY vs ADDITIONAL COLLECTOR OF
CUSTOMS, MCC OF APPRAISEMENT-WEST, CUSTOM HOUSE, KARACHI Case No.: Customs Appeals Nos.S-436 of 2016 Date of Judgment:2017-04-18 Reported As: 2018 PTD (Trib.) 1170 Result: Appeal allowed Judgment ORDER TAHIR ZIA (MEMBER JUDICIAL-II).---Through this order, I intend to dispose off two Custom Appeal No. K-436/2016 filed under section 194-A of the Customs Act, 1969 directed against Order- inOriginal No. 480555 dated 12.02.2016. 2. Briefly facts of the case are that the Principal Appraiser, Group-VII, MCC, Appraisement, West, Karachi, that Messrs Eastern Construction Co., Karachi imported a consignment said to contain "Used Trust Mounted Crane" at declared unit value US$ 4000.00, in terms of Para 9(5) of Import Policy Order, 2013. The importer Messrs Eastern Construction Co., Karachi determined their liabilities of payment of customs duty and other taxes in terms of section 79(1) of the Customs Act, 1969 and filed Goods Declaration No.KAPW-HC-70222-20-10-2015, claiming assessment under HS Code 8705.1000, for clearance thereof. In order to confirm as to whether the declaration of the importer and payment of duty and taxes are correct, the, under reference GD was selected for examination / assessm ent in terms of Section 80 of the Customs Act, 1969, and forwarded to the examination staff. On physical examination of the goods, shed examination staff reported that the imported vehicle declared as truck mounted crane is in fact an "old and used truck", whereas an old and used crane having independent chassis number is ordinarily mounted on the same. It has been further reported in the examination report that truck and crane are two separate items and a very old model crane has been put / fixed on the truck with ordinary type bolts which are detachable. It has been categorically confirmed that the crane is neither mounted nor adopted. The detailed examination report is reproduced as under:-- "INVOICE AND PACKING LIST NOT REQUIRED. EXAMINED THE CONTAINER IN THE LIGHT OF GD RETRIVED
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FROM SYSTEM. DESCRIPTION: OLD AND USED TRUCK MOUNTED CRANE, WHEREAS ON PHYSICAL EXAMINATION GOODS ARE FOUND AS UNDER; ONE UNIT OLD AND USED TRUCK BRAND ISUZU, CHASSIS NO-FRR 12DA3607758 MFG, YEAR. 1998. CAPACITY 4.9 TON, AN OLD AND USED CRANE HAVING INDEPENDENT CHASSIS WHICH IS PLACED ON THE CHASSIS OF TRUCK. LIFTING CAPACITY OF CRANE IS 4.9 TONS. THE CRANE HAVE ROTATING BASE, AND HAS SEPARATE CABIN AND OPERATOR SEAT. TRUCK AND CRANE HAVE SEPARATE CHASSIS FRAMES. WIDTH OF CHASSIS OF TRUCK AND CHASSIS OF CRANE ARE DIFFERENT. THE FITTING IS MADE WITH 2 SETS OF BOLTS EACH SIDE CLAMPING THE CHASSIS OF TRUCK AND CRANE. THE CHASSIS OF CRANE AND TRUCK WERE IN COMBINATION TO HAVE DOUBLE CHASSIS i.e. COMPLETE CRANE ALONG WITH CHASSIS AND HYDRULIC LOAD BEARING JACKS/FEET WERE FOUND TO BE FITTED/PLACED ON THE COMPLETE CHASSIS OF TRUCK. THERE WAS NO MECHANISM FOR OPERATION OF CRANE IN THE CABIN OF TRUCK. THE CRANE WAS FOUND-FITTED WITH OPERATING LEVERS AT THE BACK END AND LEVERS IN THE OUTER CABIN OF TRUCK. THE CRANE WAS FOUND FITTED WITH OPERATING LEVERS AT THE BACK END AND LEVERS IN THE OUTER CABIN FOR CRANE OPERATIONS. THE CRANE IS OF VERY OLD MODELS. IN THE LIGHT OF THE ABOVE FACTS THE CRANE CANNOT BE TERMED AS PERMANENTLY MOUNTED AND ADOPTED TO CONSTITUTE A SPECIAL PURPOSE MOTOR VEHCLE. IT IS AN ATTEMPT TO IMPORT OLD AND USED TRUCK IN THE GARB OF TRUCK MOUNTED CRANE., NETWT:7900KGS, CHECH WT:100% VIDE KICT SLIP NO.647197 DATED 21/10/2015 FOUND WT:7980KGS, IMAGES ARE ATTACHED, GROUP MAY CHECK ALL ASPECTS UNDER THE LAW AS PER IPO." In view of the above, it is clear that the importer M/s. Eastern Construction Co., Karachi, misdeclared the description of goods and classification thereof and attempted to clear an old and used truck, which is classifiable under the HS Code 8704 as per the afore-said examination report and the Explanatory Notes, in the garb of old and used truck mounted crane under PCT Code 8705.1000 in terms of Para 9 (5) of the Import Policy Order. Besides, in terms of Para 9 (5) of the Import Policy Order, pre-shipment inspection certificate of only notified PSI