SHAHID MEHMOOD BHATTI, MEMBER (JUDICIAL-II).--- This order will dispose of Customs Appeal No.322 of 2010 filed by the appellant against Order-in-Appeals Nos.324-327/2010 dated 25-10-2010 passed by the Collector of Customs (Appeals), Lahore.
2. Brief facts of the case as reported by the Principal Appraiser Customs Examination, (Group-IV), Dryport Mughalpura, Lahore vide contravention report issued under endorsement C. No. V-CUS/MISC- 386(1V)/2010/901 dated 12-5-2010 are that Messrs Pak Electron Limited, Lahore imported a consignment from China declared to contain 2500 sets of Evaporators and Condensers for split air conditioner in 2x40" containers and 1x20' container with declared value as US Dollars 61,050 (FOB) vide Invoice No. HQDR3601071427-1 dated 1-3-2010 and filed GD through Messrs. Ranziq International (Pvt.) Limited, (CHAL No. 110/74) under the regime of ACP for clearance of the same. The goods declaration was registered vide No. LDRY-HC-12509 dated 29-4-2010 at Dryport Lahore Accordingly, assessm ent of the imported goods was completed on the declared value US Dollar 64,740 (C&F).
The importer paid the duty and taxes on 4-5-2010 vide cash number HC-116. Before allowing delivery, the aforesaid containers were inspected to ascertain whether the documents i.e. Invoice and packing lists were placed inside the container as required under Rule 389(a) of the Customs Rules notified vide S.R.O. 450(1)/2001 dated 18-6-2001. On inspection, a commercial invoice showing value (worked out on the basis of unit value mentioned in the recovered invoice) as US Dollar 346,382 FOB [US Dollars 350,072 C&F] was recovered from the container. The consignment was also physically examined to Confirm actual description and quantity of the imported goods which resulted in recovery of 2525 sets as against the declared quantity of 2500 sets. The said fact confirmed that the importer has, willfully and deliberately, submitted forged and untrue documents declaring less than actual value and quantity of the imported goods in a bid to evade duties and taxes amounting to Rs.7,587,847 (Customs Duty Rs.1,845,447, Sales Tax Rs.4,259,417, Income Tax Rs.1,235,223 and Federal Excise Duty Rs.247,760), within the meaning of sections 32(1) and 32(2) of the Customs Act, 1969 read with section 36 of the Sales Tax Act, 1990 further read with section 148 of the Income Tax Ordinance, 2001, punishable under clause (14) of section 156(1) of the Customs Act, 1969 read with S.R.O. 499(1)/2009 dated 13-6-2009 further read with section. 33(5) of the Sales Tax Act, 1990.
3. Adjudication proceedings were initiated against the appellant and the Additional Collector of Customs (Adjudication), passed the Order-inOriginal No.34 of 2010 dated 21-5-2010. The extract of the concluding para of the order is enumerated below:-- ....................... In view of what has been discussed above, I have been left with no option but to conclude that the charges as mentioned in the contravention report are established against the importer. Accordingly, I hereby order as under:--
(i) The imported goods are confiscated under clause (14) of section 156(1) of the Customs Act, 1969; However, an option under section 181 of the Customs Act, 1969 read with clause (d) of S. No. 1 of the table in S.R.O. 499(1)/2009 dated 13-6-2009 is allowed and the confiscated goods are redeemed to its lawful owner on payment of redemption fine equal to 35% (thirty five percent) of the assessed value (US$ 350,072) of the goods in addition to payment of dutties and taxes leviable under the law. Needless to say that the amount of duties and taxes, already deposited against Goods Declaration No. LDRY-HC-12509 dated 29-4-2010 shall be adjusted accordingly.
(ii) The respondent is hereby` warned to be careful in future.
(i.e) The Additional Collector of Customs, Dryport Moghalpura, Lahore may like to examine the matter to discontinue the facility of ACP to the respondent."
4. The order was challenged before Collector (Appeal), who instead of deciding the appeal on merit while considering the fact of the case, provisions of the Customs Act, 1969 and Rules and Regulation framed there under, merely disposed of the appeal through a single order. The relevant extract of the order is reproduced herein-below:--- 'Considering the overall circumstances of the case, it is established that during the examination of the impugned consignment imported from China, the original commercial invoice showing value of US$ 350,072 (C&F) was recovered from the container as against the declared value US$ 64,740 (C&F). On the other hand, the prosecution department itself referred the matter to valuation department for determination of value of the subject component/parts of split air conditioner which is essential for the final determination of value. As the ease is to be decided within the time limit prescribed under section 193 of the Customs Act, 1969 and since no reply from the Valuation Department so far been received, the case cannot be kept pending for indefinite period. Therefore it is appropriate that the concerned custom authority finalize the value in terms of the mandatory provision of law.
5. The vires of the said impugned order has now been challenged through the instant appeal before the Customs Appellate Tribunal on the Following summary and grounds of appeal:-- (i)' That case relates to the Goods Declaration No.LDRY-HC-12509 dated 29-4-2010.
(ii) The appellant filed Goods Declaration (G-D) supported by Commercial Invoice issued by L.G.
Electronics Inc................. Korea, for import of Evaporators Enamelled and coated and Condensers for Split Type Air Conditioners (12000 BTU). Assessment of the goods was made on the declared value.
The appellant paid the duties and taxes vide cash number I-IC-116 dated 4-5-2010.
(i.e) According to the prosecution story the containers were inspected and commercial invoice showing value (worked out on the basis of unit value mentioned in the recovered invoice) as US Dollars 346,382-FOB (US Dollars 350,072 C&F) was recovered from the containers.
(iv) At this stage it may be noted that it is alleged by the prosecution that commercial invoice was recovered. On the other hand value is being worked out on the basis of unit value. The so-called invoice did not give the value of the consignment. The consignment was examined which resulted in recovery of 2525 sets as against declared quantity of 2500 sets.
(v) The prosecution has alleged that the appellant has contravened the provisions of sections 32(1) and 32(2) of the Customs Act, 1969 read with section 36 of the Sales Tax Act, 1990.........................
Punishable under Clause (14) of section 156(1) of the Customs Act, 1969.
(vi) The allegation is contravention of sections 32(1) and 32(2) of the Customs Act, 1969 which means that the appellant has done opposite to that which has been given in these provisions.
Delay in the release of goods was injurious, therefore, the appellant requested for summary adjudication. ii) In para 4 of the order-in-original it has been observed that the appellant requested for summary adjudication of the case without issuance of a show-cause notice. The appellant did not request for adjudication without issuance of show-cause notice.
(viii)Below para '4' of the order-in-original the contentions made in writing by the appellant have been reproduced which clearly show that appellant made request for "summary adjudication" only.
(ix) The order-in-original is against the provisions of section 180(a) of the Customs Act, 1969. The appellant had declared 2500 units in the G.D. But 2525 units were found in the consignment.
(x) The appellant had declared 2500 units on the basis of commercial invoice received through Bank. The supplier sent 2525 units to cover warranty on the basis of 1%. The commercial invoice gave 2500 units as consideration was received for 2500 units and 25 units were warranty. These are not to be counted as per trade custom. The amount of the letter of credit covered the whole consignment.
(xi) The commercial invoice filed with G-D was issued by L.G. Electronics Inc. Korea and it gives the description of goods as: Evaporator/Condenser of Split Type Air Conditioner, TSC126LGA7, A Class-1 Tone 2500 sets, USD (12,000 BTU) 24.4200, G1050-00, Evaporator Enamelled and 2500 USD, coated 12.1400, Condenser 2500 USD, 12.2800
(xii) The so-called 3 invoices recovered from the containers purport to have been issued by L.G.
Electronics TIANJIN Appliances.......................... China and give the description of goods as "Single Split Wall". There is no such description of goods in the H.S. Code.
(xiii)In the first and second so-called invoices there are seven different rates of seven different goods each 2500 and total 17,500 in each of the two. In the 3rd so-called invoice there are 6 different rates of 6 different goods total 2400. In the invoice filed with G-D reference is made to purchase order of the importer, proforma invoice of the supplier, letter of credit H. S. Code No. 8415.9019 and 8415.9029 whereas in the so-called invoices these references have not been given.
(xiv)The name of supplier in the invoice filed with G-D and the so-called invoices are different. In a similar case Order-in-Original No. 45 of 2010 was passed.
(xv) In para 10(vi) of this order it has been observed that the Commercial Counselor Embassy of Pakistani soul, Korea has attested the invoice which has been presented before the Customs along with the Goods Declaration. This proves the contention of the appellant. The goods were supplied by the party in Korea, The onus of proof of the so-called invoice is upon the prosecution.
GROUNDS OF APPEAL;
(xvi) That the impugned orders are bad in law and wrong on facts.
(xvii) That determination of value of goods is against the relevant provisions of law.
(xviii) That the impugned orders are against the provisions of section 180(a) of the Customs Act, 1969.
(xix) That the action is against the provisions of section 80(4) of the Customs Act, 1969
(xx) That the process of appreciation of evidence is against law.
(xxi) That there is no evidence to attract Clause (14) of section 156(1) of the Customs Act, 1969.
(xxii) That evidence has not been appreciated with judicial mind.
