Customs Act (IV of 1969)---

----Ss. 9(b)(c), 10 & 11---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.2(3)---Declaration of customs-ports, customs-airports, etc: ---Import of timber---Clearance of goods from a place and charging duties and taxes treating the said place as Customs House Station without notifying as required by S.9 of the Customs Act, 1969---Refund was claimed being illegal collection of such duties and taxes at such place---Validity---Levy and recovery of duties and taxes on timber were not challenged and same was paid without any objection hence refund could not be allowed---Question of mark-up also did not arise---Particulars for compensation of loss suffered had also not been given---Duty and tax leviable being legal and proper it could not be claimed that by paying the same the claimant had suffered any loss Department having acted contrary to Ss.9, 10 & 11 of the Customs Act, 1969 maladministration was established---Federal Tax Ombudsman recommended that if the Central Board of Revenue deemed it proper and appropriate it might notify the place in question as a Customs Station under S.9 of the Customs Act, 1969 within a period of 45 days and if said place was not declared as Station House within the specified period and routes were not notified clearance of goods and levy of duties and taxes from said Check Post be not allowed.

Riaz Hussain Naqvi for the Complainant.

Sadiqualla Khan, Deputy Collector Customs, Dryport Peshawar for Respondent.

FINDINGS/DECISION

Since 1977 the complainant is engaged in the sales of timber in the Provincially Administered Tribal Area (PATA) and Federally Administered Tribal Area (FATA) as timber merchant and commission agent. The complainant has also been registered since 1955 with the Divisional Forest Officer, Mardan as proprietor of Bajor Timber Supply Agency Dargai Malakand Agency. The complainant has been supplying timber to the settled areas of Pakistan. In the year 1963 or thereabout the Pakistan Customs established a Check Post in the settled area of Shergarh on the Malakand/Mardan Road. After some years Shergarh Check Post started functioning as a Land Customs Station and the Customs Authorities posted there required all persons supplying timber to the settled areas to pay:--

(a)customs duties;

(b)sales tax

(c)withholding income tax;

(d)central excise duty and

(e)other taxes for the time being in force.

2. The complainant and other similar persons complied in good faith with the requirements of the Customs Authorities by making payments of all duties and taxes. This practice continues even upto date. It has been pleaded that the respondents have been charging the duties and taxes without any lawful authority because:--

(a)C.B.R. has not declared Shergarh as Land Customs Station as required by section-9 (b) of the Customs Act 1969.

(b)C.B.R. has not declared the routes to or from so called Shergarh Land Customs Station by the notification in the official Gazette as required by section 9(c) of the Customs Act, 1969.

(c)C.B.R. has not declared what shall be deemed to be a Customs House at Shergarh or the limits thereof.

(d)C.B.R has neither specified the limits of the land customs nor approved the landing places by notification as required by section 10 of the Customs Act 1969 and

(e)C.B.R. has not declared Shergarh to be a warehousing station by notification in the official Gazette as required by section 11 of Customs Act, 1969.

It has been further pleaded that the Customs Authorities are not applying the mandatory provisions of the Customs Act relating to the arrival of the goods and the officers discharging the functions are not appropriate officers as required by law. According to .the complainant the entire exercise and acts of omission or commission are illegal and without jurisdiction and amounts to maladministration. It has been prayed that the amount of money collected as duties and taxes at the Shergarh Land Customs Station/Check Post be refunded. In Annexure-1 a summary of payment of duties and payment of taxes have been given for the years from the year 1995-96 to 1999-2000, total amount of which comes to Rs.61,430,586.

