SHAKEEL AHMED ABBASI, MEMBER JUDICIAL-III.----By this judgment, I intend to dispose of the instant appeal filed by the appellant, against Order-in-Original 403/2019-20 dated 04.12.2019 passed by Collector of Customs (Adjudication-II) Karachi.
1. Brief facts of the case are that credible information was received in the Directorate General, I&I, Karachi that M/s. Jutt Lights/Respondent No.1 are involved in evasion of duty/taxes by mis- declaring the actual description and quantity of imported goods. Respondent No. 1 imported a consignment under GD No. KAPE-HC-54725 dated 16-10-2019 of wall lamps, LED lights, hanging lights (chandelier parts) etc. from the Chinese supplier ZHONGSHAN THE CHEN TRADE CO. LTD against B/L No. 0249538402 dated 24.09.2019 and Commercial invoice / packing list No. KHQ20190921 dated 24.09.2019 and lying at SAPT, East Wharf, Karachi. In pursuance of above information, consignment was monitored online and was blocked on 21-10-2019. After approval from the competent authority the consignment was assigned to physical examination for verification of all material aspects like description, quantity, weight, origin, etc, for assessment thereof by the reporting Collectorate. In the meanwhile examination and assessment of the consignment was under-process, the R&D department of the reporting Collectorate intercepted and framed contravention case against the Respondent No. 1 on the grounds with charges of evasion of duties and taxes amounting to Rs.4,689,373 and submitted the same to the adjudication authority, whereupon a show-cause dated: 15.11.2019 was issued. Furthermore, an FIR dated 26.10.2019 was also registered against Respondent No. 1. The learned Adjudication forum, after hearing the case at a considerable length, passed impugned Order-in-Original No. 403-2019/2020 Dated 04.12.2019 for release of impugned consignment on payment of assessed duty and taxes and imposition of penalty of Rs.50,000/- upon the Respondent No.1 for failure to make declaration of the imported goods at the time of filing of Goods Declaration.
2. Being aggrieved with this Order-in-original, the Appellant Department filed this appeal on the following grounds read as under:- A. That considering the learned Collector (Adjudication-II) / Respondent No. 3's observation in the operative paragraph of the impugned Order-in-Original, and considering the position mentioned in the aforesaid chart / statement, mentioned in paragraph 12 of the impugned Order-in-Original, it is a clear case of mis-declaration of quantity description as well as deliberate evasion through self-assessm ent, as such even as per the Respondent No.3's findings is a cast which attracts the provisions of Sections 32(1) and 79(1) of the Act, thus, as per clauses (14) and (45) of Section 156(1) of the Act, the goods are liable for confiscation, which can only be released on payment of fine @35% (thirty five percent) as prescribed under Section 181 of the Act, read with SRO 499(1)/2009 dated 13-06-2009. Keeping in view the comparative chart as mentioned in paragraph 12 of the impugned O-in-O, the Respondent No. 3's observation that "there is no appreciable difference in description of the imported good", is patently incorrect and against the law as well as natural justice. Thus, the Respondent No. 3's impugned order for release of the goods, without confiscation / redemption fine, it is patently illegal and discriminative with the other similarly placed importers rather clearly giving credence to the fact that the Respondent No. 3 has given un-due favour / relief to the respondent importer / clearing agent.
B. That considering the learned Collector (Adjudication-I) / Respondent No. 3's observation in the operative paragraph of the impugned Order-in-Original and considering the consignment's position, mentioned in the aforesaid charts / statements, which also showing un-declared goods, and these facts have not been denied by the Respondents, it is a clear case of deliberate mis- statement through self-assessm ent / less payment of revenue, 'which attracts the provisions of sections 32(1)(c), 32(2), 32A and 79(1)(b) of the Act, thus, as per clauses (14), (14A) and (45) of Section 156(1) of the Act, the goods are liable for confiscation. The learned Respondent No. 3's direction for payment of duties and taxes, as reassessed in terms of section 80(3) of the Act, itself proves that it is a clear case of attempt of evasion of revenue through self-assessment / payment and the Government would have lost its revenue to the tune of Rs.4,689,373/if the OD was not thoroughly checked by the Customs Officers in terms of Section 80 of the Act. Without prejudice to the above, though the Respondent No. 3 has made to rescue the importers / clearing agent from payment of fine and penalty by taking refuge behind the pretext of false statement that there is only difference in weight of 4750 kgs. The Respondents failed to substantiate as to how a plate of one kg can be valued at par with the plate of two kg, when admittedly extra cost of raw material was consumed in manufacturing of the higher weight's plate. Secondly, the Respondents would have no answer as to why the goods were not for confiscation and as to why the established /admitted facts and circumstances of the case would not attract the "fine" for clear mis- declaration and deliberate less payment of revenue, as prescribed for confiscated goods in terms of Section 181 of the Act, read with SRO 499(1)/2009 dated: 13-06-2009.
