FINDINGS /DECISION ' This is a complaint of maladministration against Dry Port, Custom Lahore for rejecting complainant's refund claim of "additional amount" of Rs,185,044 assessed provisionally under section 81(1) and paid as security envisaged under Proviso to subsection (1) of section 81 of the Customs Act, 1969 in respect of consignment of artificial leather imported vide Bill of Entry No.8373, dated 25-4-2001.
2. Facts of the case are that the complainant imported 290 rolls of artificial leather vide the above mentioned bill of entry at a declared value of US$ 1 per meter. The respondents, while assessing provisionally the duty payable on such goods under subsection (1) of section 81 of the Customs Act, 1969 changed the unit value from per meter to per K.G. And enhanced the declared value to US$ 1.05 per K.G. On the basis of evidential Bill of Entry No. 235, dated 19-3-2001 plus 30% loading. The additional amount of Rs,185,044 so assessed provisionally was deposited as security. Six months after the provisional assessm ent, the D.C. Dry Port, Lahore issued the complainant a hearing notice, dated 26-12-2001 to assess, finally, the duty actually payable on such goods. The hearing concluded on 10-1-2002.
3. As the complainant did not receive any final assessment under subsection (2) of section 81 it addressed a letter, dated 6-11-2002 demanding refund of Duty and Taxes amounting to Rs,190,000.
Receiving no response a reminder was issued on 27-1-2003. The Assistant Collector by letter, dated 1-2-2003 informed, as follows:-- "On going through the case papers and records, it is noted that the then Deputy Collector Customs (Group-II), Dry Port, Lahore, had finalized the assessment on 30-1-2002 and the order of the final assessm ent order is available in the record. Copy of the same is. Enclosed herewith for information.
' Encl:-As above (Sd.) 1-2-2003 (Qurat-ul-Ain Dogar) Assistant Collector."
' It was followed by a show-cause notice, dated 8th February, 2003 from the Assistant Collector Customs referring to complainant's refund claimed stating:-- "Whereas, while finalizing the assessment the then Deputy Collector of Customs Group II, vide order, dated 30-1-2002 available on Note Sheet side of the File determined the assessable value of the imported goods @ US$ 2.60 Kg as against the declared unit value of US$ 1.00 per meter and the one [)rovisionally assessed @ US$ 1.365 per Kg. As a result of final assessment the amount of Rs,482,203 was determined to be payable by the Importers/Claimants of Refund.
' Now, Therefore, on the basis of aforesaid facts, the Importers/ Claimants are called upon show cause within 10 days of the receipt of this notice as to why the refund of amount claimed be not refused/disallowed."
4. It is alleged that D.C's. Unnumbered, undated and un-issued "final assessment order" is tainted with mala fides; is contrary to law, without valid reasons, arbitrary, perverse and discriminatory. The Complainant prayed for recommendation to allow claim to refund of additional amount of Rs,185,044 deposited at the time of provisional assessment under section 81 of the Customs Act, together with mark-up and the rent/demurrage incurred in the case.
5. In reply the respondents have stated that the FTO's jurisdiction does not extend to the case because the case involves assessm ent against which the remedy of appeal was available. He could have approached the Collector to reopen the case under section 195 of the Customs Act, 1969 for redress of his grievance. The assessment was finalized on 30-1-2002 with reference to evidence pertaining to similar goods and in accordance with the provisions of section 25(1) of the Customs Act, 1969. Thus final assessment order was passed well before expiry of one year period and its non-mailing to the complainant does not mean that the assessment was not finalized within one year. A copy of the assessment order, dated 30-1-2002 was subsequently supplied to the complainant. The respondent contended that the final assessment order was legally correct, as was the refund rejection order passed by the Assistant Collector vide order, dated 7-5-2003. The Department should not suffer loss of revenue on account of an individual lapse. The respondent therefore pleaded that complaint may be dismissed.
6. During the hearing the AR reiterated the same arguments as advanced in the written complaint contending that the order of assessm ent belatedly claimed to have been passed on a note sheet in the file but not conveyed to the complainant within a stipulated period of one year is a nullity: The bald and arbitrary note belatedly discovered on a note sheet conveyed to the complainant on 1-2-2003 as the final assessm ent is patently illegal. Further, there is no authenticity of the claim that the note was written on 30-1-2002 or added later to reject the refund claim. In any case it was conveyed beyond the period of one year as the provisional assessment was made on 28-5-2001. It is alleged that the refund claim has been wrongly rejected. The respondent's representative also reiterated what has been stated in the reply.
7. The arguments of the parties and the record of the case have been considered and examined.
The bill of entry filed by the complainant for clearance of goods, is dated 24-4-2001 on which a provisional assessm ent was made requiring the complainant to deposit an amount of Rs,185,044 as security in addition to the duty and taxes payable on declared value. The final assessment should have been completed by 24-4-2001 i,e, within one year in terms of section 81(2) of the Customs Act, 1969 which was not done. The respondent's contention that since D.C's. Order making final assessm ent at US$ 2.60 per Kg was passed on the file on 30-1-2002 the assessment was finalized within the period laid down under section 81(2) of the Act is not at all tenable. The Department cannot take refuge on the plea that their inaction would, after the expiry of prescribed period of one year make the provisional assessment on enhanced value final. This view of the Department has been rejected in a decision of Honourable President of Pakistan, dated 11th November, 2003 under section 32 of FTO Ordinance XXXV of 2000 in Representation made by C.B.R.
