SHIRKAT KHUSHBAKHT SULTAN LTD. VS COLLECTOR OF CUSTOMS, PESHAWAR
2011 P T D (Trib.) 2139
[Customs, Appellate Tribunal, Peshawar]
Before Gulab Shah Afridi, Member (Judicial)
Messrs SHIRKAT KHUSHBAKHT SULTAN LTD. and another
Versus
COLLECTOR OF CUSTOMS, PESHAWAR and another
Appeal No. Cus.263/PB of 2010, decided on 22/02/2011.
Customs Act (IV of 1969)---
----Ss. 128, 129, 156(1)(9), (43)(64)(90), 194-A & 195---Imports and Exports (Control) Act (XXXIX of 1950), S.3---Seizure and confiscation of goods---Staff of Customs examined the container loaded with goods "Agricultural Diesel Engine Parts ", and considered said goods to be "Interchangeable Auto Parts ", which was banned in Afghan Transit Trade vide notification dated 10-4-2004---Goods were seized for violation of Ss.128 & 129 of Customs Act, 1969 and were confiscated---Additional Collector Customs, setting aside confiscation order, ordered unconditional release of the said goods to its rightful owner vide order- in-original---Collector Customs recalled case for re-examination under S.195 of Customs Act, 1969 and setting aside order-in-original, ordered outright confiscation of the seized transit consignment vide order-in -appeal---Seizing Officer could not produce any concrete evidence/proof on file to prove that the confiscated goods were "Interchangeable Parts" and affirmed that consignment of similar parts was allowed in transit to Afghanistan---Case file was examined by the Collector twice before seizure, but no order for examination by the recognized expert was passed Collector Customs had exercised its power under S.195 of Customs Act, 1969 not on the basis of available record, but on the basis of post adjudication opinion, which was collected on his directions---Said expert opinion was also inconsistent with its previous report which it had issued regarding an identical consignment---Technical appraiser had also opined in favour of the appellant---In absence of any illegality and impropriety in the order-in-original same was restored and order by Collector Customs under S.195 of Customs Act, 1969 was set aside.
2009 PTD 246; 2009 PTD 467; 2008 PTD 1916 and 2009 PTD 1463 ref.
Danish Ali Qazi for Appellants.
Naseer Khan, Deputy Superintendent Customs and Fazal Mehmood, Inspector Customs for Respondents.
Date or nearing: 25th January, 2011.
JUDGMENT
GULAB SHAH AFRIDI, MEMBER (JUDICIAL).---This appeal filed by Messrs Shirkat Khushbakht Sultan Limited another (appellants herein) through their counsel is against the Order No.160 of 2010 dated 24-6-2010 passed by the Collector Custom, Model Customs Collectorate, Peshawar, whereby he while reopening the impugned Order-in-Original No.105 of 2010 dated 7-5-2010 ordered outright confiscation of the goods involved in the case.
2. Brief facts of the case as recapitulated in the Order-in-Original No.105 of 2010 dated are that the staff of Customs, Tax Facilitation Station (TSF) NLC Amangarh Nowshera upon examination of the goods loaded in 1x20 Container No.YMLU-2986415 pertaining to ATTI No.36209 dated 12-12-2009 filed by Messrs Haji Fazal Ahmad Haji Said Ahmad Peshawar, Agricultural Diesel Engine parts were found. The said Agricultural Diesel Engine Spare Parts were considered to be interchangeable auto parts, which being banned in Afghan Transit Trade vide S.R.O.151(I)/2004 sated 10-4-2004, therefore, the same were seized. vide Seizure Case No.33 dated 18-3-2010 for violation of sections 128 and 129 of the Customs Act, 1969 read with the Ministry of Commerce Notification No.S.R.O.151(I)/2004 dated 10-4-2004, Memorandum No.8(3)2001/FTI dated 31-3-2004 read with Pak-Afghan Transit Trade Agreement 1965, punishable under sections 156(1)(9) (43)(64) and (90) of the Customs Act, 1969.Consequently, the matter was placed before Additional Collector-I Customs, Peshawar for adjudication who vide Order-in-Original No.105 of 2010 dated 7-5-2010 ordered as follows:-
"I have perused record of the case and have considered written/oral arguments of the prosecution as well as that of the respondents. In the light of above referred opinions and successful rebuttal of the allegations contained in the show-cause notice by the respondent, nothing is left disputed/ ambiguous to be resolved. The contention of the respondents, duty supported by documentary evidence in the shape of catalogue of the seized goods as well as clarification/ classification issued by the Appraisement Collectorate vide C. No. CC/01/08-11 dated 4-4-2008 in identical issue is, therefore, accepted. The allegations contained in the instant seizure report/show-cause notice were found not sustainable and might have been based on some mis-understanding, the same are, therefore, vacated. I therefore, order unconditional release of the seized goods to its rightful owner. The seizing agency is directed to deal with the released goods in accordance with the prevailing law/proceedings."
