M.I. TRADERS, LAHORE VS ADDITIONAL COLLECTOR OF CUSTOMS, 2014 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 299 (2013)

2014 P T D (Trib.) 299

[Customs Appellate Tribunal]

Before Muhammad Nadeem Qureshi, Member (Judicial-I)

Messrs M.I. TRADERS, LAHORE

Versus

ADDITIONAL COLLECTOR OF CUSTOMS

Customs Appeal No.K-460 of 2012, decided on 25/11/2013.

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

----Ss. 3, 32 & 179---Mis-declaration---Short levied customs duty, recovery of---Show cause notice---Proceedings initiated by incompetent authority without jurisdiction---Effect---Appellant imported a consignment and declared the same as assorted Choco Toffee and Candy---In order to verify the appellant/importer's declaration the consignment was referred for physical examination, whereby it was found that importer had mis-declared the description of goods and some of the items were not even declared---On account of mis-declaration by importer, the government exchequer had suffered a loss of revenue, therefore Additional Collector of Customs of Executive Collectorate after serving show cause notice passed impugned order-in-original against the importer---Contention of the appellant/importer was that Additional Collector of Customs of Executive Collectorate transgressed the authority vested in Collector of Customs, therefore the impugned show cause notice and order-in-original was coram non judice---Validity---Before the date of issuing impugned show cause notice, the Government of Pakistan had withdrawn the power of adjudication from the Executive Collectorate and had formed Collectorate of Customs (Adjudication)---Additional Collector of Customs (Executive Collectorate) (respondent) being non-existent authority had not been empowered to adjudicate the matter, therefore the whole exercise was coram non judice---Respondent/Additional Collector of Customs (Executive Collectorate) had taken action against the appellant in absence of availability of powers, therefore the show-cause notice and order-in-original had been passed without jurisdiction and the same were of no legal effect---Show cause notice and impugned order-in-original was set aside---Appeal was allowed.

2002 PTD 2457; PLD 1971 SC 61; PLD1973 SC 236; PLD 1964 SC 536; 2001 SCMR838; 2003 SCMR 1505; 2006 SCMR 129; PLD 1996 Kar. 68;2006 PTD 978 and PLD 1971 SC 184 ref.

(b) Administration of justice---

----If a mandatory condition for the exercise of jurisdiction by Court, Tribunal or Authority is not fulfilled then the entire proceeding which follows become illegal and suffer from want of jurisdiction/powers---Any order passed in continuation of such proceeding in appeals or revisions equally suffers from illegality and are without jurisdiction.

Major Syed Walayat Shah v. Muzaffar Khan and 2 others PLD 1971 SC 184; Omer and Company v. Collector of Customs, (Valuation) 1992 ALD 449; AAA Steel Mills Ltd. v. Collector of Sales Tax and Central Excise Collectorate of Sales Tax 2004 PTD 624; Ali Muhammad v. Hussain Buksh and others PLD 1976 SC 514; Land Acquisition Collector, Noshehra and others v. Sarfraz Khan and others PLD 2001 SC 514; 2010 PTD (Trib.) 1636; ((2010) 101 Tax 221(sic) (H.C. Kar)); 2010 PTD 465; 2010 PTD (Trib.) 2158; 2011 PTD (Trib.) 1010; 2011 PTD (Trib.) 1680 and2011 PTD (Trib.) 2086 ref.

(c) Administration of justice---

----If the law had prescribed method for doing of a thing in a particular manner such provision of law is to be followed in letter and spirit and achieving or obtaining the objectives of performing or doing of a thing in a manner other than provided by law would not be permitted.

Director, Directorate General of Intelligence and Investigations and others v. Messrs Al-Faiz Industries (Pvt.) Ltd. and others 2006 SCMR 129 ref.

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

----S. 32---Mis-declaration, charge of---Show cause notice---Prerequisites---"Mens rea"---Scope---For invoking the provisions of mis-declaration, prima facie, an element of "mens rea" should be present meaning thereby that there should be an attempt of wilful and deliberate false declaration---Importer who had made a correct declaration on bill of entry or opted for first appraisement for determination of correct description, PCT heading of quantity of goods could not be charged for mis-declaration---Consignment was found to contain goods for description other than the one declared falling under separate PCT heading but chargeable to same rate of customs duty, importer, in circumstances, could not be charged for mis-declaration---Case of mis-declaration could not be made when the description of goods was as per declaration but incorrect PCT heading had been mentioned in the bill of entry and there was no change in the rate of customs duty as a result of ascertained PCT heading.

