ABDUL JABBAR QURESHI, MEMBER JUDICIAL-I. By this judgment I intend to dispose of two Customs Appeals Nos.K-792 / 2022 and K-793/2022 filed by the appellants before this tribunal against Order-in-Original No. 1758383 dated 08.04.2022, passed by Additional Collector of Customs (Adjudication-I), Karachi. These appeals have identical issue of law and facts, therefore, being heard, dealt with and disposed of simultaneously though this common order in the light of the judgment of the Honorable High Court of Sindh in Customs Reference No. 157 of 2008, S.M. Naqi son of Syed Muhammad Hussain, Karachi v. Collector of Customs (Adj-I) and others.
1. Brief facts of the case are as reported by the Respondent No. 2" namely Customs Collectorate of Appraisement (West), Karachi that the Appellant/Importer namely, M/s. K.N. TRADERS, electronically filed Goods Declaration No. KAPW-HC-99780-04-01-2022 through authorized clearing agent KAY ESS INTERNATIONAL (KCUS-1027) declared to contain EPDXY MENTHANE (INDUSTRIAL GRADE) under PCT headings 2942.0000 at a declared invoice value 3270 USD. That the Appellant/Importer determined his liability of payment of applicable duties and taxes in terms of Section 79(1) of the Customs Act, 1969. Copy of Goods Declaration along with Item Details, Assessment Notes including import commercial documents namely Invoice, Bill of Lading and Packing List.
2. It is further been alleged that in order to check as to whether the Appellant/Importer has correctly paid the legitimate amount of duties and taxes, the under reference GD was selected for scrutiny in terms of Section 80 of the Customs Act, 1969 and was referred to Examination for confirmation of description, quantity and other physical attribute of the goods, examination report is re-produced as under:- "ASSESSMENT ALERT .... MIS-DECLARATION INVOICE VALUE! DECLARED INVOICE VALUE 3270.00 (US $ HOWEVER ON PHYSICAL EXAMINATION FOUND INVOICE VALUE:31,350.00 (US$), WHICH IS 858.7% HIGHER THAN DECLARED INVOICE VALUE. GROUP MAY TAKE NECESSARY ACTION IN THE LIGHT OF EXAMINATION REPORT. GO NO: KAPW-HC-99780- DATED 04-01-2022 EXAMINED THE GOODS IN THE LIGHT OF G.D DATA RETRIEVED THROUGH WEBOC SYSTEM. INVOICE FOUND VALUE: 31,350.00 (US$)
DESCRIPTION 1. EPDXY MENTHANE, UN: 1993, PACKED IN 50 KG DRUMS, QTY =60 DRUMS, NET WT=3000 KGS APPROX, BRAND:NOT SHOWN, I/O : CHINA, REPRESENTATIVE SAMPLE DRAWN, DULY SEALED AND SIGNED IS FORWARDED TO CUSTOM HOUSE LAB TO ANALYSE ACTUAL DESCRIPTION, COMPOSITION, CLASSIFICATION AND ALL OTHER ASPECTS, CHECKED 100% WEIGHT VIDE AICT SLIP NO:79544, DATED: 3-01-2022 , FOUND WEIGHT: 3606 KGS, GROUP MAY LIKE TO CHECK ALL OTHER ASPECTS RELATED TO ASSESSMENT LIKE IPWCLASSIFICATION AND OTHER CONCERNED LAWS/ CONDITIONS. IMAGES ATTACHED ARE AN INTEGRAL PART OF EXAMINATION REPORT".
3. It is further been alleged that on the basis of physical examination of the goods, an invoice BEARING NO: PZ21132 -DATED: 10/27/2021 amounting 31350 USD which is 858.7% Higher than declared invoice value found from consignment. Furthermore, on the basis of lab report declare goods EPDXY MENTHANE, UN: 1993 packed in 50kg drums quantity 60 drums net weight 3000 kgs approx. are classic under PCT 3301.2920 having CD@ 11% instead of declare PCT 2942.0000 having CD @ 0%.
That the Appellant/Importer thus evaded legitimate Government duty/taxes by concealing actual difference of invoice value amounting to USD 28080/- which is 858.7% higher than declared value and classification of goods by declaring wrong PCT instead of correct PCT in the light of lab report.
4. It is further been alleged that the aforesaid facts prove that the Appellant/Importer has deliberately concealed / mis-declared the value/ classification in order to take an attempt for getting the goods assessed on suppressed value/pet for evading, legitimate amount of taxes to the tune of Rs. 2,317,407/- willfully and with mala fide intention. The offending value of the goods works out to be Rs.5690865/-. Thus this acts of the importer and customs clearing agent attracted the violations under the provisions of law.
5. Show-Cause Notice was issued on 20.01.2022 and the matter was adjudicated. The Adjudicating Office passed Order-in-Original No. 1758383 dated 08.04.2022, wherein the charge of mis- declaration of invoice value against the declared value and also mis-declaration of classification on the basis of lab test report and also physical description was established with the direction to confiscate the subject goods and also gave an option to release/ redeem the subject goods on payment of 35% redemption fine on the offending value of the goods found as per section 181 of the Customs Act, 1969 read with SRO 499(1)/2009 dated 13.06.2009 amounting to Rs.1,991,803/- A personal penalty of Rs.150,000/- is imposed on the importer and also a personal penalty of Rs.50,000/- imposed on the clearing agent in terms of section 209 of the Customs Act, 1969. The operative part of impugned Order-in-Original is reads as under:- "Accordingly hearings in the subject case were fixed on 27-01-2022, 04-02-2022 and 29-03-2022.
