TAYIABA KHATOON VS The COLLECTOR, COLLECTOR OF CUSTOMS (APPEALS)
2014 P T D (Trib.) 1
[Customs Appellate Tribunal, Karachi]
Before Ghulam Ahmed, Member (Technical-II)
Messrs TAYIABA KHATOON and others
Versus
The COLLECTOR, COLLECTOR OF CUSTOMS (APPEALS) and 2 others
Customs Appeals Nos.K-736 to K-740 of 2011, decided on 13/09/2013.
(a) Customs Act (IV of 1969)---
----Ss. 32, 32-A, 131(i)(a) & 156(1), (14), (14-A)---Customs Rules, 2001, R.444---Show-cause notice---Mis-declaration---Fraudulent refund/ rebate---Appellant exported consignment of Adhesive Decorative Laminated Sheets in different sizes and colours and also received drawback amounts---Show-cause notice was issued to appellant alleging that the quantity of goods claimed to be exported was much higher than the quantity of identical goods normally being exported per container by other exporters---Appellant was found guilty of mis-declaration and non-genuiness of exports in order to get fraudulent refund and rebate---Additional Collector of Customs after serving show-cause notice found that rebate claimed by appellant was illegal, therefore ordered for recovery of drawback/rebate amount along with penalty---Appellant being aggrieved by order-in-original filed appeal before Collector of Customs (Appeals), the same was rejected---Contention of the appellant was that goods declared in the export goods declaration were allowed to be shipped by the MCC and PaCCS after terming the declaration as correct and examination of the goods---Appellant had not submitted any fake documents, even otherwise no objection with regard to documentation or description of the goods could be raised post exportation---Validity---Appellant was under obligation to transmit correct and complete particulars of the goods while transmitting "Goods Declaration" with PACCS---E-form submitted by the appellant along with "Goods Declaration" was not traceable by the Bank---Declaration of the goods exported by the appellant was vague---Appellant had not intentionally declared the sizes of laminated sheet in the declaration of goods exported, and so the square meter which was a must as stuffing of laminated sheet in the container was on the basis of CBM not on weight, for deceiving the system---Grammage of sheet had been incorrectly declared---Declaration with regard to description, quantity and value was false in material particular, the same had attracted proceedings under the respective applicable provisions of the Customs Act, 1969---Goods had not shipped physically as declared, therefore the appellant was not entitled for duty drawback---Impugned orders were upheld---Appeal was dismissed.
(b) Customs Act (IV of 1969)---
----Ss. 32, 32-A, & 156(1), (14), (14-A)---Customs Rules, 2001, Rr.459 & 460---Show-cause notice---Mis-declaration---Fraudulent refund rebate---Finalized case of duty draw back---Past and closed transaction---Scope---Appellant was found guilty of mis-declaration and non-genuiness of exports in order to get fraudulent refund and rebate---Customs authorities after serving show-cause notice, ordered for recovery of unlawful drawback along with penalty---Appeal by appellant before Collector of Customs (Appeals) was dismissed---Contention of the appellant was that the transaction was past and closed and had attained finality and as such the subject matter could notbe re-opened,thereforetheimpugnedorderswereillegal---Validity---Customs authorities had power to reassess the goods declaration any time during five years of clearance of the goods for export along with a fine---Customs authorities had power to conduct audit of the finalized cases of duty drawback---Assessing officer had declined the application of duty drawback, to the contrary the duty draw back had been sanctioned fraudulently---Plea raised by the appellant was misconceived---Impugned orders were upheld---Appeal was dismissed.
(c) Administration of justice---
----One who seeks equity must have equity in his favour.
West Pakistan Tanks Terminal (Pvt.) Ltd., v. Collector of Customs Appraisement Karachi 2007 SCMR 1318 rel.
(d) Customs Act (IV of 1969)---
----S. 32---Show-cause notice---Practice of serving draft show-cause notice ---Scope---Additional Collector of Customs had signed the draft show-cause notice forwarded by the official of Post Clearance Audit or prepared on the strength of contravention report received by the Collectorate without going through the provisions of Acts/Rules---Practice of serving draft show-cause notice was depreciated and failed the test of judicial scrutiny.
Messrs Zeb Traders v. Federation of Pakistan 2004 PTD 369 rel.
Sardar Muhammad Ishaque (Advocate) for Appellant.
Ghulam Yasin (P.A.) for Respondent No.2
Faiz Mudassar (A.O.) for Respondent No.3.
Date of hearing: 10th September, 2013.
ORDER
GHULAM AHMED MEMBER (TECHNICAL-II).---By this order, I intend to dispose of above captioned (5) Customs Appeals filed by the appellants against Orders-in-Appeals Nos. 5288 to 5292 of 2011 dated 14-5-2011 passed by respondent No. 1. These appeals have identical issues of law and facts therefore, being heard, dealt with and disposed of simultaneously through this common order in the light of judgment of the Hon'ble High Court of Sindh in Custom Reference No. 157 of 2008 S.M. Naqi son of Syed Muhammad Hussain, Karachi v. Collector of Custom (Adjudication-1) and others, Karachi.
2.Brief facts of the case are that Directorate General of Post Clearance Audit, Karachi has reported vide its Contravention Report C. No. PCA/951/2009/453 dated 22-2-2010, that Messrs Tayiaba Khatoon, (NTN 2094960),A-200,Sector11-B,NorthKarachi,havefileddutydrawbackclaimsvideGoodsDeclaration(GD)bearingCRNNo.E-G-560037-060308 (one container), against the alleged expert of goods declared as Adhesive Decorative Laminated Sheets in Different Sizes and Colours and E-form Nos. ABL-9774, accordingly, the cheques bearing No. 157979 amounting to Rs.1517813 as drawback amounts were also received by Messrs Tayiaba Khatoon (NTN 2094960), A-200, Sector 11-B, North Karachi. The aforementioned claims however, revealed the following discrepancies in the referred claims: (i) that the concerned bank has confirmed that no remittance has been received against the referred E-forms, confirming mis-declaration and non-genuineness of exports. (ii) That the quantity of goods claimed to be exported i.e. 90,000 sheets is much higher than the quantity of identical goods normally being exported per container by other exporters leading to the conclusion that the quantity of goods was misdeclared. Similarly the declared values of the consignments, i.e. US $ 248,625 (GD 569937-060308) is much higher than normal export values of the goods per container (iii) That the claimant has attempted to deceive the computerized clearance system by adding nominal quantities of irrelevant items e.g. cotton dyed jean pants suits etc in the CRN. (iv) That the declared unit values are exorbitantly high and not in consonance with the value of the raw material used in the manufacture, both on per unit and per kg basis. (v) That the weight or the sheet is declared to be about 177 grams/sheet which is abysmally low for a decorative laminated sheet(vi) That the rebate claimed on Laminated Sheets was inadmissible because as per the declared weight per sheet, the grammage of sheets allegedly exported did not conform to the specification of the imported raw materials required to be used in the manufacture. (vii) That the cheque of duty drawback amount has been received by hand by Messrs Tayiaba Khatoon and not through AD post/courier at their business address as per Rules. (viii) That the address mentioned on the claims is found to be fictitious as Messrs Tayiaba Khatoon /her unit have been found non-existent at the given address upon physical verification.
3.The Additional Collector of Customs, MC of PaCCS Karachi, did not agree with replies of respondent and passed the Order-in-Original No. 14 of 2011 dated 12-2-2011 reproduced as under:--
"I have gone through facts and record of the case and the submissions made by both the sides. The respondents have raised some technical issues which need to be discussed here. I do not agree with the contention of the respondents that the export of goods in question is a past and closed transaction are cannot by reopened. The section 32 specifically empowers the customs officers to raise the demand in cases of finalized assessment where due duties and taxes were not deposited or undue refund was allowed. Moreover, reference to section 29 of the Customs Act, 1969 is also irrelevant as the same relates to amendment of Goods Declaration (GD) by the importer and does not rule out raising of demand by the department after clearance of goods as a result of short payment of duty and taxes or payment of refund which was not due. The respondents contest the issuance of show-cause notice under section 32 of the Customs Act, 1969, and maintain that the assessment finalized under section 83 of the Customs Act, 1969, can only be reopened under section 195, ibid. The contention is not admitted on the ground that section 195 does not preclude any other action which could be taken under law for recovery of unpaid or short-paid amount of duty or tax or refund not due. Section 32 of the Customs Act, 1969, is to be invoked once the assessment has been finalized and goods have been cleared. If the contention of the respondents is accepted, section 32 would become redundant and such interpretation of laws is not acceptable. It is thus held that the show-cause notice has been validly issued under section 32 of the Customs Act, 1969. The respondents also maintain that section 32 of the Customs Act, 1969, is not attracted as no case for mis-declaration is made out. This is not correct. The sections 32 and 32A relate to cases where false and forged document are submitted before Customs. In this case fake E-form was submitted. Moreover, various particulars of goods such as weight have been found to be incorrect. Therefore, both sections 32 and 32A are relevant. In this case, mis-declaration of classification was of material nature and calls for action under section 32(1) and (2) and imposition of penalty. The respondents' contention that the audit report of Post- Clearance Audit has not been provided is also baseless as the all relevant details have been provided in the show-cause notice and contravention report which was part of the show-cause notice and can also be treated as audit report. They also maintain that in some cases the refund/rebate WHS allowed on the directives of Honourable Federal Tax Ombudsman. It is observed that Honourable Federal Tax Ombudsman deals with cases of maladministration and usually orders to expedite rebate/ drawback cases on merit. The office of Federal Tax Ombudsman does not decide issues of admissibility in refund/rebate cases. This contention, therefore, does not establish the correctness of the rebates/drawbacks obtained. The other contentions of the respondents on technical grounds have been found irrelevant to the facts of the case. Coming to the merits of the case, it is noted that the departmental case is/mainly based on bank reports regarding incorrectness of the E-forms declared by the respondents. In this case, MessrsEmirates Global Islamic Bank vide letter dated 25-11-2009 and MessrsHabib Metropolitan Bank Ltd. vide letter dated 23-12-2009 have intimated about the incorrectness of the E-forms involved. After taking into consideration the factual and legal motion , I am convinced that the exporter has forged/mis-declared the value of Form-E on the Goods Declarations involved in order to get fraudulent refund and rebate. This fact supported by other corroborative facts such as excessive value and quantity as compared to averages as mentioned in para 2 above, leads to the conclusion that the drawback/rebate obtained in this case was not admissible. Therefore, it is ordered the demand of Rs.4,858,994 is established and the same is ordered to be recovered from the respondents. A penalty of Rs.50,000 is also imposed on the importer under Clauses, 14 and 14A of section 156(1) of Customs Act, 1969."
