VENUS PAKISTAN (PVT.) LTD. VS ADDITIONAL COLLECTOR CUSTOMS PREVENTIVE, MCC CUSTOMS HOUSE, 2014 PTD-CUSTOMS-APPELLATE-TRIBUNAL-KARACHI 108 (2013)

2014 P T D (Trib.) 108

[Customs Appellate Tribunal, Karachi]

Before Ch. Niamatullah, Chairman/Member Judicial-I, Ghulam Ahmed, Member (Technical-II) and Muhammad Nadeem Qureshi, Member (Judicial-I)

Messrs VENUS PAKISTAN (PVT.) LTD.

Versus

ADDITIONAL COLLECTOR CUSTOMS PREVENTIVE, MCC CUSTOMS HOUSE and another

Customs Appeal No.K-461 of 2011, decided on 28/05/2013.

(a) "Force majeure" doctrine of---

----Meaning.

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

----Ss. 27, 108, 110, 115, 121, 128, 129, 156(1)(64), 209 & 219---Customs Rules, 2001, R.566---Customs General Order (6 of 2010), Cl. (f)(vii)---Transshipment of goods to foreign country/Afghanistan---Goods destroyed by terrorist attack---Doctrine of "force majeure"---Scope---Charge of customs duties upon non-delivery of goods to consignee in Afghanistan---Scope---NATO/ISAF forces deployed in Afghanistan imported "Low Sulphur Diesel", which arrived at Karachi Port for onward transit to Afghanistan---Appellant/clearing agent got cleared the subject goods from Customs for its safe transportation in transit to Afghanistan---Goods cleared by appellant was lost within Pakistan territory while en-route to Afghanistan---Appellant/carrier was responsible for safe transportation of the cargo and its onward delievery to ISAF/NATO forces in Afghanistan against proper acknowledgment---Customs authorities found the appellant guilty of non-delivery of goods to Afghanistan, therefore he was directed to deposit customs duties and other taxes on the subject goods lost by appellant within the territory of Pakistan---Contention of the appellant/carrier/clearing agent was that the impugned goods were destroyed by the terrorist attack, non-delivery of consignment was not on account of tampering, pilferage, damage, breakdown or accident, therefore he could not be directed for payment of customs duties---Validity---Fuel tanker/impugned goods destined for ISAF/NATO supply in Afghanistan had been destroyed by terrorists and such attacks were neither controllable nor predictable by the appellant/clearing agent---Terrorist attacks had not resistible by the drivers or conductors of trucks---Impugned goods destroyed by terrorist attack had been well covered under the act of "force majeure"---Customs duties on goods destroyed by an act of "force majeure" had not been chargeable in many statutes of the world and if had been charged, the same were liable to be refundable---Impugned goods had proven to be destroyed in unavoidable accidents, fire or act of terrorism, etc., therefore the principal importer, exporter or the respondent clearing agent could not be held liable for the recovery of customs duties and taxes---Impugned order in original and appellate order, directing the appellant for payment of customs duties and taxes were set aside---Appeal was allowed.

MessrsCrescent Sugar Mills v. CIT Lahore (1981) 49 Tax 1; Messrs Kashmir Pottry Work's case (1973) 28 Tax 172; 2002 PTD 804 and 2002 PTD 2169 ref.

(c) Words and phrases---

----"Un-avoidable accident"---Definition.

(d) Words and phrases---

----"Un-avoidable cause"---Definition.

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

----Ss. 25, 27, 110 & 115---World Trade Organization (WTO) Valuation Agreement/General Agreement on Tariffs and Trade (GATT), Art.VII---Agreements/Valuation of WTO, applicability on member countries---Importation of damaged goods---Element of "force majeure"---Diminished value of imported goods, charging of customs duties---Procedure and scope---Diminished value of imported goods on account of destruction, loss, theft were exempted from the charge of customs duties in Pakistan---Pakistan had implemented dictates of Technical Committee of WCO on Valuations, the instruments, agreements and protocols to which Pakistan being a member of WTO and WCO was a signatory---Provisions of Ss. 27, 110 & 115 of Customs Act, 1969 had provided to waive off the customs duties on account of diminishing of value of imported goods due to any reason including "force majeure" while in bond or at stage of importation---Customs duties and taxes could not be charged on imported goods damaged/destroyed on account of diminishing value of such goods resulting from terrorist attacks.

Isaac Ali Qazi for Appellant.

Atif Aijaz (A.O.) for Respondents.

Date of hearing: 22nd April, 2013.

ORDER

GHULAM AHMED, MEMBER (TECHNICAL-II).---This judgmentwilldisposeofCustomsAppeal No. K-461/2011filedbytheappellantagainstOrder-in-Appeals Nos. 5136 to 5140/2011dated1-4-2011 passed by the Collector of Customs (Appeals) Karachi.

2.Brief facts giving rise to the filing of this appeal are that Messrs ISAF/NATO Forces deployed in Afghanistan imported 10003.430 M. Tons Low Sulphur Diesel which arrived at Karachi Port per S.S. M.T "SORRELLE" IGM No.1 051 dated 23-7-2010 Index No.01. The consignee appointed MessrsNew Pak Trading Company as their Customs Agent for clearance of the subject goods from Customs and Messrs Venus Pakistan (Pvt.) Limited Customs Agent Licence No.2527 as their carrier for its safe transportation in transit to Afghanistan via Land Route in accordance with the procedure laid down by FBR vide CGO No.06/2010 dated 20-8-2010. The appellant/carrier also produced NOC dated 6-8-2010 from NLC Dry Port Keamari, Karachi for transportation of the subject cargo on 200 tank lorries. The numbers of tankerlorryweresubsequentlyincreasedfrom200 to 230tankersvide NOC dated 16-9-2010. After assignment of free number 01 dated 17-8-2010 to GD (AT) filed vide Machine No. KOIL 01 dated 4-8-2010 by Customs Agent Messrs New Pak Trading Company and electronically out of charge from Customs, the appellant started lifting of subjectcargo from Customs Bonded Tanks Terminals of Messrs Karachi Bulk Storage and Terminal (Pvt.) Limited and Messrs Panama Trading Company (Pvt.) Limited for its onward transportation to Afghanistan w.e.f. 29-8-2010 after obtaining vehicle wise transportation permits for the same from Customs Authorities in terms of aforementioned CGO. The appellant has now informed that seven tanker lorries have either been attacked or met accident within Pakistan territory while en-route to Afghanistan resultantly the cargo loaded thereon was lost. Since the appellant/carrier was responsible for safe transportation of the cargo and its onward delivery to ISAF/NATO forces in Kandhar (Afghanistan) against proper acknowledgement in terms of CGO 6/2010, he is therefore, directed to deposit Rs.9,107,853 recoverable as customs duty and other taxes on the goods admittedly lost by the appellant within the Pakistan Territory within seven days from the receipt of this notice in the Government treasury failing which penal action should be taken for violation of section 129 of the Customs Act, 1969 read with CGO 06/2010 punishable under clause 64 of section 156(i) ibid. The adjudicating officer ordered the appellant to deposit the amount of Rs.9, 107,853 and passed the Order-in-Original. No. 05/2010 (K-Oil Afghan) which is reproduced as under:--

I have gone through the written reply furnished by the respondent's advocate, departmental comments on the same and rejoinder filed by the advocate besides hearing verbal arguments advanced during the course of hearing by both the parties. Role and responsibilities of Customs Licensed carrier are clearly defined under Chapter XXII of Customs Rules, 2001 and Custom General Order (CGO) 12 of 2002 dated 15-6-2002 amended vide CG0.06/2010 dated 20-8-2010. The relevant Clauses of CGO are reproduced as under:-

Clause (f) (iv)The carrier shall be responsible and bound to carry the goods to its final destination in Afghanistan without any delay and with utmost haste. The carrier shall also be bound to deliver the goods at final destination within the prescribed time-limit, using the transport route duly approved by the Collector, Model Customs Collectorate Preventive, Custom House, Karachi. Any change in route by the Carrier should be notified and consent of the Collectorate obtained in advance.

