SHAKIL AHMED ABBASI, MEMBER JUDICIAL-III By this order, I intend to dispose of Customs Appeal No.1673/2023 filed against Order-in-Original No. 829962/2023 dated 08.09.2023 passed by the learned Additional Collector of Customs (Adjudication-I), Karachi.
2. Brief facts of the case are that electronically filed Goods Declaration No.KAPW-HC-13153-25-07- 2023 through authorized Customs Clearing Agent M/s. Seagate International. (Chall No.3211) and declared to contain (1) ABRASIVE FILAMENTS MADE OF CERAMIC GRIT (ABR 610 0,70 240KK, ABR612 0,75GEW.5 K320SC, ABR612 0,60 GEW.5 K320SC, ABR612 0,90 GEW.5 K320SC) details as per invoice, net weight 824.5 kgs under PCT heading 6805.3000 at declared invoice value 1368.59 (EURO). The importer determined his liability of payment of applicable duties and taxes in terms of Section 79(1) of the Customs Act, 1969. In order to check as to whether the 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 attributes of the goods. For ease of reference examination report is re-produced as under: "ASSESSMENT ALERT----FOR MIS-DECLARATION OF INVOICE! THE "DECLARED INVOICE VALUE IS 1368.59 (EURO), WHILE ON PHYSICAL EXAMINATION FOUND INVOICE VALUE IS 19,965.07 (EURO), WHICH IS 1359% HIGHER THAN DECLARED INVOICE VALUE, GROUP MAY TAKE NECESSARY ACTION IN THE LIGHT OF EXAMINATION REPORT, ALSO CHARGE DUTY AND TAXES AS PER CUSTOM LAWS, G.D NO: KAPW-HC-13153 DATED 25-07-2023 EXAMINED THE GOODS IN THE LIGHT OF G.D DATA RETRIEVED THROUGH WEBOC SYSTEM. INVOICE FOUND DESCRIPTION.
1. ABRASIVE FILAMENTS. (ABR 610 0,70 240KK, ABR612 0,75GEW.5 K320SC, ABR612 0,60 GEW.5 K320SC, ABR612 0,60 GEW.5 K320SC), PACKED IN CTNS, NET WT-825 KGS APPROX, BRAND, I/0:NOT SHOWN, 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:898060, DATED: 26-07-2023. FOUND WEIGHT:862 KGS, GROUP MAY LIKE TO CHECK ALL OTHER ASPECTS RELATED TO ASSESSMENT LIKE IPO/CLASSIFICATION AND OTHER CONCERNED LAWS/ CONDITIONS. IMAGES ATTACHED ARE AN INTEGRAL PART OF EXAMINATION REPORT."
3. On the basis of physical examination of the goods, the found value is Euro 19965.07/- as against declared value Euro 1368.59. The difference is Euro 18596.48/- (1359% approx). The importer filed untrue declaration to hide actual transactional value. The aforesaid facts prove that the importer has deliberately concealed/declared the value of the goods as to attempt for getting the goods assessed on suppressed value for evading legitimate amount of duty and taxes.
4. Show-cause notice issued and matter was adjudicated. The learned Adjudicating Officer passed an Order-in-Original No.1829962 'dated 08.09.2023 as under:- "It has been gathered that though the respondents have imported the goods @ Euro 1.66/kg, however, the PRAL 's record shows that in normal course the importers' declared values were never ever accepted as true transaction values. Keeping in view the facts and circumstances of the case the respondents' modus operandi of deliberate mis-declaration of value of evasion of duties/taxes is like "Switch Invoice" because of the fact that the supplier's statement/Certificate has not been supported with any export GD of the supplier's GD. Even otherwise keeping in view the proviso to Section 254(2) read with the Section 25(1) of the Act and the law settled by the Hon'ble Supreme Court of Pakistan in the case of Junaid Traders v. Additional Collector of Customs, Appraisement (2012 SCMR 1876), the duties and taxes were/are chargeable at the value's of the invoice retrieved from the container. From the above, (it is crystal clear the respondent Importer through their Custom Agent has deliberately mis-declared the value of the imported goods in order to evade legitimate duty and taxes. The importers have no case on merits, their emphasize for re-export is just to avoid penal action as warranted under the law. Had this concealment of value gone un-detected, the public exchequer would have suffered a substantial loss of revenue in shape of leviable duty and taxes. The stereo type contention of the learned counsel on behalf of the importer that the invoice was placed inside the container inadvertently is baseless and an afterthought having no substance and. cannot be relied upon.