4.Being aggrieved and dissatisfied with the Order-in-Original No.14 of 2011 dated 12-2-2011, the appellant filed an appeal before the Collector of Customs (Appeals) Karachi, who rejected the same on the following grounds:--
I have thoroughly examined the entire case record and given very careful consideration to the arguments advanced before me. In terms of the provisions of law contained in section 195-B of The Act, the Collector (Appeals) is not allowed to proceed with an appeal unless the appellant deposits the adjudged amount of duty/taxes and/or penalty or the Collector (Appeals) himself dispenses with such deposit. The aforesaid provisions of law are reproduced as under:-
"195-B. Deposit, pending appeal, of duty demanded or penalty levied. Where, in any appeal under this Chapter, the decision or order appealed against relates to any duty demanded in respect of goods which are not under the control of the customs authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, pending the appeal, deposit with the proper officer the duty demanded or the penalty levied:
[Provided that where in any particular case the Collector (Appeals) or the Appellate Tribunal is of the opinion that the deposit of duty demanded or penalty levied would Cause undue hardship to such person, the Collector (Appeals) or, as the case may be, the Appellate Tribunal may dispense with such deposit subject to such conditions as he, or it, may deem fit to impose so as to safeguard the interest of revenue.]
[Provided further that an order dispensing with such deposit shall, without effecting the appeal, cease to have effect on the expiration of a period of six months following the day on which it is made unless the appeal is finally decided earlier and nothing in the order dispensing with such deposit which as ceased to have effect shall debar the appropriate officer to recover the amount of the duty demanded or penalty levied.]
In the instant case, it was verbally communicated to the learned counsel that since the appellant did not have any case on merit, the requirement of deposit of the adjudged of fraudulently drawn amount of duty drawback and penalty could not be dispensed with. It is, however, reiterated that the goods on which duty drawback to the Rs.15,17,813 was drawn by the appellant had been exported against fake Form and sale proceeds of the same had also not been realized. The learned counsel appearing on behalf of the appellant could not produce the requisite BCAs (i.e. the evidence of realization of the sale proceed of the purportedly exported goods) despite his categorical commitment. Moreover, significant mis-declaration with regard to weight value and specifications of the goods had surfaced on scrutiny of the case record. It is, therefore, evident that the amount of Rs.15,17,813 had been unlawfuly drawn from the Exchequer by using fraudulent means by the appellant. Under the circumstances, the learned counsel's plea of strong case on merit is belied by the evidence on record and his consequent plea for non-deposit of the adjudged amount is untenable. In such a situation, I am of the considered view that dispensing with the requirement of deposit of the aforesaid amounts, stipulated under section 195-B of the Act, would cause hardship to the Exchequer. Therefore, I reject the appeal for non-compliance of the provisions of section 195-B of the Act.
5.Being aggrieved and dissatisfied with the Order-in-Appeal, the appellant filed the instant appeal before this Tribunal on the grounds as under:--
(1)That the appellant is a businessman by professional in a legal manner and running his business in a lawful manner accordingly, the appellant has never indulged in activities in derogation of law, they supply their product to maintain all the prescribed record of the Customs and Sales Tax, properly and on of liable Duty and Taxes without fail, honestly, diligently and regularly pay, for the last many years.
(2)That the appellant is a registered person, duly registered with the Sales Tax Department and regularly filing monthly Sales Tax Return-cum-Payment Challan within due date. Since the date of registration no audit objection or any other irregularity has been communicated by the department up-till now.
(3)That the appellant has not violated the provisions of the Customs, Sales Tax Act and Rules issued thereunder, the appellant are discharging their taxes liabilities in accordance with the provisions of the Acts and contributing revenue to the public exchequer but the respondent with their mala fide intention and with their ulterior motives tried to involve the appellant in the unlawful case of evasion of duties and taxes.
(4)That the objection raised by the respondents are illegal, wrong, unconstitutional, vague, absurd, unlawful, unjust, absolutely incorrect, baseless, is null and void in the eyes of law, in all regards and wastage of precious time of this Honourable Authority, hence the same is liable to be vacated the show-cause notice, waived the penalty and set-aside the impugned orders, passed by the respondents, in the best interest of justice.
(5)That the learned respondents has passed the impugned orders just being an EXECUTIVE OFFICERS and NOT BEING A JUDICIAL OFFICERS, therefore, the impugned orders being styero type/non-speaking order and devoid of reason same is not substantiated in law as laid down by the Superior Court. Furthermore the respondent failed to apply his judicial mind to the submissions made by the appellant. The decision of the learned respondent; is therefore, capricious, arbitrary, unjust and illegal, it is against the law; it is liable to be vacated the show-cause notice and set-aside the impugned order, passed by the respondent, following identical cases:--
d. 1984 SCMR P-1014 b. PLD 1970 SC 158
c. PLD 1970 SC 173a. PLD 1959 SC 2721
(6)That the allegation the appellant unit have been found nonexistent, it is illegal and against the law, therefore, this allegation is denied, because the appellant is available on own address, and received the FTO letters/decision, others letters, Bills, and the appellant received all respondents letters i.e. show-cause notice, hearing notices and Order-in-Original, thorough courier at the appellant registered address, the appellant is found and existent the given address, therefore, may kindly check the record thoroughly and withdraw thisallegation, in the best interest of justice. (Photocopies are enclosed) as.
7.That the appellant as per their business routine has purchased the goods, through various Sales Tax Invoices from other registered persons, which imported the raw materials by the other registered persons, the same was mentioned in the Purchased Registered, filed the monthly Sales Tax Return-cum-payment challan within due date by the appellant and other registered persons. The same was supplies/consumed as exports the consignments, through Bill of Export, along with complete supporting documents, the EG was filed/submitted by the Exporter, as required under relevant Rules with the Model Collectorate of Customs (PaCCS), declaring therein complete, correct and true particulars of the goods, without concealing actual goods, duly supported by Commercial Invoice, Packing List, Bill of Lading, required for clearance as export of such goods in such form and manner as the Board may prescribe. (Photocopies are enclosed) as. The Customs concerned staff process/ examination/scrutiny the relevant documents and physical examination of the goods, the EG and shipping bill are also cleared, release/allowed for export the same and out of charge the EG, as per under sections 37 and 41 of the Customs Act, 1969, read with Notification S.R.O. 931(I)/07, during the said periods, under sections 37, 40 and 41 of the Customs Act, 1969, read with section 3 as under:--
Section 37.
Drawback on goods used in the manufacture of goods which are exported. Where it appears to the Board that in respect of goods of any class or description manufactured in Pakistan and exported to any place outside Pakistan, a drawback of customs duties should be allowed on any imported goods of a class or description used in the manufacture of such exported goods, the Board may, by notification in the Official Gazette, direct that drawback shall be allowed in respect of such imported goods to such extent and subject to such condition as may be provided in the rules.
Section 40.
Time of payment of drawback.---No such payment of drawback shall be made until the vessel carrying the goods has put out to sea or other conveyance has left Pakistan.
Section 41.
Declaration by parties claiming drawback.---Every person or his duly authorized agent, claiming drawback on any goods duly exported, shall make and subscribe a declaration that such goods have been actually exported and have not been re-landed and are not intended to be re-landed at any place in Pakistan and that such person was at the time of entry outwards and export and continues to be entitled to drawback thereon.
(8)Thattheappellanthasactuallyexportedtheconsignmentsand have not been re-landed and are not intended to be re-landed at any place in Pakistan. The Federal Board of Revenue is pleased to authorize repayment of customs duties to the extent specified in FOB value, vide S.R.O. 611 and 931(I)/2007 dated 11-9-2007, paid on the importation of the raw materials specified in the exported goods, used in the production or manufacture of the goods and exported, that such person was at the time of entry outwards and exported the same, the appellant is entitle for refund the rebate claim as per S.R.O. 931(I)/2007, the processing authority rightly all documents verified and all calculation of weight, grams, qty, value checked and ten process the rebate claim and sanction the refund claim, therefore, may kindly vacate the show-cause notice and set-aside the impugned orders, passed by the respondents, in the best interest of justice. (Photocopy of the S.R.O. No.931(I)/2007 is enclosed) as.
(9)That the appellant actually exported the goods through relevant documents and Form-E No.ABL-0009774, value of US$.2,48,625 may kindly verified the Form "E" from concerned bank and the appellant, export the some nominal quantities of cotton dyed jean pants suits etc., for sampling the same and the examiner, examine the same and then release the same. If any value or weight problem, the competent authority is accepted the declared value by the appellant at the time of export, now why this objection made after the goods are exported, therefore, it is illegal and against the law and they are now made out the objection on the basis of presumption, it is against the law, the allegation of bogus from "E" numbers raised by the respondents, his false, none of the form "E" numbers as mention in the show-cause notice are bogus in fact those form "E" were obtained by the appellant from concerned bank, through proper channel, form "E" or exports are the format of State Bank of Pakistan and after the release of Goods Declaration, it can be lodge in any of the banks were the appellant maintain bank account as per the rules of State Bank of Pakistan. Furthermore, the appellant filed Complaint No. C-1217-K, before the Honourable FTO, the Honourable FTO, finding/decision, relevant para 13 is reproduced as under:--
"(i) to examine the pending duty drawback claim, decide it on merits after ascertaining the export value of Laminated Sheets,-----------"
The Honourable Collector of the respondent; informed to the FBR, through letter No.MCC/FTO/25/2008 dated 8-8-2008, "the compliance of decision in respect of disposal of pending duty drawback claims of the complainant is being made. Honourable FTO may be informed accordingly," and the FBR already informed to the Honourable FTO, vide letter C.No.1(1217)S(TO-II)/08 dated 16-8-2008. (Photocopies are enclosed as Annex J and K). The refund was sanction by the respondent, after Honourable FTO, order, neither they are challenge the Honourable FTO Order, before the Honourable President of Pakistan nor file the review, before the FTO, therefore, Honourable FTO order is now finalized and now the Customs Department objection raised by the respondent's is incorrect, illegal, wrong, unconstitutional and vague, absurd, unlawful, unjust, absolutely incorrect, baseless, is null and void in the eyes of law, in all regards and wastage of precious time of this Honourable Authority, hence the same is liable to be vacated the show-cause notice and set-aside the impugned order, passed by the respondent, in the best interest of justice.
