MS. KAUSAR SULTANA HUSSAIN, (MEMBER (JUDICIAL-III)).--This order will dispose of Custom Appeal No.K-414/05 filed against the Order-in-Original No.90 of 2005 dated 22-3-2005, passed by the Collector of Customs, (Adjudication-II) Karachi.
2. Brief facts of the case as reported by the Directorate General of Intelligence and Investigation (Customs and Excise), Karachi that a Lahore based Exporter, Messrs H. Sheikh Noor-ud-Din (Pvt.)
Ltd., 21-B, Shami Road, Lahore, was involved in fiscal tax fraud in the export consignments through mis-declaration of description, value, quantity, quality and weight packed in 1x40 containers loaded from Mughalpura Dry Port, Lahore for Riyadh, Saudi Arabia.
The declaration vide shipping bill (GD) No.8513 dated 2-6-2004 was 380 Bales of Tarpautins weighing 25,700 kgs (net) comprising 1x40 container under the claim of Customs Duty Drawback and Sales Tax Refund. The FOB value of US $ 70076 equal to Pak Rs.4,388,064 was declared in the export documents for Tarpaulins. A scrutiny of the Shipping Bill has revealed that the weight and value have been added in hand, while, the rest of the columns are filled in print.
Form-E No.0012484 dated 4-10-2003 issued by Saudi Pak Commercial Bank, Lahore shows the consignee's name as Ateia Bin Qarar Al Malky, Jeddah, Saudi Arabia, whereas, the Goods Declaration (GD) indicates the name of consignee as "National Commercial Bank Jeddah, Saudi Arabia". This has been done deliberately to hide the identity of the actual consignee, so that the Customs authorities could not easily get verification of prices/value agreed upon by the buyer and the seller: The subject container was weighted at KPT weight bridge and the total weight of the container was found to be 23,200 kgs as compared to declared weight of 25,700 kgs (net). Therefore, difference of 2500 kgs come to 11 % over declaration of weight. The subject container was examined in the presence of representative of shipping company, Stevedors, Pakistan Railways and office superintendent (Appraisement Collectorate) posted at Railway Dry Port, Karachi.
On physical examination of the container, it was found that goods are Tarpaulins of varying sizes, the value of which on the found weight was ascertained, on prorate basis, which comes Pakistani Rs.3,961,000.96 as against the declared value of Rs.4,388,064.00 and the exporter has over declared the weight and value of the goods to extent of Pakistani Rs.426,873.00 which is 11% in excess, aimed at obtaining inadmissible excess Customs Duty Drawback and Sales Tax Refund to the tune of millions of rupees. The offending goods were therefore seized on 22-6-2004 in terms of Section 168 of the Customs Act, 1969 after serving notice under section 171 ibid and after preparing mushirnama in the presence of witnesses.
3. The Collector of Customs, Central Excise and Sales Tax (Adjudication-II), Karachi issued show cause notice dated 12-10-2004 to the appellant and others. The Collector of Customs (Adjudication-II) disagreed with the replies of show cause notice and passed an Order-inOriginal No. 90 of 2005 dated 22-3-2005 as under:-- "In view ' of the above referred . Facts (Para-13) the Directors/Partners/owners and other related persons of Messrs H. Sheikh Noor-ud-Din and Sons (Pvt.) Ltd., Lahore with the active connivance of Clearing Agent and concerned Customs Officials have deliberately mis-declared the goods to obtain undue benefit of customs duty drawback and refund of sales tax which otherwise would not have been admissible to them as is evident from the mis-declaration of weight and value of the goods. The charges levelled in the show cause notice against the respondents, therefore, stand established, I, therefore, order as under:--
(i) The seized goods are confiscated under clause (14) of subsection (1) of section 156 of the Customs Act, 1969. However, in view of the fact that the subject goods are to be exported out of Pakistan, therefore, an option under section 181 of the Customs Act, 1969 is given to the owners to get the goods redeemed for export on payment of the equivalent to 25% of the actual transaction value of the subject goods. The seizing agency is directed to draw samples from the consignments in presence of the representative of Messrs H. Sheikh Noor-udDin and Sons (Pvt.) Ltd, Lahore, before export of the goods and also obtain NOC, from the concerned Court of Law in this regard.
