YASIR ENTERPRISES VS MODEL CUSTOMS COLLECTORATE through Collector Customs, Multan
2009 P T D 1880
[Lahore High Court]
Before Syed Hamid Ali Shah, J
YASIR ENTERPRISES through Proprietor
Versus
MODEL CUSTOMS COLLECTORATE through Collector Customs, Multan and 2 others
Customs Criminal Appeal No.1 of 2009, decided 8th June, 2009.
(a) Customs Act (IV of 1969)--- ----Ss. 168 & 15---Pakistan Petroleum (Refining Blending and Marketing) Rules, 1971, R.38---Seizure of imported consignment of petroleum product (Waste Oil/petroleum residue)---Classification of petroleum products---Determining factor---Consignment was allegedly found to be misdeclared and restricted/banned item---Reports of all the recognized laboratories indicated that flash point of the product in the imported consignment was more than 54% which made the petroleum product as HSD---Importer at the time of the import, was aware of the product which he imported, he had classified the consignment under wrong head, to escape duty and get the consignment cleared, without being an industrial importer and without the approval of the Ministry of Petroleum---Held, importer had imported as substandard product (HSD), misdeclared the goods, imported the consignment without being eligible for such import and had failed to seek approval of the Ministry of Petroleum---Consignment, in circumstances, was rightly seized and impugned action of the Customs Department was unexceptionable---Principles.
Nasir Ahmed v. The State 1981 PCr.LJ 594 and Central Board of Revenue and another v. Khan Muhammad PLD 1986 SC 192 ref.
(b) Administration of justice---
----Court proceedings---Presumption of correctness---Scope---Presumption of correctness was attached to the court proceedings---Court proceedings could not be nullified merely because the party or its counsel had recorded statement to the contrary or filed an affidavit.
Fayyaz Hussain v. Akbar Hussain and others 2004 SCMR 964 fol.
(c) Customs Act (IV of 1969)---
----S. 168---Seizure report---Requirements---Law requires that time, date and place be mentioned in the seizure report----Principles.
(d) Customs Act (IV of 1969)---
---Ss. 168 & 15---Pakistan Petroleum (Refining, Blending and Marketing) Rules, 1971, R.38---Import of consignment as waste oil (petroleum residue)---Seizure of imported consignment---Classification of petroleum product---Determining factor---Consignment was allegedly found to be misdeclared and restricted/banned item---Contention of the importer was that samples of the petroleum product for analysis were drawn in the absence of the importer---Samples, in fact, were drawn in presence of Clearing Agent and same were sealed according to law---Matter being still pending before Special Judge Customs and to rule out the chance of improper sampling of the consignment, High Court directed the Authorities to draw fresh samples from each container, as per R.38, Pakistan Petroleum (Refining, Blending and Marketing) Rules, 1971 in presence of the Importer or his Clearing Agent and Deputy Registrar of the High Court and after taking the samples to deliver one sample from each container to the Court of Special Judge Customs and any relevant authority of the Customs Department may join in the process of sampling and any party may get the samples analysed from the recognized laboratories for comparison with the earlier analysis done---High Court, in circumstances, declined to interfere in the impugned order, same being devoid of illegality or legal infirmity, having been passed, keeping in view the laboratory reports as well as consenting statement of the importer.
Ch. Saghir Ahmad for Appellant.
Muhammad Akhtar Qureshi, Ghulam Sarwar Shah, Deputy Collector (I&P) and Syed Muhammad Ali Rizvi, Dy. Superintendent for Respondents.
Dates of hearing: 29th May and 3rd June, 2009.
