CH. MUHAMMAD SHABBIR GUJJAR, MEMBER (JUDICIAL). This appeal has been preferred against Order-in- Appeal No. 31/2007 dated 02.04.2007, passed by the learned Collector of Customs (Appeals), Lahore.
2. Briefly stated the facts, as reported, are that on the basis of contravention report submitted by Engineering Development Board vide its letter EDB-005/03/04 dated 25.05.2004, the Deputy Collector of Customs Group-IV , Dry Port, Lahore issued a show-cause notice dated 07.10.2004 through which the appellant was called upon to pay duty and taxes to the tune of Rs.51,242,334/- against import value of Rs.194,079,319/-; that it was inter alia alleged that--
(1) The appellant was allowed importation of components on concessionary rate of duty in terms of SRO 434(1)/2001 for local manufacture of "Sohrab JS 70 Motorcycle" but had failed to achieve the deletion program for the period 2001-02 as was communicated by Engineering Development Board vide its letter EDB-005/03/04 dated 25.05.2004;
(ii) There was a shortfall of 3.8004% in the Deletion Program;
(iii) According to condition (iii) of SRO 502(1)/94 dated 09.06.1994, the appellant was required to achieve deletion program and in case of default, the component imported in violation of indigenization program would attract statutory duty chargeable on relevant CBU vehicles and continuous availability of exemption of the said notification was contingent upon the achievement of progressive annual indigenization.
3. The learned Additional Collector of Customs Dry Port, Lahore passed the Order-in-Original No.26/06 dated 02.03.2006 through which he upheld the demand of duty and taxes to the tune of Rs.22,357,988/- against the appellant. Feeling aggrieved from the said order , the appellant filed the appeal before the learned Collector of Appeals, Lahore, who after hearing the parties dismissed the same; hence this appeal.
4. The learned counsel for the appellant has contended that the ratio laid down by the Hon'ble Appellate Tribunal in its judgment has not been implemented. It is further contended that the impugned orders have been passed without taking into account that EDB had required that 3.8004% shortfall in deletion in Sohrab JS 70CC Motorcycle shall attract statutory rate of duty chargeable on the relevant CBU vehicles on CKD kits imported after 30.06.2002. It is submitted that the source of the figures specified in the show-cause notice of Rs.51,242,334/- (duty and taxes) and Rs.194,079,319/- (import value) and of Rs.22,459,036/- (duty and taxes adjudged in the order-in-original) have never been disclosed to the appellant. It is further submitted that the appellant is also unaware of the method of calculation of the said figure of Rs.22,459,036/- which has been illegally adjudged against the appellant. It is added that the EDB letter elated 15.07.2004 is not relevant to the merits of instant case as it has been issued in context with "Implementation of shortfall in indigen ization programme of 57N Toyota Corolla assembled by Indus Motors". It is further added that the learned Collector (Appeals) has not dilated upon this point which is very crucial and has decided the case without any plausible justification for applying the formula to Sohrab JS 70CC Motorcycle which had been prescribed by EDB for 57N Toyota Corolla assembled by Indus Motors. It is contended that vide letter No. EDB-005/03/03 dated 08.05.2003, EDB had categorically communicated the decision of Indigenization Committee that in pursuance of audit report for 2001 -2002 of the appellant, a shortfall of 3.8004% in Deletion Programme in Sohrab JS 70CC Motorcycle was detect ed, thus statutory rate of duty shall be chargeable on the relevant CBU vehicles on CKD kits imported after 30th June, 2002, hence the demand of statutory rate of duty on CKD kits imported prior 30th June, 2002 (2001-2002) is against the spirit of decision of Indigenization Committee and Review Committee and therefore unlawful. The Collector (Appeals) has also failed to take this aspect into account and has not given his findings as to why he has preferred to uphold the order of respondent in respect of CKD kits imported during the year 2001-2002, thus the orders of the lower forums are liable to be struck down only on this account as those are unlawful and against the spirit of EDB's aforesaid decision. It is submitted that the appellant has come before this forum with clean hands and admits that there was a shortfall of 3.8004% in Deletion Programme in the year 2001-2002, there fore, in the light of Tribunal's order , the appellant has paid the duty and taxes which had become recoverable in the light of EDB's letter dated 08.05.2003 in respect of CKD kits imported cater 30.06.2002. It is further submitted that the mala fide of the respondent is also evident from the fact that the appellant had submitted affidavits of its counsel and its Deputy Manager to the extent that -(i) the calculation sheet of Rs.22,357,988/- was never supplied to them, hence there is no question of showing satisfaction on that figure;
(ii) the formula of EDB in respect of Pakistan Cycle Industrial Cooperative Society was never communicated to the counsel and that the appellants have never admitted the liability of Rs.22,357,988/-. It is contended that the respondent has not taken into account affidavits and the same were never rebutted by the department rather has recorded in para 11 of order that the position was agreed between the appellant and the department, that it has been repeatedly contested before the Collector Appeals that the appellant had never agreed to the figures of duty and taxes of Rs.22,357,988/- and had reconciled only import value of Rs.88,253,787/- the figure which had been retrieved from the Bills of Entry . Lastly , the learned counsel argued that the assessment of duties and taxes upheld by the Collector Appeals in respect of imported consignments had no legal validity , thus the appeal be accepted after setting aside the impugned order .
5. Conversely , the representative of the respondent department has supported the allegations as framed in the show-cause notice and stated that the impugned order is a speaking- one, thus the same is sustainable under the law. It is contended that the impugned orders were passed by the forums below after applying their judicious mind, therefore, the appeal is liable to be dismissed.
6. Arguments have been heard. Record perused. We have examined the letter of EDB dated 15.07.2004 issued in respect of local assembly of Toyota Corolla Cars. It has transpired that no where mentioned in the said letter of EDB that the formula available on the letter is applicable on all local assemblers of automotive vehicles including the Motorcycles. Like-wise the formula for calculation of duties and taxes contained in the said letter dated 15.07.2004 of EDB is not relevant to the merits of the present appeal as the same has been issued in context of implementation of D shortfall in indigeniza tion programme of 57N Toyota Corolla assembled by Indus Motors, thus the same is not applicable on the Motorcycles assemblers. The department has also failed to justify the method of calculation of figure of Rs.22,459,036/- which has been adjudged against the appellant, therefore, the respondents are directed to calculate the recoverable amount of duty and taxes on the formula applied in respect of demand notice issued cu 01.12.2003 to the appellant in another case.
7. In view of what has been discussed above, the appeal is accepted and the orders passed by the lower fora are set aside.