JEHANZAIB WAHLAH (MEMBER JUDICIAL-III).--- Through this common order , I intend to dispose off 03 appeals bearing Nos.K-923/ 2017 to K-925/2017 directed against the Order-in-Appeals Nos. 316 to 318 of 2017 dated 03.07.2017 passed by Collector of Customs (Appeals) Karachi wherein upheld Order-in-Original No. 392/2016- 2017, dated 15.12.2016, Order-in-Original No. 393/2016-2017 dated 15.12.2 016 and Order-in-Original No. 359/2016-2017 dated 01.12.2016 passed by Deputy Collector of Customs, Adjudica tion-I, Karachi. Since, all the 03 appeals are based on identical fact and grounds, it is needless to reproduce separately of each case, facts and grounds of Customs Appeal No. 923/2007 are taken into consideration for deliberation/decision, which are appellant is a commercial importer and imported a consignments of Sweetened Condensed Milk falling under PCT Heading 0402.9900 from Malaysia, upon receipt of shipping documents which were delivered to clearing agent Messrs Kaka Traders Karachi for transmitting Goods Declaration (GD) with the MCC of Appraisement-W es under the provision of Section 79(I) of the Customs Act, 1969 (Act) and Rule 433 of Sub-Chapter III of Chapter XXI of Custom Rules, 2001 (Rules), which he did, while claiming the benefit of SRO 1261(1)/2007 dated 31.12.2007 and as per pre-requisite deposited upfront duty and taxes leviable thereon, consequent to which GD's were numbered as KAPW -HC-30961-30082014. Upon appearance of which the competent authority defined in Section 2(a) of the Act passed assessment order dated 01.09.2014 under Section 80 and Rule 438 in exercise of the powers vested upon him through SRO 371(1)/2002 dated 15.06.2002 on much higher value, against which appellant filed first review under Rule 441 before the Principal Appraiser , who vide dated 02.09.2014 reviewed while adducing remarks in the assessment note reading as "A.V. reviewed vide KAPW -HC-12794 dated 04.07.2014".The said assessment was also not correct. 2nd review was preferred before the Deputy Collector of Customs, Group-IL MCC of Appraisement-W est. (respondent No. 2), who on 13.09.2014 upheld the same being passed under declared PCT Heading 0402.9900, quantity and value in addition to approval/extending of benefit under SRO 1261(1)/2007 dated 31.12.2007, consequent to which the inbuilt authority of Custom Computerized System (CCS) passed clearance order under the provisions of Section 83 and Rule 442 of the Act/Rules and the clearing agent of the appellant after obtaining delivery orders from the shippin g company obtained the delivery of consignment from the terminal after payment of their charges and transported the same to the warehouse of the appellant. After lapse of considerable period after delivery of consignment, the Assistant Director , Directorate General of Post Clearance Audit (respondent No. 1) issued audit observat ion dated 13.01.2016 alleging mis-declaration of PCT heading based on the advise given by chairman classification committee in Public Notice No. 09/MCCA dated 12.10.2009 (PN), wherein classification was changed as 1901.9090, which attracted 10% regulatory duty under SRO 568(1)/2014 dated 26.06.2014 as amended by SRO 1177(1)/2015 dated 30.12.2015, which was replied by the consultant of the appellant vide letter dated 29.02.2016, through which the formed opinion on the basis of PN was disputed, despite agitation by the appellant in categorical terms, -no intimation in regards to the outcome of the reply was ever communicated by the respondent No. 1, instead he framed contravention report and forwarded to respondent No. 3 who issued show-cause notice dated 30.08.2016 alleging mis-declaration of PCT, tantamount to contravention of Sections 32(1), 32(2) 32(A), 79(1) of the Act, Sections 3, 6, 7 and 34 of the Sales Tax Act, 1990 (STA) and Section 148 of the Income Tax Ordinance, 2001 (ITO).The appellant replied that vide letter dated 01.09.2016 through which powers/ jurisdiction under the provision of Section 179 of the Act and in the matter of Sales Tax and Income Tax was challenged, in addition to comprehensively rebutting the allegation levelled therein. The respondent No. 3 brushed aside those and passed order dated 15.12.2016 through which she held the charges levelled in the show- cause notice as established and ordered payment of Rs.370,972.00 along with default surcharge to be calculated by the department at the time of payment in addition to the imposed penalty of Rs. 30,000.00 as under: "I have examined the case record and consider the arguments put forth during hearing by the department and respondent. The importer imported a consignment of "Sweetened Condensed Milk" from Malaysia under PCT Heading 0402.9900. The Directorate alleged that the goods are correctly classifiab le under PCT 1901.9090 which is confirmed by Classification Committee's vide Public Notice dated 12.10.2009. Therefore, the importer avoided to pay regulatory duty @ 10% and income tax on this item under SRO 568(1)/2014 dated 26th June, 2014 amended vide SRO 1177(1)/2015 dated 30th November 2015, which is not applicable on this item. However , the importer has made short payment of an amount of duty and taxes i.e. regulatory duty Rs. 290539/- and income tax Rs.
