JEHANZAIB WAHLAH, MEMBER JUDICIAL-III.---- Through this order , I intend to dispose off Appeals Nos.K- 05/2018 and K-39/2018 directed against the Order-in-Original N6.801413 dated 19.12.2017 passed by Collector of Customs, Adjudication-I, Karachi (Respondent No.2).
2. Since, these appeals are directed against a single order and pertain to the impor ter and clearing agent as well as being based on identical facts sans grounds, facts of Appeal No. K-05/2018 are taken into consideration, which are that the appellant during the course of his business activities entered into contract with Messrs Chong Qing Aeronautic Bashan Motorcycle Manufacturing Co. Ltd., Chong Qing, China for import of motorcycle parts of PCT heading 8714.1090 valuing to US$. 176000/-, the said contract was registere d with the Habib Metro Bank.
Subsequently , the value of contract was enhanced by US$. 105,000.00/- and the contract registered with the Bank now read to the extent of value for US$. 281,000.00/-. The shipper in fulfillment of the contract, shipped partial shipment against Invoice and Packing List No.N356PK170519-4 dated 02.08.2017 and B/L No. COMS01 1542 dated 02.08.2017. Upon receipt of import documents his clearing agent M/s. Khurram Brothers, Karachi (Appellant No. 2) for transmitting Goods Declaration (GD) with the MCC of PMBQ under the provision of Section 79(1) of the Customs Act, 1969 (Act) and Rule 433 of Sub-Chapter III of Chapter XXI of Customs Rules, 2001 (Rules) which he did and as per pre-requisite deposited upfront duty and taxes, consequent to which GD was numbered as KAPE- HC-39462-26-08-2017. The Assessing Officer on appearance of GD on his work station , instead of completing the assessment on the basis of declaration and scanned documents, opted to get the goods examined prior to assessment and to proceed with adduced his opinion and forwarded to the respondent No.1, who gave his ascent and transmitted the GD to the Deputy Collector , of Customs, QICT , who nominated the examiner/Appraiser for physical verification of the imported goods as per the contemplation of Section 198 and Rule 435 of the Act/Rules, who carried out the same in terms of Examination Manual, 1996 in compliance of para 5 of CGO 12/2002 and report so prepared on 02.11.2017 was uploaded in the reservoir of GD reading as "Examined the goods on the basis of GD retrieved from system. Description motorcycle parts (1) flywheel rotor packed in CTN QTY: 2000 Nos.
N. WT:1900 Kgs approx. (2) Piston Kit packed in CTNS N. WT: 150 Kgs approx. {3) Clutch Inner and Gutter Katora W/Plate Kit, Cover Set and intake pipe packed in CTNS N. WT: 4450 Kgs approx (4) CDI packed in CTNS QTY: 2000 No's / N. WT: 460 Kgs approx. (5) Crank Shaft packed in CTNS QTY: 1000 No's. / N. WT: 2342 Kgs approx.
(6) Regulator packed in CTNS QTY: 2000 No 's/N. WT: 80 Kgs approx. (7) Main and Counter Transmission Shaft packed in CTNS QTY: 2000 No's N. WT: 2581 kgs approx. (8) Cyl SA ASSY Packed in CTNS QTY: 3100 kgs / Brand not shown. I/O not shown Checked weight 100% vide QICT slip No. 862799 5 dated 02/Nov/2017 and found wight 15960 kgs. .. Group to check PCT value and all other aspects... images are attached .... This examination report pertain to only on container CM4U0925786." On the strength of which the assessing officer thereafter passed assessment orders dated 04.11.2017 under the provision of Section 80 and Rule 438 in the capacity of authority defined in Section 2(a) of the Act in exercise of the powers vested upon him through SRO 371(1)/2002 dated 15.06.2002 against each item and transmitted GD on the work station of Principal Appraiser , who despite of the fact the earlier examination report was comprehensive and was sufficient, on the strength of which the assessing officer passed assessment order dated 04.11. opted to get the goods re-examined, which was conducted on 14.11.2017 and report so prepared was again uploaded in the reservoir of GD, reading inter-alia "Examined the goods on the basis of GD retrieved from system. Description motorcycle parts (1) flywheel rotor packed in CTN QTY.: 2000 Nos. / N.WT :2082 Kgs approx. (2) Piston Kit packed in CTNS N. WT: 150 Kgs approx.
(3) Clutch Inner and Gutter Katora W/Plate Kit, approx wt: 3220 kgs (3-A) Crank Case Cover approx Wt: 2030 Kgs (3-B) Intake pipe packed in CTNS N. WT: 180 Kgs approx total weight : 4530 kgs (4) CDI packed in CTNS QTY: 2000 No's / N. WT: 460 Kgs approx. (5) Crank Shaft packed in CTNS QTY 1000 Sets / N. WT:: 2342 Kgs approx.
