SUPREME TUBE INDUSTRIES, KARACHI VS COLLECTOR OF CUSTOMS, (ADJUDICATION-I)
2010 P T D 1703
[Karachi High Court]
Before Gulzar Ahmed and Irfan Saadat Khan, JJ
Messrs SUPREME TUBE INDUSTRIES, KARACHI
Versus
COLLECTOR OF CUSTOMS, (ADJUDICATION-I) and 2 others
Special Customs Appeal No. 354 of 2007, decided on 16/06/2010.
Customs Act (IV of 1969)---
----S.156---Customs Rules, 2001, Rr. 110 & 125---Import of banned goods---Confiscation of such goods---Admission of charge by importer and his readiness to pay fine equal to 25% of ascertained value in lieu of its confiscation---Contravention report showed ascertained value of goods at Rs.62,37,300, while show-cause notice showed such value at Rs.7,48,516---Order of Collector rectifying typographical error made in show-cause after providing due opportunity of hearing to importer---Validity---No violation of principles of natural justice had taken place in circumstances.
Collector v. Ms. Rahim Din 1987 SCMR 1840; Ms. Mansab Ali. v. Amir Ali PLD 1971 SC 124; PLD 1979 SC 124 and 2006 PTD 2609 and PLD 2005 SC 461 ref.
Amir Malik for Applicant.
Raja Muhammad Iqbal for Respondents.
ORDER
IRFAN SAADAT KHAN, J.---This Special Customs Reference Application (SCRA) has been filed against the order passed in split decision given by Customs Excise & Sales Tax Appellate Tribunal Karachi Bench-II, (SCAT) Karachi, in Custom Appeal No.K-151/ 2003(K-2)/15506 dated 27-2-2007, by raising the following questions of law:
(1) Whether the case of appellants is covered by the law laid down by the Honourable Supreme Court of Pakistan in case of Collector v. Ms. Rahm Din SCMR 1987 P.1840 or not?
(2) Whether after accepting the material aspect by the Appellate Tribunal vide Order-in-Appeal No. 783/3 dated 11-6-2003 that the impugned order No. 71/02 dated 29-6-2002 is void order in conflict or show-cause notice remanding the same to original authority violative to ruling of Supreme Court of Pakistan given in case of Chairman, WAPDA v. Ms. Gulbat Khan SCMR 1996 P 220 or not?
(3) Whether the impugned Order No. 27/03 dated 26-7-2003 passed by the respondents after the remand of case is out of the purview of show-cause notice as well as in violative to specific directives of Appellate Tribunal already given vide Order-in-Appeal No.K-783 of 2003 dated 11-6-2003 or not?
(4) Whether the case of appellants covered by law laid down by the Supreme Court of Pakistan in case of Ms. Mansab Ali v. Amir Ali, PLD 1971 SC 124 or not?
2. Mr. Amir Malik, learned Advocate appeared on behalf of the applicant and submitted that the referee Member of the Tribunal was not justified in dismissing the appeal filed by the applicant and concurring with the decision given by the Member Technical of the Appellate Tribunal. The learned counsel submitted that no allegation of any mis declaration has been mentioned in the show-cause notice dated 9-5-2002, issued by the Collector. He submitted that in the contravention report dated 3-5-2002, also there is no allegation with regard to the import of banned items and the value of the goods has been shown at Rs.748516, whereas it has incorrectly been valued at Rs.6237300. The learned counsel further submitted that the Tribunal has erred in observing that the value of the impugned goods have been mentioned at Rs.748516 in the show-cause notice whereas while imposing the redemption fine the departmental authorities imposed the same on the ascertained value, i.e. Rs.6237300. The learned counsel further submitted that custom officials have illegally enhanced the value of the goods by attributing the same to be a typographical error without any basis and without providing them an opportunity of hearing and in support thereof has relied upon the decision reported as 1987, SCMR 1840. The learned counsel further submitted that as the very proceedings initiated by the department were void ab initio and illegal hence all the superstructure built on the same is also a nullity and of no value in the eyes of law and in support thereof has relied upon the decision reported as PLD 1979 SC 124. In the end learned counsel submitted that the order passed by the learned Tribunal may be set aside and the present reference application may be answered in his favour.
3. Mr. Raja Muhammad Iqbal, learned counsel appearing on behalf of the department at the very outset submitted that none of the questions raised in the present reference application arises out of the order passed by the Tribunal and this Court is not obliged to entertain the same and in support thereof has relied upon the decisions reported as 2006 PTD 2609 and PLD 2005 SC 461. He then submitted as none of the questions raised by the applicant are arising out of the order passed by the Tribunal this reference application is liable to be dismissed in limine. The learned counsel further submitted that it is a trite law that penalty is always imposed on the ascertained value. He in this regard invited our attention to Rules 110 and 125 of the Customs Rules and. submitted that no illegality has been committed by the authorities below and the fine/ penalty has rightly been imposed on the ascertained value. The learned counsel further submitted that the valuation was made on the basis of the data and material available with the customs officials. The learned counsel also submitted that the question No.2 raised by the learned counsel talks about the previous order passed by the Tribunal and not the present impugned order hence this question is illegal and factually incorrect. In the end learned counsel submitted that the present reference application being frivolous and misconceived deserves to be dismissed in limine.