Messrs Khawaja Metals v. Collector of Customs (Appeals) 2010 PTD (Trib.) 1983 and Messrs Iqbal Traders v. Collector of Customs (Appeals) 2010 PTD (Trib.) 2576 ref.

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

----Ss. 3, 16, 32 (1), (2), 156(1) (9), 179---Sales Tax Act (VII of 1990), Ss. 6, 11, 25(3)(c) & 36---Income Tax Ordinance (XLIX of 2001), Ss.120, 148, 162(1), 192 & 195---Federal Excise Act (VII of 2005), Ss.3, 14 & 14A---Mis-declaration---Short paid customs duties and taxes, recovery of---Show cause notice---Proceedings initiated by incompetent authority without jurisdiction---Effect---Customs officials were empowered to collect the taxes and Federal Excise Duty on import of the goods like customs duty on the determined value---Additional Collector of Customs was not empowered to initiate adjudication/ recovery proceedings for the short collected/paid sales tax, income tax and federal excise duty, either due to collusion or connivance or inadvertence, error or misconstruction---Officer of Inland Revenue and the Commissioner of Income Tax was empowered to issue show cause notice for the recovery of taxes paid short---Additional Collector of Customs had the authority to collect Sales Tax, Income Tax and Federal Excise duty at import stage in the capacity of collecting agent, he was empowered to adjudicate the cases of short payment/recovery due to any reason---Show cause notice and impugned order-in-original passed by Additional Collector of Customs was set aside---Appeal was allowed.

Collector of Customs, Model Customs Collectorate v. Messrs Kapron Overseas Supplies Co., (Pvt.) Ltd. 2010 PTD 465 ref.

(g) Jurisdiction---

----Determination of jurisdiction by court seized with the matter is one of the important elements in administration of justice---If justice has been provided basing upon coram non judice order then same would have no legal sanction behind it.

All Pakistan Newspaper Society and others v. FOP and others PLD 2004 SC 600 and DGI&I and others v. Al-Faiz Industries (Pvt.) Ltd. and others 2006 SCMR 129 ref.

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

----S. 32---Short assessed duty, recovery of---Show-cause notice---Appellant had been served with a show cause notice without mentioning the applicable provisions of law---Effect---Provisions of law had been invoked without mentioning the same in show cause notice, therefore impugned order passed in pursuance of said show cause notice was void.

Collector Central Excise and Land Customs and others v. Rahmdin 1987 SCMR 1840 rel.

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

----S. 32---Customs Rules, 2001, R. 107(a)---Customs General Order No. 12 of 2002, Para, 78---Mis-declaration of value, charge of---Onus ofproof---Scope---Appellantwasservedwithashowcausenoticeonaccountofmis-declarationofthevalueofimportedgoods---Customs authorities being dissatisfied with the reply of appellantpassedimpugnedorder-in-original---Contentionoftheappellantwas that Customs authorities had failed to substantiate the charge of mis-declaration of value in accordance with the provisions of Customs laws, therefore the impugned order-in-original was illegal---Validity---Department was under obligation to substantiate the allegations through an incriminating undisputed direct evidence in the shape of evidential invoice of the product in question for the relevant period---Customs officials had not produced any evidence during the adjudication proceeding or before the Tribunal---Department had failed to discharge the onus of establishing that the price declared by the appellant/importer of the imported goods were not fair and had been mis-declared---Allegation of mis-declaration of value were without any concrete and positive evidence, therefore charge of mis-declaration of value was declared to be unsubstantiated and of no legal effect---Appeal was allowed.

2005 PTD (Trib) 617; 1986 MLD 790; PLD 1996 Kar. 68; 2006 PTD 909; 2002 PTD 2957 and2007 SCMR 1357 = 2007 PTD 1858ref.

Nadeem Ahmed Mirza for Appellant.

Ehtasham Paracha , Appraising Officer for Respondent.

Date of hearing: 24th October, 2013.

ORDER

MUHAMMAD NADEEM QURESHI MEMBER (JUDICIAL-I).---By this order, I will dispose off Customs Appeal No.K-460 of 2013 filed by the appellant against Order-in-Original No.40800 dated 10-9-2012, passed by the respondent, Karachi.

