' GHULAM AHMED, MEMBER (TECHNICAL-II).---By this order, we will dispose of Customs Appeal No,K- 653 of 2009 filed by the appellant against Order-in-Appeal No,2028 of 2009 dated 29-9-2009, passed by the Collector of Customs (Appeals), Karachi.
2. Brief facts of the case are that Messrs Delta Automobiles, 5-Muhammad Ali Centre, Plaza Square, Karachi imported a consignment of Auto Bulbs vide IGM No,235 of 2001 dated 7-2-2001, Index No,196 and filed ex-bond bill of entry bearing Machine No,43333 dated 1275-2001 through their clearing agents Messrs Fair Business (CHAL No,572). On physical examination of the goods it was revealed that Item No,4 was declared as Miniature Bulbs (758000 pes) but during physical examination it was found that 295,000 pes were Auto Bulbs (S25 BA15S), 12V, 24W 25/8W and the rest 463,000 pes miniature bulbs were found as per declared description. The Into--bond bill of entry was processed after said examination by the concerned Group for warehousing of the goods with the endorsement on face of the bill of entry that the value will be checked at the time of ex-bonding.
Accordingly as per said endorsement and examination report the goods were in-bonded.
Subsequently two ex-bond bills of entry bearing Machine Nos. 43332 and 43333 dated 12-5-2001 were filed by Messrs Fair Business (C.II.A. L. No,572), both the bills of entry inter-alia carried the declaration of 379,000 pieces each of Miniature Bulbs (total 758,000 pieces). The entire quantity was declared on ex-bond bills of entry as Miniature Bulbs 295,000 pieces. The customs agent with the connivance of the importer had deliberately mis-declared the imported 295,000 pieces Auto Bulbs (S25/BA 15S) 12V, 24W 25/8W which were actually not Miniature Bulbs as per examination report. Auto Bulbs S25/BA15S,24W 258W are assessable at US$ 35/per 1000 pieces against assessm ent made at US$ 6/per 1000 pieces treating those 295.000 pes Auto Bulbs as Miniature Bulbs. Thus, Messrs Delta Automobiles, Karachi with the active connivance of the clearing agent Messrs Fair Business (C.H.A.L. No, 572) got the clearance of 295 cartons (295,000 pieces) of S25/BA 15S Auto Bulbs at suppressed value @ US$ 6 /pieces under the garb of Miniature Bulb, whereas the Halogen. Auto Bulbs were cleared @ US$0.25/piece vide bill of entry bearing Machine No,43332 dated 12-5-2001, and also the same item was assessed @ US$ 0.18/piece vide ex-bond bill of entry No,43333 dated 12-5-2001. The total values of offending goods has been ascertained at Rs,7,36,109 Due to the said wrong assessm ent and deliberate misdeclaration of physical description and suppressed value the government suffered a loss of revenue to the tune of Rs,1,85,651.
3. The Additional Collector of Customs, (Appraisement-I) Karachi, did not agree with replies of appellant and passed the Order-in-Original No, 1 of 2009 dated 9-1-2009 reproduced as under:-- "I have gone through the record of the case and considered verbal as well as written arguments submitted by the respondents and by the department representative and come to the conclusion that the subject case revolves around the following points/ question of law:--
(A) Whether or not after clearance of goods under section 80 of the Customs Act, 1969 Additional Collector is empowered to reopen the case and issue show cause notice?
(B) Whether or not value of consignment has been assessed in accordance to the rules provided in section 25 of Customs Act, 1969?
(C) Whether or not in terms of section 30 of the Customs Act, 1969, the value already determined at the in-bonding stage can be altered at ex-bond stage?
(D) Whether or not the subject case is time barred for adjudication in terms of section 179(5) of the Customs Act, 1969? And ' The following position emerges regarding the aforesaid Points/questions.
(A) First of all it is pertinent to mention here that as per section 79 of the Customs Act, 1969, a bill of entry can be filed for, home consumption and warehousing of the goods. Admittedly in the instant case the bill of entry was filed for warehousing of the goods subject to payment of duties and taxes at later stage of ex-bonding. It is also clear from the record that at import/inbonding stage the importers were not in a position to, supply the requisite information to determined the customs value for assessm ent purposes, that is why, to save the importer from the port/demurrage charges the warehousing of the goods was allowed subject to the determination of the customs value for charging duties and taxes at the time of ex-bonding and the said arrangement of determination of value was made with the consent of the importers/Customs Agent, that being so there was no objection on their side at the relevant point of time. Thus, it is clear that neither the customs value was determined finally nor the final assessment for charging of duties and taxes was made under section 80 of the Customs Act, 1969. Further the assessment under section 80 of the Customs Act, 1969, is an act of procedural requirement, and cannot be termed as an order or decision passed after adjudication. Further the assessment under section 80 of the Customs Act, 1969, is subject to post clearance audit/scrutiny and the provisions of section 32 ibid caters/covers all such subsequent acts. The assessm ent under section 80, unless provided under section 32 of the Customs Act, 1969, expired, cannot be termed as past and closed act. Therefore, it cannot be termed as a case of reopening in terms of section 195 of the Customs Act, 1969. More importantly the provisions of sections 32 and 195 are two distinct and separate provisions of law and having independent area of jurisdiction. In furtherance it is pertinent to mention, here that even the time limitation provided in section 32 (i,e, upto five years) and in section 195 (i,e, up to two years) itself proves that the provisions of section 195 does not have any over-riding effect on the provisions of sections 32, 80, 199 and other procedural provisions of the Customs Act, 1969, where no decision or order passed after the adjudication. That in the presence of provisions of section 32 of the Customs Act, 1969, read with the Apex Court's judgment in the case of Messrs Pfizer Laboratories v.
