' GHULAM AHMED, MEMBER (TECHNICAL-II).---This order will dispose of Customs Appeal No,K-395 of 2013 filed by the appellant against the Order-in-Original No,77251-10042013, dated 9-4-2013, passed by the Additional Collector of Customs (Adjudication-II), MCC of PaCCS, Karachi.
2. Brief facts of the case are that the appellant filed a Goods Declaration, electronically bearing CRN No,KCSI-HC-85713-04022013, through their clearing agent Messrs Merchant International (CHAL No,2166) for the import of MIXTARD 30 PENFILL 100IU/ML (203900 PCS X 2.71 = DKK. 52569) at a total invoice value of (DK) 552569.00. The appellant determined his payment of applicable duty and taxes and sought clearance under section 79(1) of the Customs Act, 1969. In order to check as to whether the appellant has correctly paid the correct and legitimate amount of duties and taxes, the under reference GD was selected for scrutiny in terms of section 80 of Customs Act 1969.
3. The examination report is reproduced as follows:-- "EXAMINED THE GOODS IN THE LIGHT OF INFORMATION RETRIEVED FROM THE SYSTEM. DESP: MIXTARD 30 PENFILL 100 IU/ML (SUSPENSION FOR INJECTION INSULIN HUMAN (RDNA) SC USE, DRUG REGISTRATION NUMBER: 010346, BATCH NO. BVG0453, MANUF: DATE: 09/2012 AND EXPIRY DATE: 02/2015, MRP: RS.197.
BRAND: NOVO NORDISK, MANUFACTURED BY NOVO NORDISK A/S, NOVO ALLE DK-2880. BAGSVAERD, DENMARK AND PACKED BY: NOVO NORDISK TIANJIN PLANT NO. 99 NANHAI ROAD TEDA 300457 TIANJIN, CHINA (MARKED ON PACKINGS/ CTNS). QTY: 203,900 PCS AND N.WT: 3262.40 KGS PACKED IN CTNS LYING ON PALLETS. IT IS PERTINENT TO MENTION HERE THAT THE DECLARED INVOICE VALUE IN GD IS DK: 552569.00 AND PKR: 9942247.00 = (USD: 101,867.28) APPROX. WHEREAS, THE FOUND INVOICE VALUE SHOWS USS=226,329 DIFFERENCE IN VALUE USS=124,462 WHICH IS (122.18% EXCESS). GROUP MAY TAKE NECESSARY ACTION UNDER THE PROVISIONS OF LAW. CHECKED WT: 100 % AND FOUND 4700 KGS VIDE PICT W/SLIP NO. 89653 DATED: 6-2-2013."
4. Scrutiny of the Goods Declaration in the light of examination report revealed that the appellant had mis-declared the actual value of the impugned goods. During the course of examination, the staff had found an original invoice from the container which indicates the total value of the impinged goods as US $ 226,329; whereas the invoice electronically filed indicates the total Declared Value as DK: 552569.00 and PKR: 9942247.00 = (US $: 101,867.28) Approx. The declared value is as low as 122.18% of the actual value as evident from the original import documents discovered from the container. The offending value of the impugned goods is to the tune of Rs,22,410,075.
5. The appellant had committed and offence by filing fake and forged documents/ particulars of the case besides making an attempt to cleared imported impugned goods at highly under invoiced value, willfully and with mala fide intention and have attempted to defraud the Government from its legitimate revenue amounting to Rs,1,932,513. The offending value of the impugned goods is to the tune of Rs,22,410,075.
6. The appellant has contravened the provisions of sections 79(1), 32(1), and 32(A) of the Customs Act, 1969, section 33 of Sales Tax Act, 1990, section 148 of Income Tax Ordinance, 2001, punishable under Clauses 14, 14(A) and 45 of section 156(1) of Custom Act, 1969, Clause 11(c) of section 33 of Sales Tax Act, 1990, and section 148 of Income Tax Ordinance, 2001.