JUDGMENT
SYED HAMID ALI SHAH, J.---Appellant imported 25 Containers, containing 2400 Drums, weighing 527 Metric tons of Petroleum products, declaring the imported consignment as waste oil (Petroleum residue). Goods declaration was filed electronically on 30-3-2009 classifying the goods under H.S. code 2713-9090. Appellant deposited an amount of Rs.17,29,865 as duty & taxes and got 14 out of 25 Containers comprising of 1904 drums released. Remaining consignment (11 Containers) reached dry port on 1-4-2009 which was examined by customs staff of Multan Dry Port and also by the staff of Directorate-General of Customs Intelligence and Investigation. It was found that goods were mis-declared and restricted/banned items were cleared. The samples were drawn in triplicate in presence of authorities of Customs Department, Directorates General of Intelligence and the representative of importer i.e. his clearing agent. The samples were sent for laboratory examination to HDIP Lahore, HDIP Multan and HEJ Research Institute of Chemistry Karachi. The reports of laboratories at Lahore and Multan, show that flash point as per test (ASTM D-93) is more than 54 and as per remarks in the report the consignment is comparable to High Speed Diesel (HSD) but it contain water and sediments. It was also mentioned in the reports that it is not suitable for diesel engine. Third laboratory (H.E.J RIC) reported that samples fulfil the requirements of High Speed Diesel. The imported consignment in view of laboratory reports, was seized under section 168 of the Customs Act, 1969. Respondent No.2 (Principal Appraiser) furnished A.I.Rs. on 9/2009 on 3 .4-2009, whereupon the F.I.R. No.1 2009 was registered on 3-4-2009. "I he respondents prepared the seizure report vide case No. F.I.R./01/2009/I&P/1565 dated 27-5-2009 and respondent No.3 consequently issued show-cause notice to the appellant on 27-5-2009. Respondent No.3 thereafter approached Special Judge Customs, Lahore for the issuance of N.O.C. for the disposal/auction of seized consignment. Appellant in response to the notice, appeared before the learned Customs Judge and admitted that 14 containers had already been released and made a request for permission to participate in the auction if the remaining consignment is auctioned. Learned Court, observed in its order dated 18-5-2009 that the consignment (14 Containers) was released by the Customs Authorities without obtaining report of the laboratory and the consignment can only be imported by the Industrial concern.
Learned Court accepted the plea of respondent No.3, qua the auction of the imported consignment and at its request allowed the appellant to participate in the auction. Order dated 18-5-2009 of the learned Special Judge Customs has now been assailed in the instant appeal.
2. Learned counsel for the appellant has contended that respondent department got laboratory analysis of the consignment from 3 different laboratories namely HDIP Lahore and Multan, and H.E.J. Research Institute of Chemistry Karachi. He contended that reports with regard to 11 Containers by HDIP laboratories Lahore and Multan reflect that consignment is comparable to HSD with water and other sediments, unsuitable for Diesel Engine. Learned counsel added that imported oil is not useable in Diesel Engine, therefore, cannot be presumed that the imported consignment is HSD. Learned counsel contended that the report of Karachi laboratory has considered the sample of 1 container out of 11, which is regarding Container No. TTENU935827-2. Learned counsel emphasized that dispute, if any, is regarding one Container only and so far other Containers (remaining 10 Containers), the Customs Department has to accept the reports of HDIP laboratories of Lahore and Multan. Learned counsel submitted that flash point is the determining factor of the nature of the material imported by the appellant. The samples were drawn in the absence of the appellant and case of the appellant was wrongly classified under the irrelevant H.S. Code. It was contended that the respondent while lodging the F.I.R. has claimed that imported consignment falls under the PCT heading 2710-9100. Learned counsel submitted that the imports under this head are not banned and the department can at the most levy taxes and duties under the head 2710-9100. The only restriction imposed in this regard is the import from India. The difference of levy of tax & duties between consignment under H. S. Code 2713-9090 and 2710-9100, is the Federal Excise, which in the former case is 1% while in latter case is 20%. Learned counsel contended the appellant is willing to make payment of adjudged amount of the duty, if the appellant is allowed to get his goods cleared. Learned counsel contended that seizure report was prepared on 3-4-2009 at 3-45 hours while the same was signed on 27-5-2009. There is a difference of 1 month and 24 days in the preparation of the report and signing of the same. This fact alone invalidates the seizure report. Learned counsel objected to the report of H.E.J Research Institute of Chemistry and contended that HDIP Laboratories are recognized Government Laboratories which have opined that imported consignment is not HSD while laboratory at Karachi is private laboratory and has no recognition. The department is bent upon to accept the unauthentic report of private laboratory. He submitted that reports of these laboratories are not relevant as samples were not drawn for these reports in the presence of the appellant. Learned counsel contended that samples can only be drawn with regard to. Petroleum products, under Rule 36 of the Pakistan Petroleum (Refining, Blending and Marketing) Rules 1971. Learned counsel contended that if the previous reports of HDIP laboratory were correct then there was no necessity of subsequent report. The respondents have relied on subsequent report without passing the speaking order. Learned counsel summed up his arguments with the contentions that act of the respondent is mala fide; that mis-declaration entails the consequences of levy of duties and penalties and not the lodging of F.I.R; that end use of the product is the determining fact and that appellant or his learned counsel never agreed or consented for the auction of goods, before the learned Special Judge Customs.
