GHANDHARA NISSAN LTD., KARACHI VS COLLECTOR OF CUSTOMS (APPG), KARACHI
2008 PTD 1610
[Karachi High Court]
Before Dr. Rana M. Shamim and Arshad Noor Khan, JJ
GHANDHARA NISSAN LTD., KARACHI
Versus
COLLECTOR OF CUSTOMS (APPG), KARACHI and another
Special Customs Appeals Nos.61 and 62 of 2002, decided on 01/07/2008.
(a) Customs Act (IV of 1969)---
----Ss. 32(2)(b) & 156(1)(14)---Misdeclaration---Concealment of con cession/rebate allowed by the principal to the importer---No proof had either been brought on the record of the Appellate Tribunal or before the High Court to show that the concession/rebate of 2.5% was declared by the importer, as such, importers had completely failed to prove that 2.5% concession extended to them by their principals was included in the statement submitted before Preshipment Inspection Company---Importershad also produced the statement submitted before Preshipment Inspection Company as Annexure which was also silent about 2.5% concession extended to them by their principals---Importers, therefore, wilfully, deliberately and knowingly concealed the concession, as such department was within its rights to claim the same.
(b) Customs Act (IV of 1969)---
----Ss. 32(1)(2) & 196---Misdeclaration---Appeal to High Court---Point of limitation under the provisions of Customs Act, 1969 is a point to probe and investigation in the factual aspect of the matter regarding misdeclaration or the statement filed by the party as such the said question could not be examined being question of fact under S.196 of Customs Act, 1969.
Pakistan State Oil Ltd. v. Collector of Customs E&ST (Adjudication-II) and others 2006 SCMR 425 fol.
Messrs S. Abdullah, and Company v. Collector of Customs (Appraisement) Karachi and others PLD 1992 Kar. 258; Ghulam Nabi v. Central Board of Revenue through Chairman and others PLD 1997 Quetta 22; Messrs China Yunnan Corporation v. Collector of Central Excise and others 2001 PTD 661; Baba Khan v. Collector Customs, Quetta and others 2000 SCMR 678; Pakistan State Oil Ltd. v. Collector of Customs E&ST (Adjudication-II) and others 2006 SCMR 425 and Messrs Adamjee Insurance Co. Ltd. v. Collector of Customs, Sales Tax and Central Excise (Adjudication) Karachi 2007 PTD 2 ref.
(c) Customs Act (IV of 1969)---
----Ss.32 & 79---Misdeclaration---Importers produced dutiable slip corresponding to S.79 Customs Act, 1969 before the Customs department wherein the material fact of concession of 2.5% rabate/concession was concealed so as to avoid duty as required under S.32(1)(2) of the Customs Act, 1969---Effect---Held, if any person in connection with any matter of Customs makes any declaration or statement which was untrue in material particulars, he was, guilty of an offence under S.32 of the Customs Act, 1969.
Baba Khan v. Collector Customs, Quetta and others 2000 SCMR 678 fol.
(d) Customs Act (IV of 1969)---
----Ss. 25 & 32---Customs value of goods---Determination of---For the purpose of levy of customs duty, the value of any imported goods is taken to be the normal price, i.e. the price which the goods would fetch on the specified date on a sale in open market between a buyer and a seller independent of each other and same yardstick is applied for the purpose of assessing the value of any exported goods under S.25, Customs Act, 1969---Assessment of value, therefore, could not be deemed to be without any basis or made capriciously or in fanciful manner having no regard for prevailing export price---Court would see, prima facie, whether determination of value would commensurate with market rate or there was unreasonable difference between the declared value and the fixed by the authorized agency---Where the importer did not allege that the department had assessed the value of the consignment arbitrarily, which was much against the actual prevailing market price of the consignment in question, High Court declined interference.
Messrs S. Abdullah and Company v. Collector of Customs (Appraisement) Karachi and others PLD 1992 Kar. 258 and Ghulam Nabi v. Central Board of Revenue through Chairman and others in PLD 1997 Quetta 22 fol.
Aziz A. Shaikh for Appellants.
Raja M. Iqbal for Respondents.
Badar Alam, D.A.-G. for Federation.
Date of hearing: 26th June, 2008.
JUDGMENT
ARSHAD NOOR KHAN, J.---By this judgment, we intend to dispose of the Special Customs Appeals Nos. 61 of 2002 and 62 of 2002, as common question of law has been raised in both of these appeals, and the parties are also same.