Federation of Pakistan and others (PLD 1998 SC 358) no Goods Declaration/Bill of Entry can be termed as past and closed transaction, till the expiry of period provided under section 32(2) of the Customs Act, 1969, Secondly, it is reiterated that the provisions of section 195 of the Act, have neither any nexus with the provisions of section 32 nor it has any over-riding affect on section 32 of the Act. Both these provisions of law are distinct and have their independent jurisdiction. Further, it is confirmed that the provisions of section 195 have jurisdiction over an order/decision passed under section 179 or 193, as the case may be, and have no overriding effect on a notice issued under section 32 of the Customs Act, 1969. It is added that neither there was any question of closed transaction nor it is a case where reopening of the case was mandatory under section 195 of the Customs Act, 1969. Further, without prejudice to above, in the section 195 the words "may" and "passed" have been used. By using words "may" the intent of the legislations is very much clear that it is not mandatory for the Collector to re-open any procedural action/decision which the appropriate officer/official has done finally. The assessment of the imported goods was a procedural act instead of a decision on quasi-judicial proceedings. It is neither a decision passed on any application for refund, re-export, etc., nor the process of assessment can be termed as an order/passed issued under sections 179 and 180 of the Customs Act, 1969.
(B) That no-where in the section 25 of the Customs Act, 1969, it has been stated that every declared value is to be accepted for the assessment purposes and rather the provision of subsection (1) of section 25 of the Customs Act, 1969, called for the acceptance of a payable transaction value (which is not in this case) as customs value on the following conditions:--
(a) subject to subsequent subsections of section 25 and rules (Le. Chapter, IX of the Customs Rules, 2001).
(b) that the value paid by an importer must be in agreement with the "payable" value in the market of similar kind of goods.
(i) First of all it is proved from the record of the case that no information or corroborative documents were provided and the appellant have failed to provide any corroborative documents i,e, L!C, etc, to prove the transaction of even their suppressed declared value, thus, the appellants have failed to substantiate their value which had been paid.
(ii) Secondly, the Appropriate Officer, by virtue of powers conferred under subsection (11) of section 25 of the Customs Act, 1969, has a right to satisfy himself whether the "paid" value is true transaction value to be considered for assessment purposes. For this purpose, apart from other information/ documents, as required by the customs the importer should provide the information about the price adjustments, along with corroborative documents, as envisaged in subsection (2) of section 25 of the Customs Act, 1969. In the instant case the respondents have failed to provide the information/documents thus, in terms of clause (1) of section 25(2) of the Customs Act, 1969, there was no question to accept the declared value as customs value in terms of section 25(1) of the Customs Act, 1969. The record and circumstances of the case proving that the customs value of the appellant's consignment cannot be determined on the basis of their declared value.
(iii) Thirdly, the words "subject to the provisions of this section and rules", appeared in section 25(1) of the Customs Act, 1969, have a great importance while accepting any transaction value. The customs values in terms of Rule 107 of the Customs Rules, 2001 has significance and cannot be ignored. If the declared value is not in agreement with Rule 107 the same cannot be accepted as payable transaction customs value. It is clear from the record that at import/in-bonding stage the importers were not in a position to supply the requisite information to determine the customs value for assessm ent purposes, that is why, to save the importer from the port/demurrage charges the warehousing of the goods was allowed subject to the determination of the customs value for charging duties and taxes at the time of ex-bonding. The warehousing of the goods was allowed wherein the whole consignment was cleared as of miniature bulbs. Thus, with the mis-declaration and manipulation there is no question to accept the suppressed declared value as customs value.
(C) As regards application of section 30 at ex-bond stage it has been gathered from the record that the value and assessm ent was not finally made at import/in-bond stage. As stated above the bill of entry was processed for warehousing of the goods subject to determination of customs value and assessm ent at ex-bond stage. The endorsement in this regard was clearly made on face of the bill of entry when the importer and his clearing agent accepted the bill of entry for further processing of warehousing of the goods. The respondent importers/customs agent failed to provide any corroborative documents to prove that there was any objection on their part while warehousing the goods with the aforesaid endorsement. Since the customs value was not finally determined at import/in-bonding stage hence there is no question that final value was changed/ altered at subsequent ex-bond stage. Without prejudice to above, it is, however, pertinent to mention here that even otherwise considering the spirit of sections 32 and 32A of the Customs Act, 1969, there is no bar to even re-determine the value at ex-bonding stage. Further in terms of sections 32 and 32(A) and section 80(2) of the Customs Act, 1969 any warehoused goods can be re-checked with reference to rate of duty and taxes, applicable on the date of presentation of an ex-bond bill of entry. Further, any assessment can be re-checking even at the time when the goods have been released by the customs. The respondents failed to mention any provisions of law which restrict the appropriate officer to check the assessment at the time of ex-bonding of the goods.
(D) The subject case was remanded by the Appellate Tribunal for de novo consideration and cannot be termed as an-adjudication in terms of subsection (1) of section 179 of the Customs Act, 1969, for confiscation of the goods or imposition of fresh penalty. Thus in remand case the stipulation of time provided under subsection (5) of section 179 of the Customs Act, 1969, is not applicable.
' In the light of position elucidated above it is an established case of misdeclaration of physical description/specification with clear intent to deprive the government from legitimate revenue.
Thus, I do not find any cogent reason to alter the Order-in-Original No,18 of 2002 dated 16-1-2002.
The importer and the Customs Agent are, therefore directed to make the payment of adjudicated amount of duties/taxes (i,e, Rs,3,61,8351) and penalty together with surcharge in terms of section 83 of the Customs Act, 1969. The department is directed to calculate the amount of surcharge till the date of actual payment of the adjudicated amount. If the importer and the Customs Agent fails to make payment of the adjudicated amount, within 15 days from the date of issuance of this order the recovery should be made in terms of section 202 of the Customs Act, 1969 by adopting the procedure prescribed in subsections (1)(b) and (4) of section 202 of the Customs Act, 1969".
4. The appellant being aggrieved with Order-in-Original No,1 of 2009 dated 9-1-2009 filed an appeal before the Collector of Customs, (Appeals) Karachi. The Collector of Customs (Appeals) rejected the appeals vide Order-in-Appeal No,2028 of 2009 dated 29-9-2009 as under:-- I have examined the case record and given due consideration to the arguments made before me.