Mr. Adnan, respondent's advocate appeared before the undersigned and presented his written and verbal defense. Mr. Abid Sarfaraz (AO) defended the case on behalf of the department. It was reported that during the course of examination an invoice BEARING NO: PZ21132 - DATED: 10/27/2021 amounting 31350 USD was found from the consignment. Furthermore, the goods were sent for a Laboratory Test where the goods were tested and found to be EPDXY MENTHANE. UN:1993 which are correctly classified under PCT 3301.2920 having CD@ 11% instead of declare PCT 2942.0000 having CD@ 0%. In consequence of the foregoing and since the respondent was unable to put forth any valid arguments in his defense that are tenable in the eyes of law, it is established that the importer misdeclared the value and physical description of the goods in order to hoodwink the authority. The importer has willfully and deliberately misdeclared the value and physical description of the imported goods to evade government legitimate revenue / duty .and taxes. The value of the offending goods is calculated and is worked out to Rs.5,690,865/-. Had this willful and deliberately offence gone undetected and goods were released in garb of declared goods, the government would have suffered a loss of revenue to Rs.2,317,407/. On the charge of misdeclaration of value and physical description, I order that the said undeclared goods be confiscated under section 156(1)(14) and (45) read with sections 32(1) and 79 of the Customs Act, 1969 and with Sections 33 and 34 of the Sales Tax Act, 1990. However, respondent importer is allowed to get his goods released/redeemed on payment of 35% redemption fine on the offending value of the goods found as per Section 181 of the Customs Act, 1969 read with SRO 499/2009 dated 13.06.2009 amounting to Rs.1,991,803/-. A personal penalty of Rs.150,000/- is imposed on the importer. In addition to the foregoing, I am also duty bound to mention here that the clearing agent in the subject case must also assume the responsibility in the misdeclaration. This act on the part of the 'clearing agent is actionable perse because when any customs agent is expressly authorized by the principal to be his agent under subsection (1) of section 208 of the Customs Act, 1969, such agent shall ipso facto be deemed to be the principal of the goods under section 209 of the Act.
Thus, it is not non-sequitur to state that the clearing agent had close connivance with the importer. Therefore a personal penalty of Rs. 50,000/- is also imposed on the clearing agent in terms of section 209 of the Customs Act, 1969. The case is disposed of in the aforementioned terms".
6. Feeling aggrieved and dis-satisfied with the above Order-in-Original, the appellant filed an appeal before this tribunal on the grounds as in cooperated in the memo of appeal. That the main bone of contention is that the whole case has been made out by the respondent Collectorate on the basis of retrieved invoice from the container which has no relevance in terms of value of the subject goods. The shipper of the subject goods has also accepted their element of human error on their part and has apologized for the inconvenience caused at this end.
7. Initially the Importer / Appellant gave a justification to the Custom Authorities as on 11.01.2022 which can also be viewed in the WeBOC System under the subject Goods Declaration with the attached documents file namely Epoxy PDF. That the supplier of the Appellant promptly replied and categorically stated that the subject goods in question namely "EPDXY MENTHANE" (Industrial Grade) from China has been wrongly shipped at their end which does not meet the requirements and specifications regarding the subject goods in question imported by the Appellant / Consigner namely M/s. K.N TRADERS in Pakistan.
8. That the subject shipment of the Shipper was meant for United Arab Emirates (UAE) instead of Pakistan, Karachi from port of loading at China. As such the supplier of the Appellant requested for re-export of the subject shipment back to M/s. EVENTSTEIN ENTERPRISE General Trading LLC, United Arab Emirates (U.A.E) at their company's expense to avoid huge accumulating charges on daily basis for no fault of the consignee. -
9. Even M/s. EVENTSTEIN ENTERPRISE. General Trading L.L.C., United Arab Emirates (U.A.E) a Dubai based Company is willing to take the above mentioned shipment covered vide Bill of Lading No. YXALN21105020 dated: 06.12.2021, which was initially shipped from China by the supplier of the Appellant namely PURONG IMPORT AND EXPORT CO., LTD, to the Appellant namely M/s. K.N TRADERS in Pakistan and which is now to be re-shipped and re-exported from Pakistan by the Appellant namely M/s. KN TRADERS which was declared by them to be frustrated cargo item being EPDXY MENTHANE (Industrial Grade) and this shipment was actually meant for UAE, Dubai as already confirmed by the supplier in China namely PURONG IMPORT AND EXPORT CO., LTD to M/s. K.N TRADERS in Pakistan.
10. That the Appellant approached the Respondent No. 2 namely the Collector of Customs, MCC Appraisement (West), 2nd Floor, Custom House, Karachi, vide their application dated: 14.03.2022, requesting to allow re-export / re-shipment of the subject disputed goods in question namely Epoxy Menthane (Industrial Grade) from China covered vide Goods Declaration No. KAPW-HC- 99780 dated: 04.01.2022 and Bill of Lading No. YXALN2I105020 dated: 20.01.2022.
11. That the main bone of contention before the Respondent No.2 was that admittedly the invoice showing values of the impugned goods higher than the declared values was found with the consignment, which the Appellant on the strength of clarification letter from the exporter abroad, denied to be the relevant to She impugned goods in question. That the Appellants have also provided CFR as per our actual declared invoice bearing No. PZ21132 dated: 27.10.2021 having H.S Code 2942.0000 from showing value of the goods is per their declaration. Conceptually, Re-export means export of foreign goods which already imported to the country from a foreign county.
However, if any goods already imported into a county and the same goods are again exported to either the same county, such movement of goods is called "Re-Export", (https//howtoexportimport. corn).
12. That upon receiving the application for re-export of the subject consignment the Respondent No. 3 namely Assistant Collector of Customs Group-II MCC Appraisement (West) Custom House Karachi, issued a hearing Memo. No. SI/Misc/33/2022 Group-II dated: 18.03.2022, in which the Appellant were duly informed that the hearing of the case was fixed as on 22.03.2022 before Respondent No.3.
13. That the Appellant attended the subject hearing before Respondent No.3 as on 22.03.2022 and made their submissions already made vide their representation dated: 14.03.2022. For allowing re- export / re-shipment of the subject consignment in question namely Epoxy Menthane (Industrial Grade) from China vide Goods Declaration No.KAPW-HC-99780 dated: 04.01.2022 and Bill of Lading No. YXALN21105020 dated: 20.01.2022.
