ABDUL JABBAR QURESHI, MEMBER JUDICIAL-I. By this order, I intend to dispose of Appeal No.K- 7418/2021 filed against Order-in-Original Nos.767 to 768/2021-2022 dated 15.07.2021 passed by learned Collector of Customs (Adjudication-II), Karachi.
2. Brief facts of the case stated in the impugned order are that the MCC Appraisement and Facilitation (East), Karachi vide its contravention report dated 18.11.2020 reported that during post released audit it has been found that M/s. Younus & Sons (Pvt.) Ltd., Karachi imported consignment of goods "2/s Coated Writing Paper in Sheets (gloss) (Nevia brand)" from China vide GDs as tabulated in the show-cause notice during the period from April, 2020 to October, 2020. The post import clearance data of PRAL WeBOC reveals that goods were released under PCT heading 4810.1910 attracting 20% customs duty reduced to 16% on strength of FTA certificates under SRO 1640(1)/2019 dated 31.12.2020 which were actually classifiable under PCT heading 4810.1990 being not specifically meant for "Writing" only chargeable to 20% Customs Duty having no ETA concession. The classification declared on scan documents is in conformity with the classification determined by the Assessing Group, the Importer / Clearing Agent deliberately mis-declared the PCT in the GDs, and have evaded an amount of Rs.3.056,105/- of Government revenue (duty/taxes).
Accordingly, M/s. Younis & Sons (Pvt.) Ltd, Karachi was called upon the show-cause under the provisions of Sections 32(1) & (2), 32A and 79 of the Customs Act, 1969 read with Sections 3, 6 and 7 of the Sales Tax Act, 1990 and Section 148 of the Income Tax Ordinance, 2001 invoking penal provisions of Section 156(1)(14)(14A) of the Customs Act, 1969 etc.
3. A Show-cause notice issued and the matter was adjudicated by the learned Collector of Customs (Adjudication-II), Karachi passed an Order-in-Original Nos.767 to 768/2021-22 as under:-
6. I have carefully examined the facts of the case and have gone through the record besides giving due consideration to the reply of the respondent, parawise comments of the department, rejoinder filed by the respondent and detailed arguments of the two parties. I have come to the following conclusions / observations from the above discussion:- A. The utility of the impugned goods is found to be of multiple kind like writing, printing etc as admitted by the respondent and also corroborated through the manufacturer's website that the goods are meant for application in "fine magazine, magazine covers, calendars, catalogues, brochures, posters, etc".
B. The utility of the impugned goods is not found to be restrictive / limited to the purpose of writing only.
C. According to the scheme of classification, Chapter Notes and spirit of the Tariff and Nomenclature, the PCT 4810.1910 has a very limited and specific scope which caters only those papers which are solely meant for writing and have no other possible usage.
D. According to the scheme of classification, Chapter Notes, spirit of the Tariff and Nomenclature, the PCT 4810.1990 caters those papers which have other and multiple uses.
E. Rule 3(c) of GIR as contested by the department in their favor is found to be relevant and justified with regard to the grounds of the case made by the department. Rule 3(c) clarifies that "when goods cannot be classified by reference to 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration".
F. Note 7 of chapter Notes of chapter 48 as pleaded by the department as a ground of their contention is also found relevant and correct. The said Notes slates that "Except where the terms of the headings otherwise require, paper, paperboard, cellulose wadding and webs of cellulose fibres answering to a description in two or more of the heading 48.01 to 48.11 are to be classified under that one of such headings which occurs last in numerical order in the Nomenclature".
G. The above enumerated observations / conclusions establish that the case of the department is on merit.
7. In the light of above facts and case record, I am convinced that entire charges enumerated in the show-cause notice against the respondent stand established. Therefore, the respondent M/s. Younis & Son (Pvt.) Limited (NTN # 4187857), Plot Nos.1726 / 1062, Baldia Town, Karachi, West Baldia Town, Karachi are directed to pay evaded revenue amounting to Rs.3,056,105/-. Moreover, a penalty of Rs.300,000/- (Rupees Three Hundred Thousand Only) is imposed on the importer M/s. Younis & Son (Pvt.) Limited (NTN # 4187857), Plot Nos.1726 / 1062, Baldia Town, Karachi, West Baldia.
Town, Karachi and a penalty of Rs.25,000 (Rupees Twenty Five Thousand Only) is also imposed on the Clearing Agent M/s. Eastman Agencies (CHAL No.KCUS-933), Room No.4/28, R.K. Square Ext, New Challi, Karachi under clause 14 of Section 156(1) of the Customs Act, 1969 and further warned to remain careful in future:
4. The appellant being aggrieved with the aforesaid impugned Order-in-Original Nos.767 to 768/2021-22 dated 15.07.2021 passed by the learned Collector of Customs (Adjudication-II), Karachi filed the instant appeal before this Tribunal on the following grounds:- A. That the show-cause notice dated 12.04.2021 issued for assumption of jurisdiction of adjudication and to pass order or decision under Section 179 of the Customs Act, 1969 in this case is without lawful authority and illegal, as the Officer of Customs who issued show-cause notice was not posted as Adjudicating Authority as defined under Section 2(a) of the Customs Act, 1969 in terms of FBR's Notification bearing No.0750-C-I/2021 dated-02.04.2021 read with Notification bearing No.0862-C1/2021 dated 13.04.2021 under which the Officer having designation of Collector of Customs (Adjudication-II), Karachi who issued the show-cause notice and assumed jurisdiction was already transferred to the post of Director General, Directorate General of Law and Prosecution, Islamabad w.e.f 02.04.2021 and had assumed charge on his new post w.e.f 12.04.2021.