17435/-. Therefore, charges levelled against the importer in the Show-Cause Notice stands fully established. The importer is directed to deposit the total evaded amount of duty and taxes amounting to Rs. 307,972/- immediately furthermore, a personal penalty of Rs. 30,000/- (Rupees Thirty Thousand) is also imposed on the importer .
Moreover , the importer is also want to be careful in future. Is there is any recurrence in future the importer and his associates would be dealt with stern action. The assessing staff is required to finalized the assessment on the basis of this order and recover legitimate amount of penalty imposed. The case is disposed off accordingly ."
2. Being aggrieved an appeal was preferred before respondent No. 4, which he rejected vide order dated 03.07.2017 and maintained the order passed by respondent No. 3 being correct in fact and law. The order passed as under: "I have examined the records of the case and the arguments placed before me from the applicant's and the respondents side. The matter involved is a contrary of classification of imported goods "sweetened Condensed Milk" whether the goods "Sweetened Condensed Milk" are covered under PCT heading 0402.9900 as was cleared by the Collectorate of Customs, Appraise ment-W est, Karachi or under PCT head ing 1901.9090 as contended by the Directorate of Post Clearance Audit. The heading 0402.9900 covers milk as per explanatory notes to Chapter 4 Heading 04.02 which states: "This heading covers milk (as defined in Note 1 to this Chapter) and cream concen trated (for example evaporated) or containing added sugar or other sweetening matter , whether , liquid, paste or should (in blocks powder or granules) and whether or not preserved or reconstituted.
Milk powder may contain small quantities of starch (not exceeding 5% by weight), added in particular , to maintain the reconstituted milk its normal physical state."
As per explanatory notes to Chapter 19 heading 19.01 the heading covers "Milk preparation obtained by replacing one or more constituents of milk (e.g. butyric fats) by another substance (e.g., oleic fats)"
As per the appellants' contention the imported products contains substitution of milk fat with vegetable fat and sugar . To my mind this product therefore becomes milk preparation obtained by replacing one or more constituents of milk wherein milk fat has been replace d by vegetable fat. Therefore this product is excluded from heading 0402 and qualifies to be classified under 1901.9090. The WCO decision No. HSC/32 is not applicable to the matter since the matter involved was not substitution of constituents but addition of sweetness in the shape of sucrose. In that case are constituent of milk was not replaced by another constituent as in the present case. This being so, I am of the opinion that the contention of Post Clearance Audit is correct and the appeal being without merit is not tenable.
The Order-inOriginal is upheld."
3. The appellant filed the instant appeal on the basis of grounds enumerated therein, the consultant/advocates on the date of hearing argued the case strictly in accordance with those. No cross objection under Subsection (4) of Section 194A of the Act has been filed within the stipulated period of 30 days by the respondent No.1, resultant, lost right of cross appeal within the contemplation of subsection (3) of aforesaid section. Ergo, on the date of hearing representatives of respondent No.1 made averment that the conduction of audit by respondent No. 1 was correct in fact and law and the goods imported by the appellant fall under PCT Heading 1901.9090 on which benefit of SRO 1177(1)/2015 is not admissible, order passed by the respondents Nos. 3 and 4 are in consonance with that and as such be maintained.
4. Arguments heard and record perused the record and the relied upon documents/judgments by the appellant's. Prior to dilating upon other factual and legal aspect of the case, it is of vital importance for me to deliberate on the mechanism/procedure outlined by the legislature in the provision of Section 26A of the Act for conduction of audit of record of importer under Section 26(2) of the Act and on the jurisdiction/powers of Directorate General of Post Clearance Audit (PCA) or respondent No. 1 in conduction of audit under Section 25 of the STA and Section 177 of the ITO of the Sales Tax/Income Tax collected at import stage by the Clearance Collectorate/respondent No. 2 or his subordinate as per the enunciation made in Section 6 of the STA and Section 148 of the ITO in the absence of their appointments as Officer of Inland Revenue under Section 30 of the STA and Section 228 of the ITO and of respondent No. 3 for proceed with the adjudication in derogation of the provision of Section 179 of the Act and in the matter of Sales/Income Tax under the provision of Section 11 of STA and 162(1) of the ITO, in the capacity of officer of customs appointed under Section 3 of the Act.
5. For obtaining answer to the first part of my observation corresponding to mechanism/devised procedure for conduction of audit under Section 26(2) is available in Section 26A of the Act, verbatim of which is of vital importance: 26A. Conducting the Audit.---(1) the appropriate officer of Customs conducting any audit under this Act shall proceed in the manner as the Board may by rules prescribe.
(2) Where any audit or inquiry or investigation is to be conducted for the purpose of ascertaining the correctness of any declaration or documents or statement, for determining the liability of any declaration or document or statement, for determining the liability of any person for duty, taxes fees surcharge fines and penalties, or for ensuring compliance with all other laws administered by the Customs, an appropriate officer of Customs may;-
(a) Examine, or cause to be examined upon reasonable notice, any record or any statement or declaration or document described in the notice with reasonable specificity , which may be relevant to such audit, inquiry or investigation:
(b) Summon, by giving a notice and reasonable time,-
(i) The person who imported, or exported or transported or stored or held under customs bond, or filed a goods declaration, drawback or refund claim,
(ii) Any officer , employee or agent of any person described in clause (a); and
(iii) Any person having possession custod y or care of records and documents required to be kept under the Act and any other person, as deemed proper , to appear before him at a reasonable time and to produce such records and documents as specified in.
