JAHANZAIB WAHLAH, MEMBER JUDICIAL-III .----By this single order I intend to dispose of the aforementioned
(17) identical Customs Appeals filed by the appellant against Order-In-Original .No.274/2017-18 dated 22.12.2017, Order-in-Original No.271/2017 dated 22.12.2017, Order-in-Appeals Nos.807 to 808 /2017 dated 15.12.2017, Order-in-Appeals Nos.959 to. 965/2018 dated 01.3.2018, Order-in-Original No.270/2017-18 dated 12.12.2017, Order-in-Original No.275/2017-18 dated 12.12.2017, Order-in-Original No.268/2017-18 dated 12.12.2017, Order- in-Original No.269/2017-18 dated 12.12.2017, Order-in-Original No.267/2017-18 dated 12.12.2017, Order-in- Appeal Nos.1056 to 1057/2018 dated 03.04.2018, Order-In Appeal No.277/2017-18 dated 22..12.2017, Order-in- Original No.273/2017 dated 22.12.2017, Order-in-Original No.276/2017-18 dated 22.12.2017 and Order-in-Original No.278/2018 dated 12.12.2017 passed by Collector of Customs (Appeals / Adjudication-II), Karachi. All these appeals have identical issues of law and facts and are thus being heard, dealt with and disposed off simultaneously through this single consolidated judgment in the light of judgment of Hon'ble High Court of Sindh in Customs Reference No.157/2008 (S.M. Naqi son of Syed Muhammad Hussain Karachi v. Collector of Customs (Adjudication-I) and others Karachi).
2. Since these 17 appeals are based on similar facts and question of law therefore, it is needless to reproduce facts of each case separately , hence for reference the fact of the Appeal No. K-234 are taken in to consideration for decision. Brief facts of the case as reported by Model Customs Collectorate (Appraisement-East) Custom House Karachi vide contravention report that M/s. Goodwill Traders had imported 2 consignment declared to contain of Polyester Shirting fabric from China vide BL No.NGPKHI12/0077 dated 11.05.2012, NGPKHI12/0067 dated 20.04.2012 and GDs No. KCSI-HC-63419 dated 14.05.2012 filed through SSJ Brother (Clearing Agent CHAL 1772) and KCSI-HC-63906 dated 24.04.2012 filed by self-declarant i.e. M/s. Good Will Traders without clearing agent.
The above referred Bill of Lading (BL) had the name of shipper as Ziang Niong Corporation, "Ningbo" China, consignee as Goodwill Traders Karachi and Port of Lading as "Ningbo" China the same was declared in the aforesaid declaration (GD). The MCC-Appraisement East Karachi has initiated investigation after receipt of information about fraudulent use of Switch Bill of Lading by freight forwarder / co-loader . The investigation which reveals that Messrs United Marine Agencies Karachi, the shipping agent of the concerned shipping line Messrs Hyundai Merchant Marine Company Ltd. provided Master Bill of Lading of the subject consignment which confirms that consignor name is Messrs AMI Middle East LLC Dubai, UAE and consignees name as AMI Pakistan (Pvt.) Ltd.
Karachi, both were freight forwarder . Messrs AMI Pakistan (Pvt.) Ltd. Karachi being freight forwarder / co-loader was supposed to issue House Bill of ladin g (HBL) as according to the contents of the Master Bill of Lading (MBL) of the aforesaid consignment. However , Messrs Good Will Traders, managed House Bill of Lading fraudulently with ulterior motive showing the consignor as M/s. Ziang Niong Corporation, Ningbo, China and consignee as M/s. Goodwill trader and port of loading as "Ningbo " instead of Dubai, UAE with the active involvement of the freight forwarder Messrs AMI Pakistan (Pvt.) Ltd. Karachi and clearing agent Messrs Shahrukh Jamal Owner of Messrs UHL Company .
3. It was alleged that the subject consignm ents were actually imported from UAE, Dubai instead of China as shown in Master Bill of Lading, hence Messrs Goodwill Traders Karachi, the freight forwarder and the clearing agent SSJ Brothers Karachi allegedly mis-declared the Port of Shipment of the goods Ningbo China as against the actual Port of shipment Dubai UAE and shipper name is M/s. Ziong Niong Corporation instead of Messrs AMI Middle East LLC Dubai, UAE to hoodwink the Customs Authorities and got cleared Fabric of Indian Origin which was otherwise banned as per Appendix-G to the Import Policy Order . They also uploaded the said fake / forged Bill of Lading and other documents in WeBOC System in respect of the subject consignments and also circumvented the condition of the Public Notice No.08/2007 A dated 12.03.2007 issued to streamline the clearance of consignment of Polyester Fabrics imported from UAE. The depart ment further alleged that the importers Messrs Goodwill Traders thus managed in the above manner fraudulen t manipulation tempering in the shippers name, and port of lading in the IGM, BL and other import documents to avoid application aforesaid requireme nt on their consignment. It is establish beyond any shadow of doubt that goods were neither imported from china nor made from china as claimed by the importer . On the other hand documentary evidences obtained from the freight Forwarder Messrs AMI Pakistan (Pvt.) Ltd. include copies of export declaration (EDs) made before the Customs Authorities of UAE which invariably show the origin of goods as India of the imported consignment and also the record of the emails relating to the consignments and payment of Bills of Messrs AMI Pakistan (Pvt.) Ltd. Karachi which indicate that actual Master Mind of the whole scheme was Shahrukh Jamal partner of the cleari ng agency of M/s. SSJ Brothers CHAL No.1772 and owner of Messrs UHL Company 3140, Arkay Square, New Challi Sharah-e-Liaquat Karachi who are in the direct liason with the concerned persons / quarters of the shipping forwarding agent Messrs AMI Pakistan (Pvt.) Ltd. He on his behalf of the importer had not only obtained the House Bill of Lading every false particulars as per desires but was also facilitated by Messrs AMI Pakistan (Pvt.) Ltd. by feeding false particulars in the manifest (IGM) and got cleared the Indian origin fabric which was otherwise not importable in terms of the said IPO condition. The offending value of the consignment have been ascertaine d to the Rs.15,891,093/- and assessed duty and taxes to the tune of Rs.3,673,863/-.