3. The Collector Customs, Model Customs Collectorate, Peshawar while feeling not satisfied with the above order, called the case for re-examination under section 195 of the Customs Act, 1969 and again issued Show-Cause Notice bearing C.No.Cus/Adj/Add:C-1/110/4944 dated 3-6-2010. The case was heard on 9-6-2010 and 16-6-2010 by the Collector Customs, Model Customs Collectorate, Peshawar who vide his Order (under section 195 of the Customs Act, 1969) No.160 of 2010 dated 16-6-2010, while setting aside the impugned Order-in-Original No.105 of 2010 ordered as under:
"I have gone through record of the case and have considered arguments and counter arguments of both the parties. The instant case was re-opened with the sole purpose to resolve the core issue i.e. as to whether the seized Afghan Transit Consignment (spare parts of Agricultural Diesel Engine) are auto parts/can be used as auto parts. According to the version of the seized agency, the consignment under reference infect contains spare parts of Agricultural Diesel Engine but simultaneously disputed the consignment to be used as auto parts as these are interchangeable.
The respondent in his written reply has attempted to prove that these spare parts have exclusive use in the Agricultural Diesel Engine, however, the prosecution was stuck to their view point that although these are spare parts for agricultural Diesel Engine, however, the same bears characters to be used as auto parts. In this, regard, the prosecution obtained an expert opinion of Messrs Mitsubishi Motors, Peshawar which is already mentioned in the preceding para of this order. According to the said opinion these spare parts are inter-changeable and can be used as auto parts Considering the said opinion of the relevant authority. I am inclined to accept the version of the prosecution that the seized transit consignment is auto parts. The Ministry of Commerce S.R.O. 151(I)/2004 dated 10-3-2004 categorically prohibits the bringing into Pakistan by Sea Land and Air in transit to Afghanistan the auto parts. In view of above explained position, I, therefore, order outright confiscation for the seized transit consignment in terms or section 156(1) (64) of the Customs Act, 1969 read with section 3(3) of/the Import and Export (Controls), Act, 1950 for violation of Section 129 of the Customs Act, 1969 read with section 3(1) of the Import and Export (Control) Act, 1950 and S.R.O. 151(I)/2004 dated 10-3-2004. The other contentions of the respondent regarding applicability of the MCC (Appraisement) Karachi's Letter No. CC/01/2008-11 dated 4-4-2008 in this case and terming of reopening of the case under section 195 as illegal were examined which have no legal footing. The MCC appraisement Karachi letter has no binding force in the issue in hand. The provisions of section 195 of the Customs Act, 1969 were also correctly invoked."
