Customs Appeal No.K-514 of 2005, decided on 7th October, 2005 VS Customs Appeal No.K-514 of 2005, decided on 7th October, 2005
2006 P T D (Trib.) 315
[Income-tax Appellate Tribunal Pakistan]
Before Khalida Yasin, Judicial Member and Zafar Iqbal, Member Technical
Customs Appeal No.K-514 of 2005, decided on 07/10/2005.
(a) Customs Act (IV of 1969)---
----Ss.16, 32 & 181---Imports and Exports (Control)( Act (XXXIX of 1950), S.3(1)---S.R.O. 374(1)/02, dated 15-6-2002---Power to prohibit or restrict importation and exportation of goods---Import of old and used Equipment/Accessories for Industrial Alcohol Project---Department after examination had alleged that the consignment consisted of different types of valves which were not importable---Adjudication Collectorate alleged that the appellant did violate the provisions of Ss.16 and 32 of the Customs Act, 1969 read with S.3(1) of the Imports and Exports (Control) Act, 1950---Appellant contended that old and used machinery parts or components imported for their plants, if not importable under Import Policy were releasable under S.181 of the Customs Act, 1969 and its release be allowed against payment of redemption fine---Department passed order for outright confiscation of offending goods---Validity---No misdeclaration was made by importer and as such provisions of S.32 of the Customs Act, 1969 were not attracted---Goods claimed to be restricted were part and parcel of the plant and were required for its operation in manufacturing of industrial alcohol, as such assumption that it was an independent import of certain prohibited goods with the intention to violate law could not be inferred---Appellate Tribunal allowed release of such goods on payment of fine equivalent to 25% of their value in addition to import levies.
(b) Customs Act (IV of 1969)---
----S. 32---Untrue statement, error, etc.---Import of old and used goods---Qualified statement---Existing practice was that where old and used goods were imported, declaration with regard to description of goods was not accepted---No qualified statement was made by the appellant to attract provisions of S. 32 of the Customs Act, 1969.
(c) Customs Act (IV of 1969)---
----Ss.32(1) & 80---Untrue statement, error, etc.---Motive---Contingency of no fiscal consequence was undeniable as the importer had demonstrated by submitting to the Customs Authorities to assess the goods on the basis of examination and after determining the exact nature of goods so arrived in such a situation no penalty under S.32(1) of the Customs Act, 1969 was leviable for any alleged under-valuation or mis?declaration since there could be no motive to evade tax.
(d) Customs Act (IV of 1969)---
----S.32---Offending goods---Past practice---Offending goods in the past had been released on payment of redemption fine in addition to import levies.
?
Muhammad Afzal Awan, Consultant for Appellant.
Abdul Rasheed, Appraising Officer for Respondent.
Date of hearing: 3rd October, 2005.
ORDER
This appeal challenges the vires of the order, dated 30-5-2005, passed by the Collector of Customs, Sales Tax and Central Excise Appeals, Karachi.
2. According to the records, the facts of the case are that the appellant imported a consignment of old and used Equipment/Accessories for Industrial Alcohol Project which was examined first to determine the actual description, value and PCT under section 80(1) of the Customs Act, 1969.
3. The respondent, after examination alleged that the consignment consists of different type of valves which were not importable, according to the Import Policy. Details are given below:--
| S.No. | Description | Quantity | H.S. Code | Ascertained Value (Rs.) |
| 1 | Old & Used S.S. Valve DIA 300 MM | 3 Units | 8481.8000 | 27,428 |
| 2 | DIA 200 MM | 20 Units | 8481.8000 | 121.902 |
| 3 | DIA 150 MM | 20 Units | 8481.8000 | 91,426 |
| 4 | DIA 100 MM | 25 Units | 8481.8000 | 76,189 |
| 5 | DIA 250 MM | 4 Units | 8481.8000 | 8,228 |
| 6 | DIA 150 MM | 6 Units | 8481.8000 | 9,569 |
| 7 | DIA 50 MM | 10 Units | 8481.8000 | 7,741 |
4. Accordingly, a contravention report dated 8-2-2005 was sent to the Adjudication Collectorate alleging that the appellant did violate the provisions of sections 16 and 32 of the Customs Act, 1969 read with section 3(1) of the Imports and Exports (Control) Act, 1950.
