MS. KAUSAR SULTANA HUSSAIN, (MEMBER (JUDICIAL-III)).---This Order will dispose of Custom Appeal No.K-1180 of 2011 filed by the appellant against the Order-in-Appeals Nos.5726 to 5727 of 2011 dated 20-8-2011, passed by the learned Collector of Customs (Appeals), Karachi.
2. Brief facts of the case as reported are that importer had imported old and used Cadillac Escalada Double Cabin Pickup bearing Chassis No.3GYFK62807G181921 from UAE under personal baggage scheme and got cleared the same under PCT heading 8704.2190 through clearing agent Messrs Al-Fajer Associate, 25-A, Pak Chamber, West Wharf Road, Karachi (CHAL No.1596). On post clearance audit conducted by the Collectorate, it was revealed that the importer had short paid duty and taxes amounting to Rs.8,45,909 in respect of the aforementioned luxury vehicle. A penalty of Rs.200,000 is also imposed on the respondent.
3. The Additional Collector of Customs, Model Customs Collectorate of Port Muhammad Bin Qasim, Karachi vide Order-inOriginal No.027/2011(PQ) dated 21-5-2011, passed the following order:-- "I have gone through the facts and record of the case and the submissions made by clearing agent. The basic charge against the respondents is that they have evaded duty and taxes in B clearance of subject imported vehicle by way of mis-declaring the actual custom value of the subject imported vehicle. The case of the department is that in light of MSRP (Manufacturer's Suggested Retail Price) the actual customs value of vehicle is ascertained at US $ 46,023 whereas, at the time of clearance it was ascertained at US $ 29,995.00. In order to appreciated the issue the primary legal instrument available is the CGO 14/2005 which provides a complete methodology for assessm ent of old and used vehicles imported under various schemes. The C.G.O. 14/2005 inter alia states that FOB value of the motor vehicle at the time of its manufacture as certified by the manufacturer or their authorized local agent shall be accepted. The CGO further describe the methodology to arrive at customs value for assessment for particular models. The record reveals that no FOB value of the subject vehicle as certified by the manufacturer or its authorized agents, as provided under the CGO 14/2005 is available. Therefore, Manufacturer or its authorized agents, as provided under the CGO 14/2005 is available. Therefore, Manufacturer's suggested retail price
(MSPR) was the only instrument upon which reliance had to be made and has to be taken as the bench mark for assessing such vehicles. This view gets strengthen from the Valuation Directorate's Letter No.1/51/2009-VIIA/3077 dated 31-5-2010. The record further reveals that while making assessm ent of impugned vehicle, the FOB value was taken as US $ 29995.00 on the basis of valuation advice issued in another case of identical vehicle which was very much contrary to the actual manufacturer's suggested retail price (MSPR) in respect of subject vehicle which was found as US $ 54145.00.
The averments contained vide clearing agents reply has also been taken into consideration. The main contention of the clearing agent is that the letter of the value department 1/51/2009- VIIA/3077 dated 31-5-2010 has non-retrospective effect and as such not applicable in the case due to the fact that the assessm ent was made prior to issuance of the aforesaid letter/clarification or circular of the valuation department. I have examined this contention of the clearing agent vis-a- vis the aforesaid letter. Careful reading of the letter reveals that it does not interpret the MSRP rather it just demonstrate the procedure to arrive at the correct customs value for assessment.
Therefore, in case the "MSPR" was wrongly applied while assessing the vehicle prior to issuance of the letter, the letter does not bar to apply the correct MSRP.
The next contention of the clearing agent is that since it is past and closed transaction therefore, no recovery can be made at this stage. This plea of the clearing agent is quite contrary to the factual as well as legal position of the case. The assessment in the instant case was made under section 80 of the Customs Act, 1969 and not under section 81 ibid. Had it been made under section 81 of the Customs Act, 1969 the clearing would take stance that in case assessment is not finalized within the period specified in the section, it would have attained finality. Even otherwise, the short levied or evaded amount of duty and taxes may be recovered if found recoverable at any subsequent stage upon audit or other such post importation scrutiny. The sections 32(1), 32(2), 32(3), 32(3A) and 32A clearly empowers the appropriate officer to recover such evaded or short levied amounts of duty and taxes, as the case may be within the period specified therein. If the plea of the clearing agent is accepted, then these section will become redundant and of non- utility.
