JAHANZAIB WAHALAH, MEMBER JUDICIAL-III. This Judgment will disposes of aforementioned (05)
Customs Appeals filed by the appellants against Order-in-Original No. 1268/2018-2019 dated 28.06.2019, Order-in-Original No.1270/2018-2019 dated 08.06.2019, Order-in-Original No.1272/2018- 2019 dated 28.06.2019, Order-in-Original No.1271/2018-2019 dated 28.06.2019 and Order-in-Original No.1269/2018-2019 dated 28.06.2019 passed by the Additional Collector of Customs (Adjudication- I), Karachi. These 05 appeals involved identical issue of law and facts. In view of aforementioned position, the same were heard together and are being decided simultaneously through this common order in the light of judgment of the Hon'ble High Court of Sindh in Special Customs Reference Application No. 157/2008 (S.M Naqi son of Syed Muhammad Hussain, Karachi v.
Collector of Customs (Adjudication-I) and others, Karachi).
2. Since all the appeals have similar facts and grounds hence there is no need to discuss the facts of all appeals separately. Brief facts of the Customs Appeal No.K-1391/2019 as reported are that certain importers are importing the chemical, named "Tri-basic Lead Sulphate" under the garb of the brand name "TS-T" by making mis-declaration of description in order to avoid assessment at its actual evidential value. The appellant has cleared the consignments at grossly on lower value
(9) US. $ 0.75/kg instead of actual value of US $ 2.60/kg. On the other hand the appellant's stance is that during the course of business they have imported a consignment of "TS-T" chemical of PCT Heading 2833.2920 @ US $ 0.75/kg and for clearance of the same the aforesaid Goods Declaration
(GD) was filed in terms of Section 79(1) of the Customs Act, 1969. After examination, the Assessment Groups' Officers was allowed release of consignments in terms of Section 83 of the Act read with Rule 442 the Custom Rules, 2001. Moreover, the appellant's consignments were imported against Letter of Credit (L/C) and the declared value was also matched with the prevailing data values of similar kind of goods / specification and the duty and taxes were accordingly assessed as per value determined / ascertained under Section 25(1) of the Act. However, the respondents in this case after almost one (01) year -issued the Show-Cause Notices to the appellants with the allegation that the appellants by mis-declaring the description of "Tri-Basic Lead Sulphate" as "TS- T" have avoided the application / assessment of higher evidential data value of US $ 2.60/kg as per the provisions of Section 25(5) of the Act.
3. It is necessary to highlight the background of cases that as per the contents of the impugned Order-in-Original, the Respondent No.2, i.e. the Directorate. General of Intelligence and Investigation-Customs, Karachi had allegedly intercepted an out of charged and assessment completed consignment vide GD No.KAPW-HC-99520-04-01-2019 of "TS-T" chemical, which was imported by one of the similarly placed importer M/s. Karachi Chemicals, Lahore (NTN-2139259), on the pretext of mis-declaration of description with an allegation that the importer was avoiding application of higher evidential value of US $ 2.60/kg. The Respondent No.2 by utilizing the un-fair means / discretions had framed a contravention report against M/s. Karachi Chemicals, whereby the importer was alleged / charged for mis-declaration of description and value for all of its previously imported consignments including this. The Respondent No.2 had even got the samples tested and goods turned out to be "Sulphate of Lead" of 68% purity level of Lead (Pb) as per final HEJ Laboratory's test reports dated 12.02.2019 whereas, the GD which was using for higher evidential value by the Respondent No.2 was of "Sulphate of Lead" of approx 90% purity which indeed justified the higher value of the so-called evidential Goods Declarations (GDs). Nevertheless, subsequently at Adjudication stage the learned Collector of Customs (Adjudication-1) vacated the charges leveled on M/s. Karachi Chemicals vide Order-in-Original No.1136/2018-19 dated 14.05.2019, with the findings that firstly the value was determined by the Customs Collectorate was in accordance with the level of purity, the evidential value was not within the applicability period that is ninety (90) days prior and more importantly keeping in view the Respondent No.2 has no jurisdiction to make any intervention in a matter of valuation in terms of Section 25 of the Act. It was also hold that 'TS-T' is the brand of supplier for "Lead Sulphate" and considering that the PCT Heading 2833.2920 clearly confirms that the said PCT Heading only covers "Sulphates of Lead" as such there was no mis- declaration of physical description. The learned Collector has not only vacated the show-cause notices issued to the present importers but also decided twelve (12) other identical cases in favour of the importers. A list of subject cases provided to the respondents by the appellants during hearing but no cogent rebuttal was offered. It is pertinent to mention here that the appellants had correctly and lawfully classified its consignment under the PCT