JEHANZAIB WAHLAH, MEMBER JUDICIAL-III .----Through this order , I dispose off appeal bearing No.K- 1251/2017 directed against the Order-in-Original No. 75498 dated 03.10.2017 passed by The Additional Collector of Customs, Adjudication-II, Customs House, Karachi.
2. Briefly fact of the case are that the appellant imported a consignment of 6274 kgs of spare parts of auto rikshaw and motorcycle from Vietnam, valuing to US $ 7528.80 C&F, Karachi against invoice No.YTP-009-14 dated 15.07.2017 and B/L No.EHPH17-037 dated 19.07.2017. Upon receipt of import documents delivered those to his clearing agent M/s. Khurram Brothers, Karachi for transmitting Goods Declaration (GD) 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), which he did and as per pre-requisite deposited upfront duty and taxes of Rs.587,107.00 on 26.08.2017, consequent to which GD was numbered as KAPE-HC-39462- 26082017. The Assessing Officer on receipt of GD on his workstation opted to get the goods examined first under the provision of section 198 and Rule 435 of the Act/Rules, to proceed with after adducing his opinion/reasoning for conduction of examination, transmitted the GD to the respondent No.1, who gave his assent and routed the GD to the Deputy Collector , Examination, PICT , who marked that to the officials of his choice/selection. The examiner conducted the desired physical verification of the imported goods and opined that the appellant has misdeclared the origin of the goods and report so prepared was uploaded by him in the reservoir of GD reading as "Assessment Alert: The trader has declared country of origin China while origin found Vietnam. Examined Container No.TEMU5644439, vide G.D No.KAPE-H C-39462-26-08-2017. (Partial Shipment). Invoice and Packing list found inside the container . Found invoice value in US$ 7528.80. Description: Motorcycle/ Rickshaw spare parts including:
(1) Engine Valve = 687 KG (Net) Approx, (2) Ring Set = 227 KG (Net) Approx, (3) Piston kit = 4176 KG (Net)
Approx, Excess weight 7.46% (4) Piston Kit (Rickshaw) = 2828, KG (Net) Approx, Excess weight 6.63% (5) Ring Set (Rickshaw) = 52 KG (net) Approx, Brand: STR, Origin: Vietnam And weight found 8820 KG (Gross). Group is requested to check all aspects including Importability as per IPO and IPR. condition in vogue." The Assessing Officer despite of the fact that the goods were found to be of Vietnamese Origin completed the assessment by passing assessment order under section 80 and Rule 438 of the Act/Rules with the application of value of China origin in terms of Vthuation. Ruling (VR) 967/2016 dated 16.11.2016 and forwarded that to Principal Appraiser for approval, who despite noticing the illegality in the Assessment Order , went one step ahead and construed the non- instant mis-declaration in material particular , framed contravention report and forwarded to Additional Collector Law who approved that and transmitted to respondent No. 2, who issued show-cause notice dated 13.09.2017 with the allegation that the appellant is guilty of mis-declaration of origin found as Vietnam as against declared China and weight declared was found in excess by 1544 kgs equivalent to 24.03% as evident from the examination report, causing anticipated loss to the exchequer in the shape of duty and taxes to the tune of Rs.1,334,582.00. Hence, contravened the provision of Sections 32(1) and 32(2), 79(1) of the Act, Section 33 of the Sales Tax Act, 1990
(STA) and Section 148 of the Income Tax Ordinance, 2001 (ITO), punishable under clauses 1, 14, of Section 156(1) of the Act read with SRO 499/2009 dated 13.06.2009. The appellant consultant replied to the show-cause notice vide dated 13.09.2017, through which he challenged his jurisdiction in the matter of Sales Tax and Income Tax and in regards to charge of mis-dec laration. He also placed on record reported Judgments of the Hon'ble Tribunal where similar issues were decided upon. The respondent No 2, ignor ed those and passed Order-in- Original imposing 20% fine of Rs. 483,861/- and penalty of 100,000/- on the pretext that the appellant has mis- declared the origin and weight of the goods imported. Paras 7 and 8 of the order is relevant, which is reproduced for easement/perusal.
"I have gone through the case record and have considered written/verbal arguments put forth by the respondents.
