M.K. INTERNATIONAL WH3, KARACHI VS SECRETARY, REVENUE DIVISION, ISLAMABAD
2009 P T D 1144
[Federal Tax Ombudsman]
Before Justice (Retd.) Saleem Akhtar, Federal Tax Ombudsman
Messrs M.K. INTERNATIONAL WH3, KARACHI
Versus
SECRETARY, REVENUE DIVISION, ISLAMABAD
Complaint No. C-1545-K of 2003, decided on 25/03/2004.
Customs Act (IV of 1969)---
----Ss.32(1), 168 & 186---Export (Quality Control) Order, 1973, Preamble---S.R.O. No. 1(KE), dated 7-1-2003---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.9 & 11---Confiscation of goods meant for export after its detention with container in Port area for violation of S.32(l) of Customs Act, 1969 and Export (Quality Control) Order, 1973---Tribunal set aside such order, but authority did not allow removal of goods due to pendency of their appeal before High Court---Waiver of demurrage charges -claimed on basis of delay and detention certificate issued by authority was declined to exporter---Validity---Authority might allow or disallow shipment of goods in accordance with customs law, but they should not arbitrarily keep goods in Port area causing damage to its quality and value---Authority had wrongly kept goods in Port area---Refusal to allow removal of goods had resulted in its deterioration, loss of its value and loss of future export orders---Such attitude was not conducive towards promotion of exports---Authority had acted arbitrarily, unreasonably and contrary to established practice without valid reasons, which constituted maladministration---Federal Tax Ombudsman recommended to C.B.R. to recommend for remission of demurrage charges and direct authority to decide within specified time issues of container rent chargeable by shipping company and loss in value of goods on account of its wrongful detention in Port area after providing opportunity of hearing to complainant.
M. Mubeen Ahsan, Advisor (Dealing Officer).
Ammar Yasser for the Complainant.
Nadeem Ahmad Mirza, Consultant.
Ms. Zeba Bashir Ahmed, Deputy Collector of Customs (Exports).
Feroze Alam Junejo, Deputy Collector of Customs (Exports).
ORDER
JUSTICE (RE'I'D.) SALEEM AKHTAR (FEDERAL TAX OMBUDSMAN).---This complaint has been filed against the Customs Department for allegedly illegally withholding an export consignment in the port area along with the container. The complainants have stated that they received an order for supply of Blended and Cotton Sheets in different colours and the goods were prepared and labels attached in accordance with the direction of the consignee. The shipping documents were prepared and filed by their clearing agent on 4-7-2000. The customs officials examined the goods and forwarded the examination report to the Appraiser/Principal Appraiser to allow shipment. However, the labels/show cards were disputed and the matter was referred to the Assistant Collector who instituted a case of misdeclaration of goods, on the basis of the lebels/show cards, under section 32(1) of the Customs Act for violation of Export (Quality Control) Order, 1973.
2. The Additional Collector of Customs decided the case and passed an order, dated 10-8-2000 confiscating the goods against redemption fine of Rs.150,000 and penalty of Rs.50,000. The complainants stated that they filed an appeal before the Appellate Tribunal, which allowed the appeal vide order, dated 23-12-2000 declaring the act of withholding the goods as illegal with the remarks that the subject order in original could not sustain judicial scrutiny. They submitted that the customs authorities did not allow the removal of goods on the pleas that they had filed a Special Customs Appeal with the Sindh High Court. Their Consultant sent a letter, dated 15-4-2002 to the Collector of Customs (Exports) requesting hire to allow removal of goods as the High Court had not passed any stay order.
3. Since no reply was received, the Consultant sent several letters, dated 18-5-2002, 28-5-2002, 19-12-2002 and 11-4-2003 to the Assistant Collector to issue delay and detention certificate for removal of goods which were deteriorating on account of long storage. At last the Deputy Collector of Customs issued a delay and detention certificate, dated 5-6-2003 on the basis of which the Complainant's submitted an application, dated 11-9-2003 to the Assistant Traffic Manager for waiver of the accumulated demurrage charges to enable them to remove their consignment. The Assistant Traffic Manager, vide letter, dated 17-9-2003 declined the waiver of the demurrage on the pretext that S.R.O. No. 1(KE), dated 7-1-2003 debarred KPT to waive the demurrage charges recoverable from the exporters.
