' The titled Sales Tax Appeal has been filed by the registered person under section 46 of the Sales Tax Act, 1990 against the order of the learned Collector Customs, Central Excise and Sales Tax (Adjudication), Lahore vide Order-In-Original No .ST-123/2005 dated 9-6-2005.
2. Facts leading for disposal of the instant case are that the appellant set up a unit for manufacturing of agricultural implements.. At the first time, the provisional certificate was issued by the C.B.R. For import of 500/M.Tons raw material to the appellant dated 16-12-1997 and subsequently on 11-8-1999 the final certificate was issued for import of 4882.800/M.Tons raw material under the benefit of S.R.O. 501(1)/94 dated 9-6-1994. Consequently, on the basis of provisional as well as final certificate, the appellant imported 4880.800/M.Tons raw material and sought its clearance vide bills of Entry No,05740 dated 27-2-1999, 97635 dated 10-5-1999, 08078 dated 24-5-1999, 08527 dated 8-6-1999 and 02104 dated 11-9-1999 on payment of concessionary rate of duty in term of notification and certificates mentioned supra. Thereafter, the appellant utilized the entire raw material in manufacturing of agricultural implements (plough blades etc.) and supplied the same to various dealers at different cities. As a result, on consumption of raw material, the appellant/registered person applied for consumption certificates as were exempted under S.R.O. 753/(1) of 1998 dated 1-7-19.98 but due to the reason best known by department which were not issued and instead thereof a contravention report was prepared alleging therein that the appellant in lieu of manufacturing agricultural implements sold the raw material in the local market and thus misused the concession/facility provided in terms of S.R.O. 501(I)/94 dated 9-6- 1994. On the basis of the aforesaid report, the Additional Collector issued show-cause notice bearing C.No,ADC/ADJ/MODEL/80/2000/342 dated 26-6-2000 calling upon the appellant/registered person to explain as to why the sales tax amounting to Rs,1,11,48,578 and further tax at Rs,22,29,717 along with penalty of Rs,55,74,290 should not be recovered from him under section 36 read with section 33 for contravention the provision of sections 3, 6, 7, 22, 23 and 26 of the Sales Tax Act, 1990. In response to the show-cause notice, the appellant furnished a detailed reply dated 18-8-2000 rebutting all the allegations mentioned in the show-cause notice but the reply submitted by the appellant could not satisfy the Additional Collector. Accordingly, the case was fixed for regular hearing before the learned Collector of Customs (Adjudication), Lahore who initiated the court proceeding and after viewing the pros and cons of the facts, directed the appellant to pay sales tax amounting to Rs,1,11,48578 along with further tax amounting to Rs,22,29,717 and penalty amounting to Rs,55,74,290 in terms of sections 11(2)(4) 34, 36 and 33(4) of the Sales Tax Act, 1990 vide Order-in-Original No, ST.12/2000 dated 31-10-2000. Feeling aggrieved with this treatment, the appellant/ registered person filed appeal before the learned Customs Excise and Sales Tax Appellate Tribunal, Lahore who by virtue of judgment bearing Appeal No,1161/LB/2000 dated 12-8-2002 accepted the appeal of the appellant, set aside the impugned order and remanded the case to the learned Collector (Adjudication), Lahore with the direction to examine Muhammad Mansoor; Superintendent as a prosecution witness and allow the appellant's counsel to cross-examine him and issue summons to all the eight customers/purchasers for cross-examination. At the stage of the learned Collector of Customs, Sales Tax and Central Excise (Adjudication), Lahore the case was fixed for adjudication on different dates and ultimately on 23- 4-2005 the hearing of the said case was completed and the decision was reserved. Having taken regard to the facts of the case in its entirety , the learned Collector (Adjudication) on 9-6-2005 issued the judgment with the following extract:- Moreover, the report of the departmental representative clearly shows that the buyers failed to render any documentary evidence regarding purchases from Messrs Model Steel. These affidavits submitted by the buyers that they have no record and are unable to maintain record because they are illiterate also seems to be hypothetical on the ground that it totally differs from those statements which were previously endorsed to the department. Their statements in the affidavit that they have purchased plough blades from Messrs Model Steel is totally baseless because their employees previously categorically stated that they have not made any such purchase. In the light of such facts all affidavits provided to be afterthought and have made with the connivance of the respondents. For the foregoing reasons, I am not convinced with the arguments and do not see any illegality in the impugned order and uphold the impugned order.
' This action of the learned Collector (Adjudication), Lahore has forced the appellant/registered person to file appeal before the Hon'ble Appellate Tribunal Inland Revenue.
3. The learned D.R for the revenue was present and supported the order of the learned Collector of Customs. Sales Tax and Central Excise (Adjudication), Lahore. Conversely,. The learned counsel for the appellant/registered person contended that the impugned order is based on surmises, conjectures and the same is the result of forced appreciation of evidence, allegations made against the appellant are baseless and without any merits. Also vehemently contended that the learned Collector being an adjudicative body had to act impartially and judicially but it is regrettably submitted that the learned. Collector had failed to comprehend its role and passed the impugned order without applying his independent judicial mind. Further agitated that the learned Collector by himself recorded and solely relined on the statement of Superintendent which was against the directions given by the Customs Tribunal. Further contended that the impugned order is a result of non-reading of evidence recorded by the learned Collector himself and it is surprising that the learned Collector ignored the evidence recorded on oath and relied upon the letter which were disowned by the buyers of the appellant.