7. The Additional Collector of Customs (Adjudication-II), MCC of PaCCS, Karachi did not agree with the reply of show-cause notice submitted by the appellant and passed an Order-in-Original No,77251- 10042013, dated 9-4-2013, directing that "the offending goods are confiscated under clauses 14, 14A and 45 of section 156(1) of the Customs Act, 1969 for violation of provisions of sections 32(1), 32(2), 32(A) and 79(1) ibid. The respondents, however, are offered an option under section 181 of Customs Act, 1969 to redeem the confiscated goods within 15 days of this Order on payment of a fine equal to Rs,7,843,526 @ 35% of the Customs value (Rs,22,410,075) of offending goods. The redemption fine is imposed in line with the provisions of S. No, 1(d) of the Table of S.R.O.
499(1)/2009 dated 13th June 2009 and as prescribed therein will be over and above the leviable duty and taxes. A penalty of Rs,2,000,000 is also imposed under clauses (14) and (14A) of section 156(1) of Customs Act, 1969 on the respondents."
8. The appellant being dissatisfied with the order in original passed by the learned the Additional Collector of Customs (Adjudication-II), MCC of PaCCS, Karachi, filed this appeal before the Tribunal on the grounds incorporated in the Memo. Of Appeal.
9. We have examined the case record and heard the rival parties. We frame the following questions emanating from the arguments factual circumstances of the case and available record:--
(i) Whether appellant successfully through incriminating evidence proved his stance that prices of the goods were revised downward by the shipper due to decline in local market price?
(ii) Whether respondent was justified to imposing fine on the value of goods as against the amount of duty and taxes evaded and expressed in section 179 and in accordance with the actual and factual expression of section 181 of the Customs Act, 1969 and Notification No, 499(1)/2009 dated 13-6-2009?
(iii) Whether the goods imported in the instant consignment and circumstances of the case warrant imposition of penalty?
' That as regards issue No, (i) is a question of fact. It is not denied that the appellant transmitted the requisite Good Declaration in terms of section 79(1) of the Customs Act, 1969 and Rule 433 of Sub- Chapter (III) of Chapter-XXI of Customs Rules, 2001 and his explanation and requisite documents in support of his declaration upon receipt of view message under Rule 437 ibid. Through those he completely veracity of invoice pasted on the door of container by the shipper in terms of Rule 389 ibid, instead submitted a very weak defense that due to market trend of Pakistan, marketing of imported drugs has to be done on economical rates, resultant, the prices were negotiated with the parent company located in Denmark and those were as per their declaration respective of these due to inadvertence the company's staff of the unit operating in China pasted the invoices, being not relevant instead related to the prices agreed upon prior to 1-1-2013 period to December, 2012. In support of his stance no incriminating evidence was furnished with the Tribunal confirming that the prices were re-negotiated and the respective bank of both the countries were notified to the said effect and the price approved by the Ministry of Health and price list of the "Mixtard 30 Penfil 100 IUML" circulated by the appellant among the distributors. If the case would had been so, the appellant instead of filing good declaration under section 79(1) should had filed an application under subsection (2) with the respective defined authority with the intimation of the said fact and availability of the invoice based on previous rate, for examination and confirmation of his stance prior to filing of good declaration. The said procedure was not adopted and good declaration was filed under section 79(1) and Rule 433, while concealing the actual value of the goods. Ironically, upon receipt of view message under Rule 437 the scanned documents forming part of declaration in terms of section 2 (kka) of the Customs Act, 1969 were also short to the said effect. The appellant also miserably failed to prove his stance at the stage of adjudication conducted by respondent.
The judgment relied by the learned counsel of the appellant 2004 SCM R 456 is for the sales tax and has nothing to do with the fact and circumstances of the instant case, hence not applicable.
Whereas, judgment of the High Court in Special Customs Reference Appeals Nos.191 of 2009, 29/2010, 238 of 2010 are also not applicable in the instant case as a citation being of different facts and circumstance. In those the applicants successfully discharged burden of proof laid upon them and justified their declaration through corroborative documentary evidences, which were ample for nullifying the effect of retrieved invoices from the container, consequent to which the Hon'ble High Court of Sindh held that the declared price of the applicant is transaction value within the meaning of section 25(1) ibid. Whereas in the instant case the appellant miserably failed to controvert the retrieval of invoice from the consignment and charge of misdeclaration invoked by the respondent. The answer to issue No, 1 is in negative.
