MUHAMMAD RAMZAN, SEWING MACHINE AND SILK YARN VS COLLECTOR MODEL CUSTOMS COLLECTOR, (PaCCS), 2013 PTD-CUSTOMS-APPELLATE-TRIBUNAL-BENCH-I 1996 (2013)

(a) Customs Act (IV of 1969)---

----Ss. 25, 79(1) & 81---Mis-declaration of origin and value of imported goods---Goods declared of China origin alleged by Authority to be of Japan origin requiring assessment at higher values as compared to China origin---Order-in-original enhancing declared value of goods upheld by Appellate Authority---Validity---No data or evidence available on record in support of impugned enhancement of value made without any reason---Importer by producing Bill of Lading, certificate of origin issued through combined declaration under FTA packing list, commercial invoice as evidence had proved subject goods to have been imported from China---Alleged offence could not be attributed to importer in absence of element of mens rea caused by him---Declaration/statement made by an importer under bona fide belief or in presence of any department practice or interpretation in vogue or view held by departmental officers would not be mis-declaration in terms of S. 32(1) of Customs Act, 1969---Tribunal set aside impugned orders and show cause notice for being arbitrary and suffering from inherent legal infirmities.

Lt. General (Retd) Shah Rafi Alam v. Lahore Race Club, PLJ 2003 Lah. 1660; Khalid Qureshi v. UBL 2001 SCMR 103; East West Steamship v. Queen Land Insurance PLD 1963 SC 663; Sahibzada Sharfuddin v. Town Committee 1984 CLC 1517; Abida Rashid v. Secretary, Government of Sindh PLD 1995 Kar. 587; Assistant Director v. B.R. Herman Mohata Ltd. PLD 1992 SC 485; Central Insurance v. CBR 1993 SCMR 1232 and Messrs Muller and Phipps Pakistan (Pvt.) Ltd. v. The Collector of Sales Tax Enforcement LTU, Karachi 2010 PTD (Trib.) 1787 ref.

PTCL 2008 CL 203 rel.

(b) Customs Act (IV of 1969)---

----S. 32(1)---Declaration of goods made under bona fide belief or in presence of departmental practice or interpretation in vogue---Effect stated.

Statement or declaration made under bona fide belief or in presence of any departmental practice or interpretation vogue or view held by the departmental officers shall not be a mis-declaration within the contemplation of subsection (1) of section 32 of the Customs, 1969. The matter of interpretation is also not a matter of mis-declaration.

(c) Public functionaries---

----Duty and obligation of public functionaries would be to redress grievance of citizens without fear, favour and nepotism.

Zahid Akhtar's case PLD 1995 SC 530 rel.

Mohabbat Hussain Awan for Appellant.

Ghulam Yasin, A.O., for Respondents.

Date of hearing: 2nd April, 2013.

ORDER

MUHAMMAD NADEEM QURESHI, MEMBER (JUDICIAL-I).--This order shall dispose of appeal filed by Messrs Muhammad Ramzan, against the Order-in-Original No.69928 of 2013 dated 7-3-2013 passed by the Collector of Customs, Customs House, Karachi against the Order-in-Original No.65598 of 2013 dated 14-2-2013 passed by the Additional Collector Adjudication-II, Model Customs Collectorate of PaCCS, Customs House, Karachi.

