JEHANZAIB WAHLAH, MEMBER JUDICIAL-III.----Through this order, I intend to dispose off Customs Appeal No.K-195/2018 directed against the Orders-in-Original No.761029 dated 16.10.2017 passed by Collector of Customs (Adjudication-II), Karachi.
2. Briefly facts of the case are that appellant is a commercial importer of miscellaneous goods, during the course of his business activities imported a consignment of the said goods weighing to 27000 kgs, for which Goods Declaration (GD) was transmitted with the MCC of Appraisement-East 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) with the transmission of exact description, quantity, quality and applicable PCT Headings under which these goods falls. Despite of the said fact appellant officials in column 40 of the GD incorporated PCT heading 9938.0000, meant for claiming/allowing on import of specific goods, referred therein. Irrespective of the said fact, appellant communicated a specific statement/declaration to the respondent Collectorate in the GD, which read as "to conduct 100% examination to check all aspects including quantity, quality origin, PCT, description, value weight valuation ruling because our shipper has not intimated these correctly and they have transmitted Goods Declaration on the basis of their best knowledge", upfront duty and taxes of Rs.133,082.00 were paid on 23.08.2017, consequent to which GD was numbered as KAPE-HC-37282 dated 23.08.2017. Upon appearance of which on his workstation the appropriate Officer opted to get the goods examined, to proceed with after adducing his opinion/apprehension, transmitted that to the Deputy Collector of Customs, Gronp-V, MCC of Appraisement-East, (respondent No. 1) for perusal/necessary orders, who gave his assent and routed the GD to the Deputy Collector, Examination, PCT, who marked that to the examiner deems to be appropriate and falls under the selection criteria, who carried out the desired examination as per the contemplation of section 198 and Rule 435 of the Act/Rules and found the goods as declared in every aspect and report so prepared was uploaded in the reservoir of the GD for the perusal of Assessing Officer. Who after going through the same passed assessment orders dated 12.09.2017 against each item under, the provision of Section 80 and Rule 438 by assessing the goods under the applicable PCT headings and with the application of infield valuation ruling,, if applicable or on the basis of data of the identical/similar goods maintained by the PRAL under Rule 110 of the period given in Rule 107(a) Rules for levy of duty and taxes. Since, PCT Heading 9938.0000 was not relevant , so the benefit expressed therein, the assessing officer deleted that while adducing remarks "SRO 9938 and 568 have been deleted as not applicable" Thereafter, routed the GD to Principal Appraiser for assent, who despite finding not discrepancy or illegality in the assessment orders, opted to frame contravention report with the allegation that the appellant tried to take undue benefit of special classification of HS Code 9938 and SRO 568(I)/2014 in item Nos.12 to 17, which is tantamount to causing loss to the exchequer to the tune of Rs.5,038,929.00. This act of his attracts the mischief of mis-declaration within the meaning of Section 32 of the Act and contravention of section 33 of the Sales Tax Act, 1990 (STA) and Section 148 of the Income Tax Ordinance, 2001 (ITO), punishable under Sections 14, 14A and 45 of Section 156(1) of the Act, clause 11(c) of Section 33 of the STA and Section 148 of the ITO. The respondent No.2 on the strength of which issued show- cause notice dated 15.09.2017 containing same fact and contravening provision of Act/Ordinance as were in contravention report. The appellant submitted an apt reply dated 23.09.2017, which failed to impress respondent No.2 in totality and he passed order dated 16.10.2017, through which he held that the charges levelled against the appellant in the show-cause notice, ordering thereafter confiscation of the appellant goods subject to redemption of those on payment of 20% fine of Rs.1,652,232.00 and penalty of Rs.50,000/- in addition to the amount of duty and taxes assessed by the respondent No.1 on the basis of examination report and assessment orders passed by the assessing officer. Operative para of the order is enumerated here-in- under: "Record of the case has been examined and consider written as well as verbal arguments of both the sides. The respondent importer have been alleged for claiming inadmissible of the SRO benefit, which otherwise are not admissible with the intention to cause revenue loss to the national exchequer. The charges against the respondent importer include mis-declaration of the classification and inadmissible benefit of SRO 568(1)/2014.