Regarding the charges of mis-declaration, contention of the clearing agent is that it was not the case of mis-declaration of value or fiscal fraud under section 32(1) or 32A of the Customs Act, 1969, as the values of such old and used vehicles had been determined from time to time by the department on its on with different criteria under section 81 of the Customs Act, 1969 and in various cases the same have been finally determined by the Valuation Department on cast to case basis.
The clearing agent further contended that the value of the impugned vehicle was assessed in light of valuation advice of an another identical `vehicle, therefore, there is no question of mis- declaration of value of fiscal fraud. The clearing agent contended that as there was no uniformity in the assessm ent of said vehicle and for this purposes a committee of 03 officers.Was formed which held its meetings and then finalized its recommendations which were circulated vide letter dated 31-5-2010, therefore, charges of misdeclaration of value under sections 32(1) and 32(A) are not warranted for.
The above discussion clearly leads to the conclusion that actual price for the assessment of the subject vehicle is US$ 54,145 MSRP as confirmed from the MSRP (Manufacturer's Suggested Retail Price). After deducting 15% VAT (in light of valuation Directorate's letter No.1/51/2009-VII-A.3077 dated 31-5-2010) and including Ocean freight the ascertained value come to US$ 46,023. This clearly establishes the phenomena that the vehicle was cleared on suppressed value. Therefore, an amount of Rs.845,909.00 (custom duty Rs.539,805.00, sales tax Rs.230,316.00, income tax Rs.66,792.00 and FED Rs.8,996.00) is held evaded and as such recoverable from the importer Mr. Bheeyan Ram Chal No.81, P.O. Chak No.100, P. Raheem Yar Khan, Pakistan through his authorized clearing agent Al-Fajer Associates, 25-A, Pak Chamber, West Wharf Road, Karachi (CHAL No.1596).
The importer through his clearing agent is therefore, ordered to make the payment of aforesaid evaded amount of duty and taxes within thirty days from the date of issuance of this order failing which the vehicle would automatically stand confiscated and all law enforcement agencies including the Directorate General of Intelligence and Investigation, FBR, Islamabad, Director General of Excise and Taxation, the Motorway/Highway authorities, Traffic Police shall be then authorized to arrest the vehicle bearing chassis No.3GYFK62807G181921 and deposit the same with this Collector.
The relevant Directorate General Excise and Taxation should cancel its registration if materialized under intimation to this Collectorate.
A personal penalty of Rs.200,000 is also imposed upon the importer and clearing agent (each) which is to be deposited within 30 days of the issuance of this order failing which they shall render themselves liable to action under section 202 of the Customs Act, 1969 read with Chapter XI (Recovery Rules) of the Customs Rules, 2001 notified vide S.R.O. 450(1)/2001 dated 18-6-2001 as amended from time to time. In case of non-deposit of the penalty by the clearing agent within the prescribed time limit the licensing authorities shall initiate proceedings for cancellation of the licence of the aforesaid clearing agent bearing Number No.1596 under intimation to this Collectorate for violation of aforesaid provisions of law."
4. The importer did not agree with the Order-in-Original 27 cf 2011(PQ) dated 21-5-2011 filed an appeal before the Collector of Customs (Appeals), Karachi. The Collector passed an Order-in- Appeals Nos.5726 to 5727 of 2011 dated 20-8-2011 as under:-- "I have thoroughly examined the entire case record and have given careful consideration to the arguments advanced before me. It is an admitted position that neither the appellant nor the importers had submitted any false/forged documents to the department and that the assessm ents had been finalized by the appropriate officers of customs after due consideration.
