SHOAIB TAYYAB INTERNATIONAL, KARACHI VS ADDITIONAL COLLECTOR OF CUSTOMS, ADJUDICATION-II, KARACHI, 2014 PTD-CUSTOMS-APPELLATE-TRIBUNAL-KARACHI 190 (2013)

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

----Ss. 25-A, 32, 32-A, 79(1) & 80---Customs Rules, 2001, Rr. 109, 110,107(a)&433---CustomsGeneralOrderNo.12 of 2002,dated15-6-2002, Paras 78(i) & 101(3)---Goods declaration filed electronically was selected for scrutiny---Charge of mis-declaration of classification and value of imported goods---Validity---Provisions of S. 32 of Customs Act, 1969 could be applied on basis of documents produced or statement made by importer before Customs Authority---Valuation Ruling issued under S. 25-A of Customs Act, 1969 and date of identical goods maintained by Collectorate in terms of R. 110 of Customs Rules, 2001 were not prescribed documents to be submitted by importer while transmitting goods declaration under S. 79 of the Act and R. 433 of Customs Rules, 2001---Nothing was available on record to show that importer had delivered any document or statement with MCC of PaCC and was found to be untrue---Invocation of S. 32 of Customs Act, 1969 (being a charging section) on basis of non-prescribed documents, to which importer had no excess, would render charge of misdeclaration to be based on assumption---Penal proceedings being criminal in nature would require proof beyond reasonable doubt---Department levelling charge of misdeclaration of value would be bound to prove same through direct evidence in shape of identical invoice of same goods of period expressed in R. 107(a) of Customs Rules, 2001---Department disputing declared value of imported goods was obliged to transmit view messages to importer for transmitting additional documents, but had failed to do so---Goods declaration did not contain column for valuation ruling---Department had failed to prove declared value as unfair---Contravention report, show-cause notice and order-in-original being void were set aside in circumstances.

2009 PTD 467 and PLD 1996 Kar. 68 ref.

2005 PTD (Trib.) 617; 1668/LB and 1669/LB of 2002; Customs Appeal No. K-1281/05; 1986 MLD 790; PLD 1996 Kar. 68; 2006 PTD 909; 2002 PTD 2957; 2007 SCMR 1357 = 2007 PTD 1858; 2008 SCMR 438; 1992 SCMR 1083; 2008 PTD 1050 and 2008 SCMR 438 rel.

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

----S.32---Allegation under charging section could be invoked on basis of respective section and not on basis of presumption or assumption.

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

----S.32---Penal proceedings being criminal in nature would require proof beyond reasonable doubt.

Hafiz-ur-Rehman for Appellant.

Ghulam Yasin, (P.A.) for Respondent.

Date of hearing: 25th July, 2013.

ORDER

GHULAM AHMED, MEMBER (TECHNICAL-II).---By this order, I will dispose off Customs Appeal No.K-542 of 2013 filed by the appellant against Order-in-Original No.77941 dated 12-4-2013, passed by the Additional Collector of Customs (Adjudication-II), MCC of PaCCS, Karachi.

2.Brief facts of the case are that the appellant Messrs Shoaib Tayyab International filed a Goods Declaration, electronically bearing CRN No.KCSI-HC-126279-20-03-2013, through their Custom House Agent namely Messrs Five Brothers (CHAL No. 1943), for the import of Base Fabric Laminated with PVC, 17493 Kgs, under HS Code 3921.9090 at total invoice value US$. 13513. The importer determined their liability of payment of applicable duty and taxes and sought clearance under section 79(1) of the Customs Act, 1969. In order to check as to whether the importer had correctly paid the legitimate amount of duties and taxes, the under reference GD was selected for scrutiny in terms of section 80 of Customs Act, 1969.