4. The Importer Messrs Goodwill trader , the freight forwarder (Co-loader), Messr s AMI Pakistan (Pvt.) Ltd. 10th Floor Business Plaza II Chundrighar Road Karachi, Messrs Shahrukh Jamal Partner company of Messrs SSJ Brothers (CHAL No. 1772), Messrs United Marine Agencies (Pvt.) Ltd. were asked to Show-Cause for being allegedly guilty of offences within the meaning of Sections 16, 32(1) clauses (a), (d) and (e) of subsections (1) and
(2) and Section 32(A), Sections 43, 79 (1), 155D, 1551, 155K, 207 and 209 of the Customs Act, 1969 punishable under clauses 9, 14, 14-A, 23 (ii), 45, 77(i), 88, 90, 101 and 103 of section 156 ibid.
5. The learned Adjudicating Officer vide Order-in-Original No.274/2017 dated 22.12.2017 held that the charges against the appellant are established. The operative part of the impugned order read as under: "I have examined the case record i.e. Contravention Report: replies received from respondents, para-wise comments of department, rejoinders on comments filed by respondents and have carefully considered all the written and verbal arguments put forth by both side. The case basically revolves around following three main issues:- (a) Submitting forged / fake documents having false particulars, mis-declaring the vital information with regard to shipper name, port of loading through incorporating the same in IGM and issuance of house bill of lading with wrong information. (b)Bringing banned goods vide Appendix-G to the Import Policy Order in vogue i.e. Indian Origin Fabric. (c) Determining the role of importer , clearing agent freight forwarder , shipping line and Mr. Sharjeel Jamal. SUBMITTING FORGED / FAKE DOCUMENTS HAVING FALSE PARTICULARS, MIS-DECLARA TION THE VITAL INFORMA TION WITH REGARD TO SHIPPER NAME POR T. OF LOADING THROUGH INCORPORA TING THE SAME IN IGM AND ISSUANCE OF HOUSE BILL OF LADING WITH WRONG INFORMA TION : This issue is very clear as the department has got copies of Master Bill of lading pertaining to instant consignments wherefrom, it has been confirmed that the aforesaid consignments were actually shipped from Dubai UAE, showing consignors name as Messrs AMI Middle East LLC Dubai UAE and consignees name as Messrs AMI Pakistan (Pvt.) Ltd..
Karachi both were freight forwarders. The freight forwarder was supposed to issue house Bill of Lading in accordance with the contents of the Master Bill of Lading but Messrs. AMI Pakis tan (Pvt.) Ltd. Karachi on illegal permission granted by the shipping agent, electronically filed Import General .Manifest (PGM) and fed incorrect information with regard to port of shipment / origin of the goods and issued House Bill of Lading by mentioning fake name of shipper as Messrs Ziang Niong Corporation Ningbo China beside port of loading as Ningbo, China was also mentioned against the actual port of shipment as Dubai, UAE. The GD, prepared by importer / clearing agent also carried these false entries. Therefore, submission of false information / mis-declaration with regard to shipper name, port loading and subsequent issua nce of false house bill of lading is proved and no one challenged this act of mis-declaration. BRINGING BANNED GOODS VIDE APPENDIX-G TO THE IMPOR T POLICY ORDER IN VOGUE I.E. INDIAN ORIGIN FABRIC The department has produced documents including export documents from Dubai mentioning Indian Origin Fabric in certain cases which shows that the above described and proved mis- declaration was made in order to bring Indian Origin Fabric in guise of Chinese Fabric. However , this charge is only established in those cases where depart ment has provided export documents found, from the computers of the Messrs AMI Pakistan. The Departmental Representative in the hearing agreed that in certain cases goods brought were not banned. DETERMINING THE ROLE OF IMPOR TER CLEARING AGENT , FREIGHT FOR WARDER SHIPPING LINE AND MR. SHARJEEL JAML : The role of importer , clearing agent and 'freight Forwarder is very clear in above two violations. The mis-declaration / providing false information to the Customs was not possible without a role by importer , clearing agent and Freight Forwarder . However , the mala fide of shipper cannot prove as it was bound to provide the details of Master bill of Lading to its freight Forwarder / co-loader . As for as role of Mr. Sharjeel Jaml is concerned the word of Master Mind is not defined in the Customs Act, 1969 and this forum has to adjudicate the matter under this Act. However , it is clear that Mr. Sharjeel Jamal, in all cases is either importer or clearing agent or partner in both. Moreover , Mr. Sharjeel Jamal also pleaded the case on behalf of all the importer / clearing agent and no one else appeared. This give credence to the point that he has a role in mis-declaration / clearance of all the goods Declaration (GD's)/Consignment in different capacities. The criminal liability is to be investigated and placed before the right forum i.e. Special Judge. Therefore, in light of above discussion, the charge of mis-declaration/providing false information to Customs is established. However in accordance with the given information by the department during proceeding the goods brought in this case were not banned at the time of import. Accordingly a penalty of Rs. 1000,000/- (Rupees Ten Million only) is imposed on the importer Messrs Good Will Trader (NTN 143804-7) Shop No.81 Bahadur Shah Market MA Jinnah Road Karachi for violation of Sections 16, 32(1) clauses (a), (d) and (e) of subsection (1) and subsection (2) of sections 