' MHER MUHAMMAD ARIF SARGANA, MEMBER (JUDICIAL).---This appeal has been directed against Order-in-Appeal Nos.216-217 of 2008, dated 6-11-2008, through which the learned Additional Collector (Adjudication), Lahore had upheld the Order-in-Original No, 21 of 2007, dated 31-12-2007 passed by the learned Deputy Collector, Customs (AFU), Allama Iqbal International Airport, Lahore.
2. The facts, giving rise to this appeal, are that an information was received to the effect that Vehicle Tracking System have been got cleared from AFU Lahore in clandestine manner in the garb of Anti Theft System (Car Security Alam System) by way of miss-declaring the description, classification and value of the goods. Pursuant to this information, post clearance audit/scrutiny of above imports was carried out which revealed that the appellant through its clearing agent Messrs Allah Malik Enterprises filed goods decimation No,8901 dated 20-8-2007 and as per declaration and its related documents, clearance of 150 pieces of Anti Theft System (Car Alarm System) of unit value US$ 7/piece classifiable under H.S.Code 8512.3090 was sought. However, the goods were assessed @ US$ 16/piece keeping in view the evidential valuation data of similar goods i,e, Car Security Alarm System. The scrutiny of said GD revealed that imported goods were actually Vehicle Tracking System classifiable under H.S.Code 8525.6060. The value of the imported goods of the similar/identical goods, as per evidential valuation data, was US$ 25/piece. It was thus evident that the importer and his clearing agent have deliberately got clearance of imported Vehicle Tracking System in the garb of Anti Theft System (Car Alarm System) by miss-declaring description, classification and value of the same and have deprived the exchequer of its legitimate revenue to the tune of Rs,2,49,118. As a consequence of adjudication proceedings, the appellant was directed to pay an amount of Rs,2,49,118 and penalty of Rs,1,00,000 and Rs,25,000. Being aggrieved, the appellant went in appeal and the learned Collector (Appeals), vide impugned order in appeal had upheld the order-in-original. Hence, this appeal.
3. The main grounds of the appellant, as urged in the memo. Of appeal, are: --
(a) That the appellants are quite innocent and have not violated the provisions of sections 16, 32(1) and 32-A, of the Customs Act, 1969. Hence they are neither liable to pay any tax, duty or penalty as mistakenly alleged in the impugned show-cause notice and wrongly adjudged in the order in original.
(b) That the appellants rightly and in good faith declared the goods (Car Security System Alarm System) which are classified under H.S. Code 2512.3030 liable to customs duty @ 35%, sales tax 15% and special excise duty 1% as determined by the customs appraising staff Air, Freight Unit, Lahore.
(c) That the value of goods has been worked out at US$ 125/piece which is repugnant to the provisions of section 25 of the Customs Act, 1969. It is pertinent to mention here that the invoice value was US$ 7/piece which was firstly increased to USS 16/piece, secondly to US$ 125/piece. It is legal and possible to increase the unit price repeatedly every time penalizing the registered person? The customs value determined under section (1) shall be the applicable customs value for assessm ent of the relevant imported or exported goods. Lack of knowledge and inexperience of the customs staff cannot be pleaded for penalizing the registered person. The whole exercise is based on mala fide and bad intention culminating to harassment of the registered person.
(d) That section 25 of the Act ibid has now fairly been adjudicated upon by the competent courts of law of the country. In support of our contention it is submitted that the value of any imported goods shall be the transaction value. It is pertinent to mention here that where in relation to the goods being valued, the appropriate officer is of the opinion that the declared price at which the goods are imported is different the appropriate officer shall inform the importer his reservations in writing, and require the importer to justify the price different. However, the provisions as contained in various subsections of section 25 are to be applied in sequential order (PTCL 2007 CL 469). If conditions of clause (a) of subsection (3) of section 25 are satisfied, transaction value of the imported goods shall be accepted (2006 PTD 2237). It is further stated that final assessment shall be done after giving proper opportunity of bearing to the petitioners (2007 PTD 523). A transactional value cannot be rejected because there are some imports at higher price.
(e) That invoice price cannot be discarded in routine except on the strength of clear evidence to the contrary. The plea of enhancement is not tenable where no evidence has been produced to justify any enhancement of the invoice value of the imported goods. In our case the price has already been repeatedly increased against the practice, procedure and rules in this behalf.
(0 That rejection of declared value of goods and fixation of its enhanced value without disclosing adequate material or reason is arbitrary, whimsical, capricious and in compete disregard of section 25 (2007 SCM R 1357 = 2007 PTD 1858). The enhancement in value made on the recommendations of a person or committee not supported with any evidence cannot be accepted by a judicial forum (2004 PTD 2993). The pica of the department in relation to identical goods as provided under subsection (5) of section 25 of the Act is not tenable.
