JEHANZAIB WAHLAH, (MEMBER JUDICIAL-III).---Through this order, I intend to dispose off Appeal No, K-04/2018 directed against Order-in-Original No, 770139 dated 04.11.2017 passed by Collector of Customs, MCC of Appraisement, (East) Karachi.
2. Briefly facts of the case are that, the appellant is sub-contractor of China State Engineering Corporation, Ltd, Islamabad, (CSECL) who are registered with the Pakistan Engineering Council vide license No, 0101 in category FC-A in the capacity of Foreign Contractor/Operator and are engaged in drilling in Thar Energy Coal Power a project of China Pakistan Economic Corridor (CPEC), for their drilling machine operating there Messrs CSECL ordered the appellant for import of spare parts. The appellant in fulfillment of the contract imported these from China against invoice No, JZH-8291 dated 13.09.2017 valuing to US$. 9,999.00 and B/L No, 142701178291 dated 22.09.2017, upon receipt of those forwarded letter bearing No, JHMEL-405-25-09-2017- DMS/KHI dated 25.09.2017 annexed with invoice and B/L to CSECL for issuance of recommendation letter, CSECL accordingly forwarded the same to respondent No, 2 vide letter dated 28.09.2017. Upon confirmation of the said fact appellant delivered respective documents desired for submitting declaration as defined in Section 2(kka) of the Customs Act, 1969 (Act) to his clearing agent Messrs Usman Enterprises, Karachi for transmitting Goods Declaration (GD) with the MCC of Appraisement-East under the provision of Section 79(1) of the Act and Rule 433 of Sub-Chapter III of Chapter XXI of Customs Rules, 2001 (Rules) , which he did and as per pre-requisite for availing the regime of Customs Computerized System (CCS) deposited upfront duty of Rs, 347,621.00 on 09.10.2017, consequent to which GD was numbered KAPE-HC-65249-09102017. Upon appearance of which on his desktop the nominated Appraiser opted to get the goods examined first prior to passing of assessment order under Section 80 and Rule 438 ibid., to proceed with he adduced his opinion/reasoning for getting the goods examined as enunciated in Section 198 and Rule 433 of the Act/Rules and transmitted that to the Deputy Collector of the Group, who assented and routed the GD to the Deputy Collector of Customs, Examination, PICT, who nominated the examiner of his choice, who carried out the physical examination and opined that the goods imported by the appellant are old and used as against declared and report so prepared reading as "Assessment alert: Import Policy Violation goods are imported in second hand condition which is banned as per Appendix-C , Serial No, 7 of IPO, 2016 container No, AITU-178459 KAPE-HC-65249-09102017 no commercial invoice and packing list found inside the container, goods examined and detailed as under: declared description : Drill Machine Spare Part Qty: 1829 CTNS Total Weight: 22150 kgs it is noted that goods are old and used and seems to be recondition and repainted model is re-written on the plate, brand and origin: not shown , 100% weight at PICT Weigh Bridge found Cargo Weight 22150 Kgs vide PICT SLIP No, 639692 dated 12.10.2017, further confirmation through attached images Group may check PCT and all other aspect including IPO and IPR" was uploaded that in the reservoir of the GD. The nominated officer upon receipt of report on his desktop passed assessment order dated 19.10.2016 under the provision of Section 80 and Rule 438 for levy of duty and taxes , while construing the unit value of per carton shown in the invoice as US$. 5.47 as of kg, which was infact US$.0.48/kg and referred that to the Principal Appraiser with the remarks based on examination report reading as "DV, whereas as per ER this is pertinent to mention that "assessment alert" Import Policy violation goods are imported in second hand condition which is banned as per Appendix-C Serial No, 7 of IPO".