6. From bare reading of the provision of Section 26A of the Act, it is abundantly clear that the appropriate designated Officer of Customs empowered by the Board for conducting audit of the record of the importer under Section 26(2) is in the manner prescribed by the Board in Rules. To this date no Rules are framed /issued by the Board despite insertion of Section 26A in the Act through Finance Act, 2006, resultant, the audit of an importer accounts/record maintained under the provision of Section 211 and Chapter XI of Act/Rules, has to be conducted by the Officials of Directorate of Post Clearance Audit or respondent No. 1 as per the mechanism provided in the Section itself, wherein appropriate officer of Customs is empowered to conduct audit or inquiry or investigation of an importer for the purpose of ascertaining the correctness of any declaration or documents or statement, for determining the veracity of any declaratio n or document or statement, for determining the liability of any person for duty, taxes, fees, surcharge, fines and penalties, or for ensuring compliance with all other laws: However , prior to proceeding with the said exercise, the appropriate officer appointed under Section 3DD of the Act for the said purpose and empowered through SRO 500(I)/2009 dated 13.06.2009, which respondent No. 1 has to either summon or give a notice and reasonable time to an importer for the conduction of audit and for the said purpose production of accounts and record as per the expression of clause (b) of Subsection (2). The first ground of the appellant in memo. of appeal is that the respondent. No. 1 has not either issued to him any notice or served a summon for the purported exercise of audit despite mandated under law and this lapse renders the audit so conducted which is the root cause of the impugned show-cause notice as of no legal effect. Since, no notice is annexed with the memo. of appeal, the representative of respondent No. 1 was asked to place the copy of the notice/summon forwarded/served to the appellant, as the copy of the same would had been available with him in the case file. The query was replied in negative, which flabbergasted me and another query was put to him that how the audit was conducted, without asking for the accounts and record of the import, the answer was on the basis of GD available in the data reservoir maintained by PRAL under Rule 110 of Rules, upon this the representative of respondent No. 1 was asked to read out the passage available in Section 26A, wherein audit of any importer is permitted on the basis of the record available in the CCS Module, to this the answer was given in negative, confirming that audit of the importer accounts/book could only be conducted upon presentation of those after receiving notice/summon to do so in the absence of that conduction of audit on the basis of the record available on the CCS Reservoir is not permitted as it is settled proposition of law that a thing has to be done as it has been prescribed to be done, in case of doing the same in any other manner render it illegal and as such void and ab initio and this have been held in countless reported judgments, reference is 2002 PTD 2457 that "the thing should be done as they are required to be done, or not at all". The Apex Court held in judgment PLD 1971 Supreme Court 61 "neglect of plane requirement of an absolute statutory enactment prescribing how something is to be done, would invalidate thing being done in some other manner" and in PLD 1973 Supreme Court 236 "it is now well established that where an inferior Tribunal or Court has acted wholly without jurisdiction or taken any action "beyond the sphere allotted to the Tribunal by law and therefore outside the area within which to law recognizes a privilege to err" then such action amounts to a "usurpation of power warranted by law" and as such an act .is a nullity that is to say the result of a purported exercise of authority which has no legal effect whatsoever" in such a case, it is well established that a Superior Court is not bound to give effect to it." The said ratio was maintained, in the case, of E.A. Avans reported as PLD 1964 SC 536 "where it has been unambiguously and categorically held that if the doing of a thing is made lawful in a manner than doing of that thing in conflict with the manner prescribed will be unlawful." The Hon'ble Apex Court in 2001 SCMR 838 and 2003 SCMR 1505 held that "while considering the impact of violation or non-observance of the method prescribed by law for doing an act in a particular manner or mode, such provision of law is to be followed in letter and spirit and achieving or attaining the objective of performing or doing of a thing in a manner other than provided by law would not be permitted. The same observation has been made by the Hon'ble Supreme Court of Pakistan in the Civil Petition filed by Director General of Intelligence and Investigation and others v. Messrs Al-Faiz Industries (Pvt.) Ltd. and others reported as 2006 SCMR 129 "if the law had prescribed method for doing of a thing in a particular manner , such provision of law is to be followed in letter and spirit and achieving or attaining the objective of performing or doing of a thing in a manner other than provided by law would not be permitted. ". The super structure built on such foundation namely audit observation, show-cause notice and order -in-original no matter how strong those may be have to fall, reference is made to PLD 1996 Karachi 68 which laid down that "where the initial order or notice was void all subsequent preceding, orders or super structure built on it were also void. In reported judgment 2006 PTD 978 it is held that "the entire proceeding initiated by the Adjudicating authority and further super structure thereon including the order passed by the learned Tribunal are without jurisdiction void and in-operative." The Apex Court in PLD 1971 Supreme Court 184 held that "order of a Tribunal found to be without jurisdiction ---all successive orders based upon it illegal and liable to be quashed".