3.Scrutiny of the Goods Declaration in the light of examination report revealed that the importer had mis-declared in terms of classification and value of the impugned goods. The importer had declared the impugned goods as, Base Fabric Laminated with PVC, under HS Code 3921.9090, custom duty @ 20% at declared unit value @ US$. 0.7725/kg. Whereas in the light of examination report, the impugned goods are classified under H.S.Code 5903.1000, which attract custom duty @ 25%, assessable @ US$. 3/kg in the light of prevailing (90) ninety days data. The importer try to cleared the impugned goods under lower value by mis-declaring the classification of the impugned goods.

4.The examination report is reproduced as follows:--

"NO DOUCMENTS FOUND INSIDE THE CONTAIENR EXAMINED THE GOODS IN THE LIGHT OF GD DESCRIPTION. NO DOUCMENT FOUND INSIDE THE CONTAIENR EXAMINED THE GOODS IN THE LIGH TO GD DESCRIPTION (I) BASE FABRIC LAMINATED WITH PVC IN ROLLS OF ASSORTED SIZES (SURFACE GLOSSY) BRAND AND I/O NOT SHOWN CHECKED WEIGHT 100% AT KICT WEIGHBRIDGE AND FOUND 19170 KGS VIDE SLIP NO. 278459 DATE 22-3-2013. IMAGES ALONG WITH WEIGHMENT SLIP ATTACHED GROUP IS REQUESTED TO CHECK ALL OTHER ASPECTS INCLUDING IPR & IMPORTABILITY AS PER IMPORT POLICY ORDER IN VOGUE ADMISSIBLE TARE WEIGHT IS APPROX 1200 KGS. "

5.The aforesaid facts proved that the importer had deliberately concealed the actual comments of the GD by mis-declared the classification in order to suppress the value and taxes willfully and with mala fide intention and have attempted to defraud the Government from its legitimate revenue amounting to Rs.2432933. The value of the offending value is to the tune of Rs.5522180.

6.The importers have therefore contravened the provisions of sections 79(I), 32(I), 32(2) and 32(A) of the Customs Act, 1969, section 33 of Sales Tax Act, 1990, section 148 of Income Tax Ordinance, 2001, punishable under clauses 14, 14(A) and 45 of section 156(I) of Customs Act, 1969, Clause 11(c) of section 33 of Sales Tax Act, 1990, and section 148 of Income Tax Ordinance, 2001, hence the instant show-cause notice.

7.Theappellantcontrovertedtheallegationthroughreplytoshow-cause notice dated 4-4-2013, the respondent after considerationof that passedOrder-in-Original No. 77941 dated 12-4-2013, paras. 18 and 19 of the order are relevant and which states inter-alia:--

Para 18 : The record of the case has been carefully gone through by the undersigned including the written reply of show-cause notice by the importer and comments thereon by the Department. The verbal submissions of both sides have also been considered. The respondents have denied the charge of mis-declaration of classification and value of the goods as levelled by the Department. After going though the written reply of the show-cause notice submitted by the trader and hearing the verbal arguments, the Collectorate has consented that the classification of the goods as claimed by the trader is in order. As regards the mis-declaration of value, the Department has confirmed that the declared value is on lower side and while the declared value of similar goods lie in the range of US$. 1.0 to US$. 1.5/Kg the under reference goods are liable to be assessed at US$. 1.62/kg as against declared US$. 0.77/kg as per valuation ruling.

Para 19: In the light of above discussion, I am convinced that the charge levelled in the show-cause notice as regard mis-delcaration of goods could not be proved, however, the charge of mis-declaration of value stands established. Accordingly the offending goods are confiscated under clauses 14, 14(A) and 45 of section 156(1) of the Customs Act, 1969 for violation of provisions of sections 32(1), 32(2), 32(A) and 79(1) ibid. The respondents, however, are offered an option under section 181 of Customs Act, 1969 to redeem the confiscated goods within 15 days of this Order on payment of a fine equal to Rs.1,043, 35% of the Customs value (Rs.2,981,977) of offendinggoods. The redemption fine is as prescribed under S.No. I(d) of Tableof S.R.O. 499(I)/2009dated13thJune, 2009andwillbe in addition to leviable duty and taxes. A penalty of Rs.1,000,000 is also ordered to the imposed under clauses (14) and (14A) of section 156(1) of Customs Act, 1969 on the respondents."