The case of the departments is that the examination report confirms that the goods found are of the Vietnam origin as against declared origin of China. Excess weight to the extent of 1544 Kgs is also reported which is 24.03% of the total consignment. The duty/taxes of excess weight comes to Rs.386,402/- . Therefore, the importer have deliberately concealed/declared the origin and weight of the goods to take and attempt for getting the goods assessed on suppressed value and weight for evading legitimate amount of taxes to the tune of Rs.1334582/- willfully and with mala fide intention. The offending value of the goods is worked out to be Rs.2419,305/-. The contention of the importer through their reply as well as verbal arguments in respect of the origin of the goods is that although mis-declaration of origin is there but it does not make any difference as valuation criterian for both Vietnam and China is same. Regarding weight the exclusion of weight of essential/non essential packing added in the weight of the goods, there exist no variation in the declared weight of the goods. The contention of both sides has been examined in detail and it is fact that origin and weight of the goods have been misdeclared by the respondents. Therefore, charges mentio ned in the Show-Cause Notice stands established as the importer has deliberately mis-declared origin and weight of the goods to get the goods assessed on suppressed value for evading legitimate amount of duty and taxes , thus the importer has violated the provisions of Sections 32(1) , 32(2) and 79(1) of the Customs Act, 1969, Section 33 of the Sales Tax Act, 1990 and Section 148 of the Income Tax Ordinance, 2001. Accordingly , offending goods are confiscated under clause (14) of Section 156(1) of the Customs Act, 1969. However , an option is given to the importer to redeem goods under Section 181 of the Customs Act, 1969 read with SRO 499(1)/2009 dated 30.06.2009 on payment of duty and taxes leviable thereon along with fine equal to 20% of the offending value of the goods amounting to Rs.483861/- (20% of value of the imported goods Rs. 2419305/-) subject to condition that these goods are otherwise importable as per Import Policy Order in vogue.
A penalty of Rs.100,000/- (Rs.One hundred thousand only) is imposed on importer for deliberate mis-declaration of origin and weight of goods in terms of clause (14) of Section 156(1) of Customs Act, 1969."
3. The appellant filed application for urgent hearing and interim relief supported by affidavit with the main appeal on 11.10.2017, praying that his goods be ordered to be released upon submission of pay order equivalent to the alleged short paid/evaded amount of duty and taxes of Rs. 1334582.00 and post dated cheque of Rs.583,861.00 against the imposed fine and penalty as security deposit with the Collector of Customs, MCC of Appraisement-East subject to their encashment/return upon decision on the main appeal. The Tribunal after allowing urgent hearing took up the application for interim relief and disposed of f the same on 6-1 1-2017 in the following manner .
"The basic ingredients for grant of interim relief flow in favor of the appellant therefore, while considering the hardships of the appellant to run the business as its capital has also been blocked due to non release of his consignment, interim relief for release of subject consignment is accorded subject to payment of duty and taxes in accordance with description of the goods, pay order in respect of differential amount of duty and taxes as per assessed value and weight of the goods by the department, redemption fine and penalty. After payment of duty and taxes and deposit of pay order , the clearance Collectorate is required to release the subject consignment at once.
The Collectorate is further directed not to encash the pay order till final decision of main appeal.
Before parting with this order we feel it better to add that there is dispute in respect of weight declared by the importer and determined by the department. Same is vital issue before this forum for determination, therefore, if the appellant (importer) is not accepting the said determination of weight of the consignment than it would be in the interest of justice that before releasing of the consignment its weighment may be carried out jointly by the department and the representative of the appellant. Besides gross weight sample weight of packing may also be determined for each category of goods during examination. No technical defects notice in the appeal same is also filed within time, therefore, appeal is admitted subject to all legal exception for regular hearing. The respondent are directed to file memorandum of cross objection."
4. On the date of hearing the consulta nt of the appellant argued the case strictly in line with the grounds incorporated in the memo. of appeal and place on record of the Tribunal host of citation in support thereof. 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, resultant, lost the right of cross appeal within the contemplation of subsection (3) of aforesaid section. However , comments have been submitted, which least qualify as the definition of cross objection. Hence, will be taken as opinion having no legal sanction.
5. None appeared on behalf of respondent on multiple dates of hearing fixed between 13.12.2018 to 27.06.2019, despite categorical direction to the repres entative of the respondents Mr. Rashid Ali AO on the date he registered appearance, in addition to notice for hearing for 29.05.2019 delivered by hand in the office of the Collector of Customs, and telephone calls by the court clerk of this Bench to the Collectorate in regards to fixation of hearings.
This shows non-seriousness/lackluster approach of the department. In addition to the aforesaid date of hearing in this case, 25 hearings have been conducted and not on one occasion consultant of the appellant sought adjournment, instead was found without any exception ready for arguing the case of the appellant as against the representative of the respondent who sought adjournments now and then. Therefore, I have no other option except to close their side and decide the case on available record and comments on memo. of appeal submitted by the respondents.
6. Heard and case record perused and so the relied upon judgments. Consequently framed the following issues for decision:
(i) Whether invoking of the provisions of Section 33 of the STA and Section 148 of the ITO by the respondent No.2 in the show-cause notice are valid and whether he has been empowered to invoke those in the matter of customs?
(ii) Whether respondent No. 2 has been appointed as officer of Inland Revenue under the provision of Section 30 of the STA and respective Section of the ITO and as to whether he has been delegated power through a notification by the Board to proceed under Section 32 of the Act for the offences of STA of ITO falling under the provision of Section 11 and Section 162(1) of the STA/I TO and the law laid down by the Superior Judicial For a on the said issue?
