SYED SARDAR HUSSAIN SHAH, CHAIRMAN/MEMBER (JUDICIAL).----This appeal has been filed by the Collector of Customs, M.C.C., Peshawar (herein after called as the appellant) against the Order-in-Original No.1047-48 of 2017, dated 24.10.2017, passed by the Additional Collector of Customs (Adjudication), Islamabad, Camp Office, Jamrud Road, Custom House, Peshawar, whereby he released the vehicle against the payment of differential amount of duties and taxes plus redemption fine @ 30% of the appraised value of the vehicle.
2. Briefly stated facts of the case are that Messrs Hasnain Construction Company 103-C, Jinnah Town, Quetta cleared Transit mixture under concessionary SRO.No.500(I)2004 dated 12.06.2004 but instead of using in construction works, sold out in open market for commercial use in violation of the provisions/conditions laid down under SR0.1240(I)/2005 resulting evasion of huge amount of customs duty/taxes. According to prosecution story, staff of Intelligence and Special Checking Squad, Hayatabad, Peshawar during patrolling duty on 21.08.2017 near Ring Road, Hayatabad, intercepted such a Hino truck bearing Registration No.P- 2707/Peshawar which was cleared as Transit Mixture against GD No.PDRY1520 dated 04.01.2005, from the possession of Noor Akbar son of Gul Dad, resident of Jori Rajgan, P.O. Sangjani, Islamabad and Rizwan Akbar son of Noor Akbar, resident of Jori Rajgan, P.O. Sangjani, Islamabad and seized the truck under Section 168 of the Customs Act, 1969 for violation of Sections 16 and 19 of the Customs Act, 1969 read with Section 3(1) of the Imports and Exports (Control) Act, 1950 further read with SRO.500(I)12004 dated 12.06.2004 and SRO.1240(1)/2005.
3. Subsequently, after completion of the requisite formalities, the matter was placed before the Additional Collector of Customs (Adjudication) Peshawar, who vide Order-in-Original No.1047-48 of 2017 dated 24.10.2017 released the vehicle against the payment of differential amount of duties and taxes plus redemption fine @ 30% of the appraised value of the vehicle. Hence the instant appeal.
4. I have heard arguments advanced by both sides and gone through the case record with their able assistance.
5. In 2005, Messrs Hasnain Construction Company imported Specialized vehicles/mounted machinery and availed exemption for so much of duty/taxes as specified under Notification No.SRO.1240(I/2005. According to the said SRO there was exemption of the same amount on the import of such machinery and the company availed that exemption. According to the customs authorities, the vehicle/mounted machinery shall be used by the Importer for 10 years and that if the Importer sales the exempted machinery before 10 years, they shall require to pay duty and taxes leviable thereon. SRO 1240(I)/2005 is reproduced as under:- S.R.O.1240(I)/2005.- In exercise of the powers conferred by and clause (a) of subsection (2) of section 13 of the Sales Tax Act, 1990 the Federal Government is pleased to exempt dump truck for off-highway use and transit concrete mixer from whole of sales tax leviable thereon subject to the following conditions, namely: the dump transit and transit concrete mixers imported under this notification shall be registered with the motor vehicle registration authorities in their respective categories and shall be used exclusively for construction activities;
(ii) the registration details of each such dump truck and concrete mixer shall be furnished to the Collector of Customs, for whose jurisdiction it has been cleared, within three months of its clearance;
(iii) where such dump truck or concrete mixer has been imported by a commercial Importer, he shall be responsible to ensure that the buyer concerned furnishes him an attested copy of registration as aforesaid for onward transmission to the concerned Collector of Customs within three months of supply or sale; and
(iv) the importer or buyer of such dump truck and concrete mixer shall not further dispose it off for a period of ten years from the date of its import, or as the case may be, its purchase from a commercial importer: Provided that where a person engaged in construction business intends to sell the dump truck or concrete mixer registered in his name to another person engaged in such business before the expiry of ten years, he shall take advance permission from the Collector of Customs for the intended sale and attested copy of registration book with change of ownership shall be furnished to the said Collector within three months of grant of such permission.
2. This notification shall take effect from the 12th day.
6. The representative of the appellant-department referred to Notification No.SRO.576(I)/2006, which states that no such vehicle shall be sold, transferred or otherwise dispose of in Pakistan without prior permission of the customs, Federal Board of Revenue and without payment of duty and taxes leviable thereon at the time of import. The Board, however, may allow such sale, transfer or otherwise disposal without payment of leviable duty/taxes to any person who is entitled to import the same without payment of duty/taxes.