Clause (f) (vii) In case of non delivery of cargo at final destination in Afghanistan to the consignees within stipulated time or mis-appropriation of the same while en-route to Afghanistan the carrier shall be responsible for payment of all leviable duty and other taxes on the said goods besides penal action initiated against them under the relevant provisions of Customs Act, 1969 and Sales Tax Act, 1990.

In view of the above explicit clauses of "Procedure for transportation of imported Bulk Cargo for exclusive use of ISAF/NATO Forces in Afghanistan" notified vide CG0.12 of dated 15-6-2002, amended vide CG0.06 of 2010 dated 20-8-2010 and acceptance of role and responsibilities by the respondent carrier under the same, I, therefore, order and direct MessrsVenus Pakistan Limited Customs Agent and Carrier License No.2527 to deposit the amount of Rs. 9,107,853/= in Government Exchequer within 07 (seven) days of the issuance of this order. They are also warned to be careful in future.

3.Being aggrieved and dissatisfied with the Order-in-Original No.5 of 2010 dated 24-12-2010, the appellant filed an appeal before the Collector of Customs (Appeals) Karachi. The learned Collector rejected the appeal vide Order-in-Appeals Nos.5136 to 5140/2011 dated 1-4-2011 as under:-

I have thoroughly examined the entire case record and given very careful consideration to the arguments advanced before me. It is an admitted position that the 10008.101 M. Tons of low sulphure diesel involving duty/taxes to the tune of Rs.101.201 million, given in the custody of the appellant for delivery to NATO/ISAF forces in Afghanistan, had not been delivered at the aforesaid destination and as per the provisions of law contained in sub-Para (vii) of Para (f) of the CGO the above-mentioned amount of duty/taxes is chargeable from the appellant. The above-mentioned provisions of law are reproduced as under for ease of reference:-

Sub-para (vii) of para (f) of the Customs General Order No. 06 of 2010

(f) (vii) In case of non delivery of cargo at final destination in Afghanistan to the consignees within stipulated time or mis-appropriation of the same while, enroute to Afghanistan the carrier shall be responsible for payment of all leviable duty and other taxes on the said goods besides penal action initiated against the under the relevant provisions of Customs Act, 1969 and Sales Tax Act 1990.

Thus, the letter in law is very clear to the effect that the appellant is liable to pay duty/taxes in case of non-delivery or the cargo at the final destination and it is immaterial whether non-delivery is causal by the act of nature or the act of the carrier.

At the time of removal of the goods for transportation to Afghanistan, the CGO was at the draft stage and the appellant had submitted an undertaking to the effect that he would abide by the provisions of the CGO in letter and spirit when issued. Obviously, the CGO had been issued/drafted in consultation with the appellant and he was fully aware that consequence of non-delivery of the cargo at the final destination, for any reason, would mean that he would be charged leviable duty/ taxes. The relevant part of the undertaking dalcd 17-8-2010 is reproduced below:-

UNDERTAKING DATED l7-5-2011

"In consideration of Collector of Customs, Preventive, Custom House, Karachi allowing loading and transportation of bulk liquid cargo imported for ISAF/NATO Forces in Afghanistan. I, Rahel Zuberi son of Maj * M. Aslam Zuberi NIC No. 42301-0822674-5 resident of C-G, Marine Heights-II, Clifton Block 2, Karachi on behalf of MessrsVenus Pakistan (Pvt.) Ltd., Karachi do hereby undertake that we will follow the outlined draft procedure for transportation of imported liquid bulk cargo for exclusive use of ISAF/NATO Forces in Afghanistan. Which has been forwarded to HlR vide Model Customs Collectorate Preventive Custom House, Karachi's letter No. SS/Misc/08/201-Oil dated 10-8-2010 for final approval and notification."

Subsequently, the appellant submitted a revolving insurance guarantee dated 24-8-2010, issued by MessrsThe United Insurance Co. of Pakistan Ltd, to the effect that any amount of duty/taxes and/or penalty chargeable in respect of the lost goods/cargo shall be paid forthwith. The relevant part of the aforesaid guarantee is reproduced as under:--

REVOLVING 1NSORANCE GUARANTEE DATED 24-1-2010

"Whereas in accordance with the draft procedure for transportation of liquid bulk cargo imported for exclusive use of ISAF/NATO Forces in Afghanistan. Which has been forwarded to FBR for approvals vide Model Custom Collectorate Preventive, Custom House, Karachi's letter No. S5/Misc/08/ 2010-0il, dated 10-8-2010 and the collector of Customs (Preventive), Customs House, Karachi's permission for transportation of imported Liquid Bulk Cargo by Carries MessrsVenus Pakistan (Pvt.) Ltd., 9/1, K-28, Hawksbay Road, P.A.F, Maripur, Karachi, 111-836-871 licensed under Chapter XXII of Custom Rules 2001, pending approval of procedure from FBR, we Messrs The United Insurance Co. of Pakistan Ltd., 5111 Floor, Nizam Chambers, Shahrah-e-Fatima Jinnah, Lahore do hereby bind ourselves and our heirs successors and assignees jointly and severely to pay to the Collector of Customs (Preventive) any amount payable on goods (if lost, damaged, misappropriated within Pakistan territory while enroute to Afghanistan) as Custom Duty, Sales Tax, Surcharge, Regulatory duty or any other levy in the time in force in addition to fine and penalties which may be imposed by the said collector for contravention of the conditions contained in the said draft procedure by the said carrier as referred herein above."

The above-quoted letter of law, the undertaking submitted by the appellant in pursuance of Pakistan make it absolutely clear that in case or non-delivery of thegoods/cargo at the destination, the duty/taxes involved on the same shall be paid by the carrier or the guarantor and that the reason fornon-delivery is immaterial. Therefore, the principle of force majeure is not relevant in the context of goods/cargo taken over by the carriers for delivery to NATO/ISAF Forces and particularly in the instant case. There is a rationale behind the above-quoted provision of law that anyone undertaking such a huge business and making big profits would have such cargo/goods insured and if the goods remain undelivered to the NATO/ISAF Forces in Afghanistan for having been lost in Pakistan for any reason the duty/taxes chargeable thereon would be made good to the Government of Pakistan and, obviously, if the person undertaking to carry such goods does not bother to have the same insured it is understood that he would pay the amount of duty/taxes on his own. Therefore, the argument of appellant's counsel that since the control of the appellant and consequently had not been delivered to the NATO/ISAF Forces, he should not be asked to pay the duty/taxes chargeable thereon is untenable and the case-law quoted by him in this regard (PLD 1978 Karachi 585. 1988 CLC 299 and PLD 1980 (sic) has been found to be irrelevant to the facts and circumstances of the instant case. The principle of force majeure, referred to by the learned counsel, is also not relevant to the instant case for a number of reasons: one, it is not a contract between two private parties, instead it is a case of delivery of non-duty paid goods, involving tens of millions of rupees in duty/taxes, into the custody of the appellant for delivery to NATO/ISAF forces subject to specific conditions duly agreed upon by the appellant and stipulated through the clear letter of law; two, the consequence of non-delivery of the cargo/goods to the NATO/ISAF' Forces has been specifically mentioned in the undertaking (reinforced by the revolving insurance guarantee) and that consequence is that in case of non-delivery of the cargo at the final destination the appellant shall pay the duty/taxes chargeable thereon. The reference to various provisions of the Customs Act, 1969 such as sections 18, 27, 115 etc made by the learned counsel is equally irrelevant because transit goods are governed by Chapter XIII (sections 126 to 129) of the Act and the rest of the provisionsoftheActbecomeirrelevantincaseoftransitgoods, as has been categorically held by a Division Bench of the Honble High Court of Sindh at Karachi vide its judgment dated 27-10-2010 in Constitutional Petition No. D-2410 of 2010. The learned counsel has also contended that since the NLC was the principal party, the duty/taxes chargeable on the lost goods/ cargo should be charged from them. The aforesaid argument, too, is negated by the specific provisions of law contained in Clauses (f) (iv) of the CGO which state that it is the actual carrier (the appellant in this case) who shall be responsible to make good the duty/taxes in such eventualities. The abovementioned provisions are also reproduced below for ease of reference:-