C. That the facts and circumstances of the case are giving credence to the fact that the importers, prima facie, through concealment of facts, with false / misstatements and mis-interpretation of law and obtained the Impugned Order-in-Original With greatest respect, it is submitted that keeping in view the undeniable facts, which are quite clear from the re-examination reports, as mentioned above as well as the importer's implied admittance for payment of differential amount of duties and taxes between the two assessments, i.e. one made by the importers in terms of Section 79(1)(b) of the Act, as pan of their declarations and other made in terms of Section 80(3) of the Act, as per the aforesaid statements / re-examination reports, it is clear beyond any iota of doubt that the importers, in connivance with their clearing agents ,Ind other accomplices, are, prime facie, habitual in illicit / unlawful acts of importing high tariff goods as well as undeclared goods under the garb of law tariff items. By doing so the importers are not only inflicting loss to the exchequer to the extent of millions of rupees per container but also bring-in un-accountable / un- declared items in to the country through concealment. The facts and circumstances of the case are proving / giving credence to the fact that the importers approached the Respondent No. 3 with unclean hands, therefore, keeping in view the law settled by the Hon'ble Supreme Court of Pakistan in the case of Messrs West Pakistan Tanks Terminal (Pvt.) Ltd. v. Collector of Customs (Appraisement) and others (2007 SCMR 1318) the importers and their accomplices do not deserve any concession / relief. In the said judgment the Honourable Supreme Court of Pakistan holds that " party not approaching High Court and Supreme Court with clean hands, such party would not be entitled to discretionary and equitable relief. Party seeking equity must have equities in his favour".
In the aforesaid judgment the Apex Court has also held that "---no one can be allowed to take advantage of his wrong act or fraud played by him", therefore, it is humbly prayed to this Hon'ble Court / Tribunal to kindly allow the appellant Directorate to proceed against the tax evaders as per the mandatory procedure / requirement of the criminal cases, filed in the Customs Trial Court of the Special Judge, having exclusive jurisdiction. It is pertinent to mention here that the importers and their clearing agents as well as other accomplices are normally taking undue advantage of such un-lawful orders passed intermittently, and skipping from the Trial Court's proceedings and in some of the cases also giving threats to the concerned officers for contempt proceedings, who are actively involved in detating the crime.
D. That perusal of the examination reports in juxtaposition to declaration revealed that there is a vast variation in description, quantity and the ultimate assessments of the consignment in question. The importer not only tinkered with the actual description of each item, but mis-declared the specification/classification, quantity, value etc in negation of the leviable duties and taxes as prescribed in the tariffs well.
E. That the importer clearly committed offence of mis-declaration of description, quantity as well as weight congnizable under Sections 32(1) and 32(2) of the Customs Act, 1969 punishable under clauses 1(14) and 4(45) of Section 156(1) of the Customs Act, 1969. Had this offence gone undetected the government would have been deprived of legitimate revenue to the tune of Rs.4,689,737/-. That as per the aforesaid comparative. chart / statement of the imported goods, the importers/clearing agents have no case on merits.
