AYYAZ ENTERPRISES VS COLLECTOR OF CUSTOMS, 2014 PTD-CUSTOMS-APPELLATE-TRIBUNAL-KARACHI 956 (2013)

2014 P T D 956

[Customs Appellate Tribunal, Karachi]

Before Adnan Ahmed, Member Judicial-II

Messrs AYYAZ ENTERPRISES

Versus

COLLECTOR OF CUSTOMS and 2 others

Customs Appeal No.K-791 of 2013, decided on 22/10/2013.

Customs Act (IV of 1969)---

----Ss. 193(3) & 195---Mis-declaration---Under-invoiced value of imported goods---Short payment of Customs duties---Finalized assessment of imported goods---Re-assessment of imported goods by the orders of Collector of Customs (Appeals)---Powers and scope---Importer/appellant imported a consignment of Fabric and sought clearance of the same by paying Customs duties on declared value of goods---Examination staff of Customs physically examined the consignment and found an original invoice indicating the actual value of goods, which was much higher than the declared value of goods---Appellant was charged with an offence of filing fake and forged information/particulars with a view to get clearance of imported goods at higher under invoiced value---Deputy Collector of Customs (Adjudication) ordered for confiscation of impugned goods with a concession of redemption of goods on payment of fine along with penalty---Appellant importer aggrieved by order in original filed appeal before Deputy Collector of Customs (Appeals)---Collector of Customs (Appeals) directed to refer the case to Directorate General of Valuation for re-assessment of value of imported goods vide order-in-appeal---Contention of the appellant importer was that the Collector of Customs (Appeals) had the power to confirm, modify or annul the decision or order appealed and had no power to remand the case for re-assessment, therefore the impugned order-in-appeal was void and illegal---Validity---After release of consignment, the Deputy Collector of Customs had issued a show-cause notice without jurisdiction---Re-assessment of goods was illegal and without jurisdiction as the Deputy Collector had no authority to re-open the case after its assessment---Impugned orders were set aside---Appeal was allowed.

M.H. Awan for Appellant.

Farooq Khan, Law Officer for Respondent.

Date of hearing: 7th October, 2013.

ORDER

ADNAN AHMED, MEMBER JUDICIAL-II, KARACHI.---This order will dispose off Customs Appeal No.K-791 of 2013 filed by the appellant against the Order-in-Appeal No.7573 of 2013 dated 11-7-2013 passed by the Collector of Customs, (Appeals), Karachi.

2.Brief facts of the case are that the appellant imported a consignment of 704 Meter Fabric from UK against IGM 122 of 2012 dated 1-3-2013 Index No.440 by declaring description of the imported goods as "Fabric" and filed a WeBOC Goods Declaration No.KAP-HC-1190 dated 25-3-2013, invoice No.070413 dated 29-1-2013 and bill of lading No.DARSXJ083810 dated 6-3-2013 amounting to STG 1408 for clearance by taking benefit of S.R.O. 1155(I)/2011 and paid an amount of Rs.30,831 against duty and taxes under section 79(1)(b) of the Customs Act, 1969. During the physical examination of the consignment, the examination staff has found an original invoice indicating the actual value of the goods as STG 19360 (Rs.2941631) whereas the invoice filed indicates that total declared value as STG 1408 i.e. the difference in declared and found invoice is in term of percentage comes 1275% lower. The appellant had therefore committed an offence by filing fake and forged information/particulars of the case besides making an attempt to clear imported goods at highly under invoiced value besides filing forged information to the electronic system, wilfully and with mala fide intention and have attempted to defraud the government from its legitimate revenue of Rs.601666.

3.The Deputy Collector of Customs (Adjudication), Customs House, Karachi did not agree with the contention of appellant and passed an Order-in-Original No.93491 dated 30-5-2013 wherein ordered for confiscation of impugned items under sections 181 and 156 of the Customs Act, 1969 read with S.R.O. 499(I)/2009, however, the importer was allowed to redeem the goods on payment of 35% redemption fine of the value of offending goods and a penalty of Rs.25,000 was also imposed on the appellant, therefore, the appellant being aggrieved and filed an appeal before the Collector of Customs (Appeals), Karachi who decided the case as under:--