Clauses (f) (iv) of CGO 06/2010

Clauses (f) (iv)The carrier shall be responsible; and bound to carry the goods to its final destination in Afghanistan without any delay and with utmost haste. The carrier shall also be bound to deliver the goods at final destination within the prescribed time-limit, using the transport route duly approved by the Collector, Model Customs Collectorate Preventive, Customs House Karachi. An change in route Carrier should be notified and consent of the Collectorate obtained in advance.

The other objection raised by the learned counsel is that specific provisions/section of the Act have not been quoted either in the show-cause notices or the impugned orders. This plea is also belied by the evidence on record as well as the law by which such issues are governed. In fact specific provisions of the CGO have been quoted and reproduced in the show-cause notice as well as the impugned orders. Even otherwise, the superior courts of law have repeatedly held (for example, the Hon'ble Supreme Court of Pakistan vide judgment dated 9-12-2003 in Civil Petition No.775-K of 2003) that cases should be: decided on merit and not on the basis of technicalities. In the case reported as PTCL 2007 CL 260, the Honourable Supreme Court of Pakistan comprising four judges including the Hon'ble Chief Justice Iftikhar Muhammad Chaudhry has specifically held that mention of a particular subsection of law in the show-cause notice would not weaken the departmental case if offence committed by the tax per has been communicated in reasonable details and substantial compliance of law has been made. In the instant case, I observe that substantial compliance of law has been made. Therefore, the technical issues raised by the learned counsel are ruled to be untenable. I further observe that if the appellant or his guarantor does not make payment of the Government revenue of Rs.101.201 million and the undertaking/ insurance guarantee is not honored, strict action should be taken against them and the appellant should be stopped forthwith to play havoc with Government revenue.

For the reasons explained above, I rule that the arguments advanced by the learned counsel, reproduced at paras 3 and 5, do not find any support from the evidence on record and the case-law quoted by him is not relevant to the facts and circumstances of the instant cases. Consequently, I hold that the impugned orders are correct in law and on facts and there is no reason to interfere with the same. The appeals are rejected accordingly.

4.Being aggrieved and dissatisfied with the Order-in-Appeal, the appellant filed the Instant appeal before this Tribunal on the grounds as under:--

(i)That impugned Order is erred both in law and facts, hence, not sustainable in the eyes of law.

(ii)That entire proceedings against the appellant are without any lawful authority and legal effect as no section of law has been invoked neither in the impugned Order-in-Original nor in the Order-in-Appeal which authorize the adjudicating authority to demand duty and taxes on goods in transit which have been destroyed either in war against terrorism or natural calamity or in an accident beyond the control of human capacity, hence, the entire proceedings are void ab initio for being coram non judice, arbitrary, thus, liable to be set aside.

(iii)That impugned Order of the learned Collector Appeals is not only based on conjecture and surmises but also based on misapplication of the case-law of superior courts with mala fide intention to sustain the impugned Order-in-Original which is without lawful authority.

(iv)That impugned Order is non-speaking as it remained sub silentio over the issues raised by the appellant in reply to the Show-Cause Notice and appellant's rejoinder to the Collectorate's para wise comments, hence, liable to be set aside on this score alone.

(v)That impugned Order is bad for non joinder as National Logistics Cell (NLC) is a necessary party to the cause, hence, impugned Order I show-cause notice are not sustainable on this score.

(vi)That in the instant Show-Cause Notice, it has been alleged that out of seven (7) tankers lorries 3 tankers (details as per attached list) involving amounting to Rs. 3,958,283 have been completely ambushed.

(vii)That four (4) tankers (details as per attached list) apparently has been included erroneously in the Annex-I of the Show-Cause Notice as the said vehicle has neither been am bushed nor accidented rather decanted at its destination in Afghanistan without any hassle and trouble. Therefore, the duty/taxes involving amounting to Rs.5,149,570 rating to the aforesaid content are liable tobe (sic) from the alleged demand amount.

(viii) That WITHOUT PREJUDICE to the merit of the cause of the Show-Cause Notice, the duty and taxes involved in the two tankers i.e. Rs. 6,071,843 is liable to be deleted from the alleged demanded amount of Rs. 73,270,021 being not covered by the cause of the Show-Cause Noticed. Copies of 7 Trucks TPs/incident report/ police report(s)/Survey report etc. at Annexure-XIV

(ix)The delay is at times is beyond the control of the respondent as there are lot of uncertainties and due to danger en-route, the tankers remain stranded, otherwise once it has been admitted that the tankers had reached to its destination safely and the delivery is accepted by the consignee, the element of duty and taxes obviated. Attention is invited to case of MessrsBlue Horizon reported in PTCL. Otherwise the delay which creates hardship as in the instant case is condonable under section 224 of the Customs Act, 1969 and it is humbly requested that this cause may please be placed before the Collector Customs for condonation.

(x)That cause of ambushed vehicles in terrorist attack cannot be made as a legitimate cause for recovery as at first place it is out of the scope of CGO 6/ 2010, secondly, any attempt to bring such cause within the purview of CGO 6/2010 would be hit by force majeure as vehicles are victim in a declared WAR ON TERROR.

(xi)That it is humbly submitted that the aforesaid circumstances, Without Prejudice have not only frustrated the obligations under the CGO but also created a force majeure situation where after the appellant can not be compelled to perform their obligation under the CGO.

(xii)That the aforesaid principle of law that is the frustration of agreement and force majeure has been positively recognized by law, inter-alia, under section 56 of Contract Act, 1872.

(xiii) That now this principle has been recognized in the newly signed Afghan Transit Trade Agreement, 2010. Article 28 ibid is quo tam verbatim:

"Article 28: Loss, Destruction, or shortage of the cargo en route.

When it is established to the satisfaction of the Customs Authorities that goods specified in the Transit documents/GD have been destroyed or have been irretrievably lost by accident or other unforeseen events en route or that they are short by reason of their nature, payment of duties and taxes normally due, shall be waived."

(xiv) That it is well established principle of law that proclamation of war in an area by State or States rendered the or agreement void as in the instant case the appellant could not be asked to perform their part under the void agreement.