14. That the Appellant shall also bring it on record that till to date the application made by the Appellant vide their representation dated: 14.03.2022 has not been decided by respondents Nos. 2 and 3 and also that an impugned Order-in-Original No. 1758383 dated: 08.04.2022 has been passed by Respondent No.1 which also does not mention the main contention of the Appellant with respect to re-export / re-shipment of the subject consignment as discussed in preceding paras above.
15. That the Appellant shall also bring it on record that they promptly replied to the Show-Cause Notice dated: 20.01.2022 issued by Respondent No. 1 vide their reply dated: 14.03.2022 which was duly received in the office of Respondent No.1 as on 18.03.2022.
16. That the office superintendent of Respondent No. 1 issued a letter to the Respondent No. 3 vide their letter No. SI/MISC / WeBOC/Hearing Notice/Adj-1/2020-21 dated: 21.03.2022 for provision of para wise comments against the reply to Show-Cause Notice submitting by the Appellant before the next date of hearing which was fixed for 29th March, 2022.
17. Further submission made by the Appellant during the course of hearing are taken on record, which are as under:- i. That the circumstantial evidence and documentary evidence as disclosed by the supplier PURONG IMPORT AND EXPORT COI, LTD, China as discussed in preceding Paras above clearly discloses that the Appellant had no motive to evade tax. It was a non-deliberate mistake made unintentionally due to mistake of exporter who shipped the wrong consignment without intimation to the Appellant. Further, it is on record that Appellant has no criminal record of background of being tax ender. It is well settled law as held by the Honourable High Court of Sindh, Karachi in case of Kamran Industries's case PLD 1996 Kar. 68 that "where there can be no motive to evade tax declaration/statement cannot be false or untrue, therefore, no penalty is leviable". ii. That it is further contended that penalty proceedings are criminal in nature requiring a higher standard of proof beyond all reasonable doubt and can be only be tainted with legality if independent and cogent evidence is led. In the instant case no Rich evidence has been placed on record or disclosed in the impugned order which could establish beyond any doubt that act of the Appellant was willful, deliberate and mala fide just to evade tax. In support Appellant relied upon the reported judgment of Honourable High Court of Sindh, Karachi in case of Kamran Industries's case PLD 1996 Kar. 68 wherein, it was categorically held that:- "The standard of proof required in penal proceedings is criminal in nature which requires a proof beyond all reasonable doubt. If it is not, the impugned action of the department are held to be completely without jurisdiction, illegal, void, ab-initio and of no legal effect" iii. That only mis-declaration was found of Invoice value, against declared Invoice value and also mis-declaration of classification on the basis of Lab Report declared the disputed goods in question namely "EPDXY MENTHANE" UN: 1993 which were alleged to be classified under PCT Heading 3301.2920 having Customs Duty 11 % instead of declared PCT Heading 2942.0000 having Customs Duty 0% being Chinese origin as alleged in the examination report, Show-Cause Notice and impugned order-in-original. It is also pointed out that the redemption tine was worked out with reference to the duty and taxes leviable on the whole consignment which is arbitrary and not with application of judicious mind. Reliance is placed upon the judgment of Honourable Sindh High Court at Karachi in the case of M/s. Weave and Knit (Pvt.) Ltd., Karachi v. Additional Collector reported as 2004 PTD 2981 wherein, it was held that in case of confiscation of goods the redemption fine is to be worked out with reference to the duties and taxes attempted to be evaded and not on the duties and taxes leviable on the whole consignment. iv. That the Appellant at the very outset admitted this unfortunate incident, which was materialized due to the negligence on the part of the supplier, this admission of negligence does not bring the clement of mens rea (guilty mind) into this matter since, the Appellant had no prior knowledge of the full contents of the consignment and keeping in view of the past history and reputation of the Appellant, prima facie Appellant had made correct declaration in accordance with information in the form of invoice and agreement. Discrepancy in mentioning the goods in the Goods Declaration
(GD) by the Appellant, could not be termed as a mis-declaration within the contemplation of Section 32 of the Customs Act, 1969 and for want of any tangible evidence that such declaration was made knowingly or having reasons to believe that the same was false in any material particular, no evidence on record in its rebuttal, element of mens-rea and motive to evade tax requires the standard of proof for initiating the penal proceedings beyond all reasonable doubts. v. It has been held in the case law reported in 2003 PTD 552 (sic) (Karachi High Court) that it is an established principle of interpretation that every provision of law must be construed in harmony with other provisions of law so as to avoid any conflict. We need to peruse Section 32 of the Customs Act, 1969 which deals with untrue statement, error etc. including false declaration, notice, certificate or other document, statement in answer to any question and or submission of any false statement or document electronically. vi. There is a wide range of statement(s) and certificate(s) which are untrue and incorrect and inaccurate in material particular. Now the question is all such incorrect statements attract penal consequences under the Customs Act, 1969. In order to understand the scope of Section 32 in its true perspective we need to peruse Section 32(2) of the Act, 1969 as well which stipulate that "where by reason of any such document or statement as aforesaid has caused non-payment, short-payment or erroneous release of refund of taxes and duties and bring about revenue loss on the National Exchequer. It was held by the Honourable Justice S. Ahmed Sarwana in the case of 2003 PTD 552 at relevant page 558 "A bare reading of Section 32 clearly indicates that it related to a situation where a person makes any statement or files any document which is false in any material particular by reason of which any out or charge is not levied or short levied or is refunded.
In such event, the Customs Authority is empowered to issue to the person concerned a notice to show-cause why he should not pay the loss of revenue suffered by the Department and after giving him a hearing beside any other action under law. Order payment of the same, if a case is made out. The entire provision revolves around the central point of loss of revenue suffered by the Custom Department on account of conduct of any person".