B. That the show-cause notice is a foundational document for assumption of jurisdiction under the statutory provisions of Sections 32, 32A and 179 of the Act, 1969 which has been issued by the Officer of Customs having no jurisdiction and lawful Authority in terms of FBR's Notification bearing No.0750-C-I/2021 dated 02.04.2021 read with Notification bearing No.0862-C-I/2021 dated 13.04.2021, hence, the mandatory requirement of statutory provision(s) has been not fulfilled in this case which entailed the entire proceedings being corum non judice and rendered the entire exercise of authority ab initio void, illegal and without jurisdiction. Reliance is made on 2010 PTD 1216 and 2013 PTD (Trib.) 600.
C. That in this case the show-cause notice issued by the Officer was not posted as Adjudicating Authority i.e Collector of Customs (Adjudication-II), Karachi for assumption of jurisdiction under Section 179 of the Customs Act, 1969 was without lawful authority and jurisdiction, hence, the subsequent proceedings of adjudication and the impugned order passed therein have also become without lawful authority and jurisdiction as per settled law.
D. That the impugned order is arbitrary and illegal, wherein, the jurisdictional defects and objections raised by the Appellant in its written response / reply and re-joinder have neither been discussed and considered nor confronted and adjudicated by the Adjudicating Officer.
E. That the impugned order has been passed pursuant to the show-cause notice dated 12-04-2021 during the pendency of petition C.P. No.D-2977/2021 filed before the High Court of Sindh, Karachi, wherein, the show-cause notice and the adjudication proceedings emanating thereon have been challenged, therefore, the impugned order is abuse of process and proceedings the Court proceedings.
F. That while passing impugned order the Adjudicating Officer malafidely ignored and made defiance of referred judgments of High Court of Sindh, Karachi passed in two identical cases [SCRA No.426/2019] and [2016 PTD 2910] having similar controversy of application of classification of goods subsequently determined after customs clearance of goods, the Honorable Court has already held in its judgments passed in aforesaid cases that "subsequent determination of classification could only be applicable prospectively after issuance of public notice having no retrospective effect as required to be issued under para-2 of CGO 12/2002". Therefore, the impugned order is illegal and not in accordance with the law laid down by the High Court.
G. That the Adjudicating Officer while passing impugned order malafidely ignored the contentions and grounds of the Appellant that contravention made in this case by the respondent is violation of Section 223 of the Customs Act, 1969 under which CGO 12/2002 dated 15.06.2002 has been issued having binding effect, wherein, as per Para 74 subsequent determination of classification or change in practice of classification of goods will not have retrospective effect, but, will be applicable from the date of determination of classification and issuance of Ruling.
H. That the impugned order has been passed in arbitrary and illegal manner without considering the grounds, contentions and supporting documents submitted through written response/reply and re-joinder by the appellant.
I. That the Adjudicating Officer has passed the impugned order without giving any fact finding and in absence of any adverse material or evidence, wherein, charges enumerated in the show-cause notice including criminal charge of misdeclaration of classification have been arbitrarily and illegally established. Therefore, the impugned order is illegal and not sustainable in the light of law laid down in the judgment of Honorable Supreme Court passed in case of Collector of Customs v.
Pakistan State Oil reported in PTCL 2012 CL 27 as well as judgment of Honorable Sindh High Court passed in case of Muhammad Waheed v. Customs Appellate Tribunal reported in 2016 PTD 35.
J. While passing impugned order the Adjudicating Officer has deliberately not appreciated that contravention case of misdeclaration of classification has been made after departmental practice of classification, assessm ent and customs clearance of 250 consignments of identical goods under HS Code 4810.1910 and criminal provisions of Sections 32(1) & (2) and 32A of the Customs Act, 1969 along with penal provisions of Section 156(1) (14), (14A) and (45) have been invoked in violation of para 101(B) of CGO 12/2002 dated 15.06.2002 issued under Section 223 of the Act, 1969 having binding effect on the Respondent. Therefore, the impugned order is arbitrary, illegal and not sustainable in law as the Hon'ble High Court Sindh in the case of Messrs Sadat Khan v. FOP and others reported at 2014 PTD 1615 has held that "it is settle proposition of law that an interpretation of a notification as well as the classification of the goods does not fall within the definition of mis- declaration".
K. That in the impugned order the Adjudicating Officer has not applied his independent judicious mind who mis-interpreted the Rule 3 of the General Rules of Interpretation of Harmonized System under which the subject goods are/were classifiable under HS Code 4810.1910 reference can be drawn from the consignments of identical goods of Japan origin having declared description "Both Side Coated Paper" assessed and cleared by the Customs under HS Code 4810.1910.