Who after going through the examination report and assessment sheet/note framed contravention report with the allegation that appellant imported"Auto Parts" (finding no place in the examination report) as against "Drill Machine Spare Parts" falling under PCT Heading 8431.4300 and as such not importable under Serial No, 7 of Appendix-C of the Import Policy Order, 2016-2018, which are liable to be confiscated and referred that to Additional Collector Law, who approved that and transmitted it to respondent No,2, who on the strength of same transmitted show-cause notice dated 26.10.2017 narrating the facts and invoked provision of the Act/IPO as were incorporated in the contravention report without any slightest change of comma and full stop and appellant was asked to submit reply to that on 04.11.2017, on which date of hearing was fixed. Upon appearance of show-cause notice on his home page appellant started consultation with his consultant/ advocate and so the exporter for preparing reply to the show-cause notice, in addition to attendance of hearing. The respondent No, 2 passed order-in-original on the same date, through which he ordered confiscation of the appellant drilling spare parts out-rightly on the premise that these are not importable, in addition to imposition of penalty of Rs,500,000.00, the operative part of the order is reproduced herein-under:-- "On the basis of examination report the goods are found as used auto parts drill machine spare parts under PCT heading 8431.4300, which are not importable vide Appendix-C of the Import Policy Order, 2016 and liable to be confiscated. A show-cause notice was accordingly issued online to the importer for deliberately concealing the banned goods with mala fide intention and for violating Section 16 of the Customs Act, 1969 punishable under clause (9) of Section 156(1) of the Customs Act, 1969. No response to the SCN was received nor anyone appeared to defend their case despite multiple opportunities of hearing offered to the importers through online hearing notices. Since the case cannot be kept pending indefinitely. I have no option but to decide the case on the basis of available record and relevant law. The imported goods are in old/used condition which are not importable in terms of prevailing condition of import Policy Order, 2016 as detailed above. No response has been submitted by the importer which confirms that he has nothing to state in his defense. The charges framed in the SCN notice therefore , stand established and impugned goods are confiscated outright without any option for release. A personal penalty of Rs, 500,000/- is also imposed on the importer violating the above legal provision."
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, instead comments, which are not in any manner qualify memo. of cross-objection, deemed to be termed as cross appeal filed under subsection (3) by the department as expressed in aforesaid Section. Therefore, these are to be considered merely as opinion, having no binding force, nevertheless, placed on record of the case.
4. Rival parties heard and case record perused, in addition with the relied upon citations. Prior to dilating upon other factual and legal aspects, it is of vital importance to adduce opinion on the manner/ attitude adopted by the respondent No, 2 in handling the instant case. Upon examination of the show-cause notice/order-in-original it has been observed that these smacks of mala fide, evident from the narration made therein that "nor anyone appeared to defend their case despite multiple opportunities of hearing offered to the importers through online hearing notices. Since the case cannot be kept pending indefinitely." Astonishingly, show-cause notice was issued by respondent No, 2 on 26.10.2017 and hearing against which was fixed for 04.11.2017 i,e, just after 9 days, which is not in any manner a reasonable time narrated in clause (iii) of para 78 of CGO 12/2002 dated 15.06.2002, no further hearing whatsoever was given to the appellant by the respondent No, 2 as evident from the record of the case. To the contrary, the respondent No, 2 opted to adduce in the order that "despite multiple opportunities of hearing offered to the importers through online hearing notices". On the strength of these formed opinion proceeded in passing an ex-parte order dated 04.11.2017 , while registering non appearance of the appellant. The said observation itself proves the state of mind of the respondent No, 2, that he did not even remember that the order was passed by him on 04.11.2017, which was the solitary date of hearing given to the appellant, further validated from the narration case