(a) Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)‑‑‑

‑‑‑‑S. 9‑‑‑Jurisdiction of Federal Tax Ombudsman ‑‑‑Scope‑‑ Ombudsman, in order to redress grievance of complainants, could take cognizance and investigate cases of maladministration ‑‑‑Otherwise purpose of Establishment of Office of Federal Tax Ombudsman, 2000 would be defeated.

(b) Customs Act (IV of 1969)‑‑‑

‑‑‑‑Ss. 33 & 81‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss. 9 & 11‑‑‑Refund of duty, claim for‑‑ Appellate Tribunal directed department to assess Bill of Entry provisionally and refund differential amount of duty and taxes subject to complainant furnishing guarantee/undertaking to secure its recovery, in case final decision of C.B.R. went against complainant‑‑‑Department did no comply with Tribunal's order without any reason inspite of letters written by complainant followed by reminders‑‑‑Validity‑‑‑No proceedings were pending on such issue‑‑‑Entire conduct and treatment suffered from unexplained delay and avoidance of lawful binding order of superior authority‑‑‑Where no valid reason for delay and non‑compliance was furnished, then whole process and action would be tainted with mala fides‑‑‑Ombudsman recommended to department to follow and comply with Tribunal's order within specified time.

(c) Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)‑‑‑

‑‑‑‑Ss. 2(3) & 9‑‑‑Non‑compliance with lawful binding order of superior authority‑‑‑Effect‑‑‑Where no valid reason for delay and non‑compliance was furnished by department, the whole process and action would be tainted with mala fide.

Anwar Elahi for the Complainant.

Zahra Haider, A.C. for Respondents.

Muhammad Akbar, (Advisor) Dealing Officer.

DECISION/FINDINGS

This complaint alleges maladministration on the part of Lahore Dryport Customs Authority for failure to ‑pay refund rising out of Customs, Excise and Sales Tax Appellate Tribunal's decision in appeal No. C.A. 2467/LB/2001, dated 2‑5‑2002 directing the department to refund the differential amount of duty and taxes subject to complainant furnishing guarantee/undertaking to secure recovery in case the final decision of the C.B.R. goes against it.

2. Facts of the case, as explained, are that the complainant had imported Polyurethane Resins in 1999 claiming assessment under PCT heading 3909.5000. The goods were exbonded vide Bill of Entry No. 06470, dated 28‑1‑2000 but the department assessed duty at higher rate under PCT heading 3208.9000 instead of 3909.5000 as claimed. Since the complainant was pressed for release of material for consumption in the factory the duty assessed on the higher side was paid. The refund applied for was rejected by the D.C. against which it filed appeal before Customs, Excise and Sales Tax Appellate Tribunal who directed the department to assess the aforesaid bill of entry provisionally under heading 3909.5000 against bank guarantee/undertaking and refund the differential amount pf custom duty and taxes already recovered. The complainant submitted an application for payment of refund to the respondents, alonbwith copy of the Appellate Tribunal's decision and requisite undertaking but the department has not complied with Tribunal's order which is an act of 'maladministration'. The respondents may be directed to refund the excess amount of duty/taxes deposited by it.

3. In reply, the respondents have taken preliminary objection to the jurisdiction of the FTO on the ground that since the case involves assessment matter Honourable FTO's jurisdiction is excluded in terms of section 9(2) of the Establishment of the Office of the Federal Tax Ombudsman Ordinance, 2000. Classification of Polyurethane Resin was made under PCT Heading 3208.9000 in the light of test reports and in bond bill of entry No. 2892, dated 12‑1‑2000 of Karachi Customs House. As per order of the Appellate Tribunal refund of Rs.140,406 of customs duty was recommended by the assessing group provisionally under section 81, of the Customs Act, 1969 subject to finalization of the classification matter in the light of WCO (World Customs Organization)'s decision. While the case was being processed the Recovery Cell pointed out an amount of Rs.4,412,195 as outstanding against and recoverable from the importer. The payment of refund was, therefore, kept in abeyance. The complainant has filed in this regard a Writ Petition No. 9297 of 2003 in the Lahore High Court, which is sub judice. Meanwhile the department has received a decision from WCO confirming that the product in question is classifiable under PCT heading 3208.9000 instead of 3909.5000 as claimed by the complainant. The WCO's decision confirms Lahore Collectorate's point of view and the assessment done earlier was found to be correct. No refund is payable. The complaint may be filed.

4. During the hearing the AR, reiterated that the refund has not been paid despite Appellate Tribunal's decision and the fact that it was created on 5‑5‑2003. When asked whether the complainant had put up a bank guarantee/undertaking as directed by the Appellate Tribunal because Tribunal's decision regarding payment of refund was subject to furnishing of bank guarantee/undertaking, the AR of the complainant stated that the department never asked it to furnish the same. Had the department asked for it, it would have been furnished.

5. The DR submitted that as per Tribunal's decision the payment of refund in the case was contingent upon presentation/furnishing of bank guarantee/undertaking as directed by the Tribunal. No refund could be paid in the absence of guarantee/undertaking. The amount of refund involved in the case is Rs.140,406 and not Rs.169,541 as claimed in the written complaint. Complainant's refund claim will be finalized on its merit in terms of the Appellate Tribunal's decision after submission .of bank guarantee/undertaking as directed by the Tribunal. The AR stated that he had vide letters, dated 2‑2‑2000 and 12‑3‑2003 and a reminder, dated 23‑7‑2003 asked for payment of refund but the department never asked for furnishing the bank guarantee/undertaking.

6. The arguments of the parties and the record of the case have been considered and examined. As to respondents' objection to FTO's jurisdiction it is well settled now that in order to redress the grievances of the complainants, the FTO can take cognizance of, and investigate cases involving maladministration otherwise the very purpose of the Establishment of the Office of the Federal Tax Ombudsman Ordinance, 2000 would get defeated. It may be noted that the complaint does not relate to assessment or classification of goods. It relates to refund to be made by the Department as ordered by the Tribunal. The department has not complied with the order in spite of letters written by the complainant on 2‑2‑2000 followed by reminders without any valid reason. There is no proceeding pending on this issue. The entire conduct and treatment suffers from unexplained delay, avoidance of lawful binding order of superior authority. Where no valid reason for delay and non compliance is furnished the whole process and action is tainted with mala fides. The objection to jurisdiction has no merit. It is observed that payment of refund in this case was contingent upon furnishing bank guarantee/ undertaking in terms of Tribunal's order, dated 2‑5‑2002 a portion of which is reproduced as under:‑‑

"The department is, therefore, directed to assess the goods cleared vide aforesaid bill of entry provisionally under heading 3909.5000 and refund the differential amount of customs duty and taxes subject to the appellants furnishing some kind of guarantee/undertaking as is obtained from others to secure recovery of the same in case the final decision of the C.B.R. is against them."

The Honourable Appellate Tribunal's decision is quite unambiguous. The department should have resolved the matter in the light of Tribunal's decision. Maladministration as explained above has been established it is recommended that:‑‑

(i) The Department to follow and comply with the order of the Tribunal.

(ii) Compliance within 30 days.

S.A.K./205/FTO/Order accordingly.