(xxiii) That Collector (Appeals) failed to consider points of law and points of fact and failed to give any finding on points of law or points of facts. That evidence has been misread.
(xxiv) Lastly the appellant prayed that the impugned orders may be set aside.
6. The departmental representative filed para were comments on grounds of appeal which are as under:--
(i) Factual needs no comments.
(ii) Admitted to the extent of the narrated facts.
(i.e) Admitted to the extent that the assessable value was worked out on the basis of unit value declared on the recovered invoice and by addition of the freight cost to arrive at the C&F value.
(iv) Factual needs no comments.
(v) The importer presented fake invoice to the Customs on the basis of which the assessment was made. However, on physical examination of the container the original invoices were recovered showing much higher values. Therefore, the action of the importers attracts the provisions of sections 32(1) and 32(2) of the Customs Act, t969 punishable under clause (14) of section 156(1) ibid.
(vi) The appellant have failed to appreciate the spirit of sections 32(1) & 32(2) of the Customs Act, 1969.
(vii) The appellant willfully opted for summary adjudication.
(viii)The option for summary adjudication automatically means that the appellant withdrew their right of issuance of show-cause notice.
(ix) Needs no comments.
(x) Not admitted the appellant themselves requested in writing for summary adjudication of the case without issuance of show-cause notice.
(xi) Factual needs no comments.
(xii) The importer declared 2500 sets in the invoice but on physical examination 25 sets were found in excess of the declared quantity and therefore, the importer misdeclare the quantity. Moreover, it was never mentioned in the presented invoice or Goods Declaration that these 25 sets are warranty parts.
(xiii)Needs no comments.
(xiv)The recovered invoice on the container shows the name of supplier as "LG Electronics Tianjin Appliances Co., Ltd. Xing Dian Road, Bei Chen Dist Tianjian, China, Tel 0086-22-269". Although the presented invoice shows the address of the supplier as "LG Electronics Inc., LG Twin Towers ... Korea" but the shipment was made from China and therefore, the recovered invoice showing the supplier address in China is the original and correct invoice. The description i.e. "Single Split Wall" as mentioned on the recovered invoice means that the imported items are meant for split type air conditioners wall type.
(xv) That mere non mentioning H.S. Codes does not have any impact on the genuineness of the recovered invoice.
(xvi) Admitted to the extent that the invoices recovered from the container show different rates of the evaporator and condenser with total quantity of 17500 and 2400. However, for assessment purpose minimum values have been taken from the recovered invoices.
(xvii) The recovered invoices were issued by the manufacturer in China whereas, L/C was opened in Korea. Therefore, the recovered invoices has no mention of purchase order, proforma invoice, L/C or H.S codes.
(xviii) Not admitted. It is incorrect to say that the name of supplier on the presented invoice and the recovered invoice are different. In both the cases supplier names has been mentioned as LG Electronics but only the addresses are different.
(xix) Admitted that the confirmation bearing the signature of Mr. Faud Hashim Rabbani, Commercial Counseller, Embassy of Pakistan, Seoul Korea was received whereby the invoice dated 10-2-2010 as presented by the respondent along with Goods Declaration has been attested.
However, the confirmation was required from the Commercial Counseller, Embassy of Pakistan in China as the recovered invoice was issued from the supplier in China. Moreover, in the presence of actual invoice recovered from the container, no further proof is required.
GROUNDS OF APPEAL: '
(xx) The order-in-original and order-in-appeal were issued but the competent authorities after giving ample opportunity of hearings to the appellant and after fulfilling all the legal requirements.
Therefore, the said orders are lawful in all respect.
(xxi) No determination of value has been made by the department but the actual invoices recovered from the container have been relied upon.
(xxii) Not admitted the appellant themselves requested in writing for summary adjudication of the case without issuance of show-cause notice.
(xxiii) Not admitted. Section 80(4) of the Customs Act. 1969 deals with Customs Computerized System which is operative only at PaCCS, Model Customs Collectorate, Karachi.
(xxiv) Not admitted. The direct evidence recovered in the shape of original invoice from the container cannot be denied.
(xxv) In the light of facts of the case. It is established that the importer presented a fake invoice along with Goods Declaration and therefore, misdeclare the value just to evade the legitimate government revenue. This offence attracts clause (14) or section 156(1) of the Customs Act, 1969.
(xxvi) Not admitted. Due consideration has been given to the arguments both verbal and written presented by the appellant at adjudication and appellate stage.
(xxvii) Not admitted. The Collector (Appeals) considered the view point of the importer as well as department at length.
(xxviii) Not admitted. No question of misreading of the evidence arises as the original invoice was recovered from the appellant's container.
(xxix) That the importer by submitting forged and untrue import documents, misdeclaring value, quantity and misusing the facility of ACP has attracted the provisions of sections 32(1) and (2) of the Customs Act, 1969, therefore, liable to be punished as per law.
7. The advocate of the appellant also filed submissions in response to the reply of the Department which is as under:--
(i) That the case relates to Goods Declaration No. LDRY-HC12509, dated 29-4-2010.
(ii) That the case of the respondent is on the basis of 3 papers allegedly recovered from 3 containers. These are alleged as invoices recovered from the containers.
(i.e) That an invoice is a document issued by seller to a buyer listing the goods supplied and stating the sum of money due. (iv) That it is undisputed that 2525 Evaporators and 2525 condensers for split type Air Conditioners were recovered from the containers the total number of goods is 5050.
(v) That in the summary of the case the appellant had asserted that in the first and second so- called invoices there are seven different rates of seven different goods each 2500 and total 17,500 in each of the two (total 35,000). It was also asserted that in the 3rd so-called invoice there are 6 different rates of 6 different goods total 2400 thus total comes to 37,400.
(vi) That in para 16 of the reply the department has stated "It is admitted to the extent that invoices recovered from the container show different rates of the evaporator and condenser with total quantity of 17500 and 2400". It is submitted that the words "evaporator" and "condenser" do not appear in the so-called invoices.
(vii) In para "7(i.e)" of the order-in-original it has been observed that two of the invoices, recovered from the containers indicate dispatch of 35000 piece of product as against the quantity of 2525 sets which has been found in the containers.
(viii) That so-called invoices indicate 37400 pieces in 3 containers whereas 5050 pieces were recovered from the 3 containers.
(ix) That it is thus clear that the so-called invoices cannot be considered invoices of the consignment.
(x) That description of goods in the First Schedule to Customs Act, 1969 is in consonance of the H.S. Code and throughout the world in relation to import and export the invoices are issued in consonance of the H.S. Code.
(xi) That the so-called invoices give the description of goods as "single split wall". This is not in consonance with the H.S. Code.
(xii) That in para "17" of the reply of the department it has been contended that L/C was opened in Korea, and the recovered invoices were issued by the manufacturer in China, therefore, the recovered invoices has not mentioned the purchase, order, proforma invoice, L/C or H.S. Codes.
(xiii) It is submitted that the so-called invoices cannot be treated as invoices of the consignment.
The appellant contracted with the party in Korea and not with any party in China.
(xiv) That in para '19' of the reply by the department it has been admitted that "confirmation bearing the signature of Mr. Faud Hashim Rabbani, Commercial Counseller, Embassy of Pakistan, Seoul Korea was received whereby the invoice dated 10-2-2010 as presented by the appellant along with Goods Declaration has been attested. However the confirmation was required from the Commercial Counseller, Embassy of Pakistan in China as the recovered invoice was issued from the supplier in China".
(xv) It is submitted that the invoice relied upon by the appellant has been verified whereas the alleged so-called invoice relied upon by the department has not been verified.
(xvi) That a perusal of the contents of para '14' of the reply along with other facts of the case proves beyond any doubt that the party in Korea is the supplier though the shipment was made from China.
(xvii) That contents of para '10' of the reply and those of para '4' of the order-in-original regarding request of appellant for adjudication of case without show-cause notice are disproved by the request of the appellant reproduced in para '4' of the orderin-original.
(xviii) That section 180 of the Customs Act, 1969 lays down that no order under this Act shall be passed unless the owner of the goods "is informed in writing (or if the person consents in writing, orally) of the grounds on which it is proposed to confiscate the goods or to impose penalty".
(xix) That in the show-cause notice it was alleged that the appellant had contravened the provisions of sections 32(1) and 32(2) of the Customs Act, 1969. It clearly means that the appellant has done opposite to that which has been given in these provisions.
(xx) That it has been explained that the appellant had declared 2500 units on the basis of the invoice. The commercial invoice gave 2500 units as consideration was received for 2500 units and 25 units were warranty. The amount of the letter of credit covered the whole consignment including the warranty units.
(xxi) That in the order-in-appeal it has been observed: "considering the overall circumstances of the case, it is established that during physical examination of the impugned consignment imported from China, the original commercial invoice showing value of US$ 350,072 (C&F) was recovered from the container". It is submitted there is no such invoice.
(xxii) That in the order-in-appeal the contentions of the appellant have been reproduced but these have not been considered in the order-in-appeal.