The respondent importer in his reply has denied the allegation of mis-declaration levelled against in and he requested to decide the case as per law request for immediate decision was also made as the importer is suffering acute financial hardship due to demurrage and detention of the goods at port. Having gone .through record, I am of the considered opinion that the charges of mis-declaration levelled against the respondent importer are established. The importer has not been able to offer any plausible explanation/reason for violation of law committed. In view of the above, the charges levelled in the show-cause notice stand established.
Accordingly, the offending goods are confiscated under clause 14 of section 156(1) of the Customs Act, 1969 for violation of provision of Sections 32(1), 32(2) and 79 ibid. However, an option is given to the importer to redeem the goods under Section 181 of the Customs Act, 1969 on payment of a fine equal to 20% of the value of the offending goods to the tune of Rs.1,652,232/- (20% of ascertained value of the impugned goods Rs.8,261,158/- on addition to leviable duty and taxes thereon. A penalty of Rs.50,000/- (Rupees Fifty thousand only) is also imposed under clause 14 of Section 156(1) of the Customs Act, 1969 on the importer. Show-Cause Notice No. CN-752303 dated 15.09.2017 is disposed off accordingly.
3. The appellant preferred the instant appeal 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 objections under Section 194A(4) of the Act have been filed within the stipulated period of 30 days by the respondent No.1, resultant, lost right of cross appeal within the contemplation of subsection (3) of aforesaid section. However, on the date of hearing representatives of respondent No.1 submitted comments, least qualifying the definition of cross appeal, rather opinion/ observation of the respondents having no legal force.
The representative of the respondent in rebuttal to the arguments of the consultant, raised a preliminary objection among others, that the appeal is barred by time by 54 days, pointation of which has also been made by the office of the Tribunal. Therefore, the appeal is not maintainable and ought to be dismissed in limine, further stated on merit of the case under the provision of section 79(1) and Rule 433 of the Act/Rules, it is mandated upon the appellant to transmit correct declaration, which should answer the examined goods in all aspects i.e. description, quantity and weight, enabling the assessing officer to pass assessment order under section 80 and Rule 438 under correct applicable PCT Headings and values for levy of duty and taxes, which although appellant transmitted correctly in every extent, even PCT headings. Nevertheless, clicking key for inserting PCT Headings 9938.0000, upon which 0% duty and taxes are leviable was intentional for reaping undue benefit/causing loss to the exchequer. Therefore, the appeal on this count is also not valid and as such be dismissed.
4. Argument heard and record perused, and the relied upon citations/judgments by the appellant's Prior to dilating upon other factual and legal aspect of the case, it is apt and proper to aver on the issue of limitation. On examination of the appeal documents, it has been observed that the appellant was well aware that the appeal is barred by time and warrant condonation under section 194(5) of the Act, filed an application for condition of delay along with the appeal , wherein it has been stated that filing of appeal by him within 60 days was beyond control as he was infected with from the viral of "Chikungunya" and advised by the Doctor A for complete bed rest for at least 02 months from 10.11.2017 to 20.01.2018, in support of which he annexed medical certificate issued by Dr. Rubina Aurangzeb, Family Physician, running Al-Rafay Clinic, Karachi. Appellant attended his office on 22.01.2018 and delivered the respective documents to the consultant on 25.01.2018, who prepared the appeal on 27.01.2018 and delivered to the appellant for signature and stamp, which he returned on 06.02.2018, consequent to which the consultant officials made the required paper book and presented before the Tribunal, which acknowledged it on 09.02.2018. Since, after recovery he attended his office on 20.01.2018, hence, the time counting of the days for filing appeal before the Tribunal be reckoned from' 20.01.2018, from which date appeal is within time. Notwithstanding, delay if any the Hon'ble Tribunal seems to be occurred be condoned for the sake of regularization. In order to evaluate the request of the appellant. It is appropriate to define "Chikungunya", its severity and its after effect "Chikungunya is an infection caused by the chikungunya virus (CHIKV). Symptoms of which include fever and joint pain. These typically occur two to twelve days after exposure. Other symptoms may include headache, muscle pain, joint swelling, and a rashes. These symptoms usually improve within a week; however, occasionally the joint pain may last for months or years. The risk of death is around 1 in 1,000. The very young, old, and those with other health problems are at risk of more severe disease." In the light of the symptoms, movement of the infected person comes to zero due to joints pain and high fever, the only cure for the said disease is complete rest, which doctor advised him. However, when appellant was able to move, he attended office and delivered the documents to the consultant, who thereafter done the needful and presented the appeal before the Customs Appellate Tribunal. I therefore, hold that filing of appeal within the time specified in section 194A(3) was beyond control of the appellant and delay, if any is condoned in terms of Section 194A(5) of the Act for the sake of regularization and objections raised by the office and respondent representative in this context is overruled.