(xv) That here it is worth to add that primarily it is the duty of the State to safeguard the citizens and their properties from the terrorists and miscreants and there are incidents where the State came to the rescue of victims of terrorism and the victims had been aptly compensated by the State, therefore, under the circumstances on no moral and legal ground the State can be allowed to capitalize over the misfortune of the appellant Carrier agent mainly caused by the failure of the State to protect them in a most imminent terrorist prone areas such as en route to i.e. Torkham/Chaman Customs Stations situated Pak-Afghan Border.

(xvi) That impugned Order, humbly submitted is highly misconceived in view of sub-para (vii) of para (f) CGO 6/2010 which translate the liability of duty and taxes only to the Appellant Carrier either in case of nondelivery of cargo to its final destination in Afghanistan to the consignee or misappropriation of the same while en-route to Afghanistan whereas the Show-Cause Notice/impugned Order, humbly submits does not carry any allegation of misappropriation or cause of failure of nondelivery of cargo to final destination to Afghanistan which is attributable to the appellant.

(xvii) That there is only one instant which related to the carrier is that if in case en-route any loss due to tampering or pilferage or theft occurred only then carrier could be responsible. In the instant cases where the incidents have been promptly and duly reported to the local police and to the concerned Collectorate within stipulated time, where after, no cause exist as enumerated in the sub-para (i) of para (i) CGO 61/2010 to proceed with the impugned demand.

(xviii) That WITHOUT PREJUDICE it is humbly submitted that the word "damage" used in sub-para (i) of para (i) ibid cannot be taken into isolation or clothed with its neutral meaning as it takes colour from its neighborhood such as the words "tampering" or "pilferage" or "theft", therefore, it would take such damage which caused by any of the aforesaid modalities or such cognatic expression as it a trite law that the meaning of doubtful words should be interpreted by reference to the meaning of the word associated with it. Attention is invited to the judgment in case titled MessrsCrescent Sugar Mills v. CIT Lahore reported as (1981) 43 Tax 1 (HC Lahore) and another judgment MessrsKashmir Pottery Works reported as (1973) 28 Tax 172 (HC Lahore).

(xix) That it is humbly submitted that it is a trite law that no provision of the statute can be read in isolation rather than to be taken as part of the whole scheme, therefore, any attempt of reading the Clauses f (iv) and (vii) ibid in isolation would be violative of the law laid down by the honorable superior courts in cases 2002 PTD 804 (HC Karachi) and 2002 PTD 2169 (HC Karachi).

(xx) That it is humbly submitted that Clauses f(iv) and (vii) ibid has the history behind its introduction, therefore, its historical reason may be taken as an aid to construction of the Clauses f(iv) and (vii) ibid as has been held by the honorable Karachi High Court in PLD 1979 Karachi 591.

(xxi) That WITHOUT PREJUDICE to the above, all the aforesaid rules quoted above have been made under section 219 of the Customs Act, 1969 for carrying out the purposes of the Act, therefore, being an agent under section 209 ibid, the replying agent is not liable for the impugned demanded duties and taxes in view of the proviso to subsection (3) of section 209 ibid which reads as under:-

"Provided that where any duty is not levied or is short levied or erroneously refunded on account of any reasons other than wilful act, negligence or default of the agent, such duty shall not be recovered from the agent."

(xxii) That WITHOUT PREJUDICE to the above, many provisions of the parent law i.e. of Customs Act 1969 such as 108, 110 and 115 ibid authorize the competent Customs officers TO REMIT THE DUTY AND TAXES as in the instant case is where the POL products which were being in transit under Bond when were destroyed.

(xxiii) That otherwise the loss caused by other than the specified causes in Clauses f (iv) and (vii) ibid, the loss may be made good in accordance with the provisions of the Customs Act, 1969.

(xxiv) That as the cause is accidental and under the relevant law is condonable, if once arrived to the conclusion that the lost was caused by other than the specified instances in such circumstances, the concerned customs authority which authority humbly submitted is under legal obligation to order the remission of the duty and taxes.

(xxv) That WITHOUT PREJUDICE the learned adjudicating authority through misinterpretation of section 129 of the Customs Act, 1969 gave a complete different artificial meaning to section 129 of the Customs Act, 1969 to impose duty on the transit goods and as such wrongfully assumed the jurisdiction and therefore, acted without lawful authority.

(xxvi) That WITHOUT PREJUDICE to the above, the duties and taxes can only be demanded in case of goods in transit are found to be consumed within Pakistan for home consumption.

(xxvii) That WITHOUT PREJUDICE that section/clauses of law in the Show-Cause Notice/impugned Order are not attracted at all to the cause involved.

5.The respondent department has submitted Para-wise comments which are reproduced as under:--

(i) The Order-in-Original was issued lawfully on the basis of factual position on record and the appellant's objection regarding the non-sustainability thereof is without any merit.

(ii)The Order-in-Original dealt with the essential factual and legal position succinctly and it has the legal effect as it had been issued under the relevant provisions of the Customs Act, 1969.

(iii)That National Logistic Cell (NLC) had duly issued a No Objection Certificate (NOC) in favour of the appellants and for legal and practical purposes they were the carriers of transit goods in question and liable for making good the loss of Customs duties and taxes in the event of non-delivery of the impugned goods to its final destination in Afghanistan.

(iv)The carriers of goods meant for transit to Afghanistan including the appellants were fully aware of the risks involved during their transportation in Pakistan. They have also complete knowledge of their full liability in terms of the Customs law, including CGO 06 of 2010 involving their liability to pay the Customs duty and taxes in the event of non-delivery of goods to the final destination to Afghanistan. It is one of the reasons that transportation charges of such goods are much higher than the normal transportation cost of goods in Pakistan. It is exclusive responsibility of the carriers to have a proper insurance cover in view of the prevailing situation of law and order in the country. The terms force majeure usually applies to contracts between private parties and it has no applicability whatsoever w.r.t. the liability to pay duties and taxes which is an exaction by the state and only the Federal Government is competent to provide exemption based on its public policy parameters. The recovery of duty in terms of provisions of CGO had never been challenged by any carrier until the issuance of this particular show-cause notice and it is only an excuse to evade their responsibility in this regard.

(v)As stated above a force majeure argument only applies to contracts between the private parties and it is usually mentioned as a separate clause in the contract signed between them and it cannot be invoked for non-payment of customs duties and taxes recoverable under the Customs law.

(vi) The same comments as at paras-IV and V above.

(vii)The condition of war as mentioned in this para is an exaggeration. As stated above the appellants are fully aware of the law and order situation in certain parts of the country and it was their duty to exercise due care and discretion to protect the cargo assigned to them. In fact nothing stopped them from obtaining a comprehensive insurance to safeguard their interest in terms of the liability that devolved upon them under the CGO mentioned above.

(viii) Same comments as at para-VII above.

(ix)Sub-Para-(vii) of Para (f) of CGO 06/2010 clearly stipulates that in case of non-delivery of cargo at final destination in Afghanistan to the consignee within the stipulated time, it will be the responsibility of the carrier to pay all leviable duties and taxes. There can be no other interpretation of this clause. The appellants are employing jugglery of words and phrases to escape their liability.

(x) Para (i) (i) of CGO 061/2010 referred by the appellant reads as under:-

"In case of any tampering or pilferage or theft or damage caused en route, the carrier shall inform the Model Customs Collectorate Preventive for necessary orders within three days thereof. The carrier shall be responsible for the duties and loss or reduction in value as a result of such damage notwithstanding any other action which may be taken under the law and the rules made thereunder. "

This clause of CGO 06/2010 also put the responsibility on the Carriers for payment of duty and other taxes leviable on the goods if the same are damaged/lost while enroute to Afghanistan.