(xxiii) That the adjudicating authority misapprehended the contention of the appellant and observed that it is clarified that the imported goods even if for the purpose of warranty are not exempt from leviable duties and taxes. The contention of the appellant was to the effect that the quantity found in excess is 1% of the quantity shown in the invoice. This was supplied to meet with the warranty obligation. The amount paid as consideration to the supplier covered this warranty also. That duty etc. Is with reference to the consideration paid. Without prejudice to the above it was also submitted that S.R.O. 499(1)/2009 (Sr. No.1(a) of the Table) lays down that no penalty is attracted if the excess quantity is less than 5% of the quantity shipped/ declared.
(xxiv) That the observations in the order-in-original with reference to so-called invoices are biased and unreasonable.
(xxv)That observation in the order-in-original given in para 6(iv) are unintelligible. That there is no case against the appellant.
GROUNDS OF APPEAL:
(xxvi) That in the Order-in-Appeals Nos. 324-327 of 2010 against Order-in-Original No. 34 of 2010 in para "11" it has been observed: "considering the overall circumstances of the case, it is established that during the physical examination of the impugned consignment imported from China, the original commercial invoice showing value of US$ 350,072 C & F was recovered from the containers". This is disproved by para '3' of the reply by the department to summary of the case.
(xxvii) Contentions of the appellant reproduced in order-in-appeal have not been considered by the Collector (Appeals). The orderin-original was passed without show-cause notice. The contentions made by the appellant have not been considered. The inferences are against principles of appreciation of evidence and application of law.
(xxviii) That so-called invoices are not invoices of the consignment. These do not give required particulars in accordance with the legal provision. This is against section 25 and section 25-A of the Customs Act, 1969.
(xxix) That the appellant did not make any request for adjudication without show-cause notice.
Section 180(a) of the Customs Act, 1969 expressly lays down issuance of show-cause notice. The duty cast on the adjudicating authority is inviolable. The right given to the appellant is inalienable.
That the principle is applicable.
(xxx)That the so-called invoice is not invoice. It does not relate to the consignment. It does not conform to the invoice for the purpose of export and import. It does not relate to the contract. It was not issued by the exporter. That the invoice presented by the appellant is true.
(xxxi) That contentions of the appellant reproduced in order-inoriginal and order-in-appeal have not been considered. The reason's assigned are unreasonable. Most of the reasoning is unintelligible.
(xxxii) That the Collector (Appeals) merely observed that "it is established that during physical examination the original commercial invoice showing value of US$ 350,072 (C&F) was recovered from the container". This is incorrect. That the evidence has been misread.
8. The department filed comparative chart showing details of actual invoice, retrieved invoice and the examination on the directions given by this Tribunal, which are as under:-- Actual invoice FOB XINGANG SEAPORT, CHINA AS PER IMPORTER'S P.O. NO.PLG-AC-0031 DATED JANUA RY 28TH, 2010 AND BENEFICIARY PROFORMA INVOICE NO.PI-AC-PEL- ACLASS-BEB-P01 DATED 2 FEBRUARY, 2010 Evaporator/Condenser of Split Type Air Conditioner TS-C125LGA7-A Class, 1 Ton (12,000 BTU) 2500 SETS USD 24,1200 USD 61,050 Evaporator Enamelled and Coated 2500 U USD 12,1400 Condenser 2500 U USD 12,2800 Total FOB China Seaport: 2500 SETS USD 61,050.00 H.S. CODE NO.8415.9019, 8415.9029 LC NUMBER: MBL0201/051/10 WE CERTIFYING GOODS OF CHINA ORIGIN DRAIN UNDER MEEZAN BANK LIMITED, LAHORE CREDIT NO.MBL0201/051/10 DATED 10-2-2010 COMPLETE ADDREES PHONE AND FAX NUMBER OF THE BENEFICIARY: LG ELECTRONICS INC., LG TWIN TOWERS 20, YOIDO-DONG, YOUNGDUNGPO-GU, SEOUL 150- 721, KOREA.
TEL: 82-2-3777-1114 FAX: 82-2-3777-5206 Retrieves invoice 1 containerFOB CNXNG SINGLE SPLIT WALL 001 MODEL: TSNC126LGA7, KMBFPEL 2500EA 42.1319USD 105,329.75USD 002MODEL: TSNCI26LGA7, KMBFPEL 2500EA 96.4215USD 241,053.75USD 001MODEL: TSNC126LGA7,SMBFPEL, 2500EA 65.8388USD 164,597.00USD 002 MODEL: TSNC126LGA7, SMBFPEL 2500EA 99.4228USD 248.557.001751)
001MODEL: TSNC126LGA7,PMBFPEL 2500EA 44.5805USD 111,451.25USD 002MODEL: TSNCI26LGA7,PMBFPEL 2500EA 96.4215USD 241,053.75USD 001MODEL: TSNCI26 LGA7,LMBFPEL 2500EA 96.3963USD 240.990.75USD 1,353,033.25 USD 17500EA 2nd container SINGLE SPLIT WALL FOB CNXNG OO1MODEL: TSNC126LGA7,KMBFPEL 2500EA 42.1319USD 105,329.75USD 002MODELTSNC126LGA7,KMBEPEL 2500EA 96.4215USD 241,053.75USD 001MODEL: TSNC126LGA7,SMBEPEL, 2500EA 65.8388USD 164,597.00 USD 002 MODEL: TSNC126LGA7, SMBFPEL 2500EA 99.4228USD 248.557.00USD 001MODEL: TSNC126LGA7,PMBEPEL 2500EA 44.5805USD 111,451.25USD 002MODEI.: TSNC126 LGA7,PMBEPEL 2500EA 96.4215USD 241,053.75USD 00IMODEL: TSNC126LGA7,LMBEPEL 2500EAst 96.3963USD 240,990.75USD 1,353.033,25 USD 17500EA 3rd container SINGLE SPLIT WALL FOB CNXNG 00IMODEL:TSNC I 26YDAO, PMBFPEL 400EA 12.0286USD 4,81I.44USD 002MODEL:TSUCI26YDAO, PMBFPEL 400EA 19.5404USD 7,819.36USD 003MODEL: TSNC2465DAI, PMBFPEL 300EA 16.5879USD 4.876.37USD 004MODELTSUC2465DAI, PMBFPEL 300EA 37 6107USD 11,283 21USD 005MODEL: TSNC1865DAO, PMBFPEL 500EA 36.4814USD. 18.240.70USD OO6MODEL: TSUC186SDAO, PMBFPEL 500EA 41.9656USD 20,982.80USD 2,400EA 68,113.88USD 2,400EA 68,113,88USD Examination reportDESCRIPTION: EVAPORATOR/CONDENSER OF spur CONDITIONER MODEL ON PASTED SLIP TSUC-126LGA7 ON DOCUMENTS TS-C-126LGA7 '
S.NO. 1 PART NOS.ACG72917206 FOR CONDENSER QTY.TOTAL CARTONS 69
(i) 6SX37PCS = 2516 PCS.
(ii) IX9 PCS = 25 PCS.
TOTAL QUANTITY = 2525 PCS.
EXCESS = 25 PCS.
9. We have heard the rival parties and scrutinized the case record and thereafter framed following issues for consideration by this forum:--
(i) Whether the appellant submitted all the commercial/customs documents in respect of the subject importation of the consignment conducted through banking channel before the Customs authorities at the time of filing of goods declaration constituting sufficient evidence thereby substantiating the declared transaction value?
(ii) Whether the goods declared by the appellant in the Commercial documents and Goods Declaration submitted before the Customs Authorities match with the description of goods as mentioned in the invoice retrieved from the container?
(i.e) Whether the examination report tendered by .The customs authorities support the description of goods as given in the Commercial documents presented by the appellant before customs authorities?
(iv) Whether in the facts and circumstances of the subject case the allegation of misdeclaration levelled at against the appellant by the respondent Collectorate in terms of section 32 of the Customs Act, 1969 is factually and legally sustainable?
(v) Whether the customs assessed value of the subject goods has been determined in conformity with the provisions of section 25(1) of the Customs Act, 1969 read with Rules 107(a) of Customs Rules, 2001 further read with relevant judgments of superior judicial fora?
(vi) Whether the retrieval of the disputed invoices from the container not denied by the appellant constitute an admissible and conclusive evidence for enhancement of the declared prices as alleged and adjudicated by the respondents?
(vii) Whether the mandatory requirement of issuance of show-cause notice prescribed under section 180(a) of the Customs Act, 1969 for the purpose of adjudication is dispensed with where the incumbent files a request for summary adjudication?
(viii) Whether the Order-in-Appeals Nos. 324-327 of 2010 dated 25-10-2010, passed by the Collector of Customs (Appeals) is barred by limitation in terms of subsection (3) of section 193(A) of the Customs Act, 1969 read with judgments of superior judicial fora being issued beyond the limitation period stipulated in the relevant statute?
(ix) Whether the Order-in-Appeals Nos. 324-327 of 2010 dated 25-10-2010, passed by the Collector of Customs (Appeals) is definite and conclusive as per requirement mandated vide provisions of subsection (3) of section 193-A Of the Customs Act, 1969?
(x) Whether a discriminatory attitude has been meted out to the appellant single out through isolation of their assessm ent vis-a-vis similar other imports thereby constituting violation of Articles 4 and 25 of the Constitution of Islamic Republic of Pakistan read with relevant judgments of the superior Courts?