(iii) Whether determination/ascertainment of weight of imported goods with the addition of weight of essential/non essential packing for levy of duty and tares under the respective applicable PCT Heading of the First Schedule to the Act was correctly made by the respon dent No.1 and his subordinates at the time of physical verification of the imported goods as per the contemplation of Section 198 and Rule 435 of the Act/Rules , para 5 of CGO 12/2002 dated 15.06.2002 and Examination Manual, 1996?
(iv) Whether port of shipment is the only criteria for determination of origin of the goods in the absence of availability of engraving of "made in" on the goods and tangible unrefutable incriminating evidence validating the determined origin?
(v) Whether Vietnam and China are being termed as one and the same region by the respondents and by the Director , Directorate General of Valuation through Valuation Ruling (VR) issued under the provision of Section 25A of the Act containing determination of value for application on the imported goods or class of goods for levy of duty and taxes under the respective PCT heading of the First Schedule to the Act?
(vi) Whether loss of revenue could be worked out/determined on the basis of values of VR and as to whether charge of misdeclaration or suppressed value could be levelled on an importer on the basis of those values?
(vii) Whether assessment order of the imported goods of the appellant can be made by the competent authority defined in section 2(a) under Section 80 and Rule 438 of the Act/Rules in exercise of the vested powers delegated through SRO 371(1)/2002 dated 15.06.2002 on the basis of VR No. 967/2016 dated 16.11.2016, vires of which has been assailed under the provision of Section 25D before the Director , Directorate General of V aluation (DGV)?
7. As regard to Issue No. (i). The respondent No.2 have invoked Sections. 33 and 148 of the STA/ITO without going through their expression, and in derogation 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 containing Principle of Administration of Justice and Interpretation of Statute that "the person who is performing the role of a judge, no matter even in quasi-judicial proceeding must wear all laws of the country on the sleeves of his robes and failure to do so by any reason is not an excuse" Section 33 contain penal clauses synonymous to Section 156(1) of the Act and could only be invoked for the contravention of the respective provision of STA not the Act, whereas, Section 148 prescribes the procedure for collection of Income Tax at import stage by the authorities referred therein. Meaning thereby that the said sections are independent under which no charge can be invoked. To the contrary , respondent No. 2 invoked these for which I am unable either to visualize/comprehend his wisdom that he being an officer of customs appointed under Section 3 of the Act invoked these sections for the offence allegedly committed by the appellant under the provision of Section 32 of the Act.
The sections of STA and ITO could only be invoked for the contravention of the respective provision of the STA and ITO not for the Act. These are independent Sections of STA/ITO and have no nexus whatsoever with any provision of the Act. Issuance of show-cause notice by invoking irrelevant/erroneous sectio ns of independent statute by un authorized authority render it void and ab-Initio and of no legal effect as held by the superior judicial fora in their judgments reported at Assistant Collector v. Khyber Elec. Lamps 2003 PTD 1275, D.G. Khan Cement v Collector of Customs 2005 PTD 480, Caltex v. Collector 2003 PTD 1593 , Union Playing Card Company v.
Collector of Customs 2002 MLD 130 Atlas Tyres v. Additional Collector 2002 MLD 180, State Cement v.
Collector PTCL 2001 CL 558, Kashmir Sugar v. Collector 1992 SCMR 1898 , Rose Color v. Chairman, CBR
(sic) and 2013 PTD 813 Samar International v. Addl. Collector of Customs. The issue No. (i) is answered in negative.
8. As regard to issue No. (ii). As deliberated in above issue the respondent No. 2 invoked certain provision of the STA/ITO in the show-cause notice, the Consultant/Advocate of the Appellant contended forcefully that he has no mandate to invoke these as he is not appointed as an officer of Inland Revenue by the legislature. Whereas, respondents are of the that incorporation of the word "tax" in Sections 32(2) and (3) and 179 of the Act is sufficient for assuming powers under the charging Sections of Section 11 of the STA and 162(1) of ITO. Upon perusal of Section 32(2) and (3) of the Act, I have observed that although the word "tax" is available in those but this does not 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 him as "Officer of Inland Revenue/Commissioner of Income Tax", who has powers under these Sections to take cognizance in the matter relating to Sales Tax and Income Tax. It is to be noted that the word "tax" inserted in Secti on 179 is only for the purpose of assuming power on the basis of involved amount of duty and taxes by the adjudicating authority , likewise insertion of word "tax" in section 32, empowers the adjudicating authority to issue show-cause notice for penalizing the importer under the provision of subsection (1) of Section 156 of the Act. Availability of the word tax in both these section does not automatically empower an officer of Customs appointed under Section 3 to wield powers under the charging /respective provisions of STA and ITO, unless, they are appointed as officer of Inland Revenue by the legislature under the existing provision of Section 30 of STA and 228 of the ITO or by carving a new subsection of Section 30 of the STA and Section 228 of the ITO or all together by inserting new sections in the STA/ITO through a money bill. Therefore, despite of insertion of the word "tax" in Sectiohs 179 and 32 of the Act, the adjudicating authority including the Respondent No.2 can only issue show-cause notice within the respective applicable provision s of the Act and not under any charging sections or Section 11 of the STA and Section 162(1) of the ITO which are otherwise non-existent in the show-cause notice and no charge agains t the Appellant has been levelled under these provision of the STA and ITO, rather Section 33 of STA and 148 of the ITO have been mentioned, despite erroneous /irrelevant. Even otherwise, the Respondent No. 2 has also relied upon clauses (14) and (14A) of Section 156(1) of the Act, which are applicable in the case of mis-declaration falling within the ambit of Section 32 of the Act. These clhuses cannot be invoked in the matter of Sales Tax and Income Tax falling under Sections 1 1 and 162(1) ibid.