Clearly, the appellants had suppressed vital information like wattage and art number in respect of a large quantity of the goods imported in this case: 295,000 pieces declared as miniature bulbs had been found as auto bulbs of various wattages and art number. Obviously, miniature bulbs are entirely different and of far less value as compared to auto bulbs and the appellants had made the aforesaid misdeclaration with the clear intention of getting the goods assessed at lower value and, as a consequence, cheating the Exchequer. In the light of the available evidence in terms of section 25(5) of the Customs Act, 1969 the impugned goods were finally assessed @US$35/1000 as against the manoeuvred assessm ent @US$06/1 000. On examination of the case record, I find that customs value of the goods has been correctly determined in line with the relevant provisions of law. The argument that value of the goods cannot be re-determined at the time of ex-bonding is not tenable because no provision of law bars from such re-assessment of goods, particularly when the earlier assessm ent had been done on the basis of an incorrect information by the importer. The other arguments advanced by the learned counsel, reproduced at para 3 above, are similarly untenable and one gets a clear impression that all of them are aimed at confusing the (sic). The penal action taken in this case vide Order-in-Original No, 18 of 2002 dated 16-1-2002, subsequently confirmed through the impugned order, is also in consonance with the gravity of offence committed in this case. Therefore, I hold that the impugned order is correct in law and on facts and there is no reason to interfere with the same. The appeal is rejected accordingly.
5. Being aggrieved and dissatisfied with the Order-in-Appeal, the appellant filed the instant appeal before this Tribunal on the grounds as under:-
(a) That the impugned order has been passed without following the principles of natural justice as the same has been passed in total negation of the remand order which was passed with specific directions as submitted above and hence the impugned order is bad in the eyes of law and is liable to be set aside.
(b) That the learned Collector Appeals has failed to appreciate the fact that the Honorable Tribunal had remanded the matter to the Adjudication authority with certain conditionality's and once it is admitted that the order-in-original has been passed by the respondents ignoring such restrictions contained in the remand order, rightly or wrongly, the said order-in-original was liable to set aside at the very outset as it tried to over-rule the authority of a superior forum under the Customs Act, 1969 and hence the impugned order is liable to be set aside on this ground alone.
(c) That the learned Collector Appeals has also erred in law and fact by making the observation that the so called re-assessm ent has been done in terms of section 25(5) of the Customs Act, 1969 as no such evidence of identical or similar goods was brought on record and neither the same has any mention in the order-in-original and the impugned order. Therefore, the impugned order is bad in law and is liable to be set aside.
(e) That the learned Collector also erred in law and fact by observing that the Order-in-Original 1/2009 passed on the basis of Order-in-Original 18 of 2002 was correct in as much as the said Order-in-Original 18 of 2002 already stood set aside by the Honorable Tribunal and was no more in field and hence any discussion or reliance on the same is illegal and without any lawful authority and based on the same the impugned order is liable to be set aside. That the, learned respondent while passing the order-in-original has tried to justify the act by saying that in fact there was no assessm ent made by the department at the time of In To bonding of goods in terms of section 80 of the Customs Act and rather, impliedly it was a provisional assessment in terms of section 81 of the Customs Act, 1969 and hence could have been open to reassessment at any stage without recourse to section 195 of the Customs Act, 1969 and section 32 was rightly invoked. In this regard it is respectfully submitted that the said Bill of Entry was processed under the 1st appraisement system and without touching the merits of the endorsement recorded on the Bill of Entry to the effect that Into Bond allowed subject to check value at the time of Ex-Bonding, it is humbly submitted that the same has no sanctity in the eyes of law as the same is violative of the provisions of section 30 read with section 104 of the Customs Act 1969, made effective through S.R.O. 1375(1)/99 dated 28-9-1999, w,e,f, 1st January 2000, whereby the rate of value on any imported goods... Stands omitted. This has been done to implement the concept of Transactional Value and not the valuation of goods on Ex Bond Bill of Entry cannot be altered or changed from the value assessed at the time of In Bonding in terms of section 25 of the Customs Act, 1969.
Therefore the exercise of re-assessm ent of value at the time of Ex Bonding of goods, is illegal and without any lawful authority and is a result of wrong Practice being prevalent in the department against the explicit provisions of law. This submission of the appellant gathers further support from the recent directive of CBR dated 6-12-2008 in which the FBR while dilating upon the identical issue has categorically said that there is no concept of assessing the goods lying in the Bonded Warehouse on current values as section 25 does, not provides any mechanism in this regard.
Therefore the impugned order is liable to be set aside on this legal proposition as the goods of the appellant were assessed at the time of In Bonding and could not have been re-assessed after the clearance of the same.
(f) That the learned respondent has also failed to appreciate the fact that the assessment order in terms of section 80 of the Customs Act is an order which is directly appealable before the Collector of Appeals in terms of section 193 of the Act ibid and is no more a mere ordinary assessment of the Bill of Entry and in fact is an assessment order with complete sanctity of law and as such an observation is not maintainable in the eyes of law and liable to be set aside.
(g) That the learned respondent is trying to blow hot and cold at the same time by observing that the assessm ent made at the time of In Bonding of goods was not done under section 80 of the Act, then the question arises as to under what section the same was done. The only section left for such assessm ent is section 81 of the Customs Act, 1969, and the observations in the impugned order impliedly lead to the conclusion that it was made under section 81 of the Customs Act, 1969, but even if this argument is accepted then the same is also without any lawful authority as the assessm ent in the instant case was done by the Appraising officer who is the relevant authority under section 80 of the Act and not under section 81 of the Customs Act, 1969, as under section 81 it is the Assistant Collector who is authorized for ordering such assessment provisionally. Therefore, the impugned order is illegal and a nullity in the eyes of law.
(h) That the learned respondent in the impugned order has observed that I do not find any cogent reason to alter the Order-in-Original 18 of 2002, which in fact already stands set aside and there is no question of any alteration. The respondent was required to pass a reasoned order on the basis of the remand order specifically and under no authority was supposed to revive the earlier Order- in-Original 18 of 2002 which is no more existent and is not in field; hence the impugned order is liable to be set aside on this ground alone.