(xi)Same comments as above. The appellants are unnecessarily trying to use their defective interpretation of the relevant provisions of Customs law/Rules to avoid payment of Customs duties/taxes.

(xii) Same comments as above.

(xiii) The Carriers and all other stake holders are fully aware of the provisions of Rules in question as well as the past history and they had never challenged the same. Needless to mention that they also furnished an undertaking to the Customs to abide by the provisions of these rules for the transportation of cargo to Afghanistan. Any other interpretation is only opportunistic.

(xiv) The proviso of section 209 is being wrongly interpreted. This proviso refers to levying of Customs duty on goods imported into Pakistan for home consumption and it has nothing to do with the responsibility of carriers as regards the transit goods for which they have been saddled the responsibility of safe transportation across Pakistan failing which they are liable to make good Customs duties and taxes.

(xv) Again these provisions apply to the warehoused goods in Pakistan and these have no nexus with the transit goods meant for only temporary stay in Pakistan.

(xvi) The loss of duty and taxes on account of non-delivery of goods has to be made good only by the carriers who need to duly insure themselves in view of the inherent risks involved on this score.

(xvii) No provisions of Customs law provide for the condonation/ exemption of customs duties on account of any accident and the plea of the appellant on this ground is untenable.

(xviii) Same comments as at para XIV above.

(xix) The Customs law/Rules have no such provisions w.r.t. the transit goods.

(xx &) The Show-Cause Notice, Order-in-Original and Order-in-Appeal are factually correct.

(xxi) There is no merit in the plea of the appellant as elaborated above. The appeal may, therefore, be rejected.

6.We have examined the case record and heard the rival parties. The appellant has made out the case that the impugned goods/Oil Tanker were destroyed by the terrorist attack which has been occurred out side the Taurkhum Custom station. The Collector (Appeals) in the impugned Order-in-Appeal has dwelled upon the provision of section 110 of the Customs Act, 1969, and late submission of TPs and on the plea that any instructions of the FBR cannot override the provisions of substantive law. The substantive law provides specific provisions for exemption of duty on account of losses arising out of evaporization of volatile goods, and a CGO cannot perform this function of charging such exempted duties or charging full duties for late submission of TPs only. The FBR's instruction in shape of any subordinate legislation if militate with the provisions of the Customs Act, 1969, or with quasi-judicial functions then such instructions are not to be complied with according to proviso of section 223 of the Customs Act, 1969, we therefore, assume that Collector Appeal acted as per law only. The learned appellant raised the question about applicability of section 110 of the Customs Act, 1969, to the impugned case instead of application of provisions of CGO 12/2002. That there is no denying the fact that CGO 12/2002 dated 15-6-2002 as amended by CGO 6/2010 dated 20-8-2010 and S.R.O. 450(I)/2001, dated 18-6-2001 hold accountable the carrier for any loss en-route.Rule 566 of the Customs Rules embodied in S.R.O. 450(I)/2001 dated 18-6-2001 states as follows:- 566. Break down or accident en route.-- (1) In case of any tampering or pilferage or theft or damage caused en route, the carrier shall inform the Collectorate of Origination for necessary orders within three days thereof. The carrier shall be responsible for the duties and taxes and loss or reduction in value as a result of such damage notwithstanding any other action which may be taken under the law and the rules made thereunder.

7.That the CGO 12/2002 dated 15-6-2002 as amended by CGO 6/2010 dated 20-8-2010 also depicts similar provision vide f(i)(vii). However, both these provisions envisage any eventuality of "non-delivery of goods to consignee in Afghanistan" or "in case of tempering, pilferage or theft or damage caused en-route" the carrier shall be responsible for duties/taxes of the lost goods. Whereas the impugned case neither falls in category of non-delivery of goods on account tempering, pilferage, damage caused en-route nor breakdown nor accident en-route, rather it is the case of well designed terrorist attacks or explosions of underground explosives designed to overturn the vehicle/tanker. Therefore such acts of sabotage/terrorism are not ordinary accidents or damage. The parallel provisions to CGO 6/2010 are incorporated in Rule 566. The provisions of CGO 6/2010 or Rule 566 instead to be read in isolation, are to be read with Rules 567, 307 and 307A of the Customs Rules, 2001. Sub-rule 2(d) of Rule 307A where such incidents have been protected as if by virtue of certain omissions and commissions and happening in natural due course, the goods as the instant case goods destroyed or lost their marketability, duties and taxes are liable to be remitted. Rule 566 or relevant provisions of CGO 6/2010 are of limited application which create a liability on the Carrier only if en-route any tampering or pilferage or theft caused any damage to the goods. Therefore, whether it is a Carrier or the exporter who is liable, the fact remain the same that once the goods are destroyed with the plausible cause, duty and taxes cannot be demanded. That careful reading of Rule 566 of S.R.O. 943(I)/2007 or para f(vii) and g(iii) of CGO 6/2010 would suggest that no such demand can be directed towards the Carrier. That there is one instance which related to the carrier is that if in case en-route may lose value due to tampering or pilferage or theft occurred only then carrier would be responsible. In the instant cases which have been duly reported to the local police to the Collectorate of origination and so as to the exporter, no cause exists as enumerated in the CGO 6/2010 or Rule 566. Therefore, the word "damage" used in CGO 6/2010 or Rule 566 ibid cannot be taken into isolation or clothed with its neutral meaning as it takes colour from its neighborhood such as the words "tampering" or "pilferage" or "theft", therefore, it would take such damage which is caused by any of the aforesaid modalities or such cognatic expression as it a trite law that the meaning of doubtful words should be interpreted by reference to the meaning of the word associated with it. Our attention was invited to the judgment in case titled MessrsCrescent Sugar Mills v. CIT Lahore reported as (1981) 49 Tax 1 (HS Lahore) and another judgment MessrsKashmir Pottry Works reported as (1973) 28 Tax 172 (HC Lahore). It was submitted by the respondent that it is a principle of law that no provision of the statue can be read in isolation rather than to be taken as part of the whole scheme, therefore, any attempt of reading the Para. 25A, clause f(vii) or clause g(iii) or Rule 566 in isolation would be violative of the law laid down by the honorable superior courts in cases 2002 PTD 804 (HC Karachi) and 2002 PTD 2169 (HC Karachi).

8.It was further argued by the appellant that all the aforesaid rules CGO 12/2002 amended by CGO 6/2010 quoted above have been made under section 219 of the Customs Act, 1969, for carrying out the purposes of the Act, therefore, being an agent under section 209 ibid, the appellant agent was not liable for the impugned demanded duties and sales tax in view of the proviso to subsection (3) of the section 209 ibid which reads as under:-

"Provided that where any duty is not levied or is short levied or erroneously refunded on account of any reasons other than wilful act, negligence or default of the agent, such duty shall not be recovered from the agent".