(ii) Since, the respondents mis-declared the weight and value of the goods to the extent of 11% and a meager amount of Customs Duty Drawback and Sales Tax refund is involved, therefore, a lenient view is taken in this case and a token penalty of Rs.100,000 (One Lac) is imposed under clause (14) of subsection (1) of Section 156 of the Customs Act, 1969. However, upon Messrs H. Sheikh Noor-ud- Din and Sons (Pvt.) Ltd., Lahore (all respondents, directors/ partners/ owners as mentioned at para 6 of the show cause notice).
(i.e) A penalty of Rs.20,000 (Twenty thousands) is imposed upon the Clearing agent, Abdul Majeed of Messrs Haq Cargo Enterprises under clause (14) of subsection (1) of section 156 of the Customs Act, 1969. The Collector of Customs, Lahore, should initiate proceedings against the Clearing Agent for cancellation of his license and imposition of find/penalty under the licensing Rules or any other action as deemed fit under the law.
(iv) A penalty of Rs.10,000 (Ten thousands) is imposed upon Rizwan Yousuf, Assistant Manager, Imports, freight Ways Pakistan (Pvt.) Ltd under clause (14) of subsection (1) of section 156 of the Customs Act, 1969 on account of collusion, connivance and abetment with the exporting firm in the fraudulent export to claim undue duty drawback and sales tax refund.
(v) Since, the concerned Customs Officials have colluded, abetted and connived with Messrs H.
Sheikh Noor-ud-Din and Sons (Pvt.) Ltd., Lahore in this fraudulent export and in misdeclaration of weight and value of the goods to claim undue duty drawback and sales tax refund, therefore, the Collector of Customs, Lahore, should initiate disciplinary proceedings against them under RSO- 2000 read with E&D Rules, 1973.
(vi) I also impose a penalty of Rs.5,000 (Five thousand) each, upon S.Imtiaz Ali son of Syed Ahsan Ali, Advisor, Ahassamuddin son of Nasiruddin and Muhammad Jan son of Muhammad Ramzan, (Office Incharge) employees of Messrs H. Sheikh Noor-ud-Din and Sons (Pvt.) Ltd., Lahore under clause (14) of subsection (1) of section 156 of the Customs Act, 1969, on account of collusion, connivance and abetment with the export firm in the fraudulent export to claim undue duty drawback and sales tax refund.
4. The appellant aggrieved with the Order-in-Original No. 90 of 2005 dated 22-3-2005 filed an appeal before this Tribunal on the following grounds:-- The appellant has no involvement whatsoever as alleged in the entire case. There is no proof of any wrong doing against it as alleged so much so he has nothing to do with regard to the valuation of the export consignment. As far the weightment is concerned it is stated that the appellant informed the customs authorities about it and after conducting detailed examination they were satisfied with the declaration the exporter. The appellant was informed that they were satisfied with the declaration of the exporter being a gold category and best performance trophy holder for the past many years as such the appellant has fulfilled the liability as clearing agent. The appellant does not have any involvement directly or indirectly with the export consignment nor is a beneficiary thereof in any manner what soever, as is evident from the statement of the exporter. The above fact is clearly manifested from the order of the adjudicating authority i.e. "As regards Ahssam-ud-Din and or Mr. Abdul Majeed. The same are middle level staff of the exporter and have no direct or indirect concern with the export".
The allegation against appellant and finding of the respondent are vague and unsubstantiated.
There is not an iota evidence against the appellant which involves him in any manner whatsoever.
The findings against him are bad in law and utterly without jurisdiction.
The appellant reiterates all and every submission raised by the other appellants in the connected appeals. There is no finding of any kind against the appellant as there does not exist any evidence of wrong doing against the appellant. The appellant is innocent and all or any allegation against him, raised by the respondent, is false and without evidence.
5. Para-were comments were submitted by the department are as under:--
(i) That the order in original has been passed by the respondent No.1, in consideration of evidences available on record. The appellant has failed to defend his case and rebut the charges levelled in the show cause notice. The aforesaid order is well narrated, descriptive, just proper, legal and in accordance with law.
(ii) That the appellant filed GD under section 131 of the Customs Act, 1969, for the export of 1x40' containers said to contain 380 bales of Tarpaulin weighing 25,700 kgs (Net) declaring FOB value US $ 76,076 equal to Pak Rs.4,388,064 whereas upon reexamination and weighment, the actual weight of the consignment was found to be 23,200 kgs, and the actual transaction value was ascertained to Pak. Rs.3,961,000. Therefore the extent of this-declaration of weight and value comes to 11%.
Moreover, Form E No.0012484 dated 4-10-2003 issued by Pak Saudi Commercial Bank Ltd., Lahore is showing consignee's name as Messrs Atia Bin Qarar Al Malky, Jeddah, Saudi Arabia on the contrary, in the shipping bill/GD "National Commercial Bank Jeddah, Saudi Arabia" appears as the consignee.