That as regard to issue No,(ii) , the respondent has given the appellant option to redeem the goods on payment of all leviable duty and taxes as well as a redemption fine of 35% of the offending value of the goods. This is against the essence of provisions of Notification No,S.R.O. 499(1)/2009 dated 13-6-2009. Beside this is not inconformity with the judgment of Honourable Sindh High Court Karachi in a case of Messrs Weave and Knit (Pvt.) Ltd. Karachi v. Additional Collector of Customs (Adjudication) Karachi reported as 2004 PTD 2981. In above cited case decided by the Honourable Court the adjudicating officer ordered for outright confiscation of the consignment with an option to redeem the goods against 100% fine of the value of the consignment as per S.R.O. 1347(1)/98 dated 17-12-1998. The issue before the Honourable High Court was:- "Whether the learned Adjudication Officer as well as the learned Appellate Tribunal Customs, Sales Tax and Central Excise was justified in omitting to note that as per S.R.O. 1374(1)/1998, dated 17-12- 1998 the 100% redemption fine provided therein is to be worked out with reference to the duties and taxes attempting to be evaded and not the duties and taxes leviable on the whole consignment?"
' The Honourable High Court in this case observed an held in categorical terms that the redemption fine is to be worked with reference to the duty and taxes attempted to be evaded and not on the duty and taxes leviable on the whole consignment, inter alia, the Honourable High Court also did not agree with the Order-in-Original whereby the adjudicating officer ordered for outright confiscation with an option to redeem the goods against 100% fine of the value of , the consignment as per S.R.O.1374(I)/1998 dated 17-12-1998. This order of the honourable High Court has attained finality as it was never appealed against by the respondent department in the honourable. Apex Court.
' In order to comprehend the issue fully reference is made to section 181 of the Customs Act, 1969 which reads as under:-
181. Option to pay fine in lieu of confiscated goods.---Whenever an order for the confiscation of goods is passed under this Act, the officer passing the order may give the owner of the goods an option to pay in lieu of the confiscation of the goods such fine as the officer thinks fit [:] ' [Provided that the Board may, by an order, specify the goods or class of goods where such option shall not be given: ' Provided further that the Board may, by an order, fix the amount of fine which, in lieu of confiscation, shall be imposed on any goods or class of goods imported in violation of the provisions of Section 15 or of a notification issued under section 16, or any other law for the time being in force.] ' Explanation.---Any fine in lieu of confiscation of goods imposed under this section shall be in addition to any duty and charges payable in respect of such goods, and of any penalty that might have been imposed in addition to the confiscation of goods.
' The above section does not specify the amount or value on the basis of which the owner of the goods may be given an option to pay in lieu of the confiscation of the goods such fine as the officer thinks fit. However, through 1st proviso the Board through an order can specify the goods or class of goods where such option shall not be given, whereas 2nd proviso of section 181 refers to the amount of fine which the Board may fix through issuance of an order be imposed on any goods or class of goods imported in violation of the provisions of section 15 or a notification issued under section 16, or any other law for the time being in force. The 1st proviso limit the powers of the adjudicating authority in regards to certain goods or class of goods, wherein, no option for redemption of the goods-be given, instead be out rightly confiscated. In 2nd proviso the Board can notify the pitch of fine through a notification on the goods imported in violation of the provision of section 15 or notification issued under section 16. Confirming that the Board cannot fix any pitch of fine on any goods or class of goods not falling within 1st and 2nd proviso of section 181 of the Customs Act, 1969. The goods imported through the instant consignment by the appellant are not those of section 15 nor of those where any notification has been issued under section 16 of the Customs Act, 1969 or any other law for the time being in force. Instead a case of sections 32 and 32A of the Customs Act, 1969, for which Board is not empowered to issue notification with fixation of pitch of fine under section 181 ibid. The legislature intentionally left the imposition of fine on the discretion of the Adjudicating Authority, who has to use that sparely and in the benefit of the tax payer as held by Superior Judicial Fora in plethora of reported judgment, rendering the fixation of redemption fine on the goods or class of goods other than of sections 15 and 16 ibid through Notification No, 499(1)/2009 dated 13-6-2009 as ultra vires to the provision of section 181 of the Customs Act, 1969 and as such without lawful authority as held in reported judgment 2000 PTD 399, Superior Textile Mills Ltd. v. FOP, PLD 2001 SC 600 the Collector of Sales Tax and others v. Superior Textile Mills Ltd. And others, 2012 PTD 302 Saleem Raza v. FOP and others.