8.The appellant has now challenged the above order by way of this appeal. Mr. Hafeez-ur-Rehman A.R. appeared on behalf of the appellant who reiterated the arguments incorporated in the memo. of the appeal. And further stated that:--

That no charge of mis-declaration has ever been levelled by any Collectorate against any Importer when assessment of the consignment is made on the basis of Valuation Ruling issued by Directorate General of Valuation under section 25A of the Customs Act, 1969 or on data maintained by the Collectorate under Rule 110 of the period expressed in Sub-Rule (a) of Rule 107 of Customs Rules, 2001, if that would had been the case, not a single consignment would had been cleared by any Collectorate because in every case the value is enhanced on the basis of Valuation Ruling or data without the charges of mis-declaration. Therefore, the charge of mis-declaration of value is without any substance and nullity to the provision of Act and existing practice and as such hold no ground.

That no charge of value mis-declaration can be levelled unless direct evidence of import is available which has to be supplied in support of allegation as per direction contained in para 78 of CGO 12/2002 dated 15-6-2002. Thereafter in such like situation the difference should be more than 30% between declared and the evidence as directed in sub-para (3) of para 101 of CGO 12/2002 and Serial No. (d) of notification No. S.R.O. 499(I)/2009 dated 15-6-2009.In the instant case of the appellant the allegation of value mis-declaration is on the basis of determination of value on the basis of surmises and assumptions and as such arbitrary/unilateral and as such fall within the ambit of prohibited method expressed in Rule 110 of Customs Rules, 2001.

That in the light of golden principle of remaining within the language of law, section 32 of the Customs Act, 1969 gives a very clear impression. The provision applies on a person, who in connection with any matter of customs makes or sing or cause to be made or signed or deliver or causes to be delivered to an officer of customs any declaration, notice , certificate or other documents in any form or gives a statement in reply to a question before the Customs Authorities knowingly or intentionally having the reason to believe that such documents or statements is falls in any material particular same , he shall be guilty of an offence under this section.

That as discussed above, it is confirmed without any shadow of doubt that section 32 can only be applied on the basis of documents delivered, furnished by the importer or the statement given by him before the customs authorities. The data maintained by the customs under Rule 110 of the period expressed in Rule 107(a) of the Custom Rules, 2001 or the Valuation Ruling issued by Director of Directorate General of Valuation under section 25-A of the Customs Act, 1969 cannot be considered as a documents furnished by an appellant or reply in answer to the queries raised by the Customs Authorities by the importer and this stood validated from the prescribed form of the good declaration containing no column for declaring the applicable Valuation Ruling on the consignment under clearance. Therefore, no charge of mis-declaration can be levelled for any reason i.e. for assessment or adjudication purpose, hence invoking of section 32 by the respondent on the appellant and holding such charges as valid for imposition of fine and penalty is nothing more than an act of mala fide, high handedness and extortion , such act is never been appreciated by the Superior Judicial Fora being in violation of the statute and the dictum/principle laid down in plethora of reported judgments.

9.No cross objection under subsection (4) of section 194-A of the Customs Act, 1969 were submitted by the department, however Mr. Ghulam Yasin, Principal Appraiser, appeared on behalf of the respondent and supported the orders as correct in facts and prayed for dismissal of the appeal as of no substance.

10.Rival parties heard and case records perused, the issue involved in the appeal is that whether a charge of mis-declaration under the provision of Section 32 of the Customs Act, 1969 can be levelled on an importer on the basis of Valuation Ruling or data maintained under Rule 110 of the period expressed in Rule 107(a) ibid ? The respondent despite performing in the capacity of Adjudicating authority completely and intentionally ignored the Provision of section 32 of the Customs Act, 1969, direction contained in clause (i) of para 78 andSub-Para (3) of para. 101 of CGO 12/2002 dated 15-6-2002 and Serial No. (d) of Notification S.R.O. No.499(I)/2009 dated 15-6-2009. Prior to elucidating on these, it is appropriate to reproduce these here-in-below for ease of reference:--