5. The appellant vide their reply to the show-cause notice stated that vide S. No. (iv) clause (b) of S.R.O. 374(1)/02 dated 15-6-2002 old and used machinery parts or components imported by the industrial importers for their plants, if not importable under Import Policy are releasable under section 181 of the Customs Act, 1969. Therefore, its release be allowed against payment of redemption fine. However, the respondent did not agree with the appellant's point of view and passed orders for outright confiscation of offending goods. A personal penalty of Rs.15,000 was also imposed on the appellant. The said orders have now been challenged by way of this appeal.
6. The appellant contended that:--
(a) the respondents have deliberately erred in law by misquoting the provision of law sub-clause (iv) or (v) of clause (b) of S.R.O. 374(I)/02 dated 15-6-2002 as sub-clause (iv) which does not contain any concession for the industrial importer/appellant imported the old and used parts or component for their plant, the judgment was made without applying judicial mind in negligent manner;
(b) that section 181 mandates that "whenever an order for the confiscation of goods is passed under this Act, the officer passing the order may give the owner of the goods an option to pay in lieu of the confiscation of the goods such fine as the officer thinks fit." Which mandate was neglected by the respondents their orders are bad in the eyes of law, illegal and in disregard to their duties cast upon them;
(c) the Central Board of Revenue has not provided any order specifying the goods imported by the appellant, where such option shall not be given. Further the C.B.R. has by S.R.O. 374(1)/02 fixed amount of tine @ 25% in lieu of confiscation for violation of sections 15 & 16 of the Customs Act, 1969 or any other law for the time being in force;
(d) that there was no violation of section 32 by the appellant, as the bill of entry was filed for first appraisement, the declaration was found intact and the assessment was sought on the basis of such declaration. There was no element of mens rea on part of the appellant. The orders passed by the respondent are void, illegal and needs to be annulled.
7. On the other hand the Departmental representative defended the impugned order for the reasons given therein.
8. Rival parties have been heard and case record examined. In order to dispose of the matter, the following issues are important:---
(a) was there any qualified declaration made by the appellant?
(b) were there any fiscal consequences as an outcome of the appellant's declaration?
(c) what was the past practice in respect of offending goods?
9. As regards the first issue, the facts are crystal clear that goods were examined first. There is an existing practice that where old and used goods are imported, declaration with regard to description of goods is not accepted. As such there was no qualified statement on the part of the appellant to attract provisions of section 32 of the Customs Act, 1969.
10. As regards the second issue, it is evident from the records that there were no fiscal consequence contingent upon his declaration. The contingency of no fiscal consequence is undeniable as the importer has demonstrated by submitting to the Customs Authorities to assess the goods on the basis of examination and after determining the exact nature of goods so arrived. In such a situation no penalty under section 32(1) is leviable for any alleged under-valuation or misdeclaration since there can be no motive to evade tax.
11. As regards the last issue, it has been accepted by both the parties that offending goods in the past have been released on payment of E redemption fine in addition to import levies.
12. Having said that it is concluded that there was no mis?declaration on the part of importer and as such provisions of section 32 are not attracted. The goods claimed to be restricted are part and parcel of the plant and are required for its operation in manufacturing of industrial alcohol, as such assumption that it was an independent import of certain prohibited goods with a intention to violate law cannot be inferred. Accordingly, these goods are allowed release on payment of fine equivalent to 25% of their value in addition to import levies. The impugned order is modified in the above terms.
C.M.A./537/Tax(Trib.)???????????????????????????????????????????????????????????? Order accordingly.