2.Brief facts of the case are that the appellantMessrsM.I. Traders, Lahoreimported a consignment declared to contain assorted Choco Toffee and Candy 17901.90 kg at US$. 1.00 per kg declaring total (net weight) 17901.90 kg) at declared value US$ 17901.90/from MessrsAlpha Shipping Ltd. Fern Wood AvenueHao 2HFW London, United Kingdom vide IGM No. 321 dated 14-8-2012, Index No.173 arrival as per S.S Vessel"Hnajan Venezia".They filedGDNo. KPPI-HC-6629 dated16-8-2012 through"WeBOC" System" through clearing agentM/s.K.S.K Enterprises. They sought release thereof under PCT Heading 1704.9090 carrying CD @ 30% Sales 16% Additional Sales Tax 3% Income Tax @ 5%. The goods were stuffed in a container No. MWCU-6681334.In order to verify the importers declaration the GD was referred for physical examination through WeBOC System. The Examination staff reported the mis-declaration in description and undeclared item which are endorsed as under:

(1)CADBURY/NESTLE BRAND CHOCOLATE BAR/CANDIES, ASSORTED FLAVOUR AND PACKING, APPROX NET WEIGHT: 7414 KGS DATE OF EXPIRY 2/3/5/6-2013 , I/O U.K.

(2)CADBURY/NESTLE BRAND TOFEE and CANDIES, ASSORTED FLAVOUR AND PACKING, APPROX NET WEIGHT: 5906 KGS DATE OF EXPIRY 5/6/10-2013 , I/O U.K.

(3)REDBULL SOFT DRINK , MODE OFPACKING1X250 GRMS EACH, 1X24 TIN EACHCARTON , QTY 720 CARTONS, APPROX. QTY, 4320 LTRS, DATEOF EXPIRY 01/2014 APPROX. WEIGHT 4320 KGS , I/O UK CHECKED WEIGHT 100%AT QICT VIDE WEIGHMENT SLIP NO. 1821634 DATED 17-8-2012 AND TOTAL WEIGHT FOUND 21240 KGS. APPROX.

From above it isclear that as per physical examination report (1), The Cadbury Nestle Brand Chocolate (7414 kg) has been found which is appropriately classifiableunder PCT heading 1806.9000 carrying CD @ 30% Sales Tax @ 16% Additional Sales Tax @ 3%, Income 5% assessable at US$. 5.00 per kg vide Valuation Ruling US /25A 347 (No.Reg. Misc/07/2009-1 dated 25-6-2011). Beside Item No. 3 Red bull (4320 kg) has been found as undeclared which is appropriately assessable under PCT heading 2202.1010 carrying % Sales Tax @ 16% Additional Sales Tax @ 3% Income Tax @ 5%. The ascertained valueof the offending good is worked out at Rs.3985751. Therefore, the importer has attemptedto get clear the Cadbury Nestle Brand Chocolate (7414 kg) & Red Bull(4320 Kg)under the garb of Assorted Choco Toffee and Cadbury. Had this mis-declaration in description and undeclared goods been no detected, the Exchequer would have been suffer a loss of revenue to the tune of Rs.1463914. This act of the importer constitute an offence of mis-declaration within the meaning of sections 16 and 32(1) and (2) of the Customs Act, 1969 read withsection 3(1) of the Import and Export (Control) Act, 1950. This offence is punishable under clause (9) of section 156(1) of the Customs Act, 1969 read with section 3(3) of the Imports and Exports (Control) Act, 1950.

3.The appellant controverted the allegation through reply to show cause notice, the respondentafter consideration of thatpassed Order-in-Original No. 40800 dated 10-9-2012,Para3 of the orderisrelevantand which states inter-alia:--

"The contention stated above has been examined. Mr. Madan Lal, Principal Appraiser was asked to explain the department view point. As framed in the contravention report he stated there was a wilful attempt to evade duty/taxes by mis-declaration PCT, Classification and by giving vague description of the goods to avoid application of valuation ruling on chocolate of PCT 1806.9000, moreover, Red Bull drink was found undeclaredwhich is inter-alia is chargeable to Federal Excise duty as well. The contention of the department is found to be on merits and there is a clear attempt to evade duty and taxes by the modus operandi stated above. Therefore, the charges framed in the show cause notice are established under section 32 of the Customs Act, 1969 read with section 3 of the Import and Export Act, 1950 punishable under clause 14 of section 156(1) of the Customs Act, 1969 and section 3(3) of Imports and Exports (Control) Act, 1950. However, the departmental representative stated that the correct offending value of goods is Rs.2,830,575 instead of Rs.3985751 as stated in the contravention report. I, therefore order confiscation of the offending goods under the penal clauses mentioned above. However, an option is given to importer to redeem the goods upon payment of 35% of the redemption fine of the ascertained value of the offending goods beside payment of duty/taxes leviable thereon. As the importer has been sufficiently penalized through imposition of 35% redemption fine I see no need to imposed further penalty on him. However, the importer and clearing agent are warned to be careful in future."