18. The appellant further contended that legally on one hand the Customs Authorities in wake of the allegedly retrieved invoice are adamant to accept the transaction value of the subject goods in terms of Section 25(1) of the Customs Act, 1969 and on the other hand are not even able to fulfill the legal criteria in terms of Section 25(5) (a) ibid read with Rule 107 (a) of the Customs Rules, 2001. In this connection an appropriate reference is made to the order of the Honourable Customs Appellate Tribunal in the case of M/s. Pak Electron Limited Lahore v. Additional Collector of Customs Lahore in Customs Appeal No.332 of 2010 (2012 PTD (Trib.) 1650 whereby it has been held that:- "That the Customs Authorities have even disputed the value of the subject goods on the basis of value of the goods jotted down on an invoice retrieved from the container. In doing so, the customs authorities are saddled with the responsibility to produce cogent and admissible material to establish the genuineness, authenticity and credibility of the retrieved invoice and also to substantiate that the value of the goods has been mis-declared. The provisions enumerated in the relevant section 25 of the Customs Act, 1969 pertaining to the transaction value have to be followed in a sequential order as per the requirements of the statute and the judgments of superior courts. The customs authorities are also liable to bring on record the evidential invoices of the goods in question of the country, of export and pertaining to the period of import into Pakistan as stipulated in sub-rule (a) of rule 107 of the Customs Rules, 2001 and as per directions contained in Para 78 of CGO 12/2002 dated 15.6.2002 or data of import expressed in rule 110 ibid. Contrary to this, the customs authorities solely relied upon the retrieved invoice from the container which is neither relevant nor complete but is vague and poles apart when compared with the invoice presented to customs authorities with all other required documents as required under the Rules. The department in the instant case failed in submitting any provision of the Act/ rules or any other notification nullifying the proposition of law and did not rely upon any admissible or convincing material e.g. evidential invoices on the strength of which allegation of misdeclaration was levelled against Respondent No.1 and their goods were assessed, rendering the charge of misdeclaration and assessment of value as unsubstantiated. Admittedly the department has failed to discharge the onus of establishing that the prices declared by Respondent No.1 of the imported goods are riot correct. The same view has been taken by the superior judicial fora in judgment reported as 1986 MLD 1990, PLD 1996 Karachi 68, 2002 PTD 2957, 2004 PTD 38, 2005 PTD (Trib.) 617, 2006 PTD 909, 2008 PTD 1250 and 2008 SCMR 438.
19. The credibility and authenticity of the invoice, retrieved from the container the same cannot be treated as conclusive evidence of the transaction value agreed between the parties in terms of sub-clause (b) of subsection (1) of Section 25 of the Customs Act, 1969 read with Rule 113 of Customs Rules, 2001. All the particulars jotted down in the invoice presented to the Customs are favourably compatible with the Commercial documents submitted along with the Commercial Invoice No. PZ21132 dated 27.10.2021 of quantity 3000 KGS amounting to US$ 31350/- along with packing list and bill of lading presented to the customs by the Appellants. The main criterion for acceptance of these documents lies in the fact that these are well negotiated documents and the transaction has been conducted in a very transparent manner. In a similar matter covered by Special Reference Application Nos. 191 and 192 of 2009 decided on 18.8.2010 where an invoice was retrieved from a container, the Honourable High Court has observed as under:- "The initial objection of Mr. Zia ul Hassan, learned Counsel for the respondent is that the Tribunal had, after examining the facts of the case, given a finding of fact that the invoice which was found in the container had been returned to the exporter and then fresh invoice was received from the bank on the basis of bank certificate and the remittance record and other documents submitted, the Tribunal came to the conclusion that the invoice found in the container is an expired document and complete documents have been filed by the importer I respondent by which it has been ascertained that the price actually paid and which can be determined under Section 25(1) the price according to the invoice submitted with the declaration of the goods. The learned counsel for the Applicant, relying to the above objection, drew our attention to Section 25(1) of the Customs Act and clause (b) of subsection (2) of section 25 and agreed that the value for the imported goods shall be the transaction value which in the price actually paid or payable by the goods when sold for export to Pakistan and sub-clause (b) provides that the sale price is not subject to come condition or consideration for which a value cannot be determined with respect to the goods being valued. There can be no cavil to the arguments that subsection (1) of section 25 specifies that the price actually paid or payable for the goods when sold for export to Pakistan shall be the transaction value. However we are not able to understand how sub-clause (b) of subsection (1) applies to this case, but even if we accept the Applicant's arguments in regard to the computation of the transaction value, a perusal of the impugned order reveals that the Tribunal has, after examining the facts of the case given a factual finding that the price actually paid or payable for the goods in question when sold for export to Pakistan was not the price declared in the invoice found in the container, but the price declared in the invoice submitted along with the Goods Declaration."
20. The appellant contended that invoice presented to the customs, is a normal, regular, admissible invoice in terms of Section 2 (kka) of the Customs Act, 1969 and is complementing the accompanying documents viz packing list and bill of lading. In a comparable case covered by Customs Appeal No.K-457 of 2009 dated 13.9.2009 where the declared values of the incumbents were enhanced by the customs administration on the basis of an invoice retrieved from the container, the Appellate Tribunal Customs dismissed the case of the revenue thereby invalidating the enhancement of prices on the basis of the invoice retrieved from the container. The relevant extract of the Tribunal order is reproduced as under:- "To have comparable analysis of the evidence provided by both the parties, the respondents have no doubt furnished tremendous amount of credible, incontrovertible and strong documentary evidence to establish the declared value to be the transaction value. The chain of documents produced by them indeed coverage at one point to establish genuineness of the declared value.
The importers have fulfilled and fully complied with the provisions of section 25 read with section 79(1) of the Customs Act, 1969. On the other hand, the appellants have helplessly tried to fortify, their case on the weak and eroded foundation by overwhelmingly relying and depending on the controversial, invalid, erroneous and flawed invoice found from the container. Even the exporter/ suppliers themselves rejected their earlier invoke by terming it the production of mistake and inadvertence hitting thereby the very basis, rendering it inconsequential and an irrelevant document in the case. The invoice found from the container accordingly badly lost its significance, relevance and efficacy to reckon as the valuable piece of evidence."