"I have scrutinized the whole case and also heard the arguments of both the sides. It is evident from the respondent's statement that there was some sought of mix up regarding the invoice issue and the respondents blame the change of software for his error. However; the respondents were not clear in explaining as to why the declared value of STG 2/meter was not accepted and the goods i.e." Snooker Fabric (Genuine Strachan 6811 Tournament Poll)" width 1.96 meters, were assessed initially at STG 3.24/ meter and subsequently at STG 27.5/meter, without informing the appellant nor showing them the invoice. When confronted with the question as to why the invoice was not shown to the appellants, they were unable to come up with a sound reason. Moreover, the respondents were also unable to satisfy this forum as to why an invoice found in the container for 257 meters was applicable to the whole consignment of 704 meters and if so under which Customs law/rules. Furthermore, in such cases, a decision based on insubstantial reasoning cannot be accepted in its crude form. It is imperative that before deciding such cases, laws and facts need to be woven together to come up with a fair judgment. In this case where the moot point involved is the invoice found in the container, some basic issues need to be identified such as:--

(1)Whether the invoice found inside the container, showing a higher value, could be termed as a valid "Document" for custom assessment purposes? If yes then can all the other import documents provided by the appellants be considered to be devoid of any legal force?

(2)Once the invoice showing a higher value has been retrieved from the container and taken as gospel truth for assessment purposes, then, is here any need left of applying the relevant provisions of section 25 of the Customs Act, 1969, by the Customs authorities?

(3)Whether it is viable and practical to assume that all import documents in cases where no invoice is found inside the container, are true and correct for customs assessment purposes?

(4)Whether the paltry amount of Rs.5000, imposed on goods where no invoice is found inside the container, a sufficient safeguard of the exchequer's revenue?

Thus it is obligatory to keep the aforesaid points in view when such a case comes up. Consequently, from a perusal of the record in the instant case it is apparent that this is not an evident case of mis-declaration or-suppression of value. The assessment of the fabric at STG 3.24/meter and subsequently at STG 27.5/meter (on the basis of invoice found in the container) by the respondents shows that even the respondents were not sure of the correct value of the goods. It transpires that they merely applied the value shown in the invoice found in the container (for 257 meters) mechanically after the goods i.e." Snooker Fabric (genuine Strachan 6811 Tournament Poll)" width 1.96 meters, were assessed at STG 3.24/meter which was duly accepted by the appellants.

From the foregoing discussion, it is clear that the respondents are not on firm grounds as far as the assessment of goods is concerned. However, the legitimate revenue of the exchequer has to be protected at all costs and I am of the view that the larger interest of justice and fair play demands that the bone of contention in the case, which is the correct assessment value of the goods, should be decided by a professional body, which has been setup by the exchequer for this specific purpose, i.e. the Directorate General of Valuation, Karachi. Accordingly, I hold that the case be referred to the Valuation Department for the correct assessment of customs value of "Snooker Fabric (genuine Strachan 6811 Tournament Poll)" width 1.96 meters, and the said determined should be acceptable to both the sides. Under the circumstances, the fine imposed on the appellants is remitted and the penalty, is reduced to Rs.10,000. Moreover, the appellants deserve for delay and detention certificate from customs. The case is referred back to the concerned adjudicating officer having jurisdiction for doing the needful. The appeal is disposed of accordingly."

4.The appellant being disagree with the Order-in-Appeal No.7573/2013 dated 11-7-2013 passed by the Collector of Customs, (Appeals), Karachi and filed this appeal before this Tribunal on the grounds as under:--

That the Collector (Appeals) has the powers to confirm, modify or annul the decision or order appealed against but he has no powers to remand a case for re-assessment under section 193(3) of the Customs Act, 1969, therefore, the impugned order-in-appeal is void and illegal which is required to be set aside.

That the assessment of imported consignment was finalized under section 80 of the Customs Act, 1969 on 26-5-2013 therefore, only the Collector concerned has the power to re-open the case for examination its legality or propriety and pass order. But in this particular case the goods were re-assessed without the orders of the Collector, therefore, the whole proceedings were void and illegal and the impugned order-in-original is required to be set aside only on this ground.

That the contravention is made against the importer for import of petty consignment of 704 meter fabrics, this aspect is requires consideration.

That examination was conducted on 26-3-2013. As per examination report no invoice was found from the goods and the so called invoice is fake and forged which cannot be treated as evidential invoice.