2.Brief facts of the case are that importer (Messrs Muhammad Ramzan) electronically filed Goods Declaration bearing No. KCSI-83825 dated 26-12-2012 and declared to contain ASSORTED INDUSTRIAL SEIWING MACHINES (Items at Serials Nos. 1 to 10 of the GD) of China origin, at total invoice value of US$ 13500. The importer determined his liability of payment of applicable duty and taxes and sought clearance under section 79(1) of the Customs Act, 1969. Examination report revealed that the importer has misdeclared the origin and value of the goods. Importers has declared the origin of the goods as China origin whereas on physical examination the shed staff has confirmed that the origin of items Serials Nos. 1, 2, 8, 9 and 10 of the GD as Japan origin stead of declared China. Since the goods of Japan origin are assessed at higher values as compared to the goods of China origin. Importer tried to get his goods cleared at lower, values by misdeclaraing the origin. Moreover, exemption for Customs duty under FTA regime, vide S.R.O. 659 of 2007, also not available on above mentioned Japan origin machines. For ease of reference examination report is reproduced as under: This is the case of misdeclaration of origin invoice and packing list not found inside the container. Goods examined in the light of information retrieved from the system desp: New Industrial Sewing Machines and found detail as are under (1) Model No. 875 brand Brother new twin needle lock sticker with thread trimmer machine. I/o Japan. qty 10-sets. (3) model No. 562-05 New Flatbed Inter Lock Stitch Machine. Brand Pegasus Designed Co. Osaka Japan qty. 10-sets. (4) model No. 562.01 New Flatbed Inter Lock Stitch Machine. Brand Pegasus designed by Pegasus Sewing Machines Co. Osaka Japan qty. 5-sets. (5) model No. 664 New Cylinder Bed Interlock Stitch Machine. Brand: Pegasus Designed by: Pegasus Sewing Machines Co. Osaka Japan qty. 25-sets. (6) model No. 747 Over Lock Sewing Machine. brand Siruba Designed by Japan qty. 25-sets. (6) model No.747 Over Lock Sewing Machine brand Siruba designed by Japan qty. 100-sets. (7) Model No. 852/125 Safety Stitch Machine (over lock) brand Pegasus designed by: Pegasus Sewing Machines Co. Osaka Japan assembled in China qty. 15-sets. (8) Model No. DFB 1404p new Industrial Sawing Machine. brand Kansal. i/o: Japan qty. 20-sets (9) Model No. 1508 new Industrial Sawing Machine. Brand Kansal. i/o: Japan qty 15-sets (10) Model No. 2000c new Industrial Sawing Machines Brand Kansal. i/o: Japan qty 10-sets i/o: Japan / China (printed on catalogue/good and Ctns) mode of packing: in Ctns. total 225 Ctns each set packed in each Ctn. but found 70 set are made in Japan group may call the certificate of origin at the time of assessment and n/action as per law check weight 100% vide pict Slip No. 80718 date 25-12-2012 and found cargo weight 8760 kgs. (images) attached group is requested to check all other aspect including importability as per import policy order in vogue. The aforesaid facts prove that the importer has deliberately concealed the actual contents of the GD and his mis-declared in terms of origin and value willfully and with mala fide intention and have attempted to defraud the government from its legitimate revenue amounting to Rs.1378321. Value of the offending goods is Rs.4751784.

3.The Additional Collector of Customs, Model Customs Collectorate of PaCCS, Customs House, Karachi, vide Order-in-Original No. 65598/12, passed the order as under:

"I have carefully scrutinized the complete record of the case including the written reply of the representative of the importer as well as comments thereon by the Department and have also patiently heard verbal submission of both sides. It has been alleged vide the show cause notice that the importer has mis-declared in terms of terms of origin and value of the instant consignment. The representative of the importer in his defence has argued that the goods are undoubtedly of China Origin and have been verified as such by the Pak-China FTA Certificate as well as the Certificate of Origin submitted along with written reply. He stated that there is an insignificant difference between the assessable values of China Origin and Japan Origin machines and accordingly the resulting difference in taxes is only nominal and not very tempting for the respondent to indulge in such malpractice. He stated that the trader is wilting to get the goods assessed as Japan origin which may then be released without imposition of fine and penalty. While persisting that the goods are of China Origin, the AR could not offer any plausible explanation that why the machines are fitted with Model/Brands plate explicitly mentioning Made in Japan. If the Certificates of Origin are to be believed then logically the machines are being imported with fake indication of origin to deceive the prospective buyers. On the other hand, if the origin of goods is correct as per Brand/Model plates, the genuineness of the Certificates of Origin becomes questionable. The option to get the Certificate of Origin submitted by the trader verified, by referring it to the representative Office in China with full intimation of the case details, was declined the by trader representative on the pretext of delay. There is no denying the fact, however, that the machines bear the Name/Brand/Model plates explicitly mentioning that these are Made in Japan which fact has not been challenged by the respondents nor they have questioned the ascertained value of the goods. While scrutinizing the case record, it was noted that that the value of offending goods and the Amount of duty and taxes short levied have been incorrectly stated in contravention report as Rs.4,751,784 and Rs.1,378,321 respectively. Since the value of each item has been enhanced almost the value of the offending goods work out to be Rs.13,022,232 and the amount of taxes short paid works out to be Rs.3,261,101 after assessment. The case was accordingly discussed with Collector of Customs Adjudication-II, Karachi who directed PRAL officials to transfer the case to his folder. Upon showing inability by PRAL, Collector of Customs Adjudication-II, Karachi directed the undersigned to issue the Order in instant case, which could then be transferred to him for issuance of Order-in-Original as per merit of the case. Assistant Collector MIS MCC PaCCS has been requested to put the instant GD on hold till the issuance of Order-in-Original by Collector of Customs Adjudication-II, Karachi. The Assessing Officer is directed to resubmit the contravention report in instant case by detaining all items because the value of each item has been enhanced by almost ten times, so that the case may then be adjudicated by Collector of Customs Adjudication-II, Karachi having jurisdiction. This roundabout procedure is adopted on PRAL official's advice."