7. That in regards to the second part of my observation available in para 5 supra, I have perused Section 228 of the ITO and found that the respondent No. 1 has not been appointed/designated as Officer of Inland Revenue by the legislature, instead as per Section 228 of the ITO, the Directorate General of Internal Audit has been appointed/designated as officer of Inland Revenue and for overseeing the collection of withholding Tax, Directorate General of Withholding Taxes has been established under Section 230A of the ITO, meaning thereby that the respondent No. 1 is not at all appointed /designated as Officer of Inland Revenue. Resultant neither Directorate General of PCA nor respondent No. 1 are empowered to exercise the powers of an Officer of Inland Revenue under Section 207 for conducting audit under Section 177 of the ITO. Rendering the entire act of audit in the matter of Income Tax by the respondent No. 2 without powers/jurisdiction and as such coram non judice. Our opinion stood vindicated from the latest reported judgment [2014 PTD 1733 ] Waseem Ahmed and others v. FOP and another , where it has been held in clear terms that "unless the officer of DGI&I)-FBR are not appointed and an officer of Inland Revenue, powers under the different subsection of the Sales Tax Act, 1990 can not be delegated through any SRO with that the Hon'ble High Court of Sindh declared Notification No. 775(1)/201 1 ultra vires to the Sales Tax Act, 1990".## TS## Whereas, the respondent No. 1 is indeed appointed as Officer of Inland Revenue under Section 30DD of the STA and thereafter Board delegated powers through SRO. 42(1)/2010 dated 23.01.2010 under different Sections of the STA in column (4) of SRO, subject to exercise of those under the designation of authorities given in column (3), which are (i) Chief Commissioner/Co mmissioner Inland Revenue (ii)
Additional Commissioner of Inland Revenue (ii) Deputy Commissioner Inland Revenue and (iv) Assistant Commissioner Inland Revenue and not in the capacity or designation of (i) Director General/Director-PCA (ii)
Additional Director-PCA (iii) Deputy Director-PCA and (iv) Assistant Director-PCA. In the instant case the entire communication including the audit observations and contravention reports were prepared and served in the capacity of Assistant/Deputy Director of PCA, which are non existent in Column No. (3) of SRO.42(I)/2010 dated 23.01.2010, rendering the same without power/jurisdiction. Hence ab initio void and coram non judice. Therefore, entire proceeding right from Audit, audit observations, contravention reports are of no legal effect. Any super structure built thereon no matter how strong it may be have to crumble down 1 as held by Superior Judicial Fora in umpteenth reported judgment PLD 1971 SC 197 Chittaranjan Cotton Mills Ltd. v. Staff Union, Raunaq Ali's PLD 1973 SC 236, 2002 PTD (Trib.) 889 in M/s. Unitex Tower Factory v. The Collector of Customs (Appeals) ) and others, K-106/03 in M/s. Silver Corporation v. The Additional Collector of Sales Tax (Adjudication), Karachi III, Major Syed Walayat Shah v. Muzaf far Khan and 2 others (PLD 1971 SC 184), Omer and Company v. Controller of Customs, (Valuation) (1992 ALD 449(1), Karachi AAA Steel Mills Ltd. v. Collect or of Sales Tax and Central Excise Collectorate of Sales Tax (2004 PTD 624), PLD 1976 Supreme Court 37 Ali Muhammad v. Hussain Buksh and others and PLD 2001 Supreme Court 514 Land Acquisition Collector , Noshehra and others v . Sarfraz Khan and others.
8. The Section 179 of the Act expresses that the powers of adjudication have to be determined by the authority adjudicating the case on the basis of "amount of duty and taxes involved excluding the conveyance. In the instant case the amount of duty and taxes involved are Rs. 482,295.00 (paid upfront duty and taxes of Rs. 174,323.00 + evaded/short paid amount of duty and taxes shown in show-cause notice Rs. 307,972.00. Case of such amount falls within the powers of Assistant Collector of Customs in terms of clause (iii) of subsection (1) of Section 179 of the Act. To the contrary , the respondent No. 3 issued show-cause notice and passed order-in-original by usurping the powers of Assistant Collector , which is not permitted under law. Nobody is allowed to usurp the powers of the defined Adjudicating Authority . Rendering the act of issuance of show-cause notice and passing of order-in-original in the instant case without power/jurisdict ion, hence ab initio, null and void and coram non judice . It is also settled principle that the exercise of jurisdiction by an authority is mandatory requirement and its non fulfillment would entail the entire proceeding to be coram non judice . Ref: PLD 1963 SC 663, PLD 1971 SC 184, PLD 1976 Supreme Court 514, 1983 SCMR 1232, 1984 CLC 1517 , PLD 1995 Kar. 587, PLD 1992 SC 486, 2001 SCMR 103, 2004 CLD 373, PLD 2004 Supreme Court 600, PLD 2005 Supreme Court 842, 2009 PTD (Trib.) 1996, 2009 PTD 1112, 2010 PTD (Trib.) 832, 2010 PTD 465, 2010 PTD (Trib.) 1636, 2011 PTD (Trib.) 2114, 2011 PTD (Trib.) 2557 and PLD 2014 Supreme Court 514. (Emphasis supplied)
