Messrs AL-KAWKAB AL-FIDDI TRADING through Partner VS COLLECTOR OF CUSTOMS, SALES TAX AND EXCISE (ADJUDICATION), KARACHI, 2006 PTD-KARACHI-HIGH-COURT-SINDH 2572 (2005)

Customs Act (IV of 1969)---

----Ss. 32 & 156(I)(14)---Misdeclaration of weight of goods to be exported---Show-cause notice, issuance of---Validity---No loss caused to revenue by such act of exporter---Such act, even if deliberate with intention to defraud foreign buyers, would not call for any action under S.32 of Customs Act, 1969---Show-cause notice was declared to be illegal.

Sohail Muzaffar for Appellant.

Raja Muhammad Iqbal for Respondent.

Date of hearing: 14th October, 2005.

JUDGMENT

KHILJI ARIF HUSSAIN, J.---Aggrieved by an order, dated 19-2-2002 passed by the Customs, Excise and Sales Tax, Appellate Tribunal in Appeal No. K-1247 of 2001. The appellant preferred the appeal under section 196 of the Customs Act, 1969 and proposing of the following question of law:--

"(1) Whether the case of the appellant ought to have been decided in light .of law laid down in judgments reported in PLD 1996 Karachi 68 PLD 1992 Karachi 199 and PLD 1991 SC 963?

(2) Whether a penal clause of section 156(1)(14) of the Customs Act, 1969 can be made applicable if the Provisions of section 32 of the Customs Act, 1969 are not attracted?

(3) Whether the penalty under sub-clause (14) of section 156(1) can be imposed on an exported in respect of allegation of defrauding the buyer or damaging the reputation and goodwill of the country?

Brief facts for the purpose of deciding the appeal are that the appellant filed Bill of Export, dated 2-2-2002 through their clearing agent for the export of 100% Cotton Dyed Sold Shirting Ladies Jumper valuing Rs. 53, 82, 828. On physical examination net weight of the consignment was found less by 28% as against net weight of 7524.40 Kgs. Respondent served show-cause notice, dated 25-6-2001 for mis declaration of weight as to why penal action under clause 14 of section 156(1) of the Customs Act, 1969 should not be taken against them. The appellant appeared before the Collector of Customs Sales Tax and Excise who vide his order in-original, dated 6-2-2001 held that offence under section 32 of the Customs Act is established and imposed a penalty of Rs.5,00,000 on the appellant under clause 14 of section 156(1) of the Customs Act, 1969. The appellant preferred appeal before the Customs Excise and Sales Tax Appellate Tribunal who vide his order, dated 19-2-2002 reduced the penalty to the extent of 50%. The appellant questioned the order of Tribunal by this appeal.

Heard Mr. Sohail Muzaffar, learned Advocate for the appellant and Mrs. Raja Muhammad Iqbal learned counsel for the respondent.

Mr. Sohail Muzaffar, learned Advocate for the appellant, does not press questions Nos.1 and 3 argued that the examiner of customs authority instead of taking weight of 5% of the consignment, weighed friction of quantity weight i.e. 0.0001 which transpired variation in weight i.e. 28% less. It was, contended by the learned Advocate for the appellant that the weighment was in violation of the prescribed procedure and the direction contained in Standing Order No.2/95 which states that in case where the weight has been declared on per bale/roll/bundle basis the weighment be done to verify weight per bundle/roll/bale for ascertaining the weight and without doing the proper weighment and without following the procedure laid clown for weighing the consignment where the weight is disclosed on basis of bundle/roll or bale, it was alleged that the appellant had misdeclared the weight and a show-cause notice was issued without lawful authority.

Mr. Raja Muhammad Iqbal, learned counsel for the respondent, support the order passed by the Tribunal contended that admittedly there is a difference of 28 % in the declared weight and actual weight and the Tribunal has rightly imposed penalty upon the appellant.

We have taken into consideration respective arguments advanced by the learned Advocate for the parties and perused the record. It appears that the appellant filed Bill of Export No.38895, dated 2-2-2000 for export of 100% Cotton Dyed Solid Shirting Ladies jumper declaring the weight on the basis of bundles. The respondent served a show-cause notice, dated 25-6-2001 in which it was stated that on physical examination the net weight of the consignment was found less by 28% as against declared net value of 7524 Kgs. and misdeclaration of weight is an offence under section 32 of the Customs Act, 1969 punishable under clause 14 of section 156(1) of Customs Act, 1969. Learned Appellate Tribunal after hearing the parties recorded the following findings:

"After hearing the arguments of the parties we have come to the conclusion that the "mens rea" as far as Revenue aspect is concerned in the instant case if missing. However as admittedly there is difference of 28% less in weight and as the explanation of the appellant regarding the inclusive of weight of the attachment mentioned above does not appear to be sound and reasonable as such we have come to the conclusion that this is a deliberate act of misdeclaration with intention to defraud the foreign buyers resulting is damaging the reputation and good will of the country. Misdeclaration to the extent of 28% is thus established and it attracts an action under section 32 of the Customs Act, 1969.

However, considering that no loss of revenue is involved the imposition of penalty of Rs.500,000 seems to be harsh. Accordingly we reduce the penalty to the extent of 50%. The appeal is partly allowed. The impugned order is modified to this extent only."

From the finding recorded by the learned Appellate Tribunal it appears that the learned Tribunal gave specific finding that the "mens rea" as far as the Revenue aspect is concerned in the instant case is missing and merely because learned Tribunal came to the conclusion that is a deliberate act of rnisdeclaration with intention to defraud the foreign buyers does not call for any action under section 32 of the Customs Act, 1969 and accordingly impugned show-cause notice issued by the respondent is declared as illegal and question No.2 is answered in negative.

These are the reasons for our short order, dated 14-10-2005 which read as tinder:

"For the reasons to be recorded later on, the impugned order of the Tribunal is set aside, the entire proceedings in pursuance of show-cause notice are quashed. The appeal is allowed accordingly."

S.A.K./A-105/KAppeal accepted.