9. For lending further clarity to the issue, Section 30 of the STA and Section 228 of the ITO have been perused and observed that Respondent No.2 with the designation of Additional Collector of Customs, figures nowhere. Hence, he has not been appointed as an. Officer of Inland Revenue under these Sections. Resultant, he is not empowered to exercise the powers under Section 11 of the STA and Section 162(1) of the ITO, empowering only Officers of Inland Revenue /Commissioners of Income Tax to initiate adjudication proceeding for recovery of short collected/paid Sales / Income Tax either due to collusion or connivance or inadvertence, error or misconstruction.
Resultant, Respondent No.2 is not empowered to lay hands on any matter falling under the ambit of Section 11 of the STA and Section 162 (1) of the ITO. Assuming powers on the basis of mistaken belief and warrant of law is palpably illegal beside fatal to the health of the case, as these sections least empowers any Officer of Customs Respondent No.2 is not an exception to initiate adjudication / recovery proceeding for the short collected/paid, Sales/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(3) or (4) of the STA and Section 162(1) of the ITO, by the authority expressed therein. Respondent No.2 assumed the power not vested with him under these Sections. Therefore, I am of the considered opinion that the Customs Collectorates does have powers to collect , Sales Tax and Income Tax as duty at import stage , conversely , as regard to the plea that Customs is empowered to recover the short paid amount of sales/income tax at the import stage under Section 202 of the Act is also based on mistaken belief, the Customs Collectorate could only recover the amounts of Sales/Income Tax upon receipt of notice from the Officer of Inland Revenue and Commissioner of Income Tax in terms Section 48 of the STA and Section 140 of the ITO for recovery of E the adjudged amount of Sales / Income Tax after due process of law. Hence, the Clearance Collectorates does have the authority to collect Sales Tax and Income Tax at import stage in the capacity of collecting agent and can recover escaped/short payment paid Custom Duty and Regulatory Duty levied on the imported goods under Section 18 of the Act under Section 202 ibid., after due process of law, but have no powers to adjudicate the cases of short recovery of Sales/Income Tax falling under the ambit of section 11 and 162(1) ibid. and this stood validated from reported/unreported judgments 2011 PTD (Trib.) 110, 2010 PTD (Trib.) 2086, SCRA No. 01/2010 2004 PTD 801, C.P. No. D216/2013, 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.) (sic)
2016 PTD (Trib.) 2463, 2017 PTD (Trib.) 481. I, therefore hold in the light of the law laid down in the referred in above and cases reported at that the exercise of jurisdiction on this point by Respondent No.2 is without lawful authority and jurisdiction. Hence, issuance of show-cause notice and passing of Order-in-Original are ab-initio void and as such coram non judice on this point also. The issue No.(ii) answered in negative.
10. As regards to Issue No. (iii), in compliance of interim order dated 06.11.2017, the official of respondent No. 1 released the goods after securing the differential amount of duty and taxes, imposed fine and penalty after re- examination of the goods, copy of which has not to this date placed on record of the Tribunal by the respondent No. 1 or his subordinate, instead appellant after retrieving the copy of the same from the reservoir of GD, which read as "Container TMU5644439 GD No.KAPE-HC-39462-26.08.2017 = = = = Assessment Alert : The trader has declare country of origin China, while origin found Vietnam = = = re-examined the goods and detailed as under : description : Spare Parts packed in CTNS consisting of 1, engine valve spare parts for moto rcycle of assorted models. Net contents weight 551 kgs approx. NT WT: with essential packing 651 kgs approx.
2. Ring Set Spare Parts for motorcycle assorted models Net Contents WT: 155 kgs approx. NT WT: with essential packing 285 kgs 3. Piston Kits Spare Parts for motorcycle of assorted models, Net Contents Wt: 3494 Kgs approx. NT WT: with essential packing 4356 kgs approx.
4. Piston Kit spare for Auto Rikshaw for assorted Model Net Contents 2134 kgs approx.
NT WT: with essential packing 2503 kgs approx.
