SHER NAWAZ, MEMBER (TECHNICAL).---This appeal has been filed by Messrs Banoori Customs Agency, Airport, Peshawar and 5 others (hereinafter celled as the appellants) against the Order-in- Appeal No,133 of 2010, dated 23-2-2010, passed by the Collector of Customs, Sales Tax and Federal Excise (Appeals), Peshawar.
2. Precisely, the stated facts of the case as recapitulated from the available record are that the Directorate General of Internal Audit (Customs, Federal Excise and Sales Tax) Islamabad, had conducted an audit of record of the Airport, Peshawar, (reported vide AR No,3(357)I&A/08/Ibd(Observation No,3) and observed that goods in commercial quantity were cleared vide BD No,36, dated 4-7-2007, without charging redemption fine @ 30% Addl: Sales Tax @ 2% and SED @ 1% as provided vide Rule 17 of S.R.0.666(1)2006, dated 28-6-2006 and thus, an amount of Rs,14,256 was short paid by Mr.Owlasmir son of Masta Mir and his clearing agent Messrs Banoori Customs Agency, Airport, Peshawar as per detail given below:-- BD No. and dateDescriptionQuantityAssessed RateRecoverable Redemption FineRecoverable Add: Sales TaxRecoverable SEDTotal Recoverable Amount 36 dated 4-7- 07TV Fridge 02 .0227861... .146758358....
4402697..... .379248.....
18314255
3. Accordingly, a demand-cum-show-cause notice was issued to the party and after hearing the parties, the Deputy Collector of Customs, Air Freight Unit, Peshawar vide his consolidated Order-in- Original No,40 of 2009, dated 2-7-2009, ordered to deposit the demanded amount of Rs,14255 as detailed above, into the government treasury.
4. Being aggrieved of the impugned consolidated Order-in-Original 40 of 2009, dated 2-7-2009, the appellants filed an appeal before the Collector of Customs, Sales Tax and Federal Excise (Appeals), Peshawar, who vide his Order-in-Appeal No, 133 of 2010, dated 23-2-2010, upheld the impugned Order- in-Original. Hence the present appeal filed to this Tribunal on the following grounds:--
(a) that impugned order is erred both in law and facts, hence, not sustainable in the eyes of law;
(b) that cause of the show-cause notice and impugned order without prejudice to its merit are not sustainable against the appellants Customs Clearing Agents as under the provisions of Customs Act, 1969, the liability of duties and taxes is to be borne by the importer;
(c) that without prejudice to the merit, proviso to subsection (3) of section 209 of the Customs Act, 1969, protects the clearing agents where no wilful act, negligence or default can be attributed to them.
In such occasions the demand of alleged short levy of duties and taxes could not be demanded from them;
(d) that without prejudice to the merit of the case, the appellants agents tried their best to trace out the aforesaid passengers, however, so far failed to locate them, hence, no laxity on the part of the appellant can be attributed;
(e) that is humbly submitted that from the above table, it is quite evident that the dutiable items such as Television, Deep Freezer, Refrigerator, Washing Machine and Air Conditioner are hardly in one or two quantity which cannot be termed as "Commercial Quantity" as defined in, Rule 2(c) of Baggage Rules 2006, therefore, Rule 17 ibid can hardly be attracted to the impugned causes;
(f) that without prejudice to the above, the Baggage Rules, 2006 (S.R.O. 666(1)/2006) have been issued under section 219 of the Customs Act, 1969 which does not empower the Federal Board of Revenue to pass such instructions which tantamount to instructions to adjudicating authority controlling their discretion, thus, the demand of redemption fine on strength of Rule 17 ibid which is per se ultra vires is not legally sustainable;
(g) that without prejudice to the above S.R.O.574(1)/2005 issued under section 181 of the Customs Act, 1969 per se does not cover the items and causes involved in the instant case, therefore, its scope cannot be enlarged by a notification specifically when it has been issued under section other than section 181 or unless and until the S.R.O.574(I)/2005 be amended to encircle the cause of the instant Appeal. As such S.R.O.574(1)/2005 cannot be applied by virtue of Rule 17 of Baggage Rules, 2006 which Rules, humbly submitted were issued under section 219 of the Customs Act, 1969;
(h) that similarly the demand of Special Excise Duty under S.R.O.655(I)/2007, dated 29-6-2007, is also without lawful authority as none of the items, subject matter of this appeal, are liable to Special Excise Duty;
(i) that similarly the items impugned are household items which generally in house requires more than one to say 2, if quantum of goods up to 2 or 3 cannot be said Commercial Quantity, therefore, demand of 2% sales tax under S.R.O.645(I)/2007, dated 27-6-2007, is also not tenable;
(j) that without prejudice to the merit of the case with all due respect, it is humbly submitted that impugned cause is against the principle of consistency and natural justice as any misjudgment if at all any could be attributed to the Replying Clearing Agent, the same is true for the Customs Officer who examined and assessed the consignment, however, their cause has been condoned. For this very inconsistency, the impugned order against the appellants is not legally sustainable and liable to be vacated; and
(k) that an view of the cause involved, it is pertinent to refer to the judgment of the Customs, Excise and Sales Tax Appellate Tribunal reported as 2003 PTD (Trib.) 293, relevant para is reproduced as under: "(7) We believe that clearing agents while filing a bill of entry is required to fill the PCT column for the easement and assistance of the Assessing Officer. The perusal of section 80 of the Customs Act, 1969, indicates that during the process of assessment it is the duty of the Assessing Officer not only to examine the goods but also to tally the description, its weight and value of goods thereof, and to consider any extra information available on the bill of entry in order to arrive at a correct assessment of duty and taxes. Simply assuming that a wrong PCT heading amounts of mis-declaration would not be a correct approach to interpret section 32, where emphasis is on the word "material particulars" which means something going to the root cause of the basic declaration. To our mind, a misdeclaration in material to terms has not been made by the appellant.