5. Reverting back to the merit of the case, it is of vital importance for me to deliberate that as to whether respondent No.2 has been appointed as an Officer of Inland Revenue under Section 30 of STA and respective Section of ITO and is empowered to adjudicate the cases corresponding to the contravention of section 11 of the STA and section 162(1) of the ITO as objection qua jurisdiction is a basic lacuna on assumption of jurisdiction which can be raised at any stage of proceeding including appeal in as much as it goes to the very roots of the matter and render entire proceeding coram non judice. Beside, jurisdictional defect could not be removed by mere conclusion of proceeding and passing of order-in-original and order-in-appeal 2017 PTD 196 Collector of Sales Tax v. Khursheed Spinning Mills Ltd. and 2 others.
6. In order to decide the issue of power/jurisdiction, show-cause notice was examined scrupulously and have observed that respondent No.2 invoked certain provision of STA and ITO without going through their expressions, 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, 33 and 34 STA and 148 of the ITO have been invoked. Indeed Section 3 is a charging Section, appropriate officer for taking cognizance of the contravention of the said section, rest with Officer of Inland Revenue, whereas Section 6 defines mode and manners of collection of Sales Tax at import stage by the customs authority and on supply by the manufacturer/seller, resultant it is not a charging instead a machinery section. Section 33 contain penal clauses synonymous to section 156(1) of the Act and section 34 speaks about default surcharge to be paid upon establishing the charges under the charging sections. Likewise, Section 148 prescribes procedure for collection of Income Tax at import stage by the authorities referred therein. Meaning thereby that these sections are independent, no charge could be invoked under these. Nevertheless, respondent No.2 invoked these despite irrelevant and so the section containing penal clauses/default surcharge. I am spellbound on the ignorance and competency of respondent No.2. No show-cause notice can be issued under the aforesaid sections, which are independent and have no nexus with each other. In the absence of invoking of relevant charging/applicable sections in the light of act and commission of the importer/ manufacturer/supplier of the STA and ITO. 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, DG 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.
Additional Collector of Customs.
7. It has been forcefully 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. Upon perusal of Section 32(2) and (3) of the Act, I have observed that although the word "tax" is available therein. However, this does not automatically empowers the Respondent No.2 to assume powers under the provision of Section 11(2) and (3) of the STA and 162(1) of the ITO, unless Legislature appoint officer of Customs/respondent No.2 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 Sections 179 and 32 of the Act are only for assumption of powers of adjudication on the basis of involved duty and taxes by the appropriate adjudicating authority defined in Section 179(1) and in Section 32 , for empowering the Officer of Customs to charge the tax payer under the said provision on the basis of amount of duty and taxes, punishable under the respective provision of Section 156(1) of the Act. Therefore, despite of insertion of the word taxes in both the Sections adjudicating authority including the Respondent No.2 have to issue show- cause notice within the respective applicable provision of the Act only and not under any charging or Section 11 of the STA and Section 162(I) of the ITO, which are otherwise non existence in the show-cause notice and charge against the Appellant has been levelled under Sections 3, 6, 33 and 34 of STA and 148 of the ITO, which are irrelevant. It is to be noted that Respondent No.2 for penalizing appellant, made a reference to 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 invoked in the matter of Sales Tax and Income Tax falling under sections 11 and 162(1) ibid.
