Messrs IFTIKHAR CORPORATION through Nadeem & Company, Karachi VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2007 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 1440 (2004)

Customs Act (IV of 1969)---

----Ss.16, 32, 193, 194, 199(3), 168(2) & 186---S.R.O.377(I)/2002, para.2---Import Trade and Procedure Order 2000, Appendix-A---Estab lishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.9(2)---Restriction on importation---Misdeclaration---Appeal---Seizure---Detention---Confiscation---Adjudication order passed by Additional Collector (Adjudication) and jurisdiction in terms of S.R.O. 377(I)/2002 para. 2 was challenged in complaint and was alleged that Customs Officials had wrongly sent the samples of their imported Betelnuts to HEJ Laboratory for determination of fitness for human consumption---Department, in reply had asserted that Federal Tax Ombudsman had no jurisdiction---Remedies of appeal were available and were not exhausted---Reputable laboratory had reported that samples were not fit for human consumption and goods were liable to confiscation and cases were rightly adjudicated---Validity---Matter related to great hazard to public health particularly as HEJ, a renowned laboratory of international standard, had declared the consignments unfit for human consumption---No maladministration could be attributed to the Department---Case was closed.

Nadeem Ahmed Miraz for the Complainants.

Abid Hussain, Assistant Collector of Customs (Appraisement) for Respondent.

FINDINGS/DECISION

The complaint has been filed against the adjudication order No.99-103 of 2003, dated 24-12-2003 passed by the Additional Collector (Adjudication) ordering confiscation of five imported consignments of Betelnuts and imposition of penalty of Rs.100,000 on each import A allegedly despite lack of jurisdiction in terms of para. 2 of S.R.O. 377(I)/2002. The complainants have stated that the customs officials had sent the samples of Betelnuts to HEJ Laboratory for determination of fitness .for human consumption despite the release order of the Plant Protection Department (of Thailand) and the test reports of PCSIR that the goods were fit for human consumption. They stated that the clearing agent protected against the retesting as it was without jurisdiction under subsection (3) of section 199 of the Customs Act.

2. The complainants stated that on receipt of the test reports that 4%, 5.67% and 9.8% Betelnuts were infested and were not fit for human consumption, contravention cases were made out under section 32 of the Customs Act. They contended that as these cases did not involve any evasion of duty and could only be categorized as technical violation of import/export restrictions, the Collector (Adjudication) had no jurisdiction under paragraph 2 of S.R.O. 377(I)/2002.

3. They stated that the Adjudicating Officer passed a consolidated order corresponding to 54 consignments of Betelnuts ordering their confiscation and imposing penalty of Rs.100,000 on each consignment. They cited an order of the Supreme Court that if a mandatory condition for exercise of jurisdiction was not fulfilled, then the entire proceedings would become illegal and any order passed would suffer from illegality and lack of jurisdiction. They contended that the Customs Department had no authority to withhold any consignment on a simple charge of misdeclaration, they should have allowed clearance/warehousing pending adjudication, and the act of holding their consignments amounted to gross maladministration. They requested that on the basis of the submissions made in the complaint, the adjudication order be declared without jurisdiction, the Respondent be directed to pay an amount of Rs.1,500,000 towards accumulated demurrage charges in addition to the container detention charges of the shipping company, remit the (total) penalty of Rs.500,000 and allow any other relief as deemed fit and adequate.

4. The Deputy Collector of Customs (Appraisement), in his reply to the complaint, stated that a matter sub judice before any Court of law was outside the jurisdiction of the Federal Tax Ombudsman under section 9(2)(a) of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000. He stated that, the complainants had failed to exhaust the departmental remedies available under sections 193 and 194 of the Customs Act. He stated that inquiries have proved that PCSIR's reports were not credible and the Plant Protection Department B in its letter, dated 6-9-2003 had informed that the shelf life and fitness for human consumption was not in the purview of the Department. He stated that the Sindh High Court in its judgment, dated 7-10-2003 had held that it was the responsibility of the Customs Authorities to get the Betelnuts tested through a reputable laboratory like HEJ. He added that under Appendix-A of the Import Trade and Procedure Order, 2000, the goods were liable to be confiscated and the Adjudicating Authority had rightly adjudicated the cases.