companies as mentioned in Appendix-H of Import Policy Order is required to be submitted/accepted, whereas in the instant case importer provided pre-shipment inspection certificate issued by M/s. Inchcape Shipping Services (Dubai) L.L.C., who are not listed in the aforementioned Appendix-H. Therefore', the same is also not acceptable being issued by a company, other than notified/ prescribed one. The importer have, thus, contravened the provisions of Sections 16 and 32 of the Customs Act, 1969 read with Section 3(1) of the Imports and Exports Controls Act, 1950 punishable under clauses (9) & (14) of Section 156(1) of the Customs Act, 1969 and section 3(5) of the Imports and Exports (Control) Act, 1950. If this had gone undetected, a truck in old and used conditioned would have been released, which is otherwise not permissible in terms of entry No. 10 of Appendix-C of the prevailing Import Policy Order. On the basis of the said formed opinion, show-cause notice dated 06.11.2015 was served on the appellant that as to why imported old and used trucks should not be confiscated under the provision of the Customs Act, 1969 referred therein and Section 3(1) of the Imports and Exports (Control) Act, 1950 and as to why penal action should not be taken against them for the reported violation. The appellant in reply, requested for re-examination of the imported "old and used truck mounted crane" as evident from page 4 of the order, the respondent refused that on the basis of his observation available in the order-in-original and which he passed on 12.02.2016 , through which he held the charges levelled in the show-cause notice as established and ordered confiscation of the imported "old and used truck mounted cranes" and imposed a penalty of Rs. 500,000.00. Operative portion of the order is reproduced herein-under:-- I have examined the case record of the case and submission made before me, The request for re- examination does not merit consideration on two grounds; one, the examination report is unambiguous and two, after the introduction of computerized clearance system the post of MSA (Machinery Shed Appraiser) does not exist anymore. On the other side, the issue of importing trucks in the garb of truck mounted cranes is very serious. Importers have tried to misuse the legal
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provision of pars 9(ii)(5) of the Import Policy Order (IPO) 2013, which allows the construction companies to import secondhand crane lorries, subject to certification by the competent authority of exporting country or a recognized pre-shipment inspection company listed in Appendix-H to IPO, 2013 to the effect that the said crane lorries are; (a) compliant with Euro-1 emission standards; and (b) is in good working condition and has a remaining productive life of five years. The WCO Explanatory Notes to the claimed HS Heading 8705 (which pertains to special purpose motor vehicles, other than principally designed for the transport of persons or goods) states that this heading covers a range of motor vehicles. Specially constructed or adapted, equipped with various devices that enable them to reform certain non-transport functions, i.e., the primary purpose of a vehicle of this heading is not the transport of persons or goods. As per the said Note, this heading includes Crane Lorries (trucks), not for the transport of goods, consisting of motor vehicle chassis on which a cab and rotating crane are permanently mounted. However, lorries (trucks) with self-loading devices are excluded from that heading. The imported consignment was examined by the concerned officials of the Collectorate to ascertain veracity of the declaration of the importer. Examination report pertaining to the said consignment was prepared and uploaded in the system. The respondents disagreed with the opinion given at the end of that report, but could not differ with the preceding reported factual status, i.e. condition of the vehicle imported items. It thus becomes obvious when the said status/condition is viewed in light of the essential requirement given in the afore-cited Explanatory Notes to HS Code 8705 for the Crane lorries (trucks) to