03. Respondent No.1 filed para-wise comments reads as under:- A. That the contents of para are denied. Since, the department has failed to establish the charges of mis-declaration, the provisions of section 32 of the Customs Act, 1969, and penal clauses (14) and (45) of section 156(1) ibid are neither attracted nor applicable. All the goods imported by the answering Respondent are freely importable goods without involving any prohibition or restriction and have been assessed by the Collectoratc under relevant Valuation Rulings while the answering Respondent has voluntarily opted to pay assessed duty and taxes as per examination and valuation of such goods. The provisions of section 32 read with SRO 499 (I) / 2009 dated 13.06.2009 cannot be invoked in the absence of element of mens rea as such consignments of miscellaneous items are necessarily and invariably subjected to first appraisement prior to assessment and clearance thereof. Hence, it is not correct that such goods are liable for confiscation in terms of the aforesaid SRO or imposition of redemption tine under section 181 of the Act. So far as the personal penalty of Rs.50,000/- as imposed by the learned Adjudication authority on account of purported incomplete declaration is concerned, though such penalty was not justified yet the answering Respondent voluntarily paid the same without agitating any further.
B. That Contents of para (B) are misleading. The upfront payment of duty and taxes is generally made on the basis of declaration and cannot be termed as self-assessment. Hence, the allegations of deliberate misstatement / less payment of revenue are not correct as the consignment of miscellaneous consignments are ought to be invariably subjected to 100% examination under section 80 of the Customs Act, 1969, whereafter same are classified and assessed by the concerned section of clearance Collectorate on the basis of actual quantity, quality, weight, origin and other material particulars and through application of relevant Valuation Rulings in force. Hence, no mens rea can be attributed to the importers / clearing agent. The charges of evasion of revenue to the tune of 4,689,3793/-are baseless and unsupported as the answering Respondent / importer never disputed the payment of assessed duty and taxes on basis of Valuation Rulings. The precedent chses referred in the para are distinguishable and not applicable owing to the facts and circumstances of the instant case. Further, it is settled law that provisions pertaining to mis-declaration under section 32 of the Customs Act, 1969, are not attracted when the goods are ought to be assessed under respective Valuation Rulings, reliance is placed on case law reported in PTCL 2009 CL 470. In case of clearance through Customs Computerized System, the consignments cleared through green channel of the system i.e. without examination and assessm ent by the Customs Authorities can only be held to have been cleared through self-assessm ent. Once the consignment is subjected to examination and assessment under section 80 of the Customs Act, 1969, the same cannot be said to have been cleared on self- assessm ent basis.
C. That Contents of para are misleading. Had the under-reference consignment cleared through green channel of Customs Computerized System without examination and assessment by the clearance Collectorate on payment of upfront duty and taxes at the time of filing of Goods Declaration and subsequently such consignment after having been cleared / out of charge from customs found to contain mis-declared items, the evasion pf duty and taxes could have been attributed to the importer / answering Respondent. On the contrary, the consignments which are subjected to examination and assessment, and cleared on payment of assessed duty and taxes on the basis of examination and assessment through red channel are not liable for penal action in terms of section 32 of the Customs Act, 1969. The case law referred in the para i.e., 2007 SCM R 1318 having different and distinguishable facts and circumstances is not applicable to the instant case.
That as the Criminal proceedings were initiated against the answering Respondent, but the Appellant was miserably failed to put forth any relevant evidence which may lead to the conviction of the Respondent No.1.
D. Contents of part are denied. No item other than the declared item has been found or reported.
The bifurcation of declared items for the purpose of classification and assessment does not tantamount to mis-declaration. All the found items have been correctly classified and assessed by the clearance Collectorate and such assessment is not being disputed by the answering Respondent who has voluntarily paid assessed duty and taxes on assessed values and prescribed UoM.
E. Contents of porn are denied. The charges of mis-declaration of description, quantity and weight have not been established during the course of adjudication before the Respondent No. 3. The so- called comparative charge relied by the Appellant is not found annexed with the memo of appeal at Annex-D or DI.
4. The learned counsel for the Respondent is heard at length. Since the Appellant Department is not present despite notice, therefore, the Appeal is decided on merit on the basis of available record.
After perusal of the record and oral / written submissions of parties and for a clear understanding of the factual and legal position in the matter, it would be advantageous to reproduce the relevant finding of the impugned Order-in-Original No. 403/2-19-2020 dated 04.12.2019, which is as follows: "13. I have examined merits of the case, heard the parties at the length and studied the written comments furnished by both of them which have been reproduced as such in foregoing part of this Order. The main allegation levelled by the reporting agency against the Respondent importer is that he has mis-declared in terms of description and quantity of imported items.