4. Aggrieved of the Order (under section 195 of the Customs Act, 1969) No.160 of 2010, dated 16-6-2010, the appellants have filed the instant appeal, inter alia, on the following grounds:--
(i)That impugned order against the appellant is erred both in law and facts, hence, not sustainable in the eyes of law;
(ii)That impugned order is based on conjectures and surmises, hence, nullity in the eyes of law;
(iii)That the order of re-opening is at the face arbitrary and without justifiable cause as no material defect or error has been shown to be carried out during the adjudication proceedings conducted by the learned Additional Collector Customs-I which may have affected his judgment;
(iv)That exercising power under section 195 ibid suo motu by the learned Collector was not in accordance with the letter and spirit of section 195 ibid as neither the Show-Cause Notice nor the impugned order mentioned any wrong or error from the record available to the learned Additional Collector Customs-I rather, it is most unfortunate and humbly submitted that after the adjudication proceedings, the report of unidentified expert of Messrs Mitsubishi was obtained;
(v)That under the provisions of section 195, instead of any external cause, the learned Collector is authorized to re-open the case, if any defect is apparent on the face of the record or any illegality has been committed by the officer below the rank in him;
(vi)That otherwise for the cause of non-obtaining of the alleged expert report from Messrs Mitsubishi cannot be termed as illegality in adjudication process per se rather it is a kind of deficiency which committed' by the seizing officers as they were capable to collect by themselves,
(vii)That without prejudice to the motive and legality of he Mitsubishi Report relied upon is an inadmissible piece of evidence unless and until it has been proved in accordance with provisions of Qanun-e-Shahadat Order, 1984;
(viii)That without prejudice to the above report is within its contents, compare to the other comprehensive report of Technical Appraiser relied upon by the Adjudicating Officer, is arbitrary and in conflict with previous report earlier issued by the same Company, thus, no credibility to such arbitrary report can be attached.
(ix)That without prejudice to the above, the Mitsubishi company per se is not known for its agricultural equipments and otherwise-cannot be deemed to be expert on Chinese technology;
(x)That without prejudice to the above, the report is obtained instead of any technical person of the Mitsubishi, it has, been obtained from the sales department, therefore, for that very reason, no authenticity to its opinion can be attached.
5. During the course of arguments, learned counsel for the appellants while reiterating his grounds appeal, contended that the appellant imported a consignment of Agriculture Diesel Engine Spare Parts which were in Transit to Afghanistan vide ATTI No.36209 dated 12-12-2009, but the Customs Authorities posted at TFS, NLC, Amangarh Nowshera seized the said items on the pretext that these are interchangeable as auto parts which are banned according to the Ministry of Commerce Notification No.S.R.O.151(I)/2004 dated 10-4-2004. He further submitted that the Adjudicating Officer issued a "show-cause notice and after hearing the parties, released the goods unconditionally vide his Order-in-Original No.105 of 2010 after clearing that the said items are not interchangeable auto parts. Learned counsel for the appellant further submitted that the Collector Customs, Peshawar instead of releasing the goods, reopened the case under section 195 of the Customs Act, 1969 and issued another Show-Cause Notice C.No.Cus/ Adj/Add.C-1/110/2010/4944 dated 3-6-2010 to the appellants by stating that the seized Agriculture Diesel Engine Auto Spare Parts are interchangeable as auto parts and that the appellants filed reply to the show-cause notice but the Collector Customs confiscated the goods vide the impugned Order No.160 of 2010, which is not unjust and uncalled for in the eye of law. He stated that the order passed by the Collector Customs is arbitrary and against the facts of the case, therefore, the same is not sustainable in the eye of law. He further stated that while passing the impugned order, the Collector Customs has only relied upon the Mitsubishi Report, which according to the learned counsel for the appellants was not confronted at the time of hearing and further stated that the Mitsubishi is not authorized by the Federal Government to give opinion in such like cases. He lastly prayed that the impugned order passed by the Collector Customs, Peshawar under section 195 of the Customs Act, 1969 may be set aside and the appeal of the appellants be accepted by maintaining the Order-in-Original Np.105 of 2010 dated 7-5-2010. In support of his arguments, learned counsel for the appellant referred certain judgment reported as 2009 PTD 246, 2009 PTD 467 and 2008 PTD 1916.
6. On the other hand, the Departmental Representatives opposed the contentions of the counsel for the appellants and referred td their parawise comments and submitted that the order is passed after obtaining the status of parts from Messrs Mitsubishi Motors, which is according to law and the case is rightly reopened under section 195 of the Customs Act; 1969 and the interference in the Order-in-Original was required by the Collector Customs under the Act (ibid). He prayed for dismissal of the appeal in hand and maintaining the Order No.160 of 2010 of the Collector Customs, Peshawar.