consist of motor vehicle chassis on which a cab and rotating crane are permanently mounted (and suitably adapted accordingly, that the vehicle/ imported items do not fall under the declared PCT Code 8705 1000. This is so as the placement of the old and used crane on an old and used truck has been found to be lacking permanence and suitable adaptation to operate as a functional truck mounted crane. For these reasons, the old and used crane is separately classifiable under the relevant sub-heading of PCT Code 8426 and the old and used truck would be appropriately classifiable under PCT Code 8704.2190, as ascertained by the Group. Once the issue of classification of an imported item stands decided, then status of its importability is to be determined under the prevalent Import Policy Order The respondents attempt to jump at the import provisions without first ascertaining the exact nature and consequent classification of the imported item is not the correct and legal approach for assessment and customs clearance of imported goods. As per serial No.10 of Appendix-C to the IPO, 2013, the vehicles falling under PCT Code 8704.2190 are not importable in secondhand or used condition. The order of the Customs Appellate Tribunal, Bench-I, Karachi dated 30.05.2012 in Customs Appeal No. K-134/2012 is not relevant for the subject proceedings as the said order pertains to import clearance of vehicles declared as prime movers under PCT Code 8701.9060. Such vehicles have an entirely different criteria / requirement to qualify for classification/ categorization as prime movers. The Ministry of Commerce's clarification letter dated 12.03.2012 has also been cited in their defence by the respondents along with the Order-in-Appeals Nos. 5971-5972/2012 dated 16.04.2012 passed by the Collector of Customs (Appeals), Karachi on the strength of that letter. It was held in the said letter IPO, 2009 (prevalent at that time) does not restrict the import of old and used specialized vehicles in terms of para 9(ii)(5) read with Appendix-I (to that IPO) to factory fitted specialized vehicles. If the conditions mentioned in the above provisions of the IPO are fulfilled and vehicles are fit for the specialized end use as such, the same is importable. It is mentionable here that the dispute in this case is not whether the mounting is factory fitted or not, but is whether the "mounting" and required adaptation is permanent and proper and resultantly whether the specialized end use function can be performed by the imported vehicle/ items or otherwise. Similarly, the appellate order No. 10182-10183/2015 dated 29.05.2015 of Collector of Customs (Appeals), Karachi pertains to declared import of old and used Hino Truck mounted Crane which,
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however, was ascertained by the Collectorate (and endorsed as well by the Appellate Authority) as old and used Hino Truck fitted with Crane for self loading/ unloading. Its departmental classification under PCT Code 8704.2299 was also upheld by that Appellate Authority. The Collector (Appeals), however, allowed .release of that vehicle on the strength of the Ministry of Commerce's above mentioned letter dated 12.03.2012 and the afore-cited appellate order, after recording in the said Order that; in Appendix-I to the IPO, 2013 truck mounted cranes/ crane lorries are without any specific HSD code, meaning thereby that these goods are permissible for import by description only, therefore, classification in this case is immaterial; and that para-9 (ii) (4) of the IPO restricts import of trucks (87.04) in used and secondhand condition by the construction companies, while the vehicle/ items have been declared by the importer as old and used Hino Truck mounted Crane, and has not been found to be self-loading vehicle during its examination. Though the Appendix-I of the IPO, 2013 does not specify any HS code against the truck mounted cranes/crane lorries, the imported item is, still to qualify for that description to be able to be imported in the old and used condition. In the overall legal scheme of Customs assessment, reliance is to be invariably placed on the WCO Explanatory