(xi) Whether the referral of the matter by Collector (Appeals) to Customs Department for assessm ent of value in face of, an adjudication order issued under section 179 of the Customs Act, 1969 and in violation of provisions of subsection (3) of section 193 ibid. Constitutes a patent deviation from the maxim "Expression facit cessare taciturn" laid down by honourable Supreme Court of Pakistan in EA. Evans reported as PLD 1964 SC 536?
(xii) Whether the order-in-original and order-in-appeal are nonspeaking, non-judicial and perfunctory orders based on nonreading/misleading of the documents on record?
10. As regards Issues Nos. (i) & (ii), both are interrelated and have to be taken up jointly. It is an admitted position that the appellant has submitted before customs authorities all the requisite Commercial documents viz. Commercial invoice, packing list, letter of credit and bill of lading. The transaction has been conducted in a transparent manner through normal banking channel. These documents suffice the legal requirements of submission of prescribed documents to be submitted by the importer to the customs at the time of importation.
11. Regarding the invoice retrieved form the container it has been noted that the particulars mentioned therein and the invoice submitted by the appellant before customs are poles apart.
There are a number of major discrepancies between the particulars of both the invoices. This Tribunal is of the view that since this is a focal point, more appropriately, the main bone of contention between the appellant and the respondent on which the whole case of the revenue against the taxpayer has been built up, the paraphrasing of both the invoices as put forth by the appellant in their rejoinder in response to the Para were comments filed by the respondent is essential to be brought on record for ease of understanding and ready reference.
(i) That the' case relates to Goods Declaration No. LDRY-HC12509, dated '29-4-2010.
(ii) That the case of the respondent is on the basis of 3 papers allegedly recovered from 3 containers. These are alleged as invoices recovered from the containers.
(i.e) That an invoice is a document issued by seller to a buyer listing the goods supplied and stating the sum of money due.
(v) That it is undisputed that 2525 Evaporators and 2525 condensers for split type Air Conditioners were recovered from the containers the total number of goods is 5050.
(iv) That in the summary of the case the appellant had asserted that in the first and second so- called invoices there are seven different rates of seven different goods each 2500 and total 17,500 in each of the two (total 35,000). It was also asserted that in the 3rd so-called invoice there are 6 different rates of 6 different goods total 2400 thus total comes to 37,400.
(vi) That in para 16 of the reply the department has stated. "It is admitted to the extent that invoices recovered from the container show different rates of the evaporator and condenser with total quantity of 17500 and 2400". It is submitted that the words "evaporator" and "condensers" do not appear in the so-called invoices.
(vii) In para "7(i.e)" of the order-in-original it has been observed that two of the invoices, recovered from the containers indicate dispatch of 35000 pieces of product as against the quantity of 2525 sets which has been found in the containers.
(viii) That so-called invoices indicate 37400 pieces in 3 containers whereas 5050 pieces were recovered from the 3 containers.
(ix) That it is thus clear that the so-called invoices cannot be considered invoices of the consignment.
(x) That description of goods in the First Schedule to Customs Act, 1969 is in consonance of the H.S. Code and throughout the world in relation to import and export the invoices are issued in consonance of the H.S. Code.
(xi) That the so-called invoices give the description of goods as "single split wall". This is not in consonance with the H.S. Code.
(xii) That in para "17" of the reply of the department it has been contended that L/C was opened in Korea, and the recovered invoices were issued by the manufacturer in China, therefore, the recovered invoices has not mentioned the purchase order, proforma invoice, L/C or H.S. Codes.
(xiii)It is submitted that the so-called invoices cannot be treated as ' invoices of the consignment. The appellant contracted with the party in Korea and not with any party in China.
(xiv) That in para '19' of the reply by the department it has been admitted that "confirmation bearing the signature of Mr. Faud Hashim Rabbani, Commercial Counseller, Embassy of Pakistan, Seoul Korea was received whereby the invoice dated 10-2-2010 as presented by the appellant along with Goods Declaration has been attested. However the confirmation was required from the Commercial Counseller, Embassy of Pakistan in China as the recovered invoice was issued from the supplier in China".
(xv) It is submitted that the invoice relied upon by the appellant has been verified whereas the alleged so-called invoice relied upon by the department has not been verified.
(xvi) That a perusal of the contents of para '14' of the reply along with other facts of the case proves beyond any doubt that the party in Korea is the supplier though the shipment was made from China.
(xvii) That contents of para '10' of the reply and those of para '4' of the order-in-original regarding request of appellant for adjudication of case without show-cause notice are disproved by the request of the appellant reproduced in para '4' of the orderin-original.
(xviii) That section 180 of the Customs Act, 1969 lays down that no order under this Act shall be passed unless the owner of the goods "is informed in writing (or if the person consents in writing, orally) of the grounds on which it is proposed to confiscate the goods or to impose penalty".
(xix) That in the show-cause notice it was alleged that the appellant had contravened the provisions of sections 32(1) and 32(2) of the Customs Act, 1969. It clearly means that the appellant has done opposite to that which has been given in these provisions.
(xx) That it has been explained that the appellant had declared 2500 units on the basis of the invoice. The commercial invoice gave 2500 units as consideration was received for 2500 units and 25 units were warranty. The amount of the letter of credit covered the whole consignment including the warranty units.
(xxi) That in the order-in-appeal it has been observed: "considering the overall circumstances of the case, it is established that during physical examination of the impugned consignment imported from China, the original commercial invoice showing value of US$ 350,072 (C&F) was recovered from the container". It is submitted there is no such invoice.
(xxii) That in the order-in-appeal the contentions of the appellant have been reproduced but these have not been considered in the order-in-appeal.
(xxiii) That the adjudicating authority misapprehended the contention of the appellant and observed that it is clarified that the imported goods even if for the purpose of warranty are not exempt from leviable duties and taxes. The contention of the appellant was to the effect that the quantity found in excess is 1% of the quantity shown in the invoice. This was supplied to meet with the warranty obligation. The amount paid as consideration to the supplier covered this warranty also. That duty etc. Is with reference to the consideration paid. Without prejudice to the above it was also submitted that S.R.O. 499(1)/2009 (Serial No.1(a) of the Table) lays down that no penalty is attracted if the excess quantity is less than 5% of the quantity shipped/ declared.
(xxiv) That the observations in the order-in-original with reference to so-called invoices are biased and unreasonable.
(xxv)That observation in the order-in-original given in para 6(iv) are unintelligible. That there is no case against the appellant.
The above comparison between the invoice retrieved from the container and the one submitted by the appellant before customs authorities indicate a huge differential between the material particulars viz. Invoice numbers, dates of invoices, description of goods, selling dates, names of shippers. The invoice retrieved from the container is completely silent about the name of the Vessel, L/C No. And the issuing Bank and which are considered very essential particulars to call the subject piece of paper a commercial invoice as understood in the general and commercial parlance. Besides, the description of the goods in the invoice retrieved from the container is "single split wall" as against the description of the goods in the invoice submitted before. The customs authorities which is "evaporators/condensers of spilt air-conditioner". It has also been observed by this forum that the invoice presented to the customs by the appellant duly incorporates HS Code Nos. And certificate of origin. The above narration amply substantiates the veracity of the declaration of the appellant and negates the view of the respondent. In a nutshell the appellant have discharged their initial or persuasive burden of proof through production of all commercial documents which are compatible with one another and in other words complement one another.
However, the respondents could not produce any piece of independent evidence to rebut be customs/commercial documents submitted by the appellant. Even the examination report submitted by the respondents substantiates the particulars of the invoice presented to customs by the appellant. Further the declared prices incorporated in the invoices presented to customs by the appellant are in total conformity with the prices determined by the Directorate General of Valuation vide Valuation Ruling 253 dated 11-5-2010 and even the current prices determined by the Directorate General of Valuation vide its Valuation Ruling No. 330 dated 31-5-2011 compared favourably with the declared prices of the appellant in the invoices presented before the customs authorities. The department have, therefore, mislead the original and appellate authority through manipulation of taking the single aspect of similarity of the model number though not being completely comparable in both the invoices. It is not understood as to how the Examining Officers, Assessing Officers, Adjudicating Authority and Appellate Authority have attributed authenticity and credibility to such irrelevant, incomplete and vague document and branded it a genuine commercial invoice of the goods in question. It is simply tantamount to an act of factual as well as legal absurdity. In any case the stance nurtured by the respondents is arbitrary, capricious, whimsical, discriminatory, confiscatory and even does not appeal to common sense. As such issue No. (i) is answered in the affirmative and issue No. (ii) is answered in the negative.
12. As regards issue No. (i.e), the commercial documents viz. Commercial invoice, packing list, letter of credit, bill of lading presented by the appellant before the Customs authorities contain the same description of the imported goods as determined by the customs authorities in the examination report tendered by them on the back of the Goods Declaration which are as under:-- "DESCRIPTION: EVAPORATOR/CONDENSER OF SPLIT AIR CONDITIONER MODEL ON PASTED SLIP TSUC-126LGA7 ON DOCUMENTS TS-C-126LGA7 S.NO.1 PART NOS. ACG 72917206 FOR CONDENSER QTY. TOTAL CARTONS 69
(i) 68 X 37PCS. = 2516 PCS.