5. Ring Sets Spare Parts for Auto Rikshaw of assorted Model net contents 28 kgs approx. NT WT: with essential packing 47 kgs approx. Brand STR, Origin: Vietnam checked 100% weight at PICT Weigh Bridge vide PICT Slip No. 652209 dated 18.11.2017 found cargo weight 8700 kgs. Group is requested to check legal aspect including classification importability , as per IPO and IPR condition invoke (images are attached)".
11. The appellant on the sheet containing re-examination report, prepared breakup of the weight of each imported items, eight of essential/non essential packing used therein and weight of each item with, essential/non essential packing, reproduction of which is vital for reaching at a just conclusion that as to whether any misdeclaration in material particular has been made in the weight or otherwise: S.No. Description of the Weight of GoodsWeight of the goodsWeight of essential/non essential Weight of Essential packing packing
01. Engine V alve Spare Parts 561 kgs 90 kgs 651 kgs
02. Ring Set Spare Parts for Motor cycle155 kgs 120 kgs 285 kgs
03. Piston Kitt Spare Parts for Motor cycle/Rikshaw2134 kgs 369 kgs 2503 kgs
04. Piston Kit Spare Parts for Motor cycle 3494 kts 862 kgs 4356 kgs
05. Piston Kitt Spare Parts 28 kgs 19kgs 47 kgs 6372 kgs 1460 kgs 7842 kgs
(i) Total declared Net Weight of the consig nment is 6274 kgs, which in examination found as 6372 kgs which is excess by 98 kgs equivalent to 0.56%excess.
(ii) Total declared gross weight 8542 kgs which in the examination found as 8700 kgs, which is excess by 158 kgs equivalent to 25%
12. The weighment/ascertainment of the imported goods at the time of examination conducted as per procedure outlined in Examination Manual, 1996 as ordered by the Board in para 5 of CGO 12/2002 dated 15.06.2002 have to be made while weighing each imported item sans weight of essential/non-essential packing, wherein i.e. packed for protecting from breakage /erosion due to weather condition etc., weight of which is immaterial and cannot be construed as integral part of the imported item/goods, no duty and taxes can be levied on the weight of the essential/none-essential packing, unless those are also imported as separate items/goods and declaration to the said effect has been made in the GD to the extent of their description, quantity , value and PCT Heading obviously which shall be different from the item/goods packed in that. In the absence of any declaration, neither essential/non-essential packing or its weight cannot be considered an integral part of the imported goods. In the instant case the declared weight of the imported goods for home consumption by the appellant was 6274 kgs, which upon examination was found 6372 kgs i.e. excess by 98 kgs equivalent to 0.56%. Likewise, 8542 kgs, which upon examination was found 8700 kgs i.e. excess by 158 kgs equivalent to 25%. The imported goods weighing to 6372 kgs were packed in essential/non-essential packing weighing to 1460 kgs. The respondent No. 1 and his subordinates construed the weight of 1460 kgs of the essential/non-essential packing also being the weight of imported goods, with the addition of which the weight of declared goods was calculated as 7842 kgs as against declared 6274 kgs excess by 1460 kgs/ 24.03% (precisely 25%), weight of 1460 kgs of essential/non-essential packing is of no significance and could not be added in the weight of the actual imported goods, adding the weight of the same in the weight of the imported goods is nullity , having no warrant of law, even not supported from the outlined procedure given in Examination Manual 1996 and Section 25 of the Act. Essential/non-essential packing material after unwrapping of the imported /purchased goods is in variably discarde d as waste/trash. Hence, weight of the same is immaterial and as such has no nexus with the weight of imported goods, nor forms an integral part of the imported goods.
13. Notwithstanding, as regards to the line of arguments adopted by the representative of the respondents for justifying the addition of weight of essential/non-essential packing in the weight of the imported goods 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 (contents) 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 sans weight of essential/non-essential packing, Only the weight of imported goods matter and that is to be construed as good s, the weight of essential/non- essential packing, cannot be considered through any definition 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 by the general public. No provision of the Act, empowers the Officer of Customs to add weight of essential/non-essential packing in the weight of the imported goods. 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 as contemplated in entry No. (iii) of clause (b) of subsection (2) of Section 25 of the Act, while determining the value of importe d 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 packing material is not permitted to be added under law. The representative of the respondents also laid emphasis on Entry 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 goods 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 manne r akin to those, resultant, stands excluded from Entry No. (ii) of Clause (b) of subsection (2) of section 25 ibid. However , when against any imported item VR is in field issued by Director Directorate General of Valuation under Section 25A of the Act, for levy of custom duty, he determine 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 items/goods so imported namely motorcycle parts are subject to assessment for levy of duty and taxes with the application of either VR or 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/non-essential packing cannot be made part and parcel of asses sable 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, valuation determined under section 25A could not be further saddled in the name of weight of essential/non-essential packing. It is apparent that the value of identical/similar goods is on C&F basis of the net contents of the goods so imported, 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 conta ining no goods. In terms of the respective PCT Heading of the First Schedule , duty and taxes can only be recov ered 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 respo ndents are desirous to collect duty and taxes of Rs.386,402.00 on 1407 kgs on the weight of essential/non-essential packing in the absence of availability of motorcycle parts equivalent to the said weight. 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" and to be construed as double taxation not permitted 4der the Act/Constitution of Pakistan and even of the world and the law laid down in reported judgment 1992 PTD 593, 2003 PTD (Trib.) 928, 2010 PTD 1515 and 2009 PTD (Trib.) 2025.