That the so called invoice was seized by the customs but the required formalities under section 168 of the Customs Act, 1969, were not complied with by the Customs, therefore, the found invoice cannot be treated as evidential invoice for the purpose of assessment of importable goods.

That the consignment was assessed on 26-03-2013 on higher value @ STG 3.24, meter as against declared value @ STG 2/meter, the duty and taxes were paid on 28-3-2013 and consignment was released for delivery to importer.

That the value of STG 27.5/meter does not appear anywhere on the record. The value in the Customs Computerized data is STG 3.24/meter. The difference between Customs computerized data value and value on the invoice found from the goods is abnormal which can never be accepted.

That the found invoice as told, was of 257 meter whereas the imported consignment is of 704 meter, therefore, the so called found invoice has no relevancy with the imported consignment.

That importer has been implicated in this particular case due to some hidden enmity and business rivalry.

That it is prayed that this Honorable Tribunal may be pleased to allow this appeal and set aside the show-cause notice, order-in-original and impugned order-in-appeal and allow assessment made on 26-03-2013 as final assessment and declare all the further proceedings as null and void and declare that found invoice of 252 meter is irrelevant as the imported consignment is of 704 meter with direction to the Appraisement Collectorate for release of consignment as the duty and taxes has already been paid and return of the Bank demand draft of Rs.652000 to the appellant.

5.The para wise comments were submitted by the department on the grounds of appeals are as under:--

That redemption fine was imposed by the learned adjudicating authority in the strict compliance of applicable S.R.O. 499(I)/ 2009 dated 13-6-2009, which set out the pitch of fine that could only be reduced through the statute but the learned respondent No.1 has done it on his own accord, therefore, he has committed serious error of law in remitting the imposed fine. Likewise, the learned respondent has also erred in reducing the amount of penalty imposed upon the respondent No.2. Under such circumstances, the action taken by the learned respondent No. 2 is deemed to be bad in the eye of law and as such not tenable.

That the contents of this para are maintainable and same are applicable in the cases, where 'no invoice is found' but the assessment is challenged by the importer based on concrete evidences and that Collector of Customs, on application by the aggrieved party can re-open the case. In the instant case, evidence of higher value in shape of found invoice came before the customs authorities, therefore, it had rightly been made basis for re-assessment of the goods so found during the course of physical examination.

That for assessing the value of imported goods the aspect of being it petty or in bulk is material. Whereas, assessment of imported goods is done on the basis of original invoice found during examination of the goods. In this case, invoice, was found pertaining to the description of actually imported goods, therefore, it was made basis for re-assessment. In the circumstances, this issue requires no further corroboration or consideration thereto.

That it is incorrect to state that no invoice was found during examination, whereas the factual position is that actual Invoice No. 1050836 dated 20-1-2013 was found in the container and the appellant was confronted with it but he failed to give any plausible reason to justify the declaration made on the face of Goods Declaration and also to clarify his position vis-a-vis invoice presented by him before the customs authorities. In the circumstances, the contentions of the appellant are not tenable.

That the contents of this Para-5 are misleading and based on twisted facts with a view to take refuge from this Hon'ble Tribunal. The factual position is that found Invoice was seized under section "168" of the Customs Act, 1969 under the cover of proper musheernama and all legal formalities were duly fulfilled with regard to the seizure of found Invoice, therefore, same is admissible as evidential material, which served the purpose for re-assessment of actually imported goods by the appellant under the guise of Fabric.

That initially duty and taxes were assessed by the appellant on the basis of self-assessment under computerized system and it was believed that the appellant must have been honest in doing so and has paid the self-assessed of duty/taxes. However, the impugned consignment was selected by the system for physical examination, which resulted in retrieving the actual invoice from the container. Hence, it is incorrect to say that the consignment was released for delivery of the consignment to the appellant.

That as per the procedure, the shippers which exporting their consignment for Pakistan, they are required to place the actual Invoice of the goods so that the chances of any evasion of duty be eliminated. As regard, the available computerized data is concerned the same is being maintained by the customs authorities and is based on previous imports. However, in this case, the actual invoice is found the same would lead to amend the available data, therefore, difference between the available data and value shown in found Invoice cannot be deemed to be as abnormal and is acceptable as authentic documents being supplied by the exporter.