9. I have also noticed with great concern that the respondent No. 3 in the show-cause notice have invoked Sections 3, 6, 7, 33 and 34 of the STA and 148 of the ITO without realizing that Section 3 while indeed being a charging section cannot be invoked by anyone other than an Officer of Inland Revenue whereas Section 6 is contains machinery provision laying down the procedure for collection of Sales Tax as like custom duty at the import stage by the customs authorities hence cannot be used to charge anyone including the appellant for an offence under the said section with the exception of official of Clearance Collectorate, upon whom charge under the said section can be invoked. Section 7 speaks about the determination of tax liability at the time of filing of sales tax return cum payment challan under Sectio n 26 of STA, this is also a machinery section. Section 33 contains penal clauses synonymous to Section 156(1) of the Act and Section 34 speaks about imposition of default surcharge, to be paid by the tax payer upon confirmatio n of the charges levelled in the show-cau se notice issued by the officer of the Inland Revenue under the respective Section of the STA. Section 148 of the ITO is also a section containing machinery provision akin to Section 6 of the STA, empowering custom authorities to collect levied income tax alike custom duty on the imported goods. "Provision which provides a mechanism/mode of collection are not to be construed as charging provisions even through inapt interpretation as it could neither abridge nor expand the scope of a charging section in an Act/ Ordinan ce". Reference is made to the decision of Hon'ble Supreme Court of Pakistan in 2019 SCMR 282 Pakistan Television Corporation Ltd. v. Commissioner Inland Revenue (Legal), LTU, Islamabad and others . Resultant, the aforesaid deliberated sections are independent and cannot be used to invoke a charge. Since, these sections are irrelevant/erroneous in the matter of customs, no show-cause notice can be issued by a custom officer under these section, render the issued show-cause notice and passed order-in- original palpably illegal and as such void and ab initio as held in the following reported judgments: Asst. Collector v. Khyber Elec. Lamps 2003 PTD 1275, D.G. Khan Cement v. Collector of Customs 2005 PTD 480, Caltex v.
Collector (2003 PTD 1593 ), Union Playing Card Company v. Colle ctor of Customs 2002 MLD 130, Atlas Tyres v. Addl. Collector 2002 MLD 180, State Cement v. Collector PTCL 2001 CL 558, Kashmir Sugar v.
Collector 1992 SCMR 1898 , Rose Color v. Chairman, CBR and 2013 PTD 813 Sarwar International v Addl.
Collector of Customs (sic ).
10. In order to further crystallize, the issue relating to recovery of short paid sales tax and income tax, I was indebted to peruse Section 30 of STA and Section 228 of the ITO and have observed that the legislature appoints under the said Sections different organs of the FBR as Officer of Inland Revenue for exercising powers under the respective Sections of the Act/Ordinance, delegated through statutory notifications or under Section 207 of the ITO.
In these Sections respondent No. 3 figures anywhere nor in charging section 11 of the STA or Section 162(1) of the ITO. Therefore, the respondent No. 3 under no circumstances was empowered to lay hands on the matter falling within the ambit of Sections 3, 6, 7A and 1 1 of the ST A and Section 162(1) of the IT O.
These sections least empowers the Officers of Customs including the respondent No. 3 to initiate adjudication/recovery proceeding for the short collected/paid Sales Tax and Income Tax either due to collusion or connivance or inadvertent, error or misconstruction. For proceeding for these type of recovery a show-cause notice has to be issued under the I Provision of Section 11 of the STA and Section 162(1) of the ITO, the authority to issue show-cause notice under these Sections are Officer of Inland Revenue and the Commissioner of Income Tax, in these sections respondent No. 3 least figures anywhere.
11. In order to lend clarity expression of Section 11 of the STA and Section 162(1) of the ITO are referred, which empowered the Officer of Inland Reven ue and Commissioner of Income Tax to initiate adjudication/recovery proceeding for the short collected/paid, Sales Tax and Income Tax either due to collusion or connivance or inadvertent, error or misconstruction. Respondent No. 3 figures no where in these sections. He assumed the power not vested with him under the provision of Sections 11 and 162(1) of the STA and ITO. Therefore, I hold without any reservation that the Customs Collectorates does have powers to collect and enforce payment of Sales Tax and Income Tax at the time of clearance. The plea that the Customs is empowered to recover the short paid amount of sales tax and income tax at the import stage under Section 202 of the Act is also based on mistaken belief, The fact of matter is Customs Collectorate could recover the amount of Sales Tax and Income Tax only upon receipt of notice from the Officer of Inland Revenue and Commissioner of Income Tax in terms Section 48 of the STA and Section 140 of the ITO for recovery of the adjudged amount of Sales Tax and Incom e Tax after due process of law.
