MUHAMMAD NADEEM QURESHI, MEM BER (JUDICIAL-I). Through this order , I intend to dispose of Appeal bearing No. K-1614 of 2015 directed against Order-in-Appeal No. 10756/2015 dated 06.11.2015 passed by Collector of Customs Appeal (here-in-after to be referred as respondent No. 3) maintaining the order-in-Original No. 436636 dated 29.10.2015 passed by Deputy Collector of Customs, Adjudication-I, Customs House, Karachi.
2. Briefly facts are that the appellant imported 3700 meters, of Polyester Rayon dyed Fabric from China, comprising of 9468 meters weighing to 2150 kgs of T/R(01 1) 80/20 32x32 96/80 59" English Selvedge and 6420 meters weighing to 1550 kgs of T/R (028) 80/20 30x31 100/90 59" English Selvedge and Invoice No. 15-0801 dated 24.08.2015 , B/L No. GSHAKHII1500403 dated 11.09.2015, FTA No. P153710008640001 dated 11.09.2015 packed in 130 bales, upon receipt of documents he delivered those to his clearing agent Messrs Manzoor and Company , Karachi for transmitting Goods Declaration (here-in-after to be referred as GD) with the MCC of Appraisement-W est under the provision of Section 79(1) of the Customs Act, 1969 (here-in-after to be referred as Act ) and Rule 433 of Sub-Chapter III of Customs Rules, 2001 (here-in-after to be referred as Rules) and as per pre-requisite deposited upfront duty and taxes of Rs.376, 714.00, consequent to which is GD was numbered as KAPW -HC-63821-10102015, which was selected for examination under Section 198 and Rule 435 of the Act/Rules, which reported that appellant infact imported "Armani" Brand Fabric while declaring as "China" origin as against "Italy" (printed on Goods) and weight is found excess by 562 kgs as against declared 3700 kgs, which comes to 14.7%, examination report along with images of the fabric were uploaded reading as "Super Fine 300's Cashmire Wool Made in Italy" in the reservoir of GD. The Appraising Officer upon receipt of these on 16.10.2015 passed assessment order with the applic ation of value of Italy origin goods US$. 4.0 as against declared US$.
4.1703/kg on the quantity of 4362 kgs found in the examination report with the remarks "GD assessed as per ER/VR/TR. Receipt No. 031719 report. The sample is in the form of black color fabric. On test is found to be dyed woven textile fabric composed of blend of polyester and Viscose Rayon % age of Polyester .. 80% age of Viscose Rayon 20% age" and routed the GD to Principal Appraiser , who framed contravention for the misdeclaration weight of origin and forwarded that to the Additional Collector , Law, who approved that and routed to Collector of Customs, Adjudication-I, who onward referred that to respondent No. 2, who issued show-cause notice dated 19.10.2015, with the allegation that the appellant mis-declared the origin of the goods in addition to the weight and as such tried to cause loss to the exchequer deliberately to tune Rs. 109,697.0 0 and as such contravened the provision of Sections 32(1)(2) 32A and 79(1)(b) of the Act Section 33(c) of the Sales Tax Act, 1990 and Section 148 of the Income Tax Ordinance, 2001 punishable under clauses 14, 14(a) and 45 of Section 156(1) (b) of the Act, clause 11(c) of Section 33(c) of the Sales Tax Act, 1990 and Section 148 of the Income Tax Ordinance, 2001, which was replied vide letter dated 29.10.2015.. The respondent No. 2 without consi dering the arguments advance, passed order-in-original dated 29.10.2015, holding the charges levelled in the show-cause notice as established and ordered confiscation of the goods subject to redemption of those upon payment of 20% fine i.e. 420,790.00, penalty of Rs. 50,000.00 in addition to the said to be loss of revenue of Rs. 109,697.00. Being aggrieved the order was assailed before respondent No. 3, under the provision of Section 193 of the Act, who rejected that vide order .dated 06.1 1.2015. Para 5 of the order is relevant, verbatim of which is: "5- "I have examined the case record. The appellant claim that the goods are China Origin and weave on the edges showing "Made in Italy" is of no consequ ence as part of weave showing "Cashmire" is falsified by the test report.
The appellant have banked their claim on certificate of origin, FTA, Bill of Lading and Rule of origin for China Pak FTA. All these documents were examined. The goods were declared and assess ed under heading 5515.1 190 of the first Schedule to the Customs Act, 1969. Where statutory rates of duty is 15% AD Val. The free Trade Area
(FTA) concession is not available against this heading and neither was claimed by the appellant. Therefore, the certificate "P" 153710008640001 stated to be certificate of origin China-Pakistan FTA become superfluous and of no consequence. Even this certificate does not show the name of producer at column (3) and is blank about country of production at column (12). The invoice and packing list are also silent about the origin of the goods. Only bill of lading is supportive to the extent of shipment form China. In view of the above I hold that appellant could not establish that goods were manufactured in China and there is no reason to refute inscription of being made in Italy on the Fabric. The original order is upheld."
3. Now the appellant has assailed the order through the instant appeal before this Tribunal on the grounds incorporated in the memo of appeal and the appellant counsel's on the date of hearing tendered arguments online with the facts and grounds enumerated therein and prayed for the acceptance of appeal by setting aside the order passed by the forum below in order to meet the norms of justice and fair play .
4. No cross objection under subsection (3) of Section 194A of the Act have been submitted by the respondents within the stipulated period prescribed therein. However , on the date of hearing the representative of respondent forcefully defended the order and stated that the orders passed by the authority below are correct in facts and law.