(i) The perusal of Show Cause Notice reveals that the same has been issued in terms of section 32 of the Customs Act 1969 and punishable under clauses 14, 77 and 86 of subsection (1) of section 156 of the Custom Act 1969. Here it is pertinent to note, that the Show Cause Notice has been intentionally issued without mention of any of the subsections of section 32 of the Customs Act, 1969. This has been done so, just to avoid specific allegations against the appellants as this act of the respondents has denied the appellants to rebut the same specifically. It is pertinent to note that, all the subsections of section 32 of the Customs Act, 1969, contemplates different situations/ circumstances under which short recovery of duty can be demanded. Subsection (1) is a sort of a mandatory section as it is in this subsection, the word untrue and mis-declaration or false document has been defined. Subsection (2) then stipulates a situation, wherein, by reason of such an untrue statement/ documents or by reason of some collusion, any duty has not been levied or short levied, is defined, and, lastly in subsection (3) the short levy due to inadvertence, error or misconstruction has been defined. From the bare reading of the above condition prescribed in subsections (2) and (3) read with subsection (1) it can be easily concluded that the situations defined therein are altogether distinct, different and dissimilar in nature. Both these subsections contemplate two different situations with different periods of limitations as well. Therefore, it is incumbent upon the respondents to first establish that, whether any such document, declaration or statement has been submitted or made which can be termed as untrue within the mischief of subsection (1) of section 32 of the Customs Act, 1969. It has been alleged in the Show-Cause Notice that on physical examination, a quantity of 295,000 Pcs of auto bulbs was found instead of miniature bulbs, and the rest of the goods were found as per declared description and quantity.
However, it is pointed out that if the copy of B/E (Annexure `B-1') is perused, it is conclusively proved that no such observation has been made by the Appraising Officer on the face of B/E (except the remark that value will be checked at the time of Ex-Bonding) which establishes that when the Into- Bond B/E was presented to the Group for completion, all the aspects pursuant to examination of goods, were checked, and accordingly the B/E was out of charged for In-Bonding subject to check of valuation only at Ex-Bonding. Therefore, even if it is supposed that, there was a mis-declaration as alleged, then why the Customs completed the B/E at that stage and did not initiated any adjudication proceedings before the Bonding of goods was allowed. This act of the Customs Staff proves beyond any shadow of doubt that the proceedings initiated after the clearance of goods, is an afterthought just to victimize the appellants and cannot be sustained in the eyes of the law.
(j) That it also a factual position that collusion/connivance can only occur when the customs staff is engaged along with the importer in a criminal conspiracy and therefore, when,' in any proceedings such a charge is levelled against the importer or Custom Agent, the custom officer has to be impleaded as a defendant, as no criminal conspiracy can be consummated, if the officers are found to be innocent. Neither in the impugned order, nor in the Show Cause Notice any such officer has been impleaded, therefore, imposition of penalty on the appellants for conniving with the custom agent has no locus standi as it has no basis and is frivolous. That no finding has been given by the learned respondent on this issue and a frivolous and concocted reply has been submitted by the department in this context.
(k) That the learned adjudicating authority has failed to take cognizance of the fact that after the promulgation of amended version of section 25 of the Customs Act, 1969, under the Transactional Value concept, through the WTO agreement, the onus of proving the incorrectness of the declared Transactional value, if any now rests on the Customs Department and not on the appellant in the instant case. The Transactional Value under Subsection (1) of section 25 of the Customs Act, 1969 has to be accepted by the department, the only condition being that the declaration disclosing full details relating to the value of imported goods has been provided to the Assessing Officer. That at no stage it was determined by the customs staff that under what provisions of law, the assessm ent/valuation of the subject goods was being done. At present the concept of transactional value as notified vide section 25 (amended) of the Customs Act, 1969 is in vogue and there are 7 different methods adopted in this section to make assessment/valuation of goods. .In the instant case the authorities have not given any express opinion that under which subsection the assessm ent of the goods was being done. The Show Cause Notice, and, neither the order in original, indicates the rule under which the valuation of the subject goods was sought to be fixed, which raises doubts and is liable to be set aside. It is pertinent to note that the assessment of goods in terms of section 25 (amended) has to be done in a sequential order, that is, if the same could not be done in terms of subsection (1), only then the provisions of subsection (2) could be invoked and so on and so forth. It is presumed without prejudice that the assessment was done under subsection (14) of section 5 of the Customs Act, 1969, which empowers the government to fix minimum values of goods by notifying the same in the official Gazette as the learned adjudicating authority has relied on the fixed prices.
(1) That as per clause (3) of Rule 109 of Chapter IX under S.R.O. 450(1)/2001 dated 18-6-2001, if a value cannot be determined in terms of the provisions of section 25(1) then the appropriate officer shall inform the importer in writing his decision for not accepting the Transactional Value and the grounds thereof. In the instant case no such exercise has been carried out and all the actions taken by the Customs are in contrary to the provisions of section 25 of the Customs Act, 1969, and therefore are illegal and liable to be quashed. The department has totally negated the provisions of all the subsections of section 25 of the Customs Act, 1969, as it has been provided under subsections (5) and (6) that if the value cannot be determined under the provisions of subsection (1), it shall, subject to rules, be the transaction value of the either the identical goods or similar goods, as the case may be sold for export to Pakistan and exported at or about the same time as the goods being valued. Unfortunately no such exercise as stipulated under subsections (5) and
(6) of section 25 of the Customs Act, 1969 has been carried out and the assessment value of the goods has been determined arbitrarily without application of mind.
(m) That without prejudice to above, it has also been provided in Rule 110 of the Valuation Rules, that if the value of the imported goods cannot be determined in terms of subsections (1), (5), (6),
(7) and (8) of section 25 of the Act, the value can be determined on the basis of data of imports available with the department, but no value can be determined under these rules on the basis of ' The selling price of the identical goods produced in Pakistan; ' The price of the goods in the domestic market of the country of origin except after allowing deduction of local taxes and profits at each level of sale in the country or exportations; Arbitrary or fictitious values; or The minimum customs values except those notified under subsection (4) of section 25 of the Act.
' From clause (iv) above it is crystal clear that Customs or for that matter the SMT has no authority to determine the valuation on the basis of minimum customs values, except those notified under subsection (14) of section 25 of the Act, which in the instant case has not been notified, as the valuation fixed by the Special Monitoring Team, is without jurisdiction, and has no legal sanctity under the eyes of the law.