cannot be kept pending indefinitely. The question arise that whether 9 days from the date of issuance of show-cause notice, could be termed as indefinite period through any definition as against allotted time of 120 ' days, which could be further extended by 60 days upon availability of "exceptional circumstances" and recording of those as expressed in Section 179 of the Act. The sole aim of the respondent No, 2 seems to be cause mental torture and financial loss to the appellant and to thwart completion of project undertook by the Chinese investor under the regime of bilateral agreement of CPEC timely, subduing intentionally his powers by deciding the case in haste and in derogation of the well known maxim of audi-alteram partem ( no body should be condemned unheard)/clause (c) of para 2 of the guideline issued by the Board vide C. No, Dy. 730-M(L)2002 dated 15.06.2002 for adherence by the adjudicating authorities, (non adherence is defiance of Section 223 of the Act) , application of the said maxim has been universally recognized as ruled by the Supreme Court (PLD 1964 SC (Pak) 673) and many others reported judgments of the Superior Judicial Fora. The order passed by the respondent No, 2 confirms without any ambiguity that it has not been passed with application of mind/independently , instead on pre-determined formed opinion, having no warrant of law confirming that he lack courage to do justice without fear and favour. Rendering the order biased, suffers from the vice of self interest or tardy , indolent and incompetent and shows that he has no urge , will , passion and ability to decide the case/dispute put before him for decision fairly and judiciously. Hence, in nullity to the mandated requirement of Section 24A of the General Clauses Act, 1897. Vital lapses/illegalities committed by respondent No, 2 apparently visibly floating on the surface of the order also conform that it has not been passed on objective consideration instead on extraneous. Such type of orders are always deems to be treated as illegal, void arbitrary and a result of misuse of authority vested in public functionary. No room was available for such illegal, void and arbitrarily orders in any system of law. If any authority Court or Tribunal gave a finding of fact which was not based on material available on record was illegal arbitrarily without discussing and considering the material available on record, it became perverse and a perverse finding of fact which is violative of the established principle of appreciation of evidence on record was not sustainable in law. The principle that every judicial or quasi-judicial finding should be based on reasons containing the justification for the finding in the order itself is an established principle of dispensation of justice. The order passed by respondent No, 2 is in violation of basic principle of the goods governance and mandatory requirement of Section 24A of the General Clauses Act, is not only illegal and void but also not sustainable under law. The said position is also fortified by the judgments of Superior Courts reported as 2005 YLR 1019, 2007 PTD 2500, 2004 PTD 1973, 2005 YLR 1719, 2003 PTD 777, 2003 PTD (Trib) 2369, 2002 MLD 357, 1983 CLC 2882, 2005 PTD 2519, 2005 PTD 1189, 2003 PTD 2369 and PLD 1995 SC (Pak) 272, PLD 1970 SC 158, PLD 1970 SC 173, 1984 SCMR 1014 and 2012 PTD (Trib.) 619.
5. That the expression of Section 179 of the Act is unambiguous in regards to assumption of powers by the adjudicating authorities on the basis of involved amount of duty and taxes "amount of duty and taxes involved excluding the conveyance" in the cases of import , whereas in case of export twice to the monitory limit expressed in subsection (1) of Section 179, involving misdeclaration as contemplated in Section 32 of the Act. In the instant case no misdeclaration is apparent and so the revenue loss as evident from show-cause notice which is completely silent in this regard with the exception of offending value of the goods (which are of no consequence. Resultant, respondent No, 2 was not empowered to issue show-cause notice to the appellant under the said provision of the Act. Rendering the issuance of show-cause notice by G respondent No, 2 is without lawful authority and jurisdiction. Hence void and ab-initio and as such coram no judice and so the super structure build upon that through order-in-original as held in Order in Sales Tax Appeal No, 444/03, S.T.A.
465/07 and judgments reported at PLD 1971 SC 184, PLD 1976 Supreme Court 514 , 1992 A.L.D. 449, 2004 PTD 624, PLD 2004 Supreme Court 600, PLD 2005 Supreme Court 842, 2009 PTD 1112, 2010 PTD 465 and 2010 PTD (Trib.) 1636.