8. For lending further clarity to the issue, I have scrupulously gone through the provision of Section 30 of the STA and Section 228 of the ITO and observed that Respondents have not been appointed as an Officer of Inland Revenue under these Sections. Resultant, they are rot 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, Respondents are 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. To further elaborate and settling the issue to its logical conclusion, I add while referring to Section 6 of the STA and 148 of the ITO under which the Clearance Collectorates are empowered to collect the taxes on the imported goods as like custom duty. 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 Customs and Respondent No.2 figures anywhere. He assumed the powers not vested with him under the provision of Sections 11 and 162(1) of the STA and ITO. Resultant, the Customs Collectorates does have powers to collect , Sales Tax and Income Tax as duty at import stage , conversely, 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 based on mistaken belief, infact the Customs Collectorate could recover the amount of Sales Tax and Income Tax upon receipt of notices from either Officer of Inland Revenue or Commissioner of Income Tax under the provision of 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. Therefore, it is my considered opinion that 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 Messrs AGP (Pvt.) Ltd. v. Additional Collector of Customs, Karachi, 2010 PTD (Trib.) 2086. Messrs Global Marketing Services and another v. Model Customs Collectorate and another, SCRA No.01 of 2010 Collector of Customs, Islamabad v. Global Marketing Service and another v. Model Customs Collectorate and another, 2004 PTD 801 Al-Haaj Industrial Corporation (Pvt.) Ltd. Peshawar v. Collector of Customs (Appraisement). C.P. No.D-216/2013 Messrs Lucky Ltd. v. Federation of Pakistan and others, 2014 PTD 1963 Shujabad Agro Industry (Pvt.) Ltd. v. Collector of Customs and 8 others, 2015 PTD 702 Muhammad Measum and others v. FOP and 2 others, 2016 PTD (Trib.) 969 Asif Textile Trading v. Directorate General I&I-FBR, 2016 PTD (Trib.) 1008 Phillip Morris (Pakistan) Ltd., Karachi v. Additional Collector of Customs, 2016 PTD (Trib.)
2125 Al-Fajer Associates v. Directorate General of Intelligence and Investigations-FBR, Appeal No. K- 1635/2014 Pepsi Cola Export Corporation, Karachi v. Directorate General of Post Clearance Audit and 02 others, Appeal No. K-1029/2016 Messrs M.R. Sons, Karachi v. Directorate General of Intelligence and Investigations-FBR, Appeal No, K-1030/2016 Messrs Muhammad Imran, Karachi v. Directorate General of Intelligence and Investigations-FBR, Appeal No. K-1343/2015 Messrs Rightway Trading Company, Karachi v.
Deputy Collector of Customs, MCC of Appraisement-West and 3 others, 2016 PTD (Trib.) 2463 Messrs Zubair Wali Ahmed Zai. Ltd. v. The Principal Appraiser, Directorate of Transit Trade and others and 2017 PTD (Trib.)
481 Singer Pakistan Ltd. v. Collector of Customs and 2 others. The opinion formed by me also have the validation of the judgments reported at 1994 CLC 1612, 1990 PTD 29, 2005 PTD 23 and -- in 2007 PTD 250 titled as Collector of Sales Tax and Federal Excise v. Messrs Qasim International Container Terminal Pakistan Ltd., wherein it has been held that "There is a clear distinction between the charging provision of Statute and the machinery part thereof. It is axiomatic that mode of manner of recovery does not alter, the nature of tax nor a tax can be introduced or import by implication." In 2008 PTD 1973 Xen Shahpur Division v. Collector of Sales Tax (Appeal), Collectorate of Customs, Federal Excise and Sales Tax, Faisalabad, for clarity of the Rule of Interpretation of Statute, golden principle was outlined in so many words reading as That fiscal law is to be applied with full authority and its natural meaning--one has to look merely at what is clearly said and there is no room for any intendment--neither there is equity about a tax nor presumptions as to tax - nothing is to be read in, nothing is to be implied - one can only look fairly at the language used" The Hon'ble Supreme Court of Pakistan in reported judgment 2006 SCMR 129 titled as DGI&I and others v. Al-Faiz Industries (Pvt.) Ltd. and others held that "If the law have prescribed method for doing a thing in a particular manner such provision of law is to be followed in letter and spirit and achieving or retaining the objective of performing or doing of a thing in a manner other than provided by law would not be permitted --- each and every words appearing in a Section is to be given effect and no other word is to be rendered as redundant or surplus - when the legislature required the doing of a thing in a particular manner then it is to be done in that manner and all other manner or modes of doing or performing that things are barred -- if the doing of a thing is made lawful in a particular manner the doing of that thing in conflict with the manner prescribed will be unlawful as per maxim "Expression facit cessare taciturn"
I, therefore hold 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-Original are ah initio void and as such coram non judice on this point also.