4.Being aggrieved and dis-satisfied with the impugned Order-in-Original the appellant filed the instant appeals before this Tribunal on the grounds incorporated in Memo. of Appeal.

5.On the date of hearing Mr. Muhabbat Hussain Awan, Advocate appeared on behalf of the appellant, reiterated the grounds placed on record and contended that the declared value is transaction value which cannot be enhanced without written evidence as well as computerized data and prior information of importer. The value is enhancementarbitrarily without disclosing the evidence or giving reasons of such enhancement which is liable to be set aside. In case of enhancement ofvalue, the Adjudicating office should have referred the case to Valuation Directorate under section 81 of Customs Act, 1969, but he did not do so and violated the requirements of the said Section 81. He further contended that the Adjudicating Officer has ignored the Valuation Guide line dated 18-6-2012 and 90 days' computerized data which is not only against the law but also it is clear cut discrimination and crossed the limit of his powers and violated the provisions of section 25 of the Customs Act, 1969 as he has passed Order-in-Original which is ab-initio, illegal and against the prevailing practice of Custom House and the same liable to be set aside. He further contended and argued that a transactional value cannot be rejected because there are some contemporaneous imports at higher price. It has been shown that invoice price is not genuine and does not show the real price paid for the imports. An invoice price cannot be routinely discarded except on the strength of clear evidence that the invoice is no genuine and it does not show the real price as has been transacted between the importer and foreign supplier and that something else has passed clandestinely between the importer and foreign supplier. The plea of enhancement is not tenable where no evidence has been produced to justify any enhancement of the invoice value of imported goods. No evidence to show that the disputed transaction is false or is an outcome of a fraudulent activity, has been produced by the customs they have only relied upon a previous transactional value having no relationship with the changed scenario between the imports and exports, no evidence exists to reject the commercial documents represented by the appellants, the impugned order suffers from serious illegalities the same is therefore accordingly required to be set aside.

6.The Departmental Representative, Mr. Ghulam Yasin, Appraising officer, strongly opposed the arguments of the appellant and contended that, the scrutiny of the goods declaration in the light of examination report revealed that the Importer has mis-declared the origin and value of the goods. The appellant has declared the origin of the goods as China. Whereas on physical examination the shade staff has confirmed that the origin of items at S. Nos. 1, 2, 8, 9 and 10 of the G.D are found as Japan origin instead of China. Since the goods of Japan origin assessed at higher values as compared to the China origin, that is why the importer/appellant tried to get its goods cleared at lower values by mis-declaring the origin. Moreover, the examination is only for customs duties in FTA regime, vide S.R.O. 659(I)/2007 only to the China origin goods and not on Japan origin and as such evidently the offence of mis-declaration is committed by the appellant and on the basis of examination report and considering the facts of the case the appeal is liable to be dismissed.