Therefore, need not to be disturbed and be maintained, while dismissing the appeal.
5. I have scrupulously gone through the declaration/examination report/images and assessment order and has observed that the examiner concerned instead of determining the net weight of the fabric by weighing a meter of fabric relied upon the packing list and added the weight of Card Board Roll upon which fabric is rolled and the weight of carton and polypropylene fabric wrapped there upon as integral part of the weight of the fabric, which was 5.09kg/bale , with the multiplication of the said weight on the quantity of bales, the weight comes to 662 kgs if that weight is added in the quality of T/R/0l Fabric weighing to 2150kgs comprising of 9450 meters, each meter of which weighs 227.27 grams and T/R/028 quality of fabric weighing to 60 kgs comprising of 6240 meters , each meters of which weighs 248.39 is equal to the reported weight in the examination report. The Examiner and the Assessing Officer instead of completing the assessm ent on the weight of UOM of the fabric as notified in the respective PCT of First Schedule of the Act, unlawfully added the weight of packing material in the weight of the fabric, while ignoring the fact that the goods imported in the instant consignment was fabric , for which declaration was given not for 4 items i.e. fabric, cardboard rolls, cartons and polypropylene fabric, if that would had been given than weighment of those were warranted and if found contrary to declaration reporting of those had to be made in the examination report and those had to be assessed under their respective PCT heading when no declaration is available in the GD, weight of those is immaterial only the weight of fabric is vital for assessment for levy of duty and taxes. The Examiner/Assessing Officer wrongly construed the weight of packing material as the weight of fabric in the absence of warrant of law and made assessment of 4262 kgs i.e. in addition to 562 kgs (being the weight of packing material) sans fabric as against imported/declared 3700 kgs. @ US$. 4.40/kg of Serial No. 9 of Valuation Ruling No. 483/2012 dated 25.10.2012 issued by Director , Directorate General of Valuation under the provision of Section 25A of the Act. As adumbrated I hold that no excess quantity either in meter or weight has been imported by the appellant and charging of duty and taxes on 562 being the weight of packing material, in the absence of availability of fabric is without any substance and lawful authority and as such void and ab-initio. Duty and taxes charged/paid to/by the appellan t ought to be refunded without raising any objection/query as respondent was not within his right to receive that.
6. That as regard to the allegation of origin, edges of the fabric negates the allegation as those no where validate the stance of the respondents as those are weaved with the inscription of "Super Fine 300's Cashmire Wool Made in Italy". The said weave means with clarity that the wool is made of Italy not fabric and this stand further validated from the FTA Certificate dated 11.09.2015, column 12 of which reads "the undersigned hereby declared that the above detail and statement are correct and further confirmed that all the goods were produced in China and that they comply with the origin requirement specified for these goods in the China Pakistan Free Trade Area Preferential Tariff for the goods exported to Pakistan." FTA certificate is a valid documents for determination of origin of the goods and it is being issued under Pakistan China Free Trade Agreement notified vide SRO 1286(I)/2005 dated 24.12.2015. Clause (P) of Rule 8 expresses that the goods if not wholly produced or obtained from raw material produced in China, its aggregate non originating material should be less than 40%. The goods of appellant contains 20% viscose as reported by the Customs Laboratory as against wool and that was produced/manufactured in Italy and Polyester , which is prominent fiber in the fabric is being used to the extent of 80% and that was produced/manufactured in China. Therefore, even with' the application of the said criteria, the goods are for China origin and were shipped from Chinese Port of Shingai as evident from the tracking report of the container , that container No. YMW -8067956 40"/HQ was loaded on board of CV Wai Gao Qia" on 09.09.2015 at Shingai and arrived at Karachi per "YM Excellence" and was discharged at KICT on 02.10.2015. Leaving no ambiguity in regards to origin for which declaration was made by the appellant. It is to be noted that veracity of FTA Certificate cannot be disputed as clarified by the Ministry of Commerce in Office Memorandum F.No. 1(1)/2014-AP- 1 dated 17.07.2014 that "it is not for Pakistan Customs, or any other Govt. Agency but Chinese certifying to assess the eligibility of a product for being grante d the certificate of origin. If the relevant Chinese Authority has issued a certificate of origin to a product as per the agreed procedure, then that shipment is to be cleared under FTA Tariff concession. However , Customs Authority apprehend, any fraudulent practices then the matter can be taken up with the Chinese authority for clarification as provided in the Rules 21 and 22 of Attachm ent "A" of the Rules of origin of Pak-China, Free Trade Agreement" Whereas minor discrepancies has to be overruled as that -does not invalidate the FTA Certificate as expressed in Rule 15 that "The discovery of minor discrepancies between the statement made in the Certificate of Origin of those made in documents submitted to the Customs Authorities of the importing party for the purpose of carrying out the formalities for importing the product shall not Ipso-Fecto in valid the Certificate of Origin, if it does infact correspond to the product submitted."
7. In the light of above deliberation and adhering the ratio decidendi set-forth by the judicial fora, I hold that the preparation of contravention report by respondent No. 1 and issuance of show-cause notice and passing of order- in-original/appeal by respondent Nos. 2 and 3 are ab-initio, illegal and void and as such is of no legal effect.
Therefore, annulled and order pass by the forum below are set aside and appeal is allowed as no order to cost.
8. Judgment passed, and announced accordingly .