Section 32 False statement, error, etc.-----If any person, in connection with any matter of customs,---

(a)makes or signs or causes to be made or signed, or delivers or causes to be delivered to an officer of customs any declaration, notice, certificate or other document whatsoever, or

(b)makes any statement in answer to any question put to him by an officer of customs which he is required by or under this Act to answer,

Knowing or having reason to believe that such document or statement is false in any material particular, he shall be guilty of an offence under this section. (Emphasis Applied)

Para 78 (i) of CGO 12/2002.---In cases involving mis-declaration of value the precise basis on which the declared values are held to be mis-declared should be clearly spelt and copy of the evidence on the basis of which it is so held should also be supplied to the party after omitting the names of the local importers of identical goods which are not required to be divulged to them.

Sub-para 3 of Para 101 of CGO 12/2002.---If the appropriate officer of Customs has reason to doubt thetruth or accuracy of the declaration made by an importer on documents produced in support of the declaration and explanation provided by the importers is not satisfactory or in the absence of explanation such officer is not able to determine the customs valuation of imported goods under the provisions of subsection (1) of section 25 of the Customs Act, 1969, such appropriate officer shall then proceed with determination of customs value according to the sequential method of valuation provided I the section 25, if the difference between the customs value so determined and the declared value is more than 30%, the importer may be charged for offence of mis-declaration under section 32 of the Customs Act, 1969.

Clause (d) of Notification No. S.R.O. 499(I)/2009

Value with difference of more than 30% in declared viz ascertained value determined on the basis of direct evidence after due process of adjudication.

11.On examination of the provision of section 32 of the Customs Act, 1969, it is observed that language of the provision can only be applied on the basis of the documents delivered, furnished by the importer or the statement given by him before customs authority. In the instant case, nothing is apparent from the record of the case that the appellant delivered or furnished any documents or statement with the MCC of PaCCS, which were found to be untrue in material particular. It is mistaken belief of the official of the MCC of PaCCS and the respondent that the Valuation Ruling issued by the Director, Directorate General of Valuation under the provision of section 25A of the Customs Act, 1969 and data of identical/similar goods maintained by the Collectorate in terms of Rule 110 of the period given in Rule 107(a) of the Customs Act, 1969 are also the prescribed documents , which an importer has to submit at the time of transmitting good declaration under section 79(I) of the Customs Act, 1969 and Rule 433 of Sub-Chapter-III of Chapter-XXI of Customs Rules, 2001.

12.The official of the MCC of PaCCS and the respondent also lost sight of the principle of law that allegation under charging section could only be invoked on the basis of the respective section not on the basis of presumptions or assumption. In the case of the appellant, the section 32 was invoked on the basis of non prescribed information/documents to which an importer has no excess, rendering the charge of mis-declaration based on mere assumption. The respondent also failed to take into consideration the golden principle of law that penal proceeding is criminal in nature which requires a prove beyond or reasonable doubt, which is not existent in the instant case. Instead no element of mis-declaration as expressed in section 32 of the Customs Act, 1969 is found, the impugned action of the MCC of PaCCS and respondent are held to be completely without jurisdiction, illegal void and ab-inito as held in reported judgment 2009 PTD 467, PLD 1959 Supreme Court (Pak) 364, PLD 1996 Kar. 68.

