COLLECTOR OF CUSTOMS through Deputy Collector VS SIM LIM INTERNATIONAL, 2014 PTD-CUSTOMS-APPELLATE-TRIBUNAL-KARACHI 330 (2013)

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

----Ss. 32, 179, 193 & 195---Mis-declaration---Assessment order attained finality---Re-opening of past and closed matter by customs authorities---Scope---Respondent imported consignments of refrigerants, the same were cleared after payment of leviable taxes and customs duties---After the lapse of three years, Director General of Post Clearance Audit had reported that consignments of refrigerants were cleared by mis-declaring the classification of goods and the respondent importer has availed concessionary duty/exemption which was for pure refrigerant gases---Appellant customs authorities issued show cause notice to respondent importer and passed order-in-original demanding payment of short levied customs duties and taxes---Contention of the Collector of Customs was that respondent had imported refrigerant which were chemically blended refrigerant gases therefore because of wrong classification the customs duties and taxes had been shortly paid---Order-in-original passed against the respondent importer was challenged before Collector of Customs (Appeals) which was set aside---Contention of the respondent importer was that the impugned customs clearances were made after lawful assessment orders passed by the appropriate officers at the crucial dates, which had attained finality---Assessment orders became past and closed transactions and vested right accrued to the respondent importer, therefore show cause notice and impugned order-in-original was illegal---Validity---Assessment under the appropriate HS code was the sole duty of the Assessing Officers, who had assessed the goods as per practice of the Customs department prevailing all over the country during the crucial times---Goods were cleared after payment of leviable customs duties and taxes and the same were sold by importer in the normal course of business---Assessment orders held the field as the same were never re-opened or got re-opened under the mandate of S.193 or S.195 of the Customs Act, 1969---Customs authorities had arbitrarily attempted to re-open the matter, which was not permitted under the law---Order-in-appeal was upheld---Appeal was dismissed.

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

----Ss. 32, 80, 179, 193, & 195---Mis-declaration---Re-assessment of goods on the basis of contravention report after the lapse of three years---Scope---Respondent imported consignments of refrigerants, which were cleared after payment of leviable taxes and customs duties---After the lapse of three years, Director General of Post Clearance Audit had reported that consignments of refrigerants were cleared on mis-declaration of the classification of goods---Respondent importer was served with a show cause notice for illegally taking benefit of concessionary duty/exemption which was for pure refrigerant gases---Additional Collector of Customs demanded the respondent importer for payment of short levied customs duties through order-in-original---Respondent importer challenged the order-in-original before Collector of Customs (Appeals) which was set aside---Contention of the respondent importer was that the Additional Collector ofCustoms while issuing show cause notice had misused the authority for apparent non-bona fides and attempted to re-assess goods through an arbitrary and misconceived classification---Contention of the appellant customs authorities was that the demand for short levied customs duties made through impugned order-in-original was not time barred---Validity---No new evidence on false declaration was alleged or available, therefore re-assessment of goods already cleared could not be made---Dispute had been created by the Post Clearance Audit at belated stage on expiry of three years from the date of first assessment---Action on part of Post Clearance Audit as such was infested with non-bona fides, negligence and had proved nothing but mis-conduct in discharge of duty after lapse of three years---Customs functionaries acted as to injure the importer under misuse of public authority---Appeal was dismissed.

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

----Ss. 32, 80, 179, 193 & 195---Customs General Order (12 of 2002), O.2---Classification Committee---Re-assessment of goods by classifying the HS Code---Scope and powers---Deputy Director Post Clearing Audit submitted contravention report against the goods imported by respondent importer---Show cause notice was issued to respondent importer on the allegation that he got cleared his consignments mis-declaring the classification code---Additional Collector of Customs directed the respondent importer for payment of customs duties---Order-in-original of re-assessment on the basis of classification passed by Additional Collector of Customs was set aside by Collector of Customs (Appeals)---Contention of the respondent importer was that the Additional Collector of Customs had assumed the jurisdiction of Classification Committee, therefore order-in-original was unlawful and Collector of Customs (Appeals) had rightly set aside the same---Validity---Case of re-assessment related to technical and complicated dispute on classification between two HS Codes, which was the sole jurisdiction of Classification Committee comprising of various members having classified knowledge---None else sitting singly could encroach upon the jurisdiction of Classification Committee---Deputy Director of Post Clearing Audit or Additional Collector Adjudication had no jurisdiction to pass judgment or decide the complicated dispute of classification or to make re-assessment---Order of Collector Customs (Appeals) was upheld---Appeal filed by the Collector of Customs was dismissed.