3. Mr. Muhammad Akhtar Qureshi, learned counsel for the respondent contended that the report, whether from HDIP Lahore and Multan, or from H.E.J RIC Karachi transpires that imported consignment is HSD and the same is specified in head 27.10-1931, Such consignment can be imported by industrial importer only and not by private individual. Even the industrial importer has to seek approval for the import of HSD from Ministry of Petroleum. Government of Pakistan. Learned counsel referred to the various tests conducted by the laboratories and contended that to determine the exact nature Petroleum Product flash point is relevant. If it is more than 54, it is HSD. The relevant test for its determination is ASDM (D-93). The reports by the laboratories, reflect that flash point of the import consignment is more than 54% and it is ranging between 62-66. There is no contradiction in the report and this fact alone is sufficient to conclude that imported consignment is HSD. The laboratory reports have remarked that consignment contains water and sediment but the relevant test to ascertain the percentage of water and sediments is ASDM-D473, this test was not carried out by HDIP laboratories, therefore, the remarks do not carry any weight and cannot be considered as authentic.. Learned counsel contended that for determination of presence of sediment and water, the test (D-473) was carried by H.E.J Research Institute of Chemistry, Karachi and maximum percentage in this regard is 0.01%. The Karachi laboratory has thus correctly remarked that consignment under reference is HSD Oil. While referring to the cases of Nasir Ahmed v. The State 1981 PCr.LJ 594 and Central Board of Revenue and another v. Khan Muhammad (PLD 1986 SC 192), it is contended that in the classification proceedings the customs department can proceed against the importer for confiscatory proceedings and also for prosecution. The customs department can simultaneously proceed for prosecution as well as for adjudication under section 179 of the Customs Act, 1969. Both the remedies are concurrent and one cannot remain under suspension for the sake of other. Learned counsel contended that appellant himself consented for the auction, therefore, instant appeal against the consent order is not competent. Learned counsel contended that appellant paid Duties and taxes to the tune of Rs.17,29,865 for 25 Containers while the taxes and duties which are leviable are 89,84,859. The importer has escaped/evaded duty to the tune of Rs.51,22,440. The market value of the consignment is Rs.3,21,10,380. The item has been imported, by evading huge duty & taxes, thus the appellant is not entitled to any relief.
4. Heard learned counsel for the parties and record perused.
5. The appellant claims that imported consignment is the Petroleum residue. Petroleum residue by its literal meaning is the remaining fraction left, after the distillation of the crude oil. It has been defined as low grade oil product that remain after the distillation of Petroleum. It can be used in adhesives, roofing compounds and asphalt manufactures. The analyses of various laboratories are placed on record. The reports by Hydro-Carbon Development Institute of Pakistan (HDIP) Petroleum testing centre Lahore have carried out various tests. The test methods for the analysis are ASTM D1500, ASTM D1298, ASTM D93, ASTM D86, ASTM D96. All these reports reflect that flash point under test method ASTM D93, is above 54. Water and sediments under the test moved ASTM D96 are less than 0.6% and range between 0.42 to 0.60% which is negligible range to change HSD into Petroleum residue. Similarly water and other segments as shown in these reports are negligible. The HDIP laboratories have not carried out test method ASTM D473. The specific method test for ascertainment of water percentage was not carried, therefore, it cannot be said with absolute certainty that it makes petroleum product unsuitable for use in the Diesel Engine. The reports of all the laboratories including Hussain Ebrahim, Jamal Research Institute of Chemistry, indicate without any iota of doubt that flash point is more than 54% which make the Petroleum product as HSD. The Petroleum Products, imported by the appellant is HSD.
6. H.E.J Research Institute of Chemistry is recognized laboratory and its reports are approved by NIUCM International, WATIRO and COMSATS. It has won the prize of the best institutions in entire Islamic world in 2005. The laboratory is also recognized, by World Health Organization (WHO). The report of this laboratory is not in conflict with the reports of H.D.I.P. Laboratories. HDIP laboratories have added remarks that sample contains water and sediments which make sample unsuitable for use in diesel engine. The laboratory has also expressed that sample is comparable to H.S.D.