By this appeal under section 196 of Customs Act, 1969, the appellants have challenged the order passed by the Customs- Excise and Sales Tax Appellate Tribunal Karachi Bench, Karachi passed in Customs Appeal No.K-145/2000/414, dated 17-4-2002 whereby the appeals filed bye the appellants were dismissed.
The facts leading rise to the present appeals in brief are that the appellants are a multinational company engaged in the import, assembling, marketing and distribution of Nissan branded diesel trucks and passenger cars. On standing representation of Government vide exemption Notification S.R.O. 502(I)/94, dated 5-6-1994 read with S.R.O. 502(I)/95, dated 14-6-1995, the appellants imported said branded vehicles and parts thereof in CKD condition. At relevant time the import value of the dutiable value of goods were being determined under Comprehensive Import Supervision Scheme (CISS) through duly appointed Preshipment Inspection Companies (PSI) under Clause 4(3) of S.R.O. 1108(I)/94, dated 14-11-1994. After due verification of price prevailing in country of export and all import documents submitted by appellants. The PSI company determined import value and issued Clean Report of Finding (CRF), as per clause 7 of said S.R.O. for each consignment imported during 1996 and 1997. Declared value (DV) of appellants was never accepted by PSI company but CRF was always issued at enhanced value of goods. Assessments were finalized and concluded by respondent No.1 at enhanced value as per CRF in all the instances. Duty and taxes were accordingly paid by appellants. It is further stated in the memo of appeal that show-cause notice, dated 23-9-1999 was served on appellants by the respondents alleging therein evasion and short levy of duty of Rs.3,069,991 sales tax amounting to Rs.2,238,585 and income tax amounting to Rs.711,227 total amount of Rs.6,019,803 on presumption that cost of association as per value slip No.6/88, dated 2-3-1988 2.5 % of F.O.B. value was not added to the CRF on imports from principal in Japan. It is further stated in the appeals that despite tenable legal as well as factual submissions, the respondent passed Order-in-Original No.28 of 2000 which was challenged by the appellants before Central Excise and Sales Tax Appellate Tribunal, who appointed a commission vide order, dated 11-9-2000 to determine is to whether the price reported by PSI company was inclusive of price value slip or otherwise and its impact particularly when the PSI company is not existed. The commission answered the said question against the appellants. The Central Excise and Sales Tax Appellants Tribunal, relying on the said report of the commission, dismissed the appeal filed by the appellants vide order impugned herein.
The appellants being highly aggrieved and dissatisfied, preferred the present appeals, challenging the legality and validity of the order passed by the appellate tribunal by setting up the question of law including the question of limitation on issuance of the show-cause notice by the respondents. The present appeals were admitted only to consider the issue of limitation, which is the main issue involved in the present case, vide order, dated 6-8-2002. 'The respondents were served with the notice, who have appeared and supported the impugned order passed by the appellate tribunal.
We have heard Mr. Aziz A. Shaikh, advocate for the appellants and Mr. Raja M. Iqbal, advocate for the respondents.
Mr. Aziz A. Shaikh, advocate, learned counsel for the appellants vehemently contended that by. virtue of subsection (3) of section 32 of Customs Act, a default, if any, in payment of any duty/tax, the respondents could have claim the same within six months from the date of payment of the duty/tax and subsequently an amendment in sub-section 3 of section 32, ibid, was made, whereby period of six month has been substituted to the period of three years and admittedly the appellants imported the diesel trucks and passenger cars in the year 1996-97 and onward as such the limitation involved in the present case to claim any duty, is six months from the date of payment as such the claim of the respondents, if any, is completely barred under subsection (3) of section 32 of Customs Act, 1969. He further contended that after filing of statement of declaration the same was inspected by PSI company, who issued CRF and all the duties and taxes levied thereunder and claimed by the respondents were paid, as such nothing remained to be paid, subsequently by the appellants. It is further contended by the learned counsel for the appellants that since the declaration made by the appellants was not disputed and admittedly all the duties and taxes etc. were paid as such, the respondents could not claim any duty or tax after clearance of all the imported goods. In support of his contention he has relied upon the case of Messrs S. Abdullah and Company v. Collector of Customs (Appraisement) Karachi and others reported in PLD 1992 Kar. 258; the case of Ghulam Nabi v. Central Board of Revenue through Chairman and others reported in PLD 1997 Quetta 22: the case of Messrs China Yunnan Corporation v. Collector of Central Excise and others reported in 2001 PTD 661.
