JAHANZAIB WAHLAH, MEMBER JUDICIAL-III .----Through this order , I intend to dispose off 2 appeals bearing Nos.K-314/2017 and 364/2017 directed against the Orders-in-Original No.215/2016-17 dated 18.01.2017 passed by Collector of Customs, Adjudication-II, Karachi. These two appeals have identical issues of law and facts 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. It is needless to discuss the facts of each case separately . Hence, for refere nce the facts of Appeal Nos.K- 314/2017 are being taken into consideration for decision, wherein the appellants operate as a clearing forwarding agents having Customs Chal Nos.225 and 2020, during the course of their business activities was approached by M/s. Essa Tex Industries, Karachi for clearance of their consignment of 100% Polyetser Printed Fabric and 100% Viscose Spun Yarn for manufacturing of Fabric and Garments/Madeups for export in the Export Oriented Unit, license of which was granted by respondent No.2 in terms of SRO 326(1)/2008 and 327(i)/2008 dated 29.032008.
The appellants on the strength of import documents filed 14 Goods Declaration, which were cleared by the competent authorities after passing valid clearance order under Section 83 of the Customs Act, 1969 and Rule 442 of Sub-Chapter III of Chapter XXI, in consideration of passed assessment order under Section 80 and Rule 438 ibid, for levy of duty and taxes, against which the importer submitted postdated cheques and indemnity bonds, delivery so obtained by the appellant were received by the importer in their unit. The respondent No.1 on 21.09.2016 established FIR with the allegation importer , misused the facility of export oriented unit, instead of manufacturing fabric/goods from the imported fabric and yarn sold those A in the local market and exported the goods manufactured from fabric/yarn procured from local market and by this way cause loss to the exchequer amounting to Rs.23,530,598/- and therefore is guilty of contravention of provisions of Sections 19, 31(1)(2), 32A, 116, 131 and 219 of the Customs Act, 1969 and SRO 326(I)/2008 and 327(1)/2008 dated 29.03.2008, punishable under Section clauses (10A), (14A), (59) and (62) of Section 156(1) of the Customs Act, 1969 and relevant provision of allied laws. In the said FIR appellant figures in column 6 as witness. To the contrary , at the time of preparation of contravention report, the respondent No.1 bracketed the appellant with the importer , on the strength of which respondent No.3 issued show-cause notice dated 20.10.2016 without spelling any wrong doing on the part of appellant, reply to that was submitted and during the cause of hearing representative of respondent No.2, admitted that appellant is not privy to the act and commission of the importer .
Despite of the said fact the respondent No.3 imposed penalty of Rs.250,000/- each while forming opinion that the appellant should had been vigilant and should had submitted correct declaration , no pointation whatsoever was made in the order which proved that the appellants submitted erroneous or wrong declaration.
3. The appellants preferred the instant appeal on the basis of grounds enumerated therein, the advocate on the date of hearing argued the case strictly in accordance with those. No cross-objection 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 section 193A (3) of aforesaid section. However , on the date of hearing representatives of respondent No.1 submitted comments, which least qualify the definition of cross appeal, instead as opinion observation having no legal force, are kept in record of the case.
4. Argument heard and record perused, upon examination of the show-cause notice, it has been observed that it has been issued to the importer spelling out allegation/charges and not to the appellant despite leveling of allegation of connivance. The appellant replied to the show-cause which is annexed as annexure G of the file against which an ONO was passed by the Collector adjudication-II without considering the facts and the circumstances of the case. I have observed that the appellant had transmitted goods Declaration on the basis of the documents provided to them by the importer in the WeBoc system without any tampering or amendment which exonerates him from the charge of doing a wilful act or connivance with the importer. The ONO passed by the respondent No.3 is silent in this regard no role was specified alleging that the clearing agent was involved in tampering or filling incorrect documents before the customs, nothing contrary to the contents of those was transmitted, no fault or default has been spelt out in the show-cause notice or a slightest incriminating evidence on the record of the Tribunal. Meaning thereby that the allegations are based on assumptions /presumptions and this stand validated from the contents of show-cause notice containing no allegation of any sort. Confirming that respondents Nos.1 and 3 acted in very casual and wonton manner in framing contravention report and in issuance of show-cause notice, while ignoring the fact that it is a fundamental documents which comprehensively describe the case made out against the tax payer by making reference to the evidence collected in support of the same and with a narration of facts in the show-cause notice along with supportive evidence which determined the offence attracted to a particular case. Besides, it is of paramount importance to adduce further that show-cause notice is not a casual correspondence or a tool or a license to commence a rowing inquiry into the affair based on assumption and speculation but is a fundamental documents that carried definitive legal and factual position of the department against the tax payer , legal enforceability and jurisdictional validity of show-cause notice vested from its context, that was, the fact suppose to be tangible evidence referred to in the show -cause notice and not from the cosmetic show causing of statutory provision or from the use of statutory keywords in the show-cause notice. Such show-cause notices are always declared to be defective, nullity to the warrant of law and cases based on those are declared to be ab-initio, null and void, inclusive of subsequent orders as held in 2004 PTD (Trib.) 1324, PLD 1961 SC 237, PLD 1964 SC 410, PLD 1964 SC 536, PLD 1965 Supreme Court 90, 1983 SCMR 1208 , PLD 1987Supreme Court 304, 1994 SCMR 2232 , 2003 SCMR 1505 , 2006 SCMR 129, 2006 SCMR 1023 , 2013 PTD
(Trib) 353 and 2015 PTD (T rib.) 1422.
5. In the light of deliberation made here- in-above. I have reached to the irresistible conclusion that imposition of penalty on the appellants by the respondent No.3 in the absence of any connivance with the importer is not sustainable under Jaw. Hence, order passed by respondent No.3 to the extent of both the appellants stands quashed and appeal is allowed.