(6) Regulator packed in CTNS QTY: 2000 No's/N. WT: 80 Kgs approx. (7) Main and Counter Transmission Shaft with 03 gears packed in CTNS QTY: 2000 No's/ N. WT: 2581 kgs approx. (8) Cylinder Head complete packed in CTNS N. WT: 3100 kgs approx / Brand not shown. I/O not shown Checked weight 100% vide QICT Slip No. 8627995 dated 02/Nov/2017 and found weight 15960 kgs. .. Group to check PCT value and all other aspects... images are attached .... This examination report pertain to only on container CMAU0925788. " Upon appearance of re-examination report on the work station of the Principal Appraiser , transmitted view message under Rule 437 to the appellant for uploading of FTA, in compliance he was abreast that no FTA benefit has been claimed, hence, cannot be uploaded due to suffer of lack of availability . He on 17.11.2017 once again transmitted view message through which he called for the documents in following words "Please upload the require documents as per the EIF information the amount shows US$. 281000/- , the invoice US$. 35200.00 Plz justify with the documentary proof about the discrepancy and submit the original L/C and performa invoice assessment. " In compliance the appellant No. 2 uploaded letter dated 22.11.2017 of Habib Metro Bank , wherein they inform ed about the committed error in EIF and break up of different partial shipment was also mentioned therein. The Principal Appraiser despite not warranted in the given circumstances of the case, again on even date transmitted view message for uploading of copy of L/C. Appellant No. 2 replied to that by uploading with the submission that "this is part shipment as we had already declared A. First item of GD. the subordinate of respondent No.) Ignored the same and transmitted view message dated 23.11.2017 for submission of L/C No. HMBC/01/059/1798 ". The Principal Appraiser , thereafter despite availability of clarity in evey aspect, termed the assessment passed by Assessing Officer as erroneous/invalid being not in conformity with the goods found in examination report, opted to framed contravention report with the allegation of misdeclaratio n of description quantity PCT and value for causing loss to the exchequer to the extent of Rs.4,381,785.00 and this act of his falls under the ambit of the contravention of Sections 32(1), (2) and 79(1) of the Act Section 33 of the Sales Tax Act, 1990 (STA) and Section 148 of the Income Tax Ordinance, 2001 (ITO), punishable under clause (14) of. Section 156(1) of the Act and transmitted the same to Additional Collector , Law for approval who gave his ascent; and transmitted the GD on the work station of respondent No. 2, who issued show-cause notice dated 29.11.2017 containing the narrated facts and contravened provision of the Act/FT A and ITO as narrated in contravention report. The Advocate of the appellant replied to the show-cause notice through letter dated 02.12.2017, which failed to satisfy him and he passed order dated 19.12.2017 through which he held the charges levelled in the show-cause notice as established and ordered confiscation of the goods subject to redemption of those on payment of 20% fine of Rs.1,032,742.00 penalty of Rs.100,000.00 on/by appellant No. 1 in addition to leviable duty and taxes shown in show cause notice. The respondent No. 2 also imposed a penalty of Rs.100,000.00 on appellant No. 2 for violation of above mention provision of law. Para 4 is relevant, which is reproduced here-in-under: "Having heard the arguments of the advocate of the respondents. It is observed that the respondent importer mis- declared PCT heading of the impugned goods chargeable to additional customs duty @ of 10% and also mis- declared quantity of Item No. 5 of the GD. Moreover , an additional undeclared item crank case cover was also found where the valuation ruling is applicable of 5.7/ per kg classifiable under PCT 8409.91 10 where 10% Add.
Custom Duty is applicable, which was declared as clutch inner and outer assessable at US$. 1.45/kg it is also observed that the quoted CGO 12/2002 dated 15.06.2002 is also not applicable to the specific imported goods as the goods are chargeable with additional customs duty at 10%. The arguments of the advocate of the respondent have no weight in the presence of clear misdeclaration of under reference goods. The respondent importer have not been able to produced any plausible justification with respect to misdeclaratio n of PCT heading/quantity and undeclared item found in the consignment. It is evident that the importer failed to make a correct declaration of imported goods as required under 79(1) of the Customs Act, 1969, which forms the basis of assessment of the imported goods. Hence, the charges levelled in the show-cause notice are established. I, therefore, order confiscation of the offending goods under clause (14) of Section 156(1) read with Sections 32(1), (2) and 79(1) of the Customs Act, --1969. However , an option under Section 181 of the Customs Act, 1969 is given to the importer to redeem the confiscated goods on payment of 20% redemption fine Rs.1032742/- (Rupees One million thirty two thousand seven hundred and forty two only) of the' value of the offending goods in terms of SRO 499(1)/2009 dated 13.06.2009, in addition to paymen t of duty and taxes chargeable thereon. 1 also imposed a penalty of Rs.100,000/- (Rs. one hundred thousand only) each on the importer and the clearing agent for violation of above mention provision of law ."