(n) That, further, it is also pertinent to note that all the methods provided for valuation under section 25 of the Customs Act, 1969, are to be followed in a sequential manner and not otherwise. In terms of subsection (10) of section 25, subsections (1), (5), (6), (7), (8) and (9) define how the customs value of imported goods is to be determined wider the Act and the methods of valuation of goods are to be applied in a sequential order except reversal of the order of subsections (7) and (8), at the importers request and if agreed by the Collector of Customs. Therefore, in the instant case, the department has failed to follow any method of valuation and has therefore deviated from the laid down law under section 25 of the Customs Act, 196.9.
(o) Therefore, to summarize, it is an admitted position now, that under the concept of GATT agreement on valuation, the invoice price cannot be routinely discarded on the strength of a contemporaneous imports at a higher price of identical/similar goods or on the basis of arbitrary or minimum values fixed by an officer who is not authorized to do so. In all such cases the invoice price has to be accepted until and unless it can be shown by the department that the said invoice price is not genuine and does not show the price paid for the imports. In this system, each and every transaction of sale of goods is treated as a peculiar transaction having no relationship with any other transaction and the value so declared has to be accepted until and unless it is proved contrary by the department.
(P) That it is pertinent to note that the Show Cause Notice issued to the importers refers to violations of section 32 of the Customs Act, 1969, punishable under clauses 14, 77 and 86 of section 156(1) of the Customs Act, 1969. In this, context it is submitted that for the purposes of adjudication in terms of section 179 of the Customs Act, 1969, the invoking of clauses 77 and 86 is not relevant and is illegal as these two punishment clauses can only be invoked, after an accused has been convicted either by a magistrate in terms of clause 77 and by a special judge in case of clause 86.
Therefore, it is established without any shadow of doubt that the adjudication authority has tried to exercise jurisdiction which has not been conferred upon it by the statute, therefore the Show Cause Notice was without jurisdiction, and all such orders passed on the basis of this defective Show Cause Notice are also void and illegal.
(q) That it is also important to note that the alleged short recovery of notice says that the Government suffered a loss of Rs,185,651 in custom duty, Rs,120,674 in Sales Tax and Rs,55,510 in terms of advance income tax and the same are recoverable in terms of section 32 of the Custom Act, 1969. Here it is brought on record that under section 32 of the Customs Aci, 1969, (under which the Show Cause Notice has been issued) only a duty or charge not levied or short levied, due to mis-declaration, collusion, or due to inadvertence, error or misconstruction, as the case may be, can be recovered after issuance of a Show Cause Notice.
' Nowhere this section empowers the Customs Officer or anybody to demand recovery of short levied Sales Tax and Income Tax as both these levies are distinct, specific and chargeable under separate laws and for this purpose cannot be termed or called as a duty or charge as mentioned in the subsections (2) and (3) of section 32 of Customs Act, 1969. The recovery of Sales Tax can only be made good in terms of section 36 of the Sales Tax Act, 1990, which has been specifically provided for in the Act and therefore any recovery of short levied Sales Tax in terms of section 32 of the Customs Act, 1969, is illegal and without jurisdiction. Similarly the recovery of Advance Income Tax in terms of section 50(5) of the Income Tax Ordinance, 1979, cannot be done in terms of section 32 of the Customs Act, 1969, as the same is not a duty or charge, and hence the demand of Income Tax on the basis of a Show Cause under section 32 is illegal and without jurisdiction.
(r) That is also submitted that in the impugned order in original, the learned respondent has held that the duty and taxes are to be calculated at the time of actual payment of dues to be calculated in terms of section 32 of the Customs Act, 1969 read with sections 34 and 36 of the Sales Tax Act, 1990 and section 50(5) of the Income Tax Ordinance, 1979. As explained in Para 9 above, the Show Cause Notice has been issued in terms of section 32 of the Customs Act, 1969, to recover custom duty as well as Sales Tax and Income Tax, whereas in the impugned order in original, reference has been made to sections 34 and 36 of the Sales Tax Act, 1990, as well as of section 50(5) of the Income Tax Ordinance for recovery of both the dues. This is totally illegal, and without jurisdiction as it travels beyond the scope of Show Cause Notice as now it is a well settled law, that the order in adjudication being ultimately based on a ground which was not mentioned in the Show Cause Notice, that order would be palpably illegal and void on the face of it.
(s) That the impugned order is baseless and illegal in as much as it travels beyond the mandatory requirements of section 32 in which the Show Cause Notice has been issued as it has been clearly laid down in subsection (4) of section 32 that the adjudication authority, after considering the representation, if any, of such person as is referred to in subsection (2) or subsection (3) shall determine the amount of duty payable by him which shall in no case exceed the amount specified in the notice. In the instant case the total amount of duty, Sales Tax and Income Tax demanded is Rs,361, 835 (out of which an amount of Rs,191, 934 has been forcefully debited from the PD account of the Custom. Agent Messrs Fair Business, vide CNO.00006 dated 11-8-2001, even before the issuance of Show Cause Notice, for which the appellants/custom agent reserve their right of refund, if the appeal succeeds. This clearly demonstrates that the adjudicating authority has erred in passing the impugned order as it even intends to exceed the alleged amount of Rs,361835 as mentioned in the show cause notice. That the respondent has not given any finding on this issue and instead the department has given an evasive reply without verifying anything from the concerned Cash section as the debiting of the amount was done forcefully and the record can easily reveal as to what was the reason of such illegal debiting of the account of the Customs Agent in which the money was lying on account of some other client.
(t) That the entire proceedings by the adjudicating authority including the issuance of Show Cause Notice and the impugned order are in total disregard of the statutory provisions of section 180 of the Customs Act, 1969 as it is the mandatory requirement in the Act itself that no penalty can be imposed on a person unless the person has been served with notice specifically giving the grounds on which it is proposed to impose the penalty and secondly is given a reasonable opportunity of being heard personally or through a counsel. The action of the respondents is in total disregard to the norms of justice and equity besides being illegal and without jurisdiction in terms of section' 180 of the Customs Act, 1969.