4. We have heard both the learned counsel at length and have also perused the record and case laws presented before us.
5. Briefly stated the applicant who is engaged in the manufacture of Iron & Steel Tubes imported a consignment of `Old & Used Work Rolls (Iron & Steel Tube Mills)' from South Africa. During the appraisement the applicant contended that the consignment is in old and used condition. However, on examination the consignment was found to be otherwise as the same was imported in violation of Import Trade and Procedure Order 2001-2002. The Collector Adjudication-I then on the basis of contravention report of Member Appraiser Group-VI dated 5-3-2002, issued a show-cause notice dated 9-5-2002 to the applicant that as they have imported banned items, as to why their goods shall not be confiscated and penal action as provided under the law should not be taken against them. Hearing of the case took place on various dates and thereafter the Collector vide his order dated 29-6-2002, came to the conclusion that the charges levelled in the show-cause notice stand not only established but also admitted. The Collector thereafter confiscated the goods, however, he allowed to redeem the same on the payment of fine equal to 25% of the ascertained value of the consignment. Being aggrieved with the said order an appeal thereafter was filed before the Tribunal which vide its order dated 8-5-2003, remanded the case back to the Adjudicating Officer for deciding the matter afresh after finding that there is a variance in the show-cause notice and the final order passed by the Collector.
6. The proceedings thereafter once again were initiated against the applicant and Collector did not find it expedient to interfere with the previous Order-in-Original passed on 29-6-2002, by his predecessor and after going through the entire record and hearing the applicant at length upheld the same. An appeal thereafter was once again preferred by the applicant before Tribunal. The Judicial Member decided the appeal in favour of the applicant whereas the Member Technical differed with his view and upheld the order passed by the Collector. The matter thereafter was referred to the 3rd Member who acted as Umpire Member and concurred with the view of the Member Technical and dismissed the appeal filed by the applicant.
7. The applicant admittedly imported banned items from "South Africa" the controversy raised by the applicant appears to be with regard to the value declared and ascertained. The law permits an importer to redeem its goods on the payment of a fine equal to 25% of the ascertained value of the consignment. The claim of the applicant that the Customs Authorities have ascertained the value of the goods at Rs.748516 and not at Rs.6237300. In the show-cause notice issued in the first round of the litigation i.e. 19-5-2002, the value of the goods has been shown at Rs.748516, which as per the department is an inadvertent and a typographical mistake, which stands corrected in the Order in Original passed by the said Collector.
8. We have noted from the record that in the first round of litigation the applicant admitted his fault, however, requested that they are ready to pay the fine in respect of the goods confiscated by the custom officials. The Collector thereafter allowed them to redeem their goods on the payment of the fine equal to 25% of the ascertained value of the consignment. The applicant contended before the Tribunal that there is a variance in the ascertainment of value as the Customs officials in their show-cause notice have shown the value of the goods at the declared value i.e. Rs.748516, whereas while imposing the fine/penalty have taken the value of the goods at Rs.6237300. As the matter required some investigation the Tribunal remanded the matter back to the Adjudicating Officer for deciding the matter afresh. In the re-assessment proceedings the department observed that in the show-cause notice the value of the goods has been inadvertently shown at Rs.748516, whereas in the Order-in-Original the goods are allowed to be redeemed on payment of redemption fine equal to 25% of the ascertained value of the consignment, which as per contravention report dated 3-5-2002 was shown at Rs.6237300, which was inadvertently omitted in the said show-cause notice due to a typographical mistake. The Collector thereafter upheld its previous orders.
9. However, in the appeal before the Tribunal, the learned Judicial Member concurred with the view that the applicant by observing that the Adjudicating Officer was not justified in enhancing the value without any cogent reason and allowed the appeal of the present applicant. The Member Technical, however, differed with the view of the Judicial Member by observing that the omission took place was due to mere inadvertence and typographical error and all due legal formalities in this regard have duly been fulfilled by the Adjudicating Officer, hence affirmed the order passed by the Collector. The IIIrd Member endorsed the view of the member Technical by observing that the value has inadvertently been attributed by the Collector, which was duly rectified by him in the first Order-in-Original, hence, the said Member, Technical does not find any illegality or infirmity in the' second Order-in-Original passed by the Collector and dismissed the appeal filed by the applicant. A perusal of the contravention report dated 3-5-2002, clearly stipulates and mentions the declared value at Rs.748516 and ascertained value at Rs.6237300, if, however, while mentioning the figures any mistake or typographical error is committed in our opinion the applicant could not be allowed to get any advantage out of this typographical error specially in view of the fact that in the first round of the litigation the applicant fully admits its fault in importing banned items and thereafter admitting to pay fine and penalty.