7.After hearing both the parties and perusal of the record it has been observed that the Show Cause notice was issued in the said case on 20-2-2013 by the Collector (Adjudication). According to the Show Cause Notice date and time of detection shown as 14-2-2013. Show Cause Noticewasissuedsubsequentlyandfirsthearingdatewasgiven21-2-2012. The appellant at the time of filing the appeal annexed Two (2) order-in-originals, one Order-in-Original bearing No. 69928 attached as Annexure "A" and another Order-in-Original No.65598 attached as Annexure "B". Evidently, VIR No., GD No., and BL No. are same in both orders, but the description and particulars are entirely different. The Order-in-Original No.69928 under which the date of hearing was given as 21-2-2013 and on the date of hearing, the officer designated, who adjudicated the subject proceedings and passed the order found absconded from his designation and column of designation was kept blank, but the column indicated the amount of fine as Rs.4319183.0000. After scrutiny of the 2nd order-in-original, from the face of that order it transpires that the date and time of detection is mentioned as 12-1-2013 and hearing date was given by the Additional Collector (Adjudication) as 15-1-2013, the reason better known to the department, the said order was issued on 14-1-2013, one day prior to the hearing date. From caption of both the order-in-originals a very crucial deficiency/illegality has been noticed about the date of detection of the subject case. On that particular point, the departmental representative had not been able to satisfy the Tribunal.

8.Inspite of that, he submitted a copy of the detail preview of Order-in-Original No.65598. The observations given in the paras 8, 9 and 10 of the said impugned order are of vogue in nature and have no legal warrant in support thereof which are patently violative and transgressed from the legal jurisprudence, specially the new concept of round about procedure which is the trite law was introduced during the hierarchy of the customs. It is settled elementary principal of law that, actionof executive functionaries are to be restricted to specific sphere permitted by the statute. If the superior or sub-ordinates authority started exercising powers of their subordinates/superiors, the hierarchy of distribution of jurisdiction explicitly provided by section 179 of the Act and S.R.O. 371(I)/2002 dated 15-6-2002 shall be rendered redundant. Also the consequent result would be a total anarchy where the superior officers would be making all efforts to exercise the adjudication powers clearly conferred by law upon their subordinates. The powers of adjudication are specific and empowered by the statute and Rules and Regulation framed there under. It is an elementary principle of law that where there is a conflict between special and general provision of law, the special provision shall prevails (reference is invited to the case of Lt. General (Retd.) Shah Rafi Alam v. Lahore Race Club, PLJ 2003 Lab 1660). The power of adjudication, as already observed, is, special in nature. This cannot be eclipsed by any other general provision. Even otherwise there isanother settled principle of interpretation of statute i.e. that the courts can supply construction with a view to avoidingabsurdity (reference is invited to the case of Khalid Qureshi v. UBL 2001 SCMR 103. Equally it must be kept in mind that if it is held that sections 4 and 179, occupy the same fields, there is likely to be redundancy in respect of powers conferred under section 179 and S.R.O. 371(I)/2002 dated 15-6-2002. The Supreme Court in the case of East West Steamship v. Queen Land Insurance PLD 1963 SC 663 has been pleased to hold that redundancy is to be avoided in respect of any provision of the statute and Rules and Regulation framed there under (reference is invited to the case of Sahibzada Sharfuddin v Town Committee, 1984 CLC 1517. Apart from this law favour actions of the authorities to be confined to their own spheres of jurisdiction conferred by the statute. An aotio taken by a state functionary beyond the ambit of his jurisdiction is nullity. In this respect the judgment reported as Abida Rashid v. Secretary, Government of Sindh PLD 1995 Kar. 587 is referred. Their lordship observed as under:--

"it is trite law that power vested in an authority should only be exercised by that authority, in default whereof, the exercise of power and authority becomes without jurisdiction, illegal, void, ab initio and of no legal effect. The term "without jurisdiction" has been judicially interpreted to include usurpation of power warranted by law (the Chief Settlement Commissioner Lahore v. Raja Muhammad Fazil Khan and others PLD 1975 ??? @ p.339) an act done which the person doing, it has no jurisdiction at all to do or which was clearly outside the scope of his activities (The State v. Zia-ur-Rehman PLD 1973 SC 49) and a judgment or order delivered by a court or a judicial or a quasi judicial authority not competent to deliver it (Muhammad Saleh and others v. MessrsUnited Grain and Fooder Agencies PLD 1964 HC 97). The Constitution jurisdiction can thus be exercise when it is shown that the order is passed without jurisdiction or in excess of jurisdiction. As observed earlier the respondent No. 1 has no jurisdiction to pass the impugned order. As such we declare the same to be of no legal effect. Accordingly, we allow this petition but leave the parties to bear their own cost".

