JEHANZAIB WAHLAH, MEMBER JUDICIAL-III.----Through this order I intend to dispose off Appeal No. K- 536/2017 directed against Order-in-Original No. 658559 dated 22.03.2017 passed by Additional Collector of Customs, Adjudication-II, Customs House, Karachi (respondent No.2).
2. Briefly facts of the lis are appellant imported a consignment of 9000000 pcs weighing to 4725 kgs of shaving blades, each was packed in waxed wrapper and 10 pieces in a packet of paper board , 10 packets in a card and 50 cards in a carton, cumulative weight of which was 6075 kgs US$. 0.80/kg C&F from Jabal-e-Ali free zone, UAE against invoice No.UAE-012017 dated 01.01.2017 and B/L No. MSI/CGP-170002 dated 09.01.2017. Upon receipt of these the appellant delivered those to his clearing agent Messrs UK Traders, Karachi for transmitting Goods Declaration (GD) with the MCC of Appraisement-East under the provision of Section 79(1) of Customs Act, 1969 (Act) and Rule 433 of Sub-Chapter III of Chapter XXI of Customs Rules, 2001 (Rules), which he transmitted and as per pre-requisite for availing the regime of Customs Computerized System (CCS) after obtaining pay order from the appellant deposited upfront duty and taxes of Rs.263,081.00 on 02.02.2017 in the NBP, consequent to which GD was numbered as KAPE-HC-107526 dated 02.02.2017. Upon appearance of the GD on the desktop the Appraiser concerned opted to get the goods examined first under the provision of Section 198 and Rule 435 of the Act/Rules and to proceed with after adducing his opinion for conduction of examination transmitted the GD to Deputy Collector of Customs, Group-V, MCC of Appraisement-East, (respondent No. 1), who gave his assent and routed the GD to the Deputy Collector PICT, who onward marked it to the examiner for conduction of physical examination of the goods. Who accordingly complied to the order and confirmed the declaration in all aspects (no observation in regards to excess weight was adduced, evident from the report available in the reservoir of GD reading as "Container No. VSIU-2753398 and GD No:"KAPE-HC-107526 dated 02.02.2017" misdeclaration in net weight, no documents found inside the container, inspected the lot, examined and found "New Rise Classic" Brand Super sharp Stain less Steel shaving Blade packed in 900 cartons x 50 cart x20 packets x10 pieces = 9000000 pieces (9000 kgs net weight each packets = 10 grams. I/O : Bangladesh (printed on cartons and retail packing of goods 100% weight checked by PICT at PICT Weigh Bridge and found 1490 kgs . Gross vide W/Slip No. 556342 dated 06.02.2017. Group is requested to check all aspect including PCT and importability as per import policy Order in vogue. It is noted and pointed out that net weight declared in GD 4725 kgs. As against on physical examination found 9000 kgs. (900 cartonsx1000packets x10 pieces). Upon receipt of which the assessing officer on his work station passed the assessment orders one on declared quantity of the imported goods @ US$. 1.20/kg and second while construing the weight of essential/non-essential packing being also the imported goods, after allowing tare weight for Kgs 4275 @ US$. 1.20/kg for levy of duty and taxes of Rs.
