ABDUL JABBAR QURESHI, M EM BER JUDICIAL-I.---By this judgment, we intend to dispose of Customs Appeal bearing No.K-1819/2015 directed against Order-in-Original No.128/2015-16 dated 23.11.2015 passed by learned Collector of Customs (Adjudication-H), Custom House, Karachi.
2. Brief facts of the case are that the Model Customs Collectorate of Appraisement (East). Customs House, Karachi vide contravention report No. 4(402)KAPE-DC(IV)/2015 dated 21-04-2015 has reported that M/s. Lucky Cotton Mills (Pvt.) Limited. (NTN-2224079) 23-C, Khayaban-e-Sehr, Phase- VI, D.H.A, Karachi imported (17) consignment of "Raw and Ginned Cotton" and filed goods declaration bearing GD numbers mentioned as below The detail of the case is as under: 1.Name and address of the importersM/S. Lucky Cotton Mills (Pvt.) Ltd. (NTN-224079)23-C Khayaban-e- Seher, Phase-VI, D.H.A., Karachi 2.No. of GDS where the contravention was detectedKAPE-HC-10061-07-08-2013/ KAPE-HC-26034-27-09-2013/ KAPE-HC-30838-11-10-2013/ KCSI-HC-26033-27-09-2013/ KAPE-HC-3671-18-07-2013/ KCSI-HC-150651-02-05-2013/ KCSI-HC-168891-31-05-2013/ KCSI-HC-125753-19-03-2013/ KCSI-HC-130201-27-03-2013/ KCSI-HC-184817-27-06-2013/ KAPE-HC-61139-13-01-2014/ RAPE-HC-67233-30-01-2014/ KAPE-HC-60969-13-01-2014/ KAPE-HC-70445-10-02-2014/ KAPE-HC-75783-24-02-2014/ KAPE-HC-76339-26-02-2014/ KAPE-HC-82066-17-03-2014/ 3.Description of goods"Raw and Ginned Cotton"
4.Total Value of the Imported goodsRs.236,063,462/- 5.Total Amount of TaxesRs.9,442,538/- 6.Name of law violated Evasion of taxes by misusing of SRO 1125(I)/2001 dated 31.12.2011 and amending SRO 154(I)/2013 dated 28-02-2013 7.Sections of law violated.Sections 32, 32(2) and 79 of the Customs Act, 1969, Sections 33 and 34 of the Sales Tax Act, 1990 and Section 148 of the Income Tax Ordinance, 2001, Punishable under Clauses (14) and (14A) of Section 156(I) of the Customs Act, 1969, Clause (c) of Section 33 of the Sales Tax Act, 1990 and Section 148 of the Income Tax Ordinance, 2001.
3. We have carefully examined the record of the case and heard the rival parties. The, appeal hinges on the sole point that whether the concessionary regime of sales tax under SRO 1125(I)/2011 dated 31.12.2011 was available and reduce rate of withholding tax was applicable or not.
4. There is no ambiguity regarding the description of the imported goods vide the 17 GDs mentioned in the impugned show-cause notice and resulting Order-in-Original. The declared description on each GD is "Raw and Ginned Cotton" covered under PCT 5201.0090. The period of import of the above cited 17 GDs spreads from August 2013 to March 2014. The Order-in-Original reflects that the Adjudication Officer considered all the relevant points and issued a detailed order rejecting the stance of the Appellant. That a careful perusal of the claimed SRO 1125(I)/2011 as was prevalent at the time of imports of the Appellant reveals that concessionary regime envisaged in SRO 1125(I)/2011 was available to the Textile products beyond spinning stage. The relevant part of SRO 1125 are reproduced below: "(i) The benefit of this notification shall be available to only to such person doing business in textile (including jute), carpets, leather, sports and surgical goods sectors, who are registered as manufacturer, importer, exporter or wholesaler under the Sales Tax Act, 1990, and appear on Active Tax Payers' List (ATL) on the website of Federal Board of Revenue,
(ii) this notification shall apply from a) spinning stage onwards, in case of textile sector; b) production of PTA or MEG, in case of synthetic; c) regular manufacturing, in case of carpets and jute products; d) tannery onwards, in case of leather sector; and e) organized manufacturing, in case of surgical and sports goods;
5. That above clearly reflects that any textile related product which falls in the category prior to spinning stage was not covered under SRO 1125(I)/2011. Further the Board's letter vide C.No.1(7)WHT/2006 dated 30.06.2015 cited by the Appellant is irrelevant as it pertains to withholding issue (not related with this case) therefore the citation of the same by the Appellant cannot provide any remedy to him. It is pertinent to mention that Board's clarification reveals that to avail the benefit of reduced rate of withholding tax @ 1% it is imperative for the Appellant to fulfill the condition of SRO 1125(I)/2011 dated 31.12.2011. As discussed above, the import made by the Appellant do not qualify under the condition SRO 1125(I)/2011 dated 31.12,2011 since raw and ginned cotton has been excluded from the preview of the said SRO. Since the importer do not fulfill the condition of SRO 1125(I)/2011 dated 31.12.2011, therefore, they are, not entitled to the reduced rate of withholding tax @ 1 % as contained in Board's aforesaid clarification.
6. Similarly the argument of the Appellant that customs officers are not empowered to record the short paid / not paid sales tax at import stage does not hold good. Keeping in view the insertion of the expression "recovery" in section 6 of the Sales Tax Act, 1990 vide Finance Act, 2015.
7. Therefore, in view of above discussion we do not find any cogent and plausible reason to interfere with the impugned Order-in-Original. The appeal is rejected for the reasons recorded above. No order to cost.