SIKANDAR ENTERPRISES through Attorney VS CUSTOMS, EXCISE AND SALES TAX TRIBUNAL, KARACHI, 2008 PTD-KARACHI-HIGH-COURT-SINDH 1968 (2008)

(a) Customs Act (IV of 1969)---

----Ss. 25, 32 & 196---Determination of customs value of goods---Mis- declaration---Order passed in appeal by Customs Appellate Tribunal, whereby on the charge of mis-declaration appellant was penalized for making payment of evaded amount,,. of duties and taxes along with additional tax---Appellant, who imported certain consignment of second hand clothes, had disposed of the consignment of second-hand clothes in the same year---After disposal of imported second-hand clothes in the very year to assess the value of goods on presumptive evidence, was beyond the scope of S.25 of Customs Act, 1969---Even otherwise after clearance of goods and removal of consignment from the customs area, Customs Authorities were functus officio to reopen the case again as it had become past and closed transaction---No specific provision had been quoted as to whether appellant had been guilty of offence falling under subsection (2)(3) of S.32 of Customs Act, 1969; it would thus be difficult to observe as to whether appellant had been guilty of mis-declaration.

(b) Customs Act (IV of 1969)---

----S. 32---Untrue statement---Limitation---If case would fall under S.32(2) of Customs Act, 1969, the period of limitation at the relevant time was three years and if it would come within the purview of S.32(3) of the Act, permissible period to adjudicate would be six months---Object of providing limitation period was to finalize the transaction within specific time.

(c) Customs Act (IV of 1969)---

----S. 180---Show-cause notice after confiscation of goods---Object of issuance of show-cause notice as prescribed in 5.180 of the Customs Act, 1969, was to intimate the concerned parties beside indicating them about the nature of contravention, and the penal action intended to be taken against them---Before taking any step, subsection (b) of S.180 of the Customs Act, 1969 provided an opportunity to the party to make representation in writing within such reasonable time as the appropriate officer could specify against the proposed action---Without issuing any proper notice under S.180 of the Customs Act, 1969 and examining the subject consignment or having a similar evidence that of subject consignment, assessment of goods, after their clearance would be deemed to be an arbitrary decision with no reasonable cause.

Salim Thepdawala for Appellant.

Raja Muhammad Iqbal for Respondent.

Date of hearing: 29th January, 2008.

JUDGMENT

MRS. YASMIN ABBASEY, J.---Order-.in-Appeal No.444 of 2000 passed by Customs Appellate Tribunal has been assailed in this Special Customs Appeal, whereby on the charge of mis-declaration appellant was penalised for making payment of evaded amount of duties and taxes along with additional tax and penalty equivalent to 100% of the evaded amount of duty and taxes.

Fact leading to this case are that the appellant imported certain consignment of second hand clothes under two sectors bills of lading i.e. firstly from Korea to Singapore and secondly from Singapore to Karachi, Pakistan having the same container number and seal number on both the bills of lading. With this modus operandi importer availed clearance of goods on the basis of lower I.T.P. US$ 0.35 Kg. of Japan origin goods instead of I.T.P. US$ 0.45 Kg. of Korean origin goods. Goods arrived in Pakistan in the year 1998 and were cleared under I.T.P. US$ 0.35 Kg. as Japan origin.

According to appellant he had disposed of the consignment of second-hand clothing in the same year. It is alleged that Yousuf Ismail the petitioner was called by Director of Directorate Intelligence and Investigation in his office and verbally instructed him to produce the record of imports of appellant company within a month. Record was produced on 10-11-1998, whereafter again appellant's company proprietor namely Yousuf Ismail was called by Director of Directorate Intelligence and Investigation and harsh language was used against him and the appellant was pressurized to deposit pay order of Rs.2.50 lacs in the name of Collector of Customs. In case of non-deposit, he was threatened to register F.I.R. against him. Against that act, appellant approached this Court under C.P. No.D-828 of 1998, which was disposed of on 17-9-1999 in terms that:--

"Therefore, in the circumstances, the orders passed by the respondents are set aside with directions that in the first instance notices be served upon the petitioners by the Collector Customs (Appraisement) and thereafter the matter may be decided afresh according to law within a reasonable time. So far as the amount of Rs.10.5 lacs paid by the petitioners is concerned, in case if the petitioners are found liable to pay the amount in excess of the above amount, the same may be paid, otherwise this amount shall be refunded within 15 days. The petition stands disposed of on the above terms."