L. That the consignments of goods were imported from china having description "Two Side Coated Writing Paper" covered under SRO 1640(1)/2019 issued under Pak-China FTA supported with Certificates of Origin issued by the designated Government Authority of China having HS Code 4810.19 and national HS Code 4810.1910 in respect of which goods declaration(s) which are subject matter of this case were filed under Section 79 of the Act, 1969 which were checked under Section 80 of the Act, 1969 by the Customs who issued Assessment Orders after satisfaction that imported goods classified under HS Code 4810.1910, hence, there was no any misdeclaration of classification made by the Appellant.
M. That the conclusion given by the Adjudicating Officer in the impugned order is erroneous and based on non-reading and mis-reading of facts, documents and relevant law.
N. That Adjudicating Officer while passing impugned order has not followed the referred judgment of Apex Courts having binding effect relied upon by the Appellant which made the impugned order illegal and nor in accordance with the law.
O. That the Adjudicating Officer while passing impugned order has deliberately not considered and ignored the discriminatory treatment of the Department in classification of identical goods being imported from Japan as pointed out by the Appellant with material evidence. Therefore, the impugned order is discriminatory and illegal.
5. That the Respondent / Department supported the Order-in-Original and filed cross objections / para-wise comments through Deputy Collector of Customs, Collectorate of Customs Appraisement (East), Karachi on the date of hearing fixed on 20.09.2021 which have been taken on record, copy supplied to Counsel of the appellant to go through the same who filed rejoinder which has been taken on record for perusal.
6. That on the date of hearing fixed on 30.09.2021, the Departmental Representative appeared on behalf of the Respondent / Department and filed para-wise comments to the rejoinder filed by the Counsel of the appellant which has been taken on record and copy supplied to Counsel who preferred to argue the case. The Counsel of the appellant while reiterating the contents of the appeal, rejoinder and supporting documents argued that it is an admitted fact that the officer who issued show-cause notice dated 12.04.2021 was transferred from his posting of Adjudicating Authority vide Notification dated 02.04.2021, whereas, it is also an admitted fact apparent from the notification dated 13.04.2021 that said officer relinquished charge of an Adjudicating Authority and assumed charge of his new post on the same date i.e 12.04.2021 within government's office timings i.e 9.00 am to 5.00 pm. On the basis of such admitted facts, the mandatory jurisdictional condition has not been fulfilled regarding assumption of jurisdiction to exercise of powers as an Adjudicating Authority defined under Section 2(a) of the Act, 1969 for issuance of show-cause notice and passing order under Sections 32 and 179 of the Act, 1969 in this case. Reliance is made on judgments of Supreme Court cited in 2017 YLR Note 400 and PLD 1972 SC 271. He further argued that contravention case has been made on the basis of subsequent determination of classification PCT heading 4810.1990 having no retrospective effect in respect of goods which were already classified and assessed under PCT heading 4810.1910 and cleared by the customs under Section 80 read with 83 of the Act, 1969 during period from 04/2020 to 10/2020, hence, contravention case of the Department and issuance of show-cause notice and order thereon are prima facie in violation of Para-74 of the CGO No.12/2002 dated 15.06.2002 issued under Section 223 of the Act, 1969 having binding effect on the officers of Customs Department. Reliance is made on judgments of Sindh High Court dated 08.04.2021 passed in SCRA No.426/2019. judgment cited in 2016 PTD 2910, judgment cited in 2016 PTD 35 and judgment, of Lahore High Court cited in 2021 PTD 699.
7. The Counsel of Appellant also argued that contravention case has been made at post clearance import stage without having any adverse post clearance audit report to be issued by the officer Directorate PCA (South), Karachi in exercise of powers conferred by SRO 501(1)/2009 dated 13-6- 2009, hence, the whole contravention case and issuance of show-cause notice and order thereon are based on under challenged findings and decision/opinion of classification committee of Board dated 26.03.2021 which has been given retrospective effect illegally on past consignments of goods assessed and cleared under PCT heading 4810.1910 during the period from 04/2020 to 10/2020. He argued that in absence of allegations of filing of any forged document or payment of less duty/taxes in connivance with some customs officers and on admitted fact disclosed in the show- cause notice at Para-4 as well as on allegations relating to the dispute of correct classification of goods already assessed and out-of-charged invoking provisions of Sections 32(1) & (2) and 32A of the Act, 1969 which are criminal in nature in the show-cause notice is illegal and without lawful authority. Reliance is made on Supreme Court's judgment cited in 2011 SCMR 1279 = 2011 PTD 2220.
Counsel of the Appellant contended that impugned findings and order passed by the Adjudicating Authority are influenced by the findings and decision/opinion of the classification committee of the Board dated 26.03.2021 subsequently issued, whereas, the Adjudicating Authority has illegally not applied its independent judicious mind while exercising quasi judicial function of adjudication under Section 179 of the Act, 1969 and giving impugned findings regarding classification of subject goods tinder PCT heading 4810.1990 instead of PCT heading 4810.1910. Reliance is made on larger bench judgment of Supreme Court cited in 2020 SCMR 649. A/R also contended that the impugned order has been passed in highly arbitrary and illegal manner by preferring departmental favoritism, wherein, written submissions, documents and case laws of the Appellant have neither been discussed nor considered while giving impugned finding and conclusion not supported with any adverse material or evidence particularly any sample of such writing paper having exclusive use of writing which is classifiable under PCT heading 4810.1910 according to the Respondent, he relied upon judgment of Lahore High Court cited in PLD 2010 Lah.138.