(ii) 1X 9 PCS. = 9 PCS TOTAL QUANTITY = 2525PCS.
EXCESS = 25PCS.
(II)
5421A2012B/EVAPORATOR TOTAL QUANTITY = 19 18X36 = 2448 PCS.
1X77 = 77 PCS TOTAL = 2525 PCS EXCESS = 25 PCS."
The same aspect is further substantiated by the comparative chart submitted by the respondent Collectorate to the Tribunal. The only difference between both, i.e., the invoice submitted to the customs authorities by the appellant and the examination report tendered by the customs staff pertains to the number of units. The total quantity declared in the invoice presented before customs is 2500 whereas the examination report shows the total quantity as 2525. The appellant have appropriately elaborated this discrepancy that the difference in quantity is of 1% and is attributed to warranty requirements which is a normal commercial practice. However the difference in quantity is covered within the ambit of S.R.O. 499(1)/2009 which stipulates no penal action if the difference in quantity is less than 5%. However, the appellant have shown their willingness to pay duty and taxes on the excess quantity and which fulfills the statutory requirements besides causing no loss of revenue to the national exchequer. The examination report tendered by the customs authorities constitutes in itself an independent piece of evidence which itself negates the departmental stance and on the contrary fortifies the appellant's view point, As such issue No. (i.e) is answered in the affirmative.
13. As regards issue No.(iv), a scrutiny of the case record revealed that allegation of misdeclaration in terms of section 32 of the Customs Act, 1969 has been levelled at against the appellant on the basis of an irrelevant, vague and incomplete invoice purported to be issued by another shipper from China namely L.G Electronics Tiajn Appliances Co. Whereas the subject consignment has been imported from LG Electronic Inc. L.G Twin, Korea. The retrieved invoices have neither been prepared by the appellant nor they have been delivered by the appellant to the customs authorities. The respondent have not been able to produce any evidence against the appellant in respect of opening of letter of Credit or remittance of foreign exchange for the purpose, of importation of the subject goods at enhanced prices from the shipper from China against the so called invoice. This is a basic requirement that the allegation of colourable or tainted declared prices has to be established in the first instance with incontrovertible and cogent evidence by the revenue authorities. The onus of proof lies on the customs as per relevant provisions of Customs Rules, 2001.The case seems to have been built up by the respondents on the basis of retrieved documents assumed to be commercial invoices which are not to be relied upon for institution of a case of misdeclaration against the appellants in terms of section 32 of the Customs Act, 1969 particularly when the appellant has neither filed these retrieved invoices nor given any statement to the customs authorities tantamount to misdeclaration. The claim of the appellant is supported by the observation of the honourable High Court in their judgment reported as PLD 1996 Karachi 68 wherein it was ruled that higher degree of proof is required for initiating penal provisions against the accused:- Section-32, [Untrue] statement, error, etc. -(1) If any person, in connection with any matter of customs,--
(a) makes or signs or causes to be made or signed, or delivers or causes to be delivered to an office of customs any declaration, notice, certificate or other document whatsoever, or
(b) makes any statement in answer to any question put to him by an officer of customs which he is required by or under this Act to answer,
(c) submits any false statement or document electronically through automated clearance system regarding any matter of Customs, [Knowing or having reason to believe that such document or statement is false] in any material particular, he shall be guilty of an offence under this section.
A bare reading of the relevant provisions of section 32(1) of the Customs Act, 1969 makes it expressly clear that in order to attract the mischief of these punitive provisions, the mandatory pre- require is that the accused person should have made or signed or declared or caused the same before customs authorities in the form of any declaration, notices, certificate or any documents or should have made any statement while replying the queries put to him by an officer of customs with knowledge and belief that such documents or statements were false in any material particulars.
14. In absence of any document, declaration, notice made signed or delivered to the Customs authorities the charge of misdeclaration cannot be framed against the appellants. The provisions of section 32 have been discussed by the honourable High Court of Sindh in their unreported judgment delivered in Special Customs Appeal No. 65 of 2001 dated 22-4-2008 which states as follows:-- "Section 32 of the Customs Act, says that if any person in connection with the matter of custom makes a false declaration duly signed by him or by reason of any such document or statement made by him with the collusion, will be guilty of an offence under section 32 and can be charged under the above referred provisions. Section 180 which deals with the issuance of notice if read with section 32 of Customs Act, will further make it clear that confiscation proceedings of goods or imposition of any penalty can only be made against the owner of goods or any such person who has contravened the provisions of section 32 of the Act. So it at the most it is taken that the appellant was a middle man or the representative of the importer company, the department has not been able to place any document on record duly signed by the appellant reflecting any mis- declaration made by him in his personal capacity or as the representative of the company while clearing the vehicle."
The above interpretation made by the Divisional Bench of Sindh High Court also gains support from another judgment of its Divisional Bench reported as 2006 PTD 1207 wherein following observations has been made:-- "only a person making false statement or a false declaration before officer of customs could be held guilty of offence under section 32 and could be subject to penalty leviable under section 156(1)14."
The same point has been explicitly illustrated in unambiguous terms in the judgment delivered by the honourable Sindh High Court reported as 2003 PTD 552.
"A bare reading of the section clearly indicates that it relates to a situation where a person makes any statement or files any document which is false in any material particular by reason of which any duty or charge is not levied or is short-levied or is refunded. In such event, the Customs Authorities is empowered to issue to the person concerned a notice to show cause why he should not pay the loss of revenue suffered by the department and after giving him a hearing, beside any other action under law, order payment of the same, if a case is made out. The entire provision revolves, around the central point of loss of revenue suffered by the Customs department on account of the conduct of any person. Mr. Iqbal has not urged that the Department has suffered any loss on account of the conduct of the appellants. The question of applicability of section 32 in the present circumstances apparently does not arise."
The above principle laid down in the aforesaid judgment was followed by honourable Sindh High Court in the case of Messrs A.R. Hosiery Works Karachi v. Collector of Export, Karachi and another reported as 2004 PTD 2977 wherein it was observed that "section 32 of the Customs Act, 1969 does not cover every untrue declaration having nothing to do with evasion of customs duty or other charges but such statements must indicate an attempt to defraud public revenues. The honourable Supreme Court while upholding the above principle through its judgment reported as 2002 PTD 2215 = 2007 SCMR 1881 observed that "mischief alleged to have been made in the case was neither evasion of payment of customs duty or other taxes/charges nor same has caused any financial loss to the Government".
15. Even the honourable High Court of Sindh has observed in their above referred judgment 2004 PTD 2977 that "after the statutory change in section 32(1) through Federal Laws Ordinance, 1981, section 32(1) expressly required that to attract the penal provision a person's knowledge or belief that such documents or statements are false in any material particulars is imperative. It means that even if a document with .Untrue declaration is submitted before the customs authorities without the knowledge of that person to its being false in any material particulars then, too, provisions of section 32(1) are not attracted in respect of misdeclaration. In this case when there is no document filed or statement made before the Customs Authorities by the appellant, there is no question of invoking the penal application of section 32 of the Customs Act, 1969 against the appellant. As such issue No, (iv) is answered in the negative.
16. As regards issue No, (v), it is observed by this forum that the customs authorities have disputed the value of the subject goods on the basis of value of the goods jotted down on an invoice retrieved from the container. In doing so, the respondents are saddled with the responsibility to produce cogent and admissible material to establish the genuineness, authenticity and credibility of the retrieved invoice and also to substantiate that the value of the goods has been mis- declared. The provisions enumerated in the relevant section 25 of the Customs Act, 1969 pertaining to the transaction value have to be followed in a sequential order as per the requirements of the statute and the judgments of superior courts. The respondent are also liable to bring on record the evidential invoices of the goods in question of the country of export and pertaining to the period of import into Pakistan as stipulated in sub-rule (a) of Rule 107 of the Customs Rules," 2001 and as per direction contained in pars 78 of CGO 12 of 2002 dated 15-6-2002 or date of import expressed in Rule 110 ibid. Contrary to this, the customs authorities solely relied upon the retrieved invoice from the container which is neither relevant nor complete but is vague and poles apart when compared with the invoice presented to customs authorities with all other required documents as required under the Rules. The department in the instant case failed in submitting any provision of the Act/Rules or any other notification nullifying the proposition of law and did not rely upon any admissible or convincing material e.g. Evidential invoices on the strength of which allegation of misdeclaration was levelled against the appellant and their goods were assessed, rendering the charge of misdeclaration and assessment of value as unsubstantiated. The respondents have ignored their on valuation Ruling No. 253 dated 11-5-2010 and No. 330 dated 31-5-2011 which support the declared prices of the appellant's imports beyond any shadow of doubt. Admittedly the department has failed to discharge the onus of establishing that the prices declared by the appellant of the imported goods are not correct. The same view has been taken by the superior judicial fora in judgments reported as 1986 MLD 1990, PLD 1996 Karachi 68, 2002 PTD 2957, 2004 PTD 38, 2005 PTD (Trib) 617, 2006 PTD 909, 2008 PTD 1250 and 2008 SCMR 438. As such issue No. (v) is answered in the negative.