4. The complainants contended that the consignment was withheld by the customs authorities without lawful authority and without any notice under sections 168(2) and 186 of the Customs Act. If the Department wanted to keep the consignment in their custody they should have shifted it to their Warehouse. The act of withholding the consignment with the container in the port area was an act of gross maladministration. They requested that (i) withholding the consignment since 4-7-2000 to date be declared illegal, void ab initio and nullity in the eyes of law, (ii) the respondent be directed to pay the accumulated demurrage charges amounting to Rs.3,00,000 and the container detention charges of the shipping company, (iii) also to pay the cost of goods DM 32,008 in Pakistani rupees, (iv) pay the Rs.3 million for loss on account of cancellation of similar export order; and (v) grant any other relief considered fit.
5. The Additional Collector of Customs replied to the complaint that the case was sub judice before the Sindh High Court and the jurisdiction of this office was barred under section 9(2)(a) of the Establishment of the Office of Federal Tax Ombudsman Ordinance, 2000. He submitted detailed comments justifying the adjudication order but did not submit any response to the basic cause of the complaint i.e. the alleged illegal withholding of the goods and the container in port area resulting in huge port charges.
6. The consultant stated during the hearing that there was no justification for the customs to detain the goods in the port area, allow the demurrage and the rent of the container to accumulate and let the goods deteriorate with the passage of time. Ile requested that either the customs authorities should use their good offices for remission of the demurrage and container rent by the KPT and the shipping company or bear expenses themselves. The Deputy Collector reiterated the submissions made in the Department's reply to the complaint.
7. From the submissions of both the sides it is clear that the complaint has been made against (i) the huge demurrage charges accumulated on account of long storage of goods in the port area (ii) the rent of the container, and (iii) the value loss on account of goods worth DM 32,008 (Rs.788,062) becoming out of Fashion and claimed not saleable in the domestic or foreign market even as stock-lot/job lot. The complainants have claimed with justification that the goods should have been stored either in the Customs Warehouse or with the exporters under customs lock and key and there was no justification to keep the goods along with the container in the port area. They have also claimed compensation of rupees three million on account of loss suffered due to the cancellation of order of similar type of goods (luring the period August, 2000 to March, 2001.
8. It is established that the goods entered the port area on 4-7-2000 and the Appellate Tribunal decided the appeal vide order, dated 23-12-2000 but the customs authorities did not allow the removal of the goods. The delay and detention certificate was issued on 5-6-2003 but the KPT authorities declined to waive the demurrage charges. The complainants have felt aggrieved that the despite the favourable order of the Appellate Tribunal they were not allowed to remove the goods resulting in detonation and loss of value of goods meant for export, and additionally, loss of future orders for exports. The customs authorities have wrongfully kept the goods in the port area. This attitude is not conducive towards the promotion of exports. The customs may allow or disallow shipment of goods in accordance with the customs law but they should not arbitrarily keep the goods in the port area causing damage to quality and value.
9. This office has taken serious cognizance of the allegedly unjustified and wrongful storage of the goods and the container in the port area. The Department's contention about the lack of jurisdiction is not tenable. The customs authorities have acted arbitrarily, unreasonably and contrary to established practice without valid reasons which constitute maladministration under section 2(3) of Ordinance No.XXXV of 2000.
10. It is recommended that C.B.R.
(i) in view of the delay and detention certificate issued by the Department, recommend to the Ministry of Communications for c remission of the demurrage charges; and
(ii) direct the Collector of Customs to examine the issues relating to the container rent chargeable by the shipping company and the loss in the value of goods on account of wrongful and long storage of the consignment at the port, afford the opportunity of hearing to the complainants and decide the issues.
(iii) action on (i) and (ii) to be taken within thirty (lays; and
(iv) compliance be reported to this office within forty-five days.
S.A.K.!231/F.T.O.Order accordingly.