Notes for identification, categorization and classification of the imported items. As has already been explained in the preceding para, in light of those, the instant vehicle/items cannot be termed as truck mounted cranes / crane Lorries. Besides the above, it is worth pointing out that the Pre-Shipment Inspection Certificate is required under para 9(5) of IPO, 2013. For import of old and used crane Lorries by the construction companies, PSI is to be issued by companies specified in Appendix-H of the IPO, 2013. In the instant case, the said PSI certificate has been issued by an agent of the PSI company Messrs Lloyd's and not by the specified company Messrs Lloyds of London themselves. In view of the binding requirement of the IPO, this certificate is even otherwise not an admissible/ valid document. In the light of foregoing, the old and used truck imported by Messrs Eastern Contraction Co., Karachi through their customs agent Messrs Crown Moving Service, Karachi, (CHAL No. 855) is hereby ordered to be confiscated in terms of clause (9) of section 156(1) of the Customs Act, 1969, without any option of its redemption. A penalty of Rs.500,000/- is also imposed upon the importer for commission of the above offence. 3. The appellant has now through instant appeal challenge the vires of the order before the Appellate Tribunal on the strength of the grounds of appeal, which the Advocate reiterated during the course of hearing and which are:-- Being aggrieved and dissatisfied by the Order-in-Original passed by the respondent in above noted case because Appellant consignment were marked to examination department for confirmation of our declaration and reported as mis-declaration of item description. The examination report confirmed that container contains one unit complete crane with its rotating mechanism and operating accessories i.e. operating cabin, operating liver in the outer cabin of crane, hydraulic load jack etc is placed on the chassis of truck of Hi no brand. The ER also reflects that the fitting of crane on truck is made with 6 sets of bolts each side clamping the chassis of truck and crane. The front back ends of chassis of crane were found to be welded with the chassis of truck and crane. The definition of truck mounted crane" according to serial number 7 of heading 87.05 of explanatory notes are as under:-- "Crane lorries (trucks), not for the transport of goods, consisting of a motor vehicle chassis on which a cab and a rotating crane are permanently mounted" The main paragraph of explanatory notes also clarify about special purpose vehicles that either it may be constructed of adapted. The examination was conducted by non competent staff (non technical) which were unable to determine the classification of cranes. Therefore, it is our request to kindly re-examine the goods through MSA or technical staff to clarify this matter before proceeding further. As all the above
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findings of ER clearly meet with definition of Crane Lorry as described in explanatory notes. Further, Re-examination of the goods is our right which should be. given to us to prove trade facilitation.' That Appellant had imported "Old and Used Truck Mounted Crane" at declared unit value US$:5500.00 per unit, in terms of Para 9(5) of Import Policy Order for his constructions projects running in Pakistan in pursuance of PEC certificate which is valid till to date for the clearance of 3 units Appellant filed GDs electronically under section 79(b) of Customs Act, 1969. Consequent to examination, customs staff reported that goods are ONE UNIT OLD AND USED TRUCK BRAND ISUZU, CHASSIS NO-FRR 12DA-3607758 MFG, YEAR1998.CAPACITY:4.9 TUN, AN OLD AND USED CRANE i-ikv INDEPENDENT CHASSIS WHICH IS PLACED ON THE CHASSIS OF TRUCK. LIFTING CAPACITY OF CRANE IS 4.9 TONS. THE CRANE HAVE ROTATING BASE, AND HAS SEPARATE CABIN AND OPERATOR SEAT. TRUCK AND CRANE HAVE SEPARATE CHASSIS FRAMES. WIDTH OF CHASSIS OF TRUCK AND CHASSIS OF CRANE ARE DIFFERENT. THE FITTING IS MADE WITH 2 SETS OF SOL TS EACH SIDE CLAMPING THE CHASSIS OF TRUCK AND CRANE. THE CHASSIS OF CRANE AND TRUCK WERE IN COMBINATION TO HAVE DOUBLE CHASSIS