Messrs MEHRAN MOTOR CAR CO. through Chief Executive VS COLLECTOR OF CUSTOMS, (APPRAISEMENT), KARACHI and 2 others, 2004 PTD-KARACHI-HIGH-COURT-SINDH 1482 (2004)

(a) Customs Act (IV of 1969)‑‑‑

‑‑‑‑Ss. 32 & 156(1)(14)‑‑‑Customs General Order No. 6 of 1979‑‑ Customs General Order No.4 of 1993‑‑‑Declaration of correct enhanced value of goods in Bill of Entry‑‑‑Imposition of penalty for not intimating to customs authorities subsequent enhancement in price of goods‑‑ Validity‑‑‑Customs General Order No. 4 of 1993 having been issued on 7‑7‑1993 would not apply to period under consideration i.e. from .27‑3‑1993 to 3‑7‑1993‑‑‑Nothing was found in the Customs General Order No. 6 of 1979 which obliged the importer to intimate change in prices to customs authorities or get enhanced ITP approved‑‑‑In absence of any law to such effect, importer was merely required to declare true and correct fact in the Bill of Entry‑‑‑ importer in the present case, by declaring correct enhanced value in Bill of Entry had fulfilled his responsibility‑‑‑Importer could not be saddled with offence under S.32(1) of Customs Act, 1969 for non‑application of mind by the customs officials‑‑‑Authority in the case of taxes short levied due to inadvertence, error or, misconstruction could retrieve loss under S.32(3) of the Customs Act, 1969‑‑‑Authority .in separate proceedings had enforced demand of loss against importer‑‑‑No offence having been committed by the importer penalty imposed was not justified, and was set aside by the High Court in appeal.

(b) Customs Act (IV of 1969)‑‑‑

----Ss. 32 & 156(1)‑‑‑Recovery of tax short levied‑‑‑Proceedings for imposition of penalty‑‑‑Double jeopardy, principle of‑‑‑Applicability‑‑ Where recovery of tax short levied and imposition of penalty in appropriate cases operated into different field and their areas of operation being distinct, then question of double jeopardy would not arise‑‑‑If after enforcement of demand on account of short levy, Authority, through separate proceedings again called upon importer to pay the short levied amount, then same would be a case of double jeopardy.

Zamiruddin Ahmed, for Appellant.

Jawaid Farooqui for Respondent.

Date of hearing: 27th January, 2004.

JUDGMENT

MUHAMMAD MUJEEBULLAH SIDDIQUI, J.‑‑‑This appeal is directed against the order, dated 13‑10‑1999, passed by the Customs, Excise and Sales Tax Appellate Tribunal, Lahore Bench, in Appeal No.K‑67 of 1995.

The following points of law have been formulated for consideration:‑‑

(1) Whether the appellant committed offence under section 32 of the Customs Act, 1969?

(2) Whether the appellant has been subjected to double jeopardy, if so, to what effect?

The relevant facts giving rise to this appeal are that the appellant imported Daewoo Racer Motor Cars from Korea, in the years 1992 and 1993, under the Prime Minister's Public Transport Scheme. Prior to 27‑3‑1993, the vehicles were assessed at C&F value US $ 6, 445 per unit. During the relevant period the invoice price was US $ 6,245. However, during the period from 27‑3‑1993 to 3‑7‑1993, the supplier enhanced the C&F value of US $ 6,800. During this period the appellant imported 7322 Motorcars and got the same cleared through 53 Bills of Entry declaring the per unit value at the rate of US $ 6,806. However, the customs officers assessed and realized taxes on the basis of earlier C&F value.

On 28‑8‑1993, Principal Appraiser, Appraisement VIII, Appraisement Collectorate, Customs House Karachi, issued notices to the appellant stating that the vehicles were released on the previous valuation while during the period between March and July, 1993, the vehicles ought to have been assessed at US @ 6,800 C&F per unit. The vehicles were assessed wrongly which resulted in short levy of Rs.43150 per unit which was recoverable under the provisions of section 32(3) of the Customs Act, 1969.

Ultimately an amount of Rs.6389613 was found to be short levied and the demand was enforced. (The issue pertaining to short levy is not the subject‑matter of this appeal and any finding/observation in this appeal is confined to the issue pertaining to the imposition of penalty and shall have no bearing on the issue pertaining to the short levy of taxes).

On 28‑9‑1993, another show‑cause notice was issued to the appellant by Collector of Customs, appraisement, stating that the vehicles imported by the appellant were provisionally assessed at ITP of US $ 6245 after adding commission of US $ 200 per unit. It was further stated that in March, 1993, the principals abroad enhanced the export price from US $ 6245 C&F to US $ 6800 C&F per unit. However the appellant did not intimate the change in the price to the Customs House, with the result that the Government was deprived of legitimate revenue to the extent of Rs.6389613 in respect of 7322 units. It was further intimated that the aforesaid act constitutes an offence under section 32(1) of the Customs Act, 1969, punishable under clause (14) of section 156(1). The appellants were called upon to show cause as to why the penal action under the aforesaid provisions of law should not be taken and short levied amount should not be recovered under section 32(3) of the Customs Act, 1969.

The appellants submitted explanation and ultimately vide order0-in‑original, dated 30‑6‑1994 the Collector of Customs, Appraisement held that the appellant did not intimate the change in the price to Customs House as was required by Customs General Order No. 6 of 1979 read with Customs General Order No. 4 of 1993 and consequently it amounts to offence under section 32(1) of the Customs Act, publishable under Clause (14) of section 156(1). The Collector of Customs, Appraisement passed no orders so far, the short levy was concerned (apparently for the reason that this issue was being dealt with separately and the demand on account of short levy was enforced). The Collector, imposed penalty of Rs.35 lacs. The appeals preferred before Member Judicial, Central Board of Revenue and the Customs, Excise and Sales Tax Appellate Tribunal were dismissed, hence this appeal before us.