Therefore, if any one is to be blamed for the short-assessments it should be the Assessing Officers.
There is nothing on record or in the impugned orders to suggest that the appellant was involved, in any way, in causing short-assessment of the vehicles and the superior judicial fora have repeatedly held that a clearing agent should not be punished unless his role in unlawful clearance of goods has been specified. I, therefore, rule that since the appellant had not played any unlawful role in clearance of the vehicles involved in these cases the penal action taken against him is not maintainable in law. The penalty imposed on him is accordingly remitted. The impugned orders are modified to the aforesaid extent only and the appeals are allowed accordingly."
5. Being aggrieved with the Order-in-Appeals Nos.5726 to 5727 of 2011 dated 20-8-2011, passed by the Collector of Customs (Appeals), Karachi, the appellant/department filed an appeal before this Tribunal on the basis of the following grounds:--
(1) That the learned Collector (Appeals) has erred in facts that all these transactions were basically made by these unscrupulous clearing agents in absence and knowledge of the importer/ passenger whose passport have only been used for availing import scheme of old and used vehicles under Personal Baggage Scheme. The importer has ever been appeared before the adjudicating authority which makes these transactions more dubious. The clearing agent and car dealers in these cases are basically the investors and middle men who have just used the passport of the passengers coming from abroad for availing import scheme of old and used vehicles under Personal Baggage Scheme. No proof of payment of foreign exchange/cost has ever been disclosed by these unknown importers/passengers whose whereabouts are not even known to these clearing agents who are actually the investors/ beneficiaries in this case.
(2) That the learned Collector (Appeals) have not considered the role of clearing agent in the clearance of vehicle. The whole scam of release of luxury vehicle cannot be complied without knowledge or involvement of the clearing agent. The clearing agent completely failed to provide complete information were required after clearance of the vehicle as envisaged vide responsibility of a licensee in terms of Rule No.101(d) of Custom Rules, 2001 notified vide S.R.O. 450(1)/2001 dated 18-6-2001 and the clearing agent has failed to pay the evaded amount of duty and taxes.
(3) That the clearing agent has failed to comply with the Rule No.101(h) of the Custom Rules, 2001 notified vide S.R.O. 450(I)/2001 dated 18-6-2001, as a licensee shall not appear, act or plead any proceedings under sections 179, 193, 194-A or 196 of the Act, on behalf of any person other than a person for whom it acted as licensee in relation to matters out of which proceedings have arisen.
The clearing agent has to exercise due diligence to ascertain the correctness of any information which he imparts to the custom department or to a client with reference to any customs business vide Rule No.101 (k) of the Custom Rules, 2001 notified vide S.R.0.450(1)/2001 dated 18-6-2001.
(4) That the Clearing agent has failed to comply with the Rule No.101(1) of the Customs Rules, 2001 Notified vide S.R.O. 450(1)/2001 dated 18-6-2001 for payment of Government dues received for payment of any duty, tax or other debt or obligation owing to the government and promptly render account to its client regarding any money received from him for government, or received from it in excess of government, or the other charges properly payable in respect of the client in its customs business.
(5) That the clearing agents has failed to comply with the Rule No.101 (p) of the Customs Rules, 2001 Notified vide S.R.0.450(I)/2001 dated 18-6-2001 as to produce the actual importer whenever required and declare his computerized national identity card number, actual office address, telephone number, tax number and e-mail address etc.
(6) That the clearing agent has failed to comply with the Rule No.101(r) of the Custom Rules, 2001 Notified vide S.R.O. 450(1)/2001 dated 18-6:2001 as to report immediately to the customs about suspected financial transaction proceeds to crime by his client.
(7) That the learned Collector (Appeals) had erred while interpreting the assessment criteria. The instant case is not the case of reassessment but for the recovery of duty and taxes which was unearthed by the Collectorate on post scrutiny of the import documents of luxury vehicle, therefore, the learned Collector's version is beyond the scope of law and it was not appreciated the crystal clear position that the incorrect base price was taken at the time of clearance which was not certified by the manufacturer, therefore the recoverable amount held by the adjudicating authority cannot be brushed aside.