5. During the hearing of the complaint, Mr. Nadeem Ahmad Mirza, Consultant, submitted the following arguments:

(i) Betelnuts have not been declared as a food item under the relevant law by the Federal Government or the Provincial Government and no standard has been fixed for import of Betelnuts by the Pakistan Standard Institute.

(ii) The sample was drawn without jurisdiction as there was no authority by a general or special order of the Provincial Government to this effect under subsection (3) of section 199 of the Customs Act.

(iii) According to the reports of HEJ Institute, Betelnuts contained some infested quantity and were not fit for human consumption. Earlier the Plant Protection Department had obtained reports from PCSIR according to which the Betelnuts were fit for human consumption.

(iv) The goods were neither detained under section 186 of the Customs Act nor assessed under section 168(2) and were held at the port area where port demurrage charges had multiplied.

(v) The Additional Collector of Customs (Adjudication) who issued the show-cause notice was not empowered to adjudicate upon the case on the basis of a technical violation. The show-cause notice did not charge the importer for evasion of duty or for contravention of ITC regulations. Accordingly, the jurisdiction of the Additional Collector was challenged. He had passed the Order No.99/103 of 2003 under which he disposed of 54 cases without taking into consideration the arguments put forward by the complainants except briefly at page 17.

(vi) The Additional Collector had stretched the law and tried to justify his jurisdiction although several decisions of the superior Courts have clearly laid down that the officers of the Adjudication Callectorate were not authorized to decide the cases of technical violation where no evasion of duty was involved. He submitted copies of an order passed by the Appellate Tribunal where the similar circumstances the adjudication order passed by the. Deputy Collector (Adjudication) had been set aside.

6. The learned Consultant argued that he did not discuss the merits or demerits before the Adjudicating Officer and had only challenged his jurisdiction to adjudicate upon the cases. He requested that the order passed by him be set aside, the demurrage be condoned and goods released. He submitted photocopy of the decision of this office in Complaint No.1132 of 2002 where it was held that charge of violation of restrictions under section 16 of the Customs Act and misdeclaration under section 32 were not applicable to such imports.

7. The Assistant Collector of Customs stated that a large number of similar cases of Betelnuts were sub judice before the Supreme Court of Pakistan as the High Court had upheld the decision that the Betelnuts imported by several importers were not fit for human consumption and were hazardous for public health, their import was banned under the Import Policy Order, which constituted a contravention under the Customs Act, clearance thereof should not be allowed.

8. The learned Consultant has argued against the adjudication order primarily on the point that since the case did not involve evasion of duty, it should have been categorized as a technical violation of import restrictions and the Collector (Adjudication) had no jurisdiction to adjudicate upon the case. He has also contested the drawing of samples, and argued that since PCSIR test reports had held the Betelnuts fit for human consumption, the goods should have been allowed clearance or at least warehoused pending adjudication. He contended that since the Adjudicating Officer had no jurisdiction to decide the cases, the entire proceedings had no legal validity.

9. The Respondents have, however, emphasized that since the Betenlnuts imported by a large number of importers were found to be unfit for human consumption, their petitions before the High Court against the confiscation orders of the Adjudicating Officer were rejected. The importers had filed appeals before the Supreme Court where the matter was sub judice. The contention is misconceived and not tenable. A matter is sub judice when the dispute between the same parties is pending in a Court. Similar matter between different parties and the Revenue Division cannot be treated to operate as sub judice between the Revenue Division and a person who is not a party in similar earlier litigation. The jurisdiction of the Federal Tax Ombudsman will be barred where any matter between the complainant and Revenue Division is pending before a Court on the same subject and issues, provided the matter was pending in Court at the time of filing of the complaint. In the present case the matters pending in the Supreme Court relate to betelnuts but they are not between the complainant and the Department. Furthermore the matters relate to different consignments and each one has to be decided on it own merits and facts. The objection to jurisdiction is overruled.

10. In this particular case, order of confiscation of Betelnuts and imposition of penalty was ordered against 54 consignments of reportedly identical, nature. The matter relates to great hazard to public health particularly as HEJ, a renowned laboratory of international standard, has declared the consignments unfit for human consumption. In these circumstances no maladministration can be attributed to the Department. The case is closed.

M.I./264/FTOOrder accordingly.