(Emphasis Supplied). I therefore, hold that no mis-declaration of weight is either apparent or made by the appellant as alleged by the respondents. The Issue No. (iii) is answered in negative.
14. As regard to Issue No. (iv), upon perusal of uploaded documents as defined in Section 2(kka) with the declaration transmitted under Section 79(1) and Rule 433 of the Act/Rules, it has been noted that the shipment has been made by M/s. Brighton Auto Parts Co., Ltd., Taiwan, as per information available on google search engine, it has manufacturing units in Taiwan , China and Vietnam and shipped the goods of either origin from any of the country to their buyers. In the instant case the goods were shipped to the appellant from the Port of Taiwan namely "Haiphong" as mentioned in the B/L, which let to conclude that the goods are of Vietnam origin in addition to sticker/marks and number available on any one of the packet. Mere shipmen t from the port of Vietnam or availability of sticker on carton/package least render the goods of Vietnam origin, unless the goods so imported have engraving of "Made in Vietnam" nothing in this context is available in the examination report with the exception of a sweeping statement readi ng as " origin Vietnam". For levelling allegation mis-declaration of origin, un-refittable tangible evidence is warranted i.e. the goods should have marking or engraving of "Made in Vietnam", which is non-existent. Ergo, there exist every likelihood that the goods may be of China origin as declared, which could had been refuted/controverted by the respondents after seeking advise of their experts of motorcycle industry . The said exercise was also not undertaken and allegation of origin has been levelled of misdeclaration of origin on the appellant in very cursory and unprofessional manner , and that also merely on assumption/presumption and conjectures on the basis of port of shipment available on the B/L , which could not be construed as lone criteria for determinat ion of origin of the imported goods. The Issue No. (iv) is answered in negative.
15. As regard to Issue No. (v), The respondents terms China, Laos, Cambodia, Vietnam and Taiwan one and the same region for the purpose of assessment of the goods imported from these countries and apply single value for levy of duty and taxes, and even by the Director , Directorate General of Valuation, who determined the value of the goods or class of the goods of the origin of aforesaid countries as one and the same and issue VRs under the provision of section 25A with the application of Section 25 of the Act in sequentia l manner e.g. VR Nos.886/2016 dated 25.07.2016, 1005/2017 dated 09.01.2017 and 1163/2017 dated 25.05.2017 for garments of low brands, children (baby/baba) garments and baby diapers and sanitary towel napkin , wherein China and Vietnam are bracketed as of same region and on which one and the same determined: value is applicable for passing of assessment order under Section 80 and :Rule 438 for levy of duty and taxes thereo n. In the instant consignment of the appellant the subordinate of respondent No. 1 assessed the goods of the appellant with the application of VR of motorcycle parts issued by Director , Direc torate General of Valuation for China origin goods despite of the fact that the goods were alleged to be of Taiwan origin. Meaning thereby determination of origin as against declared by the appellant is immaterial as in any case the leviable duty and taxes ought to be one and the same on the basis of applicable value and appropriate PCT heading under which these falls. In the given circumstances levelling charge of mis-declaration of origin was not warranted under law within the meaning of section 32 of the Act, which could only be invoked on a importer (appellant) in case of loss of revenue, which is non-existent in the instant case as held in reported judgment 2003 PTD 552 M/s. Al-Hamd Edible Oil Ltd and others v. Collector of Customs and others, PLD 1996 Karachi 68 M/s. "Kamran Industry v. The Collector of Customs (Export) and 4 others and 2007 PTD 2215 Collector of Customs Exports and another v. R.A Hosiery Works. The Issue No.(v) is answered in af firmative.
16. As regard to issue No. (vi), the impugned loss of revenue has been calculated/determined in the instant case of the appellant on the basis of the values available in VR No. 967/2016 dated 16.11.2016 issued by the Director , Directorate General of Valuation under the provision of Section 25A of the Act and for levelling hidden charge of mis-declaration of value under the provi sion of Section 32 ibid. Neither loss of revenue could be calculated or determined on the basis of the values available in the VR nor charge of mis-declaration of value within the contemplation of Section 32 could be levelled on an importer on the basis of those or, values of identical/similar transaction goods within the meaning of Section 25(5)(6) and Rules 117 and 118 of the Act/Rules, available in data reservoir maintained by PRAL under Rule 110 of the period given in Rule 107(a) ibid. The respondent No.2 despite performing in the capacity of Adjudicating authority completely and intentionally ignored the Provision of Section 32 of the Act direction contained in clause (i) of para 78, Sub-Para (3) of para 101 of CGO 12/2002 dated 15-6-2002 and Serial No. (d) of SRO 499(I)/2009 dated 15.06.2009, which speaks about direct evidence evidential invoice of the same goods /origin and period given in Rule 107 (a) of the Rules. VRs are exclusively meant for the purpose of assessment not for levelling charges for mis-declaration. If that would had been the case, not a single consignment would had been cleared by any Collectorate because in every case value is enhanced on the basis of value available in VR, without levelling charge mis-declaration of value. Therefore, the calculated impugned loss of revenue is without any substance and based on surmises and so the hidden charge of mis-declaration of value.