(8) That the learned Collector while deciding the case had travelled beyond the memo. Of appeal and the order had been passed on extraneous considerations, the release of luxury vehicle on short levied amount of duty and taxes will become null and void and there will be no hope for recovery of huge amounts involved in many similar/identical cases.
(9) That the appeal under section 193 of the Customs Act, 1969 had not been filed yet by the importer in whose name the luxury vehicle was imported and released by the clearing agent who has failed to exhaust responsibility as provided under the Licensing Rules vide Rules Nos.90 to 106 of the Custom Rules, 2001 issued vide S.R.O. 450(1)/2001 dated 18-6-2001. The appeal before him was not filed by the juristic person and no authorization/ affidavit was filed along with the memo. Of appeal.
(10) That in case of recovery of legitimate revenue, the clearing agent cannot be allowed to go escort free on mere technicalities, such precedents will encourage mis-declaration and evasion of duty by other clearing agents and would set a precedent for future cases. Non-payment of short levied amount of duty and taxes is an act against entire country as it amounts to deprive the government of its lawful dues therefore no leniency ought to have been shown. The impugned order is illegal and against the provisions of the Customs Act, 1969 and Custom Rules, 2001 framed thereunder and as such the impugned order cannot be sustained under the law and is illegal.
6. Cross objection were filed by the learned Consultant of Respondent as under:-- (i)_ That the demand notice and subsequently show cause notice by the Deputy Collector of Post Clearance (Audit) PMBQ and Additional Collector of Customs, PMBQ are bad in law and suffer from legal infirmity as these suffer from powers/ jurisdiction. The powers of post clearance (Audit) under sections 32 and 32(3A) of the Customs Act, 1969 rest with the Directorate of Post Clearance (Audit) exclusively in terms of S.R.O. 500(1)/2009 dated 13-6-2009 whereas powers under section 32 of the Customs Act, 1969 after post clearance audit of the imported consignments for adjudication rest with Director General of Valuation vide S.R.O. 495(1)/2007 dated 9-6-2007 read with para. 44 of Customs General Order 12/2002 dated 15-6-2002, Additional Collector of Customs suffers from lack of powers jurisdiction as held in reported judgments PLD 1971 SC 184, 1992 ALD 449(1), 2004 PTD 624, PLD 1976 (sic), PLD 2001 SC 514, 20Q6 PTD 2237, 2009 PTD (Trib.) 1996 and 2010 PTD (Trib.) 823.
(ii) That issuance of demand under section 32(3) ibid only Principal Appraiser is empowered under S.R.O. 371(1)/2002 dated 15-6-2002 to proceed in the matter under section 32(3) ibid and none else.
The distribution of jurisdiction provided by section 179 of the Act and S.R.O. 371(1)/2002 dated 15-6- 2002 shall be rendered redundant. The superior officers would be making all efforts to exercise the adjudication powers clearly conferred by the law upon their subordinates. There is conflict between special and general provision of law, the special provision shall prevails as reported PLJ (sic)
Lah.1660. The power of adjudication as already observed is special in nature, statue and rule and regulations framed and jurisdiction as reported 2001 SCMR 103, PLD 1963 SC 663 and 1984 CLC 1517.
(i.e) That the Hon'ble Supreme Court of Pakistan observed regarding powers of adjudication, judicial or quasi judicial functionaries under section 223 of the Customs Act, 1969 in judgments reported as PLD 1992 SC 485 and 1993 SCMR 1232 in this case CBR issued directions for re-opening of Income Tax Assessm ent under section 65 of the Income Tax Ordinance, 1979.