17. As regards issue No. (vi), pertaining to the credibility and authenticity of the invoice retrieved.From a container, the same cannot be treated as conclusive evidence of the transaction value agreed between the parties in terms of sub-clause (b) of subsection (1) of section 25 of the Customs Act, 1969 read with Rule 113 of the Customs Rules, 2001. On the contrary the invoice- retrieved form the container is completely Cifferent in material particulars and details and which have elaborately been discussed in issue No. (ii) supra. The invoice retrieved from the container is an incomplete, vague document and the particulars jotted therein have no nexus with the description of goods, quantity, invoice dates, etc. Except the partial similarity of the model. Though the model is similar but the description of goods in both the invoices, one retrieved from the container and the other declared to the customs is regarding description of goods, one being a complete product and the other being component parts. All the particulars jotted down in the invoice presented to the customs are favourably compatible with the packing list, letter of credit and bill of lading submitted along with the commercial invoice presented to the customs by the appellant. The main criterion for acceptance of these documents lies in the fact that these are Bank retired documents and the transaction has been conducted in a very transparent manner. In an identical matter covered by S.1. Reference Applications Nos. 191 and 192 of 2009 decided on 18- 8-2010 where an invoice was retrieved from a container, the honourable High Court has observed/opined as under:- "The initial objection of Mr. Zia ul Hassan, learned counsel for the respondent is that the Tribunal had, after examining the facts of the case, given a finding of fact that the invoice which was found in the container had been returned to the exporter and then fresh invoice was received by the Bank and on the basis of Bank Certificate and the remittance record and other documents submitted, the Tribunal came to the conclusion that the invoice found in the container is an expired document and complete documents have been filed by the importer/respondent by which it has been ascertained that the price actually paid and which can be determined under section 25(1) is the price according to the invoice submitted with the declaration of goods. The learned counsel for the applicant, relying to the above objection, drew our attention to section 25(1) of the Customs Act and clause (b) of subsection (2) of section 25 and argued that the value for the imported goods shall be the transaction value which is the price actually paid or payable for the goods when sold' for export to Pakistan and sub-clause (b) provides that the sale price is not subject to some condition or consideration for which a value cannot be determined with respect to the goods being valued. There can be no cavil to the 'arguments that subsection (1) of section 25 specifies that the price actually paid or payable for the goods when sold for export to Pakistan shall be the transaction value, however, we are not able to understand how sub-clause (b) of subsection (1) applies to this case, but even if we accept the applicant's arguments in regard to the computation of the transaction value, a perusal of the impugned order reveals that the Tribunal has, after examining the facts of the case given a factual finding that the price actually paid or payable for the goods in question when sold for export to Pakistan was not the price declared in the invoice found in the container, but the price declared in the invoice submitted along with the Goods Declaration."
The invoice presented to the customs is a normal, regular, admissible invoice in terms of section 2
(kka) of the Customs Act, 1969 and is complementing the accompanying documents viz. Letter of credit, packing list and bill of lading. In addition the examination report conducted by the examining staff of the customs Collectorate also support all the particulars given in the invoice except the quantity differential amounting to 1% which has beerf adequately explained in issues Nos. (ii) and (i.e) supra. Also the prices indicated in the retrieved invoice from the container do not tally with the customs values determined by Directorate General Customs Valuation in Valuation Ruling 253 of 2010 dated 11-5-2010 issued one week after the filing of the present GD. Even the current prices determined by the Directorate General Valuation vide Ruling No. 330 dated 31-5-2011 also are favourably compatible with the prices incorporated in the commercial invoice presented by the appellant. In a comparable case covered by Customs Appeal No. K-457 of 2009 dated 13- 10-2009 where the declared values of , the incumbents were enhanced by the custom administration on the basis of an invoice retrieved from the container, the appellate Tribunal Customs dismissed the case of the revenue thereby invalidating the enhancement of the prices on the basis of the invoice retrieved from the container. The relevant extract of the Tribunal order is reproduced as under:- "To have comparative analysis of the evidence provided by both the parties, the respondents have no doubt furnished tremendous amount of credible, incontrovertible and strong documentary evidence to establish the declared value to be the true transaction value. The chain of documents produced by them indeed coverage at one point to establish genuineness of the declared value.
The importers thus fulfilled and fully complied with the provisions of section 25 read with section 79(1) of the Customs Act, 1969. On the other hand, the appellants have helplessly tried to fortify their case on the weak and eroded foundation by overwhelmingly relying and depending on the controversial, invalid, erroneous and flawed invoice found from the .Container. Even the exporter/suppliers themselves rejected this earlier invoice by terming it the production of mistake and inadvertence hitting thereby the very basis, rendering it inconsequential and an irrelevant document in the case. The invoice found from the container accordingly badly lost its significance, reliance and efficacy to be reckoned as the valuable piece of evidence."
The above order of the Tribunal was upheld by the honourable High Court of Sindh in S.1. Customs Reference Application No. 29 of 2010 vide their order dated 29-3-201L. As such issue No. (vi) is answered in the negative.
18. As regards issue No. (vii), the Order-in-Original No. 34 of 2010 dated 21-5-2010 has been passed by Additional Collector of Customs (Adjudication) without issuance of any show-cause notice to the appellant on account of the plea that the appellants requested for summary adjudication. In all fact and fairness the appellant never requested the adjudicating office to summarily adjudicate the case without issuance of the show-cause notice. The request for summary adjudication implied in legal and common parlance for expeditious disposal of the matter by the adjudicating authority in face of entailing circumstances whereby the production of the split air conditioners of the appellant was badly affected resulting in huge financial loss to them due to non-fulfillment of their contractual obligation besides other allied factors. Even otherwise in cases where request for summary adjudication is made, in the words of Customs, Excise and Sales Tax Appellate Tribunal, Peshawar recorded in his judgment reported as 2004 PTD (Trib.) 1324 it was stated that:- "It is not understood as to under what law such right, which is primarily the duty of the Adjudicating Officer under section 180 of the Customs Act, 1969 to issue show-cause notice before confiscation of goods or imposition of penalty, could be waived of by the owner of the goods or person, for 'imposition of penalty on him.
Section 180 stipulates that three mandatory conditions are to be fulfilled step by step in chronological order and not simultaneously by the Adjudicating Officer before confiscation of goods or imposition of penalty.
The provisions of section 180 of the Customs Act, 1969 does nowhere provide for the waiver of show-cause notice on the part of any person who has limited choice under it.
The provisions of section 180 of the Customs Act, 1969 do not absolve the Adjudicating Officer of discharging his responsibility to comply with the given charter."
A scrutiny of the subject case record revealed that no show-cause notice H has been issued to the appellant by the Adjudicating Authority while finalizing their declared values in terms of section 25 of the Customs Act; 1969. Issuance of show-cause notice is a mandatory requirement for the adjudicating officers while adjudicating issues before them. This is also in violation of the principle of natural justice since the appellants were not afforded any opportunity to put any meaningful defence at the time of hearing. In this respect it is also observed that:--
(i) It is the first principle of natural justice to issue a show-cause notice to the person concerned. It is a mandatory requirement for crystallization of monetary liability ragainst the taxpayer through stating of material particulars of the rcase along with applicable provisions of the relevant law.
(ii) It is a well settled proposition of law that if a thing is required by law to be done in certain specific manner must be done in the same manner as prescribed by law or not at all, as per maxim "Expression Facit Cessare taciturn" as observed by the Apex Court in their judgments reported as PLD 1964 SC 536, 2003 SCMR 1505, 2006 SCMR 129.
(i.e) Violations of principle of natural justice can be equated with violations of provisions of statutory instruments.
(iv) It is the common principle which governs the administration of justice in Islam that in case of liability with penal or quasi penal consequences and for deprivation of basic rights, a notice as well opportunity of hearing is absolutely necessary. This by itself has to be recognized as a basic right as observed by honourable Supreme Court, Shariat Appellate Bench in the case of Pakistan v.
Public at large reported as PLD 1987 Supreme Court 304.
(v) Even issuance of a proper show-cause notice to a person is an essential ingredient of the expression "audi alterm parten" which literally means that no man shall be condemned unheard.
The right of being issued with a show-cause notice and the right of being personally heard are inseparable and inalienable rights of the defendant and cannot be denied to the person concerned under any circumstance.
(vi) In one case, the suspension without issuance of a show-cause notice was quashed by Dhaka High Court and was later confirmed by the Supreme Court that the rule of natural justice applies though there may not be any positive words in the statute, for such requirements and such rules are minimum requirements of fairness as reported in the case of University of Dhaka v. Zakir Ahmed PLD 1965 Supreme Court 90. This has also been followed by the honourable Supreme Court of Pakistan in their judgment reported 1994 SCMR 2232. As observed by the honourable Supreme Court in the judgment. M.D. The Bank of Punjab v Syed Shahzad Hussain reported as 2006 .SCMR 1023, it is also a settled principle of law that principle of natural justice must be read in each and every statute unless and until it was prohibited by the wording of the statute itself as the law laid down by this Court in Sir Edward Snelson's case PLD 1961 SC 237, Fazal-ur-Reham's case PLD 1964 SC 410, Zakir Ahmed's case PLD 1965 SC 90, Pakistan Crome Menes' case 1983 SCMR 1208 and Pakistan's PLD 1987 SC 304.