7. Petroleum product can be classified as per its specific description and on the basis of its chemical properties/composition. The reports of various laboratories have unequivocally and in clear terms, found flash point more than 54. The product has to be classified according to its chemical properties and the contents as per analysis. The remarks that "water and sediment are found in the imported consignment, therefore, it is not suitable for the use in Engine Oil", will not change the nature of the product, which is determinable only on the basis of its flash point percentage. The importer at the time of the import, was aware of the product which he imported. He has classified the consignment under wrong head i.e. 2713-9090, to escape duty and get the consignment cleared, without being industrial importer and without the approval of the Ministry of Petroleum. The appellant has imported the consignment as sub-standard product (HSD), mis-declared the goods, imported the consignment without being eligible for such import and has failed to seek approval of the Ministry of Petroleum. The goods in these circumstances were rightly seized and impugned action of the Customs Department is unexceptionable.
8. Learned counsel for the appellant consented before the learned Special Judge Customs that the article being HSD cannot be released on the basis of payment of the customs duties. Request was made to the Court for permission to the appellant to participate in the auction, which was accorded through impugned order. The appellant cannot turn around and take a new plea from the one which he has taken before the Court. Learned counsel for the appellant, in the course of his arguments contended that the learned counsel who appeared before Special Judge Customs is in attendance and willing to state at bar that he had not consented for the auction before the Court. He has also denied his admission before the learned Court that imported goods cannot be released legally. The statement of the learned counsel will not be of any help to the appellant. The presumption of correctness is attached to the Court proceedings. The Court proceedings can not be nullified merely because the party or its counsel has recorded statement to the contrary or filed an affidavit. While observing so I am fortified by, the dictum to the Honourable Apex Court in case of Fayyaz Hussain v. Akbar Hussain and others (2004 SCMR 964) wherein it was held:--
"Learned counsel attempted to persuade us, accept the affidavit of Ch. Muhammad Afzal Kahloon Advocate over the judicial proceedings recorded in the Court of Additional District Judge in view of unfair reputation of the Presiding Officer but we are not inclined to adopt this course of action which may lead to a , large number of legal complications. In any event this being an essentially a disputed question of fact could neither be resolved by the High Court nor by this Court in the exercise of extraordinary Constitutional Jurisdiction."
9. Appellant has made the time and date of seizure as on 3-4-2009 and signing of seizure report as on 27-5-2009, the basis for invalidity of the process of seizure. I am not convinced with this stance of the appellant. Law requires that time, date and place be mentioned in the seizure report. The seizure report was prepared and issued on 27-5-2009 and was signed on the same day. The show-cause notice was issued to the respondents after the seizure report on the same day. It is, therefore, incorrect to state that seizure report was made on 3-4-2009, goods were seized on 3-4-2009 and was signed on 27-5-2009. The seizure report was made and signed' on the same day i.e. 27-5-2009. The date of seizure was mentioned as 3-4-2009 to meet the requirement of law.
10. I am not convinced with the appellant's arguments that the samples were drawn in the absence of the appellant. It is evident from the report regarding withdrawal of the sampling dated 1-4-2009, that it was signed by Principal Appraiser, Appraiser, Superintendent, Assistant Deputy Collector, Deputy Collector. Shahid Mehmood clearing agent of, the appellant had also signed the same.
The samples, were drawn in triplicate in presence of clearing agent and the same were sealed according 'to law. The matter is still pending before Special Judge Customs and to rule out the chance of improper sampling of the imported consignment Additional Collector Customs MCC Multan is directed to draw fresh sample from each container, as per Rule 38 of Pakistan Petroleum (Refining, Blending and Marketing) Rules, 1971 in presence of the appellant or his clearing agent and Deputy Registrar of this Court. Additional Collector after taking the samples will deliver one sample from each container to Court to Special Judge Customs. Any relevant authority of the Customs may join in the process of sampling. Any party may get the samples analyzed from the recognized laboratories for comparison with the earlier analysis.
11. The order impugned in this appeal is devoid of illegality or legal infirmity, therefore, does not call for any interference. The order was passed, keeping in view of the laboratory reports as well as consenting statement of appellant, the same is therefore not open to exception.
12. For the foregoing, this appeal has no merit and is accordingly dismissed.
M.B.A./Y-9/LAppeal dismissed.