6. In addition to the referred in above illegality, neither respondent No, 2 nor any other authority is empowered to issue show-cause notice in the case where there exist no revenue loss i,e, of importability, which is the case of the appellant, cases of such nature are to be dealt by the competent authority defined in Section 2(a) of the Act at the time of passing assessment order under Section 80 and Rule 438 of the Act/Rules, which is Principal Appraiser, who has jurisdiction in terms of S.R.O. 371(1)/2002 dated 15.06.2002 and none else. Whereas, in the instant case show- cause notice has been issued by Respondent No, 2, who is anon entity. By laying hands on the instant case by usurping the powers of his subordinate i,e, Principal Appraiser , which he could have only exercised under Section 4 of the Act during the course of administrative work not for the purpose of adjudication, which are to be exercised exclusively by the authority empowered to do so and this stands validated from the reported judgments 2014 PTD 1256 Messrs Paramount International (Pvt.) Ltd. v. FOP and others, corresponding to the case of restriction laid upon on the imported goods under the Import Policy Order, 2013-2016 i,e, importability and was adjudicated by the Principal Appraiser, which was reopened and subsequently adjudicated by the Additional Collector, the Hon'ble High Court of Sindh held the subsequent proceeding as of no legal effect/jurisdiction and allowed the petition. This order was assailed before the Hon'ble Supreme Court of Pakistan vide C.P.L.A. No, 105-K of 2014 by the Collector of Customs, MCC of Appraisement- West, leave to appeal was refused and petition was dismissed, further stood validated by the judgments relied upon the Appellant and are incorporated in ground (iv) of Memo of appeal.
Rendering the issuance of show-cause notice and passing of order-in-original by Respondent No, 2 without lawful authority/jurisdiction. This proposition of law stands further validated by the Hon'ble Supreme Court of Pakistan in the case "Izhar Alam Farooqi Advocate v. Sheikh Abdul Sattar Lasi and others" (2008 SCMR 240) has held that the Institution specifically barred to adjudicate any matter to the extent of certain mandatory limits shall not be competent and had no jurisdiction to deal with any such matter exceeding the limit subscribe under the law. Hon'ble Supreme Court of Pakistan has held in the case of "Sardar Ahmed Yar Khan Jogzai v. Province of Balochistan" 2002 SCMR 1022 that "where essential features for assumptions of jurisdiction is contravened or forum exercises powers not vested in it or exceed authority beyond limit prescribed by law, the judgment is rendered coram non judice and in operative." Hon'ble Supreme Court of Pakistan in re "Faqir Abdul Majeed Khan v. District Returning Officer and others" 2006 SCMR 1713 has observed that "by now it is well settled that any order which suffers from patent illegality or without jurisdiction, deserve to be knock down. Whereas, the Hon'ble Supreme Court took a very serious notice in reported judgment 2001 SCMR 1822 Ali Muhammad v. Chief Settlement Commissioner, wherein the Hon'ble Chief Justice presiding a Bench in the capacity of Judge of Supreme Court as was then their lordship was held that "whenever order are passed by an Officer without caring whether jurisdiction vests in him or not, it is prima-facie reflect on his conduct as well as competency. It is also to be noted that whenever authority is exercised in such a manner then no other inference can be drawn except that the functionary has transgressed his jurisdiction for the consideration other than judicial one and the Courts seized with such orders may recommend any action against the said Officer because neither the executive authorities nor judicial forum will pass a wrong order because' the jurisdiction in both the capacities is conferred upon such authorities to discharge their function in accordance with law which has bestowed upon. them to function in that capacity and if there is abuse of power by such officer then no hesitation should be felt in passing stringent stricture against officer keeping in view of norms of justice" re: PLD 1958 SC 104 , PLD 1973 SC 326, PLD 2002 SC 630, 2003 SCMR 50, 2004 SCMR 25, 2004 SCMR 1798 and PLD 2005 Supreme Court 842. I, therefore, declare the show-cause notice and order-in-original/appeal without power/jurisdiction on this count also. Hence, void and ab-initio and coram non judice.