The importer and clearing agent thus found guilty in terms of provisions of Sections 32, 32A, 79(1) and 209(3) of the Customs Act, 1969, read with Section 6 of Sales Tax Act, 1990 and Section 148 of the Income Tax Ordinance, 2001, punishable under clauses (14) and (14A) of Section 156(1) of the customs Act, 1969, therefore, the impugned goods are confiscated in terms of aforesaid provision of law. However, since the impugned goods are otherwise freely importable, therefore, an option is given to the importers to release the goods on payment of the redemption fine 35% (Rs.2,281,952/-) under Section 181 read with SRO 499(I)/2009 dated 13.06.2009, in addition to duties/taxes leviable thereon. Moreover, a personal penalty of Rs.300,000/(Rupees Three hundred thousand only) is also imposed on the importer under the aforesaid provisions of law, as were also mentioned in the show-cause notice.
The acts of the customs agents have also been examined in the light of facts and circumstances of the case. Admittedly, the GD was filed by the customs agent after obtaining the requisite documents from the porters, including the information related to the specification of the imported goods. Being authorized declarant before filing of the GDs the documents as well as particulars of the imported goods are scrutinized by the Customs agent and thereafter made declaration/self- assessment for obtaining pay order, etc., for payment of leviable duties/taxes in terms of Section 79(1) of the customs Act, 1969. As per the responsibilities, legally entrusted on the customs agent, as per Section 209 of the Customs Act, 1969 read with Chapter-VIII of the Customs Rules, 2001, particularly rule 101, the declarant customs agents were I are legally bound to make correct declaration/self-assessment, while also considering the prevailing ruler/regulation, and pay the duties and taxes in accordance with law. However, in the instant case the respondent customs agents have been failed to protect the governments interests rather connived with the importer not only to clear the banned goods rather also to evade the revenue and acted as per the unlawful instructions of the importer instead after receipt of the import shipping documents partially Invoice and B/L, he should have been more careful for making declaration. As such the charges of making attempt for clearance of the impugned goods, with deliberate misdeclaration and wrong self-assessment for less payment of revenue by making the connivance with the importers are also established against the customs agent, therefore, a personal penalty of Rs.100,000/-, (rupees one Hundred thousand only) is also imposed on the customs agent in terms of clause (14) of Section 156(1) of the Customs Act, 1969. In the presence of proviso to Section 25A(2) read with 25(1) of the Customs Act, 1969, it is clear that the respondent importer in league with their clearing agent has made a willfully mis-declaration of value with clear intentions defraud government with evasion of revenue."
5. The appellant being aggrieved with the aforesaid impugned order passed by the Adjudication Officer filed the instant appeal before this Tribunal and assailed the impugned order inter alia on the following grounds:- That the importer M/s. NorTex Corporation has purchased a consignment of ABRASIVE FILAMENTS MADE OF CERAMIC GRIT from M/S. ZNF TRADE VENTURE LLC, DUBAI, UAE of GERMANY origin but shipper Hahl Filaments Gmbh, Germany has mistakenly shipped a wrong cargo of ABRASIVE FILAMENTS MADE OF SILICA GRIT of any other consignee. The seller and shipper has also confirmed that the wrong cargo of other buyer has been wrongly shipped and requested for re-ship/re-export of frustrated cargo as per provision of law back to shipper.
2. That the found invoice has also revealed the name of importer as M/s. Nortal Corporation and address as 46, Nishtar Road 54000, Lahore instead of M/s. NorTex Corporation, address as 27-C, Gulberg-II, Lahore.
3. That the Custom House Lab report has also confirmed 'The sample is the form of grey lustrous cut to size filament/wire. On test is found to consist of core of filament composed of synthetic polymer nylon which is coated/covered by abrasive material/grit (essentially of silica). Diameter of sample is measured as 0.90min."instead of ceramic grit.
4. In the light of above facts it is humbly submitted that importer has newly started business of import few months ago and not fully aware he has only filed 05 GDs in which 02 of TP and 03of This is the 3rd import of his entire import history and has imported ABRASIVE FILAMENTS for the first time.