3. The appellants filed the appeals 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 have been filed within the stipulated period of 30 days by the respondent No.1 against the appeals preferred by the appellants instead comments, which do not in any manner qualify as memo of cross objection, to be termed as cross appeals filed under subsection (3) by the respondent No.1 as expressed in aforesaid section. Therefore, these are to be considered merely as opinion, having no binding force, however , are placed on record of the case for perusal and consideration.
4. Rival parties heard and case record perused and so the relied upon judgments Consequently framed the following issues for decision: Whether Sections 33 of STA and Section 148 of the ITO can be invoked by respon dent No. 2 in the capacity of an Officer of Customs appointed under Section. 3 of the Act in the show-cause notice and as to whether those were correctly invoked by the respondent No. 3 in the show-cause notice?
Whether respondent No. 2 has been appointed as officer of Inland Revenue under Section 30 of the STA or any section of ITO and as to whether he is empowered to issue show-cause notice and pass order-in-original in the matter of sales/income tax? Whether any contravention of Section 79(1) of the Act has been committed by the appellant? Whether any excess quantity was found in the consignment of the appellant No.1 as alleged by the respondents? Whether provision of Section 32 of the Act can be invoked on imported goods when duty and taxes leviable under declared and ascertained PCT heading are one and the same in negation of the direction issued by the Board in para B (ii) of para 101 of CGO 12/2002 dated 1.5.06.2002?
Whether classification of the goods imported in the light of conducted examination report in consonance with the Examination Manual, 1996 in compliance of the direction issued by the Board in para 5 of CGO 12/2002 dated 15.06.2002 rest on the appellant in the presence of availability of provision of Section 80 and Rule 438 of the Act/Rules? Whether charge of misdeclaration of value could be invoked on the basis of the value determined in valuation ruling by the Director , Directorate General of Valuation under the provision of Section 25A of the Act and as to whether assessment of the imported goods for levy of duty and taxes can be passed with the application of stale valuation ruling i.e. after 90 days from the date of its issuance? Whether appellant No.2 acted contrary to defined duties in the respective provisions of the Act and Chapter VIII of the Rules?
5. That as regard to Issue No. (i) . That respondent No. 2 invoked Section 33 of the STA and 148 of ITO without going through their expression, and in negation of the ratio settled by the Suprem e Court of Pakistan in reported judgment 2010 SCMR 1425 Section Officer Government of Punjab Finance Department and others v.
Ghulam Shabbir that the Principle of Administration of Justice and Interpretation of Statute is that "the person who is performing the role of a judge, no matter even in quasi-judicial proceeding must wear all laws of the country on the sleeves of his robes and failure to do so by any reason is not an excuse " Section 33 contain penal clauses synonymous to Section 156(1) of the Act and it is invoked for the contravention of the respective provision of STA not the Customs Act, whereas, Section 148 prescribes the procedure for collection of Income Tax at import stage by the authorities referred therein. Meaning thereby that the said sections are independent under which no charge can be invoked. To the contrary , I am flabbergasted to note that respondent No. 2 invoked these for which I am unable to visualize the wisdom of respondent No. 2, who being an officer of custom s appointed under Section 3 of the Act invoked for the offence allegedly committed by the appellant of the provision of section 32 of the Act. The sections of STA and ITO could only be invoked for the contravention of the respective provision of the STA and ITO not for the contravention of any provision of the Customs Act. These are indepe ndent Sections of STA/ITO and have no nexus whatsoever with any provision of the Act. Issuance of show-cause notice by invoking irrelevant/erroneous sections of independent statute by un authorized authority render it void and ab-initio and of no legal effect as held by the superior judicial fora in their judgments reported at 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. Collector 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. The Issue No. (vi) is answered in negative.
