COLLECTOR OF CUSTOMS VS QASIM IRON MERCHANT, 2011 PTD-KARACHI-HIGH-COURT-SINDH 2853 (2010)

Customs Act (IV of 1969)---

----Ss. 25, 32 & 196---Determination of customs value of goods---Misdeclaration---Reference application---Respondent had imported consignment of steel and declared the same to be of secondary quality steel which was classified under PCT Code 7225.1900 on which duty was leviable at 5%---Department collected only one sample from four containers and sent it for test to the Laboratory---Contents of 'silicon' in that sample as per report were 0.58%---Case for misdeclaration was made against the importer and customs duties were imposed under the PCT Code 7209.1510---Minimal difference in the proportion of silicon in the consignment imported by the importer, would not make it a case of misdeclaration, because it could be a difference of which the importer was not aware; and had in good-faith classified it under PCT Heading 7225.1900 and paid duties thereon---Such a minimal difference having occurred in testing of one sample, getting the samples drawn from other containers for testing was obligation of the department instend of arriving at any conclusion---Minimal difference that had occurred in the present case, could be considered to be within margin of error---Case being not of misdeclaration, in view of such a minimal error, and no further test having been gotten done by the department, duties were payable under Heading 7225.1900 and not under PCT Heading 7209.1500---Order accordingly.

Zain A. Jatoi for Applicant.

Junaid Ghaffar Advocate along with Darvesh Mandhan for Respondent.

ORDER

MUHAMMAD ATHER SAEED, J.---This Reference Application has been filed against the order of the appellate Tribunal dated 10-7-2009 in Customs Appeal No.K-233 of 2008, wherein the questions noted in the order of this Court dated 18-8-2010 had been referred for the opinion of this Court, and after hearing the arguments of the learned counsel on 18-8-2009, we were of the opinion that prima facie the questions appeared to be the questions of law arising out of the order of the learned Tribunal and since short point was involved, we had put both the learned counsel on notice that this point would be finally disposed of at Katcha Peshi stage.

Today, we have heard Mr. Zain A. Jatoi, learned counsel for the applicant and Mr. Junaid Ghaffar along with Mr. Darvesh Mandhan, learned counsel for the respondent and have reviewed the proposed questions in the light of their arguments.

The dispute in this case is that the present respondent had imported a consignment of steel and declared it to be secondary quality steel, which according to them was 'classifiable under PCT Code 7225.1900 and on which duty was leviable at 5%. The Department collected only one sample from the four containers and sent it for test to the Laboratory and according to the test report the contents of Silicon in this sample was 0.58%. Learned counsel for the applicant drew our attention to clause (0 of Chapter 72 of Pakistan Customs Tariff where "other alloy steel" has been defined and one of its prescribed property is that the content of Silicon in this item is 0.6% or more. Since according to the test report the Silicon content was 0.58%, therefore, a case for mis-declaration was made out against the respondent and the duties were imposed under the PCT Code 7209.1510 and the offending goods were confiscated subject to redemption of payment of 50% fine which came to around Rs.14,00,000.

Being aggrieved by the order the respondent preferred Appeal before the Collector (Appeals), which was dismissed, against which he had gone to the Tribunal where the Tribunal had allowed the Appeal and set aside the impugned order by giving benefit of doubt in favour of the respondent, hence this Reference Application.

On a review of the questions, we asked the learned counsel for the applicant as to how the order in respect of redemption of goods of fine can be restored, even if the answer of the proposed questions are given in the Department's favour and the learned counsel candidly admitted that no question had as such been framed the answer to which would restore the fine but submitted that if question No.4 is answered in negative then the demand of legitimate duties and taxes will be restored and that may apply to the fine as well.

The learned counsel for the respondent Mr. Junaid Ghaffar argued that the difference was 0.02%, which is somewhere around 3% of the total required content of 0.6% of Silicon and, therefore, the case will fall under the principle of interpretation known as the de-minimis rule, which provides that for the purpose of interpreting a statute, trifles have to be ignored. His other contention was that only one sample from one container was taken out and since a minimal difference had arisen, therefore, the applicant was duty bound to take further samples and get them tested. He submitted that since the goods were released to the respondent after the order of the Tribunal, therefore, it is not possible now to conduct further tests.

While replying to the above arguments of the learned counsel for the respondent, the learned counsel for the applicant stated that the procedure is that if the respondent i.e. importer wants to get the samples tested from other containers they should make such an application but no such application was made and, therefore, no further tests were carried out.

After hearing the arguments of the learned counsel and examining the case in the light of arguments, we are of the considered view that the minimal difference in the proportion of silicon in the consignment imported by the respondent will not make it a case of mis?declaration because it can be a difference of which the importer/ respondent was not aware and had in good-faith classified it under PCT heading 72.25 and paid duties thereon. We also tend to agree with the learned counsel for the respondent that since such a minimal difference had occurred in testing of one sample, whether he applied for getting samples drawn from. other containers or not for testing, it was obligation of the applicant in these circumstances to get further samples tested to arrive at a conclusion that such a difference occurred in all the samples and was not a one-off difference. From what we know about the chemical tests we are also of the opinion that in such tests there is always some margin of error and the minimal difference that had occurred in the present case can be considered to be within the margin of error.

In view of the above discussion we are of the considered opinion that this is not a case of misdeclaration and in view of such a minimal error, and since no further test was carried out by the applicant we are of the view that the duties are payable under PCT Heading 7225.1900 and not under PCT Heading 7209.1510. Since all the questions referred for our opinion although being questions of law are academic questions and answer to the above questions will not resolve the controversy in issue, we, therefore, refrain from answering the questions proposed and a dismiss this Special Customs Reference Application.

H.B.T./C-8/K????????????????????????????????????????????????????????????????????????? Application dismissed.