Mr. Raja M. Iqbal, Advocate, learned counsel for the respondents while refuting the contention advanced by the learned counsel for the appellants, has vehemently contended that in view of section 196 of Customs Act, only the question of law could be determined by the High Court and factual aspect of the matter could not be considered. It is further contended that the point of limitation, agitated by the appellants as envisaged in section 32(1)(2) and (3) of Customs Act, 1969 could not be examined by the Court being factual investigation. He further contended that the appellants malafidely concealed 2.5% concession given by the principal of the appellants in their declaration of assessment and by such mis-declaration, they have evaded the payment of taxes of millions of rupees and have intentionally caused loss to the Government. According to him by the concealment of the actual cost of the consignment, an offence of fraud has been made out. According to him the respondents rightly issued show-cause notice to the appellants and the appellate tribunal rightly held the appellants guilty of misdeclaration and no case for interference, in the order passed by the appellate tribunal, has been made out and the appeals are liable to be dismissed with cost. In support of his contention, he has relied upon the case of Baba Khan v. Collector Customs, Quetta and others reported in 2000 SCMR 678 the case of Pakistan State Oil Ltd. v. Collector of Customs E & ST (Adjudication-II) and others reported in 2006 SCMR 425; the case of Messrs Adamjee Insurance Co. Ltd. v. Collector of Customs, Sales Tax and Central Excise (Adjudication) Karachi reported in 2007 PTD 2.
We have considered the arguments advanced on behalf of the parties and have gone through the entire material available on record.
Admittedly the appellants imported Nissan branded diesel trucks and passenger cars and parts whereof in CKD condition from their principal at Japan. After arrival of the said consignment, admittedly the appellants submitted the statement of declaration to PSI company who after inspection issued CRF and in pursuance of the said report all the dues assessed by the respondents were paid by the appellants, whereas the respondents claimed that appellants were allowed 2.5% concession/ rebate by their principal and the appellants have wilfully and deliberately concealed the said concession/rebate on the consignment vide dutiable value Slip No. 6/88, dated 2-3-1988, which is punishable under section 156(1)(14) of Custom Act, 1969. The emphasis of the appellants is that they had not concealed any value of the consignment and after the report of PSI all the payments were made. The appellants no where in the memo. of appeal have denied the assertion of the respondents that they have not concealed 2.5% of concession. Rebate allowed to them by their principal at Japan vide dutiable slip No.6/88. The appellants have not produced slip No.6/88, dated 2-3-1988 to assess their contention that they had included 2.5% concession/rebate extended to them by their principal in the dutiable value slip- No. 6/88. Non-production of dutiable value slip No.6/88 adversely reflects on the case of the appellants. The appellants have also produced bills of entry, which are available at pages 161 to 165 and an appraisal of these bills of entry also shows that the said bills are also completely silent to show that the appellants had declared the said concession of 2.5% in their bills of entries. By virtue of section 32(2)(b) of Customs Act, 1969 the appellants are required to submit the statement making declaration therein about the contents of consignment which admittedly the appellants submitted as per S. R.O. Nos. 502(I)/1994 and 502(I)/1995 with dutiable slip No.6/88 but the said declaration remained silent on the point of concession/rebate extended to the appellants by their principal. The learned appellate tribunal also appointed a commission, who through his report was also of the view that dutiable value slip No.6/88 remained silent about the said concession of 2.5%. The finding of the appellate tribunal on the said point of concealment of 2.5% concession/rebate remains unshaken as no proof has either been brought on the record of the tribunal or before this Court to show that the concession/rebate of 2.5% was declared by the appellants, as such, the appellants have Completely failed of prove that 2.5% concessions extended to them by their principal was included in the statement of declaration filed before PSI. 'The appellants have also produced the statement submitted before PSI as Annexure "B", which is also completely silent about 2.5% concession extended to them by their principal. It is therefore, evident that the appellants wilfully, deliberately and knowingly concealed the -concession of 2.5% extended to them by their principal as such respondents were, within their rights to claim the same. The learned counsel for the appellants have vehemently raised the point of limitation as envisaged under subsection (3) of section 32 of Customs Act, which according to him provides period of limitation of six months from the date of payment of taxes, which according to him is a pure question of law but the said point of limitation raised by the learned counsel for the appellants have been emphatically refuted by the learned counsel for the respondents. The vires of subsections (1), (2) and (3) of section 32 of Customs Act, 1969, to determine as to whether the said point is a point of law or fact, came for consideration before the Hon'ble Supreme Court in the case of Pakistan State Oils Company Ltd. supra, wherein after thorough examination of scope of section 32, the Honourable Supreme Court was of the view that sections 32(1) and (2) of Customs Act, 1969 read with related provisions, would show that factual inquiry is essential to ascertain the nature of transaction and to determine the commencing date for the purpose of calculation of the period for giving show-cause notice under the above section. It may be decided that question of law does not require investigation of facts and thus a question involving factual inquiry into facts or to which answer could not be given without going into facts, is not a question of law. The dictum laid down by the Hon'ble Supreme Court in the case of Pakistan State Oil Co., supra, is usefully quoted herein below for the sake of convenience:
" ..In view thereof, the question whether show-cause notice was given within the time prescribed under the law or beyond the said period, would be considered a question of fact and not a question of law to be raised and decided by the High Court in the proceedings under section 196 of the Customs Act, 1969, therefore, the grant of review of the judgment on the above point, would amount to re-consider the point already decided."