It is thereafter, show cause notice was issued on 14-4-2000 and by order in original dated 24-11-2000 appellant was penalised as detailed above.

Apart from merits of the case, which at this stage need not to be considered, the main ground urged by learned counsel for the appellant is that show-cause notice issued on 14-4-2000 is time barred, for the consignment imported in 1998. From perusal of show-cause notice it appears that the charge against the appellant is that he got the goods cleared at a lower I.T.P. of US$ 0.35 Kg. applicable to Japan origin instead of I.T.P. US$ 0.45 Kg. being Korean origin because the bill of lading as produced on record shows that in the first round of shipment the goods were imported from Korea to Singapore and then Singapore to Karachi, Pakistan. According to appellant, though no similar evidence of subject consignment was available with the Custom authorities while assessing the goods at a higher level of US$ 0.10 Kg. than declared nor any notice of making an enquiry for the assessment of subject goods was ever issued to the appellant nor he was ever called to produce the subject .consignment for its examination as required under section 26 of the Customs Act nor in August, 1998 when for the first time appellant was called in his office by Director of Directorate of Intelligence and Investigation as stated in C.P. No.D-828/1998 he was asked to produce the subject consignment. Therefore, after disposal of imported second-hand clothes in the very year of 1998, to assess the value of goods on presumptive evidence is beyond the scope of section 25 of Customs Act. Even otherwise, it is a settled principle that after clearance of goods and removal of consignment from the Custom area, Customs authorities are functus officio to reopen the case again as it become past and closed transaction.

Further perusal of show-cause notice viewed that no specified provision has been quoted therein as to whether the appellant has been guilty of offence falling under subsection (2) or (3) of section 32 of the Customs Act, 1969. In such eventuality, it would be difficult to observe that whether appellant had been guilty of mis-declaration with some collusion or due to inadvertence, error or misconstruction, he had not paid the levied duty or the same has been short levied or erroneously refunded and under which provisions of law, party should be dealt with.

As if the case falls under section 32 (2) of the Act, the period of limitation at that relevant time was three years and if case comes within the purview of section 32(3) of the Act permissible period to adjudicate would be sic months.

The object of providing limitation period is to finalize the transaction within specific time. The extended period of three years upto 2000 and now five years through amendment by Ordinance 2000 is to cover up the element of mens area, which has to be taken more seriously than error or misconstruction.

In the given circumstances, non-mentioning of specific provision under which, authorities intend to charge the appellant becomes more important. Even if it is taken under subsection (2) of section 32, which relates to mis-declaration along with the collusion of Custom Authorities then there is nothing on the record that whether the department had initiated any disciplinary proceedings against the alleged Custom officers simultaneously along with the appellant. In absence of departmental proceedings against the delinquent officers, who were in collusion with appellant in evading the Government duty, the proceedings conducted only against appellant cannot be said to be a penal action under section 32 (2) of the Act, but would be considered as discriminatory action taken only against the appellant/importer. And if the case is taken under subsection (3) of section 32 then apparently show cause notice issued on 14-4-2000 is time barred as in 2000 the period of issuance of such notice was six months from the date when goods were imported which is the year 1998.

The object of issuance of show-cause notice as prescribed in section 180 of the Customs Act, 1969 is to intimate the concerned parties beside indicating them about the nature of contravention the penal action intended to be taken against them. So before taking any step sub-clause (b) of section 180 of the Customs Act, 1969 provides an opportunity to the party to make representation in writing within such reasonable time as the appropriate officer may specify against the proposed action but it appears from the record and also pointed out by learned counsel for the appellant that no proper notice under section 180 of the Customs Act, 1969 as directed by order dated 17-9-1999 in C.P. No. D-828/1998 was ever issued to the appellant. Although section 180 does not prescribe any time period for the issuance of show-cause notice but still it should be within reasonable time to resolve the dispute, if any.

In view of the foregoing reasons, we are of the view that without issuing any proper notice under section 180 of the Customs Act, 1969 and examining the subject consignment or having a similar evidence that of subject consignment, assessment of goods after their clearance will be deemed to be an arbitrary decision with no reasonable cause.

With these reasoning the appeal of the appellant is allowed and the impugned order is hereby set aside. This judgment will mutatis mutandis apply in S.C. Apply No.149 to 156/01.

H.B.T./S-85/KAppeal allowed.