7. I have heard both the parties and have perused the record of the case. It has been revealed that ATTI No.36209 was filed on 12-12-2009 of a consignment of "Agricultural Diesel Engine Spare Parts" and was initially seized by Superintendent Customs, TFS, NLC, Amangarh, Nowshera on 18-3-2010 after 03 months of filing of ATTI for being interchangeable auto parts which are banned in terms of Ministry of Commerce S.R.O. 151(I)/2004 dated 10-4-2004 as a goods in transit to Afghanistan. Seizure Report was submitted before the Additional Collector-1 Customs for adjudication, who issued show-cause notice on 3-4-2010 to the present appellant and was properly replied by the appellant. In reply to the Show-Cause Notice, the appellant took the stand that the seized consignment was of "Agricultural Diesel Engine Spare Parts" specifically meant for/identifiable parts of Chinese Agricultural Diesel Engine Models SD 1105, SD 1110 and SD 1100, classifiable under PCT Heading 8409.9999 which classification has already been endorsed by the Classification Center of Collectorate of Appraisement, Custom House, Karachi vide its Ruling No. CC-01/08-II dated 4-4-2008. To further strengthen its case that such consignment are being allowed in transit on regular basis placed GD Nos. KAPR-AT-28976 dated 5-3-2010 and KAPR-AT-30300 dated 18-3-2010 which GDs were incidently related to the post seizure period of the instant consignment whereby identical good of the same importer/appellant were allowed to be transited to Afghanistan. Besides, the appellant also produced the manufacturer's certificate verifying therein that the same parts are not interchangeable. Despite of all, the learned adjudicating officer referred the matter to Technical Appraiser, who submitted his detail opinion to adjudicating authority which is reproduce as under:
"Appraising Officer Opinion
Representative samples seen along with the manufactures catalogues. The following has been observed.
| S. No. | Description | Model No. of Agricultural Diesel Engine | Horse Power |
| 1. | Cylinder liner with piston and Rings | LD/110 | 20HP |
| 2. | Cylinder liner with piston and Rings | ZH 1115 | 23 HP |
| 3. | Cylinder liner | | |
| 4. | Cylinder liner with piston and Rings | 2105 A | 24 HP |
| 5. | Cylinder liner | R 175A | 6 HP |
| 6. | Cylinder liner with piston and piston pin and Rings | KM 130 | 23 HP |
| 7. | Cylinder liner with piston and piston pin and Rings | SD 115 | 26 HP |
| 8. | Cylinder liner with piston and piston pin and Rings | SD 110 | 20 HP |
| 9. | Water body part | | |
| 10. | Air Cleaner | | |
On perusal of catalogue and representative sample it has been observed, that the consignment in question i.e. cylinder liner, water body and air cleaner are suitable for SD 115, LD 110, ZH 115, R 175A, KM 130, SD 1110 and 2015, as confirmed from the web site on Internet and fall under HS code 8409.9999. Moreover, packing of the goods also confirms that these are agriculture diesel engine parts.
These cylinder liners are cylindrical part to be fitted into an engine block of the specific model of agriculture' diesel engine (mentioned above) to from a cylinder. Subject to general provisions regarding classification of Parts: "parts which are suitable for use solely and principally with particular machine and apparatus are classified in the same heading as those machine and apparatus" unless separate headings me provided, meaning thereby that these are agriculture diesel engine parts are not interchangeable with auto mobile engines. It is worth mentioning that previously a similar consignment was held up by Afghan Transit group at Karachi Custom House, regarding interchangeability of these parts and consignment was examined by PASIDA. PASIDA confirmed that the goods are neither auto parts nor interchangeable auto mobile engine (Annex "A"). The issue regarding interchangeability of the subject diesel engine as auto parts was also addressed to F.B.R. vide. Letter No. SI/Misc/100/97-TG dated 14-11-1997, in which the Collectorate confirmed that the diesel engine model SD 1100 and SD 195 are general purpose engines and not specially designed for use in auto vehicle or tractors. These are mainly used in agriculture machine including tube well pups as a prime mover (Annex B"). Therefore, according to these essential character and general purpose use, the same are classifiable under PCT heading 8409.9999 and cannot be treated as auto parts."