19. As regards issue No.(viii) relating to time bar, it has been observed by this forum upon scrutiny of the record presented before it that the appeal was filed by the appellants on 21-6-2010 and order-inappeal was issued by the respondent No. 2, after the initial period of 120 days beyond the limitation period prescribed in terms of subsection (3) of section 193(A) of the Customs Act, 1969.
The final date for deciding the appeal expired on 19-10-2010. It has also been observed that no extension was granted by the appellate authority as per contents of the order-in-appeal. The order-in-appeal has been passed beyond the period of limitation by (6) days thereby rendering it ab initio null and void. The issue of time bar has been time and again discussed in a number of judgments delivered by the superior judicial fora and the provisions relating thereto are mandatory in nature for implementation by all subordinate judicial and quasi-judicial forums in view of the "Doctrines of Binding Precedents and Stare Decisis". In this connection it is a misconstrued position nurtured by the revenue that time period prescribed under the relev.Ant statutes of the Customs Act, 1969 is administrative and directory in nature and not mandatory, hence does not affect the proceedings, if any, concluded after expiry of time limit. In this regard, reference to the Article 254 of the Constitution of Islamic Republic of Pakistan in like cases is also not pertinent. The Article 254 of the Constitution is general in nature and does not specify or rebut statutory provisions contained in special/specific Acts. Otherwise there is no requirement for legislature to prescribe different limitation periods for different statutes in presence of the aforesaid Article. Redundancy cannot be attributed to these statutory prescribed time limits.
20. In words of Superior Judicial Fora time extension given in such cases is akin to giving a new lease of life into dead entity. It is tantamount to flogging a dead horse if an event or document has become dead on account of non timely extension of time period prior to expiry of entire stipulated period. It is legally considered dead and new spirit cannot be infused into it by any means or on account of any reason whatsoever. Following extract from the judgment of the Hon'ble Sindh High Court reported as 2007 PTD 117 is relevant to the merits of this case:-- We are of the considered opinion that once a matter becomes barred by time then the subsequent enhancement in the period of limitation shall not have the effect of reopening the past and closed transaction and resuscitating the matters which attained finality and had gone in the annals of history.
The same principle has been laid down by the Hon'ble Lahore High Court in the case of Messrs Super Asia Muhammad Din Sons (Pvt.) Ltd. v. Collector of Sales Tax Gujranwala and another reported as 2008 PTD 60:--
(i) "Once limitation had started to run and had come to an end the assessee had acquired a vested right of escapement of assessment by lapse of time."
(ii) The claim of the revenue that the prescribed limitation of 45 days from completion of adjudication proceedings as provided through Finance Ordinance, 2000 and enhanced to 90 days by Finance Act, 2003 is merely directory cannot be accepted. It is settled law that where inaction on the part of a public functionary within the prescribed time is likely to affect the rights of a citizen the prescription of time is deemed directory. However, where a public functionary is empowered to create liability against a citizen only within the prescribed time, it is mandatory. The acceptance of contention of the revenue in that regard will make a provision of law redundant and nugatory.
Redundancy or superfluity of an act of Parliament and a provision of law cannot be readily accepted. All the more so when the prescribed limit is beneficial for the citizen and restricts the executive power to touch the pocket of a taxpayer thereby, creating threat after its expiry even if there was good case for creation of liability he will not be dragged in."
"Having said as much, we also do not think that the petitioner's caveat is totally devoid of substance. Thus if initial period of two months, envisaged in S.168 (Supra) is allowed to go by without any extension having been made, a vested right may come to accrue to the affectee and Collector should be obliged to issue a notice and accord necessary hearing before granting any extension correspondingly as always, it would remain a moot question whether an extension, if any, was actually made within the initial period of two months from the date of seizure and merely because it purports to have been so made within time, may not be in itself be enough the contrary may be shown but, ordinarily within the Customs Jurisdiction alone."
Since the initial period of 120 days stood expired on 19-10-2010, without any extension, the order-in- appeal becomes barred by limitation period by (6) days rendering it and preceding order as without power/ jurisdiction, hence ab initio null and void and not enforceable under the law.
The above contention of the department is also negated by the ratio decidendi settled by the honourable Supreme Court of Pakistan in Nagina Silk Mills Lyallpur v. The Income Tax Officer and the Income Tax Appellate Tribunal, Pakistan reported as PLD 1963 SC 322:-- ......................... In SG. Many words referred to legal position that once limitation has started to run and had come to end the assessee has acquired vested right of escapement of assessment by lapse of time."
The honourable Supreme Court of Pakistan in the above referred two judgments observed as under:- "The Court must lean against giving a statute retrospective operation on the presumption that the Legislature does not intend what is unjust. It is chiefly where the enhancement would prejudicially affect vested rights, or the legality of past transactions, or impair existing contracts, that the rule in question prevails. Reference may be made in this connection to page 206 of Maxwell on the Interpretation of Statute, Eleventh Edition. Even if two interpretations are equally possible, the one that saves vested rights would be adopted in the interest of justice, specially where we are dealing with a taxing statute. The appellant herein had already acquired the vested right of escaping assessm ent, by lapse of time, when the 1960 Ordinance was enforced. In all probability, the Legislature never intended that the period of limitation prescribed in the Act should become variable with the charges in the "financial year" or "year" inserted in the Act for certain other purposes, namely, to accord with the new accounting year adopted by Government."
The same view point has been taken by the honourable Supreme Court in their judgment reported as 1992 SCMR 1898. It in so many words states that while construing the financial statute, its terms are strictly to be followed:-- ......................... Thirdly, while considering a financial statue, its terms are strictly to be followed. Keeping in view these principles, for short levied duties on account "of inadvertence, error or misconstruction", section 32(3) of the Customs Act, 1969 provides that for recovery notice shall be served 'within six months'. If that is not done, like a suit for recovery of money after lapse of time prescribed by law of limitation, the recovery becomes unenforceable. Therefore, the provision is not merely directory as concluded by the learned Deputy Attorney- General...... "
The above view that once limitation period expires the order or assessment becomes time barred is also supported by various judgments of the superior judicial fora reported as 2009 SCMR 1126, 2002 MLD 180, 2003 PTD 1354, 2003 PTD 1797, 2Q08 PTD 578, 2009 PTD 762, 2009 PTD Trib. 107, (2010)
109 Taxation 221(sic). Hence issue No. (viii) is therefore, answered in the affirmative.
21. As regards issue No. (ix), it is pointed out that the Collector (Appeals) vide her order dated 25- 10-2010 in the operational part of the impugned order incorporated in the last par has remanded the matter to the Customs Department/Valuation Department for determination of customs value of the subject goods. The order of the Collector (Appeals) is, therefore, not in conformity with the provisions enumerated in subsection (3) of section 193 of the Customs Act, 1969 which is reproduced as follows:-- "(3) The Collector (Appeals) may, after making such further inquiry as may be necessary pass an order, within (one hundred and twenty) days from the date of filing of appeal or within such extended period as the Collector (Appeals) may for reasons to be recorded in writing, extend, confirm, modify or annul the decision or order appealed against."
The above observation of this forum regarding the unlawful and illegal dictate of the Collector (Appeals) not authorized by the aforesaid subsection becomes more explicit and clear when viewed in juxta position with the un-amended subsection as it stood prior to promulgation of Finance Act, 2007-2008 and which reads as under:-- "(3) The Collector (Appeals) may, after making such further inquiry as may be necessary, pass such order as he thinks fit, confirming, modifying or annulling the authority with such direction as he may think fit for a fresh adjudication or decision, as the case may be, after taking additional evidence, if necessary."
The above position has been interpreted by Honourable High Court of Sindh in one of their judgments that Collector (Appeals) has admittedly been disinvested with power of remand. The powers of remand earlier entrusted to Collector (Appeals) were withdrawn by the legislature through Finance Act, 2007-2008. In addition to the above legal position, it has been observed in the subject case that on account of remand of a finalized matter where the officer of original jurisdiction has indulged into a number of violations of mandatory provisions, the revenue is being offered a soft arm to plug or remove the legal lacunae/flaws or to remove the violations of mandatory provisions through remand of the matter to Collectorate of Customs/Director General Valuation. The Honourable Supreme Court has time and again denounced such practice in adjudication proceedings by different appellate and revisional forums in a number of judgments.
22. Besides the Collector (Appeals) directions for referring the matter to the Valuation Department is uncalled for in as much as it is discriminatory as well as confiscatory in the sense that identical/similar goods have been released by the Collectorate at favourably compatible prices and which otherwise is tantamount to usurpation of vested rights created in favour of the appellant. In all fairness the Collector has tried to absolve herself from taking responsibility upon herself for deciding the matter at her on and has again thrown the appellant at the mercy of the customs authorities. This action of the Collector is appropriately and patently in derogation of the principles enunciated by the aforesaid relevant statute, orders of the High Court/Supreme Court as well as general Principles and cannons of natural justice, equity and fairplay. When viewed in the spectra of legal and moral planes, the impugned order is admittedly adverse to the vested rights as well as fundamental rights of the appellant and needs redressal/rectification by this forum. As such issue No. (ix) is answered in the negative.