Vide C. No.1(143)S(TO-II)/ 2002, dated 20-9-2002 in Complaint No.747-K/2002 wherein Honourable President has observed and held:-- "The Customs are of the view that for the purpose of subsettion (4) ibid provisional assessment shall include the additional amount which the importer/exporter pays or in respect of which furnishes guarantee of a scheduled bank under the proviso to subsection (1). The view of the Custom is not supported by the language of the section. The additional amount is not received as duty. It is only security to meet the excess of the final assessment of duty over the provisional assessm ent. The provisional assessment in section 81 ibid refers to the legal effect, and not to the quantification of the assessm ent. It simply means that the duty paid by the importer/exporter on the declared value shall in effect not be final but provisional and subject to re-examination. Section 81 does not empower the appropriate officer to assess duty tentatively. The opinion of the Federal Tax Ombudsman in this regard is sound."
8. The question arises whether final order was passed on 30-1-2002. According to the Department, the final order was passed on 30-1-2002 but the copy supplied to the complainant does not bear any date. No proper evidence was produced to prove that the said order was passed on 30-1-2002.
The copy of the order was supplied only when the complainant demanded refund of the security amount deposited by it.
9. The Department has filed photocopy of the note sheet which has been examined. It starts with a note, dated 21-5-2001. Thereafter is a note of Appraising Officer (GR-II)_ who after discussing the case recommended for provisional assessment under section 81. The entire notings up to 9-1-2002 relate to the determination of value, issuance of notice to complainant and hearing which concluded on 10-1-2002. On this date the Deputy Collector ordered.
"Hearing concluded put up assessm ent order"
' On 17-1-2002 draft was put up through Principal Appraiser II to Deputy Collector who made the following remarks on 30-1-2002.
"77. Poor draft. P1. Put up amended draft."
' It is followed by note 78 which seems to be dated 21-11-2002.
' Then comes Note No. 79, dated 20-12-2003 which reads as follows:-- "PI. Study and discuss.
(Sd.) Qurat-ul-Ain Dogar 20-12-2002"
' Thereafter, there is no noting about the submission of draft order or passing of final order. Note 80, dated 16-1-2003 relates to the refund application filed by the complainant. After narrating the details of proceeding it has been stated: "Subsequently case was finalised by the competent authority vide office order C. No. V. Cust Vol-04(11)2001". This was submitted to AC-II. It is pertinent to note that the date of the final order was not mentioned in 'it. From the subsequent Notes Nos.81 to 86 it is clear that the Refund Department (AC R&R) was not aware of the final order up to 30-1- 2003. Then how could Note No.80, dated 16-1-2003 state that final order had been passed on 30-1- 2002. It is an admitted position that the order was not dispatched up to 1-2-2003. Thereafter the Department hastened to issue show-cause notice to the complainant. From the above facts drawn from the Department's note sheet it is clear that the final order was not prepared and approved till 30-1-2002. On 20-12-2002 the Assistant Collector (Mr. Qurat-ul-Ain Dogar) asked PA-II to "Pl. Study and discuss" (Note 79). Thereafter there is nothing to show when second draft was put up for approval and was signed by the D.C. It therefore, leads to the conclusion that the final order was not passed on 30-1-2002 and up to 20-12-2002. It was prepared afterwards on receipt of complainant's letter for refund, dated 6-11-2002 which was not replied. Again a reminder was issued on 27-1-2003 when the Department came out with a reply dated 1-2-2003 disclosing for the first time that the order was passed on 30-1-2002.
10. A perusal of the alleged final order reveals that except with minor amendment of few words in the opening sentence and last paragraph which were of formal nature, the entire draft order which was discarded has been reproduced in verbatim. Thus the A.C. Who signed the order neither drafted it nor applied his mind. The order was prepared by Appraiser or any other officer and not by the person who heard the arguments. This not only amounts to maladministration but makes the order void. The Department in order to frustrate the right which had accrued to the complainant by operation of law (section 81) prepared and placed on record an order after the complainant had applied for refund. Such acts prove mala fide and dishonest conduct of the concerned officer and fraud on statute. It is also intended to conceal negligence and inefficiency in performance of official duty. In these circumstances as maladministration has been established the Federal Tax Ombudsman has jurisdiction to investigate.
11. The claim does not relate to assessment or valuation of goods. It is a claim for refund. Of Rs,185,044 deposited as security in terms of section 81(2) which became refundable as no final order of assessm ent was passed within one year. The provisional assessment at the declared value, under the circumstances has become final under subsection (4) of section 81 of the Customs Act, 1969. As a result, the A.C. Customs' order rejecting complainant's refund claim is contrary to law, mala fide and without valid reason against which no appeal has been provided.
12. It is recommended:--
(i) The C.B.R. Collector refund the amount deposited by the claimant as security.
(ii) Compliance be reported within 30 days.