8. The Seizing Officer was also called for assistance along with office file, who on a query admitted that no superior officer of the Collectorate ordered for examination of the goods from any Expert, the seizing officer also not produced any concrete evidence/proof on file to prove that the confiscated goods are interchangeable parts. The Seizing Officer was also asked whether any consignment of the similar parts was allowed in Transit to Afghanistan, the reply was in positive. Further it is transpired from the record that two time i.e., on 21-1-2010 and 23-1-2010 the case file was examined by the Collector before the seizure but no order was passed to be examined from a recognized expert. On the basis of aforesaid material, the learned Adjudicating Officer released the consignment unconditionally vide Order-in-Original No. 105 of 2010 dated 7-5-2010 and a copy of which was endorsed to the learned Collector Customs: As it appears from the record as ascribed by the learned Collector Customs in his Show-Cause Notice under section 195 of the Customs Act, 1969 found itself from the proceedings and called for the record and after examining it, nothing was found ignored by the learned Adjudicating Officer, therefore, moved towards of re-investigation of the matter and directed the seizing agency to obtain opinion from Mitsubishi Motors. On the basis of that post adjudication report of an expert of Mitsubishi Motors, Show-Cause Notice C.No.Cus/ Adj/Add:C-1/110/4944 dated 3-6-2010 under section 195 ibid was issued again on the basis of that post adjudication report, is as "Expert Opinion regarding ATTI/No.36209 dated 12-12-2009, I have examined the aforesaid goods and found that these are Spare Parts which are interchangeable e.g., Pistons, Rings, Water bodies, Air cleaners, Nozzles (F.I.P) fuel injection pumps and Glass Cylinders signed by Manager Parts and Director after sales dated 20-5-2010". The said examination report is without any detail while the opinion submitted by the Appraisement Collectorate, Karachi reproduced at page-5 of the Order-in-Original No.105 of 2010 passed by the Additional Collector Customs is in detail along with the H.S. Code and horse power and on the basis of report obtained from the Mitsubishi Motors. The Order of the adjudicating authority was recalled and goods were ordered to be confiscated vide the impugned Order-in-Original No. 160 of 2010 dated 24-6-2010, Now the question raised in this appeal is that whether in view of the circumstances, the learned Collector Customs has rightly exercised its powers under section 195 of the Customs Act, 1969.
9. The scope of section 195 ibid has already been appraised by the superior courts in numerous judgments 2009 PTD 246, 2009 PTD 467 and 2008 PTD 1916. In a case titled Messrs Namazfk (Pvt.) Ltd. v. Federation of Pakistan reported as 2009 PTD 14463, the honourable Lahore High Court has held that:-
"13. Section 195 deals with a different situation it starts from the language that the Customs Collector or Federal Board of Revenue after calling or Federal Board of Revenue after calling for the record and inspection of the proceedings can further proceed in the matter. It does not apply where the information comes to the knowledge from the other sources.
(14) It is true that it can be applied where the legality or proprietary of any decision of the subordinate is challengeable, but, however, the proceedings therein can only be initiated on the basis of the inspection of record itself and not for the reason of the information collected from out-side Apparently, this is the basis difference "
10. It is evident from the impugned order that the learned Collector Customs has exercised its power under section 195 ibid not on the basis of available record rather on the basis of post adjudication opinion of Mitsubishi Motors which was collected on his direction, thus, the very cause is extrinsic from the scope of section 195 ibid. Not only that the said expert opinion is also inconsistent with its previous reports which it has issued regarding identical consignments. During the proceedings in appeal, the seizing officer was called in, however, he remained stanched with his earlier opinion which has expressed during adjudication. Otherwise, the classification of the goods as resolved by the Classification Center vide Ruling No.CC/01/08-11 dated 4-1-2008 is in favour of the appellant by classifying the parts in question in Chapter 84 rather then Chapter 87 (relating to vehicle) of the Pakistan Customs Tariff. As reproduced above, the said ruling has also been endorsed by the Federal Board of Revenue. The Technical appraise also opined in favour of the appellant, thus, in such circumstances where there is no illegality and impropriety exist in the order of the learned adjudicating officer, I have no option but to set aside the learned Collector Customs Order-in-Original, No. 160 of 2010 dated 16-6-2010 passed under section 195 ibid and restore the Order-in-Original No.105 of 2010 dated 7-5-2010. Appeal is accepted accordingly.
H.B.T./89/Tax(Trib.)Appeal accepted.