It is also submitted that importer has not intentionally or deliberately made any wrong declaration of concealment to the public exchequer nor tried to evade legitimate amount of taxes to the tune of Rs.3,741,387/- willfully.
5. It is a fundamental law that all citizens are equal before the law in terms of Article 25 of the Constitution of Islamic Republic of Pakistan 1973, Article 25 of Constitutions of Islamic Republic of Pakistan 1973 says about Equality of Citizen: "All Citizens are equal before the Law and are entitled to equal protection of Law".
6. Mr. Zulfiqar Ali Shah, A.O. appeared on behalf of respondent and filed parawise comments on grounds of appeal as under:-
1. That the contents of paras of facts are merely recapitulation/reproduction of the facts of the case as copied from show-cause notice/contravention; hence, self-explanatory in nature; thus, warrant no specific comments. However, importer M/s. NorTex Corporation has electronically filed Goods Declaration No.KAPW-HC-13153-25-07-2023 and declared to contain ABRASIVE FILAMENT'S MADE OF CERAMIC GRIT classified under HS Code 8050.3000, declared net weight 825 Kgs and declared invoice value 1368.59 (EURO). The importer has determined his liabilities of payment of applicable duty and taxes and sought clearance under Section 79(1) of the Customs Act, 1969 under self-assessm ent system. In order to check whether the importer has correctly paid the legitimate amount of duty and taxes, the referred GD was selected for scrutiny in terms of Section 80 of the Customs Act, 1969 and referred to examination for confirmation of description, quantity and other physical attributes of the goods,
2. A bare perusal of the Goods Declaration in the light of the examination report it was revealed that at the time of examination, examination staff has found invoice of value 19,965.07 (Euro), which was 1359% higher than declared invoice value, thus the importer has deliberately mis-declared the value of the goods in order to get the goods cleared willfully and with malafide intention has attempted to defraud/deprive the state exchequer of its legitimate revenue to the tune of Rs.3,741,387/- in terms of customs duty and other taxes, The offending value of the goods comes to Rs ,6519862/-
3. Had the consignment not been subjected to in-depth scrutiny, the legitimate revenue engulfed by the appellant through mis-declaration would have gone undetected. It is poignant to mention that the appellant in the entire memo of appeal has not been able to satisfactorily come up with any explanation or any Incontrovertible, compelling and substantive documentary evidence refuting an offence of mis-declaration/fiscal fraud. Hence, the case of mis-declaration instituted by the department within the contemplation of section 32 of the Customs Act, 1969 and the charges delineated therein remain un-rebutted. Both ingredients of offence namely "Actus Reus (guilty Act) and Mens Rea (Guilty intention)" are glaringly visible from the face of the record, thus, the importer has, ipso facto, attempted to hoodwink the customs authorities by mis-declaring the value; resultantly, causing colossal loss to the national exchequer. Thus, this act on the part of the importer in connivance with the clearing agent is "Actionable per se" a perfect case of mis- declaration.
4. During the adjudication proceedings before the Adjudicating Authority, both sides submitted their arguments and counter arguments, as annexed with the appeal. Resultantly, after dilating upon the arguments advanced by both sides, the learned Adjudicating Authority passed the impugned order in favour of the department by ordering the importer to pay the legitimate amount of duties and taxes along with redemption fine of 35% (Rs.2,281,952/-) and personal penalty of Rs.300,000/-.
5. The importer attempted to hoodwink the customs authorities by submitting fake and forged invoices retrieved from the container. There are cases when a partial amount is transferred through a banking channel while the 'rest of the amount is transferred through illicit channels.
There are ample chances that the exporter and importer have connived and the rest of the amount might have been transferred to the exporter through illicit means. Furthermore, payment slips from banks are not enough to prove that the invoice provided is genuine. The declared invoice must reflect the price trends in international markets and should also correspond with the WeBOC data reservoir which shows prices of identical goods and similar goods cleared at any customs station across the country.
6. Except for the value of goods, all other particulars of retrieved/fond invoice including type, quality, weight, and specifications, match with the actual goods found inside the container. Hence, the plea of 'the importer is a mere eye-washing, exercise, after-thought contention, post-script, and a cunning attempt to seek refuge under fallacious argument with the sole purpose of averting anticipated penal action to be taken against them. Thus, the plea taken by the importer is absolutely flimsy and untenable.