Beside nullity to the provision of Act and existing practice and as such hold no ground, this has been held by this Tribunal in reported judgment 2014 PTD (Trib.) 190 M/s. Shoaib Tayyab International v. Additional Collector of Customs, Karachi, which has been implemented and attain finality . Hence, the worked out/determined loss of revenue and hidden charges of mis-declaration of value on the appellant are declared to be unsubstantiated/devoid of merit and as such of no legal effect, rendering the contravention, report, show-cause notice and order-in-original as ab-initio void. The same view has been taken by the Hon'ble Supreme Court of Pakistan and High Courts and Tribunal in judgments reported Customs Appeal No. K-249/2000/13372, Customs Appeal No. K-35/2002, Customs Appeal No. K-1670/2001, 2005 PTD (Trib.) 617, 1668/LB and 1669/LB of 2002, Customs Appeal No. K-1281/05, 1986 MLD 790 Karachi PLD 1996 Karachi 68, 2006 PTD 909,2002 PTD 2957 , 2007 SCMR 1357 = 2007 PTD 1858 , 2008 SCMR 438, 1992 SCMR 1083 , 2008 PTD 1250 and 2014 PTD (Trib.)
190. The Issue No.(vi) is answered, in negative.
17. As regard to the Issue No. (vii), the respondent No.1 and his subordinates ough t to complete the assessment of the appellant imported goods by applying value available in VR No. 967/2016 dated 16.11.2016 for levy of duty and taxes. Despite of the fact that the vires of which bas been challenged by the appellant through a revision application under section 25D of the Act before the Director General, Directorate General of Valuation on 16.11.2016 and which is pending without any decision to this date before the Director General. It is settled principal of law that when any order is challenged through an appeal/revision, it stands merged in that and the case stands wide open by virtue of the fact that the order/VR stand abate Resultant, no action whatsoever could be initiated on the strength of the order , likewise, no assessment of the goods of the person who has challenged the vires could be made with the application of the value available in VR, unless those attain finality after crossing all the forum earmarked in the Act as held by Hon'ble Supreme Court of Pakistan in reported judgments 1993 SCMR 39 Central Board of Revenue and others v . Chanda Motors, paras 17 to 22 are relevant and which read as: "17-. Word "finalized "is derived from the word "final" which is define in Chambers 20th Century Dictionary to mean "last decisive, conclusive: respecting the end or motive of a judgment ready for execution- last of series". "Finality" is defined as state of being final completeness or conclusiveness. In Black's Law Dictionary Fifth Edition, word "final" is defined as, "last; conclusive, decisive, definitive; terminated; and completed". In it's used in reference to legal actions this word is generally contrasted with "inter -locatory". Viewed in the light of meanings of the word "assessments" and "finalized", it appears that assessment order as such do not have touch of finally unless all the forum are exhausted in which such orders can be challenged so that the order take the final decision."
18- Legally speaking order of assessmen t passed by Income Tax Officer is an order -of-original authority but is not final for the reason that it can be challenged in appeal or revision as the case may be and would be final only when it goes through all the forums and the finding of the last forum shall be binding as conclusive.
19- The question whether appeals and other remedies provided under the law formed part of proceedings or not came up for consideration before the Supreme Court of India in the case of Garikapati Veeraya v. N. Subbiah Choudhry and others reported in PLD 1957 Supreme Court (India.) 448 it is held as per majority opinion that legal pursuit of a remedy , suit, appeal and 2nd appeal are really but steps in a series of proceedings all connected by an intrinsic unity and are to be regarded as one legal proceeding. Reference can be made to the case of Commissioner of Wealth Tax v. Vimlaban Vadilal Mehta reported in (1984) 145 ITR 11, in which it is held that it is well settled that when an appeal is filed against assessment order before AAC the assessment is thrown open and Appellate proceeding constitute a continuation of a assessment proceeding"
20- In the case of F.A Khan v. The Government of Pakistan (PLD 1964 Supreme Court 520), question came up for consideration that in the case of dismissal of a Government servant for filing a declaratory suit whether limitation would start from the date of order of dismissal to be reckoned under Article 120 of the Limitation Act or from the date of order of Appellate Authority confirming the first order to be reckoned under Article 58 of the Limitation Act. It is held that such right accrued on the date of dismissal but, where there is an appeal on the date of Appellate order upholding dismissal. It is further held that the legislature when its provided a hierarchy of the Tribunal for the determination of a dispute it is really providing one complete procedure for such determination, proceeding before different T ribunal being only step in this procedure.