6. That as regard to Issue No. (ii). I, have also noticed with great concern that Respondent No. 3 in the show cause notice have invoked Section 33 of STA and Section 148 of the ITO as contended by the Consultant/Advocate of the Appellant that Respondent No. 2 even has no mandate to issue show-cause notice in the matter of Sales Tax/Income Tax. Whereas, Respondents are of the view that incorporation of the word "tax" in Sections 32(2) and
(3) and 179 of the Act is sufficient for assuming powers under the charging Sectio ns of Section 11 of the STA and 162(1) of ITO. Upon perusal of Sections 32(2) and (3) of the Act, I have observed that although the word "tax" is available, this does not empowers the Respondent No. 3 to assume powers under the provision of Section 11(2) and (3) of the STA and 162(1) of the ITO unless Legislature appoint him as "Officer of Inland Revenue/Commissioner of Income Tax", who has powers under these Sections to take cognizance in the matter relating to Sales Tax and Income Tax. It is to be noted that the word "tax" inserted in Section 179 is for the purpose of assuming power on the basis of involved amount of duty and taxes by the adjudicating authority and likewise insertion of word "tax" in section 32 , empowers the adjudicating authority for issuance of show-cause notice for penalizing the importer under the provision of subsection (1) of Section 156 of the Act , availability of the word tax in both these section does not automatically empower an officer of Customs appointed under Section 3 to wield powers under the charging /respective provisions of STA and ITO , unless, they are appointed as officer of Inland Revenue by the legislature under the existing provision of Section 30 of STA and 228 of the ITO or by carving a new subsection of Section 30 of the STA and section 228 of the ITO or all together by inserting new sections in the STA/ITO. Therefore, despite of insertion of the word "tax" in Sections 179 and 32 of the Act, the adjudicating authority including the Respondent No. 2 can only issue show cause notice within the respective applicable provisions of the Act and not under any charging sections or section 11 of the STA and Section 162(1) of the ITO which are otherwise nonexistent in the show-cause notice and no charge against the Appellant has been levelled under any provision of the STA and ITO, rather Section 33 of STA and 148 of the ITO have been mentioned, despite erroneous /irrelevant. Even otherwise, the Respondent No.2 has also relied upon clauses (14) and (14A) of Section 156(1) of the Act, which are applicable in the case of mis-declaration falling within the ambit of Section 32 of the Act. These clauses cannot be invoked in the matter of Sales Tax and Income Tax falling under Sections 11 and 162(1) ibid.
7. For further clarity of the issue I have scrupulously gone through the provision of Section 30 of the STA and Section 228 of the ITO and observed that Respondent No.2 has not been appointed as an Officer of Inland Revenue under these Sections. Resultant, he is not empowered to exercise the powers under Section 11 of the STA and Section 162(1) of the ITO, which empowers Officer of Inland Revenue /Commissioner of Income Tax to initiate adjudication proceeding for recovery of short collected/paid Sales Tax/ Income Tax either due to collusion or connivance or inadvertence, error or misconstruction. Hence, Respondent No.2 is not empowered to lay hands on any matter falling under the ambit of Section 11 of the STA and Section 162(1) of the ITO. Assuming powers on the basis of mistaken belief and warrant of law is palpably illegal beside fatal to the health of the case, as these sections least empowers the Officers of Customs including Respondent No.2 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 with these type of recoveries a show cause notice has to be issued under the Provision of Section 11 of the STA and Section 162(1) of the ITO, by the authority expressed therein i.e. Officer of Inland Revenue / Commissioner of Income Tax under subsections (3) and (4) of Section 11 of the STA and Section 162(1) of the ITO. In these sections neither Officer of Custom s and Respondent No. 3 figures anywhere. He assumed the power not vested with him under the provision of Sections 11 and 162(1) of the STA and ITO. Therefore, I am of the considered opinion that the Customs Collectorates does have powers to collect , Sales Tax and Income Tax as duty at import stage , conversantly , to the plea that 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 Customs Collectorate could recover the amount of Sales Tax and Income Tax upon receipt of notice from the Officer of Inlan d 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 Income Tax after due process of law. Hence, 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 Section 18 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 under sections 11 and 162(1) ibid. and this stood validated from reported/unreported judgments 2011 PTD (Trib) 110, 2010 PTD (Trib.) 2086, SCRA No. 01/2010 2004 PTD 801 , C.P. No. D-216/2013 , 2014 PTD 1963 , 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 , 2016 PTD (Trib.) 2463 and M/s. Singer Pakistan Ltd. v. Collector of Customs 2017 PTD (Trib.) 481. I, therefore hold in the light of the law laid down in the referred in above and cases reported at that the exercise of jurisdiction on this point by Respondent No. 2 is without lawful authority and jurisdiction. Hence, issuance of show-cause notice and passing of Order-in-Origin al are ab-initio void and as such coram non judice on this point also. The issue No. (ii) answered in negative.
8. That as regard to Issue No. (iii). Leveling allegation of contravention of Section 79(1) of the Act is erroneous by virtue of the fact that aforesaid section is not a charging section instead a machinery section outlining the procedure of transmitting GD with the Clearance Collectorate under the regime of CCS, no charge under the said Section could be invoked in the show-cause notice even in general not particularly when the goods were selected for examination under the provision of Section 198 and Rule 435 of the Act/Rules, on the basis of which assessment order under the provision of section 80 and Rule 438 ought to be passed by the authority defined in section 2(a) in exercise of the vested power delegated upon him through SRO 371(1)/2002 dated 15.06.2002 for levy of duty and taxes with the applicatio n of valuation ruling infield of the impor ted goods or class of goods or value of the identical/similar goods availa ble in the data reservoir maintained by the PRAL under Rule 110 of the period given in Rule 107(a) of the Rules. The goods of the appellant were not either auto cleared by the CSS module, resultant, it stands ousted from the provision of Section 79(1) of the Act and transferred to the regime of Section 80 and Rule 438 of the Act/Rule s. Hence, impugned consignment cannot be construed by any stretch of imagination/interpretation cleared on the basis of self assessment as contemplated in Section 79(1) of the Act. No contravention of the said section despite machinery has been made by the appellant, invoking the contravention of Section 79(1) by the respondent No. 2 in the show-cause notice is erroneous/out of context. The Issue No. (iii) is answered in negative.