' Notwithstanding to the fact, that it is for the legislature or the Board to revisit the provision of section 181 or the Notification No,499(I)/2009 dated .13-6-2009 in the light of observation made in the instant judgment. The Tribunal also intend to resolve the bone of contention that what does the word "custom value" mean in the notification. Although this controversy already has been laid to rest by the Hon'ble Division Bench of the High Court of Sindh in reported judgment 2004 PTD 2981, Messrs Weave and Knit (Pvt.) Ltd. v. Additional Collector of Customs, (Adjudication) Karachi and others. In the said case the fine was imposed on the basis of total amount of duty and taxes of the consignment instead of the amount of duty and taxes evaded, under Notification No,1374(I)/98 dated 17-12-1998, which is the parent notification containing the word " value of the goods", which meant the value defined in section 179 of the Customs Act, 1969 for assuming the jurisdiction for adjudication, in the said section the value mean the amount of duty and taxes involved in the consignment, i,e, the amount arrived at said to be short paid/evaded and fine has to be imposed in accordance with the evaded involved amount, while holding that in case of confiscation of goods the redemption fine was to be worked out with reference to the duty and taxes attempted to be evaded and not duty and taxes leviable on the whole consignment.
The said notification was amended from time to time by the FBR and the latest notification in series is 499(1)/2009 dated 13-6-2009. No drastic changes were made in the proceeding notifications instead of number and date, the column 3 of the notification remained the same since 1998 to this date reading as "custom value" for levy of duty and taxes to be determined under section 25 of the Customs Act, 1969, this does not mean that the determined custom value is for levy of fine instead for fine the value has to be taken as given in section 179 ibid as this is in accordance with the provision of section 181 of the Customs Act, 1969 and intention of the legislature and the judgment of the High Court, even otherwise the notification has to be read in harmonious manner and for the benefit of the tax payer. Therefore, the redemption fine imposed by the respondent is modified in accordance with the essence of the notification and section 181 of the Customs Act, 1969 as Rs,676,380.00 being the 35% of the evaded duty and taxes of Rs,1,932,513.00. The issue No, (ii) is answered in negative.
' That as regard issue No, (iii), prior to imposing penalty the adjudicating authority has to take into consideration the profile of the importer and his line of business and the relevant clause of the provision of section 156(1) of the Customs Act 1969. Indeed the clauses of section 156(1) defined the pitch of penalty and other actions, but none of the clause is mandatory in nature, it is left for the discretion of the adjudicating authority and the court to impose the penalty defined therein to the extent of "he" or "it" feel appropriate. The adjudicating authority is also empowered to let free the person/company with a warning. In the instant case the respondent has imposed a penalty of rupees 2,000,000.00 in addition to leviable duty and taxes and imposed fine without taking into consideration the profile of the appellant, who is one of the leading pharmaceutical firm of Pakistan and deals in medicine including life-saving drugs and insulin for the use of diabetic patients and the fact that burdening the importer of such huge penalty on the consignment of insulin will render it expensive as the penalty so imposed and paid on the consignment shall ultimately be passed on to the end consumer, the patient of diabetic. There is no history of any wrongful act on part of the appellant in the past. The pitch of penalty has to correspond with the G gravity of the offence of the respondent cannot be appreciated at all and declare it an act of arbitrariness and nullity to the spirit of the provision of section 156(1) and renders the imposition of penalty as an act of arbitrariness and being nullity to the Provision of the section 156(1) of the Customs Act, 1969. Keeping in view the importance of the imported drugs and the profile of the importer and the fact that this offence is its first and has been committed due to negligence or purposely as the case may be by the shipper in China and of and been placed in this ignoble position. We reduce the penalty to Rs,2,00,000 and appellant is warned to be careful in future in filing Goods declaration either under the regime of WeBoC or One Customs'. The issue No,(iv) is answered in negative.
10. This being so, the impugned order is modified to the extent of observation made above. The appeal is accordingly disposed off in above terms.
11. Order passed accordingly.