Heading of 2833.2920 which only covers "Sulphate of Lead". Indeed both application of assessment rules/laws and determination of quality of the goods were ascertained in the light of the declared PCT Heading and description, therefore, accordingly there was no mis-declaration as to the description of the goods. In above- mentioned Adjudication Orders it has also been acknowledged and accepted that with declaration of HS Code / PCT Heading 2833.2920 that is exclusively for chemicals of "Sulphate of Leads", an importer cannot be charged for mis-declaration as to the description of the goods. It is very much clear that under Customs realm the correct HS code / PCT classification of the goods determines the correct and exact specification / physical description of the imported goods. Under WeBOC, the data of the previous GDs for valuation purpose is also available with reference to the goods' classification PCT Heading 2833.2920, which mentions all the commodities of that HS Code's family but having different values due to specification, purity and usages. The said data includes "Teri- basic Lead Sulphate", "TS-T", "TLS", etc. Without prejudice to the above, it is also pertinent to mention here that in terms of Para-101(B) of CGO-12/2002 even if there is change of description/classification but there is no change of rate of duty than there is no question to charge an importer for mis-declaration of Section 32 of the Act. Moreover, the appellant's consignment was imported at a true transactional value through Letter of Credit (L/C), therefore, considering the law settled by the Hon'ble High Court of Sindh in its number of judgments including the judgments' in the case of Rehan Umer (2006 PTD 909) and Saadia Jabbar (2018 PTD 1746) the declared transaction value cannot be discarded merely on so-called data value which is otherwise of goods having different specification / purity. The Respondent have disregarded the submissions of the appellants, the Orders-in-Original of the Senior Adjudicating Authority and also the relevant unequivocal law i.e. Section 25(5) of the Act and Rule 107(3) of the Customs Rules, 2001) and passed an un-reasoned and illogical impugned Order-in-Original. The learned Collector (Adjudication-1) stated in his order that the appellant's imported "TS-T" and M/s. Newage Cables imported Tri-Basic Lead Sulphate", are two (02) different commodities due to purity and usage application, therefore, assessm ent as per the provisions of Section 25(5) of the Act, as an evidence of identical goods, is not acceptable under the law. The appellant has also stressed that the Collectorate of Customs (Adjudication) vide respective Order-in-Original Nos. (i) 1136/2018-19 dated 14.05.2019, (ii) 1147/2018-2019 dated 16.05.2019, (iii)----- 1148/2018-19 dated 16.05.2019 and (iv)
371 to 374/2019-20 dated 31.10.2019 have categorically affirmed that the value of the appellants and other importers determined in accordance with the level of purity / specification and more importantly for the evidential value to be applied has to be within the applicability criteria of identical and similar goods in terms of Section 25 of the Customs Act, 1969, read with the Customs Rules, 2001. The same fact can also be confirmed from two Certificates / letters of the Malaysian manufacturer, however, the respondents have acted arbitrarily and denied the correct application of law by a Senior officers / Superior Adjudicating Authorities. The Respondent No.1 was bound by the Orders of her Senior Adjudication Officers as per the judicial principle. Further, subsequently more than ten (10) Show-Cause Notices of the respondents have been vacated by the Collectorate of Adjudication, Karachi, the list of which was delivered to the respondent No.2 representative appeared for hearing.
4. The appellants being aggrieved and dissatisfied with the impugned Order-in-Original, received by the appellant M/s. Qazi Company whereby the respondent No.1 erred in Law as well as on facts and failed to apply a proper judicial mind and directed to the appellant to pay the alleged / short paid amount of duty and taxes amounting to Rs.15,42,813/- along with penalty of Rs.100,000/- and Rs,50,000/- on the Customs Agent despite the fact that the application of the higher value is not even permissible as per the provisions of Rules 107(a) of the Customs Rules, 2001, therefore, the appellants prefer to file the appeals under Section 194-A of the Act before this Tribunal on the grounds mentioned in the memo. of appeal.
5. No cross objection; were filed by the respondents despite directions during hearings, however an officer namely Mr. Ejaz, 1.0 appeared on behalf of Respondent No.2 and requested for adjournment on the pretext that he has no case file. Ironically, out of six (06) hearing opportunities only on two occasions the D.R of the Respondent No.2 has attended the Court / Tribunal and that is too just for the adjournment of hearing on the pretext of submissions of para-wise comments. As there is no rebuttal / cross objection filed on behalf of the respondents hence I have no option left but to decide the cases on basis of available record.