7. Reverting back to contentious issue of the case, upon perusal of the photographs of the goods placed on record during the course of hearing by the appellant as those were at port of loading were new evident from their wrapping, which were torn down during the course of examination and left in the same condition unattended, rendering some of the goods lightly rusty, this is a normal behavior of base metal goods as these are exposed to hot and humid environment, excessive humidity generate process of oxidation and rusting. The fact of matter is that the examining official attended the goods in very callous and hap hazard manner rendering some of the goods as rusty otherwise these were/are new, validated from the plates affixed thereupon. I am also flabbergasted to note and observe from the photograph taken by the appellant at the time of loading at the port of export and images taken by the examining official at the terminal, wherein the goods arrived that these are spares of drilling machine, without any exception not old and used auto-parts in any manner and even through appearance, this is ruthless lie /slanderous on the part of the respondents, veracity of the said fact has not been disputed by the representative of the respondents, rendering the examination report and the formed opinion by the subordinate of respondents as of no substance/legal effect and as such void and ab-initio. Notwithstanding to the adumbration made here-in above, which rendered the goods importable without any exception. Even, if it is considered for the sake of arguments that the goods as opined by the respondents are old and used (second hand), these are importable and least falls within the ambit of Serial No, 7 of Appendix C to the Import Policy Order, 2016-2018 by virtue of the fact that these falls under clause (3) of para 9(ii) of the Import Policy Order, 2016, which with clarity express in regards to imports of second hand and re-condition parts of plant machinery and equipment as clause (1) , which are not restricted under para 7(ii) of Appendix-C of the Import Policy Order, 2016- 2018. The appellant being sub-contractor of Messrs CSCECL is entitled for importing old and used parts as per condition (3) reading as "second hand/re-condition parts of the plant machinery and equipment by construction, mining and petroleum sector companies (paragraph 9(ii)(3) refers), which is construction, mining and petroleum sector companies are also allowed to import secondhand or re-conditioned parts of the plant, machinery and equipment as clause (1).
"Construction companies duly registered with Pakistan Engineering Council, mining, oil and gas and petroleum sector companies are allowed to import second hand plant, machinery and equipment actually required for their projects in Pakistan subject to the prior pre-shipment inspection in the exporting country by any of the internationally recognized pre-inspection companies listed at Appendix-H to the effect that the plant , machinery and equipment are in good working condition and they are not older than ten years." Messrs CSCECL is duly registered with the Pakistan Engineering Council in the capacity of foreign constructor /operator vide license No, 0101 in category FC-A, this vital fact has neither been denied or controverted by the representative of the respondent. Hence, deems to be admitted, resultant, Messrs CSCECL is entitled to import even old and used spare parts itself or through their sub-contractor K without any restriction. Rendering the opinion formed in this context also of no substance/legal effect.
8. That as regards to the determination of value of the imported goods for levy of duty and taxes through assessm ent order dated 19.10.2017 and connected show-cause notice and order-in- original, declared value has been accepted as fair with the exception that the subordinate of the respondents construed the declared unit value on the basis of per carton i,e, US$. 5.47 as per kg , without conversion of the value of US$. 9999/- with the application of the imported weight of 22150 kgs confirmed in the examination report, which comes to US$. 0.45/kg, which should had been the basis of assessm ent, same could not at this stage be disputed upon as nothing in regards to the said fact/ground has been spelled out in the charter of show-cause notice. Reassessment shall be tantamount to travelling beyond the scope of show-cause notice, rendering the assessment order/order-in-original palpably illegal as held in the Hon'ble Supreme Court in reported judgment 1987 SCMR 1840 Collector Excise and Land Customs and others v. Rehm Din that "wherein it has been held that "Order of adjudication, being ultimately based on a ground which was mentioned in the show-cause notice is palpably illegal on the face of it". Apart from this, it has also been noted that despite terming appellant goods as old and used machinery spare parts, the determination of value prior to framing of contravention was not correctly made as ordered by the Board in para 41 of CGO 12/2002 dated 15.06.2002, reading as:-- "Valuation of second hand machinery:- The assessable value of second hand machinery shall be determined in accordance with the following principles namely:- If the original price of such machinery is available then the original price will be depreciated by 7.15% per each year of the age of such machinery, reaching a maximum depreciation of 50% of the original price in seven years to arrive at the F.O.B. value.