304,343.00 and thereafter framed contravention report with the allegation that the appellant committed an act of misdeclaration of weight, which is found excess by 4275 kgs being 90.47% of the declared quantity, on which the duty and taxes of Rs.304,343.00 are payable which he tried to evade and as such contravened the provisions of Sections 79(1), 32(1) and 32(2) of the Act, Sections 3, 6 and 7 of the Sales Tax Act, 1990 (STA) and Section 148 of the Income Tax Ordinance, 2001 (ITO), punishable under clauses (14) and (45) of Section 156 of the Act clause 11(3) of Section 33 of the STA and 148 of the ITO and transmitted the GD to Additional Collector, Law, who approved that and routed that to respondent No.2 , who transmitted show-cause notice dated 15.02.2017 containing the reported fact and invoked provision of the Act/STA and ITO by respondent No. 2 with the direction to the appellant to reply to the allegation levelled therein. The Appellant consultant submitted the reply dated 23.02.2017 by pasting the same in the reservoir of GD, challenging the power/jurisdiction of respondent No.2 under the provision of Section 11 of the STA and Section 162(1) of the ITO and so the veracity of the found excess weight and charges of misdeclaration. The respondent No.2 without dilating upon the advanced arguments passed order dated 22.03.2017 holding that the charges levelled in the show-cause notice stand established against the appellant and ordered confiscation of the goods subject to redemption of those upon payment of 20% fine of Rs.108,800.00, penalty of Rs.50,000.00 , in addition to duty and taxes leviable on the weight of essential non-essential packing of the blades, relevant portion of the order is reproduced here-in-below: "I have gone through the case record as well as written submission of the respo ndent and the department. The issue between the importer and department is the weight whereon duty and taxes are to be collected as the gross weight in the Goods Declaration has been ground as per goods Declaration. The department, on the other hand is of the view that the goods in the market are not sold without essential packing and thus the weight of this packing must be taken for assessment purposes. The department further submitted that even the other importer of the same commodity have got their goods cleared after declaring the weight with essential packing thereby further strengthening the department point of view. During proceeding, the respondent submitted a written request that they are ready to pay duty and taxes as demanded by the department as the clearance of the goods had already been delayed which is causing huge loss to them. As respondent has shown his willingness to pay differential amount of duty and taxes as demanded by the department: the charges levelled in the show-cause notice stands established to the extent of declaration of net weight. In exercise of the powers conferred upon me under Section 156(1), (14) of the Customs Act, 1969. I order for confiscation of goods for violat ion of the provision of Sections 32(1), 32(2) and Section 79 (1) of the Customs Act, 1969, Section 33 of the Sales Tax Act, 1990 and Section 148 of the Income Tax Ordinance, 2001. Howev er, the importer is given an option to redeem the same on payment of leviable duty and taxes and redemption fine equivalent to 20% i.e. Rs. 108,800.00 of the value of the offending goods (calculated on the basis of revised value given by the department as US$. 1.20/kg for offending weight of 4275 kgs = US$. 5130 or Rs. 543780) as contained in clause 1(a) of SRO 499(1)/2009 dated 13.06.2009 and subject to the condition that the same are importable. A penalty of Rs. 50,000/- is also imposed on the importer under section 156(1), (14) of the Customs Act, 1969 for the aforesaid misdeclaration."
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 has been filed within the stipulated period of 30 days by the respondent No. 1 against the appeals preferred by the appellants instead comments which are not in any manner qualify 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. Heard and perused the record of the case and the relied upon documents / citations by the appellant's. Prior to dilating upon other factual and legal aspect of the case , it is of vital importance for me to dilate upon the invoking of Sections 3, 6 and 7 of the STA and 148 of the ITO and so the penal clause of 11(c) of Section 33 of STA and 148 of ITO and jurisdiction of Collectorate of Customs Adjudication and power of respondent No 2 in the matter pertaining to Sales/Income Tax , falling under the ambit of the provision of Section 11 and Section 162 of the STA and ITO, which respondent No 2 assumed in the absence of appointment of Officer of Inland Revenue under the provision of Section 30 of the STA and 228 of the ITO , only for the sake of obtaining the desired results of their choice. It is settled proposition of law that "objection qua jurisdiction is a basic lacuna on assumption of jurisdiction, which can be raised at any stage of proceeding including appeal, as much as it goes to the very root of the matter and renders the entire proceeding coram non judice" (2017 PTD 196 Collector of Customs Sales Tax v.
Khursheed Spinning Mills Ltd., and another .