That the consignment upon examination was found to contain the goods contrary to the declaration made by the appellant but found description of goods was in accordance with the description detailed in the found Invoice. As far as the contention of the appellant with regard to metrage of found goods is concerned, same is misleading for the reason that when two packing lists of the goods obtained from the concerned shipping line reflect the quantity of goods as 257 meters and 447 meters, hence, the total quantity comes to 704 meters, which is the actual declared quantity by the appellant. On the basis of documentary evidences, the contention of the appellant is entirely negated.

That the case instituted against the appellant is based on true facts and circumstances which emerged after the physical examination of the consignment was conducted and Invoice of higher value was retrieved from the container. In said circumstances, it is wrong to allege that the appellant has falsely been implicated in this case. The facts given in above lines would clearly reveal that appellant committed criminal act by furnishing the false invoice of much lower value for the purpose of assessment.

That the above discussed documents of evidentiary nature would be submitted before this Hon'ble Tribunal at the time of hearing of present appeal and further arguments would be advanced accordingly.

That the facts given above, clearly prove that the appellant committed criminal act by furnishing a fake Invoice of much lower value for the assessment purpose to the respondent. The actual invoice retrieved during physical examination was of 1275% higher value. This honorable Appellate Tribunal is, therefore, graciously requested to kindly dismiss the appeal, so that the ends of the justice be met.

6.The learned counsel for the appellant filed rejoinder to the para comments submitted by the department as under:--

That the above GD was submitted on 25-3-2013, goods were examined on 26-3-2013, assessment was completed on 26-3-2013 and consignment was released subject to payment of additional amount of duty and taxes which was paid on 28-3-2013. After payment of additional duty and taxes and release of consignment the Deputy Collector of Customs had no jurisdiction to issue show-cause notice and adjudicate the case. It was only the Collector of Customs who could re-open the case for re-assessment or adjudication of the case under section 195 of the Customs Act, 1969.

That it is also incorrect that the Collector (Appeals) has committed serious error of law in remitting the imposed fine and reducing the amount of penalty. As a matter of fact the Collector (Appeals) has the powers to confirm, modify or annul the decision or order appealed against under section 193(3) of the Customs Act, 1969.

That the imported consignment is consisted of 704 meter of Fabric whereas the so called invoice is of 257 meter and as such it does not relate to imported consignment. There is no evidence of value @ STG 27.5/meter available with the Customs authorities all over the Pakistan hence, no such invoice was found from the consignment. It is also incorrect that second assessment was made on the basis of above said so called invoice. The respondents Nos. 2 and 3 may kindly be directed to submit the proof of second assessment.

That the consignment is consisted of 704 meter and so called invoice is 257 meter which has no relevance to the imported consignment.

That the consignment was examined on 26-3-2013 and there is no evidence on record that any seizure report was made during the examination and no notice was served upon the importer as required under section 168 of the Customs Act, 1969, really it is afterthought because as per F.I.R. dated 5-4-2013, the date, time and place of seizure of the documents/record is shown as 2-4-2013. This statement confirms that the author of the para wise comments was not fully conversant with the real facts of the case. The statement "it is incorrect to say that the consignment was released to the appellant" is against the factual position of the case. The consignment was assessed on 26-3-2013 and additional duty and taxes were paid on 28-3-2013, resultantly the consignment was released. The consignment was blocked after its release.

That the imported consignment is 704 meter and there was no justification to issue two invoices for one and same consignment. The clarification of respondents is incorrect; they have tried to cover their illegal act. The Collector (Appeals) vide his Order-in-Appeal No. 7573/2013 dated 11-7-2013 has observed as follows:--

"When confronted with the question as to why the invoice was not shown to the appellants, they were unable to come up with a sound reason. Moreover, the respondent were also unable to satisfy this forum as to why an invoice found in the Container for 257 meter was applicable to whole consignment of 704 meter and if so under which Customs law/ rules. Furthermore, in such cases, a decision based on insubstantial reasoning cannot be accepted in its crude form"

That the respondents may kindly be directed to show the other invoice of 447 meter and also justify as to why the two invoices were required for one and same consignment.

That in view of above submissions it is prayed that the show-cause notice and order-in-original being illegal, void, ab-initio may kindly be set-aside and allow the appeal in the interest of justice.