9. Levelling allegation of contravention of Section 79(1) of the Act in the case in hand is misplaced due to the fact that aforesaid section is not a charging instead a machinery, outlining the procedure of transmitting GD with the Clearance Collectorate. 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 strength of which the competent authority defined in Section 2(a) had to pass assessment order under the provision of Section 80 and Rule 438 in exercise of the powers vested upon him through SRO 371(1)/2002 dated 15.06.2002 for levy of duty and taxes either with the application of Valuation Ruling issued by the Director , Directorate General of Valuation under Section 25A for the imported goods or in case of non availability of valuation ruling, the value of the identical/similar goods available in the data reservoir maintained by the PRAL under Rule 110 of the period given in Rule 107(a) of the Rules. Since, the goods of the appellant were not auto cleared by the CCS module, instead selected for examination, verification of declaration, which were found correct in all aspects as no misdeclaration in material particular has been reported therein. Hence, the case of the appellant stands ousted from the said Section and transferred to the provisions of Section 80 and Rule 438 of the Act/Rules, which lays inbuilt duty on the Officer of Customs to check all the aspects of the imported consignment as evident from their expressions reading as " 80(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 "438: 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". As adumbrated, appellant consignment cannot be construed by any stretch of imagination/interpretation has to be cleared on self assessment basis under Section 79(1) of the Act. Therefore, 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/misplaced.
10. The Assessing Officer upon finding that benefit of Special Classification provision of PCT 9938 has been claimed by the appellant erroneously, acted rationally and in accordance with the prevailing existing practice since, time immemorial deleted those and passed assessment order against each imported items under the provision of section 80 and Rule 438 of the Act/Rules for levy of duty and taxes under the respective declared/applicable PCT heading and with the application of valuation ruling if in field 'and applicable or the value available of the identical goods in the data reservoir maintained by PRAL under Rule 110 of the period expressed in Rule 107(a) of the Rules, while adducing his opinion in the assessment note reading as "VR, SRO 9338 and 568 have been deleted as not applicable. It is to be noted that no benefit under SRO 568(I) was claimed by the appellant, whereas, transmitting HS Code 9338 was due to inadvertence/human error of pressing the wrong key, which is by all mean have to be construed as error, which a human err not an act of mala fide through any stretch of imagination/definitions available in the renowned dictionaries of English language. Notwithstanding, charges are to be levelled on any person upon availability of two elements mens- rea and actus-reus, which are missing in this case, as appellant has not done any wrongful deed , comprising physical component of a crime coupled with mens rea for establishing criminal liability under the provision of section 32 of the Act, instead bona fide of the appellant is validated from the fact that while transmitting GD with the MCC of Appraisement-East, under the provision of Section 79(1) and Rule 438 of the Act/Rules, he in categorical terms informed the official of the respondent Collectorate conducting, examination and passing assessment order under the provision of Sections 198 and 80 and Rules 435 and 438 of the Act/Rules "to conduct 100% examination to check all the aspects including quantity, origin, PCT, Description, value, weight, valuation ruling because its shipper has not intimated to him these correctly and he transmitted GD on the basis of his best knowledge." This is his categorical declaration and had to be taken as stated by him , not otherwise, which was taken In rational and fair manner by the official conducting examination and by the officer passing assessment order with the exception of the Principal Appraiser of the Group and respondent No.2, in the absence of availability of any cause or reason, only for conduction of proceeding needlessly, in negation of the prevailed existing practice in the Collectorates to assess the goods under the respective applicable PCT Heading determined on the basis of found goods in the examination for levy of duty and taxes as expressed in section 80 and rule 438 and the law laid down by the superior Judicial Fora 2003 PTD (Trib.) 293, 2002 MLD 1980 and 2014 PTD 1615.
11. What have 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 annul contravention report framed by Principal Appraiser and cancel/set aside the show-cause notices/order-in- original issued/passed by respondent No.2 in totality being illegal, ab initio and null void. Appeal is allowed accordingly with no order as to cost.
12. Order passed and announced accordingly.