Therefore, it is my considered opinion that the Clearance Collectorates does have the authority to collect Sales Tax and Income Tax at import stage in the capacity of collecting agent and can recover escaped/short payment paid Custom Duty and Regulatory Duty levied on the imported goods under Sections 18, 18A and 18C of the Act under Section 202 ibid., after due process of law, but have no powers to adjudicate the cases of short recovery of Sales Tax and Income Tax falling within the ambit of Section 11 of the STA and Section 162(1) of the ITO, my opinion stands fortified from the reported/unreported judgment of the superior Judicial Fora namely 2011 PTD (Trib.) 110, 2010 PTD (Trib.) 2086, SCRA No. 01/2010, 2004 PTD 801, C.P. No. D-216/2013, 2015 PTD 702, 2016 PTD (Trib.)
969, 2016 PTD (Trib.) 1008, 2016 PTD (Trib.) 2125, Appeal No. K-1635/2014, Appeal No. K-1029/2016 Appeal No. K-1030/ 2016, Appeal No. K-1343/2015, 2016 PTD (T rib.) 2463 and 2017 PTD (T rib.) 481 .
12. I, therefore hold in the light of the law laid down in the referred in above deliberation and cases reported at, that the exercise of jurisdiction on this point by Respondent No. 3 is without lawful authority and jurisdiction. Hence, issuance of show-cause notice and passing of Order-in-Original are held to be ab initio void and as such coram non judice on this point also. Upon passing of assessment order under Section 80 and Rule 438 of the Act/Rules and thereafter passing of clearance order under section 83 and Rule 442 ibid by the authority defined in section 2(a) of the Act and SRO 371(1)/2001 dated 15.06.2001, it cannot be disturbed by any authority for the purpose of preparing contravention report and adjudication proceeding. The only course left for the respondent No. 1 was to challenge the said order before the Collector of Customs (Appeals) under Section 193 of the Act in exercise of the powers delegated upon him through SRO 500(I)/2009 dated 13.06.2009. In the filed appeal the respondent No. 1 is empowered to incorporate all the apprehension, misreading of the facts and contravention of the provision of the Act/Rules. The Collector of Customs, upon receipt of the appeal and going through the facts and grounds if thinks fit that the contention of the respondent No. 1 seems to be correct and the duty and taxes has not been either not levied or short paid on the basis of the goods found subsequent to clearance, is empowered to issue show-cause notice to the importer (appellant) as expressed in 3rd proviso to subsection (3) of Section 193A of the Act. Instead of the adhering the prescribed method available in the Act the respondent No. 1 reopened the assessment/clearance order under section 195 of the Act under which no powers are vested with any Officers of the respondent No. 1 or with respondent No. 3. When the right of appeal has been accorded by the legislature in the provision of Section 193 of the Act, the provision of Section 195 is un-operation al and cannot be exercised even by the authority defined therein and this has been validated by the Hon'ble High Court of Sindh in reported judgment 2014 PTD 1256 Messrs Paramount International (Pvt.) Ltd., Karachi v. Secretary Revenue Division that "department or an Officer of Customs, if aggrieved, by any decision or order passed by an officer of customs below the rank of additional collector could prefer an appeal before the Collector (Appeal)---1st order in original passed in the subject matter was an appealable order for both the parties, therefore option to reopen and order pass under the adjudication hierarchy was not available to the Collector . Even the Collector of Customs Adjudication could not oversee or exerc ise any right of re-opening of any order which has been passed by an officer lower in rank but acting as an adjudicating authority . Impugned order was set-aside and Constitution Petition was allowed." It is also settled proposition of law that in the presence of an appealable order , fresh order cannot be passed even through issuance of show -cause notice under section 180, while exercising powers under the provision of Section 179 ibid. The said act is piling upon yet another order on the existing appealable order not permitted under law as held by Hon'ble High Court of Sindh in reported judgment 2004 PTD 3020 Messrs Smith Kline French v. Pakistan that "once an order is passed, which attain finality the same cannot be subject to a show- cause notice again, considering that no appeal or revision is filed against the first order". By virtue of non filing of appeal as elaborated above. The transaction stood passed and closed and attain finality and cannot be disturbed.
For reaching at the decision I have gained strength from the reported judgment 1989 MLD 4310 Messrs World Trade Corporation v. Central Board of Revenue, wherein their lordship of High Court held that "if the order has attained finality through limitation. A fortiori; the Central Board of Revenue could not open up an order that has attained finality , under the Sea Customs Act, 1878 and against which suo motu revision. Notwithstanding, the act of issuance of show-cause notice and passing of order-in-original in the instant case by the respondent No.3 also falls under the ambit of "double jeopardy" not permitted under Article 13 of the Constitution of Islamic Republic of Pakistan. Rendering the order passed by respondents Nos. 3 and 4 for piling upon an existing appealable order are without lawful authority and jurisdiction and as such void and ab initio and of no legal ef fect.