8. Counsel of the Appellant vehemently contended that subject goods "2/s coated writing paper in sheets" were imported under un-confronted certificates of origin having HS Code 4810.19 (International) and PTC heading 4810.1910 (National) issued by the designated Chinese Government Authority under the Rules of Origin framed pursuant to the FTA on the basis of such certificates having entitlement of concessionary exemption of 4% duty in terms of SRO 1640(1)/2019, the impugned goods were assessed, classified and released, without any classification objection as customs authorities have no power to deny such certificate of Chines Authority in terms of Rule 22 of the said Rules. The Counsel pointed out that the assessment order passed under section 80 of the Act, 1969 which are subject matter of show-cause notice have neither challenged under section 193 nor reopened under section 195 of the Act, 1969 which established prima facie case of the Appellant and mala fides of the Respondent. The Counsel also contended that single dash (-) of heading 48.10 defines paper and paperboard having -- others and --- writing paper which if read in juxtaposition with test report of HEJ, Rule 3(a) of GRI, Valuation Ruling No. 1354/21,2 assessm ent orders/GDs, DIT letter, assessment order/GD No.63174 and customs observations, Manufacturer Certificate and assessment orders / GDs of Japan origin identical goods, it shall prima facie established that the respondent has no case on merits who are misinterpreting the import tariff and illegally and discriminately determined the classification PCT heading 4810.1990 on subject goods. Finally, it has been argued that 'interpretation of PCT heading 4810.1910 of the respondent is that this heading classify only coated paper of a kind useable exclusively of writing, whereas, the interpretation of the appellant is that it classify coated paper useable for writing and printing etc. the interpretation of respondent leads to redundancy of PCT heading 4810.1910 if read in juxtaposition with HEJ test report of goods dated 01.02.2021 obtained by the Respondent reported that internationally there is no reference available to differentiate between writing and printing.
Whereas, interpretation of appellant of PCT heading 4810.1910 avoids surplusage or redundancy which is well supported with more than 250 assessment, orders / GDs of customs having PCT heading 4810.1910 for classification of goods, test report of HEJ dated 01.02.2021 and observations of concerned officers of Respondent. It is well settled principle of statutory interpretation that if two reasonable interpretation are possible, but, one leads to redundancy while the other avoids surplus age, it is the later interpretation that has to be preferred as held by the Divisional Bench of Sindh High Court judgment cited in 2010 PTD 2338 delivered in similar case of classification under which the case of the Appellant is fully covered. The A/R contended that Appellant's case involved following three issues which required findings and decision by this Tribunal being final fact finding authority:- a) Whether in the facts and circumstance of the case the impugned show-cause notice issued for assumption of jurisdiction to exercise powers under Sections 32 and 179 of the Customs Act, 1969 and subsequent proceedings and order based thereupon are without jurisdiction and lawful authority? b) Whether subsequently determined classification PCT heading 4810.1990 has been correctly applied retrospectively by invoking Sections 32(1)&(2) and 32A on the subject consignments of goods which were assessed, classified and cleared by customs under PCT heading 4810.1910 during period from 042020 to 102020? c) Whether the Adjudicating Authority and the Respondent misinterpreted PCT heading 4810.1910 of Import Tariff being part of the Customs Act, 1969 for classification of subject goods and recovery of duty/taxes thereon?
9. In the light of aforesaid arguments, appellant's counsel prayed that this Tribunal may be pleased to pass and allow the appeal as prayed in the interest of justice.
10. The Departmental representative while reiterating the contents of the para-wise comments argued that show-cause notice was lawfully issued and impugned order was passed in accordance with the law. The DR also pointed out that conclusion regarding correct classification of goods in the impugned order derived from the decision/opinion of the classification committee constituted by the Board which final authority under Rule 2 of Pakistan Rules to the General Rules of interpretation. The DR prayed that appeal of the Appellant may be dismissed as meritless.
11. Arguments heard and concluded. After perusal of facts and circumstances of the case and record, grounds of appeals, referred case laws and arguments extended by both the parties, it has been observed that following issues are involved in this case which require fact findings and decision by this Tribunal under its appellate jurisdiction:- I) Whether the officer of Customs issued show-cause notice dated 12-04-2021 as an Adjudicating Authority correctly assumed jurisdiction vide show-cause notice dated 12-04-2021 to exercise powers under sections 32(1)&(2), 32A and 179 of the Customs Act, 1969?
II) Whether the provisions of Sections 32(1)&(2) and 32A of the Customs Act, 1969 have been correctly invoked for retrospective application of subsequently determined classification PCT heading 4810.1990 on past consignments of subject goods?