(u) That without prejudice to the above legal submissions, even on merits of the case the impugned order is liable to be set aside as much as it is based on presumption and not on factual position/ working procedure prevalent in the department in so far as the assessment of subject goods is concerned. The allegation that the assessment of 295,000 miniature bulbs ought to have been made @ US$.35/1000 Pcs instead of US$. 6/1000 Pcs is totally baseless and frivolous, as the same is not supported by any documentary evidence. The assessment of the miniature bulbs has been made in the instant case on the bases of price list notified by SMT vide S. Nos.1823 and 1824 which is @ US$. 6/1000 Pcs and covers the part Nos. S25 BA 15S and S25 BA 15D, therefore the allegation that the miniature bulbs, so declared by the appellants are auto bulbs and not miniature bulbs has no standing as all the miniature bulbs notified vide S.Nos.1821 to 1824 are basically Auto Bulbs. (Copies of relevant pages of SMT price list are filed herewith as Annexure K-1, and K-2, respectively). Therefore this contention of the respondents is unconvincing and is based on presumption.. The' second allegation that the assessment of Item No,1 of B/E M No,43332 was done @US$, 0.25/pce and the same item vide B/e MNO. 43333 was assessed on 16-7-2001 US$.
0.18/ Pce, is also baseless as at that point of time the price so notified by the SMT was revised on 26-6-2001, vide noting in File No,SI/MISC/241/ 2001 available with the concerned group. Therefore this allegation speaks for the incompetence of the prosecution department, which has made such a glaring mistake and has tried to hide the factual position from the adjudicating authority. It is further submitted that the department, at present, as well as in the past, has also assessed the same goods of other importers at the same prices as that of the appellants and no extra recovery has been done from them, thereby discriminating with the appellants.
(v) That on behalf of the appellant No, 2 it is submitted that there are no specific allegations against the appellants in the Show Cause Notice and in fact the same was issued and addressed to the importer and not to the appellants. Perusal of Para No,3 of the Show Cause Notice clearly says as follows:-- "Now, therefore, Messrs Delta Automobiles, Karachi are called upon ,to Show Cause within 10 days of the issuance of this notice as to why the impugned goods should not be confiscated under clauses 9 and 14 of subsection (1) of section 156 of the Customs Act, 1969 read with section 3(3) of the Imports and Exports (Control) Act, 1950 and CBR's Notification S.R.O. 1374(1)/98 dated 17-12-1998 along with its subsequent amendments besides taking other penal action against them"
' The above mentioned Para has been addressed to the importers and specifically calls upon them to Show Cause for the alleged violations of the provisions of Customs Act, 1969. Nowhere, in the above operative part of the Show Cause Notice, the appellants have been asked to give reply to the Show Cause or to rebut the allegation contained in the Show Cause Notice against the importers. Therefore, factually the appellants were not charged with any offence in the Show Cause and accordingly they did not tender any reply to the same.
(w) That in so far. As the impugned order is concerned there is nothing against the appellant No, 2 and no finding of whatsoever nature is given by the respondent against the appellant No, 2 and hence the revival of Order-in-Original 18 of 2002 in which the penalty was imposed on the appellant No,2 has no legs to stand and is liable to be set aside.
(x) That it is also pertinent to mention that the learned Collector Appeal has failed to give any findings is so far as the appellant No, 2 is concerned and in fact no separate order has been issued independently to the appellant No,2. However the appellant No,2 prefers this appeal as an abundant precaution so as to avoid any limitation issues.
(y) That the appellants crave leave to alter, add, modify and submit any further arguments at the time of hearing.
6. The Intelligence Officer has submitted Cross Objection to the Memo of Appeal on behalf of the respondent which are reproduced as under:--
(i) That the contents of Ground (1) are incorrect, hence, denied. It is respectfully submitted that the Tribunal vide order dated 11-8-2004 has remanded the case with the observation to provide opportunity of hearing and dispose of the case with the frame work of law points:--
(ii) Whether or not after clearance of goods under section 80 of the Customs 1969, Additional Collector is empowered to reopen the case and issue show cause notice?
(iii) Whether or not value of the consignment has been assessed in accordance to the rules provided in section 25 of the Customs Act, 1969?
' Careful perusal of the Order-in-Original dated 9-1-2009 (annexed at page 169 of the appeal) clarifies that the question No, (1) of the Tribunal has been answered thoroughly. Considering the provisions of section 32 of the Customs Act, 1969, it is clear that every assessment can be checked/audited subsequently for recovery of short paid amount and in terms of section 4 of the Customs Act, 1969, an Additional Collector is fully authorized to take action for recovery of the short paid amount. The examination report (P-83 of the appeal), is confirming that 295 cartons of Auto Parts Type: S25/BA 155 (Back Light Bulb) were imported and warehoused, but at the time of ex- bonding the appellant has cleared those Auto Bulb under the garb of "Miniature Bulb" and inflicted colossal loss of revenue to the exchequer. Such type of situation clearly covered under section 32 of the Customs Act, 1969, and since procedural assessment is not an adjudication or quasi judicial decision of section 179 of the Customs Act, 1969, thus, there is no question of any reopening under section 195 of the Customs Act, 1969.
' Further the 2nd point/question of the Tribunal's order dated 11-8-2004 has also been replied comprehensively vide para 8(B) of the Order-in-Original. It is an admitted fact that on the basis of importer's own request dated 10-3-2001 the goods were warehoused subject to be aspects checked at the time of ex-bonding. Further considering the provisions of section 32 of the Customs Act, 1969, it is clear that any assessment can be checked anytime between five years. Thus, it is totally incorrect that the short payment of duty and taxes and value thereof can not be checked at the time of ex-bonding.
(ii) That in the light of submissions made above and-submissions made in para (8) of the Order- in-Original dated 9-1-2009 the contents of Ground (2) are incorrect, hence, denied.
(iii) That the value was determined in the light of customs value data maintained in terms of subsections 13(a) and 9 of section 25 of the Customs Act, 1969, read with Rule 107 of the Customs Rules, 2001 thus, the contents of Ground (3) are incorrect, hence, denied.
(iv) That considering the contents of Order-in-Original dated 9L1-2009 the submissions made in Ground (4) are incorrect, hence, denied.
(v) That in the light of submissions made in para 8(A) of the Order-in-Original dated 19-1-2009 (pages 195 and 196 of the appeal) the contents of Ground (5) are incorrect, hence, denied. It is, however, added that it is not a case where re-assessment for recovery of the Government's legitimate revenue was made at the customs values prevalent at subsequent Ex-Bonding stage and in-fact it is a case where the re-assessment under section 80 of Customs Act, 1969, was made on the customs values prevalent at the time of import/in-bonding consignment. Further the appellant has no answer to the fact that legitimate duty and taxes were not paid for Auto Bulbs (Bake Light Bulbs) of Type 25/BA 155 and same were assessable @ US$ 35/1000 pes whereas the same were cleared @ US$ 6/1000 pes under the garb of Miniature Bulbs.