4. We have given anxious thought to the arguments advanced by the rival parties as well as perused the orders of the authorities below and the relevant available record before us and in consistency of the S.R.O's. Mentioned in the appeal memos. Having taken regard to the facts of the case in its totality, we have noted that the appellant/ registered person being a manufacturing of agricultural implements took the advantage of S.R.O. 501(1)/94 dated 9-6-1994 and on the basis of provisional as well as final certificate, the appellant imported 4880.800/M.Tons raw material.
Subsequently, he sought its clearance vide bills of entry No,05740 dated 27-2-1999, 97635 dated 10-5-1999, 08078 dated 24-5-1999, 08527 dated 8-6-1999 and 02104 dated 11-9-1999 on payment of concessionary rate of duty in term of notification and certificates mentioned above. To resolve the controversy and to meet the ends of justice, we deem it appropriate to reproduce some contents of the impugned order for convenience and ready reference as under: -- 5.
14. In view of the above instructions, Mr. Mansoor, Superintendent was directed to appear for hearing. The purchasers were also summoned. Both the parties were cross-examined Mr. Sibtain Ali, Deputy Superintendent was directed to verify the requisite report from local dealers who submitted his report as under:- "The undersigned was directed for verification and confirmation the genuineness of documents i,e, affidavits, NIC etc. Submitted by the respondents to establish their sale to different purchasers. In compliance of the above orders, I along with Inspector Saeedullah Khan visited the business premises of the following purchasers:--
(i) Messrs Chaudhry Tractor House near Millat Tractor, Sheikhupura Road, Lahore.
(ii) Messrs Awami Tractor House, Dera Adda Multan.
(iii) Messrs Chaudhry Tractor, Kamalia Road, Toba Tek Singh.
(iv) Messrs Zamindar Tractor House, Piranwali Pull, Dera Ghazi Khan.
(v) Messrs Mian Tractor House near Millat Tractor, Sheikhupura Road, Lahore.
(vi) Messrs Hussain Agricultural Implements Dealers, Shandara, Lahore.
(vii)Messrs Aslam Tractor Agricultural Implements Dealers, Badami Bagh, Lahore.
(2) All the above buyers submitted the documents regarding purchase of agricultural implements (cultivator plough) from Messrs Model Steel Enterprises (Pvt.) Ltd., Lahore and also admitted that affidavits which have been presented before your good-self have been signed by them and they also produced the original National Identity Cards to prove the genuineness of their affidavits and identity card. However, it is not out of place to mention here that they failed to produce any documentary evidence in support of their purchases. In reply to my questions everybody stated that he has no record and also stated that he is unable to maintain record because of the reason that he is illiterate and do not know how to maintain the record.
(3) The statement of the owners of the above firms were recorded, copies of which are enclosed for your kind perusal. It is further submitted that owners of the above shops/premises were contacted at the addresses of their shops/premises mentioned in their affidavits and no discrepancy in this regard was noticed. The report is submitted for your kind perusal."
5. We have looked into the matter carefully and after giving due consideration to the entire facts of the case, we have observed that as per the directions of the learned Customs Tribunal, Lahore dated 12-8-2002 the whole structure of the case would be built on the report of the Muhammad Mansoor, Superintendent. Further noted that the learned Collector (Adjudication) followed the directions of the learned Customs Tribunal to that extent but he did not decide the case on the basis of the report submitted by the Superintendent and the Deputy Superintendent Mr. Sibtain Ali narrated above. We have further observed that the learned Collector (Adjudication) issued summons to all the purchasers and during the cross-examination all the purchasers admitted/stated in their statements that they knew Messrs Model Steel Enterprises (Pvt.) Ltd., Baghanpura, Lahore who were manufacturing plough blades and they had been purchased the blades to the said company at the relevant time. It is pertinent to mention here that all the purchasers admitted this facts through the affidavits and also produced their Original Identity Card during the court proceedings.
6. Keeping in view of the aforementioned discussion, it is crystal clear that everything had been established in favour of the appellant/registered person then why the department intended to drag the appellant/registered person into another chain of litigation. However, we are surprised to know that after recording all the evidence in the instant case why the learned Collector (Adjudication), Lahore ignored the factual as well as legal facts of the case. Consequently, we are of the considered opinion that both the authorities have initiated the proceedings against the assessee-respondent on the basis of surmises and conjunctures which do not have any legal consequences in the eyes of law. The submissions made by the learned counsel for the appellant/ registered person are convincing so we have no option except to vacate the orders of the authorities below which are void, illegal and ab initio. Accordingly, we accept the appeal of the appellant/registered person and this would result into set aside the orders of the authorities below and we feel no hesitation to direct the department to waive off the impugned tax demand as well as the further tax and the penalties imposed therein.
7. As a result, the appeal of the appellant/registered person is accepted to the extent and in the manner as indicated above.