9.The counsel for appellant made submission that the cause is accidental and under the relevant law is condonable, therefore, the carrier cannot be held responsible for the duties and taxes on the spoiled consignment and it is the obligation of the competent authority, if once arrived to the conclusion that the loss was caused by other than the specified instances to take up the matter with the customs authorities which are under legal obligation to order the remission of the duty and taxes. The appellant carrier is not responsible for the loss of duties and taxesongoods en-route to Afghanistan.AppellantemphasizedthatCGO 12/2002 as amended by CGO 6/2010 create the impugned demand. It is not correct because it is clearly mentioned there that in case of any tempering or pilferage or theft or damage the carrier should be responsible for the duties and taxes on goods loss or reduction in value as a result of such damage but it is case of none of those eventualities. Infact the tankers destined for ISAF Kabul were attacked by terrorist and set ablaze or these tankers were fired upon resulting in total loss of fuel being transported. The appellant has also stated instances of hijacking of tankers and destruction by engineered accidents by planting IEDs on roadsides. The appellant submitted that all these instances are not covered under CGO 06/2010 or Rule 566 of the Customs Rules, 2001 as these instruments provide no provisions to take cognizance of such acts of terrorism which come under definition of "Force Majeure". The consultant of the appellant submitted that loss of goods through such acts which result into total destruction/loss of goods have been take cognizance of by sections 27, 108, 110 and 115 of the Customs Act, 1969, which provide for waiver of duty on such goods.

10.The issue raised by the appellant is about demand for payment of duty on the consignment lost in terrorist attack, hijacking, fire and terrorist engineered accidents. The appellant has claimed all these cases to be covered under "Force Majeure" as none of these incidents was stoppable by the appellant.

11.The moot issues raised by the advocate for appellant during the hearing are as under:-

(i)That the burning of these containers by direct terrorist attacks or through explosion driven designed accidents are the events which are neither in control of the appellant nor perhaps under any effective control of government. Infact these are result of "force majeure". "The force majeure means and includes but is not limited to any act of God, explosion, fire, flood, drought or peril of sea or air, sabotage, embargo, commotion or war hostilities". It is an event or effect that cannot be reasonably anticipated or controlled. Therefore terrorist attacks or their engineered accidents are unforeseeable and irresistible and by and large these rendered the appellant to fulfillment of his obligation as carrier absolutely impossible.

(ii)That the Rule cited by the appellant have been made under section 219 of the Customs Act, 1969, for carrying out the purposes of the Act, therefore, being an agent under section 209 ibid, the appellant was not liable for the impugned demanded duties and sales tax in view of the proviso to subsection (3) of the section 209 ibid which reads as under:

"Provided that where any duty is not levied or is short levied or erroneously refunded on account of any reasons other than wilful act, negligence or default of the agent, such duty shall not be recovered from the agent".

(iii)That many provisions of the parent law i.e. of Customs Act, 1969 such as sections 27, 108, 110 and 115 ibid authorize the competent Customs officers to remit the duty and taxes as in the instant case where the POL products which were being exported under Bond when they were destroyed en-route by terrorist attacks.

(iv)That as the cause is accidental and under the relevant law is condonable, therefore, the carrier cannot be held responsible for the duties and taxes on the spoiled consignment and it is the obligation of the competent authority, if once arrived to the conclusion that the loss was caused by other than the specified instances to take up the matter with the customs authorities which are under legal obligation to order the remission of the duty and taxes.

(v)The appellant (carrier) is not responsible for the loss of duties and taxes on goods en-route to Afghanistan. Learned customs authorities emphasized that Rule 566 and Rule 564 of Rules envisaged under S.R.O. 450(I)/2001 create the impugned demand. It is not correct because it is clearly mentioned there that in case of any tempering or pilferage or theft or damage the carrier should be responsible for the duties and taxes on goods loss or reduction in value as a result of such damage but it is case of none of those eventualities.

(vi)That the provision of S.R.O. 450(I)/2001 reflects the responsibilities of carrier in case of normal environment. These provisions in-fact do not cater the event of terrorist attacks or terrorist engineered explosion drive accidents, hence these provisions are not applicable in case of force majeure. The force majeure have usually three elements i.e. externality, unpredictability and irresistibility. The terrorist attacks or their engineered accidents enshrine all these three, hence are case of force majeure. The superior courts have ruled in many cases that force majeure removes the liability for unavoidable catastrophe that interrupts the expected course of events and restrict any part from fulfilling obligations. As a matter of fact the terrorist attacks and terrorist engineered accidents are unexpected and disruptive events that are not covered either by S.R.O. 450(I)/2001 dated 18-6-2001 (as amended by S.R.O. 943(I)/2007 dated 14-9-2007 and S.R.O. 90(I)/2008 dated 29th January 2008), hence, the "responsibilities of carrier" legally shall not include payments of duties and taxes on lost/burnt goods en-route to Afghanistan.

(vii)That the superior judicial fora has given many landmark decisions on the legal position of the issue ruling that in case of terrorist attacks or accidents engineered by such attack the normal application of legal provisions for routine and normal business shall not be applicable. It is pertinent to mention that there are many precedents where on account of force majeure FBR remitted duties and taxes on bonded goods. The loss of bonded goods by fire at Lahore Dry Port was held as act of God/ force majeure and claim of duties and taxes on such goods were withdrawn by FBR. There are many other precedents to this effect. The Honorable Appellate Tribunal may give ruling that all containers lost in terrorist attacks or terrorist engineered accidents shall not entail any liability of duties and taxes.

(viii) That a force majeure clause provided in international transport jurisprudence particularly in famous US case Fairclough Dodd v Vantol, holds that there would be no liability if a breach of contract was due to causes beyond the sellers control.

(ix)That due diligence is another important factor to be considered in transportation of goods. Article III of the Hague Visby Rules and Hague Rules require the carrier to exercise "due diligence" before and at the beginning of the voyage to make the vessel seaworthy. "Seaworthy" means that the vessel must be physically sound, she must have proper equipment and supplies and efficient and sufficient manpower. The vessel must also be "cargo worthy", that is completely fit and safe to receive, carry and protect the cargo. Before the advent of the Rules, the common law obligation on the carrier was very strict and heavy. That "due diligence" is not difficult to define. "Diligent" can mean that a person is attentive to duties or uses persistent effort or work to achieve some objective. In surface transport, therefore, it may mean that the carrier must be careful, reasonable and honest in his duty to make the transport tanker road worthy. He should show reasonable and due care. However, it seems clear that the duty for due care is only an "attempt". Because the obligation is not absolute, if the carrier fails, for some reasonable cause, he may not be liable for a breach of the obligation. If the obligation was "absolute" the carrier would be liable for any loss or damage caused by un-road-worthiness irrespective of why or how or when the transport tanker is alleged by the cargo interest to have been un-road-worthy.

(x)That the Law and Rules of transport stem from vessel transport jurisprudence and Hague Rules and Hague Visby Rules. The Responsibility and Exemption is defined therein. The owners only to be responsible for delay in delivery of the Vessel or for delay during the currency of the Charter and for loss or damage to goods on board, if such delay or loss has been caused by want of due diligence on the part of the owners or their Manager in making the Vessel seaworthy and fitted for the voyage or any other personal act or omission or default of the owners or their Manager. The owners not to be liable for loss or damage arising from strikes, lock-outs or stoppage or restraint of labor (including the Master, Officers or Crew) whether partial or general.

(xi)That the effect of such clauses in all the international rules is to protect the ship owner and/or the charterer from liability should a breach of the charter party take place or a breach occurs of any contractual obligation such as to carry a cargo safely under a bill of lading. An exceptions clause can also cause one party's obligations to cease (come to an end) on the happening of a certain event, for example, the' loading of a cargo. The "Cesser clause" has this effect. A cesser clause reduces or removes some of the charterer's obligations after loading has been completed.

(xii)That exception clause is also found in bills of lading. However, most carriage under a bill of lading is subject to The Hague Rules or Hague-Visby Rules. In these Rules, Article IV deals with exceptions of liability of the carries.