(10)That the word "order" was interpreted in Noor Muhammad v. Member Judicial-FER, reported as PLD 1986 Lah.237 as follows:-
" .............................. the word 'order' is not being a term of art has no fixed legal meaning. According to Prem's, Judicial Dictionary, it covers commands or directions that something shall be done ........................ the terms order in general is comprehensive enough to include all kinds of order including a formal order."
The word 'order or decision' as used in section 193 of the Customs Act, 1969 were interpreted by a Division Bench of Appellate Tribunal in Shaikh Muhammad Saeed and Co., v. Deputy Collector reported as PTCL 1997 CL 206, in which while relying upon Secretary of State v. Mask and Co., AIR 1940 PC 105, it was observed that the words 'order or decision' are not circumscribed by any specified form or format. Thus the order passed by an appropriate officer of Customs at the time of release is an order in terms of section 193 of the Customs Act, 1969.
(11)That the Adjudication by qusi-judicial and judicial hierarchy appointed in the Customs Act, 1969 any order, assessments order passed in terms of under section 79 read with sections 80 and 83 of the Customs Act, 1969 is challengeable order i.e. the same was an appealable order in terms of section 193 ibid., to the Collector Appeals by the aggrieved person which of course does not include the Customs Officers. In the present case the assessments were finalized by the Customs Officers through assessment orders in terms of sections 80 and 83 of the Customs Act, 1969. These orders if issued against the taxpayer could have been assailed by the taxpayer in terms of section 193 of the Customs Act, 1969 with the Collector (Appeals). Since the officers of customs have no right to assail these orders in terms of section 193 ibid there is a course defined by the legislature in section 195 of the Customs Act, 1969 for reopening of such cases where legality or proprietary of any decision or order passed by subordinate officer is in question. If for any reason, the concerned Customs Department were aggrieved with the order/ assessment/sanction order issued by the Competent Authority they were under legal obligation to proceed with in terms of under section 195 of the Customs Act, 1969, but they failed to comply with such provisions of law and against which no appeal was even filed, therefore the assessment order is finalized. The subject goods were assessed to customs duty on the basis of physical examination by more than dozens of officers who were on duty on different dates during the said period. It may be noted that these officers also scrutinized the customs/commercial documents presented by the appellant to them and after exercising their authority expertise and wisdom allowed the clearance of these goods to the appellant. In view of the aforesaid exercise spread over a long period, the respondents at this belated stage are not allowed to take a complete U-turn on the basis of unfounded assumptions and presumptions by importing assumed deficiencies into the body fabric of the relevant statute namely PCT heading and start adjudication of past and closed transaction through issuance of show-cause notice and adjudication order under section 179 of the Customs Act, 1969.
(12)That the appellant, exported a consignment and sought its release by asking the Customs to examine the goods under first examination, accordingly, the assessment proceedings were completed and release of the consignment as allowed in term of section 83 of the Customs Act, 1969, after completion of all the required formalities in line with the directive of CGO 12/2002, without any objection/reservation same has taken its finality and shall be treated as closed transaction which can not be reopened as a routine merely on the basis of any advisory and reopening the same without following a proper order required procedure as laid down under section 195 of the Customs Act, 1969. That Customs Department or any other agency was not competent to re-assess the goods unless and until a closed transaction is re-opened by a competent officer under the Customs law, i.e. under section 195 of the Customs Act, 1969, this issue already decided by the Honourable Appellate Tribunal, vide Customs Appeal No. K-241 of 2001 (Photocopy is enclosed as Annex L) relevant paras 9 and 10 are read as under:-
"9. As regards the issue that whether or not the act of reassessment of the goods was legal, it is observed that in terms of section 83 of the Customs Act, 1969, the assessment has been completed and another authority of the same level was not competent to re-assess the same. The Customs Act, 1969 provides a mechanism for corrective process, for example, matter can be reopened in terms of section 195 of the Customs Act, 1969 by a competent authority. However no such action was ever taken in this matter. Hence the re-assessment proceedings initiated by an incompetent authority were ab initio not warranted by law.
10. Having said that, this appeal is accepted and the impugned orders are set aside."
(13)That the action of issuance of the show-cause notice was ab initio wrong in as much as that the competent authority who did pass the assessment order was satisfied in respect of their claim and the authority who did issue the show-cause notice was not competent to reopen a past and closed transaction with the framework of Customs Act, 1969. That except the provisions contained in under section 195 of the Customs Act, 1969, there is no other provision in the Customs Act, to re-start an investigation in a matter finally decided by a competent authority, reproduce the provisions of subsection (1) of section 195 of the Customs Act, 1969, the same are as under:-
"195. Power of Board or Collector to pass certain orders.---(1) The Board or the Collector of Customs may, within his jurisdiction call for and examine the records of any proceedings under this Act for the purpose of satisfying itself or, as the case may be, himself as to the legality or propriety of any decision or order passed by a subordinate officer and may pass such order as it or he may think fit; Provided that no order confiscating goods or greater value or enhancing any fine in lieu of confiscation, or imposing or enhancing any penalty, or requiring paymentofanydutynotleviedorshortleviedshallbepassed unless the person affected thereby has been given an opportunity of showing cause against it and of being heard in person or through a counsel or other person duly authorized by him."
(14)As per the said provisions of the Section, any proceedings under the Customs Act, 1969 and Sales Tax Act, 1990 is subject to review either by -the CBR or by the respective Collector, and that too for satisfying in respect of legality or propriety of any decision or order passed by a subordinate Customs and Sales Tax Officer. There is no other provision in the act authorizing a Customs and Sales Tax, functionary to review or re-open a past or closed transaction, and no amendment of is allowed, under section 29 of the Customs Act, 1969. Only Collector, is empower to condone the examination or defer the examination of imported goods or class of goods, under subsection (5) of section 80 of the Customs Act, 1969. Hence the outcome of observation, whereby an auditor of Customs or Sales Tax Department has observed that there existed a procedural impropriety in assessment order or sanctioned refund orders, is an action within the purview of section 195 of the Customs Act, 1969 and under section 45(A) of the Sales Tax Act, 1990. The act of sanctioning or rejection of a refund claim fall within the purview of the word, "proceedings," As all the happenings or events any other authority on which jurisdiction is conferred by way of contentious matters are understood by the term proceedings. Therefore, the proper way to dispose of the objection was to place it before the Collector for initiation of proceedings as envisaged therein. It is now well settled principle of law that where a statute prescribes a particular mode or mechanism to do act, the same is to be done in the same manner and within the framework of the relevant legal provisions. As such the issuance of show-cause notice by an incompetent authority would be an act lacking jurisdiction to do so.
(15)That the fact cannot be denied that the goods imported by appellant have been assessed by competent officer exercising power under section 79 read with section 80. This assessment order becomes a final order after the lapse of time period for filing an appeal against the said order. Such right of appeal has not been given to Customs authorities in terms of section 193 of the Customs Act, 1969 in order to reopen a past and closed transaction, the only recourse available for the respondent was to initiate action within the framework of Section 195 of the Customs Act, 1969 as it is a settled law that assessment orders are appealable and where an appeal has not been filed, the matter was to be reopened by a competent and authorized officer under section 195 of the Customs Act, 1969 and failure to do so would render the initiated proceedings as being illegal and not warranted by law. The Honourable Sindh High Court in Smith Kline French v. Pakistan, has held that once an order is passed which attains finality, the same cannot be subject to a show-cause notice against. Considering that no appeal or revision is filed against the first order. This was held by the learned High Court to be in derogation of the principles of administration of justice.
(16)That the same identical another cases already decided by the Honourable Appellate Tribunal and Honourable Superior Courts, detail as under:-
(a)Appeal No.K-2352/99 in respect of Messrs Uni-tex Towel.
(b)Appeal No.K-106/03 in respect of Messrs Silver Corp.,
(c)Messrs Punjab Feeds (Pvt.) Ltd., v. Assistant Collector of Customs, Lahore, reported in 2002 CLC 705.
(d)Another judgment reported in 2009 PTD 246.
(e)Messrs Khan Trading Co., Gujranwala v. Collector of Customs, Lahore, reported in PCTLR 2002 1247(sic). "any order of assessment passed on the reverse of the bill of entry appears to be appealable." 201 PTD (Trib.) 335(sic), Export processing authorities which examined, assessed and allowed exportation of the goods were not authorized to carry out post clearance audit and issue the show-cause notice.
(g)2010 PTD (Trib.) 283
(h)2010 PTD (Trib.) 472
(i)2010 PTD (Trib.) 893
(j)2010 PTD (Trib.) 2523
(k)Appeal No. K-54/09, decided on 20-5-2009, reported in 2010 PTD (Trib.) 1759. "That in a case of reopening of Sales Tax refund claim that once the disputed claims of the appellants were scrutinized by the competent authority and after being satisfied with the legality and propriety the same were sanctioned, that could not be reopened by the same authority as they are a past and closed transaction. The Order so passed attained finality through limitation. A fortiori orders attained finality cannot be disturbed at any later stage by any authority including FBR."
These judgment relied upon by the appellant are relevant on this point and have been reported as 2004 PTD 3020, 1990 PTD 155, 1989 MLD 4310 and1984 MLD 4310. (Photocopies are enclosed as Annex M, N and O). The Tribunal went on to observe that show-cause notice issued was incompetent and beyond jurisdiction in terms of judgment of the Honourable Supreme Court of Pakistan reported as PLD 1971 SC Page 197, in the case of Chittaranjan Cotton Mills Ltd. their lordships of the Honourable Supreme Court had observed, and relevant extract being as under:--
"Where the court is not properly constituted at all the proceedings must be held to be coram-non-judice and therefore, non-existent in the eye of law. There can also be no doubt that in such circumstances "it could never be too late to admit and give effect to the plea that the order was a nullity, as was observed by the Privy Council in the case of Chief Kwame Asante, Tredahone v. Chief Kwame Tawia 9 DLR 686 (PC)."