9. That as regard to Issue No. (iv). The respondent has alleged that an excess quantity of 4060 kgs of crank case cover of PCT 8409.91 10 has been found in the consignment of the appellant, as against the contention of the appellant that they have declared the said part in Item No. 3 reading as "clutch inner and outer katora with cover set and plate kit and intake pipe of motorcycle" weighing to 8900 kgs attracting PCT heading 8714.1090. For determining the actual fact I have scrupulously gone through Items Nos. 3 and 9 available in assessment sheets/notes and have observed that the subordinate of respondent No. 1 assessed Item No. 3 by construing its quantity as 4640 kgs as against declared 8900 kgs, for validating the charge of excess quantity created a fresh item as 9 segregating one of integral part namely crank case cover weighing to 4060 kgs from Item No. 3, comprising of complete unit of the motorcycle component. No excess quantity is visible in the instant consignment as alleged for further validation I examined the catalogue of Suzuki and Honda and have observed that "clutch inner and outer katora with cover set and plate kit and intake pipe of motorcycle" i one single component, resultant, its description and quantity has to be cons trued in accordance with the Rule 1 of GRI i.e. "as presented ". How can, and under which authority , the respondent No.1 and his subordinates detach one of the part namely "crank case cover" of a component for the purpose of leveling allegation of excess quantity and PCT for charging 11% additional custom duty, not leviable if imported as a complete component, it falls without any exception under PCT 8714.1090 on which 11% additional custom duty is not leviable. However , if imported separately as crank case cover sans remaining parts forming a component, it falls 8409.91 10 and is subject to levy of 11% additional custom duty. In the instant case appellant has not imported "crank case cover" as a individual part rather attached with a complete component namely "clutch inner and outer katora with cover set and plate kit and intake pipe of motorcycle". Hence cannot be segregated from the complete component of the motorcycle , for creation of said to be alleged undeclared item and for levy of 11% additional custom duty by applying the value available in valuation ruling , despite not applicable/leviable under law as it is settled principal that "Tax cannot be charged and levied unless it falls squarely within the purview of the charging provision". Taxing laws are not to be extended by the implication beyond the clear import of language used. To hold otherwise would violate another principle of interpretation of taxing statute: that tax law should be construed in favour of the citizen and against the Government. This principle is based on the fact that taxation is a process which interferes with the personal and property right of the people, although it is necessary inference. But it does take from the people portion of their properties. The tax law must be construed in favour of the tax payer PLD 2017 SC 99 Chairman, Federal Board of Revenue, Islamabad v. Al-Technique Corporation of Pakistan, Ltd. and others and "no tax could be levied against a person beyond the scope of a charging section and it had to be constru ed and applied strictly--- before taxing any person, it must be shown that he fell within the ambit of charging section by clear words used therein. If the case did not falls within the four corners of the charging section, not tax could be imposed by inference, analogy or trying to probe into the intention of the legislature" (2017 SCMR 884 Collector of Customs, Sales Tax and Central Now Federal Excise v. Haji Mahmood Essa and Co. and another . I therefore hold in clear terms that the charge of excess quantity is concocted /framed only for validating the contravention report and levy of 11% additional custom duty , otherwise not leviable. The Issue No. (iv) is answered in negative.
10. That as regard to Issue No. (v). When a consignment is found to contain goods of description other than one declared falling under separate PCT head ing but chargeable to same rate of duty Sections 32 and 32A cannot be invoked by virtue of the fact that no false declaration was submitted. Secondly , both quality of goods despite falling under separate PCT heading attracts same rates of duty and taxes as ordered by Board in para B(ii) of para 101 of CGO 12/2002 dated 15.06.2002 is relevant, containing direction for the customs an importer may not be charged for misdeclaration under section 32 of the Act, in the following situation:
(i) Where an importer makes a correct declaration on bill of entry or opts for 1st appraisement for determination of correct description, PCT heading of quantity of goods.
(ii) When a consignment is found to contain goods for description other than the one declared falling under separate PCT heading but chargeable to same rate of duty .
(iii) Where the description of goods is as per declaration but incorrect PCT heading has been mentioned in the bill of entry no mis-declaration case under section 32 of the Customs Act, 1969, be made out provided there is no change in the rate of customs duty as a result of ascertained PCT heading.