S.R.O. 576(1)/2006.- In exercise of the powers conferred by section 19 of the Customs Act, 1969 (IV of 1969), and clause (a) of subsection (2) of section 13 of the Sales Tax Act, 1990, and sections 53 and 148 of the Income Tax Ordinance, 2001 (XLIX of 2001), read with the Second Schedule thereof, subsection (10) of section 7 of the Finance Act, 1989, and in supersession of its Notification No. SRO 447(1)/2004, dated 12th June, 2004, the Federal Government is pleased to exempt vehicles, including motor cars, falling under respective headings of Chapter 87 of the First Schedule to the Customs Act, 1969 (IV of 1969), imported into Pakistan free of customs- duty and other taxes by a privileged person, organization, office, agency and the dignitaries of UAE and Qatar listed under PCT 9905 1 [or allowed to be imported free of customs-duty and sales tax under other applicable headings of Chapter 99 and under Notification No.S.R.O.1199(I)/83, dated the 24th December, 1983, or under any special exemption order issued by CBR under section 20 of the Customs Act, 1969, but excluding those cases in which the transfer by sale or by any other way is specifically governed by any other independent Notification is filed] and subsequently sold or otherwise disposed of in the country, from so much of customs- duty and other taxes as is in excess of that leviable thereon as set out below, subject to the following conditions, namely :- [(a) no such motor vehicle shall be sold, transferred or otherwise disposed of in Pakistan without prior permission of the Customs Wing of Federal Board of Revenue and without payment of duties and taxes leviable thereon at the time of import. The Board, however, may allow such sale, transfer or other disposal without payment of leviable duty and taxes to another person who is also entitled to import the same without payment of duty and taxes.
(b) a motor vehicle being sold, transferred or otherwise disposed of in Pakistan on payment of customs-duty and other taxes, after approval by Customs Wing of Federal Board of Revenue, shall be subject to the following conditions, namely
(i) if sold or otherwise disposed of before the expiry of one year from the date of importation.
The whole of customs-duty and other taxes shall be payable as were leviable at the prevailing rates of exchange at the time of importation on value determined in foreign currency;
(ii) if sold or otherwise disposed of after the expiry of one year--but before expiry of five years from the date of importation.
So much of the customs-duty and other taxes shall be payable as are in excess of leviable amounts of customs- duty and other taxes at the prevailing rates of exchange and duties and taxes on the value determined in foreign currency at the time of importation, which is arrived at after deduction of 1% per month of duty and taxes calculated from the date of importation subject to a maximum of thirty-five percent deduction;
(iii) if sold or otherwise disposed of after the expiry of five years but before the expiry of ten years from the date of importation.
So much of the customs-duty and other taxes shall be payable as are in excess of leviable amounts of customs- duty and other taxes at the prevailing rates of exchange and duties and taxes on the value determined in foreign currency at the time of importation, which is arrived at after deduction of 35% plus further deduction of 1% per month of duty and taxes calculated from five years from the date of importation, subject to a maximum of fifty- five percent deduction; and
(iv) if sold or otherwise disposed of after the expiry of ten years.
So much of the customs-duty and other taxes shall be payable as are in excess of leviable amounts of customs- duty and other taxes at the prevailing rates of exchange and duties and taxes on the value determined in foreign currency at the time of importation, which is arrived at after deduction of 55% plus further deduction of 1% per month of duty and taxes calculated from ten years from the date of importation, subject to a maximum of seventy five percent deduction.
(c) a vehicle imported without payment of duty and taxes under any provision of law or availing' the benefit of this notification, may be surrendered at any time to the Collector of Customs having jurisdiction, without payment of any customs-duty and other taxes, for further disposal or departmental use. Customs-duties and taxes on such vehicles shall be assessed at appraised value for disposal purposes by the Collector; and
(d) in case any vehicle is sold, transferred or otherwise disposed of in violation of any of the conditions of this notification, then the whole of customs-duties and taxes leviable at the time of import shall become payable and any other penal action may also be taken under the Customs Act, 1969 (IV of 1969). Explanation.- For the purposes of this notification the expression "determination of duty and taxes" means customs-duty and sales tax at the rates mentioned above. No other duties and taxes shall be levied on the disposal of vehicles imported for the purpose prescribed in the exemption order."