32(A), 43, 45, 79(1), 155D, 155I, 155K, 207 and 209 of the Customs Act, 1969 punishable under clauses 9, 14, 14A, 23(h), 45, 88, 90, 101 and 103 of the Section 156(1) ibid read with clause 11-C of the Section 33 of the Sales Tax Act, 1990 and Imports and Exports (Control) Act, 1950 further read with Appendix G to the Import Policy Order , in vogue. Mr. Arif Humayon of Messrs AMI Pakistan was also found involved in the offence and was cited as accused person along with manager of the company Mr. Noman Rauf in investigation report. Therefore, a penalty of Rs.1,000,000/- (Rupees One Million Only) imposed on each employee namely Mr. Arif Humayoon and Mr. Noman Rauf both employees of the agent / co-loader , Messrs AMI Pakistan (Pvt.) Ltd. for their involvement in issuance of forged house bill of lading in the instant case and for violations of provisions of Sections 16, 32(1) clause (a) (d) and (e) of subsection (1) and subsection (2) of 32(A), 43, 45, 79(1), 155D, 155K, 207 and 209 of the Customs Act, 1969 punishable under clauses 9, 14, 14A, 23(ii), 45, 88, 90, 101 and 103 of the Section 156(1) of the Customs Act, 1969 read with clause 11-C Section 33 of the Sales tax Act, 1990 and Imports and Exports (Control) Act, 1950 further read with Appendix G to the Import Policy Order , in vogue. The recovery and payment of this penalty shall be made by Messrs AMI Pakistan. As far as the role of the clearing agent in the subject case is concerned, it is observed that under the Customs Act, 1969 he acts on behalf of the principal for all the purpose of the Act and cannot be absolved of all responsibility other than merely scanning the documents delivered by the principal / importer . He is required to make a true statement / presentation to Customs after analyzing all aspects of the Goods Declaration and the documents delivered to him by his principal. In case mis-declaration is proved, the clearing agent has to be penalized along with the principal / importer . A penalty of Rs. 2,000,000/- (Rupees Two Million only) is imposed on Messrs UHL Company Office 3/40 Arkay Square, New Challi Shahrah-e-Liaquat Karachi and Messrs SSJ Brothers (CHAL 1772) clearing agents to be recovered from owner / partner including Mr. Shahrukh Jamal for violation of Sections 16, 32(1) clauses (a) (d) and (e) of subsection (1) and subsection (2) of sections 32(A), 43, 45, 79(1), 155D, 155I, 155K, 207 and 209 of the Customs Act, 1969 punishable under clauses 9, 14, 14A, 23(ii), 45, 88, 90, 101 and 103 of the Section 156(1) ibid read with clause 11-C of the Section 33 of the Sales Tax Act, 1990 and Imports and Exports (Control) Act, 1950 further read with Appendix G to the Import Policy Order , in vogue".
6. Feeling aggrieved and dis-satisfied with the Order-in-Original No.274 dated 22.12.2017 the appellant filed an appeal before the Customs Appellate Tribunal Karachi in terms of Section 194-A of the Customs Act, 1969 on the following grounds that the impugned order is illegal and unlawful, same has been issued on the presumption basis and hypothetical basis. The Show-Cause Notice as issued on 25.10.2016 whereas case was adjudicated and impugned order was issued on dated 22.12.2017 i.e. after the expiry of 120 days as mandatory stipulated under subsection (3) of Section 179(1) of the Customs Act, 1969. As such impugned order is time barred, same is liable to be set-aside on this ground only. The subject goods i.e. fabric are classifiable under PCT Heading 5407.5200 which is freely importable from India as envisaged vide Appendix-G of the IPO. The consignments were released vide GDs filed in 2012 whereas show-cause notice was issued on 25.10.2016 i.e. after the expiry of 4 years, whereas same were required to be issued within three years as stipulated under Section 32 of the Customs Act, 1969. As such impugned order is time barred liable to be set-aside. The Respondent No. 1 issued Show-Cause Notice alleging that the appellant is Master Mind of whole mis-declaration. However the role of the master mind had not been defined in the Show-Cause Notice. The show-cause notice is silent about the direct in the commission of offence, subsequently the appellant appeared before the Respondent No.1 and furnished reply letter and also attended the quasi-judicial proceeding and controverted each and every allegation and also the provision of Section of the Customs Act, 1969 were vigorously defended. The Respondents Nos.1 and 2 failed to produce documentary evidences in order to estab lish the offence, despite of fact the Respondent No.1 did not furnish the basis of huge penalties, no any concrete evidences was incorporated in the impugned order . As such the impugned order is defective, same is not sustainable / maintainable and liable to be set-aside on this ground only. It is settled law when any evidences / documents were not part of the Show-Cause Notice and beyond Show Cause Notice and it is a principle of law that none can be permitted to pitch a case beyond Show Cause Notice [Reliance is place upon 1987 SCMR 1840 ]. The import and export is being gover ned under the law of the land i.e. country , the appellant, is bound to act as per the provision of the Customs Act, 1969, how the declaration of the other country can be imposed upon the appellant when the goods are already out of charged and after conducting the Physical Examination by the Customs Functionary and after assessment of goods. [No further action can be taken at this stage. Reliance is placed upon PLD 1991 SC 630 ].