(vi) That in the light of submissions made above the contents of para (6) are incorrect, hence, denied. It is once again reiterated that the provisions of section- 32 of the Customs Act, 1969, is not dictated by or subordinate to sections 80, 193 and 195 of the Customs Act, 1969.
(vii) That in the light of submissions made above the contents of para (7) are incorrect, hence, denied. It is once again submitted that under section 79 of the Customs Act, 1969, the goods can be released for home consumption after payment of duty/taxes and also can be warehoused without payment of duty/taxes. It is a case where goods were allowed warehousing pending valuation at the time of Ex-Bonding, Secondly, the provisions of section 80 of the Customs Act, 1969, allows the respondents to assess the goods at any time even after release of the goods. Thirdly, without prejudice to above, even in the case of adjustment/ finalized assessment of section 81 of the Customs Act, 1969, a demand for short recovery can be issued within five years in terms of section 32(2) read with 32(5) of the Customs Act, 1969.
(viii) That in the light of submissions made above the contents of para (8) are incorrect, hence, denied. The adjudicating officer has adjudicated the case afresh after taking into consideration all aspects of the case and a self-speaking order has been passed.
(ix) That in the light of submissions made above the contents of para. (9) are incorrect, hence, denied. It is clear that the subsections (2), (3) and (4) of section 32 of the Customs Act, 1969, are all calling for recovery of short levied amount. As stated above the legitimate revenue for Auto Bulb (Back Light Bulb) was not paid by the appellant/importer, thus, for recovery of short payment mentioning of subsection is not mandatory and merely on this count short payment of Government revenue cannot be waived. Further considering the dictum settled by the honourable Supreme Court of Pakistan in its number of judgments, including Collector of Sales Tax and Central Excise, Lahore, v. Zamindara Paper and Board Mills (2007 PTD 1804), and as per apex Supreme Court's order dated 10-11-2003 in Case No,775-K of 2003 the merit of the case cannot be-scrapped on sheer technicalities.
(x) That the contents of para (10) are incorrect, hence, denied. The provisions of section 32 of the Customs Act, 1969, though taking about collusion also but section 32(2) is not confined only to collusion but also providing other reasons for invoking the said provisions of law.
(xi) That in the light of submissions made above and considering a comprehensive reply by the adjudicating officer in para 8(B) of the Order-in-Original (page 199 of the appeal) the contents of para (11) are incorrect, hence, denied.
(xii) That in the light of submissions made above and considering a comprehensive reply by the adjudicating officer in para 8(B) of the Order-in-Original (page 199 of the appeal) the contents of para (12) require no further comments.
(xiii)That in the light of submissions made above and considering a comprehensive reply by the adjudicating officer in para 8(B) of the Order-in-Original (page 199 of the appeal) the contents of para (13) are incorrect, hence, denied.
(xiv) That in the light of submissions made above and considering a comprehensive reply by the adjudicating officer in para 8(B) of the Order-in-Original (page 199 of the appeal) the contents of para (14) are incorrect, hence denied.
(xv) That in the instant case the importer/customs agent have all the knowledge about import of Auto Bulbs (Bake Light Bulbs) of Type : 25/BA 155, which is quite evident from the examination report (page 83 of the appeal) but deliberately has not made any statement/declaration about the said importation neither at in-bonding stage nor at ex-bonding stage. Thus, apart from clause (14) of section 156(1) the Customs Act, 1969, the clauses (77) and (86) are also correctly invoked.
(xvi) That the contents of para (16) of the appeal are incorrect and misleading, hence, denied. It is respectfully submitted that it is a case of evasion of customs duty and other taxes, that being so, for violation of section 32 of the Customs Act, 1969, the show cause notice was issued to the importer. Thus it is incorrect that it is only a case of adjudication in terms of Sales Tax Act, 1990.
Without prejudice to above, - even otherwise in terms of section 6 of the Sales Tax Act, 1990, read with S.R.O. 232(I)/1991 dated 10-3-1991 the customs officers are empowered to adjudicate such cases also where only sales tax is involved at import stage, whereas in the instant case the adjudication is involved for misdeclaration and evasion of customs duty and other charges attracting the provisions of S.32 of Customs Act, 1969. Similarly the recovery of income tax, related to import consignments, can also be made by the customs officers.
(xvii) That in the light of submissions made above the contents of para (17) are incorrect, hence, denied:
(xiii) That the contents of para (18) are incorrect, hence, denied. It is hard to believe that without any consent/authorization how an amount can be debited from an account? Without prejudice to above, even otherwise the appellant has failed to produce any corroborative document to prove that an amount of Rs,191,9341 was debited against the consignment imported vide IGM No,235 of 2001 dated 7-2-2001, Index No, 196.
(xix) That in the light of submissions made above and facts/ circumstances of the case the contents of para (19) of the appeal are 4ncorrect, hence, denied.
(xx) That in the light of submissions made above and facts/ circumstances of the case the contents of para (20) of the appeal are incorrect hence, denied. In view of submission made at para 4 and para 8(b) at pages 187 and 189 of the appeal it is clear that the assessment was made on the basis of evidential GDs of prevailing assessable prices in the light of subsections 13(a) and 9 of section 25 of the Customs Act, 1969, read with Rule 107 of the Customs Rules, 2001.
(xxi) That in the light of submissions made above and facts/ circumstances of the case the contents of para (21) of the appeal are incorrect, hence, denied. The charges on both the appellants are very precisely and categorically mentioned in para 2 of the show cause notice and both the appellant were served with the said show cause notice (pages 89 and 91 of the appeal).
(xxii) That in the light of submissions made above and facts/ circumstances of the case the contents of para (22) of the appeal are incorrect, hence, denied.
(xxiii) That in the light of submissions made above and facts/ circumstances of the case the contents of para (23) of the appeal are incorrect, hence, denied.
7. We have examined the case record and given due consideration to the arguments advanced by the both sides. There are three moot questions which have arisen before us from the pleading and available record.