(17)In Raunaq Ali's case reported PLD 1973 lordships of the Honourable Supreme Court, did following terms:--
"It is now well established that where an inferior tribunal or court has acted wholly without jurisdiction or taken any action "beyond the sphere allotted to the tribunal by law and, therefore, outside the area within which the law recognizes a privilege to err" then such action amounts to a "usurpation of power unwarranted by law" and such an act is a nullity, that is to say, "the result of a purported exercise of authority which has no legal effect whatsoever", In such a case, it is well established that a Superior Court is not bound to give effect to it, particularly where the appeal is to the latter's discretionary jurisdiction. The Courts would refuse to perpetuate, in such circumstance, something which would be patently unjust or unlawful."
(18)That the judgment reported as 2009 PTD 467, the Honourable Lahore High Court in respect of application of section 32 of the CustomsAct, 1969hasobservedthatonceaconsignmentisout of charge after due consideration of relevant facts it becomes a past and closed transaction. Another judgment reported a 2009 PTD 246, the Honourable Lahore High Court, (Photocopy is enclosed as Annex P), relevant para read as under:-
"Order passed by Principal Appraiser (Customs) can only be reopened by the Collector of Customs while exercising jurisdiction under section 195 Customs Act, 1969---- Collector of Customs only revise the order, if any illegality or irregularity is committed by the Principal Appraiser or its subordinate---- Any such order by the Deputy Collector of Customs against the order or Principal Appraiser was without jurisdiction, illegal and without lawful authority qua the rights of the importer."
(19)That the controversy in this case is merely a change of opinion since after the clearance of all the goods and after thorough examination the classification in terms of PCT was permitted and the goods cleared after about --- years since then this is being disputed on the basis of same facts obtained at the clearance. Reliance is placed on the Honourable Supreme Court of Pakistan, judgment. This is not permitted since being mere change of opinion:--
(a)1990 PTD 155 (SC of Pakistan)
(b)1990 PTD 873 (Sindh High Court Karachi).
(20)That if for any reason there was inadvertent mistake in mentioning HS Code on Goods Declaration; Customs authorities could have rectified the error. Moreover, S.R.O.487(I)/2007 dated 9-6-2007 is silent about any punishment for the act of omission and commission if committed towards incorporation of wrong HS code. The same identical cases, Collector of Customs (Adj -II), Karachi vide his Order-in-Original No.12 of 2002 dated 9-2-2002, after going through the entire proceedings, was pleased to hold that the charge of mis-declaration of value and PCT Heading are not established and accordingly vacate the show-cause notice.
(21)That the charge of mis-declaration of the PCT heading is not established/applicable, the various authorities already decided the matter and waived the fine and penalties. The Central Board of Revenue, in its CGO No.l0/1999 laid down the following criteria for invoking provisions of section 32 of the Customs Act, 1969, read as under:-
"For invoking provisions of mis-declaration under section 32 of the Customs Act, 1969 prima facie, an element of mens-rea should be present."
(22)That the appellant is innocent and has not committed any offence of mis-declaration as defined under section 32 of the Customs Act, 1969, section 32(1) are inapplicable as the Importer has neither signed nor caused to be signed any declaration knowing or having reasons to believe that such documents or statement is false in material particular and as such cannot be held guilty of an office under this Section. Section 32 (2) of the Customs Act, also not applicable as the Importer has not made any statement whereby the duty has not been levied or has been erroneously refunded. The amount levied as duty in fact is on account of error or misconstruction, this is a bona fide error and no show-cause notice could be issue on a human mistake, the Importer paid the duty and taxes as per demanded by the Custom Department at the time of clearance/processing the imported goods at port area. Therefore, in view of the above submission as explained, it is respectfully, prayed before this Honourable Authority that a lenient view may kindly considering the matter sympathetically.
(23)Here the only charge against the appellant is that he claimed benefit of a notification and wrongly got assessed the goods on concessionary rate of duty, there is no charge that his declaration in respect of nature, description and value of goods was found to be wrong. In the case of Eastern Rice Syndicate v. Collector of Customs (PLD 1959 SC 364), the Supreme Court had held that in order to attract the penal provisions of section 39 (now section 32), it must be established that the person who alleged to have made any statement in a document, submitted to the Customs Authorities must be false to his knowledge, and it would depend upon the facts and circumstances of each case. It is not disputed here that the statement made in the Customs documents regarding the nature and value of the goods imported were in anyway wrong; rather that information was found correct and true. The role of the Importer is to file the GO on the basis of imported documents i.e. Commercial Invoice, Packing List, Bill of Lading etc., received from the Principal. The allegation of active collusion is accordingly not established. In the light of above, none of the provision of section 32(1)&(2) of the Customs Act, 1969, has been violated by the appellant;
(24)That the subsection (2) of section 32 of the Customs Act, 1969, "where by reason of any such document or statement as aforesaid or by reason of some collusion, any duty or charge has not been levied or has been short levied or has been erroneously refunded, the person liable to pay an amount on that account shall be served with a notice within five years of the relevant date, requiring him to show cause why he should not pay the amount specified in the notice." In this case, the department failed to established wilful default or deliberate attempt to evade Government Revenue, on the part of Importer, who paid the due duty and taxes on the demand of the Customs Department, after proper process/scrutiny of the Bill of Entries by the Customs Department. Thecasethusfallswithintheambitofsub-section (3) of section 32 of the Customs Act, 1969.
(25)That the impugned order of the respondent is also in violative to spirit of section 179(3) of the Customs Act, as the same has been passed the impugned Order, after the lapse of 234 days, from the date of contravention report dated 22-2-2010, which is in violative to spirit of aforesaid provision of law/ruling of Superior Courts given in identical case, wherein it is clearly held that no liability can be created after the stipulated period given under the mandatory provision of law, which the respondent failed to follow and due to the said reason/basis impugned order which is in disregard to mandatory provision of law/ruling of Superior Courts is void and have no legal value, operative para, reported in PLD 1971 SC 61, of the same is reproduced as under:-
"If the statute enacts that certain action shall be taken in a certain manner and in no other manner, it has been held that the requirements are absolute and that neglect to attend them will invalidate the whole procedure."
(a)2009 PTD (Trib.) 1263
(b)2008 PTD 60
(c)1999 SCMR 2189
(d)2007 PTD 1337
(e)Order-in-Original No.3056/09
(f)PLD 2006 Karachi 25
(e)PLD 1971 SC 61
(26)That the impugned order is also in violative to ruling of the Honourable Federal Tax Ombudsman which is also upheld by the Honourable President of Pakistan and also notified vide ruling of Law Ministry No.185/2004/FTO-Law dated 7-5-2005, wherein it is clearly held that after the expiry of stipulated period no liability can be created, considering the said facts impugned order which has been passed in violative to aforesaid mandatory provision/ruling of Superior Courts is a void order, reliance is made on case of CBR v. Messrs Pace International, Rawalpindi, reported in 2006 PTD 340.
(27)That the Adjudication Authority issued the show-cause notice on the basis of an scrutiny of audit report submitted by the Custom Int., & Inv-FBR, and passed the impugned order, which is not only against the provisions of Customs Act, but also contrary to the natural principal of justice and Secondly the competent authority also failed to comply with the instructions contained under Customs Act, it is illegal and against the law. Furthermore, neither any opportunity is granted to clarify the position, nor any documentary evidence provided against the allegation mentioned in the show-cause notice/contravention report, which is not only against the provisions of Customs Act, but also contrary to the natural justice. The impugned order cannot be said to be a just and proper order as the same was passed without considering the impugned order. Hence the principles of no one should be condemned unheard has been violated hence vacate the show-cause notice and set-aside the impugned order, passed by the respondent. It has been held by the Honourable High Court of Sindh at Karachi in .P.No.849 of 1998 reported in 1999 PTD 1358, which is in reference to the judgment of the Honourable Supreme Court of Pakistan, reported in 1994 SCMR 2322 wherein it has been held that "Audi alterem partem i.e. no one shall be condemned unheard is a universally established principle of law. This rule is applicable to both judicial and non judicial proceedings;"
(28)That the show-cause notice has admittedly been issued by the Adjudication Authority on the basis of scrutiny of audit report by the Director of the Directorate General PCA, but neither provide the any documentary evidence or statement of any witness was recorded in presence of neither the Exporter nor any provide proper opportunity of hearing to cross-examine the witness and/or verify the correctness of any documents was granted. The entire proceeding before the Custom Department was behind the back of the Importer without any notice and therefore, illegal, null and void. Legally speaking, a report is, at best, an opinion of the auditor and a material in support of the departmental version. It has been held to be a part of the charge sheet, which needs to be established through the process of adjudication. (Decided by the Judgment of the Honourable Lahore High Court, reported in 2004 PTD 714). That being so, a copy of the audit report is required to be forwarded to the auditee/importer and a failure to do so renders the show-cause notice ab initio, as per decided by the Honourable Lahore High Court, reported in 2002 PTD 2780. It is a matter of verifiable record that in the instant case, the Importer has only been intimated audit observations. It is firmly settled law that mere intimation of audit observations is not a show-cause notice as per decided by the Honourable Sindh High Court, reported in 2000 PTD 1798. Even otherwise, the show-cause notice has been issued mechanically, without proper verification of facts and law involved in the case and does not show judicial application of mind. The show-cause notice is; therefore, void an initio, illegal and defective.