10. In our opinion the applicant was in full knowledge of the fact that the goods being imported by him are banned items which fact is evident from the written reply submitted by them in response to the first round of litigation i.e. in response to the show-cause notice dated 9-5-2002 wherein it has categorically been admitted by the applicant as under:-
(ii) That we admit fault. However, the F.B.R. vide S. No.7 of Table-III to S.R.O.1374(I)/98 dated 17-12-1998 has fixed pitch of fine 25%. We are ready to pay the same in lieu of confiscation as the goods are for industrial consumption and not marketable otherwise. Unit is lying closed for want of imported material.
11. The decision relied upon by the learned counsel appearing on behalf of the applicant reported as 1987 SCMR 1840 (Collector Central Excise and Land Customs and another v. Rahm Din) is on totally different footing as in this decision the honourable Supreme Court observed that "order of adjudication which is ultimately based on a ground which was not mentioned in the show-cause notice, was palpably illegal on face of it." Whereas in the instant case the applicant was in full knowledge of the fact that they have imported an item which is banned and that is why they candidly conceded and admitted vide their written reply, mentioned supra, that they are not only at fault but are ready to pay fine in lieu of the confiscation of the goods.
12. So far as the decisions relied upon by the learned counsel appearing on behalf of the respondent are concerned, the first decision is Manhattan International (Pvt.) Ltd. Karachi and others v. Director General Intelligence and Investigation Customs and Excise, Karachi and others (2006 PTD 2609) wherein a Division Bench of its Court has held that "a plea which was neither raised before the Tribunal nor there was any finding of Tribunal thereon, High Court in exercise of its powers under section 196 of the Customs Act, 1969 could not grant any relief to appellant on such plea as same would amount to transgressing its jurisdiction". The next decision relied upon by the learned counsel is Collector, Customs, Central Excise and Sales Tax, Quetta v. Messrs Haji Ahmeduallah & Company, Quetta (PLD 2005 Supreme Court 46), wherein the honourable Supreme Court of Pakistan observed that "the option to make payment of fine in lieu of confiscation would certainly encourage such like fraud and unscrupulous entrepreneurs. It was further held in the aforesaid judgment by the honourable apex Court that it is not necessary that option must be given to the delinquents who are responsible for forgery and fraud to get such consignment released in lieu of confiscation, otherwise it is proved that the case is that of mis declaration simpliciter or that of bona fide mistake".
13. We have gone through the above referred judgments and also perused the record and are of the opinion that the applicant was in full knowledge of the fact that he is importing banned items which is evident from the fact that when he was confronted with this illegality which he candidly conceded that he is at fault and is ready to pay fine in respect of confiscation of the goods in order to get the goods released. In the contravention report dated 3-5-2002 it has categorically been mentioned that the value of the goods has been ascertained at Rs.62,37,300 however due to typographical error which subsequently was rectified by the Collector, the figure of the goods have been mentioned at Rs.7,48,516 which in our opinion could not be made basis for declaring the proceedings taken by the Customs Authorities to be ab initio void and illegal.
14. We have further noted that the observation made by the learned Sales Tax Appellate Tribunal that neither in the Show-Cause Notice nor in the Order-in-Original there was any specific mention with regard to the value of the imported goods. This observation made by the Tribunal, in our view, is not correct as in the Order-in-Original, which is available at page 17 of the file, it has specifically been I mentioned that the applicant was allowed to redeem its goods as under: --
"The importers are, however, allowed to redeem the same on payment of fine equal to 25% of the ascertained value of the consignment, besides payment of duties and taxes leviable thereon..." (emphasis supplied)
This specific observation made in the Order-in-Original clearly proves that the applicant was in full knowledge that in order to redeem its goods it has to pay fine equal to 25% of the ascertained value of the consignment. Thus, the applicant was in full knowledge that in order to redeem its goods, it was required to pay fine equal to 25% of the ascertained value of the consignment. Hence, in the given circumstances, in our opinion, no violation of the principle of natural justice has taken place.
15. It seems that the applicant has only tried to take benefit and exploit the situation in respect of the typographical error made in the show-cause notice which subsequently was rectified by the custom officials after providing due opportunity of hearing to the applicant. This fact was not even disputed and controverted by the learned counsel appearing on behalf of the applicant.
16. In view of the facts and circumstances mentioned above, we do not find any merit in this Special Custom Reference Application which is hereby dismissed in limine.
All the questions raised in the present reference application are therefore answered as under:-
Question No.1: This question does not arise from the order
passed by the Tribunal.
Question No.2: This question does not arise from the order passed by the Tribunal as this question speaks of the original assessment order passed by the Tribunal.
Question No.3: In negative i.e. in favour of the department and against the applicant.
Question No.4: This question also does not arise from the order passed by the Tribunal.
S.A.K./S-52/KReference dismissed.