i.e. COMPLETE CRANE ALONG WITH CHASSIS AND HYDRAULIC LOAD BEARING JACKS/FEET WERE FOUND TO BE FITTED/PLACED ON THE COMPLETE CHASSIS OF TRUCK. THERE WAS NO MECHANISM FOR OPERATION OF CRANE IN THE CABIN OF TRUCK. THE CRANE WAS FOUND FITTED WITH OPERATING LEVERS AT THE BACK END AND LEVERS IN THE OUTER CABIN OF TRUCK. THE CRANE WAS FOUND FITTED WITH OPERATING LEVERS AT THE BACK END AND LEVERS IN THE OUTER CABIN FOR CARNE OPERATIONS. THE CRANE IS OF VERY OLD MODELS. IN THE LIGHT OF THE ABOVE FACTS THE CRANE CANNOT BE TERMED AS PERMANENTLY MOUNTED AND ADOPTED TO CONSTITUTE A SPECIAL PURPOSE MOTOR VEHICLE. IT IS AN ATTEMPT TO IMPORT OLD AND USED TRUCK IN THE GARB OF TRUCK MOUNTED CRANE. NET WT:7900 KGS, CHECH WT:100% VIDE KICT SLIP NO.647197 DATED 21/10/2015 FOUND WT:7980 KGS, IMAGES ARE ATTACHED. GROUP MAY CHECK ALL ASPECTS UNDER THE LAW AS PER IPO." Thereafter, Appellant received show-cause notices which was properly replayed later on respondent No 3 passed impugant order in original who was pleased to outright confiscate used truck mounted crane also impose penalty of Rs.20,000/= on the Appellant which was challenged in accordance with Law. That same kind of used truck mounted crane cleared from Appraisement Collectorate is quite identical with our case. Therefore, it is our humble request to kindly do justice with us and release our consignment on the same parameters adopted by the appraisement Collectorate and save us from huge loss being incurred day by day in shape of port demurrage, container detentions etc. With regards to respondent query regarding pre-shipment inspection please be informed that we had attended for pre-shipment inspection of subject vehicle as inspected in accordance with law. Similarly a letter / application was also filed in which it was requested to remove the used truck mounted crane to the CPF Bonds to save port charges which was not allowed and passed impugned order in original which is liable to be set aside in the interest of justice. That same kind of used truck mounted crane was allowed by Collector of Customs (Appeals), Karachi vide Order-in-Appeals Nos. 5850 to 5852/2012 dated 01.03.2012 observed that as regards whether the same are importable in terms of the Import Policy Order in vogue it is acknowledged that the appellants have submitted copies of pre-shipment inspection certificates issued by the recognized companies and thus meet the condition of as laid down in Para 10 (i) (b) of Appendix C read with Annexure-H of the Import Policy Order in vogue. The respondent/department filed an appeal before this Tribunal against the said order before this Tribunal vide Customs Appeals Nos.K- 132/2012, K-134/2012 and K-135/2012 while deciding these appeals the Tribunal upheld the order of Collector with observation that the subject specialized vehicles fulfils the criteria laid down in para 9(ii)(5) of the Import Policy Order, 2011-12 and dismissed the appeals of department. The counsel for appellant also produced copies of Order-in-Appeals Nos.5968/2012 dated 14.04.2012 and Order- in-Appeals Nos. 5971 to 5972/2012 dated 16.04.2012 wherein the specialized/modified vehicles has
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been released on same facts and law points on duty and taxes without filing any appeal against these orders and fully complied. The counsel for appellant also provided copies of orders passed by this Tribunal in Customs Appeals Nos.K-359 to 361/2006 dated 21.08.2007 and Customs Appeals Nos.367 to 371/2006 dated 19.12.2007 wherein transit mixers were released on duty and tax subject to conditions laid down in para 6 of Import Policy Order, 2004-05 and department's view point was rejected regarding import of specialized vehicles. That Respondent No. 2 has merely relied on false information of their market rivals and had thus illegally detained the subject consignment of the Appellant. It is a fundamental Law that all citizens are equal before the Law in terms of Article 25 of the Constitution of Islamic Republic of Pakistan, 1973 and to avoid discrimination Appellant's vehicle may be released accordingly because same kind of vehicles are freely importable in the current import policy. Article 25 of Constitutions of Islamic Republic of Pakistan 1973 says about Equality of Citizen: "All Citizens are equal before the Law and are entitled to equal protection of Law". 