11. The arguments of the departmental representative that said para of the CGO is not applicable as it was the clarification of SRO.374(I)/2002 dated 15.06.2002, which stood cancelled and was issued when there was no clearance of cargo through self asse ssment in terms of CSS is without any foundation because SRO No.499(I)/2009 dated 13.06.2009 is continuation of proceeding SROs right from SRO 374(1)/2002 in which pitch of redemption fine has been notified by the Board. Direction of the given in Sub-para B (ii) of para 101 of CGO 12/2002 dated 15.06.2002 was incorporated by the board in the Customs General Order for facilitation/minimizing the hardship of the importer . It has not been to this date either amended, altered or rescinded. The stance of D/R also stood nullified from the prescribed penalties in notification number 499(1 )/2009 without any mention of misdeclaration/redemption fine. Resultant compliance of it is mandatory under the provision of Section 223 of the Act without any exception and this stance validated from the judgment of the Hon'ble High Court of Sindh reported at 2016 PTD 35 Muhammad Waheed v. Customs Appellate Tribunal 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 " The goods declared by the appellant and ascertained by the respondent and his subordinates on the strength of examination report despite differing in description and PCT heading attracts same rate of duty and taxes, the charge of misdeclaration in the given circumstances cannot be invoked as ordered by the Board in the aforesaid sub-para of para 101 of CGO 12/2002 dated 15.06.2002 without any exception, interpreting contrary , is tantamount to defiance not permitted under law . The Issue No. (v) is answered in negative.
12. That as regard to Issue No. (vi). That the determination of actual description, quantity , quality and PCT heading after examination of the goods under Sections 198 and 435 of the Act/Rules solely rest upon the respondent No. 1 and his subordinates by virtue of availability of inbuilt powers to them under the provision of Sections 80 and Rule 438 of the Act/Rules, which read as "Section 80 Checking of goods declaratio n by the Customs ---- (1) on the receipt of goods declaration under section 79, an officer of customs shall satisfy himself regarding the correctness of the particulars of imports, including declaration assessment, and in case of the customs computerized system payment of duty, taxes and other charges thereon." and "Rule 438-- Assessment by Customs Authorities : Where any declaration has been filed under Rule 433 or additional documents have been submitted under Rule 437 the Customs shall satisfied itself as to their correctness including its value, classification claim of exemption, payment of duty and taxes and may re-assess the goods during or after clearance". The instant case is simply of passing of assessment order section 80 and Rule 438 for levy of duty and taxes by the respondent No.1 and his subordinates, power vested are exercised by them invariably on daily basis and they pass assessment order of the consignments of the importer by changing PCT heading, without any leveling charge of misdeclaration or framing contravention for the said effect, if they starts framing contravention reports, none of the consignment will be cleared and only exercise undertaken by them would had been framing contravention report for the purpose of adjudication, consequent result of which would had been the terminal/port shall be choked to capacity . The fact of matter is the charge of misdeclaration of PCT is levelled on the importer on the basis of pick and choose criteria completely in negation of the provision of Section 80 and Rule 438 of the Act/Rules and well settled law that that no charge of misdeclaration can be invoked on the basis of either transmitting or mentioning erroneous J PCT in the GD as held by Judicial Fora in countless reported judgments since, long, for reference 2002 MLD 180 State Cement Corporation v. GOP , wherein, Hon'ble Late Justice Sabihuddin Ahmed held in cleared terms that while observing that "We are rather amazed at the line of reasoning put forward to the effect that while an assessee is required to interpret the law and relevant notification correctly and could be held guilty of a penal offence for not doing so in terms of Section 32(1) of the Customs Act, no responsibility of any kind would devolve on the customs officials."
We may add that in case of short levy or evasion became possible due to collusion of some customs officials the mere fact that no such customs official involve and no notice was served in terms of Section 32 of the Customs Act, indicate that the entire exercise was mala fide" and 2014 PTD 1615 Sadaat Khan v. DG Intelligence and Investigation FBR, wherein the Hon'ble High Court held that that an interpretation of a notification as well as the classification of the goods does not fall within the definition of mis-declarat ion." Rendering the charge of misdeclaring PCT heading as of no substance and as such void and ab-initio. The Issue No. (vi) is answered in negative.