PTCL 2008 CL 17(sic) and Director, Directorate General of Intelligence and Investigation and others v. Messrs Al-Faiz Industries (Pvt.) Ltd. and others 2006 SCMR 129 ref.

Muhammad Afzal Awan for Appellant.

Ghulam Yasin Appraising Officer for Respondents.

Date of hearing: 25th July, 2013.

ORDER

CH. NIAMAT ULLAH, CHAIRMAN.---This appeal came up for hearing against Order-in-Appeals Nos.6911 to 6914 of 2011 passed by the Collector of Customs (Appeals) Karachi whereby appeal of the Importer/respondent No.1 was allowed by the respondent No.2 the Collector Customs (Appeals) and the Order-in-Original bearing No.66 of 2011 (Manual-4) dated 28-11-2011 was annulled. The facts of the case as stated in the show cause notice bearing No.MCC/SCN-15/PCA-1608/BLENDED-REFRIGERANTS/SIM LIM/ADC-ADJ/ PaCCS/2011, dated 24-9-2011 "SCN" are as under:

2.The Directorate General of Post Clearance Audit "PCA" Karachi has reported vide its Contravention Report C. No. PCA/1608/2010/ Audit/1872 dated 12-4-2011, that the importer/respondent imported (16) consignments of refrigerants and filed Goods Declarations on the various dates, i.e., 20-7-2007, 31-8-2007, 24-1-2008, 31-3-2008, 29-4-2008,19-5-2008, 28-6-2008, 24-7-2008, 23-8-2008, 18-9-2008, 28-11-2008,9-4-2009, 9-4-2009, 13-5-2009, 29-5-2009 and 5-5-2009.

3.Those consignments of refrigerants were cleared after misdeclaring the classification under HS Code 2903 and availing concessionary duty/exemption under Pak-China FTA. The said PCT Heading 2903 covers pure refrigerant gases, whereas the instantly imported refrigerant are chemically blended refrigerant gases and therefore appropriately classifiable under HS Code 3824 as Chemical Mixtures. Because of wrong classification the duty taxes have been found short paid.

4.The appellant disclosed his dissatisfaction with the findings of the respondent No. 2/the Collector Customs, (Appeals) that he allowed appeal, of the importer, without taking into consideration of the submission of the Customs, the contents of Order-in-Original and without considering the provisions of Pakistan Customs Tariff, the learned Collector Customs (Appeals) allowed appeal and set aside the order-in-original on the ground that Nine (09) GDs the demand is time barred in terms of section 32 of the Act and further the PCT Heading 3824.9099 has been determined as per PaCCS Collectorate's letter dated 8-7-2010, therefore, the PCT Heading of 3824.9099 cannot be applied retrospectively.

5.That the importer denied the allegations stated in the memo. of appeal Para Nos. 1 to 4 of facts and Para Nos. 1 to 9 of grounds, and raised almost Fifteen (15) preliminary legal objections. The appellant did not file a rejoinder as to rebut the same; the core issue is the dispute of complicated classification raised by the Collectorate in defiance to the prevailing practice since the last many years in all the Collectorate of Pakistan, and decided at its own end without referring seeking independent ruling from the appropriate authority for such complicated classification. The crux of arguments advanced by the importer/ respondent No. 1 at all the stages (including original and first appeal) is as under:--

(a)the customs clearances were made after lawful assessment orders passed by the appropriate officers at the crucial dates by different officers working at the crucial dates the assessment orders were passed. Secondly, it was sole obligation of the assessing officers to classify the goods under the appropriate HS Code (A provision of First Schedule to the Customs Act, 1969). Whereas the obligation of the importer was limited to declaration of the material facts of the import consignment in the Goods Declarations such as (a) Description of Goods (b) its Quantity and (c) the Transaction Value. Which was found correct and was not challenged or impugned in the SCN.

(b)That the said Goods Declarations were Sixteen (16) in number and the appealable assessment orders were passed during a period spread over a span of two years (from 20-7-2007 to 0505-2009) on the sixteen different Goods Declarations and different times and were assessed by various Customs Officers comprising of different Appraising Officer, Principal Offices, Assistant Collectors and Deputy Collector. The assessments of goods were made lawfully at the applicable HS Codes as well as policy of the Customs House and the long standing practice under the mandate of Order 74 of Customs General Order 12 of 2002.

(c)That such assessment orders attained finality as the Customs or its field forces did never challenge such assessment orders under section 193 of the Customs Act, 1969 such assessment orders became past and closed transactions and vested rights accrued to the importer. Moreover during the crucial periods the Collector examined the record of each and every assessment order and were satisfied with the legality of the assessment made in the appropriate HS Codes in all those Sixteen (16) Goods Declarations and never re-opened or changed the same under the mandate of Section 195 of the Customs Act, 1969.