(g) That the aforesaid provisions of law does not give unbridled powers to valuation department for determination of the values according to its own wishes and whims as the scope is restricted under the provisions of section 25A of the Act ibid.
(h) That in case the goods cannot be assessed on transactional value for reasons specified in subsection (1) the transactional value of identical goods in terms of subsection (5) or transactional value of similar goods under subsection (6) can be made basis for determination of customs value. It cannot be increased again and again.
(i) That the appellant were not confronted the precise basis of under valuation and copies of relevant evidences or data forming such allegation were also not provided, therefore, the impugned show cause notice is illegal and impugned order-in-original passed thereon subsequently is also not sustainable in the eyes-of-law. Thus the illegal and void show cause notice but subsequently proceedings or super structure built on void show-cause notice are nullity in the eyes of law,
(j) That, provisions of section 32 of the Customs Act, 1969 are not applicable in the case: of the appellant as they declared the imported gods as per description, mentioned on the invoice issued by the supplier. Further the contents of declaration given on the GD as mentioned above were checked and examined by the customs examining officers. After raid examination 'of goods appraisement of valuation was duly corrected and assessed by the concerned customs officers.
After correction/assessm ent as mentioned herein before the responsibility of its correctness undoubtedly devolved upon their shoulders.
(k) That classification of the goods mentioned, in the GD once determined by the customs staff cannot be changed again and again and thus the penalty, default surcharge, additional tax etc. Cannot be charged from the registered person under section 156(1)(14) of the Customs Act, 1969.
The impugned, order-in-original containing irrelevant and frivolous observations is liable to be struck down straightaway. Subsequent appraisement and proceedings initiated on its basis are vitiated when conducted on a dead horse/law or procedure which is void ab initio.
4. The respondent submitted para wise comments. They submitted:--
(i) That the contents of para-a as narrated are totally irrelevant, hence vehemently denied and rebutted. In fact the appellant in connivance with customs agent had took full advantage of the customs field formation negligence and successfully deprived the federal government from its legitimate revenue due.
(ii) That the contents of para-b as narrated are totally irrelevant and evasive hence vehemently denied and 'rebutted. Legally the appellant is not entitled any relief. The miss-declaration of description vis-a-vis incorrect PCT classification and assessment beyond any shadow of doubt had been established, therefore, the earlier assessment based on incorrect declaration of particulars does not withstand to legal tests, hence provisions of section 32(1) read with section 25(5)(6) of the Customs Act, 1969 were lawfully invoked for recovery proceedings.
(iii)' Denied. Legally the show-cause notice was lawfully served upon the appellant and the appellant had totally failed to justify his declarations before the competent adjudication/appellate authorities arguments are devoid both in fact and law.
(iv) Denied. In fact invoice price on the basis of factual import evidence i,e, computerized data of relevant periods under section 25(5)/(6) has lawfully been rejected, hence demand withstand to all legal tests.
(v) Denied. In fact invoice price on the basis of factual import evidence i,e, computerized data of relevant periods under section 25(5)t6) has lawfully been rejected, hence demand withstand to all legal tests.
(vi) Denied. In fact the appellant had failed to abide by the law and rules on the subject, therefore is not entitled for any relief in this matter.
(vii) Denied. In fact the assessm ent made on the basis of incorrect information/particulars supplied by the appellant/importer falls within the ambit and scope fiscal fraud, therefore the original assessm ent carried out by the held formation staff had lawfully been set aside by the competent adjudication/ appellate authorities therefore the argument had no force of law;
(viii) Denied. In fact appellant was confronted with factual import evidential data therefore their argument had no force of law.
(ix) Denied. In fact appellant in connivance with customs agent has clandestinely managed to obtain examination report other than the actual physical attributes of the imported goods i,e, car tracking system,, therefore, assessme nt based on incorrect information/particulars cannot be admitted as legal tender, hence this argument had no force of law.
(x). Denied. In fact appellant in connivance with customs agent has clandestinely managed to obtain examination report other than the actual physical .Attributes of the imported goods i,e, car tracking system, therefore, PCT classification/assessment based on incorrect information/ particulars cannot be admired as legal tender, hence this argument had no force of law.
5. Arguments were heard. The learned counsel for the appellant argued on the lines of submissions made in the memo. Of appeal.
