ABDUL JABBAR QURESHI, MEMBER JUDICIAL-I. By this order, I intend to dispose of Customs Appeals No.K-1238/2017 filed against the Order-in-Original No.752702 dated 27.09.2017 passed by the learned Additional Collector of Customs (Adjudication-1), Custom House, Karachi.
2. Brief facts of the case as reported by MCC-Port Qasim (Imports) Karachi that M/s. Rana Enterprises Karachi (NTN: 3211591) imported a consignment declared to contain (i) 'Wall Lamp, Mirror Lamp, Ceiling Lamp (quantity declared in pcs total 2204 pcs), (ii) LED Wall Lamp, LED Ceiling Lamp, LED Panel Light (quantity declared in pcs total 1260 pcs), (iii) LED Pendant Light (quantity declared in pcs total 90 pcs) (iv) Pendant Light (quantity declared in pcs total 204 pcs), (v)
Porcelain Holder (quantity declared in pcs total 68,500 pcs), (vi) Spare Parts for Light Fitting (quantity declared in pcs total 44,876 pcs) and (vii) Glass Parts for Chandelier (quantity declared in pcs total 62,774 pcs). The importer filed GD No.KPP1-HC-13103 dated 17.08.2017 on self- assessm ent basis under Section 79 of the Customs Act, 1969 for clearance of goods by claiming PCT heading 9405.1010. On examination, it was reported that (i) Complete Wall Lamp with Iron Frame, Glass, Plastic Attachments and Accessories in Assorted Types and Models, quantity 2204 pcs, Complete Led Mirror Light 3 pcs set, (ii) LED Panel Light with driver 12w each canon 50 pcs x 10 cartons, Complete Led Pendant Light with Colour Coated Glass, Iron and Plastic Frame in Assorted design and Models, quantity 90 pcs (iii) Complete Pendant Light with Colour Coated Glass, Iron and Plastic Frame in assorted Design and Models quantity 204 pcs, (iv) Porcelain Holder (Physical examined not found) quantity 68,500 pcs, (v) Spare Parts for Chandelier quantity 44,876 pcs and
(vi) Complete LED Chandelier Light with Bluetooth, Speaker, Remote and 058 function in assorted types & models quantity 62,774 pcs. On scrutiny it was revealed that goods mentioned at Sr.No.7 of GD were declared as Glass Parts for Chandelier under PCT heading 9405.9110 chargeable to Customs Duty @ 5%, Sales Tax @ 17%, AST @ 3%, IT @ 6%, and ACD @ 1% whereas upon examination goods were found Complete Chandelier Light with Bluetooth, Speaker, Remote and USB Function in assorted types and model were classifiable under PCT heading 9505.1010 chargeable to Customs Duty @ 20%, Sales Tax @ 17%, AST @ 3%, RD @ 20%, IT 6%, and ACD @ 1%. The importer has, thus, willfully and deliberately mis-declared the description and PCT heading of above referred goods and attempted to evade legitimate government revenue to the tune of Rs.11,00,700/-. The act of the importer constitutes an offence within the meaning of Sections 32(1), 32(2) and 79 of the Customs Act, 1969, Section 33 of the Sales Tax Act, 1990 and Section 148 of the Income Tax Ordinance, 2001.
The offence is punishable clause (14) of Section 156(1) of the Customs Act, 1969, Section 36 of the Sales Tax Act, 1990 and Section 148 of the Income Ordinance, 2001, read with the SRO 499(I)/2009 dated 13.06.2009.