21. The above order of the Tribunal was upheld by the Honourable High Court of Sindh in Special Customs Reference Application No.29/2010 vide their order dated 29.3.2011. It may be mentioned here that retrieval of invoices placed by the shippers in containers of imported consignments in terms of Rule 389 of Customs Rules, 2001 constitutes a regular bone of contention between the importers and the customs administration and such disputed matters and controversies are settled on merits after taking into account all the primary as well as circumstantial circumstances involved therein. The Customs Department ordinarily on the basis of retrieval of invoice of higher value from the container of imported goods without making any inquires and without ascertaining the evidence on record jumps to the conclusion that misdeclaration of value and fiscal fraud have been committed by the importer. Such an issue as the present one has been aptly replied by the Honourable High Court of Sindh in Special Customs Reference Application No. 238 of 2010 decided on 20.4.2012 is reproduced below for ease of reference of the Honourable Customs Appellate Tribunal:- "As the Customs Authorities have neither substantiated their claim through confirmation from the shipper nor have ascertained its market value nor have shown that duty at the claimed rated was paid on any other similar consignment. The fact that the difference in the two values has the financial impact on the payable duties to the extent of Rs.72, 836/- only, we are of the view that no case for mis-declaration is made in the circumstances, we answer the questions of law Nos. 1 and 2 in the negative i.e. against the applicant and in favour of the respondent."
22. The order of the Customs 'Appellate Tribunal rendered in Customs Appeal No. K-575/2009 dated 13.05.2010 and upheld by the Honourable High Court of Sindh at Karachi needs to be reproduced here since it deals at length the phenomenon of the downward trend of prices during the relevant period as well as the importance attached by the appellate authorities and superior judicial fora to well negotiated commercial documents. For ease of reference the order of the Honourable Customs Appellate Tribunal in Customs Appeal No. K-575 / 2009 dated 13.05.2010 is reproduced below:- "The declared transaction value of the subject goods has been enhanced by the respondents only on the basis of the invoke retrieved from the container. The revised price in the invoice presented to the Customs Authorities has since been explained by the appellant due to downward price trend of the subject goods in the international market. The respondent has nor been able to controvert the revised invoice price of the appellant with any independent cogent and tangible evidence of physical imports of contemporaneous goods in terms of Section 25(1) of the Customs Act, 1969 read with Rule 107(a) of Customs Rules, 2002. The enhancement of the transaction value of the appellant by Respondent thus violates the principle laid down by the Honorable Supreme Court in their judgment reported as 2008 SCMR 438 and is, therefore, unlawful and illegal. Lastly I agree with the contention of the appellant that imposition of penalty is tantamount to levelling of criminal charge against the appellant which requires a higher degree of proof mens rea (guilty mind) on the part of the appellant in view of the judgments of the Superior Courts reported as PLD 1991 SC 963 and PLD 1996 Karachi 68. In view of the foregoing, the imposition of penalty on the appellant is, therefore, not warranted by law. As such the impugned orders are set-aside and the appeal is accordingly allowed".
23. The appellant further quoted similar case decided by the Honourable Customs Appellate Tribunal Bench-II in Customs Appeal No. K-219/2012 dated 7.6.2012 an invoice of higher value of the same supplier was retrieved from the container and which did not match the particulars mentioned in the banks documents and bill of the lading. The Honourable Appellate Tribunal dismissed the case of the Respondent Collectorate thereby allowing the Appeal of the Importer.
24. The appellant also argued that allegation of mis-declaration in terms of section 32 of the Customs Act, 1969 has been levelled at against the appellant on the basis of an irrelevant, vague, defective and incomplete invoice. It would be more appropriate to determine whether the recovered invoice relates to the goods imported in the instant case the retrieved invoices have neither been prepared by my clients nor they have been delivered by my clients to the customs authorities. The respondent Collectorate have not been able to produce any evidence against Respondent in respect of Advance Payment or remittance of foreign exchange for the purpose of importation of the subject goods at enhanced prices from the shipper from Turkey again% the so called invoice. This is a basic requirement that the allegation of colourable or tainted declared prices has to be established in the first instance with incontrovertible and cogent evidence by the revenue authorities. The onus of proof lies on the customs as per provisions of customs rules 2001.
The case seems to have been built up by the department on the basis of retrieved documents assumed to be commercial invoices which are not to be relied upon for institution of a case of mis- declaration against the appellants in terms of section 32 of the Customs Act, 1969 particularly when the appellants has neither filed these retrieved invoices nor given any statement to the customs authorities tantamount to mis-declaration, The claim of the appellants is supported by the observation of the Honourable High Court in their judgment reported as PLD 1996 Karachi 68 wherein it was ruled that higher degree of proof is required for initiating penal provisions against the accused.
25. In absence of any document, declaration, notice made singed or delivered to the Customs Authorities the charge of mis-declaration cannot be framed against the Appellant. The provisions of Section 32 have been discussed by the Honourable High Court of Sindh in their unreported judgment delivered in Special Customs Appeal No.65 of 2001 dated 24.04.2008.
26. No charge of value mis-declaration can be levelled unless direct evidence of import is available which has to be supplied in support of allegation as per direction contained in Para 78 of CGO 12 /2002 dated 15.6.2002. Thereafter in such like situation the difference should be 30% between declared anti the evidence as directed in sub-para (3) of para. 101 of CGO 12/2002 and Serial No.(d) Notification No.SRO 499(1)/2009 dated 15.6.2009. In the instant case of the appellant the allegation of value mis-declaration is on the basis of determination of value on the basis of surmises and assumptions and as such arbitrary/unilateral and as such fall within the ambit of prohibited method expressed in Rule 110 of Customs Rules, 2001.