(29)That the Department has not issued the Audit Observation Report nor provided the contravention report neither provided the back up data and also not provided the documentary evidence to the Importer, which is violative of principle of natural justice, furthermore the closed transaction re-opened by the Officers cannot be termed as lawful. It has legal sanctity; hence demand is premature and is not sustainable. It is therefore, may kindly vacate the show-cause notice, in the best interest of justice. Whereas in this case his GD's, have been compared with the irrelevant record, which is illegal and unauthorized as observed by the Honourable Supreme Court of Pakistan in the case of Government of Pakistan v. Shahi Bottlers reported as PLD 1976 Lahore page 1584 and 1987 SCMR page 571. The Customs Department has not based the finding on any evidence and the same case already decided by the Honourable Appellate Tribunal, vide Appeal No.K-2224199, allow the Appeal.
(30)That the alleged impugned action is based on the Audit Report, (irrespective of its legality or otherwise). The contents of it were not made available to the assessee. The Superior Court has held in number of judgments that no action is considered to be lawful unless the report relied on is confronted and aggrieved assessee is allowed to rebut it. On this score the impugned show-cause notice is unlawful and is liable to vacate the show-cause notice and set-aside the impugned order, passed by the respondent.
(31)That it is a matter of fact that numerous consignment have been released at the muddy lower values than the value taken in the case of Importer and their act established a practice. That the practice whether wrong or right become a law as held by the Superior Courts in many cases and also held by CBR vide CGO 21/73 in the light of instructions Nos.4/24 page 72 of the General Manual of Orders. The learned respondent has not considered the moot point based the previous Custom House practice and as per various judgments in similar cases, it always in the interest of justice and legality that previous decisions should not be reversed overnight, (Estoppels).
(32)That the impugned order of the respondent is highly unjustified and clear misuse of discretionary power which is in violative to principles of natural justice as well as established departmental practice/procedure and due to the said reason/basis same is discriminatory and also against the ruling of Honourable Supreme Court of Pakistan given in identical case of MIS Walayat Ali Mir v. PIA Corporation, reported in 1995 SCMRP-650, wherein for proper use of discretion a specific criteria is laid down, operative para of the same is reproduced as under:-
"Exercise of---Mode---While exercising discretion, Authority should not act arbitrarily, unreasonably and in complete disregard of relevant rules and regulations-----Discretion to be exercised has to be judged and considered in the background of facts and circumstances of each case------Discretion is not be exercised on whims, caprices and mood of Authorities-----Exercise of discretion is circumscribed by principles of justice and fairness-authority exercising discretion should take into consideration and advance aim and object of the enactment, rule of regulation under which it was authorized to act; it should not act in complete negation of the object of such law, rule, regulation or established policy otherwise it would not be fair, reasonable and just exercise of power---Pre-conditions imposed for exercise of discretion should be honoured and respected unless for valid reasons, they have to be discarded."
(33)That the impugned order of the respondents is also in violative to established practice followed in identical cases, which is clear negation of ruling of Honourable Supreme Court of Pakistan given in identical case, wherein it is clearly held that established practice is law it creates a vested right and same can not be withdrawn abruptly without following a proper procedure as required under the mandatory provisions of law/rules/procedure, reliance is made on following cases.
(a)1995 SCMR P-516
(b)1989 SCMR P-353
(c)PLD 1970 SC 453
(d)PTCL 1984 CL 37(sic)
(34)That in view of the above the appellant has done substantial compliance with the requirement of law and having fulfilled the requirement of law, must be issue the show-cause notice to the appellant, without providing the proper opportunity of hearing and without providing the documentary evidence charged mentioned in the show-cause notice, it is illegal and null and void, it is therefore, may kindly vacate the show-cause notice and set-aside the impugned order. The reliance is placed on the judgment of the Honourable Supreme Court of Pakistan in the case of Messrs Nishat Mills Ltd., as reported in PLD 1989 SC 222. With regarding to these procedural aspects, of not claiming in the very period, the relevant portion of the judgment is reproduced hereunder:--
"The proper place of procedure in any system of administration of justice is to help and not to thwart the grant to the people of their rights. All technicalities have to be avoided unless it be essential to comply with them on grounds of public policy. The English system of administration of justice on which our own is based may be to a certain extent technical but we are not to take from that system its defect to the form and not to the substance defeats substantive rights is defective to that extent. The ideal must always be a system that gives to every person what is his."
(35)That the attention is invited to the case of Pakistan Industrial Development Corporation v. Pakistan as reported in PLD 1992 at Page 576, in which of the Honourable Supreme Court of Pakistan at page 593, has observed as follows:-
"Any construction of a taxing statute which results in taxation of the same properly twice is to be avoided if possible, or if the statute is ambiguous, uncertain of its construction, doubtful, or if it may be reasonably interpreted so as to avert that result, or if the intent to impose double taxation is not clearly expressed and such construction should never be adopted unless necessary to effect the manifest intent of the legislature. Doubts as to whether double taxation has been imposed should be resolved in favour of the taxpayers."
(36)The basic principle for the interpretation of fiscal statues is that such laws are to be construed and applied strictly. The principle was stated as long ago as 1921 in Cape Brandy Syndicate v. Inland Revenue Commissioners (1921) 1 KB 65 in the following terms:--
"ItsimplymeansthatinataxingActonehastolookmerelyat what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no tax. Nothing is to be read in, nothing is can only look fairly at the language used."
The above principle has been applied innumerable times by the Courts in Pakistan. For instance, citing the above passage with approval in Government of Pakistan v. Hashwani Hotels Ltd., PLD 1990 SC 68, the Supreme Court described it as an excellent guideline (which) can be safely utilized for interpreting a taxing statute.
(37)That the goods were examined under first examination system, the charge of mis-declaration in terms of section 32 was not tenable as the appellant had not made any declaration in respect of goods. That whether or not charge of mis-declaration can be framed where goods were examined under first examination, it is submitted that this issue came up before their lordship of a Division Bench of the Honourable Sindh High Court in the case of Akhtar Hussain v. Collector of Customs, reported as 2003 PTD 2090 and their lordships in their regard observed asunder:--
"In order to appreciate the contentions raised by the learned counsel for the petitioner, it would be appropriate to reproduce sections 79 and 205 of the Customs Act, 1969 as well as the relevant instructions contained in CGO 12/2002. 79. Entry for home-consumption or warehousing.
(1)-------------------
Provided that, if the owner makes and subscribes a declaration before the appropriate officer to the effect that he is unable, for want of full information, to make a complete entry of any goods, then the said officer (may subject to the conditions prescribed by the Collector) permit him, previous to the entry thereof, to examine the goods in the presence of an officer of customs or to deposit such goods in a public warehouse appointed under section 12 without warehousing the same, pending the production of such information.
(2)--------------------
(3)If [an officer not below the rank of (Additional Collector) of customs] is satisfied that the rate of customs duty is not adversely affected and that there was no intention to defraud, he may in exceptional circumstances and for reasons to be recorded in writing permit substitution of a bill of entry for home consumption for a bill of entry for warehousing or vice versa.
CGO 12 of 2002
"(b) Question of taking cognizance description, value and PCT heading:-
For invoking provisions of mis-declaration under section 32 of the Customs Act, 1969 prima facie, an element of 'mens rea' should be present i.e. there should be an attempt of wilful and deliberate false declaration. The importers may not be charged for misdeclaration under section 32 of the Customs Act, 1969, in the following situation:-
(i)-----------
(ii)when a consignment is found to contain goods of description other than the one declared falling under separate PCT heading but chargeable to same rate of duty.
(iii)whether the description of goods is as per declaration but incorrect PCT Heading has been mentioned in the Bill of Entry no mis-declaration case under section 32 of the Customs Act, 1969 be made out provided there is no change in the rate of Customs Duty as a result of ascertained PCT heading"
In the above circumstances, no detailed discussion is required for deciding the point in issue. It is established principle that any administrative order, violative of the provisions contained in the statute is bad and invalid to the extent of inconsistency. It is also undeniable preposition of law that instructions issued by the CBR under section 219 of the Customs Act, 1969 are binding on all the officers of the customs employed in the execution of Customs Act by virtue of provision contained in section 223 of the Customs Act. It there is any conflict in the instructions issued by the CBR and the instructions/order issued by the officer subordinate to the CBR, that the instructions/order issued by the subordinate official are invalid and inoperative to the extent of conflict.
For the foregoing reasons, it is held that the order/instructions contained in para "3" of Standing Order 5/2002 and to the extent in Standing Order 9/2002 that "henceforth no importer shall routinely be permitted examination of imported goods under the first proviso of subsection (1) of section 79 of the Customs Act, 1969" and that "after filing of bill of entry only machine number of set of document shall be entertained for the customs purpose by this Collectorate" are illegal, void, without jurisdiction and having no legal effect. It is further declared that respondents Nos. 1 and 2 are bound under the law to allow amendment in the bill of entry and that in the case of option given for first appraisement for the determination of correct description PTC heading, quantity of goods no importer shall be charged for mis-declaration under section 32 of the Customs Act, 1969."
(38)That the impugned order of the respondents regarding imposition of penalty, wherein no evasion of taxes is involved is also in violative to ruling of Superior Courts given in case of Collector v. Messrs A.R. Hosiery Works, reported in 2007 PTD 2215, therein it is clearly given that section 32 of the Customs Act did cause every declaration it only revolves around the evasion of not and in cases, wherein no evasion of taxes is involved application of penal provision is without lawful authority.
(39)It is held in 1992 SCMR page 196 "that no body is to be punished unless proved guilty on the basis of true and reliable evidence and that in cases reported in 1995 SCMR page 1345 and 1996 PCr.LJ 181, it has been held by the Superior Courts that for giving the benefit of doubt to an accused it is not necessary that there should be many circumstances creating doubt, but if a simple circumstance creates doubt in a prudent mind about the guilt of accused then he shall be entitled for such benefit not as a matter of grace or concession but as a matter of right. In the absence of any material or corroborative evidence the prosecution is unable to prove the guilt of accused.
(40)That there is no liability of the appellant to pay the demanded amount as alleged in the show-cause notice and hence the demand of amount and the consequent additional surcharge is illegal. The appellant has paid more than what was due and payable to the Government; the Honourable Supreme Court decided the matter in Messrs Humayun Ltd., v. Pakistan and others as reported in PLD 1991 SC 963, wherein it is held that "where the evasion of duty is not wilful the imposition of penalty is illegal". Not to speak of any wilful evasion, in the instant case, there is no evasion of tax/duty or loss of revenue at all. The appellant did not act malafidely with intention to evade the tax, the imposition of penalty is not justified, and reliance is place on case referred as PTCL 1995 CL. 415. In view of the above correct factual position the show-cause notice is clearly illegal and mala fide and is liable to be withdrawn this allegation mentioned in the show-cause notice, in the best interest of justice.