7. There is no loss of revenue, where there is not evasion of taxes where there is no fiscal consequences, no mis- declaration, section 32 does not applicable where there is no involvement of legitimate revenue, no evasion no un true declaration [Reliance is placed upon Hon'ble High Court vide Citation PLD 1996 Kar. 68 which reflects that "Where there can be no motive to evade taxes, his declaration / statement cannot be false / untrue therefore no penalty is leviable [Messrs Kamran Industries v. Collector of Customs (Export) Karachi 2004 PTD 2977 ]. The Respondent No.1 alleged the violation of Section 16 of the Customs Act, 1969 upon the appellant about the importability of the goods. The case is of import trade violation are being dealt and adjudicated by the clearance Collectorate not by the adjudication Collectorate as such the matter do not fall within the ambit of the Respondent No.1, beside the applicability of section 32(1) of the Customs Act, 1969 which does not come within the jurisdiction of the Collector of Customs (Adjudication ), Karachi as envisaged vide SRO 371(1)/2002 dated 15.06.2002 as an appropriate officer as conferred upon him under clause (b) of Section 2 of the Customs Act, 1969 as regard to the applicability of the Section 32(2) of the Customs Act, 1969. An element of collusion with the customs official is required, since the ingredient like collusion is missing, no documentary evidences produced in support of the allegation, therefore section 32(2) is also not applicable. As such impugned order is not maintainable / sustainable liable to be set-aside. The Respondents Nos.1 and 2 has also erred in law by invoking Section 32-A of the Customs Act, 1969. The Section 32(A) of the Customs Act, 1969 fiscal fraud i.e. in Urdu Fiscal Fraud (Maali Fraud). In order to invoke Section 32(A) fiscal fraud there must be ingredient of fiscal consequences i.e. involvement of revenue.
When there is no loss of revenue, then section 32 cannot be invoked. Besides the show-cause notice was not issued within 180 days from the date of deduction, the Show-Cause Notice has been issued after 180 days as such impugned order is not maintainable / sustainable liable to be set-aside. As regard to the section 45 of the Customs Act, 1969, the appellant has neither put any signature on the contents of IGM nor produced any false manifest at his own level to get clear the goods. The Respondent No.1 has erred in law by invoking sections 79(1), 155D, 1551, 155K, 207 and 209 of the Customs Act, 1969 illegally and unlawfully . When the appellant has not contravened the aforesaid provisions of the Customs Act, 1969, therefore no penal clause could be invoked against the appellant under clauses 9, 14, 14A, 23(ii), 24, 45, 88, 90, 101 and 109 of Section 156(1) of the Customs Act, 1969 read with clause 11(c) subsection (33) of the Sales Tax Act, 1990 and Import and Export Control Act, 1950 further read with Appendix-G of the IPO. It is settled law that when goods are out of charged after the payment of leviable duty and taxes, that particular incidence then become the past and closed transaction. Therefore, if any illegality has come on the surface, the matter should have been re-opened by the concerned Collector by exercising his power under section 195 of the Customs Act, 1969, as the impugned case has not been re-opened, therefore the impugned order is illegal and unlawful. How the re-determination of origin can be made in absence of case property , when consignment is out of Customs Control and out of charged. As regard to applicability of section 16 of the Customs Act, 1969, the impugned item is being importable as per Appendix-G as such there is no any prohibition or restriction, beside 32, 32A of the Customs Act, 1969 are also not applicable. The appellant had neither delivered false documents nor any false statement to Customs Authority , beside element of collusion is missing, therefore no penal clause unde r subsection (14) of Section 156(1) of the Customs Act, 1969 could be invoked against the Appellant. The imposition of penalty of an amounting to Rs.2,000,000/- on Messrs SSJ Brothers clearing agent (CHAL No.1772) is illegal and unlawful, same is not sustainable / maintainable liable to be remitted.