III) Whether the impugned order correctly passed by the Adjudicating Authority and interpreted PCT 'Heading 4810.1910 and mischiefiously applied the PCT heading 4810.1990 for the purpose of classification of subject goods for recovery of impugned duty/taxes thereon?
12. I first take up the above issue No. (1) involved in this case. It is apparent from the FBR's notification of transfer and posting dated 02.04.2021 that the Officer who issued show-cause notice dated 12.04.2021 for assumption of jurisdiction being adjudicating Authority under Sections 32(2), 32A and 179 of the Customs Act, 1969 was transferred from the post of Collector, Collectorate of Customs (Adjudication-II), Karachi to Director General, Directorate General of Law and Justice, Islamabad w.e.f. 02.04.2021, but, had relinquished the charge of that post and had assumed the charge of his new post w.e.f. 12.04.2021 as apparent from the FBR's notification of charge relinquishment/assumption dated 13.04:2021. I observed that the Officer who issued show-cause notice had assumed jurisdiction being Adjudicating Authority as defined under Section 2(a) of the Customs Act, 1969 in this case on 12.04.2021 for exercise of powers provided under sections 32(2), 32A and 179 of the Customs Act, 1969. The foresaid officer after issuance of show-cause notice had assumed charge being Director General, Directorate General of Law and Prosecution, Islamabad stationed at Karachi, hence, show-cause notice could not be assumed without jurisdiction, as prior to relinquishment of charge of Collector of Customs (Adjudication-II) Karachi on 12.04.2021 he had issued show-cause notice. I decide the issue No. (I) in affirmative in favor of the Respondent / Department and against the Appellant.
13. As regard to the above issue No.(II) involved in this case, I have perused the case record and contents of show-cause notice which reflects that there is no dispute on declared description of goods i.e. 2/s coated writing paper in sheets between the parties rather dispute relates to the classification of such goods under PCT heading 4810.1910 which was determined as correct by the Customs for the purpose of duty/taxes, determination of customs values and customs clearance while exercising supervisory powers of checking of goods declarations and passing final assessm ent order under section 80 of the Customs Act, 1969 in almost 250 consignments of such goods including consignments which are subject matter of instant appeal which were not assailed by the Customs under Section 193 or 195 of the Customs Act, 1969 significantly prior to making present contravention case and issuance of show-cause notice. have also perused the contents of Para-4 of the show-cause notice, wherein, there is an admission of fact on part of the Customs the "the classification declared on the scanned documents is in conformity with the classification determined by the Assessing Group". It has been observed that though provisions of Sections 32(1)&(2) and 32A of the Customs Act, 1969 have been invoked in the show-cause notice but, there is no allegation of filing of forged document or short payment of duty and taxes by the Appellant in collusion with some Customs Officers rather there is a dispute of classification of goods subsequently occurred on which an opinion was given on 26.03.2021 by a Classification Committee of Customs Officers constituted by the Board vide letter dated 01.01.2021 on recommendation of the Standing Committee of Finance and Revenue of National Assembly. However, the consignments of goods which are subject matter of this case were already released during the period from April 2020 to October, 2020 and no samples of goods were available with the Customs to examine the physical attributes for the purpose of classification. Based on the above case of the Appellant doesn't falls within the ambit of Section 32(1) & (2) and 32A of the Customs Act, 1969 which have been invoked in the show-cause notice without fulfilling the mandatory statutory requirements and in absence of any adverse material evidence. Reliance in this regard is rightly made on judgment of Honorable Supreme Court of Pakistan cited in 2011 SCMR 1279 = 2011 PTD 2220. [Pakistan State Oil]
14. It has also been observed that the Tariff headings 4810.1910 as claimed by the Appellant and 4810.1990 as claimed by the respondent have no difference in the rate of customs duty. The only consequence or difference is that if the goods are classified under the later heading, they were not allowed 4% Pak-China FTA Tariff concession as per SRO 1640(1)/2019 dated 31-12-2019, as apparent from the imports of consignments of identical goods from Japan having declared description "Both Side Coated Paper in Sheets" available at pages 433 to 449 were/are being classified, assessed and released by the Customs under the same PCT Heading 4810.1910. Such conduct on part of the respondent while making contravention case of mis-declaration of classification doesn't seems to be appropriate and in accordance with the law and against the directions of the FBR given in CGO No.12/2002 dated 15.06.2002 having binding effect upon the field Officers of the Collectorate in terms of Section 223 of the Customs Act, 1969, they are required follow such directions which are mandatory in nature before making any contravention case against an Importer. Some observations were given in the judgments I relied cited in 2016 PTD 2910 [Muhammad Amer Saeed] and 2016 PTD 35 [Muhammad Waheed]. Whereas, Para 101(B) of CGO No.12/2002 particularly deals with question of taking cognizance of description, value and HS Code. The relevant portion read as under:
(B) Question of taking cognizance of mis-declaration of description, value and PCT heading,--- For invoking provisions of mis-declaration under Section 32 of the Customs Act, 1969 prima facie an element of mens rea should be present i.e. there should be an attempt of willful false declaration.
The importer may not be charged for mis-declaration under Section 32 of the Customs Act, 1969, in the following situation:-
(i) Where and Importer makes a correct declaration on bills of entry opts 1st appraisement for determination of correct description of PCT heading or quantity of goods.