The counsel as well as representative of the importer has strongly challenged this assertion by the agency on the strength of factual evidence. As per declared and ascertained description on examination, no appreciable difference in description of imported goods has been found. The only aspect/charge which needs further examination is whether the Respondent importer has mis-declared quantity/weight of the impugned goods. The reporting agency in its para-wise comments has identified five main contravening items mentioning therein the excess weight found on examination including the differential of duty and taxes payable on excess weight.
However, on close scrutiny of GD as well as other documents filed by Respondent importer, notable discrepancies have been observed in the version reported by reporting agency in the contravention report submitted by them to Adjudication Collectorate on the basis of which show-cause notice was issued to the Respondent importer. The written comments of the reporting agency also contain the same inaccurate factual information. For example, the prescribed Unit of measurement (UoM) of CTCP Printing Plates in Pakistan Custom Tariff is sq. meter. The assessment was finalized by the Collectorate on the basis of prescribed UoM after converting the found CTCP Printing Plates into square meters. However, the reporting agency has incorrectly re-assessed the aforesaid item on weight basis whereas its weight is irrelevant as far as assessment is concerned which is done on sq. meter basis.
14. Another apparent anomaly noted is that the reporting directorate has ascertained the differential amount of duties and taxes recoverable from the Respondent importer as Rs.
4,689,373/-whereas the recoverable amount of duty and taxes pointed out in their reply submitted on 26.11.2019 is Rs.18,799,17/- on account of five main contravening items. In the latest information submitted by the Directorate, it has been argued that the recoverable amount of duty and taxes involved on five major items where discrepancy in weight was found did not include remaining recoverable amount involved on other items as mentioned in their earlier comments. However, the fact remains that even the difference in weight involving five items only not including weight of other items as claimed by the agency in their earlier comments is 8307 kg whereas actual difference between the declared weight and ascertained weight as per weighment slips is only 4750 kgs. The above facts reveal that concerned officials of the reporting agency dealing with the case have not accorded due attention to accuracy of factual information while forwarding contravention report to this office on the basis of which show- cause notice was issued which is all the more disturbing in view of the fact that in FIR has been lodged against the Respondent importer in this case.
Coupled this with the fact that the consignment was meant for examination through red channel where there is practically no likelihood of evasion of leviable duty and taxes as the assessment invariably completed on the basis of examination of such imported consignments (unless examination and assessment is not done properly by concerned officials of the Collectorate), it is very difficult to establish an element of mens rea on the pan of importers in such a scenario.
15. As apparent from facts of the case, there is not enough evidence against the Respondent Importer to charge him for mis-declaration of description which is more or less the same as per declaration. Besides, there is reasonable doubt about accuracy of findings by officials of the Directorate as borne out by the facts mentioned about perhaps due to the reason that it was a miscellaneous consignment which contained many items and it is difficult to catalogue each item in such cases. That partially explains why some declared items were not found in the consignment whereas a few un-declared items were discovered on examination by the Directorate. That is exactly the reason why such miscellaneous consignments are invariably selected by the computerized system for examination through red channel in order to find out the actual contents of the consignment and verify the declaration by the importers. In any case, the Respondent importer has asserted that they have duly declared most of the items which the directorate has alleged were found undeclared, for Instance LED candled bulb has been properly declared in the CD as against the claim of the Directorate that it has not been declared at all. As the charge of mis-declaration of value has not been levelled in the show-cause notice and the final assessment of duty and taxes is to be made by assessing staff of the Clearance Collectorate on the basis of applicable valuation rulings as well as valuation data of import, the only incontrovertible evidence placed before me on which the case could be adjudicated is the difference between the declared weight and ascertained weight on the basis of weighment slips which is 47520 kgs. The declared net weight by the respondent importer of both containers is 20030 kgs whereas the ascertained weight is 24780 kgs. Therefore, the charge of mis- declaration to the extent of excess weight only against the respondent importer stands established. Accordingly the offending goods are confiscated under clause ,I4 of Section 156(1) of the Customs Act, 1969 for violation of provisions of Sections 32(1), 32(2) and 79 ibid. However, an option is given to the importer to redeem the goods under Section 181 of Customs Act, 1969, on payment of a fine equal to 20% of the value of the offending goods, that is excess weight mentioned above which comes to Rs.111,577/- (Rupee One hundred Eleven Thousands Five Hundred Seventy Seven Only subject to the condition that the same are otherwise importable as per Import Policy Order in vogue) as prescribed under SRO 499(1)/2009 dated 13th June 2009, in addition to leviable duty and taxes thereon including the differential amount of duties and taxes to be worked out by the clearance Collectorate on the basis of applicable valuation rulings and relevant valuation data of import. A penalty of Rs.50,000/- (Rupee Fifty Thousands Only) is also imposed under clause (14) of Section 156(1) of Customs Act, 1969 on the importer. The case is disposed of in above terms."