3. The department has submitted reply in which it has been pleaded that in fact timber used to be smuggled from Afghanistan under the garb of permits issued by the Political Authorities. In June 1995 some eight trucks of smuggled timber and all leviable taxes were recovered after adjudication. The importers showed their willingness to import timber from Afghanistan and the Collector of Customs, Peshawar by his letter, dated 28-3-1996 addressed to the Member (Customs) C.B.R., that "till the notification of Shergarh Customs Station is issued ad hoc arrangements are being made by allowing importers to file their bills of entry at the Dry Port, Peshawar for the purposes of assessment of taxes In order to ensure that only duty paid timber enters in the settled areas necessary staff has been posted at Shergarh Check Post" Shergarh Check Post was never notified as Land Customs Station and never functioned as such. In case of timber no notification under section 9 in respect of specified route has been issued and-o therefore, no specific route for import of timber exists. The duties are being charged by the Collector of Customs, Peshawar lawfully and on the basis of bills of entry filed by the complainant. The complainant is therefore, estopped from questioning the lawful authority of the respondent. The staff posted at Shergarh Check Post have acted according to the law. The Collector of Peshawar has plugged the smuggling route and saved revenue amounting to Rs.61,430,586 which are efficient performance and pragmatic administration.

4. Mr. Riaz Husain Naqvi, learned counsel for the complainant has contended that Shergarh was never notified as a Customs Station House as provided by section 9 of the Customs. Act. All acts of the Customs Authorities leading to recovery of duties and taxes are illegal contrary to law and without jurisdiction. Thus maladministration is established. On the other hand the representative of the department has justified the action as legal, proper and in the interest of State revenue. From the reply and examination of sections 9 and 10 other Customs Act it is clear, as admitted by the respondent, that so far no notification has been issued under section 9 declaring Shergarh as a Customs House Station nor as a Check Post nor any notification. regarding route has been issued. The department has taken the stand that Shergarh Check Post has never acted as Land Customs Station. However, from the several bills of entry which has been produced it is clear that the Customs Authorities have affixed stamps of Custom House Station Shergarh: This belies the respondents. The Customs Authorities have been clearing the goods from Shergarh and charging duties and taxes treating it Customs House Station without notifying as required by section 9 of the Customs Act.

5. The department has produced letters, dated 28-3-1996 and 20-10-2000 where the Collector had requested the Member Customs, Central Board of Revenue, to notify Shergarh Check Post as Customs Station. But it is not known what reasons. prevented C.B.R. not to issue such notification. The net result that emerges is that Shergarh Check Post has not been notified as Customs Station. Therefore, neither clearance of goods can be allowed from this Check Post nor duties and taxes can be charged here.

6. The complainant's claim is that as the entire action was illegal he is entitled to refund of the duties and taxes paid to the Government with mark up @ 14% and compensation for loss. The claim for refund of duties and taxes does not entirely depend upon the question of point of recovery and clearance of goods. From the very beginning the complainant had been allowed to clear the goods through Shergarh Check Post on payment of duties and taxes. It is not the case of the claimant that the duties and taxes were illegally recovered which were not leviable on the goods cleared by him. The duties and taxes recovered at Shergarh Check Post though not notified as a Customs Station would have been recovered in case the complainant would have cleared the goods through any other Customs Station House. The object of creating Check Post at Shergarh was to check smuggling of timber from Afghanistan to the settled areas. It was open to the complainant to have challenged the levy and recovery of duties and taxes on the ground that the timbers were not imported from Afghanistan and were not of foreign origin. No such sten was taken by the complainant who paid it without any objection. The levy and recovery of duties and taxes were not challenged at any stage hence refund cannot be allowed the complainant's conduct debars him from claiming refund. The question of mark-up also does not arise. So far the claim for compensation of loss suffered by the claimant is concerned no particular of such claim has been given. As the duty and tax leviable were legal and proper it cannot be claimed that by paying them the claimant has suffered any loss.

7. As the department has acted contrary to sections 9, 10 and 11 of the Customs Act maladministration is established. It is recommended that:

(i)If the C.B.R. deems it proper and appropriate it may notify Shergarh as a Customs Station under section 9 of the Customs Act within a period of 45 days.

(ii)If Shergarh is not declared as Station House within the specifies period and routes are not notified clearance of goods and levy of duties and taxes from Shergarh Check Post be not allowed.

(iii)Compliance be reported within 60 days.

C.M.A./840/FTO. Order accordingly.