7. According to the counsel for the respondents, the Goods Declaration (GD) was filed on 04.01.2005 and the notification/SRO produced by the representative of the respondents was issued on 05.06.2006, which does not attract to the transaction conducted before the issuance of the notification. This notification has been issued under Section 19 of the Customs Act, 1969 (IV of 1969) and it shall effective on the 6th June, 2006. The counsel for' the respondents referred to subsection 19 of the Customs Act, 1969, which is reproduced as under:- "A notification issued under subsection (1) shall be effective from the day specified therein, notwithstanding the fact that the issue of the official Gazette in which such notification appears is published at any time after that day."
Which clarified that the Notification/SRO stated supra has no retrospective effect. The show cause notice dated 29.08.2017 disclosed that the action taken against the respondents on the basis of a letter No.FEC/508/2007/9776 dated 24.02.2015. The show-cause notice was issued to Noor Akbar son of Guldad and Rizwan Akbar son of Noor Akbar, residents of Joni Rajgaan, P.O. Sangjani, Islamabad. The recovery memo. dated 21.08.2017 disclosed that the vehicle was taken into possession from Noor Akbar son of Guldad at the time it was plying on Ring Road, Peshawar. In the show-cause notice, the appellant has been charged for penal consequences under Sections 16 and 19 of the Customs Act, 1969. Section 16 of the Customs Act, 1969 is reproduced as under:- "Power to prohibit or restrict importation and exportation of goods.- The [Federal Government] may, from time to time, by notification in the official Gazette, prohibit or restrict the bringing into or taking out of Pakistan of any goods of specified description by air, sea or land."
8. For the ready reference Section 19 of the Customs Act, 1969 is also reproduced as under:- "General power to exempt from customs-duties: 7&110[(1) The Federal Government pursuant to the approval of the Economic Coordination Committee of Cabinet, whenever circumstances exist to take immediate action for the purposes of national security, natural disaster, national food security in emergency situations, protection of national economic interests in situations arising out of abnormal fluctuation in international commodity prices, removal of anomalies in duties, development of backward areas and implementation of bilateral and multilateral agreements, subject to such conditions, limitations or restrictions, if any, as it deems fit to impose, may, by notification in the official Gazette, exempt any goods imported into, or exported from, Pakistan or into or from any specified port Or station or area therein, from the whole or any part of the customs-duties chargeable thereon and may remit fine, penalty, charge or any other amount recoverable under this Act."
Perusal of the Sections stated supra of the Customs Act, 1969 reveals that it do not attract to the case of the respondent. Section 16 is in respect of the exportation and importation of goods, while section 19 deals with the exemption of duty of goods imported or exported.
9. In this case, the vehicle was imported near bout 13 years before in accordance with law and sold by importer to the respondent. Notification No.SRO.576(I)/2006 restrain the importer not to sale, transfer or otherwise dispose of the vehicle in Pakistan, without prior permission of the Customs or the Federal Board of Revenue
(FBR) and without payment of duty and taxes leviable thereon at the time of import. Similarly, SRO.1240(1)/2005 also impose restriction on the Construction Company/Importer that in case of sale the truck or the concrete mixture registered in his name to another person engaged in such business before the expiry of ten years, he shall take advance permission from the Collector of Customs for intended sale and an attested copy of the registration book with change of ownership shall be furnished to the said Collector within three months of grant of such permission. In such scenario these notifications has imposed no liability on the purchaser or the appellant. According to law, it was the liability of the importer/seller and the respondents was miserably failed to issue show-cause notice and did not took the importer/seller into consideration. The show cause notice issued to the present owner/purchaser after 12 years that too under Sections 16 and 19 of the Customs Act, 1969 has no relevance with case or with the appellant and the show-cause notice was issued beyond 10 years of limitation.
10. Moreso, this Tribunal has already decided the matter vide Appeal No. Cus. 380/PB/2017 filed by the respondent against the same Order-in-Original No.1047-48 of 2017, dated 24.10.2017, whereby the order of the Additional Collector Customs (Adjudication), Islamabad, Camp Office, Jamrud Road, Custom House, Peshawar, the show-cause notice and all proceedings were held illegal, void, ab initio. As such, this appeal being without any substance stands dismissed.