7.The learned counsel for the appellant argued that the importer has imported a consignment of 704 meters of fabric from UK against IGM No.122/2012 dated 1-3-2013 and properly filed GD on 25-3-2013. The goods were examined and assessed on 26-3-2013 then released subject to payment of duty and taxes on 28-3-2013. After release of consignment, the Deputy Collector of Customs issued a show-cause notice without jurisdiction. As per law, the Collector of Customs is only competent to re-open any case for re-assessment or adjudication under section 195 of the Customs Act, 1969. As regards to found invoice, the learned counsel for appellant rejected the respondent contention on grounds that the imported consignment is of 704 meters and the found invoice is of 257 meters so there is no relevance between the found invoice and imported consignment. As regards to value, there is no evidence of value @ STG 27.5/meter available with the customs all over the country. He further argued that it is incorrect that second assessment was made on the basis of so called invoice as there is no proof of such assessment. As regards to seizure report, the record of case is showing that there is no seizure report was prepared during the examination and no notice was served upon the importer as required under section 168 of the Customs Act, 1969 all these are afterthought actions because as per F.I.R. dated 5-4-2013, the date time and place of seizure of the documents/record is shown as 2-4-2013 and the consignment was blocked after its release. The imported consignment is 704 meters and there was no justification to issue two invoices for one and same consignment. The clarification of respondents is incorrect; they have only tried to cover their illegal act. It is also evident from the observation of Collector (Appeals) in the impugned order that "When confronted with the question as to why the invoice was not shown to the appellants, they were unable to come up with a sound reason. Moreover, the respondent were also unable to satisfy this forum as to why an invoice found in the Container for 257 meter was applicable to whole consignment of 704 meter and if so under which Customs law/rules. Furthermore, in such cases, a decision based on insubstantial reasoning cannot be accepted in its crude form". The respondents also failed to show the other invoice of 447 meter and not justified the requirement of two invoices for one and same consignment.

8.The departmental representative argued that the appellant imported 704 meters of Fabric from UK and declared the description of same as fabric by filing GD through computerized system for clearance by taking benefit of S.R.O.1155(I)/2011 and paid Rs.30,831 against duty and taxes under section 79(1)(b) of the Customs Act, 1969. On physical examination, an invoice was found from container which showing the value of the goods as STG 19360 whereas the invoice filed and value of goods declared is STG 1408. The difference in declared and found value is in term of percentage comes 1275% lower, therefore, the appellant had committed an offence by filing fake and forged information and attempted to clear goods on lower value, therefore, the case was re-opened and assessed on the basis of found invoice It is also incorrect to state that no invoice was found during examination, the factual position is that the invoice No. 1050836 dated 20-01-2013 was found in the container and the appellant was confronted with it but he failed to give any plausible reason to justify the declaration made on the face of Goods Declaration and also to clarify his position about invoice presented, hence, the contentions of the appellant is not tenable. The found invoice was seized under section 168 of the Customs Act, 1969 under proper musheernama after completing all legal formalities. He further argued that as per procedure, the shipper while exporting a consignment, he is required to place the actual invoice of the goods so that the chances of any evasion of duty be eliminated. As regard, the available computerized data is concerned the same is being maintained by the customs authorities and is based on previous imports. However, in this case, the actual invoice is found the same would lead to amend the available data, therefore, difference between the available data and value shown in found invoice cannot be deemed to be as abnormal and is acceptable as authentic documents being supplied by the exporter. On examination, the found goods were contrary to the declaration. The contention regarding meters is misleading for the reason that when two packing lists of the goods obtained from the concerned shipper reflect the quantity of goods as 257 meters and 447 meters, hence, the total quantity comes to 704 meters, which is the actual declared quantity by the appellant.

9.In view of the aforesaid facts and circumstances of case. I am a considered view that the re-assessment of goods is illegal and without jurisdiction as the Deputy Collector is not authority to re-open a case after its assessment. As regards to meters of consignment there is wide gape between meters indicated in found invoice or invoice submitted by the appellant and the value of goods was re-assessed on higher side, hence, I allow the appeal of appellant and set aside the impugned orders passed by the lower forums.

10.Order passed accordingly.

JJK/178/Tax(Trib.)Appeal accepted.