27. There are two questions which need to be addressed before invoking section 32 of the Customs Act, 1969, for mis-declaration (a) whether mens-rea which is essential element for the purpose of subsection (1) of section 32 has been proved and (b) whether a demand for short recovery can be made under the provision of subsection (2) of Section 32, without proving any guilty intention, knowledge or mens-rea on the part of the maker of the statement. If the element of mens-rea is not visible and guilty intention is not proved then provisions of Section 32 cannot be invoked as held in the judgments which are reported as follows:- Union Sport Playing Cards Co. v. Collector reported as 2002 YLR 2651, AL-Hamad Edible Oil Limited v. Collector reported as 2003 PTD 552 and A.R. Hoisery Works v. Collector of Customs Export reported as 2004 PTD 2977. This celebrated principle of law in customs jurisprudence that mis-declaration charges under Section 32 of the Customs Act, shall not be invoked has now been well settled in a large number of cases i.e. Ibrahim Textile Mills Limited v. F.O.P reported as PLD 1989 Lahore 47, Central Board of Revenue .v.
Jalil Sheep Co. reported as 1987 SCMR 630, State Cement Corporation v. GOP C.A. No.43 of 1999 and Cargill Pakistan Seeds (Pvt.) v. Tribunal 2004 PTD 26.
28. It can be seen that the customs authorities have disputed the value of the subject goods on the basis of value of the goods jotted down on an invoice retrieved from the container. In doing so, the Customs Authorities are saddled with the responsibility to produce cogent and admissible material to establish the genuineness, authenticity, and credibility of the retrieved invoice and also to substantiate that the value of the goods have been misdeclared. The provisions enumerated in the relevant Section 25 of the Customs Act, 1969 pertaining to transaction value have to be followed in a sequential order as 'per the requirements of the statute and the judgments of superior courts.
The respondents are also liable to bring on record the evidential invoices of the goods in question of the country of export and pertaining to the period of import into Pakistan as stipulated in sub- rule (a) of rule 107 of the Customs Rules, 2001 and as per direction contained in Para 78 of CGO 12/2002 dated 15.6.2002 or data of import expressed in Rule 110 ibid. Contrary to this, the customs authorities solely relied upon the retrieved invoice from the container which is neither relevant nor complete but vague and poles apart when compared with the invoice presented to customs authorities with all other required documents as required under the rules. The department in this instant case failed in submitting any provision of the Act/Rules or any other notification nullifying the proposition of law and did not rely upon any admissible or convincing material e.g. evidential invoices on the strength of which allegation of mis-declaration was levelled against my clients being the respondent and their goods were assessed, rendering the charge of mis-declaration and assessm ent of value as unsubstantiated. Admittedly the department has failed to discharge the onus of establishing the prices declared by my client being the Respondent of the imported goods are not correct. The same view has been taken by the superior judicial fora in judgments reported as 1986 MLD 1990, PLD 1996 Karachi 68, 2002 PTD 2957, 2004 PTD 38, 2005 PTD (Trib.) 617, 2006 PM 909 and 2008 SCMR 438.
29. Without prejudice to our above stance that the invoice retrieved from the container is not the actual invoice supplied by the Appellants shipper to represent correct transaction value of the subject goods. It is submitted that different Adjudicating Authorities have given the importers at large options to redeem the goods on payment of leviable duty and taxes as well as a redemption fine of 35% of the offending value of the goods. This is against the essence of provisions of Notification No. SRO 499(1)12009 dated 13.6.2009. Besides, this is not inconformity with the judgment of Honourable Sindh High Court in case of Messrs Weave Knit (Pvt.) Ltd. Karachi v. Additional Collector of Customs (Adjudication) Karachi reported as 2004 PTD 2981. In above cited case decided by the Honourable Court that, the adjudicating officer ordered for outright confiscation of the consignment with an option to redeem the goods against 100% fine of the value of the consignment as per SRO 1347(1)/98 dated 17.12.1998. The issue before the Honourable High Court was-(sic).
"Whether the learned Adjudicating officer as well as the learned Appellate Tribunal Customs, Sales Tax and Central Excise was justified in omitting to note that as per SRO 1347(1)11998 dated 17.12.1998 the 100% redemption fine provided therein worked out with reference to the duties and taxes attempting to be evaded and not the duties and taxes leviable on the whole consignment?"
30. It is therefore, respectfully prayed on behalf of Appellants abovenamed that this Honourable Tribunal may be graciously pleased to pass the orders against the respondent in favour of appellants and to adjudge Commercial Invoice bearing No. PZ21132 dated 27-10-2021 issued by the Supplier M/s Purong Import and Export Co. Ltd. Zhousbi Kunshan, Jiangsu Province (China) to be the actual invoice -value of the appellant representing actual transaction value as fair for assessm ent purposes. It is also submitted that the value of this item has been determined vide 90 days import data found under the Weboc System and request that the subject goods declaration may be pleased assessed as per 90 days valid import data in field.
31.That Respondent Department has tiled cross objections Para- wise comments which are taken on record.
32. Arguments heard a record perused, In this case the appellant imported, Epoxy Menthane Industrial Grade (HS Code 2942000 at a declared invoice value of US$ 3270. On physical examination the customs staff reported that an invoice of US $ 31,350 was found. The goods were assessed on the amount shown in invoice along with a redemption fine of 35% and penalty of Rs.150,000/- importer and also Rs.50,000/- on clearing agent. The case of the appellant is that the impugned invoice does not relate to this consignment as shipper has intimated about the mistake.
33. Now I come towards the valuation aspect of the subject goods in question "EPOXY MENTHANE (INDUSTRIAL GRADE)". The appellant further contended that value for "EPDXY MENTHANE (INDUSTRIAL GRADE)" is also available in 90 ninety days valid import data which should be applicable. He said that as per decision of the Superior Courts, the value fixed through 90 (Ninety) days import data shall be applicable irrespective of any value determined by the department.
34. The Hon'ble Sindh High Court has held in C.P. No D-1118 of 2011 in Good Will Traders v. Federation of Pakistan and in C.P. 2673 of 2009 in Sadia Jabbar v. Federation of Pakistan. The valuation ruling which mentions that "VR shall not be applicable, if invoice or evidence of higher value is found is in ultra vires of section 25A. It was held that "setting minimum" values is prohibited bath under the valuation Agreement (Article 7), which corresponds to the fall back method".