8. The learned counsel for the appellant stated that in Customs Appeals Nos.K-236/2018, K-229/2017-18, the appellant is neither Importer nor clearing agent. The Adjudication Authority has imposed a penalty of Rs .3000,000/- upon appellant vide Order-in-Original No.271/2017-18 dated 22.12.2017, Order-in-Original No.270/2017 dated 22.12.2017 on the basis of role of clearing agent when appellant is not infact a clearing agent who has not transacted any business and filed Goods Declaration. The impugned order do not establish the mens- rea, hence no basis of imposition of penalty has been indicated shown vide Order-in- Original. As such in Customs Appeal No.K-204/2018 against Order-in- Appeal No.807 to 808/2017 dated 15.12.2017 against Order-in-Original No.215 of 2016-2017, - thereby imposed a penalty of Rs.200,000/- upon clearing agent (appellant). The appellant is neither importer nor clearing agent, who has not filed Goods Declaration, when appellant is not a clearing agent than Adjudicating Authority has imposed penalty without any basis, even Order-in-Original do not reflect the element of "Mens rea". As regard to Customs Appeal No.K-605/2018 dated 02.06.2018, K-606/2018 dated 02.06.2018 against the Order-in-Appeals Nos.1056 to 1057/2018 dated 03.04.2018, the Order-in-Original No. 292 of 2017 dated 05.09.2017 thereby imposi ng Rs..500,000/- (Five lacs) each upon clearing agent. The appellant has not filed GD than there is no basis of imposing a penalty .
9. No cross objection under subsection (4) of Section 194-A of the Customs Act were filed by the department. Only in Customs Appeals Nos.K.605/2018 and K.204/2018 the parawise comments were filed wherein mostly contended that the Order-in-Original passed by the Collector of Customs (Adjudication) Karac hi is well within the ambit of law and passed after scrutiny as per record. The DRs prayed for the dismissal of the appeals in the interest of justice
10. I have examined the case record and considered rival submissions put forth from both sides during the course of hearing. The case of the department against the appellant is that subject consignments of Ladies Shirting Polyester Fabric under PCT Heading 5407.5200, was actually shipped from Dubai UAE instead of Ningbo China as declared in the IGM and House Bill of Lading provided by the freight forwarder/co-loader namely , Messrs AMI Pakistan (Pvt.) Ltd. According to the Respondent / department goods of Indian origin were actually imported./ shipped through Dubai based freight forwarders / co-loaders Messrs AMI LLC Middle East, UAE as consignor vide AMI Pakistan (Pvt.) Ltd. were shown as consignee in the Master Bill of lading issued by the shipping company .
Department, therefore, resorted to make contravention against the importer , clearing agents, shipping agency and freight forwarders framing thereby inter alia following charges (i) violation of Appendix-G read with Section 16 of the Customs Act, 1969 further read with relevant clauses 9, 14, 14A, 23(ii), 45, 77(i), 88, 90, 101, 103 of the Section 156(1) ibid. read with 11(c) of Section 33 of the Sales Tax Act, 1990 and Import and Export Control Act 1950 (ii)
Mis-declaration under section 32(1) clause (a) (d) and (e), 32(2) of the Customs Act, 1969 (iii) Fiscal fraud under Section 32A of the Customs Act, 1969 (iv) Contravention of Section 79(1) of the Customs Act, 1969 (v) Section 155D, 155I, 155K, of the Customs Act, 1969 (vi) Violation of Section 207 and 209 of the Customs Act, 1969.
Subsequently , the Learned adjudicating officer Karachi and the Adjudicating officer vide Order-in-Original concluded that Shahrukh Jamal owner of SSJ Brothers Messrs AMI Pakistan (Pvt.) Ltd, are the guilty of offence within the meaning of Sections 16, 32, 32A, 43, 45, 79(1), 155D, 155I, 155K, 207 and 209 of the Customs Act, 1969 punishable under clauses 9, 14,14A, 23(ii), 45, 77(1), 88, 90, 101 and 103 of the Section 156 ibid. You are directed in the Order-in-Original (i) Messrs Goodwill Traders Karachi [Importer] to deposit penalty of Rs.10,000,000/- penalty . [Ten Million](ii) Mr. Arif Humayun of Messrs AMI Pakistan along with the manager of the company Messrs Nauman Rauf [Employee] Rs.1,000,000/- each.(iii) Messrs SSJ Brothers (CHAL No.1772) clearing agent from Owner / partner including Mr . Sharukh Jamal Rs.2,000,000/- [T wo Million]
11. The appellant however denied all the charges and contended that imported goods are of Chinese Origin. The relevant import documents including House Bill of Lading provided by the Freight Forwarder reflected port of shipment as Ningbo China. Appellant further contended that as per documents and relevant IGM filed by the shipping agent of the carrier , there was no reason to suspect the shipment and also contended that even Ladies Shirting Polyester Fabric classifiable under PCT Heading 5407.5200, is also freely importable from India as per Appendix G. There is no restriction / cond ition in relevant Import Policy Order . The appellant vehemently denied the allegation of connivance with the shipping company / agent or freight forwarder for managing Switch bill of lading and stated that he has nothing to do with the issuance of Bill of Lading or filing of IGM which is sole responsibility of shipping agents. Appellant further contended that under reference consignment of Ladies Shirting Polyester Fabric was duly examined by customs staff at the time of Import and no controversial aspect in respect of description, quantity , weight and origin was observed and reported and such consignment was released after assessment and payment of leviable duties and taxes. Further appellant contended that creation of contravention report on past and closed transaction on wage charges of violation of IPO as the fabric of the catego ry imported got classified under PCT Heading 5407.5200 even otherwise not banned for import vide Appendix-G of IPO. Since goods were cleared after examination and verification of description, weight, origin etc. the allegatio n of mis-declaration are totally baseless and presumptive not being supported with any cogent evidence. As regard the feeding of incorrect of IGM or House Bill of Lading, the issue pertains to the shipping company , its agent and freight forwarders for which necessary course is available under the provision of Sections 43 and 45 of the Customs Act, 1969, read with relevant licensing Rules. It was also put forth by that past and closed transaction where goods are cleared by customs with due care and diligence after examination, assessment and payment of assessed duties and taxes, cannot be re-opened on the vague plea of violation of IPO, when such goods are no more under the Customs control for outright confiscation. Appellant also stated that he was punished unhear d. The appellant also contended that as per SRO 886/2012 dated 18.07.2012 para-3 (d) the cases involving technical violation of Import and Export Restriction without the involvement of any evasion of duty and taxes were required to be dealt by the respective Collectorate rather than Collectorate of Customs (Adjudication) Customs House Karachi. As such the Collector of Customs adjudicated the matter without his jurisdiction.