5. Upon perusal of show-cause notice, I have observed that respondent No. 2 invoked certain provision of STA and ITO without going through their expression, and in negation of the ratio settled by the Supreme 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 " Sections 3, 6, 7, 33 and 34 STA and 148 of the ITO, Section 3 is indeed a charging Section but under the said Section the appropriate authority is officer of Inland Revenue, whereas Section 6 defines mode and manners of collection of Sales Tax at import stage by the customs authority , resultant it is not a charging instead a machinery section. Whereas, Section ,7 of the STA speaks about determination of tax liability at the time of filing sales tax return under section 26 of the STA, this is as well a machinery section and Section 33 contains penal clauses synonymous to Section 156(1) of the Act and Section 34 speaks about default surcharge to be paid upon contravention and establishing of the charge under charging section. Likewise, 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.3 invoked these. I am speechless, on the competence and wisdom of respondent No. 2. No show-cause notice is permitted to be issued by terming aforesaid section, who are independent and have no nexus with each other . Issuance of show-cause notice, while invoking irrelevant/erroneous sections, renders it void and ab-initio and of no legal effect as held by the superior judicial fora in their judgments reported at Assistant Collector v. Khyber Elec. Lamps 2003 PTD 1275, D. G Khan Cement v. Collector of Customs 2005 PTD 480, Caltex v. Collector (2003) 88 Taxation 128 (Lah), Union Playing Card Company v. Collector of Custom s 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 Consultant/Advocate of the Appellant contended forcefully that respondent No. 2, even otherwise, has no mandate to issue show-cause notice under any sections of STA and ITO in the matter of Sales Tax/Income Tax.
Conversantly , not a single word is available in the comments filed by the respondent supporting the invoking of the provision of STA and ITO, this is tantamo unt to admission that the respondent No. 2 is not empowered to invoke any provision of the STA and ITO for evaded/short paid sales/income tax by virtue of non appointment of Officer of Inland Revenue under the provision of Section 30 of the STA and 228 of the ITO and as such cannot exercise powers under these sections. In the capacity of Officer of Customs. Appointed under Section 3 of the Act. While, issuing show-cause notice in the matter of customs, has to remain within the ambit of Act. 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 inadvertent, 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, by virtue of without power/jurisdicti on as evident from the legal fiction validated by the Superior Judicial Fora and this Tribunal in judgments reported at 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, 2018 PTD (Trib.) 2016 PTD (T rib.) 2463 and 2017 PTD (T rib.) 481 .
6. Now I determine that, as to whether any misdeclaration has been made by the appellant at the time of transmitting GD with the Customs for obtaining clearance of his consignment, for that relevant documents are scrupulously examined and observed that the appellant imported 9000000 pcs weighing to 4725 kgs of shaving blades, each was packed in waxed wrapper and 10 pieces in a packet of paper board, 10 packets in a card and 50 cards in a cartons, cumulative weight of which was 6075 kgs. The documents at no where transpires that the appellant imported 05 items namely blades, waxed wrapper , packet, card and carton . Resultant, appellant transmitted single declaration instead of 05 separate items, those were subjected to examination, which confirmed the declaration in all aspects. Amazingly , the examiner concerned despite not warranted under law reported the weight of the blades with the addition of waxed wrapper , packet, card and carton , which were 6075 kgs and as such increased the weight of the goods to the extent of aforesaid kgs, without reporting any excess quantity either in pieces or weight. With this it is establish that no misdeclaration either in quan tity or weight was made by the appellant. No misdeclaration in material particular has been made by the appellant, invoking of provision of Section 32(1) and (2) of the Act is erroneous and without lawful authority , being stretching he provision beyond its expression for the sake of achieving the desired result based on mala fide having no warrant of law .
7. In order to have clarity , in resolution of the issue, the representative of the respondent No. 1 that as to whether it is not a legal fiction that blades are imported in the condition narrated by the appe llant? Answer was in affirmative.