(ii) When a consignment is found to contain goods of description other then the one declared falling under separate PCT heading but chargeable to same rate of duty. (Emphasis supplied).
(iii) Where the description of the goods is as per declaration but incorrect PCT heading has been mentioned in the bill of entry no misdeclaration case under section 32 of the Customs Act, 1969, be made out provided there is no change in the rate of customs duty as a result of ascertained PCT heading. These observation were set as bench mark to decide the controversy of same nature.
15. The directions contained in CGO 12/2202, though not binding upon the authorities performing quasi judicial functions, but are mandatory in nature and are binding upon the field officers of the Collectorates in terms of Section 223 of the Customs Act, 1969. The field officers are required to follow such directions and or guidelines before making any contravention report / case against an Importer. The field officers are not authorized to act as per their own discretion in a situation, wherein, FBR has already issued directions and or guidelines. After considering the issue in depth-in line with settled principles of law, and any act of the field officers in violation of such direction would be illegal and of no consequences. Reliance in this regard may be placed on the case of Akhtar Hussain v. Collector of Customs (2003 PTD 2090), wherein, a learned Division Bench of Hon'ble High Court, speaking through Mr. Mujeebullah Siddiqui, J, has observed that it is undeniable proposition of law that instructions issued by FBR under Section 219 of the Customs Act, 1969 are binding on all the officers of the Customs employed in the execution of Customs Act, 1969 by virtue of provision contained in Section 223 of the Customs Act, 1969, if there is any conflict in the instructions / orders issued by the subordinate to the CBR that [sic] the instructions/orders issued by the subordinate official are invalid and inoperative to the extent of conflict.
16. Being a custodian of law it the duty of the Court to dispense with justice, by doing so, the scrutiny of case record reveals that subject consignments of goods were classified, assessed and released by the Customs during the period from April, 2020 to October, 2020 under PCT heading 4810.4910 and assessm ent orders under Section 80 read with 83 of the Customs Act, 1969 were issued which were neither assailed under section 193 nor reopened under Section 195 of the Customs Act, 1969. Subsequently, dispute of classification was raised in absence of any post clearance audit or audit report of Directorate PCA (South), Karachi in terms of SRO 501(1)/2009 dated 13.06.2009. It is also apparent from the observations of concerned Officers of Customs given in identical case of M/s Salman Paper Products (Pvt.) Ltd. having GD No.KAPE-HC-63174-17-10-2020 available at page-159 to 169 that admittedly almost 250 consignments of such paper were classified, assessed and released under PCT heading 4810.1910 as per departmental practice from which deviation has been made in an abrupt manner in contravention to the procedure prescribed for change of classification practices vide Para-74 of CGO.12/2002, as subsequently an opinion has been given on 26.03.2021 available on pages 221 to 303 by a Classification Committee of Customs Officers constituted by the Board vide letter dated 01.01.2021 for classification of such goods under PCT heading 4810.1990 which shall be subject to approval by the FBR and yet to be notified through public notice as required under Para-2 of CGO.12/2002 issued Under Section 223 of the Customs Act, 1969 having binding effect on Collectorates and their Officers. In support thereof, reliance in this regard is made on judgment of Honorable High Court of Sindh cited in 2016 PTD 2910 [Muhammad Amer Saeed], same was further endorsed by un-reported judgment delivered in similar cases of classification dated 08.04.2021 in SCRA No.426/2019 etc [United Refrigeration Industries Ltd. and others]. The Honorable Sindh High Court while exercising its reference jurisdiction has recently decided 'bunch of similar cases through its common un-reported judgment Supra involving particular question that "Whether subsequent determination or classification of goods by the Classification Committee through public notice would apply retrospectively?". In view of the findings and judgments of apex Courts, I hereby decided the issue No. (II) in negative, in favor of the Appellant and against the Respondent Department by holding that no case of misdeclaration and fiscal fraud in terms of Sections 32(1)&(2) and 32A respectively found established against the Appellant and classification PCT heading 4810.1990 determined subsequently on the basis of an opinion given on 26;3-2021 by a Classification Committee of Customs Officers constituted by the Board vide letter dated 01.01.2021 could not be given retrospective effect on the consignments of the Appellant which are subject matter of this case already cleared under Section 80 read with 83 of the Customs Act, 1969 during the period from April, 2020 to October, 2020.
17. That the issue No. (III) about the subsequent determination of classification of subject goods has been examined, the case record, written and verbal submissions and findings of the Adjudicating Authority have been perused. It is observed that entire case of classification of subject goods turns on the proper interpretation of sub-heading 4810.1910 of heading 48.10 for clarity reproduced as under:- 48.10. Paper and paperboard, coated on one or both sides with Kaolin (China Clay) or other inorganic substances, with or without a binder; and with no other coating, whether or not surface, coloured, surface-decorated or printed, in rolls or rectangular (including square) sheets, of any size. first single dash - heading of HS Code 48.10 reads as "Paper and paperboard of a kind used for writing, printing or other graphic purposes, not containing fibers obtained by a mechanical or chemi-mechanical process or of which not more than 10% by weight of the total fiber content consists of such fibers".