13. I have noted with concern that the respondent No. 1 implicated and the respondent No. 3 charged the appellants, for mis-declaration under the provision of Section 32 of the Act merely on the basis of assumption/presumption that the appellan ts transmitted GD on the basis of erron eous PCT, in order to hoodwink the Customs and to evade the amount of duty and taxes. I am unable to comprehe nd with the line of arguments as in conduction of examination appellants have no part to play instead had to be carried out by the subordinate of respondent No. 2 with the assistance of Officials of Terminal Operator , independently and without any influence as per the expression of Section 198 and Rule 435 and the passing of assessment/cle arance order under sections 80 and 83 and Rules 438 and 442 of the Act/Rules rest with the sole and exclusive domain of the Customs Officer listed at Serial Nos. 30 and 33 of the SRO 371(1)/2002 dated 15.06.2002. The Officials conducting the examination who confirmed the declarations and who passed assessment/ clearance orders while accepting the declaration as true and correct. If it is presumed as stated in the show-cause notice that the alleged clearance of the goods imported by appellant were on the basis of erroneous PCT, that could had not been possible unless these officials were having hands in gloves with the appellants. Meaning thereby that they are standing on the same pedestal.
Ironically , no charges have been levelled under Section 32(2) against those Officials, as of appellant. This act of the respondents proves that the appellant had been met out with partial treatment, which is not permitted under Article 25 of the Constitution of Islamic Republic of Pakistan and the law laid down by the Superior Judicial Fora in reported judgment 2002 SCMR 312 and 2009 PTD 1507 the Hon'ble Superior Courts have observed that "there exists no power to target incidence of tax in such a way that similarly placed person be dealt not only this similarly , but discriminatingly". Whereas, in reported judgment 2005 SCMR 492 the Hon'ble Supreme Court held that "A facility allowed to some one and denied to other is discrimination". The Apex Court further held in reported judgment 2010 SCMR 431 that: "Doctrine of equality , as contained in Art. 25 of the constitution, enshrine golden rules of Islam and states that every citizen, no matter how high so ever, must be accorded equal treatment with similarly situated persons---State may classify persons and objects for the purpose of legislation and make laws applicable only to persons or objects within a class---In fact all legislations involve some kind of classification whereby some people acquire rights or suffer disabilities whereas others do not---What however , is prohibited under princ iple of reasonable classification, is legislation favouring some within a class and unduly burdening others---Basic rule for exercise of such discretion and reasonable classification is that all persons placed in similar circumstanc es must be treated alike and reasonable classification must be based on reasonable grounds in given set of circumstances but the same in any case must not offend spirit of Art. 25 of the Constitution."
14. Notwithstanding, for resolving the issue in hand, prior to proceeding with the exercise of classification of the imported goods, goods of appellant are not an exception, it was mandated upon the Chairman Classification Committee to seek expert opinion and issue notices of the importers of "Sweetened Condensed Milk" of PCT Heading 0402.9900 for reclassifying it for the purpose of assessment for levy of duty and taxes under PCT heading 1901.9090 as against existing, under which the said product was assessed/cleared since, time immemorial cannot be termed as valid and legal, due to the fact that none of the stake holder were called for deliberation, instead was issued on predetermined formed opinion, evident from the fact that while doing so with mala fide intention, ignored the direction contained in clause (v) of para 2 of C.G.O. 12/2002, which read as under: "On receipt of the above request, the centre will seek opinion from the relevant group of Appraisement Collectorate, Custom House, Karachi as soon as possible but not later than 15 days (fifteen days) of the receipt of the request.
Thereafter the case will be presented in the meeting of classification committee where the importer or his representative shall also be invited for discussion. The Committee may also direct the importer to supply any other information or documents as it may deem necessary before making it decision. (Emphasis supplied)
15. The PN on the face of it speaks volume about the working of Classification Committee, which only invited a single importer , who desires to get the PCT Heading changed for obtaining benefit of duty and taxes at that point of time on flimsy grounds, having no nexus with the terms of reference for classifying any goods and decision of the World Customs Organization and First Schedule to the Act, none of the other impo rter of the said item were called.
This fact alone renders the PN as of no legal effect and as such not enforceable under law for the purpose of reclassification/assessment as held in reported judgment 2019 PTD 288 Messrs Nayatl (Pvt.) Ltd. v. Appellate Tribunal Customs, Islamabad and others that "where mandated requirement of inviting importer or his representative for discussion before Customs, Classification Committee had not been fulfilled and importer had not been invited for discussion or afforded opportunity for hearing before the Custom s Classification Committee and such committee made ruling adverse to the importer's interest, then requirement of Custom General Order No. 10 of 2001 had not been fulfilled. Order of the Appellate Tribunal based on such opinion/Ruling of the Customs Classification Committee was therefore liable to be set aside".
16. Even otherwise, the criterion adopted by the Chairman Classification Committee and as opined by respondent No. 4 are erroneous and being based on faulty interpretation of General Interpretation Rules 1 and 6 as for preparation of condensed/concentrated milk no question arises for substituting milk fat with vegetable fat, instead water is removed by the process of boiling and after it became thicker sugar is added as enunciated in PCT heading 0402.9090 and this stands strengthened from the Decision No. HSC/32 of the World Customs Organization ("WCO") in file No. 2853 taken and announced with the correct application of General Interpretation Rules 1 and 6 in the year 2004 that condensed/concentrated milk falls under PCT 0402.9090 and which read as "The committee decided that there was no reason to classify concentration milk containing 48.7% sucrose outside heading 04.04. ". Validated from the fact that despite the presence of PN, which is being considered a sacred legal document by the respondents for the purpose of classifying "Sweetened Condensed Milk" they are to date classifying the same under PCT heading 0402.9900 as apparent from the import data maintained by PRAL under Rule 110 of the period given in Rule 107(a) of the Rules annexed with the memo. of appeal and placed on record of the case during the course of hearing for the period for the year 2017-18, veracity of which has not been disputed by either of the respondents. Hence, it is proved and established that the PN has no legal sanction and Sweetened Condensed Milk was rightly in the past and even today assessed under PCT Heading 0402.9900 without any exception.
