DECISION/FINDINGS Maladministration on the part of the Additional Collector of Customs, Dry Port Mughalpura, Lahore, Collector of Customs, Customs House, Nabha Road, Lahore, Collector of Central Excise and , Sales Tax, Fane Road, Lahore and Deputy Collector of Customs (Refund), Customs Dry Port, Lahore, is alleged in the instant complaint for repeated decisions and acts of omission and commission which were contrary to law, rules and regulations, perverse, arbitrary and unreasonable. Such decisions and acts also involve exercise of powers for administrative excess and reflect negligence, inattention, incompetence and inaptitude in discharge of duties and responsibilities as well as indicate wilful errors in passing orders on the issues remanded by the Tribunal in order to withhold refund of duty arbitrarily recovered from the complainant. Besides, raising new issues and read judication of the issues already decided by the Tribunal is also noted by the Appellate Tribunal themselves in the orders passed by respondent in pursuance of specific remand orders of the Tribunal. It is alleged that the foregoing matters raised in the complaint are traits of maladministration as defined in section 2(3) of the Establishment of Office of Federal Tax Ombudsman Ordinance, 2000, hereinafter referred to as the FTO Ordinance.
2. Facts of the complaint are that the respondents, after issuing notices to the complainant that it had imported components and parts of agricultural tractors in violation of (i) the provisions of S.R.O. 502(1)/1994, dated 6-9-1994, and (ii) ISDP (Industrial Specific Deletion Programme) approved by the Engineering Development Board (EDB)/C.B.R. Vide letter, dated 18-9-1998, adjudicated a number of cases (about 120) instituted against it demanding duty and taxes along with penalties adjudged through various adjudication orders. The complainant contends that it was entitled to concessionary rates of duty and taxes on CKD kits of agricultural tractors, which were imported as per the conditions laid down in S.R.O. 502(1)/94, dated 9-6-1994.
3. The S.R.O. Ibid exempts components imported for the manufacture of vehicles specified in column (2) of the Table appended thereto from so much of customs duties as are in excess of the rates specified in column (3) thereof subject to nine conditions laid down therein. Condition .Which is pertinent to the impugned issue requires that:-- "(iv)The manufacturer shall chalk out deletion programme spreading over a maximum period of five years within which period he shall achieve a minimum deletion in the manufacture of vehicles to the extent of 75% of the C&F value of the inputs of the manufactured items. Continued availability of the exemption under this notification shall be contingent upon-
(a) the achievement of progressive annual deletion as approved by the Central Board of Revenue or Ministry of Industries, as the case may be; and
(b) the use of locally manufactured deleted items."
4. Thus a Unit Specific Deletion Programme (hereinafter referred to as USDP) as envisaged in condition (iv) supra is chalked out in three deletion levels by each manufacturer. Besides the USDP, the Engineering Development Board set up under the Ministry of Industries and Production prepares an Industrial Specific Deletion Programme (hereinafter referred to as ISDP) to lay down broad parameters of the deletion to be achieved by an industry as a guideline for approval envisaged in condition (iv)(a)'surpa. (Emphasis provided)
5. Deletion level in ISDP generally consists of 3 lists. List "A" represents all those components which have been successfully developed by at least one OEM (Original Equipment Manufacturer). List "B" represents components which are to be deleted over 'a period of time' as specified in the deletion programme. List "C" consists of items which are considered undeletable due to the non availability of the manufacturing facility in the country. An item included in list 'A' of ISDP may be approved as an item of list 'B' or 'C' of USDP of a particular unit. However, this will also be subject to the condition that overall progressive deletion level is maintained during the specific maximum period of five years. There is a possibility that one particular OEM has developed a particular item and it is indicated in list "A" of ISDP but the same item might have not been developed by the other OEM.
Therefore, the said item might be included in list "B" of the approved deletion programme of a unit i.e. USDP. The said item will be importable under S.R.O.
502(1)/94 for that specific unit insptie of the fact that it is included in list "A" of the ISDP. ISDP is supposed to serve the EDB/Ministry of Industries and Production or the C.B.R. As the case may be to approve the progressive, annual deletion achieved under USDP by a particular manufacturer as required under condition (iv)(a) supra.
6. ISDP is thus a reference document indicating state of industry and targets for deletion to be achieved by Tractor manufacturers. It was adopted by the EDB on 16-1-1999 and sent to the C.B.R.
On 29-1-1999 for monitoring the import of CKD kits of agricultural Tractors. The complainant prepared in USDP for Tractors Model MF-240, MF-375 in pursuance of Government's deletion policy broadly indicated in ISDP. Thereafter, a team of EDB visited complainant's unit on 25-2-2000 to verify and approve complainant's USDP in respect of two Tractor models and informed the C.B.R.