Mr. Zamiruddin Ahmed, learned counsel for the appellant has taken us through the entire material available on record and has submitted that there is no mis‑declaration on the part of appellant. According to him, when the export price was enhanced from US $ 6245 C&F to US $ 6800 C&F per unit, the enhanced value was declared in the bills of entry. In support of his contention he has placed reliance on the copy of the Bill of Entry, showing the invoice value and the assessed value. He submitted that in spite of declaration of the higher invoice value by the appellant, the customs, officials continued to assess the value of vehicles per unit in accordance with the ITP value adopted by the Department. "Thus, there is no mis‑declaration on the part of appellant and thus, no offence envisaged under section 32(1) of the Customs Act, has been made out. He has further maintained that in view of the earlier show‑cause notice issued by the Principal Appraiser, on account of short levy, the appellant has been subjected to double jeopardy which is not sustainable in law. He has vehemently argued that the learned Customs, Excise and Sales Tax Appellate Tribunal, has not adverted to the facts available on record. In support of his contention that the facts alleged by him are admitted, he has drawn our attention to para. 3 of the Memo of Appeal, wherein it is alleged that, on and from 27‑3‑1993 the supplier of Motor Vehicles enhanced C&F Value at the rate of US $ 6800 per unit and up to 3‑7‑1993 under ten different in Bond Entry imported 7322 Daewoo Motor Cars and all the aforesaid 7322 Motor Cars were cleared by the appellant in fifty three (53) instalments under fifty three (53) Bills of Entry, declaring the per unit value at the rate of US$ 6800. In the parawise comments, filed on behalf of respondent No. 1, the Collector of Customs, Appraisement, has not denied the declaration of actual price at US $ 6,800 per unit, and it has been merely alleged that the vehicles were assessed at lower price because the revised enhanced value was not got approved by the appellant for assessment purpose. Mr. Zamiruddin Ahmed, has submitted that the appellant is not obliged under any provision of law to get the enhanced value approved. It is the duty of the department to adopt the enhanced value and the importer is merely required to declare the correct import value which has been done and is not denied by the Collector of Customs, Appraisement. He has therefore, submitted that the Tribunal has mis‑directed in coming to the conclusion that the appellant committed an offence under section 32(1) of the Customs Act and in up‑holding the penalty levied by the respondent No. 1.

On the other hand, Mr. Jawaid Farooqui, learned counsel for the respondents has supported the impugned findings of the respondents.

We have heard the learned advocates and have given our anxious consideration to the facts available on record. We find that the respondent No.1, has not denied that during the period between 27‑3‑1993 and 3‑7‑1993 the appellant declared enhanced value at US $ 6,800 per unit. From a perusal of the order passed by the respondent No. 1, upheld by the respondents Nos.2 & 3, we find that sole reason for levy of penalty is that the appellant did not intimate the change in the price to the Customs House, as required vide Customs General Order No.6 of 1979 read with Customs General Order No.4 of 1993. So far, Customs General Order No. 4 of 1993 is concerned, it is not applicable at all, for the reason that it was issued on 7‑7‑1993 and the period of import under consideration is from 27‑3‑1993 to 3‑7‑1993. So far, Customs General Order No. 6 of 1979 is concerned, we do not find anything in the CGO obliging the importer to intimate the change in the prices to the Customs House or to get the enhanced ITP approved. In the absence of any law in this behalf, the importer/appellant was merely, required to declare the true and correct facts in the Bill of Entry. Thus, when the appellant/importer declared the correct enhanced value in the Bill of Entry, he fulfilled his responsibility and if the customs officials did not apply their 'mind, the importer cannot be saddled with the responsibility of committing any offence envisaged under section 32(1) of the Customs Act, 1969. If the taxes were short levied due to inadvertence, error or mis‑construction, the customs department could merely retrieve the loss, in accordance with the provisions contained in subsection (3) of section 32 of the Customs Act, which has already been done in the separate proceedings and the demand of Rs.6389613 has already been enforced. In the facts and circumstances of the case, it is held that the appellant has not committed any offence under section 32(1) of the Customs Act, 1969 and consequently, the Tribunal has mis directed in up‑holding the penalty levied at Rs.35 lacs on account of alleged Commission of offence under section 32(1) of the Customs Act, 1969. However, we do not find any substance in the second contention of Mr. Zamiruddin, that the Principal Appraiser, had already issued a notice for the recovery of taxes short levied, therefore, the proceedings for imposition of penalty amounted to double jeopardy. The recovery of taxes short levied and imposition of penalty in appropriate cases operate into different field and their area of operation being distinct there is no question of double jeopardy. Of course, it would have been a case of double jeopardy if after enforcement of demand on account of short levy through a separate proceedings, the Collector of Customs would have again called upon the appellant to pay the same short levied amount again. This is not the case and consequently, the question of double jeopardy does not arise.

For the foregoing reasons, it is held that the appellant committed no offence under section 32(1) of the Customs Act, 1969 and consequently, the imposition of penalty was not justified, which is liable to be set aside.

The question No. 1, reproduced in the earlier part of this judgment is answered in negative and so also the question No.2, is also answered in negative.

A copy of this judgment shall be sent under the seal of the Court to the Customs, Excise and Sales Tax Appellate Tribunal, Karachi, who shall call for the record of the case from Lahore if not transmitted to Karachi and shall pass such orders as are necessary to dispose of the case conformably to this judgment.

The appeal is allowed as above.

S.A.K./M‑19/K Appeal allowed.