(i) Whether upholding of an order which has already been set aside by this Tribunal in Customs Appeal No,K-375/dated 11-8-2004 can the revived by the Original adjudicating authority to whom it was remanded to decide afresh.
(ii) Whether impugned goods which have been examined under first appraisement and value loaded up by the Deputy Collector and allowed in bonding after assessment' under section 80 of the Customs Act, 1969 can be put to reassessment well after clearance from the bond under section 109 of the Act, ibid.
(iii) Whether the provisions of section 32 of the Customs Act can be invoked when the impugned goods till its clearance had been in custody of the respondent No, 1.
8. Now as to first question we observe from record that respondent No,1 earlier Order-in-Original No,18 of 2002 has been set aside by this Tribunal in Customs Appeal No,K-375 of 2002 dated 11-8- 2004 and remanded back for de none consideration on the following two specific questions:--
(a) Whether or not after clearance of goods under section 80 of the Customs Act, 1969 Additional Collector is empowered to reopen the case and issue show cause notice?
(b) Whether or not value of consignment has been assessed in accordance to the rules provided in section 25 of Customs Act, 1969?
9. The operating Para 9 of the Order-in-Original No,1 of 2001 dated 9th January 2001 in compliance of the aforesaid direction of the Tribunal Order does not answer the queries posed by it. Rather, the adjudicating officer without application of mind fairly inked that he did not find any cogent reason to alter the Order-in-Original No,18 of 2002 dated 16-1-2002 and revive it by putting life in to a dead body. The impugned order has been based by reviving an order which has lost its validity is in itself a nullity in law and is therefore a void order. Hence the answer to this question is negative.
10. As to the second question, the goods have been examined under first appraisement system after physical examination and taking up the declared value by the shed staff and Deputy Collector, and allowed removal for into bond under section 84 of the Customs Act, 1969. The respondent plea that goods were not assessed under section 80 as there is a remark on face of goods declaration that 'into bond allowed subject, to check value aspect at the time of ex- bonding". There is nothing else which could bring forth the fact with evidence that the goods have been assessed provisionally under section 81 of the Customs Act, 1969. Whereas various Sections of Chapter XI of Customs Act, 1969 deal exclusively with warehousing and provide detail procedure in such circumstances.
11. In the instant case, the adherence to rules and law prescribed on the subject has been deviated.
Section 86 of the Customs Act, 1969 provide for such occasion. The respondents have failed to prove that any guarantee or other instruments have been taken from the appellant under section 56 of the Act, ibid. We observe that goods assessed under Section 80 for the inbonding cannot be subjected to redetermination check ration of value unless specifically allowed under section 81 of the Act,. Ibid. There is only one Section which deals with re-assessm ent but restricts itself to the rate of duty and that is section 109 of the Customs Act, 1969. There is now settled view point of the judicial fora that things have to be done in the same manner and the same way as prescribed under the law and no other way. The imported goods allowed release for into bond have to either assessed under section 80 or section 81 of the Customs Act, 1969 at the initial stage of the their import when goods declaration is filed.
Both Sections provide and prescribe methods as how to go about in following them. Merely putting remarks that Valuation check to be made at the time of export is neither legal nor provided under the law, as to allow an open cheque for an indefinite period. Mores, the valuation dispute in the instant case has been made after release of the impugned goods from the bonded ware house making it thus a close transaction and during this time till release was in custody of respondent No,
1. Hence answer to this question is also negative.
12. As to third question about the application of section 32 and its provisions for making it a case of misdeclaration, we are of the view that impugned goods have been examined at length under first appraisement system and allowed for in bonding which is evident from the examination report on the goods declaration filed by the appellant. In spite of the point of jurisdiction, it is also important to refer and observed thereon that the charge levelled against the appellant with reference to section 32 of the Customs Act, 1969 also has legal infirmities. A perusal of section 32 of the Act reveals, that in addition to declaration any communication, or answers to questions, put by customs officers and found wrong in material terms, constitute an offence within the framework of the said section. "So, in order to bring an act, or action within the framework of the word 'false' , as used in section 32 of the Act, the act should either be a conscious wrong, or culpable negligence and should be untrue either knowingly or negligently. [Omalsons Corporation v. The Deputy Collector of Customs (Adjudication) Karachi 2002 PTD (Trib.) 3053. Mala fide and mens rea are necessary ingredients for committing any offence, including that of smuggling (Moon International v. Collector of Customs (Appraisement) Lahore PTCL 2001 CL 133). There are two questions which need to be addressed before invoking section 32 of the Customs Act, 1969, for misdeclaration (a) whether mens rea which is essential element for the purpose of subsection (1) of section 32 has been proved and (b) whether a demand for short recovery can be made under the provisions of subsection (2) of section 32, without proving any guilty intention, knowledge, or mens rea on the part of the maker of the statement. If element of mens rea is not visible and guilty intention is not proved then provisions of section 32 cannot be invoked as held in the judgments. Union Sport Playing Cards Co. v. Collector 2002 YLR 2651, Al-Hamd Edible Oil Limited v. Collector 2003 PTD 552 and A.R. Hosiery Works v. Collector of Customs (Export) 2004 PTD 2977. This celebrated principle of law in customs jurisprudence that mis-declaration charges under section 32 of the Customs Act, 1969, shall not be invoked has now been well settled in large number of cases, i,e, Ibrahim Textile Mills Limited v. F.O.P. PLD 1989 Lahore 47, Central Board of Revenue v. Jalil Sheep Co. 1987 SCMR 630, State Cement Corporation v. G.O.P. C.A. No,43 of 1999 and Cargill Pakistan Seeds (Pvt.) v. Tribunal 2004 PTD 26. Hence the answer to this question is also negative.
13. To what has been stated/discussed herein above particularly the interpretation of law made under proposed question of law and legal position referred in the light of prescribed law and to follow the ratio decidendi in the judgments of Superior Courts along with the additional observations made thereon, we hold that, the impugned show cause notice as well as subsequent orders passed during the hierarchy of customs, being suffering from grave legal infirmities are declared to be illegal, void ab initio and without jurisdiction and are hereby set aside and allow the appeal as prayed with no order as to cost.
14. Order is passed accordingly.