(41)That the impugned order of the respondent is out of purview/ parameters of show-cause notice and due to said reason/basis same is in violative to principles of natural justice as well as rulings of Superior Court given in identical case of Collector v. Ms. Rahm Din, reported in 1987 SCMR 1840, wherein the impugned order has been treated as without lawful authority, operative para of the same is reproduced as under:-
"We are of the opinion that it is not necessary to determine this question of law in the facts of the present case as this petition can be disposed of on the short ground that the order of adjudication being ultimately based on a ground which was not mentioned in the show-cause notice, the order was palpably and void on the face of it."
(42)That the objection raised by the respondent's and passed the impugned order is incorrect, illegal, wrong, unconstitutional and vague, absurd, unlawful, unjust, absolutely incorrect, baseless, is null and void in the eyes of law, in all regards and wastage of precious time of this Honourable Authority, hence the same is liable to vacat the show-cause notice and set-aside the impugned orders, passed by the respondents, forthwith.
(43)That the Honourable Federal Tax (Ombudsman) in identical case of Messrs Nadeem Textile Mills Ltd., reported in 2002 PTD 3087, clearly held that the principles of law enunciated by HonourableSupremeCourtandHonourableHighCourtis(a) binding force on all the citizen and any defiance from its implementation is tantamount to mal-administration. As far as the following rather obeying the opinion judgments etc. of our Higher Courts by the Subordinate Courts, Tribunals and Authorities is concerned is a legal and conditional bindings otherwise it make the delinquent liable for a server action as held in 1993 PCr.LJ 1701 Lahore and PLD 1994 SC 879 respectively. Furthermore, that a charge which was not framed in the show-cause notice cannot be adjudged through an adjudication order since respondent was never given opportunity of hearing/defending the case, as per decided by the Honourable Tribunal, Lahore Bench, vide Sales Tax Appeal No.1761/LB/ 2001.
(44)That the equal protections of law does not envisage that every citizen is to be treated alike in all circumstances, but it contemplates those persons similarly situated or similarly placed are to be treated alike. A law applying to one person or are class of person may be constitutionally valid if there insufficient basis or reason for it, but a classification which is arbitrary and is not founded on any rational basis is no classification as to warrant its exclusion from the mischief of Articles the Show-Cause Notice and passed the impugned orders by the respondents are against Guaranteed Fundamental Right of the appellant and violative of Articles 4, 13, 18, 24 & 25 of Constitution of Islamic Republic of Pakistan 1973.
6.Rival parties heard and case records perused, it is observedthat the appellant is of the viewthatthe goods declaredin theexport good declaration were allowed to be shipped by the MCC of PaCCSafter terming the declarationas correctand examination of the goods, whereinit was confirmed thatthe goodswere as per declaration, likewise the duty drawback was correctly sanctionedto the appellant being admissible. No documents whatsoever was fake, even otherwise no objection in regards to documentation or description of the goods can be raised post exportation as per law laid down by the Superior Judicial Fora . On the other handthe respondent No. 3 is of the opinion that theForm "E" utilizedin the consignment is fake, record of which is not available with the issuing bank, resultantly. Government of Pakistan is deprived ofvaluable foreign exchange. Moreover, the goods declared are not shippedas the weight shown againstthe laminated sheet cannot be stuffed in the 20" container, resultant,appellant is not entitledfor duty drawbackand the amount so sanctioned /paidhas to be recovered from himalong with the import penaltyby respondent No. 2. The representative of the respondentNo. 2supported the order passedby the Adjudicating Authority and the respondent No. 1 and laid emphasis that the instant appeal is not maintainable , unlesscompliance to the provision of section 195-Bof the Customs Act, 1969 is not made.
7.That in order tohave a better understandingof the devised mechanismunder the provision ofsections 130 and 131of the Customs Act, 1969 throughSub-Chapters IVand V of Chapter XXIof Customs Rules, 2001in addition tothe conditionlaid down in ScheduleLVIIIof Notification No.S.R.O. 931(I)/2007 dated 11-9-2007 for export and re-payment of duty under section21(c) of the Customs Act, 1969 are reproduced here-in-below:--
Section 130:No goods to be loaded on a conveyance till entry outwards or permission granted.---Nogoods other than passengers' baggageor mailbags orballast urgently required for a vessel's safety shall be loaded or water borneto be loaded on a conveyance at a placein a customs station approved for the purpose under clause (b) of section 10 untill an order under section 50 in respect of the conveyance has been given or permission in this behalf in writing has been granted by the appropriate officer.
Section 131. Clearance for exportation.---(I) No goods shall be loaded for exportation until :
(a)The owner of any goods to be exported has made a declaration in such form and manner as prescribed by the Board , by filing a goods declaration to Customs containing correct and complete particulars of his goods, and assessed and paid his liability of duty, taxesandother charges , if any,
(b)The claim of duty drawback, if any, has been calculated and reflected in the declaration filed for export through PaCCS.
(c)Customs has, on the receipt of goods declaration under clause (a)satisfied itself regarding the correctness of the particulars of export including declaration, assessment and payment of duty and taxes and other charges and verified the admissibility of the duty drawback claimed as specified in clause (b) and
(d)Theappropriate officer has permitted passenger's baggageormail bags, to be exported notwithstanding clauses(a), (b) and (c)
(2)If any goods or class of goods imported and lying within the port area are intended to be exported by this owner, the Collector may allow the export subject to thecondition as the Board may, from time to time notify:
Provided that the Board may in the case of any customs station or wharf, by notification in the official Gazette, and subject to such restrictions and conditions, if any as it thinks fit, exempt any specified goods or class of goods or any specifiedperson or class of persons, from all or any of the provisions of this section:
Provided further that the Collector, where Customs Computeri-zed System has not been introducedfor reasons to be recorded in writing may cause the examinationofgoods or any class ofgoods or goods belonging to a particular exporter or class of exporters at a designated place as he deems fit and proper.}
Sub-Chapter IV
Procedure of Export through{PaCCS}
443. Procedurefor exports.---Subject to the provision here-in-laid down, the procedure for export including subject to the provision here-in-laid down, the procedure for export includingevery activitythereagainst onlineshall apply to CY FCLand CY LCL container as may be operatedfrom any container terminalwhereat PaCCS is operational
444. Filing and validity of Export good Declaration.---Every declaration in relation to each consignmentofto-be exportedgoods shall be filedwith PACCS online by the exporter or his agentwhich shall be deems to have been submitted to Customs onlywhere duty and taxes leviable thereon, if any have been paid or discharged through pre-Pact as self assessed by the person declaring it and after claiming duty drawback if any .
Every export declaration shall be valid for a maximum period of 15 days from its submission
445. Amendment to goods declaration.---Subject to the following condition, a declaration for export filed under Rule 444 may be amended by the exporter or his agent who initially filed the goods declaration:
(a)a goods declaration for export once completed cannot be amended:
(b)goods declaration that has already been cancelled cannot be amended:
(c)information relating to a container that has already passed into customs area cannot be amended :
(d)new itemsmay not be added to a Goods Declaration asamendment,
(e)an export declaration cannot be amended where its validity has expired
And none of the container relating thereto have passed into the port:
Explanation: 1.---An export declaration shall be deems to be complete in case :
(i)All the container relating to export declaration have passed into the port :
(ii)The exporter or his agent specifically complete the export declaration: and
(iii)Some of the container in the Goods Declaration have passed into the port and the validity of the Goods Declaration has expired in such cases the exporter or his agentshall be at liberty to file anew Goods Declaration for the remainingcargo on same form "E".
Explanation: 2.---allow loading shall only be granted to the container for which the goods declaration is complete.
446. Cancellation of export declaration.---an export goods Declaration may be cancelled at any time by the exporter or his agent who initially filed such declaration provided no container declared there-under has passed into the customs area before validity has expired otherwise in that case the declaration shallautomatically stand cancel on the expiry of the validity period.
447. Passed-in authorization of the container.---soon afterfiling of the export goods declaration under Rule 444, the Terminal operator shall be authorized onlineto allow pass in of the container as specified in such declaration provided that each container is :
(a)accompanied with consignment note as provided inChapter XVIII; and
(b)sealed except the container falling under certain typewhere seals cannot be applied, like one door open , open top , flat rack etc.
448. Cut-offtimefor filing of export declaration or pass-in of cargo.---There shall be no cut -offfor filing of export declaration or pass-inof the cargo in the customs-area underPaCCS and, with respect thereto,the customs shall not summarily apply or waive offany process required under any law for the time being in force allowing export of the cargoon the plea that any vessel is schedule to depart, orinvolve its selfwith the particular vessel on which a cargo is shipped from Pakistan, yet,exporter encouragedto monitor and managethere own schedule and to adhered to the cut-off timingas are given to them by the carrier or theTerminal Operator and the decision where torest with the shipper and the carrier.
449. Export cargo to bear numbered bullet seal.---each container carrying export cargoshall bear number bulletsealapplied to the containerbefore itspassed-inand subject to rule 448, the Terminal Operator shall not receive any such cargo without number bullets sealas indicated in the consignment note.
450(1) Examination of the export goods.---The terminal operator shall make arrangement for the examination of the export goods after the goods pass-in which includes their weighing, sampling, inspecting and scanning in accordance with the requirement of these rules.
(2): Assessment by Customs.---Where any goods declarationhas been filed under rule 444the Customs shall satisfy itselfas to its correctnessincluding its value, classification, claim of exemption , payment of duty and taxes , repayment ofduty drawback etc. , and may re-assess the goodsduring or after release.
(3). Review of Assessment.---The exporter or his agent mayfilerequest fora review to Customs onlinegiving detailed reason for disagreementwiththe customs.Customs shall review the assessment on the basis of submission by the exporters or his agent.