(xiii) That the operator of transport or vessel will not be held responsible if any accident is caused by unforeseeable event or latent defect of transport. "Latent defect" can be defined as "a defect which could not be discovered by a person of competent skill using ordinary care". The exception from liability for latent defect is contained in Art. IV, R. 2(p): neither the carrier nor the ship is responsible for loss or damage resulting from "Latent defects not discoverable by due diligence". This is only a defect of the vessel itself and not of the cargo. A defect of the cargo would come under "inherent defect, quality or vice of the goods" in Art. IV, R. 2(m) where the carrier is not responsible for loss or damage resulting from these causes. The exception from liability for latent defects of the vessel is not in conflict with the obligation in Art. III, R. 1 to exercise due diligence to provide a seaworthy vessel. However, the obligation is on the carrier before and at the beginning of the voyage while the exception could operate at any time.

(xiv). That in The Theodegmon case, 1989, the vessel loaded a cargo of oil in the River Orinoco in ' Venezuela under a bill of lading which incorporated the U.S. Carriage of Goods by Sea Act, 1936: This generally implements the Hague Rules. The exceptions to liability are contained in section 4 of the Act as in Art. IV of the Hague-Visby Rules. After departure from the loading berth, and while proceeding down-river, the vessel stranded. The cargo interests suffered considerable financial loss and claimed this from the ship-owners on the basis that the stranding and the financial loss were caused by the owners' breach of contract. The judge concluded, from all the evidence before him that the vessel's steering gear had failed, being on accident beyond control of operator, thus causing the vessel to fail to respond to the river pilot's helm orders. In another case U.S. Court of Appeals also had to consider the issue of cargo damage caused by alleged unseaworthiness. The vessel loaded wood pulp from Chile to China. Clean bills of lading were issued. The wood pulp was improperly stowed, according to the statements in the mate's receipts, but the bills of lading were not claused. On the voyage the cargo caught fire. The vessel was not fitted with a fixed fire extinguishing system using carbon dioxide. The crew partly flooded the hold in an attempt to extinguish the fire. The cargo swelled, pushed open the hatch covers and the fire increased. Further flooding was necessary. The cargo was mainly damaged by flooding. The District Court in the United States held that the lack of a carbon dioxide fixed fire extinguishing system rendered the vessel unseaworthy to carry wood pulp, a high risk cargo. However, the court also held that the cargo interests were not able to prove that such a fixed system would have prevented the need to flood the hold to control the fire. The carrier was held not liable.

(xv) That in road transport for transit between various countries is governed by TIR Rules issued by TIR Commission of United Nations. The Article 41 of TIR depicts a waiver of duties and taxes for the operator if transit goods are lost by accident or force majeure or any plausible cause like evaporation of volatile substance inspite of exercising due diligence.

(xvi) That United Nations in document A/CN.4/315 (extract from year book of International Law Commission) 1978, Vol.-II (1) depict characteristics of "force majeure" and "fortuitous event" in state practice of various countries and international judicial decisions and doctrine and elaborates force majeure" as follows:-

(a)Force majeure may be viewed as a mere event or occurrence, or as a legal concept. In international relations, as in municipal law relations, the material causes giving rise to events or occurrences termed force majeure may vary. Force majeure may certainly be due to a natural disaster like an earthquake, but also to situations having their roots in human causes such as a war, a revolution, mob violence etc. Moreover, certain causes that eventually may give rise to force majeure may originate from natural as well as from human causes.

(b)Events or occurrences amounting to force majeure prompted the different systems and branches of municipal law to enact rules defining the rights and duties of their respective legal subjects vis- -vis such events or occurrences. This reaction of the legal order to force majeure occurs also in international law. A series of primary rules of international law is specifically intended to regulate events or occurrences due, wholly or partly, to force majeure. An appropriate example may be found in the Agreement on Co-operation with regard to Maritime Merchant Shipping, done at Budapest, on 3 December 1971, Article 11 of which provides for assistance and facilities to be granted by the authorities of the territorial State to a vessel, its crew, passengers and cargo in distress being victim of force majeure/ accident.

(xvii) That from the above it is clear that international carriage of goods by road governed by convention on the contract for International Carriage of Goods by Road (CMR) or TIR (International Convention on Road Transport) or (Transports Internationaux Routiers) provide sufficient grounds for remittance/waiver of duties and taxes on consignment lost/destroyed during transit between countries by reason of force majeure. These laws are international laws and have precedence over national laws and rules. Therefore if international law accepts that duties and taxes of lost consignments by force majeure will not be responsibility of carrier then demands raised by the respondent are not tenable? The Supreme Court of Philippine in case [G.R No.L-47822 Dec. 22, 1988 Pedro de Guzman v. Court of Appeal] decided that carriers of goods are responsible for any loss or destruction of goods unless same is due cause of force majeure or circumstance beyond coverage of due diligence.

(xviii) That it is generally recognized that for "force majeure" the following requirements should be met: (1) the event must be beyond the control of the obligor and not self-induced; (2) the event must be unforeseen or foreseen but inevitable or irresistible; (3) the event must make it impossible for the obligor to perform his obligation; (4) a causal effective connection must exist between the event of force majeure, on the one hand, and the failure to fulfill the obligation, on the other. The first of those requirements does not mean, however, that an event or occurrence constituting force majeure must be absolutely external to the person and the activities of the obligor. The essential element in a force majeure event is not whether the acts or omissions involved are those of the obligor or external to him but rather the fact that such acts or omissions cannot be attributed to him as a result of his own wilful behavior. Concerning the second requirement, namely the unforeseen or foreseen but inevitable or irresistible event, it should be stressed that it is sufficient if either of these two conditions is met. The loss of cargo in the impugned case by the terrorist attacks meets all the above requirements of force majeure.

12.We have observed legal reference mentioned supra and analyzed the issues in the light of provisions of law. It is confirmed by the F.I.Rs. of terrorist cases that the fuel tankers were either set ablaze by the terrorist or the fuel was lost due to damage of tanker on account of firing or bomb explosion, engineered accidents by any act of force majeure. The force majeure is "Infact these are result of "force majeure". "The force majeure means and includes but is not limited to any act of God, explosion, fire, flood, drought or peril of sea or air, sabotage, embargo, commotion or war hostilities". It is an event or effect that cannot be reasonably anticipated or controlled. Therefore terrorist attacks or their engineered accidents are unforeseeable and irresistible and by and large these rendered the appellant to fulfillment of the obligation absolutely impossible. The record show that the terrorists' acts to destroy fuel tanker destined for ISAF supply in Kabul were attempted by terrorists and such attacks were neither controllable nor predictable by the appellant. Further such attacks were also not resistible by the drivers or conductors of trucks. Therefore, these cases are well covered under act of force majeure. The duties on goods destroyed by an act of force majeure are not chargeable and this is reflected in many statutes of the world. The Customs Act of USA (Code of Federal Regulations) vide sections 158.7, 158.21a, 158.27 and 158.41 such duties are not chargeable and if such duties have been charged and goods were destroyed thereafter even then such duties are refundable. The Customs Act, 1962 of India provide for waiver of customs duties under section 23 of thereof. The Customs Act of Singapore provide vide section 15(i) thereof as follows:--

"Remission of customs duty or excise duty on goods lost, damaged or destroyed before removal from customs control

15.---(1) If any dutiable goods are by unavoidable accident lost, damaged or destroyed or are lost through theft or through evaporation at any time before removal from customs control, the Director-General may remit the whole or any part of the customs duty or excise duty payable thereon".