6. The crux of the cases are that the appellants have been alleged for mis-declaration of description and concealment of actual value and evasion of the custom duties and taxes. Precisely according to the Respondents No.2 that the appellants have imported "Tri-basic Lead Sulphate" which was presumably ought to be assessed at unit value US $ 2.60/kg under the garb of "TS-T" which was imported at a unit value @ US $ 0.75/kg. The appellants were therefore, alleged for violation of the provisions of Sections 32(1), 32(2), 32A and 79(1) of the Customs Act, 1969, punishable under clauses (14), (14A) and (45) of Section 156(1) ibid, read with Sections 3, 6, 7A, 13(2), 33 and 34 of Sales Tax Act; 1990, further read with Sections 148 of the Income Tax Ordinance, 2001.
As per respondent No.2 the importers in association with their clearing agents were involved in the import of "Tri-Basie Lead Sulphate under PCT 2833.2920 of Malaysian origin by mis-declaring its description as "TS-T" only in order to avoid assessment at its actual evidential value of US $ 2.60/kg with a view to evade livable duty / taxes. The respondents blocked a container of the above- named importer bearing GD No. KAPW-HC-99520 dated 04.01.2019 online after the same was out of charged and assigned to gate out by the clearance Collectorate of MCC-Appraisement (West), Karachi. After examination, the representative sample of the items were drawn and sent for laboratory test to Custom Laboratory, Custom House, Karachi in the first instance and secondly to the HEJ, Research Institute of Chemistry, University of Karachi, for chemical analyses. As per results from both the labs confirmed description of said representative sample as "TS-T" to be "Lead Sulphate". The goods were deliberately mis-declared by mentioning only value description of "TS-T" on GD in order to get the items assessed at the lower value instead of applicable value. The previous clearances of the aforementioned importers and others under various GDs during the years 2015 to 2018 were also scrutinized and believed that in these GDs description was also mis- declared merely as "TS-T" with the same modus operandi. Based on their above presumptive conclusion a contravention report bearing C.No.26-Appg-II/DCl/Cont./Qazi & Company/2019, was issued by alleging that respondents have deliberately acted in violation of the provisions of Customs Act, 1969 and other allied laws as mentioned above with the intention to cause revenue loss to the national exchequer by releasing the goods at grossly under invoiced value vide GD No.KAPW-HC-208151- 22-06-2018. In reply the appellants have denied the charges of mis- declaration of description as well as value and contended that they are not involved in alleged offence. It was contended by the appellants that the impugned consignment was duly examined assessed and released by the relevant Customs Authorities while keeping in view its declared contents and also considered the clearance data. It has also been contended by the appellant importer that the ease making agency has no jurisdiction to frame case on the point that the Customs Value was not determined, correctly in terms or section 25 of Customs Act, 1969. The appellant's contention carries weight that the assessments in all previously cleared GDs were completed by the Assessing Group after examining all aspects before release of the goods. The appellant have placed on record and convincingly explained that "TS-T" is the commercial trade name / label given by the supplier to the particular type of "Sulphate of Lead", the importers usually import and declare the same under PCT Heading 2833.2920 which infact only covers "Sulphate of Lead" therefore, indeed there is no mis-declaration as to the physical description or any other content of the imported goods on their part. The appellant further contended that they have clearly classified the goods under the correct PCT Heading in order to enable the Collectorate to assess the imported goods keeping in view all the relevant information / data available with the clearance Collectorate. As regards valuation aspect, it has been observed that the clearance Collectorate considered available data values, in accordance with law, in the given circumstances and the case making agency has no justification as well as jurisdiction to question the assessment / determination of the Custom Value by the clearance Collectorate and thus illegally acted beyond its mandate. The appellant / importer also produced the relevant literature and data of the impugned goods in support of their contention. It was also vehemently emphasized by the appellant / importer that the goods TS-T (Sulphate of Lead) was imported against proper letter of credit (L/C). The literature / manufacturer's certificates and the HEJ Laboratory's test report of M/s. Karachi Chemical's seized consignments confirms that the "Tri-basic Lead Sulphate", valued @ US$ 2.60/kg imported by the cable manufacturers and the "TS-T" (Lead Sulphate), imported by the appellants and other commercial importers are two different trade commodities due to the difference in quality, purity and the subsequent usage. The appellants demonstrated that as per HEJ's report dated 12.02.2019 which was obtained by the case making agency after seizure of M/s. Karachi Chemicals' consignment imported through GD No.KAPW-HC-99520-04-01-2019), the purity of TS-T was about 60% to 70%, precisely 65% whereas the Tri-basic Lead