That it had achieved more than the entire Deletion Programme expected under the S.R.O. Ibid. Emphasis provided).
7. However, in July, 2000 the respondents started monitoring complainant's imports strictly under ISDP instead of USDP and made out about 120 contravention cases for violation of S.R.O. Ibid and directed it, through different adjudication orders, to pay amounts of duty and taxes on goods already imported by it alleging wrong availing of concessionary duty rates under the S.R.O. Ibid on the basis of USDP. The complainant filed appeals against these orders before the Sales Tax Appellate Tribunal, Lahore. During the pendency of appeals the respondents issued recovery notices for recovery of the amounts adjudged as payable and deducted the same from its refund claims. By the time the Respondents were restrained from effecting recovery vide Tribunals' order, dated 6-12-2000 they had succeeded in deducting a sum of Rs.108,504,444 from its pending refund claims.
8. The complainant requested the C.B.R. As well as EDB to advise the respondents to monitor imports on the basis of approved USDP instead of ISDP. The C.B.R. Also constituted a committee of Collecthrs to look into the matter. The committee, after due deliberations, concluded that USDP would be the monitoring document for the purpose of import. Accordingly, the Chairman C.B.R.
Prepared and submitted on 28-4-2001 a Note to the Finance Minister (FM) in following terms:-- "NOTE FOR THE FINANCE MINISTER SUBJECT: IMPORT OF. COMPONENT/CKD KITS FOR LOCAL MANUFACTURING OF AGRICULTURAL TRACTORS BY MESSRS MILLAT TRACTORS LIMITED, LAHORE Industrial Specific Deletion Programme
(ISDP) for tractors, prepared in consultation with manufacturers and vendors by the Engineering Development Board was circulated to the customs formations for necessary action. Subsequently, the Unit Specific Deletion Programme (USDP) received from Messrs Millat Tractors Ltd. Lahore was approved by the Ministry of Industries and Production with the observations that the list of components in Proforma-A, B & C of the said programme were in line with the Industrial Specific Deletion Programme for the progressive manufacturer of tractors. Accordingly, the USDP was forwarded to the concerned Collectors for implementing subject to the conditions that the same should be in line with the ISDP circulated earlier. (Emphasis provided)
(2) Subsequent to a complaint by Messrs Baluchistan Wheels, Karachi that the localized/deleted parts were being imported by Messrs Millat Tractors in CKD Kits, a detailed scrutiny of import by Messrs Millat Tractors were carried by the Customs Collectorate, Lahore. Resultantly, several contravention cases involving million of rupees were made against Messrs Millat Tractors for violation of S.R.O. 502(1)/94, dated 9-6-1994 and the Industrial Specific Deletion Programme (ISDP).
Some of these cases have been adjudicated upon by the competent authority whereas the rest are pending.
(3) A careful perusal of the table (Annx.-V) would show that the USDP of Messrs Millat Tractors is, in the fact, not in consonance with the ISDP as certain items deleted in the ISDP have been shown as non-deleted items in the USDP.
(4) Engineering Development Board (EDB) of the Ministry of Industries on the other hand is of the view (Annx-vi) that Messrs Millat Tractors have achieved more than desired level of deletion hence they are at liberty to choose the components from basket A, B & C of the printed ISDP. EDB has accordingly recommended for the condonation of the irregular imports by Messrs Millat Tractors.
The Committee constituted by the Board to resolve the questions of ISDP v. USDP have also supported EDB's contention (Annx-vii) that lists A, B & C of ISDP is in fact a basket from which assembler is at liberty to choose to arrive at his deletion level. The Committee has also concluded that USDP should be treated as monitoring document. C.B.R. Has accordingly granted interim relief (Annx-viii) to Messrs MTL by allowing their current imports under USDP against an undertaking subject to a final decision. (Emphasis provided).
(5) It would be relevant to mention that the Economic Coordination Committee (ECC) of the Cabinet considered the summary, dated 30-8-2000 submitted by Ministry of Industries and Production on the subject issue and decided as follows:--
(i) The ECC endorsed the recommendations contained in paragraph 9(a) of the Summary with retrospective effect subject to approval of the Cabinet. The recommendations in para. 9 of the summary were:---
(a) Those items which are not in conformity with these lists and have already been imported by MTL as consequence to the clarification made by Ministry of Industries and Production will be permitted on CKD rates.
(b) EDB will undertake an exercise and prepare the lists containing Pro forma A, B, C for all'categories, within the parameters of ISDP and keep in view "No Roll Back" is allowed. These lists will be used to monitor the CKD imports of Millat Tractors'.
(ii) The ECC directed that the Engineering Development Board should review the whole situation of the Deletion Policy and submit its recommendations for approval of the competent authority.