If the original price is not available, and if the price of the latest model of such machinery is available, then, the price of the latest model will be depreciated by 10% per each year for the first three years and 5% per each year for the remaining four years, of the age of the second hand machinery reaching a maximum depreciation 50% in value of the latest model to arrive at the F.O.B. value of the second hand machinery.
In other words, a seven year old machine will get the maximum concession of 50% free of its original price from the price of its latest model in case the original is not available.
If both these prices and the price of the latest model are available, then, the higher FOB value will be taken for assessment.
If both these prices are not available then the FOB value will be appraised on the basis of the following factors namely:- a. Type of machinery. b. Condition of machinery c. County of origin/manufacture, and d. Evidence of value of new, re-conditioned and old. e. Machinery, available with the customs authorities
(i) If, such machinery is reconditioned, then 10% of the FOB value determined on the basis of the above principles will be added to arrive at the FOB value for assessment; and
(ii) Assessable value shall consist of the FOB value, as determined in accordance with the principles mentioned above plus freight, insurance, commission (if any) and 1% landing charges.
Conditions:
(i) The importer will provide information regarding the year of manufacture, country of origin, make and model number of the machinery and its original price.
(ii) No depreciation shall be allowed for age above 7 years from the year of manufacture of such machinery.
Explanation:- "Original price means the normal selling price of the manufacturer of such mac kinery when it was originally manufactured.
9. Adherence to the instructions, directions and orders of the Board are mandatory on the field formations during the performance of their prescribed duty in terms of Section 223 of the Act, no defiance is permitted under any pretext or circumstances. Deviation from that renders the whole proceeding without Lawful authority and jurisdiction as held by the Hon'ble High Court of Sindh in 2003 PTD 2821 Syed Muhammad Razi v. Collector of Customs, (Appraisement), Karachi and 02 others that "in the wake of clear instruction contained in Customs General Order No, 12/2002, the importer may not be charged for mis-declaration under Section 32 of the Customs Act, 1969, the impugned action on the part of Customs Officials is not sustainable 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 S. 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." Determination of value for levy of duty and taxes of the impor ted old and used machinery/spare parts under any other method contrary to the para 41 of CGO, 12/2002 dated 15.06.2002, is nullity, being tantamount to defiance of the order of the Board and renders the exercise so under taken as illegal and without lawful authority.
10. To the contrary, the respondents are assessing the old and used machinery/spare parts in negation to the devised procedure, on the basis of some devised criteria having no warrant of law @ US$. 1.40/kg of China origin, despite being fake and fictitious, not permitted under Rule 110 of Chapter IX of the Rules same treatment needs to be given to the appellant being in consonance with the Articles 4 and 25 of the Constitution, which guarantees equal treatment to all and sundries and even Article 18 , which enunciate freedom of trade, business or profession and Sub-Clause (b) of which restricts regulation of Trade, Commerce or Industry for safe guarding the interest of the citizen through healthy and fair competition as held in reported judgments AIR 1954 SC 747, AIR 1963 SC 1811, AIR 1970 SC 1453, AIR 1971 SC 1017 and PLD 2005 SC 193.
11. What has been disc ussed hereinabove, particularly the interpretation of law, legal propositions and observations made thereon and to follow the ratio decidendi observed by the Superior Courts, by holding that the appellant has been needlessly dragged into the litigation despite not warranted under law by the respondents with the sole purpose of shying away foreign investment and to thwart the progress undertaken by them for overtake the deficiency faced by Pakistan in the power sector under the bilateral agreement under the protocol of CPEC, I hereby vacate the impugned show-cause notice, and set aside the order passed by the respondent No, 2 being illegal, void and ab-initio, appeal is accordingly allowed with no order as to cost. The respondent No, 1 is directed to issue delay detention certificate in terms of Section 14A (2) of the Customs Act, 1969.
12. Judgment passed and announced accordingly.