23. As regards issue No. (x), pertaining to meting out a discriminatory attitude to the appellant the advocate for the appellant placed on record many copies of GDs for the confirmation that the price indicated in the retrieved invoice does not reflect the prevailing prices of the goods imported by the appellant in the International Market, instead those reflect the prices declared by the appellant. While ignoring the evidence of identical and similar imports of the goods in question the customs has discriminated by way of preparation of contravention report and subsequently passing of Order-in-Original, despite the fact that the appellant stand on the same pedestal. In rebuttal of the said arguments the department took the stance that the referred GDs have no nexus with the consignment in question. No evidence was placed on record to substantiate the said stance nor any authority was placed on record that the importer can be treated differentially.
As discussed supra the two Valuation Rulings dated 11-5-2010 and 31-5-2011 issued by the Director General of Customs Valuation have also been ignored by the respondents which support the declared prices of the appellant. It is also observed that despite the orders of the adjudicating officer at sub-para (iv) of Para II of the order-in-original regarding discontinuation of the facility of ACP to the appellant by the Additional Collector of Customs, Dry Port Mughalpura, Lahore, no action has been reportedly taken by the Additional Collector of Customs, Mughalpura despite lapse of more than (1) year from the date of order-in-original and the appellant is still enjoying the facility of ACP. The said vital fact further aptly nullifies the charge of misdeclaration held in order-in- original. Even otherwise a person placed at the same pedestal cannot be treated differently. The honourable High Court of Sindh in its reported judgment 2002 PTD 976 held that "vacating the show-cause notice in one case and taking action against another person in similar situation, is amount to discrimination which is hit by Article 25".
24. The treatment given to the appellant against the principle enshrined in Articles 4 and 25 of the Constitution of Pakistan violates the settled law laid down by the Superior Courts in their judgments reported as 1990 SCMR 1072, 1990 SCMR 1059, 1975 SCMR 352, PLD 1995 SC 396, 1998 SCMR 1404, PLD 1997 SC 582, PLD 1997 SC 334 and 1997 SCMR 1874. As such issue no (x) is answered in the affirmative.
25. As regards issue No. (xi), it is co-related to issue No. (ix) dealt with supra regarding remand of the matter to Customs Department, instead of deciding it at her on end as per provisions of subsection (3) of section 193 of the Customs Act, 1969 by the Collector of Customs (Appeals). This issue finds further relevance to non-issuance of show-cause notice to the appellants as well as non-observance of mandatory limitation period by Collector (Appeals) in terms of section 193 of the Customs Act, 1969. In this connection, the honourable Supreme Court has ruled in case of Messrs AL-Faiz Industries (Pvt.) Ltd. Reported vide 2006 SCMR 129, that if the law requires something to be done in a particular manner that thing is to be done in the manner as prescribed under the law, otherwise, should not be done at all. In this case the department has committed various types of violations of mandatory provisions of law as discussed in the preceding paras which has vitiated the whole proceedings and the order impugned before us cannot sustain in the eyes of law. The honourable Supreme Court of Pakistan while deciding the aforementioned case of Messrs Al-Faiz Industries has ruled as under:-- "13. This court in a large number of cases starting with the case of E.A. Evans v. Muhammad Ashraf PLD 1964 SC 436 has unambiguously and categorically held that if the doing of a thing is made lawful in particular manner then doing of that thing in conflict with the manner prescribed will be unlawful as per maxim "Expressions facit cessaretacitum." In this case it was observed that proviso to section 30 of the Displaced Persons (Compensation . And Rehabilitation) Act, 1958 required the tranferree landlord to send notice of intimation of his becoming landlord by registered post acknowledgement due, which was a condition precedent before the tenant could be held defaulter. It was observed that intimation of change of ownership given to the tenant or acquired by the tenant in a manner other than the one mentioned in section 30 would not absolve the landlord from discharging his duty under section 30 of the Displaced Persons (Compensation and Rehabilitation) Act, 1958. In the case of Atta Muhammad Qureshi v. Settlement Commissioner PLD 1971 SC 61 this court while dealing with this principle reiterated this view and observed as under:-- "It is not possible to lay down a general rule of universal application in this behalf, but the one which is suggested by reported authorities in this connection is the affirmative or negative character of the language in which the provision is couched. If it is negative, that is to say, if the state enacts that certain action shall be taken in a certain manner and in no other manner, it has been held that the requirements are absolute and that neglect to attend them will invalidate the whole procedure. If, on the other hand, the language is affirmative, it may be considered as a directory provision. Nonetheless appears that in several reported English cases, it has been held that an enactment prescribing the formalities which are to be observed for validating an action, are not absolute, although expressed in negative or prohibitory language. In Mayor of London v. 'R (1848) 13 OB 30, it was stated that the words negative and affirmative of a statute mean nothing.
The question is whether they are repugnant or not to that which before existed. That may be more easily shown when the statute is negative than when it is affirmative, but the question is the same.
In Liverpool Borough Bank v. Turner (1861) 30 LJCH 379, Lord Campbell observed as follow:-- "No universal rule can be laid down as to whether a mandatory enactment shall be construed directory only or obligatory with an implied nullification for disobedience. It is the duty of the Courts of Justice to try to get at the real intention of the Legislature by carefully attending to the whole scope of the statute ' to be construed. In Horward v. Bolligndown (1877) 2 PD 203, Lord Penzance after citing dictum of Lord Campbell added as follows "I believe as far as any rule is concerned, you cannot safely go further than that. In each case you must look to the subject matter consider the importance of the provision and the relation of that provision to the general object to be secured by the Act and upon review of the case in that aspect, decide whether any enactment is, what is called, imperative or only obligatory."
One other principle which has been enunciated in this behalf is that as a general rule, statutes, which enable person to take legal proceedings under certain specified circumstances, demanded that those circumstances must be accurately obeyed, notwithstanding the fact that the provision thereof are expressed in merely affirmative language.
26. From the above observations made by this Court in the concluding portion of the above reproduced paragraph it may be noted that this Court while being mindful of the observations made in the case of Liverpool Borrough Bank v. Turner (1848) 13 OS 30 that though no universal rule could be laid down as to whether a mandatory enactment would be construed directory only or obligatory with an implied nullification for disobedience, concluded that the accepted principle in this behalf would be that as a general rule, statutes, which enable persons to take legal proceedings under certain specified circumstance, demand that those circumstances must be accurately obeyed notwithstanding the fact that the provision thereof are expressed affirmative language. Application of the pronouncement made by this Court in the cited case can be extended with advantage to the case in hand by holding that section 196 of the Act specified a particular office to initiate legal proceedings on behalf of the Customs Department, therefore, the demands of section 196 of the Act are to be accurately and strictly obeyed. It is not the job of this Court to question the property, motive, prudence of object of the Legislature in conferring the power or right to file an appeal under section 196 of the Act on a particularly or specified officer. If any authority is required in support of the above proposition, the same is available from the Judgment of this. Court in the case of the Punjab Province v. Malik Khizar Hayat Khan Tiwana PLD 1958 Federal Court 200. It may be noted that in section 194-A of the Act which deals with appeals to the Tribunal constituted under section 194 of the Customs Act, the Legislature has authorized any person aggrieved by any of the orders mentioned in section 194-A of the Act to file an appeal before the Appellate Tribunal. The different language used in the above two sections is a clear intention of the Legislature that for the purpose of filing an appeal before the High Court the words "aggrieved party" would not be applicable to or include an officer of the Customs Department on whose behalf the authority and power of filing an appeal has been specifically conferred on the Collector.
29. The upshot of the foregoing discussion converges on a focal point as to whether orders passed by the forums below can be sustained in this case in view of the established position that retrieved invoice from the container has no nexus with the merits of this case and no act of misdeclaration has been indulged into by the appellant within the ambit of mischief of section 32 of the Customs Act, 1969. Even otherwise, the adjudication and appellate proceedings are patently and deeply infested with apparent violations of statutory provisions. The various legal infirmities floating on the surface of the original adjudication order as well as the order-in-appeal, viz. Non-issuance of show-cause notice, issuance of non-speaking and perfunctory adjudication and appellate orders without due application of mind and that, too, in derogation of the relevant statutes and courts' judgments, non-adherence to limitation period stipulated in subsection (3) of section 193-A of the Customs Act, 1969 remand of the matter by Collector (App,cals) through an incomplete and vague order to Collectorate, etc. Constitute serious statutory lapses on the part of both the adjudicating and appellate authorities manifesting distinct acts of palpable inequity and gross injustice to the detriment of the appellant besides being violative of the principles enshrined in Articles 4 and 25 of the Constitution. The orders issued by both the forums below namely the Additional Collector (Adjudication) as well as Collector of Customs (Appeals) are, therefore, set aside. However, duty and taxes shall be charged on excess quantity of goods claimed as warranty requirements and found at the time of customs examination. The subject appeal is accordingly allowed.
Certified that this judgment consists of 40 (forty) pages and each page has been dictated, read, corrected and signed by me.