(6) Considering the recommendation of the EDB and the Collector's Committee, confirmation of .The Finance Minister is requested on the principle that where both ISDP as well as USDP are laid down, then USDP will be the monitoring document. If the above principle is accepted it will also apply to the previous clearances of Messrs Millat Tractors Ltd., Lahore in terms of their USDP including the contravention cases made by the Customs Collectorates (whether adjudicated or under adjudication). "(Emphasis provided)
9. The Finance Minister approved the confirmation sought by the Chairman C.B.R. In the last para. Of the Note supra. The Note duly approved by the F.M. Was sent vide Revenue Division C. No.1(26)S& R-2/84.Vol. VI dated 26-5-2001 to the Collector of Customs, Custom House, Lahore and the Collector, Sales Tax and Central Excise, Lahore for follow up action and copies were endorsed to:--
(i) The Collector of Customs (Appraisement), Custom House, Karachi.
(ii) The Collector, Sales Tax and Central Excise (East/West), Karachi.
(i.e) The Collector, Customs, Sales Tax and Central Excise, Multan.
(iv) The Collector, Sales Tax and Central Excise, Gujranwala with reference to their letter No.ADCHQ- DSAW/Misc/2000/08, dated 19-1-2001.
(v) The Engineering Development Board, H. No. 6, St. No. 16, aside impugned order and remanded case to Adjudicating Officer to assess consignment strictly in accordance with requirements of Ss. 25 & 30 of Customs Act, 1969. [pp. 1769, 1770] A, B & C
KHILJI ARIF HUSSAIN, J.---The petitioner imported various consignments of vehicles during April and May, 1987 and declared C & F prices at Japanese Yen 776,900 and were cleared by respondent No.2, on the declared value. Thereafter, on 19-9-1988, respondent No.2 issued show-cause notice under subsection (2) of section 32 of the Customs Act, 1969, that due to false statement and misdeclaration of Import Trade Price (ITP) short recovery of duty has been made.
After hearing the parties respondent No. 2 vide order, dated 22-11-1988 ordered for the assessment of the vehicles on the basis of ITP price of Japanese Yen 8,50,000 (FOB) and freight Japanese yen 1,60,000.
Against the order, dated 22-11-1988, the petitioner filed appeal and order was set aside and the matter was remanded on 8-10-1992 to respondent No.2, who after remand vide his order, dated 4- 1-1993 maintained the earlier order. The petitioner filed appeal against the said order which was dismissed by respondent No.1, vide order, dated 6-4-1993 which has been impugned in this petition.
Mr. Aziz A. Shaikh, learned Advocate for the petitioner questioned the order on the ground that the price of vehicles in question have fluctuated varied from time to time depending upon the demand and supply of the same. Learned Advocate contended that without having any reliable basis respondents have increased the value of consignments while ignoring documentary evidence produced by the petitioner in support of the prices declared by him. The respondent has fixed the prices at Japanese yen 8,50,000 solely on the ground that ITP required prior approval of respondent No.2, and since no prior approval has been taken and the consignments got cleared on the declared value the same should not be assessed on FOB price of Japanese yen 8,50,000 of identical vehicle in March, 1986.
On the other hand, Mr. Nadeem Azhar, D.A.-G., and Mr. Raja Mohammad Iqbal, learned Advocates for the respondent attempted to justify the order of the contending that under Customs General Order 23 of 1986, the petitioner was required to get the price approval from the competent authority and since in the instant case such approval prior to the arrival of the consignment has not been obtained respondent had determined the value relying upon the prevailing price of the vehicles in March, 1986.
We are afraid that such contention of the learned Advocates for the respondents have handly any force. Section 25 of the Customs Act deal with the determination of value of imported goods. The declared value of the importer in respect of the consignment if not accepted as true then value of the identical or similar consignment from the port of origin from where the importer has imported the goods at the same time and for the same quantity and on the same commercial level can be made basis for assessm ent of duty. Respondent refused to accept the declared value merely because said value was not approved by them prior to arrival of the consignment whereas there is no such requirement under the Customs Act which required that the importer of the vehicles ought to have got prior approval of the ITP from the Collector of Customs before arrival of the consignment.
For the foregoing reasons we allow the petition only to the extent that the prior approval of ITP by the Collector of Customs is declared not to be a valid basis for assessment and accordingly impugned orders are set aside including the findings as to misdeclaration and the matter is remanded to the appropriate Adjudicating Officer, whose particulars will be provided by Mr. Raja M.
Iqbal to assess the consignment for the purpose of customs duty strictly in accordance with the requirements of sections 25 and 30 of the Customs Act.
These are the reasons of our short order, dated 10-9-2004. .