5. It is gathered from above that the main allegation of the Appellant is that the Respondents have mis-declared in terms of quantity and description of the items. As per the Appellant, the importer had filed Goods Declaration No. KA P E-HC-54725 dated 16.10.2019 and that the same was blocked on 21.10.2019 after being assigned to gate staff at SAPT, East Wharf, Karachi. That as per the Appellant / reporting agency, the containers were examined and the net weight found of both the containers was 24,780 kg. Accordingly, the goods were seized and the contravention report was forwarded to adjudicating authority for the attempt of evading Rs. 4,689,373/- by the importer as a result of gross mis-declaration. The Appellant further contended that as per SRO 499(I)/2005, the pitch of fine should have been 35% upon mis-declaration of description as opposed to 20% imposed by the Adjudicating Authority on account of mis-declaration in weight and quantity. The Appellant also contended that the CTCP printing plates are liable to be assessed in Kgs, as opposed to Sq.meter, as more raw material has been consumed to increase the weight of such plates. Lastly, the Appellant prayed to set-aside the Order-in-Original No. 403/2-19-2020 dated 04.12.2019 and impose a severe fine and penalty upon the Respondents for mis-declaration of the impugned consignment.
6. On the other hand, the Learned counsel for the Respondent No.1 /importer contended that the impugned Order-in-Original No. 403/2-19-2020 dated 04.12.2019 is well-versed and has been passed after application of judicious mind. In response to the contentions made by the Appellant, the Learned Counsel for the Respondent No.1 contended that the items imported by the Respondent are invariably subject to examination for verification of description, quantity, quality and other material particulars for assessment thereof as per Valuation Rulings issued by the DG Valuation, where applicable or on the basis of valid import data of identical and similar goods.
Such consignments are bound to be assessed through Red Channel of Customs Computerized System, thus it is not possible for anyone to mis-declare the description of goods imported or their quantity. Moreover, no items other than items already verified, confirmed and reported by the examination staff of clearance Collectorate have been found or reported by the Appellant. The Counsel for the Respondent No.1 further contended that the items were purchased on unit / per piece basis and not on the basis of weight, however due to the large quantity of same, those are packed in cartons and accordingly are denoted by weight in the packing list. It was next contented that the Customs Computerised system is not improvised to convert the unit of measurement from pieces into weight (kgs), whereas, the valuation rulings issued by the DG Valuation are in Kgs. The counsel produced Valuation Rulings No. 1393/2019, 1184/2017 & 1542/2021 to substantiate this position. The counsel further produced various evidentiary GDs, some of them having GD Nos.
KAPE-HC-113980 dated 15.01.2019, KAPE-HC-138946 dated 23.02.2019, KPPI-HC-23642 dated 08.10.2019, KAPE-HC-84933 dated 01.12.2022, KAPW-HC-97760 dated 05.01.2021, KAPE-HC-27614 dated 19.08.2020, etc. and claimed that the similar items have been imported by the Respondent and other various importers which have been declared in pieces and accordingly assessed by the Collectorates as per relevant Valuation Rulings. The Respondent further challenged the authenticity of the re-examination and re-assessment by contending that this whole exercise is prejudiced, mala fide and unlawful in the eye of law. As per the learned counsel for the Respondent No.1, the reporting agency should have adopted proper course by obtaining permission from the Chief Collector of Customs for conducting joint re-examination of the consignment in association with the staff of clearance Collectorate and in presence of the importer or his clearing agent to ensure transparency. Moreover, the Appellant is not empowered to hold the consignment within the port area, let alone re-examine and re-assess the Same. It was also argued that most of the items imported by the Respondent No.1 are required to be assessed under Valuation Rulings Nos.