(8) The contravention report submitted by the Principal Appraiser indicates that the steps taken by the customs were in line with the requirements of section 80 of the Act in order to properly assess the goods. This fact is not disputed that the appellant made a correct declaration in respect of description, weight and value, and the same do correspond to the relevant documents submitted in support of that. In these circumstances, assuming that there was an intention of the appellant to misguide the respondent amounts to stretching of the law in order to bring a normal act of an importer in the fold of violations. Such attitudes on the part of functionaries is not desirable, as a functionary is to carry out its duties within the framework of law. It has clearly been laid down, therein that he has to get the goods tested chemically from the chemical experts, etc. And very rightly the Assessing Officer can send the goods for testing to the proper professional authorities and accordingly on the basis of their advice to assess the goods. In these circumstances, we do not agree with the point of view of the respondent that any mis-declaration has, been made by the appellant."
5. On the date of hearing fixed on 11-10-2010, the learned counsel for the appellants repeated the same position as advanced in the memo. Of appeal. Additionally he contended that as per the provisions of S.R.O.666(I)/2006, dated 28-6-2006, commercial goods have been defined under Clause 2(c), so according to him two televisions or two fridges cannot be termed as commercial quantity as these are mainly used for domestic uses of the passenger and not for any commercial purpose. He also referred to subsection (3) of section 209 of the Customs Act, 1969, wherein it has been described that "when any customs agent is expressly authorized by the principal to he his agent under subsection (1) of section 208 in respect of such goods for all or any of the purposes of this Act, such agent shall, without prejudice to the liability of the principal, be deemed to be the principal of such goods for such purposes: Provided that where any duty is not levied or is short-levied or erroneously refunded on account of any reason other than wilful act, negligence or default of the agent, such duty shall not be recovered from the agent. The Departmental Representative, however, contended that in terms of section 209 of the Customs Act, 1969, agent is responsible for the actions principal and as such the clearing agents are required to pay the duty and taxes in the absence of their client. He also referred to a Rule No,101 (e) of the Customs Agent Rules, wherein it has been prescribed that it is the responsibility of a clearing agent to pay the evaded amount of duty and taxes in case it is established that evasion has taken place because of his negligence, failure to perform his functions as prescribed under the law or because of connivance or wilful act of its employee or permit holder..
6. I heard the learned counsel for the appellants and D.R. For the respondents and have gone through record, of the case. From the record of the case it appears that the Audit Party of the Directorate General of Internal Audit (Customs, Federal Excise and Sales Tax), Islamabad, conducted audit of the record of the Airport, Peshawar, and observed that goods in commercial quantity were cleared without charging redemption fine, sales tax and central excise, which is leviable upon the clearance of the goods. The record shows that against BD No,36, dated 4-7-2007, two TVs and two Fridges were cleared by Messrs Banoori Customs Agency, Peshawar. The size of fridges as indicated in the BD is 12and 6respectively. Similarly, the TVs, one Hitachi and other Panasonic have been shown as 21". Besides these two items, rest of the goods were covered under the allowances admissible, S.R.O. 666(1)/2006, dated 28-6-2006, defines commercial quantity as under:-- "Commercial quantity means a quantity of goods imported prima facie for trading or pecuniary gain and not for personal use or gift."
Under Rule 3-B (viii), of the said S.R.O., the following items are to be cleared on payment of duty and taxes leviable thereon:
(a) television;
(b) deep freezer;_
(c) refrigerator;
(d) microwave oven;
(e) cooking range; (t) washing machine; and (g) air conditioner.
7. A question arises as to whether two TVs and two Refrigerators would come within the definition of commercial, quantity and whether this quantity could be sold in the market for any pecuniary gain?
These aspects needed to be examined at the time original jurisdiction. Similarly about the role of clearing agent, the provision to subsection (3) of section 209 of the Customs Act, 1969, are very clear.
The said section says that where any duty is not levied or is short-levied or erroneously refunded on account of any reason other than wilful act, negligence or default of the agent, such duty shall not be recovered from the agent. In this case it is to be ascertained as to whether it was a wilful act or negligence or default on the part of the agent or it was mere omission and no wilful act was involved.
In case it was mere omission then the clearing agent cannot be held responsible. It is also be examined to what role did the customs staff play, while examining the goods and processing the BDs.
Has any action been taken against the customs staff for their negligence or omission and if not then how clearing agent alone can be held responsible. Keeping in view the nature of the case and other similar cases, the case is remanded back to the adjudicating officer to examine all these aspects and to issue a speaking order, fixing responsibility upon the clearing agent and other persons involved.
8. This judgment consists of six (06) pages and each page bears my official seal and signature.
9. Announced.