(i.e) The clearing agent under the provisions of section 209 of the Customs Act, 1969 read with licensing Rules, 1971 is equally bound along with the importer to give correct declaration of the consignment and remain faithful to the state. Similarly, in terms of sub-Rule (v) of Rule 102 of the Customs Rules 2001, the clearing agency is responsible to "exercise due diligence to ascertain the correctness, of any information which he imports to a client with reference to any customs business". However, the appellant failed to discharge his duties as stated herein above and is fully responsible the commission of offence.
(iv) As far as the matter submissions raised by the other appellants in their appeals and relied upon by Abdul Majeed, Clearing Agent; the same have already been replied and commented upon in the respective appeals which may be treated integral part of these para were comments.
(v) In view of the above, it is prayed that as the appellant has been found criminally involved with the exporters in the commission of offence of fraudulent exports by mis-declaration of value to claim undue Customs Duty Draw Back and Sales Tax Refunds and the Order in Original has been pasted on the basis of material evidences available on record by the respondent in exercise of the powers conferred upon him, therefore, the appeal may graciously be dismissed in limine.
7. We have examined the case record and given due consideration to the oral submissions made by the rival parties. The contention of the counsel for appellant is that show cause notice issued by the respondent No.1 is void of law as it does not entail the role of the appellant in the impugned case as is evident from para 6 of the aforesaid show cause notice, which only mentions the name of the Managing Director, Director, Proprietor, Owner and Advisor of the firm who intently defrauded the ex-chequer through mis-declaration of their consignment in terms of weight, quantity, description and value. As much as the appellant did not receive the copy of the show cause notice which is also mentioned in the order of the respondent No.1. During the course of his arguments, the appellant's counsel has relied upon the case-laws as reported in case of Muhammad Sadquain v.
Collector of Customs (Appraisement), Karachi 2006 PTD 2742, Customs Appeal No.K-543 of 2001, 2005 PTD (Trib.) 10, Customs Appeal No.K 198 of 2004, 2005 PTD (Trib.) 196, Messrs Exide Pakistan Limited, Karachi v. Deputy Collector (Adjudication-III), Karachi and others 2004 PTD 1449, Adam v.
Collector of Customs, Karachi PLD 1969 Supreme Court 446, and the Collector Central Excise and Land Customs and others v. Rahm Din 1987 SCMR 1840.
8. It is evidently clear from the perusal of the show cause notice that neither appellant's name find mention among the names of the other persons, indicated there in nor his role has been specifically stated outlining abetment and collusion. Rather a copy of the same has been endorsed in his name. Moreover, Respondent No.1 has issued orders ex parte without granting them the opportunity of being heard. The superior fora under the similar points of fact and law have always held unequivocally that show-cause notice must contain specific charge along with specific relevant provisions of law violated. The honourable Supreme Court in its judgment in Collector Central Excise and Land Customs v. Rahm Din 1987 SCMR 1840 has held that "order of adjudication, being ultimately based on a ground which was not mentioned in the show-cause notice, was palpably illegal on the fact of it ................ Honourable Sindh High Court at Karachi in Messrs Exide Pakistan Limited, Karachi v. Deputy Collector (Adjudication-III), Collectorate of Customs, Sales Tax and Central Excise (Adjudication), Karachi in 2004 PTD 1449 has observed that "No additional tax could be levied without issuance of show-cause notice. Mere observation in the order that in case of failure to pay tax, provisions of section 12 of the Sales Tax Act, 1951 would be enforced, would not amount to confirming assessee with the intention to levy additional tax. Such intention had to be specifically stated in the show-cause notice, otherwise assessee would be deemed to have been condemned unheard."
9. In view of the legal infirmities in the show-cause notice and subsequent order of the respondent No.1 fails the test of being in order and have no warrant with the legal frame work as held by Superior fora in aforesaid judgments. The honourable Supreme Court of Pakistan in PLD 2005 (SC)
842, Khyber Tractor v. Government of Pakistan, held that, "Courts are required to do justice between the parties in accordance with the provisions of law. It is elementary principle of law that, if a particular thing is required to be done in a particular manner, in must be done in that manner, otherwise it should not be done at all". Having said so, the appeal is allowed and the show-cause notice is declared void of the law and orders amenating from it also stand annulled upto the extent of appellant/clearing agent only. Order passed accordingly. .