12. DR appearing on the behalf of the respondent Collectorate retreated the same arguments and same stance as took in the contravention report, show- cause notice and impugned Order-in-Original. He also admitted that although phenomena of switch bill of lading and re-routing of fabric consignment through UAE cannot be ruled out, there have been very few cases made by Collectorate against shipping companies, shipping agents or freight forwarders during the last decade until January 2016, when investigation were formally initiated in this regard through scrutiny of previous clearances. On query whether any delinquent shipp ing company , shipping agent or freight forwarder responsible for incorrect information in IGM or Bill of Lading was previously blacklisted or their licenses revoked or ever prosecuted, we are replied that he had no knowledge in this regard. However , he admitted that penalty envisaged under relevant penal clauses 23 and 26 of Section 156(1) of the Customs Act, 1969 for violation of Sections 43 and 45 are of nominal nature without prosecution mandate, hence with the exception of the imposing such penalties, no other action can be taken against them. The consignments of fabric are still being imported from UAE, however clearance Collectorate is being releasing same regularly. It was further admitted by the DR that no action was taken by the department against the officers / official involved in examination, assessment and clearance of any of the impugned consignments. DR also confirm ed that there was no evasion of duties and taxes in all these cases and contended that appellant has manipulated the documents and imported the Indian Origin Fabrics.
13. It is observed that the Collectorate has allowed the clearance of the consignment after physical examination, assessment and after thorough scrutiny and verification collected the duty and taxes since 2012, the Collectorate allowing the release of such consignments as per BL and now on the other hand resorting to initiate proceeding in such past and closed transaction on the basis of violation of Appendix-G of the IPO, besides the goods are not the under the custody of the customs and same were already cleared out of charge after proper examination of goods and assessment under Sections 80 and 83 of the Customs Act, 1969.
14. The assessed duty and taxes amounting to Rs.3673,863/- in these consignments, this amount is actually paid up amount in both GDs KCSI- HC-63419 dated 14.05.2012 and KCSI-HC-63906 dated 24.04.2012. As such there is no any evasion of taxes. This fact was also confirmed by DR during hearing. The GDs also confirmed that imported fabric was of PCT Heading 5407.5200 which was not on the banned list and imported from India. The payment of duty and taxes has already been paid as shown vide impugned Order- in-original and import of fabric of HS classification importable from the India which strengthens the fact and demolishes the whole basis of Show- Cause Notice and subsequent construction of the Impugned Order-in-Original.
15. The perusal of the whole record of the appeals placed before this forum which confirms that assessed duty and taxes has already been paid before the issuance of the show cause notice and also passing of the impugned Order . Hence in all these cases there is no any evasion of taxes, no amount is recoverable from the appellants, importers or clearing agents.
16. As regard to five Customs Appeals Nos.K-236/2018, K-229 / 2017-18, K-204/2018, K-605/2018 dated 02.06.2018, K-606/2018 dated 02.06.2018 wherein appellant is neither importer not clearing agent, who has not transacted any business and filed Good Declaration the impugned order do not establish the element of mens-rea hence no basis of imposition of penalty has been indicated vide Order-in-Original and Order-in-Appeals.
17. The Hon'ble Supreme Court of Pakistan in the case Collector of Customs (Exports) and another v. R.A Hosiery Works (2007 SCMR 1681) while relying on (i) Kamran Industries v. The Collector of Customs (Export) Karachi and 4 others PLD 1996 Kar. 68 (ii) Messrs Al-Hamd Edible Oil (P) Limited and others v. Collector of Customs and others 2003 PTD 552: (iii) Pakistan v. Hardcastle PLD 1967 SC 101 (iv) Finest Corporation v.