21- On the question construction, in the light of what is stated above, it can be said without fear of contradiction that order passed in original proceedings is not final unless it crosses all the forums set up under that law in which it can be challenged and the order of the last forum would become final Mr. Rehan Hassan Naqvi, learned counsel for the respondent has submitted before us that there is plethora of case law on the point that even within the same work of Income Tax law, appeals and other remedies provided therein formed part of the same proceedings regarding assessment. In this context our attention is drawn to the case of Chatturam and others v. Commissioner of Income Tax, Bihar reported in (1947) 15 ITR 302. In the reported case assesses of partia lly excluded areas were served with the notices under section 22(2) of the Income Tax Act for furnishing returns. Subsequently Governor of Bihar by notification directed that India Income Tax (Amendment) Act, 1939, the Income Tax Law Amendment Act, 1940 should be deemed to have been applied to the Chotanagpur Division containing partially excluded areas with retrospective effect. Subsequently Regula tion 1 of 1941 was also issued by the Governor to remove doubts as to the retrospective applicability of the Act mentioned in the Notification. Assesses were assessed and their appeals were pending when Regulation 1 of 1941 was issued. It was contended that assessment proceedings initiated and completed against them were invalid and neither the notification nor the Regulation were competent in law to validate those proceedings, it was held by the Federal Court of India, inter alia, that appeals to the Appellate Assistant commissioner were an integral part of the machinery of assessment and therefore it could not be contended that assessment proceedings were over when Regulation I of 1941 was made and the Regulation could not apply to the proceedings covered by those appeals.
18. Even otherwise, the validity of ruling is only 90 days, no assessment under the stale ruling is permitted under law as held by Hon'ble High Court of Sindh 2018 PTD 1746 Sadia Jabbar v. FOP and 2016 PTD 702 Danish Jehangir v. FOP and 2 others revalidated in that "a valuation ruling issued under Section 25A can, in our view, only apply for a certain period and no more. The reason for this lies in the fact that the valuation ruling must be determined using one of the methods of Section 25/the Valuation Agreement. Now at least three of those methods, the identical goods method, the similar goods method and the deductive value method, require the value to be determined "at or about the same time" as the goods being valued. This expression has been defined in Chapter IX of the Rules (in Rule 107) as meaning "within ninety days prior to the importation or within ninety days after the importation of the goods being valued" in the same judgment the Hon'ble High Court nullified para 5 invariably available in all ruling that "in cases where declared/transaction value are higher than the Custom values determined in the ruling, the assessing officer shall apply those value in terms of subsection (1) of Section 25 of the Custom Act, 1969, "while holding "that any valuation ruling issued with the said direction is ultra virus to Section.
25A because it contemplates and permits a predetermination of Custom Value. It is impermissible to apply Transaction value in terms of Section 25A the respondent are applying VR No.967/2016 dated 16.11.2016 for the assessment of appellant imported goods, which otherwise could not be applied for two reasons (i) it has been impugned before Director General Valuation through Revision Application under the provision of Section 25D of the Act, hence it is non-existent to the extent of appellant and (ii) it is stale as its validity stands expired on 15.02.2017 as such having no warrant of law, any assessment made with the application of it is without lawful authority and ab- initio, void. In the given circumstances, question arises that on which value. assessment of the appellant goods have to be made, without any exception on transaction value as expressed in Section 25 ibid, if not than on identical similar goods import value as contemplated in Section 25(5), (6) and Rules 117 and 118 of the Act/Rules as enunciated in Rule 110 reading as "the Custom value shall be determined on the basis of data of import" maintained by PRAL of the period given in Rule 107(a) of the Rules, which upon perusal of the data supplied by the respondents representative are (i) Engine Valve Spare Parts @ US $ 1.25/kg (ii) Ring Set @ US $ 1.50/kg (iii)
Piston Kit for motorcycle @ US $ 1.40/kg (iv) Piston Kit for rikshaw @ US $ 1.35/kg (v) Ring Set for Rikshaw @ US $ 1.35 /kg. The Issue No. (vii) is answered in negative.
19. What has been discussed hereinabove, particularly the interpretation of law, legal propositions and observations made thereon and to follow the ratio-decidendi observed by the Superior Courts, I cancel contravention report/show-cause notice framed/issued and set aside the connected order passed by respondent No.2 being illegal, void and ab-initio and order assessment of the goods on the values given in Issue No. (vii).
Appeal is accordingly allowed with no order as to cost. Pay order submitted as security against the duty and taxes, redemption fine and penalty are ordered to be returned after cancellation.
20. Judgment passed and announced accordingly .