The dictum laid down by the Honourable Supreme Court settled the controversy at rest, by holding that subsections (1) and (2) of section 32 of Customs Act allowed inquiry about factual aspect of the matter and inquiry about factual aspect of the matter in any way could not be termed to be a point of law. The case of Pakistan State Oil Company is therefore, complete answer to the arguments advanced by the learned counsel for the appellants. It is, therefore, crystal clear that the point of limitation under the provisions of Customs Act, 1969 is a point of probe and investigation in the factual aspect of the matter regarding mis-declaration or the statement filed by the party as such the, said question could not be examined being question of law under section 196 of Customs Act by the High Court.
It is an undisputed fact that the appellants produced dutiable slip No.6/88 corresponding to section 79 of the Customs Act, 1969 before the respondents wherein the material fact of concession of 2.5% rebate/concession was materially concealed so as to avoid the duty by the appellants as required under sections 32(1) and (2), 'ibid. In the case of Baba Khan, supra, the petitioner had also filed declaration concealing therein material facts and Honourable Supreme Court was pleased to observe that if any person in connection with any matter of customs makes any declaration or statement which is untrue in material particulars, he is guilty of an offence under section 32, ibid.
The learned counsel for the appellants have vehemently argued that PSI used to assess much higher taxes than actual assessment, therefore, the appellants have already paid much more taxes than actual assessment, therefore, the appellants have already paid much more taxes than the actual tax but the said contention does not cover the fact that 2.5% concession/rebate extended to them- by their principal was not declared anywhere in the statement of declaration by the appellants. The case of S. Abdullah & Co., supra, relied upon by the learned counsel for the appellants, in which it was observed that for the purposes of levy of customs duty, the value of any imported goods is taken to be the normal price, i.e. the price which the goods would fetch on the specified date on a sale in open market between a buyer and a seller independent of each other and same yardstick is applied for the purpose of assessing the value of any exported goods under section 25 of the Customs Act, 1969. The said case of Abdullah & Co., therefore, in any way, is not supporting the case of the appellants.
In the case of Ghulam Nabi, supra, it was held that assessment of value, therefore,' could not be deemed to be without any basis or made capriciously or in fanciful manner having no regard for prevailing export rice. Court would see, prima facie, whether determination of value would commensurate with market rate or there was unreasonable difference between the declared value and the fixed by authorized agency. In the present case, the appellants have not alleged that the respondents have assessed the value of the consignment arbitrarily, which is, much against the actual prevailing market price of the consignment in question. The case of Ghulam Nabi is, therefore not supporting the case of the appellants.
In the case of Messrs China Yunnan Corporation, supra, it was held that the consignment of the goods imported were according to the specifications and the same were thoroughly inspected by the custom Authorities and after the laps of nine months notice issued by the Custom Authorities was declared to be ineffective. The present case is distinguishable from the circumstances of this case for the reasons that in the present case 2.5% concession was materially concealed by the appellants.
After evaluation of the whole material available on record as well as the case-law cited above, we are of the firm opinion that no point of law is involved in the present case, in view of sections 32(1) and (2) of the Customs Act, 1969, the investigation in the factual aspect of the matter could be conducted and investigation in factual aspect of the matter, in any way, could not be treated as law point, in view of the observation of the Honourable Supreme Court, discussed above. It has also not been disproved from any material evidence by the appellants that the concession of 2.5% were included in the .declaration submitted by them in view of sections 32(1) and (2) of Customs Act, 1969. The concealment of 2.5% rebate/concession by the appellants is, therefore, wilful concealment of the fact in order to avoid the heavy taxes, as such, the appellate tribunal rightly observed that the appellants are guilty of concealing the concession of 2.5% in their statement of declaration. We, therefore, do not find any illegality or irregularity to interfere in the order passed by the learned appellate tribunal. The appeals have, therefore, no merits and the same was dismissed. Vide short order, dated 26-6-2008 and theses are the reasons for the same.
M.B.A./G-16/KAppeals dismissed.