451.(1). Inspection or sampling by pre-shipment organizations, price checking orquality assurance bodies.---In case export cargo is to be inspectedby a pre-shipment organization, price checking orquality assurance bodies, such bodies will complete their functions and issue their NOC's or certificate, if any, prior to pass-in of the container into customs area.
(2)Inspection or sampling by regulatory bodies of the Government.---Government bodies that are involved under their own law to inspect the export cargomay do soprior to the pass-inof the container into the port and sealed the container after inspection or in casethey deem it necessary to examine the cargo at the port they may acquire online access from PaCCS, wherebythey will have the facility to monitor the export consignment and if required under their law, may hold any container onlinefrom being shipped abroad unless their legal requirement have been completed. On completion of legal requirement the department may release online the container that was held earlierby them.
452. (1).Allow loading.---Each consignment i.e. allowed loading by the Customs shall be intimated online by the Terminal Operator as well as the exporter or the agent. Allow loading shall only be granted to the cargo for which the goods declaration has been completed.
(2)Loading of Cargo.---(a) The Terminal Operator shall load container on the vessel on the basis of 'loading allowed' message from PACCS and shall intimate the event of loading of each container to PACCS online. Loading allowed for a container shall be independent of vessel, a container i.e. allowed loading may be loaded on any vessel from the terminal as per arrangement of the exporter with the carrier. No subsequent authorization for allow loading for any left out container will be required.
(b)Terminal Operator shall allow loadingonly to those container for which documents if any, as are required for export of the cargo and as are electronically intimated to the exporter or his agent at the time of filing of a goods declaration to the Customs have been collected by the Terminal Operator.
453. Removal ofExport Cargo from the Port.---The exporter or his agentmayat any time after loading has been allowed through PACCS and till the time the container has been loaded on to a vessel request forremoval of any of his container from the port area, whereupon the customs shallsubject to such condition limitations or restrictions as may be imposed by it or otherwise specified in this Sub-chapter authorized such removal which shall be communicated to the Terminal Operator onlinewho shall cause the removal of such container from the Port Area. Authorization of removal allowed shall be communicated online to the exporter or his agent.
454.Passed-in Loading of Export Cargo fromOtherPorts.---The procedure as has been laid down under Rules 503 to 510 shall be applicable in case of passed-in and loading of export cargo originating from up country customs-stations or other ports or terminals.
Section 21. Power to delivercertain goods without payment of duty and to repay duty on certain goods.---subject to such conditions, limitations or restrictions as it thinks fit toimpose, the Board may, in such general cases as may be prescribed by rules or in particular cases by specialorder , authorize-
(c)the repayment in whole or in part of the customs duties paid on the importation of any goods which have been used in the production manufacture, processing repair or refitting in Pakistan of goods meant for exportation {or for supplies against international tenders, or for supply to industrial units projects, institutions agencies and organizations, entitled to import the same at concessionary rates. Provided that no repayment may be granted in a case in which theamountinvolved is less than one hundred rupees}
Sub-Chapter V
Duty Drawback under PACCS
455.Application for duty drawback.---every good declaration for export filed under Rule 444 shall also be considered as an applicationfor duty drawback.
456. Processing and Sanction of duty drawback.---duty drawback as may be admissible shall be part ofthe process of assessment of cargo for exportan amount so admissible to the exporter shall be computed and processed by PACCS on departure of the vessel or conveyance carrying export cargo.
457.Payment of duty drawback.---the sanctioned amount of duty drawback shall be paid through a cross chequein the name and account number of the exporterwhich shall be signedby an officer of customs, authorized by the Collector, and the Chief Account Officerof the Collectorate and shall be dispatch at the address as provided by the exporterin his user profile to PaCCS.
458.Requirement of Electronic Processing Refund Claim (EPRC).---the amount of duty drawback has may be admissibleshall be sanctioned by the Customs as soon as the goods are exported without requiring proof of repatriation of foreign exchange in shape of EPRC.
459.Re-assessment of duty drawback.---thecustomsmayre-assess the export declaration any time during 5 years of clearance of the goods and if on account of suchre-assessment it is found thatduty drawbackhas been paidin excess the differential amount shall be recovered from the exporter with fine,etc.
460.Post duty drawback audit.---the finalized cases of duty drawback may be subjected topost auditby the authoritiescompetent to conductsuch audit.
GOVERNMENT OF PAKISTAN
(REVENUE DIVISION)
CENTRAL BOARD OF REVENUE
----------
Islamabad, the 11th September 2007.
NOTIFICATION
(CUSTOMS)
S.R.O.931(I)/2007 ----In exercise of the powersconferred by clause (c) of section 21 of theCustoms Act, 1969 (IV of 1969) and in supersession of this Notification No. S.R.O. 613(I)/2007 dated the 16th June 2007. The Central Board of Revenue is pleased to authorize repayment of custom duties to the extent specified in column (5) of the Schedule below paid on the importation of the raw material as specified in column (1) of the said schedules, used in the production or manufactured of the goods specified in column (2) of those schedule are exportedduring the period specifiedin column (4) subject to the following conditions namely:
(i)The manufactured goods are exportedout of Pakistan and an application for repayment of customs duties is presented to the proper officer of customs within two hundred and ten days of such exportation or within one hundred and eighty daysfrom the date of realization of foreign exchange as shown on bank credit advice issued in accordance with the current directive of the State Bank of Pakistan, and,
(ii)The exporter makes a declaration on the goods declaration filedunder section 131 of the Customs Act, 1969 (IV of 1969) and on other exportdocuments for his claim for repayment of the customs duties paid on the imported raw materials used in the production or manufactureof the goods being exported.
SCHEUDLELVIII
| 1. | 2. | 3. | 4. |
| Raw materials Imported | Goods products or HS Code | Period | Extent of repayment of Customs-duties |
| (1) | (2) | (3) | (4) | (5) |
| 1. Raw D cor Paper 90 Grams | 1. Industrial or technical Laminated P-1 electrical | 4811.1000 | From 11-9-2007 onwards | 2.74% of the f.o.b. value |
| 2. Raw Kraft paper 155 grams | Grade, all sizes | | | |
| 3. Phenol | | | | |
| 1. Raw D cor Paper Rs.16.86/ Grams/m2 | 2. Decorative laminated Sheets, all sizes | 4811.1000 | From 11-9-2007 onwards | Rs.16,86 per Sheet |
| 2. Melamine | | | | |
| 3. Raw kraft paper 146 grams/m2 | | | | |
| 4. Phenol | | | | |
| 5. Coated paper (Release)one sheet 20/41 grams/m2 | | | | |
8.Upon minuteand scrupulous study of the provision of section 131 of the Customs Act, 1969, it is clear that the owner ofany goods to be exported has to make a declaration in the Goods Declaration for exportunderclause(a) ofsubsection (1) of section 131and transmit that online in terms ofRule 444 of Sub-Chapter (IV) of Chapter XXI of the Customs Rules, 2001and that declaration should be containing correct and complete particulars ofhis goods andthe owner himself has to assessand pay the leviable duty, taxes and other charges, if anyand in terms of clause (b) the owner has to claim duty drawback, if any under the relevant notification and calculation to the said effect be reflected in the declaration filed forexport throughPakistanAutomated Customs Clearance System (PaCCS) . The system upon receipt of good declaration for export allots thereupon a number and the terminal operator immediately transmits a view message to the exporter and his clearing agent to pass the container in terms of authorization given to him by the Customs under Rule 447 ibid., for completion of customs procedure. If the GD is selected for examination, the terminal Operator arranges for examination under Section 198 of the Customs Act, 1969 and Rule 450(1)ibid., vice versa the goods declaration is referred to the assessing officer, who completes the assessment of the consignment in terms of clause (c)and Rule 450(2) ibid. In case of examination, the GD is referred to the assessing officer after uploading the examination report, who on the strength of that completes the assessment on the respective clause of section 131 and Sub-Rule of Rule 450 ibid. As per devised procedure the assessment of the consignment is completed after export of the consignment either through System or after conduction of examination. Once the said procedure is completed the System or the Appropriate Officer who is delegated the powers under section 130 of the Customs Act, 1969 read with Rule 452(1) allows loading of the consignment on the vessel. Consequent to which the consignment is loaded on the vessel in terms of Sub-Rule (2) of Rule 452 ibid.
9.That since the goods declaration is an application for duty drawback under section 21(c) of Customs Act, 1969 and Rule 455 of Sub-Chapter (V) of Chapter XXIof the Customs Rules, 2001 , the assessing officer processesand sanctions duty drawback claimsin terms of Rule 456 ibid.,without calling for EPRCin terms ofRule 458 ibid., the rational forincorporation of said Rule was based onthe conditions of the notificationsissued for duty drawback, which contains two conditions (i) the claim should be submitted within 210 days from the date of export and180 days from the date of export proceed realization of foreign exchange, this condition is not applicable in PaCCSby virtue of the fact thatthe good declaration is itself an application andits date of filing is date of Goods Declaration, resultant,counting time for limitation is irrelevant. Whereas in regard the condition No. (ii)emphasis laid is that the goods declared in theGoods Declaration shouldhave beenactually physically exported, there exists no conditionfor submission ofEPRCinduty drawback notification and this wasdue to the reasonthatrepayment ofcustom duty (drawback)is subject toexport of the goodsshown in column (2) and thoseshould be manufacturedafter utilization ofraw material shown in column (1). In terms of Rule 457 payment against sanctioned duty drawback claim is to be made through a cross cheque in the name and account of the exporter and be dispatchedat the addressof the exporter availablein his user profileto the PACCS. Notwithstanding Rule 459 ibid empowers the assessing officer to reassess the export Goods Declaration anytime during the five years of clearance of goods for exportand if during the reassessment it is found that the duty drawback has been paid in excess, thedifferential amount shall be recovered from the exporter along with fine etc.The finalized duty drawback claims are subject to post auditby the Officer of Post Clearance Audit under section 26Aof the Customs Act, 1969.