6. The respondent defended the impugned orders.
7. I have heard the learned counsel and perused the record carefully. The import processing authorities were not authorized to carry out post clearance audit and issue show-cause notice in terms of para-44 of CGO 12/2002 dated 15-6-2002. The controversy stood resolved in the case of "Pak Suzuki Motors Co. Ltd. Through Senior General Manager (Corporate Playing and Logistic), Karachi (2006 PTD 2237), in which their Lordships have observed as under:-- "We are of the opinion that para. 44 of CGO 12 of 2002, is very clear and fully supports the contention of Mr. Aziz A. Sheikh. We are persuaded to agree with the submission and consequently hold that the Assistant Collector, Import processing, Port Muhammad Bin Qasim who issued the show-cause notice under section 32 and passed the order-in-original had no jurisdiction. It was clearly a post importation case and therefore the officers of the Valuation Department could initiate action for recovery of the government dues under section 32 of the Customs Act. The Tribunal has fallen in error in holding that the order-in-original was with jurisdiction."
8. The aforesaid judgment was delivered by the learned Division Bench of the Hon'ble High Court of Sindh at Karachi in Customs Reference under section 196 of the Customs Act, 1969 and it was never assailed by the department in appeal. This judgment of the Hon'ble High Court of Sindh at Karachi thus had attained the finality and as such it becomes binding upon this Tribunal too.
9. Moreover, CGO 12/2002, dated 15-6-2002 is also binding upon the departmental authorities as held in cases Akhtar Hussain (2003 PTD 2090) and Syed Muhammad Razi (2003 PTD 2821). Once the consignment is out of charged, it becomes past and closed transaction, so far as its value is concerned. In this behalf, reliance is placed on the case of Messrs S.T. Enterprises in which it was held that:-- "8. Section 32 also is not being understood in its true spirit. One must understand that it has been inserted to correct an error, modify an assessment and to recover the refund issued inadvertently.
This obviously means review or correction of the error in a finalized matter. Once a consignment is out of charge after due consideration of relevant facts, it becomes a past and closed transaction to the extent of its value etc. The same, therefore, should not be invoked only on the basis of the mere estimate, gossips, personal whims or feelings that the value could have been enhanced or it could fetch more taxes etc. The re-opening of an appraisement for the purposes of revaluation of an earlier estimate or adopted figure would require reason to believe and not reason to suspect.
For example, if one subsequently, finds that the description of the imported goods was different, H.S. Code applied was wrong, as a result of miss-representation or the number of items mentioned in GD and accepted by the Department were incorrect etc. Nobody will have any objection on the application of provisions of section 32. However, if one feels that more revenue could have been generated and thus, invokes the provision of section 32, this Court will not agree to the said understanding."
10. Similar views were taken by the Hon'ble Lahore High Court Lahore in un-reported case " Messrs Sunny Traders v. Federation of Pakistan reported as (2009 PTD 281)". The Director General of Customs Valuation, Custom House Karachi vide order dated 25-9-2008 passed in review Application No, DG(V)Val-Rev/67/2007, had also followed the law laid down in the aforesaid cases, so far as the invocation of section 32 of the Customs Act, 1969 in valuation cases was concerned. If in applying, the provisions of subsection (5), there are two or more transaction values of identical goods that meet all the requirements of this subsection and clauses (b), (d) (e) and (0 of subsection (13) of section 25 of the Customs Act, 1969, the customs value of the imported goods shall be the lowest transaction value and not the higher transaction value in terms of clause (d) of subsection (5) which reads as under:--
(d) If, in applying the provisions of this subsection, there are two or more transaction values of identical goods that meet all the requirements of this subsection and clauses (b), (d), (e) and (0 of subsection (13), the customs value of the imported goods shall be the lowest such transaction value, adjusted as necessary in accordance with clauses (b) and (c).
11. The perusal of the record shows that the original assessment was also made on the basis of evidence, and as such applying the evidence of higher value at subsequent stage is unjustified and illegal.
12. The learned counsel further contended that since it was final assessment, thus invoking of section 32 in such cases was not legal because, had there been any irregularity in the assessment, the matter should have been examined by the competent authority under section 195 of the Customs Act, 1969. I do agree with the judgment given in the case reported as 2002 PTD 889 by the Karachi Bench of this Tribunal that "in cases of final assessment no show-cause notice can be issued unless the earlier assessm ent order is set aside by re-opening the case by the competent authority because the Assessing Officer is also an Adjudicating Authority in terms of section 2(a) of the Customs Act, 1969".
13. With this discussion, the appeal is accepted and the impugned orders-in-original as well as order-in-appeal (to the extent of appellant) are set aside.