13.Similarly, sections 27, 110, and 115 of the Customs Act, 1969, provide same relief. The Customs Tribunal Islamabad in case vide Customs Appeal No.02-CU/IB/2011 dated 31-1-2012 has already decided that duty on such cases where goods were lost, destroyed by the act of God, which was beyond the competency of appellant to stop, are not chargeable. The Indian Courts vide Cases No. [National Organic Chemical v. Commissioner of Customs (imports)], [Bharat Petroleum v. Collector of Customs] have allowed waiver of duty on such destroyed goods. Here it is worth to mention that Customs Act, 1969 has prime Rule that duty and taxes are paid when goods are cleared for home consumption and recovery proceedings are initiated in case where goods are removed for home consumption either without payment of duty or less of leviable duty and taxes whereas in the instant case it is admitted position goods lost have been destroyed and thus could not been put to human consumption and these have been destroyed in unavoidable accidents. The expression "Unavoidable accident" is defined in Black's Law Dictionary as "An inevitable accident; one which could not have been fore-seen and prevented by using ordinary diligence, and resulting without fault. Not necessarily an accident which it was physically impossible, in the nature of things, for the person to have prevented, but one not occasioned in any degree, either remotely or directly, by the want of such care or skill as the law holds every man bound to exercise. An accident which could not be prevented by the exercise of ordinary care and prudence. A casualty which occurs without negligence of either party and when all means which common prudence suggests have been used to prevent it". The Black's Law Dictionary further defines the expression "Unavoidable cause" as "A cause which reasonable prudent and careful men under like circumstances do not and would not ordinary anticipate, and whose effects, under similar circumstances, they do not and would not ordinarily avoid". As the provisions of the Customs Act, 1969 per se do not envisage to recover duty and taxes on goods proven to be destroyed in unavoidable accidents such is the case of the instant appeal or fire or act of terrorism etc. Thus, under the circumstances, where even the principal importer or exporter cannot be held liable, the recovery of duties and taxes cannot be recovered from the respondent Agent.

14.It goes without saying that customs duty (and allied taxes if any) is function of value of goods. In case the goods are destroyed by terrorist act, or by any account, the value of imported goods is diminished to that extent that no duty is chargeable on such goods. The non-charging of duty on damaged, destroyed, lost goods is infact one of the facets of WTO Valuation Agreement (Article VII of GATT). Many experts have deliberated the issue in their research. "A Handbook on WTO Customs Valuation Agreement" by Sheri Rosenow, Brainj, and O'shea vide Page 37 depicts as follows:--

"If some or all of a consignment is discovered prior to customs clearance to have been completely destroyed is without commercial value. National Customs Rules often treat the damaged goods as if they never arriveda "non importation". In that case, because the destroyed or lost goods are not imported, the question of their customs value (an incidental duty and taxes) does not arise"

15.The local or imported goods which are exported from Pakistan have to be governed under section 25 of the Customs Act, 1969, for valuation. The Article VII of GATT (WTO Valuation Agreement) remains the main source of legal pedestal. The WCO Explanatory Notes 3.1 to Valuation in Customs Valuation Compendium vide page EN 3.1/1 reflect that "the damaged goods upon importation; if the shipment is found totally damaged, then it has no value". The valuation treatment for "damaged goods" vide page EN 3.1/2 depicts that "there is no liability to duty". This principle to not levy any duty on totally damaged goods is also reflected vide Standard 6 to Annex F.6 to the Kyoto Convention. The above bindings of Article VII of GATT (WTO Valuation Agreement) the Explanatory Notes to Technical Committee of WCO on Valuation, the Kyoto Convention are well reflected in customs law of various countries. WTO, Committee on Valuation issued "information on implementation and administration of the agreement on customs valuation" for India vide G/Val/N/2/IND/1 dated 15-7-2002, wherein the following question was posed to India "How has Article 1.2(b)been implemented?". The reply of India as depicted in the above said document depict as follows:-

Price of lost or damaged goods:

There are two provisions in the Customs Act, 1962 which provide for abatement/remission of duty on damaged or deteriorated goods or goods that have been lost, destroyed or abandoned.The relevant extracts of provisions are reproduced below:

"Section 22.Abatement of duty on damaged or deteriorated goods:

(1)Where it is shown to the satisfaction of the Assistant Commissioner of customs or Deputy Commissioner of Customs---

(a)that any imported goods had been damaged or had deteriorated at any time before or during the unloading of the goods in India; or

(b)that any imported goods, other than warehoused goods, had been damaged at any time after the unloading thereof in India but before their examination under section 17, on account of any accident not due to any wilful act, negligence or default of the importer, his employee or agent; or that any warehoused goods had been damaged at any time before clearance for home consumption on account of any accident not due to any wilful act, negligence or default of the owner, his employee or agent, such goods shall be chargeable to duty in accordance with the provisions of subsection (2).

(2)The duty to be charged on the goods referred to in subsection (1) shall bear the same proportion to the duty chargeable on the goods before the damage or deterioration which the value of the damaged or deteriorated goods bears to the value of the goods before the damage or deterioration."

"Section 23.Remission of duty on lost, destroyed or abandoned goods---

(1)Without prejudice to the provisions of section 13, where it is shown to the satisfaction of the Assistant Commissioner of Customs or Deputy Commissioner of Customs that any imported goods have been lost (otherwise than as a result of pilferage) or destroyed, at any time before clearance for home consumption, the Assistant Commissioner of Customs or Deputy Commissioner of Customs) shall remit the duty on such goods.

(2)The owner of any imported goods may, at any time before an order for clearance of goods for home consumption under section 47 or an order for permitting the deposit of goods in a warehouse under section 60 has been made, relinquish his title to the goods and thereupon he shall not be liable to pay the duty thereon."

16.Similar provisions are available for charging no duty on account of diminished value of imported goods on account of destruction, loss, theft in the customs statutes of Singapore, USA, Canada and Pakistan. The Pakistan has to implement dictates of Technical Committee of WCO on Valuation vide Explanatory No. 3.1 and Kyoto convention standard 6 to Annex F.6, the instruments Agreements and Protocols to which Pakistan being member of WTO and WCO is a signatory and under obligation to abide by them. Therefore, Customs Act, 1969, reflect the provisions of sections 27, 110 and 115 to waive off the duty on account of diminishing of value of imported goods on account of any reason including force majeure while in bond or at stage of importation. Therefore, not charging duty and taxes for the damaged/destroyed goods is on account of diminishing of value of such goods resulting from terrorist attacks. This is the practice in all WCO and WTO members, who practice Article VII of GATT for Valuation of goods, and Pakistan is no exception to that. Besides the fact that duty is function of value of goods and if value diminishes to zero, on account of damage or destruction the rationale for charging the duty also fades away. The other factor for not charging duty on destroyed consignment is element of force majeure, in shape of terrorist attacks. In spite of due diligence, such events could neither be predicted nor stopped. The force majeure also provide a legal ground for waiving off the duty on such consignments which are lost en-route to ISAF owing to terrorist attacks. Reliance is also placed upon Customs Appeal No.02-CU/IB/2011 dated 31-1-2012 title Venus Pakistan (Pvt.) Ltd., v. Additional Collector Customs Rawalpindi, by the Customs Appellate Tribunal, Islamabad.

17.To what has been stated and discussed herein before particularly the interpretation of law made under the purposed question of law and legal position referred to in the light of prescribed law and international law and practices on the issues and to follow the ratio decidendi in the Judgment of superior fora and rule of consistency, we uphold the appeal and is allowed as no order to cost.

18.Order passed accordingly.

JJK/165/Tax(Trib.)Order accordingly.