He was further confronted with the query that in which condition these are sold in the local market? Answer was in packet. Hence, another query was raised that as to whether the seller only charge the price of the blade, not on the essential/non-essential packing, in which those are packed?. Finally , he was asked that as to whether any shop keeper/seller demanded any additional money for the weight of the essential/non-essential packing used for the export of blades or he himself paid any money voluntarily for the weight of the said material at the time of purchasing blades? His reply was in big "NO and added that the cost of those is included in the cost of the blades and weight of essential/non-essential packing is immaterial. I, fail to comprehen d the rationale adopted by the respondents and their subordinates, creation of separate item for the weight of waxed wrapper , packet, card and carton in the absence of availability of 8142857 pieces of blades and assessing those @ US$. 1.20/kg for creation of additional amount of duty and taxes of Rs.304,343.00. The duty and taxes on the waxed wrapper , packets, cards and cartons, if the declaration in regards to import of these items had been made by the appellant separately under the respective PCT headings and on the value if determined by the Director , Directorate General of Valuation under the provision of Section 25A or with the application of identical /similar goods value available in the data reservoir maintained by PRAL under Rule 110 of the Rules. In the absence of no separate declaration for these items had been made by the appellant, no duty and taxes are either to be deposited or can be charged. The respondent No. 1 and his subordinate added the weight of aforesaid packing material in the weight of blades in derogation of the unit of measurement given in First Schedule to the Act, which speaks with clarity about the goods imported, which in the case of appellant are blades without any exception. The agony of the appellant does not ends here as evident from the fact that the subordinate of the respondent No. 1 framed contravention report and forwarded to respondent No. 2 with the allegation that the declared weight of the blades is found to be excess by 4275 kgs i.e. 90.47% despite not. The respondent No. 2 without going through the documents forming the basis of declaration and examination report transmitted show-cause notice in mechanical manner , when the appellant consultant, controverted the allegation, successfully , he ignored those in addition with the question of powers/jurisdiction and passed slip shot and bald order , through which he held the charges as levelled in the show-cause notice established. I am flabbergasted to note that he does not took pain to confront the respondent No. 1 and his subordinates that under which provision of law weight of essential/non essential packing has been added in the weight of the goods and to the fact that whether it is just and proper and legal to charge duty and taxes in the absence of availability of the goods, apparently which are non existent. In the absence of answer to the said query the impugned order would not had been passed by him, which he did and cause d hardship and, financial losses beside multiplication of the agony of the appellant.
8. Notwithstanding to above, as regards to the line of arguments adopted by the representative of the respondents for justifying the proceedings that the weight of essential/non essential packing is deemed to be part and parcel of the weight of the goods so imported and to be construed as UOM /quantity (conte nts) as mentioned against each PCT heading of First Schedule to the Act. It is based on misconception and inapt interpretation of the UOM and in derogation to the First Schedule to the Act which speaks about the contents of the imported goods/items sand weight of essential/non essential packing, which is disposed off, after unwrapping/using the contents of actual goods, as trash. Only the weight of imported goods matters and that is to be construed as goods, the weight of essential/non essential packing, cannot be considered through any figment of imagination as an integral part of the goods so imported. The duty and taxes has to be charged/collected on the goods actually imported for use/consumption of the general public. No provision of the Act, empowers the Officer of Customs to add the weight of essential/non essential packing , the vital element is its cost not weight and this is validated from the provision of Section 25 which speaks about determination of value of the "goods" and "category of the goods" and Section 25A speaks about "goods" and "class of goods" which means the goods so imported and its quantity excluding the weight of essential/non essential packing, which is not for use instead "trash" which cannot be used as goods so imported through any stretch of imagination or definition available in reputed dictionaries of English language. Weight of essential/non essential packing is immaterial. However , addition of cost of essential/non essential packing material in the value of the imported goods is permitted in terms of Serial No. (iii) of clause (b) of subsection (2) of Section 25 of the Act. While determining the value-of imported goods under the concept of "Transaction Value" within the meaning of section 25(1) of the Act, only then when it is confirmed that the importer has incurred that but