Sulphate of having purity above 90% thus, both the commodities cannot by equated at par. It has also been substantiated by the appellants that owing to the high percentage of purity, the Tri-basic Lead Sulphate of@ US $ 2.60/kg have its specific use for making Electric Cables because of high percentage of purity for heat resistance. Whereas the "TS-T" (Lead Sulphate) having purity of Lead (Pb) up to 60 %-70% is to be used in manufacturing of the ordinary PVC Plastic articles. It has also been observed that in this case the goods have been imported against letter of credit (L/C) directly from Malaysian manufacturer and not from a wholesaler. The said manufacturers profile depicts products which clearly indicate the "TS-T" as Lead Sulphate, therefore, the department's contention on description of the imported goods was vague is incorrect because of the Customs House data is full of this name's description. As the PCT declared as 2833.2920 was correct and TS-T is well known brand of Lead Sulphate, therefore, there is no reason to believe that there was any mis-declaration of description. It is also observed that the case has been framed by the Directorate General of Intelligence and Investigation, FBR (Customs), Regional Office, Karachi on the basis of a seizure case made by them in respect of the importer, namely M/s. Karachi Chemicals, Lahore. It is pertinent to mention here that in the referred case of M/s. Karachi Chemical, Lahore, the goods were got tested but in the impugned case where the goods were cleared in June, 2018, no such test was conducted by the Customs / case making agency and there is no sample with them for such test, therefore, how it is possible to determine the exact specification / purity after clearance of the goods. For the sake of information and the arguments, it is pertinent to mention here that in the referred seizure case of M/s. Karachi Chemical, Lahore decided by the learned Collector (Adjudication-1), vide Order-in-Original No.1136/2018-19 dated 14.05.2019, the Show-Cause Notice was vacated on the basis of HEJ Laboratory's test report. It is further observed that in the similar ten
(10) cases the Show-Cause Notices have been vacated by the Adjudication Collectorates. It is also noticed that, besides one or two, all the Order-in-Original haves been accepted by the Respondent No.2 / case making agency and no appeal has been filed. The facts and circumstances are proving that the under reference cases have been framed by the Directorate on their own fabricated belief, assumption and presumptions. Further, it has also been observed that the assessm ent of all the consignments have been re-opened without jurisdiction in violation of sections 25 and 195 of the Customs Act, 1969. The case was made for alleged mis-declaration whereas the impugned goods were assessed under Section 80 of the Customs Act, 1969 by the Customs Assessing Officers appointed under Section 3 of the Customs Act, 1969, even up to the level of "A.C/D.0 Assessm ent." who were the appropriate officers to deal with Customs Valuation under Section 25 the Customs Act, 1969 whereas, keeping in view the Notification SRO 486(I)/2007 issued by the Board regarding jurisdiction of the Directorate's Officers, and also considering the Honorable Sindh High Court in the case of Saadat Khan v. Federation of Pakistan (2014 PTD 1615) where it has been clearly decided that officers of the Directorate General of Intelligence and Investigation have no powers to deal with the matters of the Customs in respect of interpretation of the PCT classification and determination of Customs valuation. Therefore, the Directorate's contravention report which resulting in issuance of the Show-Cause Notice and the impugned Order-in-Originals are held to be void ab initio and of no lawful substance and have no legal consequences.
7. In view of the above, I am also of the firm view that in presence of analytical certificates provided by the manufacturer / supplier, the HEJ Laboratory's test report confirming the strength / percentage of "Lead" (Pb) of TS-T brand Sulphate of Lead which is less than the imports of "Tri- basic Lead Sulphate" made by the cable manufacturers, hence, due to the change of specification, quality, usage and less strength / percentage of Lead (Pb), the price cannot be equated at par because the goods cannot be termed as "identical" and / or "similar" within the meaning of subsections (5) and (6) of Section 25 of the Customs Act, 1969. Further the facts and circumstances of the case are also giving B credence to the fact that the appellants have been discriminated by the respondents in the presence of data of the goods cleared as "Sulphate of Lead" under PCT Heading 2833.2920 which clearly shows that even the goods of Korean origin were cleared (a US $ 0.50/kg which proves that the Assessing Officers of the clearance Collectorate have determined the values after considering the strength, percentage of Lead (Pb) and its usage, therefore, I do not find any substance in the Contravention Reports of the Directorate of Intelligence and Investigation-Customs, Karachi and impugned Orders-in-Original, which have been based on presumption after clearance of the goods. Resultantly, all these appeals are allowed and the impugned Order-In-Originals passed by the Respondents set aside being uncalled, unwarranted by law having been passed in an arbitrary and capricious manner.
8. Judgment passed and announced accordingly.