The above single dash - heading is further sub-divided into three double dash -- headings. -- in rolls: -- in sheets with one side not exceeding 435mm and the other side not exceeding 297mm in the folded state. -- Other: That the third double dash heading "Other" sub-divided into two --- national headings:- 4810.1910 --Writing Paper 4810.1990 --- Other:
18. Considering the aforementioned detailed about the principle of classification and after perusal of the record placed during the proceeding of the case it has been observed that --- sub-heading 4810.1910 provides specific description "Writing Paper" which spelled out two conditions to be fulfilled, one is coating with Kaolin (China Clay) or other inorganic substances not containing fibers obtained by a mechanical or chemi-mechanical process or of which not more then 10% by weight of the total fiber content consists of such fiber and the other is it's usage for writing. There is no dispute between the parties regarding fulfilment of first condition of coating and fiber content. The dispute between the parties relates to the fulfilment of second condition, the Appellant's stance is that this heading has been created such paper having one of its use as writing paper on the other hand, the Respondent's stance is that such paper is classifiable in this heading which has exclusive use of writing. I have perused test reports including test report of HEJ dated 01-02-2021 available at pages 451 to 471 of such goods obtained by the Respondent having resulting remarks of "Wood free" writing paper" and a note of HEJ that "the International Standards Technical Association of the Pulp and Paper Industry and American Society for Testing and Materials have no reference to differentiate between the writing and printing paper". The Certificate of Manufacturer of subject goods dated 03.11.2020 available at page 431 has also been perused certifying that "Our 2/s coated paper is coated on wood free writing paper both side, each side coating not less than 18% with Kaolin (China Clay) or other inorganic". I have perused assessment' orders/GDs of identical goods imported from Japan having declared description "Both Side Coated Paper, in Sheets" available at pages 433 to 445 showing that Customs Department classifying and assessing such goods under same PCT heading 4810.1910. The contents of Valuation Ruling bearing No.1354/2021 dated 27.05.2021 available at pages 497 to 505 have been considered, wherein, PCT heading 4810.1990 has been preferred for valuation of paperboard coated with one / both side with Kaolin (China Clay) and paper of such kind has been valued by preferring PCT heading 4810.1910. The rational set forth by the Department is confusingly deceptive, the Department while issuing the Valuation Ruling failed to distinguished the category of paperboard and writing paper with its specific nomenclature, after giving the anxious thought to the subject issue, this Court preferred to apply the judicious mind for the purpose to distinguish the categories of writing paper and paperboard and resultantly it has been noticed and observed that the contents mentioned in the report of classification committee and observations made therein were based on presumptions and assumptions and there is iota of evidence available nor produced or referred for claiming the application of PCT heading 4810.1990, instead of declared PCT heading of Importer 4810.1910 (No evidence privy to it).
19. The case record also reveals that subject goods were imported from China in respect of which Chines Certifying Authority issued Certificates of Origin under Rules 6 and 7 of Operational Certification Procedures for the Rules of Origin of the China-Pakistan Free Trade Area for eligibility of preferential concession of goods (FTA Tariff concession of 4% customs duty under S.R.O.
1640(1)/2019 under Rule 12 of Rules of China-Pakistan Free Trade Area available at pages 109-145, wherein, both international and national HS Codes 4810.19 and 4810.1910 respectively have been mentioned as determined . which are un-confronted on part of the Customs Authorities who in case of apprehension of any fraudulent practices were under obligation to take up the matter with Chines Authorities for clarification as provided under Rules 21 and 22 of aforesaid Rules of FTA as clarified by the Ministry of commerce vide Office memorandum dated 17.07.2014 available at page-
147. The case record also reveals that no any import document i.e. invoice and certificate of origin contained HS Code 4810.1910 submitted before customs at the time of assessments have not been confronted rather there is an admission of fact on part of the Customs stated in Para-4 of the show-cause notice that the classification declared on the scanned documents is in conformity with the classification determined by the Assessing Group". An important fact has also remained un-confronted on part of the respondent that similar dispute of classification of identical goods was raised in two similar cases having assessment order/GDs Nos.KAPE-HC-46565 dated 19.09.2020 and KAPE-HC-57541 dated 8-10-2020 available at pages 179-209, wherein, the Respondent after due process had determined appropriate classification of goods under PCT heading 4810.1910 in terms of Para 2(i) of CGO No.12/2002 dated 15.06.2002.
20. It is also important to note and observed here that the report prepared by the classification committee issued on 26.03.2021 was never referred to the Board nor any deliberation has been caused by the concerned quarters of competent Authority. There is no public notice available on record of the case issued in terms of Para 2 of CGO.12/2002 with any directions to be given by the Board under Section 223 of the Customs Act, 1969 to follow the report prepared by the classification committee in the subject matter. The allegations attributed against the Appellant/Importer through impugned show-cause notice and the observations made thereon by the adjudicating Authority at the time of passing Order-in-Original are perverse from the evidence available on record, as such, the act caused and created by the Department / Respondent against the Appellant / Importer is ultra vires based on misconceived facts, illegal and without jurisdiction liable to be set aside in accordance with the prescribed provisions of law.