has not included those in the price actually paid or payable of the imported goods. This means that the onus to prove that the cost of packing whether for labour or essential/non essential packing material is not included by the exporter , rests on the shoulders of the Officer of Customs in terms of Articles 117 and 121 of Qanun-e-Shahadat (10 of 1984), unless it is not proved through tangible incrimina ting evidence, the cost whether for labour or essential/non essential pack ing material is not permitted to be added under law. The representative of the respondents also laid emphasis on Serial No. (ii) of Clause (b) of subsection (2) of Section 25 of the Act., which read as "the cost of container which are treated as being one for customs purpose with the goody in question". This is in consonance with the illustration made in Rule 5(a) of General Rules of Interpretation, i.e. for the purpose of classification and valuation items listed therein or akin to those are to be treated as integral part of the goods so imported To the, contrary , the goods imported by the appellant are not in any manner akin to those, resultant, stand excluded from Serial No. (ii) of Clause (b) of subsection (2) of Section 25 ibid. Notwithstanding, when against any imported item a ruling is in field issued by Director , Directorate General of Valuation under Section 25A of the Act, for levy of custom duty, he determines those to the extent of unit as given in the respective applicable PCT of First Schedule on C&F basis , meaning thereby in the said custom value every single element/expense is taken into consideration by him i.e. "cost" not "weight " which is immaterial due to the fact that the essential/non essential packing or akin receptacle, in which goods or item products are packed or filled are to be thrown after use of the contents in the garbage bin as trash. In the instant case the item so imported namely blades is subject to assessment for levy of duty and taxes with the application of identical similar value as contemplated in Section 25(5)(6) and Rules 117 and 118 of the Act/Rules maintained by the PRAL under Rule 110 of the period given in Rule 107(a) of the Rules, on the net contents of the goods as weight of essential/n on essential packing cannot be made part and parcel of assessable weight, if i.e. allowed to be added, being in derogation of the norms of business, WTO Agreement on Valuation and provision of Section 25 of the Act, above all "extortion". No commodity is sold without its essential packing and while a seller offering the goods for sale includes the incidental charges in its final cost. In juxtaposition an importer/buyer will also not lift the imported goods without its essential packing.
The value of essential/non essential packing is in fact inbuilt in the custom value determined under section 25A of the Act, after following the method laid down in Section 25 ibid. Therefore, valuatio n determined under section 25A could not be further saddled in the name of weight of essential/non essential pack ing. It is apparent that the value of identical/similar goods is on C&F basis of the net contents of the goods so impo rted, in which addition of weight of essential/non essential packing is not supported by warrant of law. If it allowed as opined by the respondents for generating revenue for the exchequer on that weight containing no goods. In terms of the respective PCT Heading of the First Schedule, duty and taxes can only be recovered on the net contents of the imported goods.
Essential/non essential packing cannot be construed as goods by any mean and as defined in Section 25 and First Schedule to' the Act, without supplying the goods equivalent to the added weight, in addition to the imported goods declared in GD transmitted under the Provision of Section 79(1) and Rule 433 of the Act/Rules . In the instant case, the respondents desires to collect duty and taxes of Rs. 304,343.00 on 4275 kgs valuing to US$ 5130.00 on the weight of essential / non-essential packin g in the absence of availability of 8142857 pieces of blades. This type of generation of revenue is in derogation of the provision of Section 25 of the Act, and Article 13 of Constitution of Islamic, Republic of Pakistan and without any exception is "extortion" E and to be construed as double taxation not permitted under the Act /Constitution of Pakistan and even of the world and the law laid down in reported judgments 1992 PTD 593, 2003 PTD (Trib.) 928, 2010 PTD 1515 and 2009 PTD (Trib.) 2025. (Emphasis supplied)
9. For the foregoing deliberation/observation and in the light of prescribed law laid down by the Superior Judicial Fora and in adherence of the ratio decidendi , we hold that the appellants have been dragged needlessly in the litigation in the absence of any wrong doing or misdeclaration within the meaning of Section 32 of the Act and allow the appeal and the show-cause notice providing the basis thereof for impugned order are hereby vacated /set- aside with no order as to costs. The respondent No. 1 is ordered to issue delay and detention certificate as contemplated in section 14A(2) of the Act in duplicate to the appellant No. 1 for submission with the Shipping Company and Terminal for refund of paid accumulated container detention/rental and terminal demurrage/storage charges for obtaining delivery after issuance of interim order by this Tribunal.
10. Order passed and announced accordingly .