17. It has also been noted by me that Chairman Classification Committee despite acting in derogation of the prescribed procedure in para 2 of CGO 12/2002 dated 15.06.2002 and First Schedule of the Act, he was not empowered even to issue PN in terms of Sub-para (vi) of s para (ii) of CGO 12/2002 dated 15.06.2002, it is for the Collector of Customs to issue the same after obtaining validation from the Board as ordered in CGO 9/2004 dated 20.08.2004 prior to issuance of that, reading as "It has been observed that Collectorates issue Public Notices and Standing Orders for facilitation, clarification, standardization of procedures etc. however , due to divergent practices and order issued by the Collectorates on same issue, uniformity as envisaged under the Revised Kyoto Convention is not being attained at all the customs stations. Therefore, it has been decided that Collectorates will not issue Public Notices and Standing Orders, in future. However , if a need arises, a draft Public Notice or Standing order will be sent to the Central Board of Revenue for further necessary action. " Compliance of orders, instructions and direction of the Board is mandatory under Section 223 ibid and no defiance is perm itted to be made as held by the Hon'ble High Court of Sindh in reported judgments 2003 PTD 2821 Syed Muhammad Razi v. Collector of Customs, (Appraisement), Karachi and 2 others that "in the wake of clear instruction contained in Customs General Order No. 12/2002, the importer may not be charged for misdeclaration under Section 32 of the Customs Act, 1969, the impugned action on the part of Customs Officials is not sustainab le in law and liable to be struck down as illegal and without lawful authority" and in 2016 PTD 35 Muhammad Waheed v. Customs Appellate Tribunal , it was observed that "Direction contained in Customs General Order 12 of 2002 though not binding upon Field Officer of the Department in terms of section 223 of the Customs Act, 1969 Field Officer were required to follow such direction or guideline before making any contravention report/case against an importer ---- any act of field officer in violation of such direction would be of no legal consequences." Seeking approval in the matter of classification is no exception as the word "classification has been specifically incorp orated in the C.G.O., it is due to the fact that Board has to incorporate fresh determined PCT Heading in para 3 of C.G.O. 12/2002 dated 15.06.2002 for application/implication by the field formation on the forth coming consignments. In the absence of availability of any power either under the provision of the Act and para 2 of C.G.O. 12/2002 and that also without approval of the Board, renders the same without lawful authority and as such void and ab initio and so the assessment made of the appellant or any importer consignment on the strength of the said classification ruling are as well without lawful authority and as such ab initio, null and void.
18. In the matter of customs classification decision of the WCO prevails on the decision circulated to unlawful PN, which is in nullity to the decision of WCO and index of First Schedule to the Act, which in unequivocal terms classify "Sweetened Condensed Milk" under PCT heading 0402.9900 its classification cannot be changed by virtue of the fact that "The whole system of HS Classification hinges on the Rules of Interpretation of the First Schedule to the Customs Act, 1969. All headings/sub-headings as appearing in the First Schedule in vogue have, therefore, a legal sanctity and are binding" and amendment in the First Schedule to the Act could only be made by an Act of Parliament, delegated legislation such as Statutory Regulatory Order (SRO) or PN could not amend the same, which the Chairman Classification Committee did (2019 SCMR 282).Hence, no classification contrary to the intention of the legislature can be made/issued because of the settled provision of law i.e. "in interpreting the taxing statute the customs must look to the words of the statute and interpret in the light of what is clearly expressed. It cannot imply anything which is not expressed, it cannot import provision in the statu te so as to support an assumed deficiency . There is no room for intendment. There is no equity about a tax. There is no presumption as to tax nothing is to be read in, nothing is to be implied. One only look fairly at the languag e used and nothing else is to be done." For all practical purpose inclusive of levy of duty and taxes First Schedule to the Act prevails upon the PN as held 2000 PTD 399 Superior Textile Mills Ltd v. FOP that "Where rules were in conflict with the Parent Act, the former must yield to the latter and the rules to the extent of inconsistency would be void."
19. What has been discussed hereinabove, particularly the interpretation of law, legal propositions and observations made thereon and to follow the ratio decidendi observed by the Superior Courts, I annul Public Notice No. 09-MCCA dated 12.10.2009 issued by Chairman Classification Committee, audit observations/contravention report issued/framed by respondents Nos. 1 and 3 and set aside the orders passed by respondents Nos. 3 and 4 in totality being illegal, ab initio, null and void. Appeal are allowed accordingly with no order as to cost.
20. Order passed and announced accordingly .