The importer has mis-declared the actual value of the goods by submitting a fake and forged invoice. This fact stands proved by the fact that actual invoice is retrieved from the containers reflecting genuine higher value of the goods. Hence, the importer has, ipso facto, attempted to hoodwink the customs authorities and evade the legitimate quantum of duties and taxes. The 'instant case is a perfect case of mis-declaration in terms of section 32-A of the Customs Act, 1969.
Since the importer has been caught red-handed, therefore, should be meted out and treated accordingly as per section 156(1)(14-A) of the Customs Act, 1969. Reliance is placed upon the judgment of Sindh High Court in the identical case universal enterprise v. Custom Appellate Tribunal (2022 PTD 94) and 2012 SCMR 1876 and 2022 PTD 94 SCR A. No 203 and C.M A. No. 1506 of 2019.
7. Keeping in view the facts and circumstances of the case the appellant's modus operandi of deliberate mis-declaration of value of evasion of duties/taxes is like "Switch Invoice" because of the fact that the supplier's statement/certificate has not been supported with any export GD of the supplier's GD. Even otherwise keeping in view the proviso to Section 25A(2) read with Section 25(1) of the Act and the law settled by the Hon'ble Supreme Court of Pakistan in the case of Junaid Traders v. Additional Collector of Customs, Appraisement (2012 SCMR 1876), the duties and taxes were/are chargeable at the values of the invoice retrieved from the container.
The contents of the un-numbered para fail the test of logic that the name printed on the higher invoice retrieved has a slightly changed spelling of the name of the importer and the exporter has submitted its mistake that the wrong invoice was placed in , the container. The plea of the importer is mere a desperate attempt, eye-washing exercise, after-thought contention, post-script, and a cunning attempt to seek refuge under fallacious argument with the sole purpose of averting anticipated penal action to be taken against them.
9. No action on part of respondent department can be equated with a violation of fundamental rights; thus, no violation whatsoever, is committed by the respondent department.
7. I have examined the case record and considered the written as well as verbal submissions made by the both sides. The learned counsel for the appellant argued that the goods were mistakenly shipped by the shipper hence frustrated consignment may be allowed to re-export back to shipper as per provision of law under Section 138 of Customs Act, 1969 read with Rules 86 - 89 of SRO 450(I)/2001 or as per provision 20 "d" of IPO, 2022. He further argued that the importer M/s. NorTex Corporation has purchased a consignment of Abbrasive Filaments made of Ceramic Grit from M/s. ZNF Trade Venture LLC, Dubai, UAE of Germany origin but shipper M/s. Hahl Filaments Gmbh, Germany has mistakenly shipped a wrong cargo of Abbrasivc Filaments made of Silica Grit of another consignee. In this regard, the seller and shipper has submitted undertaking with confirmation that the wrong cargo of other buyer has mistakenly been shipped, therefore, he requested for re-ship/re-export of frustrated cargo back to shipper as per provision of law. He further stated that found invoice is displaying the name of importer as M/s. NorTex Corporation with address 46, Nishtar Road 54000, Lahore instead of M/s. NorTex Corporation is addressed at 27- C, Gulberg-II, Lahore. The Custom House Lab report has also confirmed that the sample is in form of grey lustrous cut to size filament/wire. On lab test is found to consist of core of filament composed of synthetic polymer nylon which is coated/ covered by abrasive material/grit (essentially of silica). Diameter of sample is measured as 0.90 min instead of ceramic grit.
8. In view of the above discussions on description of frustrated cargo, lab report, change of name and address of importer in found invoice and documents submitted by the importer, the found invoice is depicting the name of importer as M/s. Nortal Corporation with address 46, Nishtar Road 54000, Lahore instead of importer name M/s. Nortal Corporation, address as 27-C, Gulberg-II, Lahore. Besides above, Custom House Lab Report has also confirmed that the found goods are made of Silica instead of Ceramic as declared by the importer. The seller and shipper has also confirmed by submitting undertaking that the wrong cargo of other buyer has mistakenly been shipped hence they requested for return/re-export of frustrated cargo to shipper.
9. In view of above unrebutted factual position on record, I hereby set aside the impugned Order- in-Original No.1829962 dated 08.09.2023 and allow the appeal of appellant for re-export of consignment to shipper.
10. The appeal stands disposed of in above terms.