13. That as regard to Issue No. (vii), the charge of mis-declaration of value under the provision of Section 32 of the Act cannot be levelled on an importer on the basis of Valuation Ruling No. 967/2016 dated 16.11.2016. The respondent No. 2 despite performing in the capacity of Adjudicating authority completely and intentionally ignored the Provision of Section 32 of the Act, direction contained in clause (i) of para 78, Sub-Para (3) of para 101 of CGO 12/2002 dated 15.06.2002 and Serial No. (d) of SRO. 499(1)/2009 dated 15.06.2009. Upon examination of the provision of Section 32 of the Act, I have observed that the contravention of the provision for value misdeclaration can only be applied on the basis of the documents defined in Section 2(kka), delivered, furnished by the importer or the statement given by him before customs authority . In the instant case, nothing is apparent form the record of the case that the appellant delivered or furnished any documents or statement with the respondent No. 1 and his subordinates, which were found to be false /untrue in material particular . It is mistaken belief of the respondents that the Valuation Ruling issued by the Director , Directorate General of Valuation under the provision of Section 25A of the Act is one of the defined docu ments warranted for declaration under Section 2(kka) for transmitting GD under Section 79(I) and Rule 433 of the Act/Rules. The respondents also lost sight of the principle of law that allegation under charging section could only be invoked on the basis of the respe ctive section not on the basis of presumptions or assumption. In the case of the appellant, section 32 was invoked on the basis of non prescribed information/documents to which an importer has no excess and rendering the charge of mis-declaration, based on mere assumption. Beside on the stale valuation ruling dated 16.11.2016, valid for only 90 days for the purpose of the assessment of the imported goods not beyond that as held by Hon'ble High Court of Sindh 2018 PTD 1746 Sadia Jabbar v. FOP and 2016 PTD 702 Danish Jehangir v. FOP and 02 others revalidated in that "a valuation ruling issued under Section 25A can, in our view, only apply for a certain period and no more. The reason for this lies in the fact that the valuation ruling must be determined using one of the methods of Section 25/the Valuation Agreement. Now at least three of those methods, the identical goods method, the similar goods method and the deductive value method, require the value to be determined "at or about the same time" as the goods being valued.
This expression has been defined in Chapter IX of the Rules (in 'Rule 107) as meaning "within ninety days prior to the importation or within ninety days after the importation of the goods being valued" in the same judgment the Hon'ble High Court nullified para 5 invariably available in all ruling that "in cases where declared/transaction value are higher than the Custom values determined in the ruling, the assessing officer shall apply those value in terms of subsection (1) of Section 25 of the Custom Act, 1969, "while holding "that any valuation ruling issued with the said direction is ultra virus to Section 25A because it contemplates and permits a predetermination of Custom Value. It is impermissible to apply Transaction value in terms of Section 25A. The respondents intentionally ignored the law laid down by the Hon'ble High Court and also failed to take into account the golden principle of law that penal proceeding is criminal in nature which requires a prove beyond or reasonable doubt, which is not existent in the instant case. Instead no element of mis-declaration as expressed in section 32 of the Act is found, the impugned action of the respondents are held to be completely without jurisdiction, illegal void and ab initio as held in reported judgment 2009 PTD 467, PLD 1959 Supreme Court (Pak) 364, PLD 1996 Kar. 68, insertion of para 78 in CGO 12/2002 dated 15.06.2002 has been made by the Board on the basis of numerous reported judgments of the Superior Judicial Fora that for levelling allegation of mis-declaration of value , it is upon the department levelling the allegation to substantiate through an incriminating un-refutable direct evidence in the shape of evidential invoice of the said product of the period expressed in Rules 107(a) of Rules , re-validated by the Board through sub-para (3) of 101 and clause (d) of SRO 499(1)/2009 dated 15.06.2009. No evidence has been produced by the respondent as directed in para 78 at any stage i.e. preparation of contravention report, during the adjudication proceeding or before the Tribunal, irrespective of the fact that for disputing the said value of the imported goods, it was mandated upon respondent No. 1 to transmit view messages under Sub-Rule (1) of Rules 109 and 437 of Rules, to the appellant for transmitting/sca nning additional documents in support of declared value. To the contrary no such exercise was under taken either by the respondent No. 1 or 2 evident from the fact that no copies of the transmitted view messages in regards to value dispute have been placed on record before Tribunal despite, shifting burden of proof on their shoulder as per the contemplation of Articles 117 and 121 of Qanun-e-Shahadat, 1984.
Similarly , no decision was also communicated with grounds as enunciated in Sub-Rule (3) of Rule 109 of the Rules, confirming that no evidence was available with the respondent No. 1 for levelling the charge of allegation.
The respondent No. 1 miserably failed to discharge the onus of burden for establishing the allegation that the price declared by the Appellants of the imported goods are not fair and been mis-declared within the meaning of Section 32 of the Act through concrete and positive evidence despite being transaction value within the meaning of section 25(1) and Rule 113 of the Act/Rules. Rendering the allegation of value mis-declaration and assessment based on stale valuation ruling as arbitrary/unilateral barred under Rule 110 of the Rules. Hence the charges of mis- declaration of value and assessment of the imported goods for levy of duty and taxes are declared to be unsubstantiated and as such of no legal effect, rendering the contravention report, show-cause notice and order-in- original as ab initio void. The same view has been taken by the Hon'ble Supre me Court of Pakistan and High Courts and Tribunal in judgments report ed Customs Appeal No. K-249/2000/13372 , Customs Appeal No. K- 35/2002, Customs Appeal No. K-1670/2001 , 2005 PTD (Trib.) 617, 1668/LB and 1669/LB of 2002, Customs Appeal No. K-1281/05 , 1986 MLD 790 Karachi PLD 1996 Karachi 68, 2006 PTD 909, 2002 PTD 2957 , 2007 SCMR 1357 = 2007 PTD 1858 , 2008 SCMR 438 , 1992 SCMR 1083 , 2008 PTD 1250 and 2014 PTD (Trib.) 190.