Collector of Customs PLD 1990 Kar. 338 rel." Has held that "There can be no room for doubt that the provisions of Section 32(1) of the Customs Act will be attracted only when a mis-declaration or misstatement is made with a view to obtain illegal gain by evasion of payment of customs duty and other taxes or by causing loss of government revenues. The mis-declaration alleged to have been in this case was neither for evasion of payment of customs duty or other leviable taxes/charges nor occasioned any financial loss to the government. While reaching above conclusion, the Hon'ble Supreme Court of Pakistan has upheld the following observation of learned Single Judge of the Hon'ble High Court recorded in the judgment impugned before the Hon'ble Supreme Court of Pakistan.
"The next arguments, however , deserves mere serious consideration. It had been argued by learned counsel that no penalty under Section 32 can be imposed unless it was shown that the mis-declaration was made to avoid payment of public revenues in this context learned counsel relied upon the observation of Kamran Industries v.
The Collector of Customs (Export) Karachi and 4 others PLD 1996 Kar. 68 and the more recent pronouncement, in Messrs Al-Hamd Edible Oil (P) Limited and others v. Collector of Customs and others 2003 PTD 552 to the following effect;- "A bare reading of the section clearly indicates that it relates to a situation where a person makes any statement or files any documents which is false in any material particular by reason of which any duty or charge is not levied or is short levied or is refunded. In such event, the Customs Authority is empowered to issue to the person concerned a notice to show cause notice why he should not pay the loss of revenue suffered by the Department and after giving him a hearing besides ant other action under law, order payment of the same, if a case is made out. The entire provision revolves around the central point of loss of revenue suffered by the Customs Department on account of the conduct of any person. Mr. Iqbal has not urged that the Depart ment has suffered any loss on account of the conduct of the appellants. The question of applicability of Section 32 in the present circumstances apparently does not arise".
18. The contention raised before the learned Single judge of the Hon'ble Sindh High Court by the petitioner was that Section 32 of the Customs Act did not make any distinction between mis-d eclaration with the intention to defraud or cause loss or a simple mis-declaration. In other words the arguments was-that no mens rea on the part of the person making mis-declaration was required to be established and in support of the above proposition reliance was placed on the cases of Pakistan v. Hardcastle PLD 1967 SC 101; Sikandar and Brothers v.
Government of Pakistan PLD 1986 Kar. 3783 and Finest Corporation v. Collector of Customs PLD 1990 Kar.
338. The above contention raised on behalf of the petitioners was not accepted by the Sindh High Court on the ground that an amendment/modification in Section 32(1) of the Custom Act, 1969 was made through the Federal Laws (Revision and Declaration) Ordinance, 1981 which amended / modified Section 32(1) of the Customs Act, 1969 whereby to attract the penal provision of this section the person guilty of mis-declaration on non- misdeclaration ought to have made the same with knowledge or belief that such statement was false in any material particular . It was also pointed out that in the afore-cited case relied upon by the learned counsel for the petitioners the mis-declaration had resulted in evasion of payment of the customs duty which was due and payable, therefore, ratio of the judgments in the cited cases would not be applicable as in the case in hand admittedly no evasion of payment of customs duty or no financial loss had been caused to the Government. It will also be advantageous to reproduce the relevant passage from the judgment of Sindh High Court dealing with the provisions of Section 32(1) of the Customs Act under;- "It may also be mentioned that apart from the statutory change mentioned above section 32 does not merely contain punitive provision basically it deals with recovery of duties and charges payable to the exchequer either on account of fraudulent acts of persons liable to pay or through errors of customs officials as is evident from a reading of clauses (2) (3) (3-A) and (4). Moreover clause (1) requires that the untrue statement must be made in connection with any material of customs and should be fall in any material in particular . A harmonious reading of the entire section tends to show , that it does not cover every untrue declaration having nothing to do with evasion of customs duty or other charges but such statements must indicate an attempt to defraud public revenues.
In view of the admitted position that the fact whether the goods exported consisted of Cotton or Cotton Blended with Polyester did not attract any export duty or duty drawback. I am of the view that Section 32 was not attracted"
19. The ratio decendi from the above coated cases decided by the Hon'ble Supreme Court of Pakistan squarely price applies in the instant cases, where all these legitimate duty assessed same has been deposited voluntarily by the importer (appellant). At the time of filing of Goods Declaration and goods were accordingly out of Customs Charge and there was no any evasion / short payment of duty and taxes, therefore there is no question applicability of Section 32 of the Customs Act, 1969. In absence of any evasion of duty and taxes there is no question of applicability of Section 32(A) (fiscal fraud) in instant cases.
20. The penal clauses invoked in the Show-Cause Notices 9, 14, 14A, 23(ii), 45, 77(1), 88, 90, 101 and 103 of the Section 156 ibid and subsequent impugned Order which reveals the punishable clauses 14, 14A, 23(ii), 45, 77(1), 88, 90, 101 and 103 of the Section 156 ibid. provided for the punishment for importing or attempting of import goods in violation of any prohibition or restriction imposed. In the instant case the appellant and importer had imported Polyester Fabric PCT Heading 5407.5200 which was accordingly examined assessed, duty and taxes deposited and goods declared out of Customs charged. The Fabric of PCT heading 5407.5200 is freely importable from India as per Import Policy Order and is not restricted / prohibited hence there is no question of applicability of clause (9) of Section 156(1) of the Custo ms Act, 1969 in the instant case. Howev er the impugned order does not show the penal clause (9) of Section 156(1) ibid. Moreover , for invoking any penal provisions Reliance cannot be made on the presumption and conjuncture basis a clear undeniable evidence is essentially required to establish that fabric imported from India. In all these cases the learned adjudicating officer have relied on the assumption and presumption that impugned fabric is of Indian origin without any concrete evidence and without ignoring the fact that in many of the cases imported fabric is not prohibited / restricted from India.