(d)That the Additional Collector issued the Show Cause Notice under misuse of authority of section 179 of the Customs Act, 1969 for apparent non-bona fides and attempted to re-assess the goods through an arbitrary and misconceived classification of the goods. Instead of re-assessment order under section 80(3), he passed the impugned Order-in-Original bulldozing all the legal, constitutional, and vested rights of the importer/ respondent No. 1, as well as in violation to the mandate of Customs General Order 12 of 2002 "CGO" strictly binding to be obeyed by all the field forces of the Federal Board of Revenue vide its Orders 74 on Departure from existing practice and Order 2 on Classification of Goods.

(e)That the proceedings under taken by the Additional Collector acting under section 179 were unlawful not only bye-passed the authority of sections 193, 195 but also that of section 80 and Order 2 of the Customs General Orders and assumed the jurisdiction of classification committee of experts comprising more or less in eight in number. As such attempted fraud with the facts and law of the case under apparent non-bona fides as to cause injury to the appellant which is not authorized under the mandate of section 166 of P.P.C.

(f)That at the original stage the Customs' field forces "PCA" and Additional Collector attempted to frustrate and confiscate the vested rights accrued to the importer/respondent under various provisions of law subjected to mandatory procedure and period of limitations prescribed under the Customs Act, 1969, including but not limited to sections 80, 83, 193, 195, 223, 4 and 65 of the Customs Acts. 1969 and Customs General Order 12 of 2002 dated 15-6-2002 its Orders 2, 74, 80, 101 and others. They attempted to frustrate the enunciated principle of law "If the law had prescribed method for doing of a thing in aparticular manner, such provision of law is to be followed inletter and spirit." Relied upon judgment of Honourable, Supreme Court of Pakistan cited as PTCL 2008 CL 17 (sic).

(g)That the PCT Heading 3824.9099 has been determined as per PaCCS Collectorate letter dated 8-7-2010 therefore, the PCT Heading of 3824.9099 cannot be applied retrospectively on the customs cleared consignments prior to 8-7-2010 as per mandate of Order 74 of Customs General Order 12 of 2002. Moreover theShow-CauseNoticewasissuedbeyondtheperiodofThree (3) years if the case is that of error, omission or inadvertence of the field forces of the Customs in the cases. The goods are no more within the custody of the importer/respondent No. 1 he is not obliged to be penalized for the neglect of the appellant and all those working under his instructions and direction. No action was ever taken by the appellant against all those Customs Officers who passed the assessment orders at different crucial dates, which proves non-bona fides of the appellant towards the importer/respondent.

6.The Additional Collector did not, apply his judicial mind or did not choose to demolish the argument raised by the importer/respondent at the original stage and passed the Order-in-Original bearing No. 66 of 2011 (Manual-4 Cases) dated 28-11-2011, which reads as under:--

"I have gone through record of the case carefully considered written replies of the respondents and heard arguments of both sides. The crux of the matter is as to whether the impugned goods are classifiable under PCT Heading 2903 or Heading 3824. The prosecution has contended that the goods being blended refrigerant gases are appropriately classifiable under HS Code 3824 as chemical mixtures. The respondents denied and vehemently contended that the impugned goods are to be classified under HS Code 2903. It is general principle of interpretation of the Harmonized System that the classification shall be determined according to the terms of heading. Heading 29.03 is for Halogenated derivatives, whereas impugned goods being chemically blended refrigerant gases fall squarely under HS heading 38.24."

7.That being aggrieved by the Order-in-Original an appeal was preferred by the importer/respondent No. 1 under Section 193 of the Customs Act, 1969. The learned Collector Customs (Appeals) Karachi, respondent No. 2 passed a speaking order and finally observed and adjudged as under:--

"Taking in consideration of all accumulated facts and law, I am satisfied that the impugned order has not been passed in accordance with law and is therefore devoid of substance. Moreover, the respondents have been unable to refute any of the legal arguments and stance adopted by the applicant".

8.That now being aggrieved by the Order-in-Appeal the Collector of Customs/Appellant filed the captioned appeal, the Memo. of Appeal was not signed by him but the same was signed and verified by the Deputy Collector of Customs. The Counsel for the respondent No. 1 impugned the maintainability of the appeal as the same is deemed not to have been filed in accordance with the law as per enunciated Principle of Law by the Honorable Supreme Court of Pakistan cited as 2006 SCMR 129 in the case of Director, Directorate General of Intelligence and Investigation and others v. MessrsAl-Faiz Industries (Pvt.) Limited and others.