21. It is also important to observed that the issue of classification agitated by both the parties during the proceedings of the case, specifically the objections and counter-objections placed before the Court which were taken on record, wherein, the representative of the Appellant significantly pointed out that while assessment of a consignment of identical goods of M/s. Salman Paper Products (Pvt.) Ltd. having GD No. KAPE-HC-63174 dated 17.10.2020 certain observations were given by the concerned customs officers of the Respondent in the case file available with better copies at pages 159-175, wherein, there are admissions of facts that almost 250 consignments of such goods were classified and cleared under PCT heading 4810.1910 by customs who are of the view that "since the Board has created a separate heading (i.e. 4810.1910), it is construed that 2/side coated paper for writing purpose also exists, which could have other uses as well, accordingly, it is proposed that, we may release the goods on the strength of manufacturer certificate that the impugned goods are writing paper and keeping in view past practice of classification". There is no material evidence available on record to establish why Board has created separate PCT heading 4810.1910 for writing paper, evidently this fact was never controverted by the Respondent during the hierarchy of the customs as well as before this Court, no evidence privy to it is available at paras 26 and 27 of the reply of show-cause notice which is available at pages 365-395 of the record file.
22. Now it important to understand the legal rational prescribed under the GRI Rules of Interpretation. Rule 3 of the GRI Rules of Interpretation in its sub-rule, (a) provides guideline that heading which provides the most specific description of an article shall be preferred for classification rather heading providing more general description. I read my above findings and documents available on record in juxtaposition position with the Rule 3(a) of the GRI Rules and observed that subject goods falls under PCT heading 4810.1910 which provides most specific description i.e. Writing Paper. Moreover, no justification has been given by the respondent regarding deviation from previous practice of classification of subject goods of Chines origin under PCT heading 4810.1910 and continuation of such practice in classification of identical goods being imported from Japan having declared description both side coated paper in sheets. It is also observed that while passing impugned order reliance was made on Note 7 to Chapter 48 of the Pakistan Customs Tariff which has reference to distinguish classification at heading level which is inapplicable in this case where there is no dispute that subject goods are not classifiable under heading 48.10. In view of my findings and after considering relevant documents and case record that interpretation of the Adjudicating Authority leads to the redundancy of PCT heading 4810.1910, on the other hand, the interpretation of the Appellant avoids surplusage or redundancy, hence, I am of the considered view that impugned order interpreting the PCT heading 4810.1010 leads to the redundancy to classifying-the subject goods, under PCT heading 4810.1990 which provides more general description is not in accordance with the settled principle of statutory interpretation that if two reasonable interpretations are possible, but one leads to redundancy while the other avoids surplusage, it is the latter interpretation that has to be preferred.
23. This Court also preferred to deliberate on the arguments extended by the representative of the Respondent on opinion of the Classification Committee constituted by the Board subsequently vide letter dated 01.01.2021 in terms of Para-2(viii) of CGO No.12/2002 dated 15.06.2002 issued in exercise of powers conferred under Section 223 of the Customs Act, 1969, wherein, Classification Committee is of the opinion that subject goods having description "Two Sided Coated Paper in Sheets (Nevia Brand)" falls appropriately under PCT Heading 4810.1910 which provides general description "Others" on the ground that such paper is not specifically meant for "Writing" having multiple uses. It has been observed that the Adjudicating Authority has neither discussed the opinion of the Classification Committee of Board in its conclusion/finding nor the same could be given effect unless notified: through public notice as required to be issued after approval of the Board in terms of Para-2 of the CGO No.12/2002 as held by the Honorable High Court of Sindh in its case cited in 2016 PTD 2910 [Muhammad Amer Saeed v. MCC (East)]. This Tribunal in exercise of its judicial functions being final fact finding Authority is to make its own decision on the basis of facts and circumstances of the case and the applicable law, as the Import Tariff is the first Schedule to the Customs Act, 1969 and being part of the statute, its contents, including explanatory notes, applicable rules and classification headings are to be interpreted and applied in terms of the well-known principles applicable to the statutory interpretation (i.e. determination of the legal meaning) of a statute or any part thereof, including a schedule thereto, is the function and the duty of the Courts. Reliance in this regard is made on judgment of Honorable Sindh High Court cited in 2010 PTD 2338. In view of my observations, findings and judgments of apex Courts, I decide the issue No. (III) in negative in favor of the Appellant and against the Respondent Department.
24. On the basis of ably deliberations and reading of facts of the case, and by getting the strength, what has been stated and observed hereinabove particularly the interpretation of law and legal propositions, in the light of prescribed law and to follow the ratio decidendi as observed by the superior Courts for the purpose to maintain the elementary principle of law, I hold that the adequate breach of natural justice has been equated with breach of law during the hierarchy of Customs and order passed thereon including the issuance of show-cause notice and all subsequent proceedings are without any warrant of law, illegal, discriminatory and without jurisdiction hereby set aside, having no legal effect, as such, the appeal is accordingly allowed.
25. Judgment passed and announced accordingly.
26. This order is consist of sixteen (16) pages and each page bears my initial and office seal. revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.