The Issue No.(vii) is answered in negative.
14. That as regard to issue No. (viii), the appellant No. 2 as observed from show-cause notice and Order-in- Original and as verbally explained by the learned Counsel, was held guilty of an offence under Section 32(1) and
(2) of the Act. The charge framed in the notices relates to a claims made by the appellant No. 1 through him, which upon examination found to be excess beside contrary to the declared description/P CT and value being suppressed meaning thereby that allegation against appellant No. 2 are on the basis of the allegation levelled on the appellant No. 1 in the show-cause notice , so specific allegation in regards to his act and commission are apparent from its charter , which means appellant No. 2 only offence is that he transmitted GD for the clearance of the goods of appellant No. 1 and for the said act, for which he is accorded License by the Licensing Authority , assertion is that he should not have made the declaration in the GD on the basis of documents defined in Section 2(kka), since, he made said act of his attracted the provision of Section 32 of the Act. According to the show-cause notice itself and construing it in the light of the Act, the Customs should have made distinction between a declaration or "a statement in answer to any question put" and a "claim". As regards declaration it means a communication by a person in relation to a business being conducted. The word "declaration" came to judicial scrutiny in the case of Vithoba Syamna v. Union of India reported as AIR 1957 Born. 321. It was held in that case that the word "declaration" refers to the nature, description and value of goods so that assessing officer can apply appropriate Tariff rate for assessment and charging. On the other hand the word "claim" means a demand for something suppose due to or demanded as a right. In the case of Eastern Rice Syndicate v. Collector of Customs (PLD 1959 SC 364), the Supreme Court had held that in order to attract a penal provision of Section 39 now Section 32) it must be established that the person who alleged to have made any statement in a documents submitted to the Customs authorities must be having knowledge and it would depend upon the facts and circumstances of each case. It is not disputed here that the statement made in the Customs documents regarding the nature and value of the goods were in any ways wrong; rather that information was found correct and true. The assumption of the Customs that violation of the said section did take place upon perusal of the conducted examination report under the provision of Section 198 and Rule 435, i.e. also based on mistaken belief as in conduction of examination, appellant No. 2 has no part to play instead to be carried out with the assistance of terminal operator , whereas assessment order is passed by the appropriate authority defined in Section 2(a) under Section 80 and Rule 438 of the Act/Rules in exercise of the powers vested upon him through SRO 371(1)/2002 dated 15.06.2002 independently without any influence after going through the examination report, uploaded documents with the GD, in compliance of view message transmitted under Rule 437 and First Schedule to the Act, in this whole exercise again appellant No. 2 has no part to play. The charges against the appellant No. 2 were/are wholly misconceived, as his action does not falls within the operative mechanism of Section 32 of the Act. A study of Sections 79 and 80 of the Act reveals that importer or his agent has to file GD for release of the goods on which assessing officer has to make an assessment, any claim made by an importer is subject to scrutiny by the assessing officer who has been vested with unfettered powers to complete an assessment. A claim is a request subject to approval by a competent officer, and where a competent authority grants or reject the claim, no charge of fraud or otherwise can be finked to the agent or to his principal, whose duty is to submit relevant document for processing for release of consignment or application. It appears that the respondent No. 2 who issued the show-cause notice grossly mis-understood the scheme meaning an operative mechanism of Sections 32 and 80 of the Act. The liability of appellant No. 2 durin g the course of clearance of the consignment has to be evaluated under the provision of Sections 207, 208 and 209 of the Act, which indicate that an agent represent his principal and until and unless any direct evidence is attributed against him or when department is not able to prove any crimin al intend on his part, he cannot be penalized under the General provision of the Act, unless he violates the governing condition of his License and this stood validated from the judgment relied upon by the appellant No. 2 and are referred in grounds of memo. of appea l and observation made by their lordship in 2002 YLR 2651 holding that "to hold the clearing agent liable for an act of commission and omission on the part of the importer will require a clear findings based on legally acceptable evidence of his being an active and conscious party to the manipulation. In normal course of his business a clearing agent files a bill based upon the documents and information provided by the importer . He cannot be presumed to be privy to any illegal arrangement, which the importer may have coined or had intended in his mind for that purpose some evidence of his direct involvement will have to be brought on record. Particularly when it is not shown that the clearing Agent was directly or indirectly a beneficiary of evasion of taxes. The answer to Issue No. (vii) is answered in negative.
15. 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 vacate the show- cause notice and set aside the order issued/passed by respondent No. 2 being illegal, void and ab-initio, appeals are IP accordingly allowed with no order as to cost.
16. Judgment passed and announced accordingly .