35. Even considering the equity, it has been noticed that in numerous cases invoice is found and department contended that invoice value was the actual transaction value. Even after getting actual evidence, the department continues to assess similar / identical consignments on old values i.e. on 90 ninety days data basis or on VR value. On query it was told by DR that no reference is sent to Valuation Directorate for revision of value of VR where invoices were found or new evidence was found. He stated that to fix values, the Director of. Valuation is responsible for such revision. Though the Collector of Customs is also empowered to determine or to fix value under section 25-D but Collectors are generally evasive to fix value on higher side when they get actual evidence of value. The department is highly irresponsible on this account and they have no explanation as to why Collectorates and assessing officers, in particular, don't revise values upwardly. When actual invoice is found as per Collectorate's contention. To point out one importer and charge duty on higher value on the basis of evidence of invoice found and continue to charge duty and taxes from rest of importer on low value on the pretext of 90 ninety days data is highly discriminatory, objectionable and against the Article 4 of the Constitution of Pakistan whereby one importer is practically throwing out of market by application of different valuation for different importers. It was seen in some cases that a particular brand and size (ball bearing) was imported and actual invoice was found whereas VR was much on lower side but the department continued to assess all subsequent consignments on VR and 90 ninety days data. It was argued by the DR that in some cases exact description does not match so value differs and department applies invoice value only for that particular consignment. It was asked whether "any exercise was initiated to determine value of that class of goods in general on the basis of new evidence and whether any inquiry / investigation was carried out. The DR replied this is not the practice in the Collectorate or Directorate. The attitude of the department is too casual towards valuation aspect and methods of determinations are at times too crude and in "generalize manner. All other importers are not even asked as to why invoice was not available in container. In routine a fine of Rs.5000/- is imposed by the computer system and then assessment is made as per 90 days evidence which is manipulated data and based on the declared values of importers, which mostly does not depict correct values. Even otherwise to stick to such higher value, the respondent had to provide reasons and qualification of goods to be that expressive or exclusive.
36. I also have before me judgments of this Tribunal in the identical issue as contained in (i)
Customs Appeal No. 623/2014 dated 30.06.2014, (ii) Customs Appeal No.K-135/2014 dated 29.01.2014 and (iii) Customs Appeal No. 461/2014 dated (sic) 46.05.2014 which supports appellant's contention that Customs value for assessm ent of goods has to be the value as notified in a Valuation Ruling or based on 90 days data. For ready reference concluding para of the judgment in Customs Appeal No. K-461/2014 is reproduced as under.
"12. We have also carefully gone through Section 25A of the Customs Act, 1969, and found that subsections (3) and (4) thereof explicitly stipulate that the values determined in a valuation ruling shall continue to be applied until revised or rescinded, it is not legislated anywhere that in case of higher transaction value determined in a ruling shall be discarded and the transaction value shall be applied. We have also gone through Section 25 and found that it carries a detailed mechanism of assess imported goods. However, it is not provided in the said provision of the law that even in the event of an existent valuation ruling the transaction value shall apply. We have no hesitation in holding that the Hon'ble High Court of Sindh has used the word "impermissible" for applying transaction value in cases where a ruling under section 25A exists. Therefore, respectfully following both the judgments of the Hon'ble High Court of Sindh and keeping in view the surrounding facts and arguments put forth by the learned counsel for the respondent, we hold that the impugned order is in accordance with law and does not warrant any interference. The same is upheld, and the appeal is dismissed being devoid of merits."
37. The Appellate Tribunal in Customs Appeal No. K-457 of 2009 decided retrieved invoice case in case of importer which was upheld by the High Court in S.C.R.A. No.29/2010 and by Supreme Court in Civil Appeal No. 629/2017 decided in 2017. The higher courts have held that department cannot beyond values fixed under section 25A as it is binding and non-obstente clause. It over sides the provisions of section 25 and empowers the relevant officer (in variably, the Director Valuation) to fix by notification in the official Gazette, the value of imported goods for purposes of the Act. The appellants have rightly pointed out that in the absence of valuation ruling, 90 days data should be applicable on their imports to avoid 'discrimination. The department has not tried to verify the documents through the appellants has stated that present involve was issued by mistake. Proper investigation /inquiry under section 166 should have been conducted. The aforementioned core issue of the case was not investigated by the respondent/seizing agency, even though, they have the power under Section 166 of the Customs Act, 1969 to summon the person give evidence and Produce documents or things. Neither the present appellants nor their supplier were approached for verification.
38. In accordance with section 25(1) of the Customs Act, 1969, the customs value of the goods is price actually paid or payable for the goods when sold for export to Pakistan. In this case transaction was made with seller in China for export of goods to Pakistan. The appellants have made no transaction with the manufacturer, therefore, any document generated by manufacturer cannot represent as evidence of transaction value, therefore it cannot form the basis for determination of customs value as per section 25(1) of the. Customs Act, 1969. It is therefore held that appellants cannot be charged for submitting incorrect statement in terms of section 32(1) of the Customs Act, 1969. The learned adjudicating authority did not pass the order according to facts of the case. The confiscation of goods and consequent option, to redeem the goods upon payment of fine is excessive and unwarranted, hence the same along with personal penalty against the appellant importer and the clearing agent is set aside. The regarding department is at liberty to determine customs value of goods in accordance with methods provided under section 25 of the Customs Act, 1969.
39. Before parting with the judgment, it is paramount of, importance to subscribe that where any assessm ent of the imported goods for levy of duty and taxes is being made with the application of valuation ruling issued by Director, Directorate General of Valuation under the provision of Section 25A of the Act, retrieved invoice whether of higher or lower value is of no significance, even if it is transaction value within the meaning of Section 25(1) of the Act because "Custom value" as determined under Section 25A has preference. Therefore, I have reached to the irresistible conclusion that the entire proceeding right from framing of contravention report till issuance of order is based on whims and caprice, hence of no legal effect.