13.The insertion of para 78 in CGO 12/2002 dated 15-6-2002 has been made on the basis of numerous reported judgment of the Superior Judicial Fora that for levelling allegation of mis-declaration of value , it is upon the department levelling the allegation to substantiate through an incriminating undisputable direct evidence in the shape of evidential invoice of the said product of the period expressed in Rules 107(a) of CustomsRules,2001,re-validated by the Board through sub-para (3)of 101andclause (d)ofNotificationNo. S.R.O. 499(I)/2009dated15-6-2009. No evidence has been produced by the respondent as directed in para 78 at any stage i.e. preparation of contravention report, during the adjudication proceeding or before the Tribunal, irrespective of the fact that for disputing the said value of the imported goods, it was mandated upon the official of MCC of PaCCS to transmit view messages under Sub-Rule (1) of Rule 109 of Chapter IX and 437 of Sub-Chapter III of Chapter XXI of Custom Rules, 2001 to the appellant for transmitting/scanning additional documents. On the contrary no such exercise was under taken either of the officials, as evident from the fact that no copies of the transmitted view messages have been placed on record by them with the respondent and the Tribunal despite, shifting burden of proof. No decision was also communicated with grounds as enunciated in sub-rule (3) of Rule 109 confirming that no evidence was available with the official of MCC of PaCCS for levelling the charge of allegation. The department has miserably failed to discharge the onus of establishing that the price declared by the appellants of the imported goods are not fair and been mis-declared within the meaning of section 32 of the Customs Act, 1969 through concrete and positive evidence, rendering the allegation of value mis-declaration on the basis of arbitrary/unilateral determined value as positive evidence rather the said value is without any concrete and positive evidence and this cannot warrant a finding of falsity to the declaration in "material particular". Hence the charges of mis-declaration of value are declared to be unsubstantiated and as such of no legal effect, rendering the contravention report, show-cause notice and order-in-original as ab inito void. The same view has been taken by the Honb'le Supreme Court of Pakistan and High Courts and Tribunal in judgments reported Customs Appeal No. K-249/2000/13372, Customs Appeal No. K-35 of 2002, Customs Appeal No. K-1670/2001, 2005 PTD (Trib) 617, 1668/LB and 1669/LB of 2002, Customs Appeal No. K-1281/05, 1986 MLD 790 Karachi, PLD 1996 Karachi 68, 2006 PTD 909, 2002 PTD 2957, 2007 SCMR 1357 = 2007 PTD 1858, 2008 SCMR 438 , 1992 SCMR 1083 2008 PTD 1250 and 2008 SCMR 438".

14.The Tribunal also observed that the field formations level no charges of mis-declaration on the importer when the officials complete the assessment of the consignment on the basis of Valuation Ruling issued by Directorate General of Valuation under section 25A of the Customs Act, 1969. This is so because of the fact that value of the goods is to be assessed as per Valuation Ruling in field and vogue irrespectively of the value declared. The Valuation Ruling can only be over ruled where there is an evidence of higher value undisputed as per legal mechanism provided thereunder. By virtue of the fact that proving of charge of mis-declaration of value needs high standard of proof, a direct evidence not the valuation ruling, or the value of identical/similar goods available in the data. Additionally, in case of levelling charges of mis-declaration of value on each importer based on valuation ruling or identical/similar assessed value (instead of import) in the data, not a singleconsignment would had been cleared by any field formation in Pakistan and their job would had been only to frame contravention reports,adjudicatingauthoritieswouldhadbeenpiledwiththecasesand the port/dry port would had been chocked to their capacity due to non timely clearance of consignments. The Tribunal failed to digest the wisdom of respondent shown in the order which on one hand US$. 1.62/kg on the basis of Valuation Ruling No.481 of 2012 dated 24-10-2012, whereas, on the other hand holding the appellant guilty of mis-delcaration of value and imposition of a fine on the appellant @ 35%while completely ignoring the fact that the good declaration contain no column for giving declaration to the fact of valuation ruling, provision of Section 32 of the Customs Act, 1969, direction of the Board contained in para 78 and Sub-para (3) of para 101 of CGO 12/2002 dated 15-6-2002 and clause (d) of notification No S.R.O.466(I)/2009 dated 15-6-2009. Thus rendering, the charge of mis-declaration of value without any substance and nullity to the provision of Act and Rules and regulation framed there-under and existing practice in vogue within the field formations.

15.In view of the foregoing discussion we hold that the impugned order as well as proceedings held in hierarchy of the respondent department are patently infested with legal and factual impropriety and therefore are to be null and void. The appeal is allowed as no order to cost.

16.Order passed accordingly.

SAK/130/Tax(Trib.)Appeal accepted.