1393/2019, 1184/2017 and 1542/2021 and as per section 25A(2) of the Customs Act, 1969, the applicable value would be the value determined under section 25A of the Customs Act, 1969. The counsel for the Respondent No.1 finally prayed that the Order-in-Original should be upheld as the same has been passed in accordance with the law.
7. After carefully examining the available record it appears that the Respondent/importer imported consignment of miscellaneous electronic items, inter alia, including LED Lights / fittings and fixtures, bulbs and parts thereof, chandeliers, galvanized iron and steel screws, etc. That all the items imported by the Respondent are freely importable items without involving any import restrictions and normally such consignments are assessed on the basis of relevant Valuation rulings where applicable or import data in the light of examination report where after same are released on payment of assessed duty and taxes. The counsel for the Respondent importer rightly submitted that the entire exercise of examination and assessment conducted by the Reporting agency is not only illegal and without jurisdiction, but it is also faulty. Substantiating his argument, the Respondent submits that one of the items i.e. CTCP Printing Plates is liable to be assessed on m2 but the Directorate has assessed the same in kg. In this regard, the counsel for the Respondent No.1 drew my attention to the Relevant PCT heading where the HS Code No. 3701.3020 of the CTCP printing plates was sq. meter. Thus the claim of Appellant that the same is liable to be assessed in kgs is unwarranted and baseless. It appears that the case has been made in a rush and against the norms and practice in vogue in the Collectorates in such cases. Even otherwise, the counsel for the Respondent also argued that the entire exercise of re-examination and framing of the instant case is without jurisdiction. In this regard, the counsel for Respondent brought the attention of this court to SRO 486(1)/2007 read with letter dated 11-12-2018 issued by the FBR, whereby the seizing agency derive their power. Mere perusal of the letter dated 11.12.2018, issued by the FBR and SRO 486(1)/2007 shows that the reporting agency can only re-examine the consignment with prior approval of the Chief Collector of the Customs. However, there is nothing on record which shows that the Appellant sought permission from the Chief Collector for joint, re-examination. With regards to the seizure of consignment in port area, the High Court of Sindh in the case of Saadat Khan (reported as 2014 PTD 1615) has expressly held that the officers of Directorate do not have any lawful authority to detain goods within the port area. It was contended that the seizing agency has no power to invoke section 32 of the Customs Act, 1969. As far as the mandate of Section 32 of the Customs Act, 1969 is concerned, the Supreme Court in C.Ps. 869-1 and 897-L of 2020 vide Order dated 03.10.2022 was faced with a question that whether the Directorate has powers under Section 32 of the Customs Act, 1969. While declining leave to Appeal, the Supreme Court observed the following in stricto sensu: "It was correctly held that the Directorate was granted seizing powers under the notification, but was not granted section 32 powers. Therefore the Directorate is not an aggrieved party. If the Collector Customs has preferred a petition or an appeal is pending which impugns the same judgment, the same will be considered on its own merits." Moreover, no glaring discrepancy in description of imported items is found. Therefore it is quite hard to establish mens rea on the part of Respondent No.1 in such circumstances, even then the Adjudicating Authority vide impugned Order-in-Original has penalised the importer by imposing penalty of Rs. 50,000 and fine @ 20% on the excess quantity as per SRO 499(1)/2009 dated 13.06.2009. It appears from the record that the Respondent No. I/importer has complied the impugned ONO and paid the fine and penalty as adjudged vide impugned ONO 403/2-19-2020 dated 04.12.2019. Hence there arises no question for dragging the matter any further which should come to an end now.
8. In view of the above facts and circumstances of the case, I do not find any reason to interfere with Order passed by the Adjudicating Authority which is unexceptionable and is in accordance with law.
9. Accordingly, the Appeal is dismissed and stands disposed in above terms with no order as to cost.