3. Show-cause notice issued and matter was adjudicated. The learned Additional Collector of Customs (Adjudication-I), Custom House, Karachi who has passed following impugned order which is reproduced as under:-- "I have gone through the case record and considered written and verbal arguments of the respondent and the department. The department's case is that the respondent imported the above reference consignment by declaring item at serial No.7 of the GD as "Glass Parts for Chandelier (Qty declared in pcs total 62,774 pcs) under PCT heading 9405.9110 charge to Customs Duty @ 5%, Sales Tax @ 17%, AST @ 3%, 1T @ 6%, and ACD @ 1%. However, on physical examination, the goods were found Complete LED Chandelier Light with Bluetooth, Speaker, Remote and USB function in assorted types and Model Qty 62,774 pcs Net Weight 2400 kgs classifiable under PCT heading 9405.1010 chargeable to Customs @ 20%, Sales Tax @ 17%, AST@ 3%, RD @ 20%, IT @ 6%, and ACD @ 1%. The respondent attempted to evade legitimate amount of government revenue to the tune of Rs.1,100,700/-. The arguments of the respondent are not acceptable in presence of the clear misdeclaration of the description of the impugned goods. The respondent could not provide any plausible justification for misdeclaration of 'Complete Chandelier' as 'glass parts for Chandelier'. The respondent failed to accomplish his legal obligation with respect to the correct declaration of goods, which forms the basis of assessment of imported goods in terms of sections 79(1) and 80 of the Customs Act, 1969. In view of the above, the charges levelled in the Show- Cause Notice stand established. I therefore, order confiscation of the offending goods under clause 14 of section 156(1) read with section 32(1), (2) and 79(1) of the Customs Act, 1969. However, an option under Section 181 of the Customs Act, 1969 is given to the importer to redeem the confiscated goods on payment of Rs.506,247/- (Rupees five hundred six thousand two hundred and forty seven only) as redemption fine 35% of the value of the offending goods in terms of SRO 499(I)/2009 dated 13.06.2009 in addition to payment of duty, and taxes chargeable thereon, A penalty of Rs.100,000/- (Rupees one hundred thousand only) is also imposed on the imparter under section 156(1) (14) of the Customs Act, 1969, for violation of above-mentioned provisions of law.
4. The appellant being aggrieved with the aforesaid impugned order filed an appeal before this Tribunal on the grounds that the Respondent No.1 passed the impugned Order-in-Original without any cogent or lawful reasoning, arbitrarily without applying judicial mind and applicable law. The imposition of fine and penalty is totally against all cannons of law and based on mis-conceptions regarding the description of goods. The respondents being public authorities are bound under the law to act and can only act in the public interest and in accordance with the settled principles of due process of law and natural justice, and in a manner which is not repugnant to the Constitution.
Without prejudice, the respondents have no unfettered powers in exercise of discretion. They can neither pick and choose nor should their actions be unreasonable and irrational. The discretion vested in them is to be exercised reasonably, fairly, justly, free from any taint of mala fides, without element of discrimination and for advancement of the purpose of the enactment. The acts of the Respondents Nos.1 and 2 are mala fide and based on extraneous considerations and cannot be allowed to proceed in illegal and unlawful manner. The appellant is losing their business, is not able to fulfill their contractual obligations. The learned counsel for the appellant prayed that the impugned order may be set aside being void ab initio and to declare that the in position of fine and penalty along with duty and taxes applied unlawfully.
5. The respondent/department filed comments on grounds taken by the appellant that the learned adjudicating officer after considering all aspects of the case particularly in view of the fact that the appellant has miserably failed to justify his position by providing any substantive documentary evidence in support of his contents, the learned adjudicating officer has come to the conclusion that the charges levelled in the show-cause notice have stand established and accordingly he passed the Order-in-Original No.752702 dated 27.09.2017 thereby ordered for confiscation of the offending goods. However, an option was given to the appellant to redeem the same on payment of 35% redemption fine. A personal penalty of Rs.100,000/- was also imposed upon the appellant, and as such the learned adjudicating officer has fully applied his judicial mind and applicable law while passing the order. Since the charges levelled against the appellant stand established without any iota of doubt and as such the learned adjudicating officer has correctly ordered for confiscation of the offending goods under clause 14 of Section 156 (1) of the Customs Act, 1969. An option under Section 181 of the Customs Act, 1969 was given to the appellant to redeem the same on payment of 35% of the value of the offending goods in terms of SRO 499(I)/2009 dated 13.06.2009. The fact is that the acts of the respondent are absolutely legal and lawful hence DR prayed that the appeal filed by the appellant may be dismissed.