(iv) That the Board or Collector of Customs has the power to examine the record of any proceeding for the purpose of satisfying itself or the case may be himself as to the legality or propriety of any decision or order passed by subordinate officer and may pass such order as it or he may deem think fit as expressed in section 195 of the Customs Act, 1969. The assessment/clearance order passed by the Appraiser and. Principal Appraiser under sections 80 and 83 of the Customs Act, 1969 in the capacity of adjudicating authority as expressed in section 2(a) of the Customs Act, 1969. Neither the Deputy Collector, Post Clearance Audit and Additional Collector of Customs are vested with the power under section 195 of the Customs Act, 1969 as reported PLD 1975 SC 331. S.T.
Appeal 72/04, S.T. Appeal 54/09, S.T. Appeal No. 2352/99, S.T. Appeal No 106 of 2003, 2002 CLC 705, 2004 PTD 624; 2004 PTD 3020, 2007 PTD 1895, 2009 PTD (Trib.) 1925, 2005 PTD (Trib.) 135, 2010 PTD (Trib.) 759, 2010 PTD (Trib.) 1283, Customs Appeal No.K-44/2010 and Customs Appeals Nos.K.435/08 to 455/08.
(v) That all these transaction were basically made by the these unscrupulous clearing agent in the absence and knowledge of the importer/passengers whose passports have only been used by these unscrupulous clearing agents for availing import scheme of old and used vehicle under personal baggage scheme, and licensing rules embodied in Chapter-VIII of Customs Rules, 2001, neither the said allegation and Licensing Rules incorporated in Chapter VII of Customs Rules, 2001 find any place in demand notice/show-cause notice and order in original. It is well settled principal of law that grounds not mentioned in the charter of show cause notice cannot be subsequently taken up at later stage reported as 2004 PTD 1449, 1987 SCMR 1840 and 2010 PTD (Trib.) 1759.
(vi) The record of the applicant case reveals that allegation of misdeclaration in terms of sections 32(1) and 32-A of the Customs Act, 1969 has been levelled against the respondent No.1 by the Additional Collector of Customs by inapt interpreting the provisions of sections 32(1) and 32-A embodied in the Act. The stance of the respondent No.1 is supported by the observation of Hon'ble High Court of Sindh in judgment reported as PLD 1996 Kar. 68 that the higher degree of prod is required for initiating penal provisions against the accused.
(vii) That charge framed in the said notice relates to a claim by the importer through the respondent No.1 that goods in question be assessed for correct value for levy of duty and taxes under the Act which customs official did while passing order for assessment /clearance under sections 80(1) and 83 in the capacity of adjudicating authority in terms of explanation given in section 2(a) of the Customs Act, 1969.
(viii) That in terms of section 79 of the Act, the Board through its order did prescribed form, manner and particular of a GD to be filed either manually or electronically through NIFT/to MCC of PaCCS to be filled by an intending importer. The form of GD so. Prescribed submission and reporting of detailed information including description of goods it weight and value. After processing the said information, the Assessing Officer has to get the goods examined or tested for determining, the nature, quantity, description of the goods and value to assess the amount of duty and taxes thereon.
(ix) The assessm ent procedure as provided in section 80 of the Act is quite exhaustive and detailed. The Assessing Officer can call for all the relevant documents and any other information which he deems necessary, and still the Assessing Officer can put questions or require submission of additional information for the purpose of completing the assessment order. A perusal of section 32 of the Act reveals that in addition to declaration any communication or answer to question put by customs and found wrong in material terms do qualify to constitute an offence within the frame work of the said section. So in order to bring an act or action within the frame work of word 'false' as used in section 32 of the Act, The Act should either be a conscious wrong or culpable negligence and should signify knowingly or negligently untrue. Such issue came up for decision before the Karachi High Court in the case reported as PLD 1976 Kar. 1154.
(x) That the procedure for clearance for goods for home consumption is embodied in section 83 of the Act, _which empowers the appropriate officer to make an order of the clearance for home consumption upon satisfaction that the duty and taxes have been paid and the import of the goods is not prohibited or in breech of any restriction or conditions applying to the import of such goods. The clearance order passed by the Principal Appraised in the instant case was after having satisfaction in regards to the assessment order made under section 80 of the Customs Act, 1969.