40. That the bone of contention between the rival parties is that the department has pleaded that the appellant committed an offence of misdeclaration of value and PCT Heading of imported consignment of "EPDXY MENTHANE (INDUSTRIAL GRADE)" having PCT / HS Code 3301.2920 Quantity '3000 Kgs from China and Goods Declaration No. KAPW-HC-99780-04-01-2022 was filed by declaring the actual description as per Commercial documents provided by the shipper i.e Bill of Lading, Commercial Invoice and Packing List under HS Code 2942.0000 for clearance under section 79(1) of the Customs Act, 1969. On subsequence scrutiny of documents and lab test report the imported were found "EPDXY MENTHANE (INDUSTRIAL GRADE)" under PCT / HS Code 3301.2920 instead of HS Code 2942.0000, thus department alleged that the appellant has committed above misdeclaration in respect of value and classification and impugned Order was passed for payment of differential amount of duty and axes along with payment of fine and penalty, therefore the appellant challenged the subject order with prayer that there is no misdeclaration because GD has been filed in accordance with law and import documents. Even otherwise if there was any deficiency in import documents or misdeclaration regarding value and PCT Heading than the same can be corrected by charging the differential amount of duty and taxes without imposition of fine and penalty by saving the appellant from further losses on cost of demurrage and detention charged.
41. I have also examined on behalf of clearing agent the case record and considered written oral arguments advanced by both parties. The appellant has argued that Honourable Lahore Court in a case (2002 YLR 2551) has, held that the agent liable for the acts of commissions and omission on part of an Importer would require a clear finding based upon a legally acceptable evidence of his being active and conscious patty to the manipulation. It has further been held that where in normal course of his business, the clearing agent filled bill of entry based upon documents and Information provided by the importer, the clearing agent could not be held to be privy to an illegal arrangement which the Importer might have devised or had in his mind. And where it was not shown that the agent was directly or indirectly a beneficiary of evasion of taxes, the imposition of personal penalty on the agent was unjustified. In this case, the appellant file GD on the basis of documents provided by the importer. Apparently, the GD was to be assessed on the basis of 90 ninety days valid import data under WeBOC system. I hold that there is no evidence on record that could warrant penal action against the appellant/Clearing Agent. Hence, the penalty imposed on the appellant is remitted. The Order-in-Original is modified to this extent only.
42. That the shipper has erroneously shipped a Commercial Invoice No PZ21132 dated 27-10-2021, which is neither signed / stamped nor reflecting correct HS Code and other particulars. It is also pointed out that the above goods were examined on 05.01.2022 wherein the alleged Invoice was found. It is pretend to mention that after the knowledge of Value and H.S. Codes of Epoxy Menthane, many consignments till today were released under HS Code 2942.0000 @ US$ 1.50/Kg from the same regulatory clearance Collectorate namely MCC Appraisement (WEST) Custom House, Karachi, which clearly indicates that case was deliberately imposed and the value found in invoice was not actual/ transactional value.
43. The statutory ditties are not properly been performed by the department and are found transgression from the statutory provisions of law, as well as the constitutional obligation, under Article 4 of the Constitution of Islamic Republic of Pakistan every Citizen enjoy the protection of law and to be treated in accordance with law is inalienable right of every citizen, wherever he may be, and every other person for the time being within Pakistan, clause (a) of Sub-Article (2) express that no action detrimental to the life, liberty, body, reputation or property of any person shall be taken except in accordance with law. In the instant case the proceeding initiated by the respondent are in "unlawful manner" in negation of Article 4 and the judicial principle laid down from time to time by the Superior Court. It means, according to the accepted form of legal process and postulates, a strict performance of the function and duties laid down by law. It may well be as has been suggested in some quarters, that in this sense it is comprehensive as the American "due process" clause in a new garb. It is in this sense that an action which is mala tide or colorable is not regarded as action in accordance with law. Similarly, action taken upon extraneous or irrelevant consideration is also not an action in accordance with law. Action taken upon no ground at all or without proper application of mind by the quasi-judicial authorities, would also got qualify as an action in accordance with law and would therefore, have to be stuck down as being action taken in unlawful manner. A person acting in pursuance of a statute cannot be set to be acting bona fide, if he has no reasonable ground for believing that the statute justifies him in what he does. If the case, therefore is one where there are no grounds or the grounds are such that no reasonable person would have acted on the supposition that he was acting under the authority of statute, then it is a case of the court to look into it. In order to thwart, the commission of unlawful act in derogation of the provision of the statute the Hon'ble Supreme Court of Pakistan in reported judgment 2002 PTD 2457 held that " the thing should be done as they are required to be done, or not at all" and in PLD 1971 Supreme Court 61 "neglect of plane requirement of an absolute statutory enactment prescribing how something is to be done, would invalidate thing being done in some other manner" and PLD 1973 Supreme Court 236. The Hon'ble apex Court in 2001 SCMR 838 and 2003 SCMR 1505 held that "while considering the impact of violation or non-observance of the method prescribed by law for doing an act in a particular manner or mode, such provision of law is to be followed in letter and spirit and achieving or attaining the objective of performing or doing of a thing in a manner other than provided by law would not be permitted. The same observation has been made by the Hon'ble Supreme Court of Pakistan in the Civil Petition filed by Director General of Intelligence and Investigation and others v. Messrs Al-Faiz Industries (Pvt.) Ltd. and others reported as 2006 SCMR 129 "if the law had prescribed method for doing of a thing in a particular manner, such provision of law is to be followed in letter and spirit and achieving or attaining the objective of performing or doing of a thing in a manner other than provided by law would not be permitted."
44. In view of the above detailed deliberation on the factual and legal aspect of the case and by getting strength from the judgment of apex Courts referred herein above. I am of the considered view that as per circumstances of the case the appellants / importers have not committed any offence of mis-declaration of any material particulars, therefore I set-aside the impugned order only to the extent of redemption fine and penalty imposed upon the importers / appellants and remit the same in all. The differential amount of duty and taxes be charged as per found invoice under relevant PCT heading. The respondent is further directed to issue a delay and detention certificate as to save the appellant from demurrage and detention charges. The appeals stands disposed off.
45. Judgment passed and announced accordingly.
46. This judgment consist of (22) pages and each page bear our initial and office seal.