9.That the counsel for the respondent No. 1 farther argued that it is sole jurisdiction of the Federal Board of Revenue to authorize the Deputy Collector as to act or sign in lieu of Collector under the mandate of section 5 of the Customs Act, 1969. Otherwise there in no authority of law to confer such powers to subordinate by the Collector himself for an assignment being performed by him in his official capacity for official task. The Collector is an officer duly appointed under section 3 of the Customs Act, 1969 and has filed the captioned appeal in his official capacity (not in personal capacity). It is legislated law under section 4 of the Customs Act, 1969 that the subordinate officer of Customs cannot exercise such powers and discharge such duties as are conferred or imposed on his senior officer working under the Customs Act, 1969.

10.That Mr. Ghulam Yasin the Appraising Officer of the appellant reiterated the arguments contained in the memo. of appeal and the case was heard at length in the light of record, arguments advanced by both the sides on in the light of applicable provisions of law, I observe that:--

(a)there was no misdeclaration of the material facts of the consignments in the referred GD(s), the assessment under the appropriate HS Code was the sole duty of the Assessing Officers and they assessed the goods or let to be assessed as per practice of the Customs prevailing for the customs clearances all over the country during the crucial times. On clearances the goods against payment of leviable duty/taxes the same were sold by the importers in the normal course of business. The assessment orders hold the field as the same were never reopened or got re-opened under the mandate of section 193 or 195 of the Customs Act, 1969 but attempted arbitrarily to be reopened under the authority of section 179 of the Customs Act, 1969, which is not permitted under the law.

(b)Secondly, the cases under their circumstances were not fit for re-assessment, by any stretch of imagination, under the mandate of section 80 of the Customs Act, 1969 as no new evidence on false declaration was alleged or available in this case. The dispute created by the Post Clearance Audit "PCA" under Audit Observation No. PCA/1608/2010/Audit was dated 28-7-2010 at belated stage on expiry of three years from the date of first assessment in GD No. I-HC-332795-2007. The action on part of PCA as such is infested with non-bona fides, negligence and proves nothing but mis-conduct in discharge of duty after lapse of three years. Such negligence in the last referred assessed GD No. I-HC-1021939-2905-2009 works more than one year as such this is matter of serious concern as the public functionaries acted as to injure the importer under misuse of public authority.

(c)Thirdly this case relates to technical and complicated dispute on classification between the two HS Codes 2903 and HS Code 3824, which, under the law, is the sole jurisdiction of the Classification Committee comprising of various members having classified knowledge. None else sitting singly can encroach upon the jurisdiction of the Classification Committee (constituted and working under the mandate of Order 2 of the CGO 12/2002). There was no jurisdiction with the Deputy Director PCA or the Additional Collector Adjudication as to make judgment /decided the complicated dispute of classification or to make re-assessment of section 80 of the Custom Act, 1969.

(d)That the Impugned judgment made by the collector Customs (Appeals) in order-in-appeal is speaking judgment on all the aspect and there is no illegality. However at the original stage of Custom, field forces attempted to frustrate and confiscate the vested rights accrued to the importer/respondent under various provision of law, procedure of limitation, including but not limited to sections 80, 83, 193, 195, 223, 4 and 65 of the Customs Act, 1969 and Customs General Order 12 of 2002 dated 15-6-2002 its Order 2 and 74.The impugned order reads.

8. "Taking into consideration all accumulated facts and law, I am satisfied that the impugned order has not been passed in accordance with the law and is therefore devoid of substance. Moreover the respondents have been unable to refute any of the legal arguments and stances adopted by the appellants. Accordingly, the appeal is allowed."

"Finally, I am of the view that the case in hand relates to dispute regarding classification which was required to be referred to Classification Committee for clarification as per prescribed procedure. However, the record produced before me reveals that the appellant was in hurry to pass order-in-original for changed classification from retrospective effect. The contention of the respondent No.1 that the matter of this case are not "chemically blended refrigerant gases" but are "compound of pure refrigerant gases" has noteven been considered by the appellant. Further more, refrigerant gas R-406-a was classified under HS Code 3824.9099 through a letter No.MCC-FTO-88/2009-PaCCS dated 8-7-2010 of the PaCCS Collectorate whereas the consignments of the subject case are of the years 2007, 2008 and 2009. The appellant has agreed that this classification of the PaCCS Collectorate is effective prospectively and not retrospectively.

12.In view of the above I am satisfied with the order-in-appeal and same is upheld and departmental appeal is dismissed.

13.As the facts of the case as well as legal grounds of Appeals Nos.229/13, 214/13 and 212/13 are same to this appeal. The judgment passed in this appeal will equally be applicable to these appeals.

14.Announced.

15.Parties may be informed accordingly.

JJK/161/Tax(Trib.)Appeal dismissed.