6. Arguments heard record perused. It was observed from the arguments and record of case that the appellant is a sole proprietor and engaged in business of import of renewal energy technology products and related parts. The main dispute between the rival parties is mis-declaration of description and PCT heading. The appellant declared the aforementioned goods as Glass Parts for Chandelier under PCT heading 9405.9110 in parts but on physical examination same were found, in complete sets were classifiable under PCT heading 9505.1010 hence there is difference in chargeable duty and taxes thus the importer has deliberately mis-declared the description of the imported goods as to avoid the legitimate chargeable duty and taxes.
7. Before concluding case, I give my observations on "untrue statement and misdeclaration" in terms of Section 32, subsection (2) for proof must have an evidence and mens-rea and evidence of collusion with reasons that a person should be liable to be charged under these Sections. In this case, no evidence about element of mens-rea and collusion was brought on surface nor mentioned in show-cause notice. The element of mens-rea is to be seen when a criminal liability is required to be established against a person and not in the cases of assessment whether even duty/taxes has been detected that view was observed by the Honourable High Court of Sindh in a judgment of M/s. Liver Brothers of Pakistan Ltd. v. Customs Sales Tax and Central Excise Appellate Tribunal and others reported as 2005 PTD 2462. On further perusal of Section 32 of the Act reveals that in addition to declaration any communication, or answers to questions, put by customs officers and found wrong in material terms, constitute an offence within the framework of the said Section "so, in order to bring an act, or action within the framework of the word 'false', as used in Section 32 of the Act, the act should either be a conscious wrong, or culpable negligence and should be untrue either knowingly or negligently, (Omalsons Corporation v. The Deputy Collector of Customs (Adjudication) Karachi-SBLR, 2002 Tribunal 57]. Mala fide and mens rea are necessary ingredients for committing any offence, including that of smuggling. [Moon International v. Collector of Customs (Appraisement) Lahore PTCL 2001 CL 133]. There are two questions which need to be addressed before invoking Section 32 of the Customs Act, 1969 for misdeclaration (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 provisions of subsection (2) of section 32, without proving any guilty intention, knowledge, or mens rea on the part of the make of the statement. If 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 of Union Sport Playing Cars Co. v. Collector 2002 YLR 2651, Al-Hamd Edible Oil Limited v. Collector 2003 PTD 552 and A.R. Hosiery Works v. Collector of Customs Export 2004 PTD 2977. This celebrated principle of law in customs jurisprudence that mis-declaration charges under Section 32 of the Customs Act, 1969, shall not be invoked has now been well settled in large number of cases, i.e. Ibrahim Textile Mills Limited v. F.O.P PLD 1989 Lahore 47, Central Board of Revenue v. Jalil Sheep Co. 1987 SCMR 630, State Cement Corporation v. G.O.P. C.A. No.43 of 1999 and Cargill Pakistan Seeds (Pvt.) v. Tribunal 2004 PTD 26.
8. In view of above discussions and by getting strength from the interpretations of law by the competent courts and legal prepositions in the light of prescribed law and to follow the ration decidendi in the judgments of Superior Courts as well as my observations made therein. I am of the considered view that the adjudicating officer passed the impugned, order with least application of judicious mind as the pitch of fine and penalty imposed not correspond with the gravity of the offence hence, l hereby order to modify the impugned order to the extent that the appellant is only liable to pay all adjudged amount of additional duty- and taxes. The imposed redemption fine @35% and penalty are remitted .with further directions, if the subject amounts of fine and penalty has already been secured by way of pay order or in cash be returned/refunded to the appellant.
The impugned order is modified and disposed of in above terms with no order as to cost.
9. Judgment passed and announced accordingly.
10. This order is consist of five pages and each page bears my initial and office seal.