9.It is needless to observe, that our Supreme Court has jealously guarded the same. In Assistant Director v. B.R. Herman Mohata Ltd. PLD 1992 SC 485. A full bench of Supreme Court was pleased to observe that section 223 of the Customs Act, 1969 could not be employed so as to interfere with the judicial or quasi judicial functionaries. It was clearly observed that the power of the FBR as to prescribed guideline were not relevant for the exercise of judicial function. To similar effect is the judgment of Supreme Court reported as Central Insurance v. CBR 1993 SCMR 1232. In this case the FBR issued direction for the reopening of Income tax Assessment under section 65 of the Income Tax Ordinance, 1979. It was held by the Supreme Court that the FBR did not figure in the hierarchy of the officer provided in the statute for the purpose of assessment and adjudication. On the basis of this it was held that the directions of the FBR to reopen the assessment was without jurisdiction and the adjudication officer was directed to apply its own mind. Reliance is placed on the order of the Tribunal in S.T. Appeal No.5 of 2007 MessrsMuller and Phipps Pakistan (Pvt.) Ltd. v. The Collector of Sales Tax Enforcement LTU, Karachi and 2010 PTD (Trib.) 1787. In this case, if it is so, the powers used under section 195 of the Customs Act, 1969 by the respondent are also used without warrant of law.

10.Evidently, it has also been observed that the respondent failed to produce the iota of evidence in support of their claim neither any date on the basis of which the appellant's transactional value is ignored and enhanced the same without applying the proper provision of law. The respondent deliberately escaped from the principles of section 25 of the Customs Act, 1969 which vested the jurisdiction to comply with in case of any enhancement. The subject desperate attempt made by the respondent at the time of enhancement of the value without the support of any data or evidence cannot be accepted and fail to pass the test of its legal admissibility. In absence of material on record and subsequently speaking order affirming the impugned verification of price is only on the basis of apprehensions, importer/appellant ought not to be saddled with an attributed value to sustained liability which has no warrant under the law and such kind of observations if so made are held illegal, void and ab initio by the Superior Courts, in the case reported as PTCL 2008 CL 203, the Honourable Court observed that the rejection of declared goods and fixation of its enhanced value without disclosing adequate material or reason is arbitrary, whimsical, capricious and incomplete disregard of section 25 of the Customs Act, 1969. It is also observed fromthe record that the guidelines regarding the assessment of value was given separately for the assessment, the officer concerned has a jurisdiction to comply with from that table, the only difference in between China origin to others is 50 penny's which is nominal and the enhancement made thereon without disclosing any evidence or given reason of such enhancement are without applying the judicious mind and arbitrary in nature. It is also observed from the record that the subject consignment was imported from China, the detail mentioned in the bill of lading certificate of origin issued through combined declaration under FTA packing list commercial invoice as well as the GD produced by the appellant as evidence in support of their case clearly substantiated the whole controversy and there is no element of mens rea found or caused by the appellant under which the alleged offence can be attributed against the appellant. The statement or declaration made under bona fide belief or in presence of any departmental practice or interpretation in vogue or view held by the departmental officers shall not be a mis-declaration within the contemplation of subsection (1) of section 32 of the Customs Act, 1969. The matter of interpretation is also not a matter of mis-declaration. Consequent to the above discussion the controversy raised in the subject matter as per show cause notice has not qualify the test of warrant under the law.

11.It is the duty and obligation of the public functionaries to redress the grievance of the citizens as is envisaged by Article 4 of the Constitution without fear, favour and nepotism. The Hon'ble Supreme Court has laid down the guide lines for the public functionaries to act within the frame-work of constitution and law in Zahid Akhtar's case PLD 1995 SC 530.

12.By getting the strength from the aforesaid observation made by the superior courts and further observation made thereon, the subject appeal is allowed and declared that, the whole proceedingsare infested with inherent legalinfirmities, in utter disregard of principal of law settled by the Superior Judicial fora, hence impugned orders passed during the hierarchy of the Customs including show-cause notice are declared null and void and hereby set aside. The respondents are also directed to issue delay detection certificate in accordance with law.

13.Order passed accordingly.

SAK/98/Tax(Trib.)Appeal accepted.