4. The appellant Advocate in addition to the grounds incorporated in para 3 supra further stated as under: (i) That the case of the appellant upon invoking section 32 of the Custom Act, 1969 stood ousted from the jurisdiction of the Executive Collectorate in terms of S.R.O. 886(1)/2012 dated 18.07.2012 and falls within the jurisdiction of Collectorate of Customs Adjudication-I. The respondent in the capacity of Additional Collector of Clearance Collectorate, encroached the jurisdiction of the Collectorate of Customs Adjudication, which is not permitted under law, rendering the show-cause notice without jurisdiction and as such of no lawful authority/ jurisdiction', (ii) That as regard to contravention of Section 16 and para 9(5) of the Import Policy Order, 2013, the authority to adjudicate the such cases rest with the Principal Appraiser of the Clearance Collectorate in terms of SRO 371(1)/2002 dated 15.06.2002. The respondent while laying hands on the case of the appellant encroach the powers of his subordinates, which is not permitted under law, rendering the show-cause notice suffering from availability of the powers. Hence, void and ab- initio and of no legal effect. without powers. 5. No cross objection under Subsection (4) of Section 194-A of the Customs Act, 1969 has been submitted by the respondents Collectorate to this date, instead comments were submitted, verbatim of which are incorporated here-in-below for the sake of regularization fair play and justice. Denied. The examination report confirms that a very old model used crane having independent chassis was placed and bolted with the independent chassis of Isuzu brand old and used (1998 model) truck. The crane is not permanently mounted/adopted to constitute special purpose vehicle. The Explanatory Notes to HS 8705 pertain to special purpose motor vehicles, other than those principally designed for the transport of persons or goods. These notes state that this heading covers a range of motor vehicles, specially constructed or adapted, equipment with various devices that enable them to perform certain non-transport functions i.e. the primary purpose of a vehicle of this heading is not the transport of persons or goods. As per the said note, this heading includes crane lorries (trucks), not for the transport of goods, consisting of motor vehicle chassis on which a cab and rotating crane are permanently mounted. However, lorries (trucks), with self- loading devices are excluded from that heading. The essential requirements given in the Explanatory Notes to HS 8705 are permanent mounting of devices and suitably constructed or adapted to perform certain non-transport functions. The placement of an old and used crane welded and bolted to an old and used truck chassis lacks permanence and suitable adaptation to operate as functional truck mounted crane. For these
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reasons, the old and used crane is separately classifiable under the relevant sub-heading 8426 and the old and used truck would be appropriately classifiable under HS 8704.2190. Denied. The classification has correctly been made in accordance with physical attributes of the goods and Explanatory Notes to HS 8705 and 8704. The request for re-examination was uncalled for because the examination report unambiguously depicted true picture of the goods and the post of Machinery Shed Appraiser (MSA) has ceased to exist in the WeBOC system. The appellant, instead of insisting for re-examination of the goods, should have furnished certificate of the Original Equipment Manufacturer (OEM) to this effect that the goods imported in this case were manufactured or properly adopted as truck mounted crane. 6. Rival parties heard and case record perused and so the relied upon citation. Prior to dilating upon the core issue of the case in question, it is appropriate and just to decide the issue of jurisdiction and powers.…
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