10.That since the appellant's advocate and the representatives of respondents Nos. 2 and 3 failed to assist the Tribunal to determine the actual facts of the case, none ofthem providedthe actual sizes of the exportedadhesive decorated laminated sheet, colors, and designs purportedly exportedand to the fact contained in the show-cause notice. The Tribunal recorded additional evidence on its own for reaching a judicious decisionand to proceed with that it is of vital importance to reproducethe declaration given by the appellant in Goods Declaration No. CRN:EG-569937-06-0308
| Declared | |
| Item SR # | HS Code | Quantity | UOM | Country of Origin | Currency | Unit value | Total Customs Value |
| 1 | 6107.2220 | 225.000 | Units | Pakistan | US$ | 4.9774 | 119,915000 |
| Item Description of Goods | Item Level Duty Drawback | |
| | S.R.O. | Quantity | Rate | Duty value | |
| | -- | | 0.590 | 4134973 | |
| | Total | | | 4134973 | |
| Item Description of Goods | Item Level Duty Drawback | |
| Art No : NEONSize : DIFFERENT Composition : JEANS PACKING : PKGS Brand: LOCAL | |
| | | | | | | | | |
| Declared |
| Item SR # | HS Code | Quantity | UOM | Country of Origin | Currency | Unit value | Total Customs Value |
| 2 | 4811.1000 | 14932.500 | Kilograms | Pakistan | US$ | 16.4995 | 246378.783750 |
| Item Description of Goods | Item Level Duty Drawback |
| Adhesive Decorative Laminated sheet in various colors and designs | S.R.O. | Quantity | Rate | Duty value |
| | .. No of Sheet | 90000 | 16.860 | 1517400.0000 |
| | Total | | | 1517400.0000 |
| Item Description of Goods | Item Level Duty Drawback |
| Size: VARIOUS GRAMAGE (G/M2) = 177GR Whether surface is plane, coloured decorated or printed? = COLOURED/DECORATED Type = SHEETS Brand : Local |
| | | | | | | | |
| No Non-Duty Paid Item Used |
| Assessed |
| Item SR # | HS Code | Quantity | UOM | Country of Origin | Currency | Unit value | Total Customs Value |
| 2 | 4811.1000 | 14932.500 | Kilograms | Pakistan | US$ | 16.4995 | 246378.783750 |
| Item Description of Goods | Item Level Duty Drawback |
| Adhesive Decorative Laminated sheet in various colors and designs | No Item Level Duty Drawback |
| Specifications/Grade | Item Level/Duties |
| | |
| Quote No. | | | | |
| | | | | | | | | | |
11.That under clause (a) of section 131(i) of the Customs Act, 1969, the appellant has to transmit correct and complete particulars of thegoods whiletransmitting Goods 'Declaration with the PaCCS under Rule 444 ofSub-Chapter (IV) of Chapter XXI of Customs Rules, 2001. Inspite of the said mandated condition, the appellant filed Goods Declaration while mentioningForm "E" No. ABL-0009774 issued by AlliedBankofPakistan Ltd, which isnot traceablewiththeBankasevidentfrom its Letter No. C.O./FI&CMD/AAK/2009/700dated21-12-2009. Whereas, the declaration of the goods exported is vague, stood provedfrom the fact thatsizes ofthe laminated sheethas been intentionallynot declaredand so thesquare meter , which is a must as stuffing oflaminated sheetin the container is on the basisof CBM not on weight , for deceiving the system and the officials grammage of sheet is declared as 177 grams , which is alsonot correct. In orderto determinethat whether 90,000 sheetsas declared by the appellantcould be stuffed in a 20" container, the standard size of sheetof 8'x4'x0.5mm (2440 x1220x0.5mm)wastaken into account , the cubic meter of each sheetcomes to0.0014884and for 10000 sheets 14.884,these sheetsare either to be packedin pallets or boxes.For10000 sheets8 plywood palletsand 4 plywood caseshave to be used, resulting to whichCBMwill increase,presumablythe CBM of10000 sheetswith pallets/boxeswill cometo22 CBM,and these can be stuffedin 1x20' container ,forfurtherclarificationthe mode and manner ofpacking in a containeris illustrated through the image here-in-under:
12.Inthelightofreferredinabovecalculationandthemodeand manner of the packing, 90,000 pieces as declared by the appellant could be stuffedin 9x20'not in 1x20' container , resultant, the declaration in regards to description , quantityand valueis false in material particular and attracts proceeding under the respective applicable provision of the Customs Act, 1969. Since, the goods were not shipped physically as declared, the appellant is not entitled for duty drawback under Schedule LVIII of Notification No. S.R.O 931(I)/2007 dated 11-9-2007.
13.I also failed to comprehend as how the claim was sanctioned in the presence of assessing officer clear remarks in the Goods Declaration in regards to the said item "no item level duty drawback" meaning thereby the applied drawback in terms of condition (ii) was declined. The claim was sanctioned and cheque was issued to the appellant. The said fact needs thorough investigation.
14.Despite of the above factual position, the advocate of the appellant has taken many stereo-typical grounds in the memo. of appeal, which are irrelevant, hence I hold that reliance on sections 37, 40 and 41 of the Customs Act, 1969are out of place as these relates to "drawback on goods used in manufacture of goods which are exported" and "time of payment of drawback and declaration by parties claiming drawback".The regime of drawback under section 37 is altogether different and it is not applicable on the exported goods, on which repayment of customs duty is notified by the Board through respective duty drawback notification in exercise of the powerunder the provision of section 21(c) of the Act.Likewisereliance placedby the Advocate on sections 29, 79, 80 and 83 are misconceivedassection 29lays certain prohibition for amendment after clearance of the goods for exportor clearance of the imported goods for home consumption i.e. no amendment is permitted inGoods Declaration in the column of description, quantity and value, no question of amendment arise in the case of appellant. Section 79 is meant forfiling ofGoods Declaration for the imported goods for home consumption and section 80 for assessment of those goods and section 83 for clearance/out of charge of the Goods Declaration.The subject case is of exportand has no relevance with these sections, instead of sections 131 and 130 of the Act, which have beenexplained in detail in the paras supra. The appellantAdvocate has also taken the plea that thetransactionis past and closed and attains finalityby virtue of notassailingthe sameunder the provision of section 193(1) of the Customs Act, 1969. Neither the said order was reopened by the competent authority under the provision of section 195 of the Customs Act, 1969. It is mistaken belief of the appellant advocate that the assessment passed under section 131 of the Customs Act, 1969 is not finalas evident fromRule 459 of Sub-Chapter (IV) of Chapter XXI of Customs Rules, 2001 through whichthe Customs is empowered to reassess the Goods Declaration any time during 05 years of clearance of the goods for export, any amountpaid in excess has to be recovered from the exporter along with a fine. Rule 459 ibid., also empowersthe competent authority to conduct auditof the finalized cases of duty drawback. Even otherwise in the instant case the assessing officerdeclined the application of duty drawback as evident from the remarks "no item level duty drawback".To the contrary the duty drawback was sanctionedfraudulently by the respective sanctioning authority in connivance with the appellant. Since it is a criminal offence, section 195 of the Customs Act, 1969 has no Role to play in the instant case, hence, the plea raised by the appellant is misconceivedand stands diminishedfrom Rules 459and 460 of Sub-Chapter (IV) of Chapter XXI of Customs Rules, 2001. Even otherwise in the given circumstancesof the casethe appellant is not entitledto takeshelterunder anyprovision of theAct, by virtue of the fact that he has not come with clean handsas held in reported judgment ofHon'ble Supreme Court of Pakistan 2007 SCMR 1318, West Pakistan Tanks Terminal (Pvt.) Ltd.v. Collector of Customs Appraisement, Karachi, wherein their lordship heldthat"the petitionerseeking leave to appealagainst the High Court Order is not entitled to discretionary and equitable relief from this court in the exercise of Constitutional Jurisdiction and he has notapproached this court or fora prescribed under the Constitutionand the lawwith clean hands. One who seeks equity must have equities in his favour. In the present case we are firmly of the opinion that the equities do not lean in favour of petitioner. Therefore, in our considered view the judgment does not warrant any interference by this Court."
15.While perusing of the record of the case, I also observed that the official of Post Clearance Audit and the Additional Collector, Model Customs Collectorate of PaCCS, who conducted the audit and issued show-cause notice and passed order-in-original acted in very cursory, wanton and perfunctory manner without application of mind. As evident from the fact that no proper audit was conducted. If that would had been conducted in the true essenceand norms of audit, insteadof preparing contravention reportand forwarding to Collector of Customs PaCCS for the purpose of Adjudication the case should had been referred to Directorate of Intelligence and Investigation/FBR for initiation of criminal proceedingunder the provision of sections 2(s) and 32A of the Customs Act, 1969 which stood proved from the paras supra, astonishinglythis was not done, rendering the act highly deplorable. Simultaneously, the respondent No. 2 while issuing the show-cause notice invoked the provision of sections 32(1)(2) and 32A and 39 of the Customs Act, 1969. Irrespective of the fact that section 39 is irrelevant and the appropriate sections to be invoked were 2(s) and 32A, these type of deficiencies are fatal for the case. It seemsthat the respondent No. 2signedthe draft show-cause noticeforwarded by theofficial ofPost Clearance Audit orprepared thaton the strength of the contravention report received by the Collectorate without going through the provision of the Act/Rules and Schedule LVIIIof Notification No. S.R.O.931(I)/ 2007 dated 11-9-2007, this type of attitude is not appreciable and fails the test of judicial scrutiny as held by the Hon'ble High Court of Sindh in reported judgment 2004 PTD 369 in the case of MessrsZeb Traders v. Federation of Pakistan. Their lordship of the High Court held that:--
"The proceeding before Adjudicating Officer, under the Customs Act, 1969 are in the nature of quasi judicial proceedings and issuance of notice under section 180 of the Customs Act, is very important documents. The decision to issue show-cause notice is to be taken by the Collector, Adjudication, by application ofindependentmind and not merely signing thedraft show-cause notice submitted by the investigation agency separate from the Adjudication Department and each category of officers are required to perform their respective functions/duties under the law. The practice to submit draft show-cause notice by the Director General of Intelligence and Investigation to the Collector Adjudication is depreciated."
16.In view of theforegoing the order-in-original/Appealare correct in law and facts and the appeal is without any substance in factual and legal aspect and as such dismissed without any merit it as no order to cost.
17.Order passed accordingly.
JJK/169/Tax(Trib.)Order accordingl