(xi) That it is settled principle of law in Customs Jurisprudence/ through a series of judicial for a of Indian and Pakistani Jurisprudence reported as 2002 MLD 1980, 2002 MLD 180 and 2011 PTD 2220.
(xii) That according to subsection (3) of section 179 of the Customs Act, 1969 the adjudicating authority is required to decide the case within 120 days of issuance of show-cause notice or within such period extended by Collector for which reason were to be recorded in writing and as such extended period shall in no case exceed 60 days. According to 1st proviso the period during which the proceedings were adjourned on account of stay order or alternate dispute resolution or time taken through adjournment by the respondents not exceeding 30 days shall be excluded for the accumulation of the said period.
(xiii) That in this case the show-cause notice was issued on 25-11-2010 and the respondent No.1 replied to that vide letter dated 20-1-2011. Consequent to which it was mandated for the adjudicating authority to pass order within 120 days from the date of show cause notice i.e. On or before 25-3-2011 whereas impugned order in original has been passed on 21-5-2011 rendering it bared by limitation by 56 days having no validity in the eyes of law. Hence, the impugned order in original suffer from lack of power/jurisdiction and null and void. In this regard reliance in judgments reported as S.T. K.255/01 (New No.286/04 and K-309/01), 1998 MLD 450, 2004 PTD 369, 2005 PTD 23, PTCL 2005 CL 481, 2005 PTD 340, 2007 PTD 2092, 2007 PTD 117, 2008 PTD 60, 2008 PTD 578, 2009 PTD 762, 2010 PTD (Trib.) 1631, (sic) PTD (Trib.) 1636 and 2010 PTD (Trib.) 2117.
(xiv) In the light of the submission made above the hon'ble Tribunal may disallow the appeal with declaration that it is being filed without any cause or reason or law point and order in appeal passed by the respondent No.2 may please be maintained as correct in facts and law.
7. I have examined the case record and given due consideration to the oral submissions made by the rival parties. The crux of the matter is that whether respondent No.1 has been found guilty of suppressing the facts while making declaration of the impugned vehicle as to its description, brand, capacity and make. A perusal of the memo. Of appeal, show cause notice, order in original and order in appeal evidently transpires that the Assessing Officer after due consideration allowed clearance of the subject impugned vehicle on the basis of an other identical vehicle. The Customs General Order 14 of 2005 dealing with the assessment of old and used cars/Vehicles prescribe a procedure and methodology to arrive at custom value of assessment of particular models. Moreso, the valuation Advice 1/51/2009-VHA/3077 dated 31-5-2010 cannot be applied retrospectively despite the fact that it helps in assessment of values of vehicles right from the declaration and presentation of import documents, the appellants were at liberty to investigate and approach the relevant quarter, which in this case is Director General Valuation, to provide them information and advice to arrive at the correct custom value for assessment of the subject impugned vehicle. The Assessing Officer after due consideration and application of mind has allowed the clearance under section 80 of the Customs Act, 1969. In case of uncertainity and doubt, still clearance would have been allowed under section 81 of the Act ibid which the appellant failed to do. In this whole scenario, the element of mala fide and mens rea on fact of the respondent No.1 does not surface as started earlier that whole matter was in hands of Assessing Officers. At best, if agree with the view point of the appellant, it than would be a case of collusion. Ironically, the appellant did not invoke the provision of section 32(2) of the Customs Act. The merits of the case have been deliberated exhaustively in the orders of the Collector Appeal. It is not out of place to mention that present appeal filed by the appellant is being aggrieved of the decision by the Collector appeal and latter has not been pleaded in the case as evident from the title of the appeal. In view of the aforesaid discussion, I do not find any reason to interfere in the orders of the Collector Appeal which is correct in law. This being so, appeal is disallowed. Order passed accordingly. .