21. Clauses 14 and 14A of Section 156(1) of the Customs Act, 1969 provide for the punishment for committing offence under sections 32 and 32(A). In the light of above paras 17, hence no offence committed under sections 32 and 32(A) in this case. Hence there is no question of awarding punishment under clauses 14 and 14A of Section 156(1) of the Customs Act, 1969. The clause 45 of Section 156(1) of the Customs Act, 1969 provides for the punishment for any concealment of goods are mixed within the goods so declared in order to injure the revenue. It has been established through evidence that there is no injury caused to the revenue in any of the cases being decided by this order , hence clause 45 of the section 156(1) of the Customs Act, 1969 is totally irrelevant in these cases. The Respondent has not brought any documentary evidence which establish es that appellant clearing agent had delivered manifest which contain untrue specification, the manifest has been delivered through automated WeBOC electronic system prior to 24 hours of arrival of vessel that is to be delivered by shipping agent / shipping company but in fact not by importer / clearing agent hence the invoking clause 23(ii) is totally irrelevant.
22. No allegation against the clearing agent has stated in the Show-Cause Notice which talley with offence in the clause 88 of the Section 156(1) of the Customs Act, 1969. As 1 GD KCSI-HC-63413 dated 14-5-2012 which has been filed by the clearing agent having CHAL No.1772 which is valid and license granted by the competent authority and other GD No.KCSI-HC-63906 dated 24-4-2012 was filed by importer himself but not by appellant.
Moreover no documentary evidences produced by the respondent which establish the offence against the clearing agent, as such the punishment under this clause in not liable to be invoked against the clearing agent.
23. Here again no allegation against either be appellant importer or clearing agent stated in the Show-Cause Notice tally with the offence stated in the clause 90 of the Section 156(1) of the Customs Act, 1969. Moreover this clause relates to the goods which is either lying in the warehouse or which are chargeable duty and taxes Same has not been paid and the goods have been removed illegally and unlawfully from the warehouse. Since the subject consignments has already been assessed and customs duty and other leviable taxes has already been paid and consignments were also out of charged legally and lawfully , beside there is no any prohibition / restriction upon import and export as goods are freely importable. Hence, no removal of consignment from the warehouse and no evasion of taxes are involved, therefore, this clause is also irrelevant.
24. The allegation against the importer or the clearing agent as described vide Show-Cause notice do not tally with the offence stated in clauses 101 and 103 of Section 156(1) of the Customs Act, 1969 and no documentary evidences produced by the Respondent which establish that importer and as well as the clearing agent has accessed unauthorized to the shipping company / shipping agent in order to alter the contents of Manifest IGM. As such the punishment awarded under the clauses 101 and 103 are not liable to be invoked against the importer or clearing agent and having no relevance. It seems that clauses 77, 88, 90, 101 and 103 have appeared in the Show-Cause Notice as the consequence of cut and past phenomena from the FIR without any relevance and without any application of mind.
25. From the facts of the case it is clearly established that no duty or taxes was short levied or evaded by the Appellant importer . That restrict the case of the respondent department against the appellant only to the extent of presumed mis-declaration of origin SRO 886(1)/2012 dated 18-7-2012 envisages that Collectorate of Adjudication are barred from dealing with contrave ntions involving technical violation of import restriction without the involvement of any evasion of duty and taxes. Such cases fall within the jurisdiction of respective Collectorate.
Therefore, the show-cause notice in the instant case (for violation of IPO) issued by the Officer of Adjudication Collectorate is out of jurisdiction illegal and is not sustainable under the law. Hence the consequent Order-in- original which is impugned before this Tribunal is without jurisdiction and void ab-initio. For this ratio is derived from the judgment of Hon'ble Supreme Cour t of Pakistan in the cage reported in PLD 1971 Supreme Court 124 (Mansab Ali v. Amir and 3 others ) whereby it was held that: "it is an elementary principle that if a mandatory condition for the exercise of jurisdiction by a court or authority is not fulfilled, then the entire proceedings which follow become illegal and suffer from want of jurisdiction. Any order passed in continuation of these proceedings in appeal or revision equally suffer from illegality and are without jurisdiction".
26. By getting the strength from what has been stated and observed hereinabove, particularly the interpretation of law and legal preposition in the light of laid down and to follow the judgments of Superior Courts along with my own additional observations made thereon, I am of the considered view that the proceedings in the subject cases are infested with inherent legal infirmities and substantive illegalities. This tantamoun t to violation of prescribed law therefore, impugned orders passed during the hierarchy of customs are hereby declared null and void ab initio as such are set-aside. Appeals are accordingly accepted with no order as to cost.
27. Order Passed accordingly .