4.On the date of Mr. Nadeem Ahmed Mirza, Consultant appeared on behalf of the appellant, reiterated the arguments incorporated in the memo. of the appeal and further argued that the Government of Pakistan in exercise of power conferred under section 3 of Customs Act, 1969 (IV of 1969) read with section 179 thereofhas withdrawnthe power of adjudication from the Executive Collectorate and has formed Collectorate of Customs (Adjudication) vide S.R.O. No. 886(I)/2012 dated 18-7-2012, which is effective from 1-8-2012, Meaning thereby that every adjudication after 1-8-2012 has to be done by the officer of Collectorate of Customs (Adjudication) and not by the Executive Collectorate. While issuing show cause notice dated 4-9-2012 the respondenthas transgressed the authority vested with the Collectorate of Customs (Adjudication) rendering the issuance of show cause notice being in-flagrant violation of law and as such coram non judice, hence void and ab-initio. He further argued that, it is mandated upon the respondent to pass order-in-original within four corners of show cause notice which revolves around section 32(1) and (2) of the Customs Act, 1969 without mention of any section of Sales Tax Act, 1990 or Income Tax Ordinance, 2001. Contrary, the respondent passed order-in-original for the payment of Sales Tax and Income Tax in the instant case by travelling beyond the charter of show cause notice. Such orders are being termed palpably illegal. Reliance is placed on the reported judgment 1987 SCMR 1840. The Collector of Central Excise and Land Customs and others v. Rahm Din. Wherein their lordship of Supreme Court held that, "Order being ultimately based on a ground which was not mentioned in the show cause notice or earlier taken was palpably illegal on face of its." He contended that, no charges for mis-classification or PCT heading can be invoked under the provision of section 32(1) and (2) of the Customs Act, 1969 as per direction contained in Sub-para (B) of para 101 of CGO, 12/2002 dated 15-6-2002, which is mandated to be adhered by the field formationunder the provision of section 223 of the Customs Act, 1969. He further contended that, it makes no difference that whether the goods in question were found"Cadbury Nestle Brand Chocolate Bars/Candies orCadbury/Nestle Brand Toffee and Candies orRed Bull Soft drink" falling under PCT heading 1704.9090 or 1806.9000 or2202.1010becauseallattracts levy of customduty @30%,sales tax @16% and income tax @5%. Hence, no mis-declaration in material particular to the extent of description/PCT heading. No charge of value misdeclaration 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 situationthe difference should be more than 30%between declared andthe evidence. Simultaneously no charge of misdeclaration 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 oron data maintainedby the Collectorate under Rule 110 of the period expressed in Sub-Rule (a) of Rule 107 of CustomsRules, 2001, ifthatwould had been the case, not a single consignment would had been cleared by any Collectorate because in every casethe value is enhanced on the basis of Valuation Ruling or data without the charges of misdeclaration. Therefore, the charge of misdeclaration of value is without any substance and nullity to the provision of Act and existing practice and as such hold no ground.

5.Mr. Ehtasham Paracha, appraising Officer appeared on behalf of the department/respondent submitted and reiterated the comments on the memo. of appeal and argued in accordance with the same. He further argued that, the appeal is not maintainable for the reason that the person who has filed the appeal is not authorized by the appellant to file instant appeal on behalf of the appellant. No such specific authorization and/or power of attorney is available with the memo. of appeal. The person who had authorized the consultant to file appeal himself had not placed on record any authorization from the appellant to file appeal and/or to further authorized to file such appeals. The appeal is therefore liable to dismiss on this ground alone. He rebutted and argued that at the time of commencement of quasi-judicial proceeding in the matter newly formed Collectorate of Customs (Adjudication) has not been functional. During the period when the Adjudicating Collectorate was not functional, matter could not be kept pending and where there was any illegality found it ought to have been treated in the same manner as it would be dealt before issuance of S.R.O. No. 886(I)/2001 dated 18-7-2012. The Federal Board of Revenue, in view to save importers from undue delay in finalization of such matter and to remove difficulties and hardship, vide letter C.No. 2(2) L&P/89(PT) dated 6-8-2012 specifically authorized the respondent to adjudicated such matter. He further contended that till the time the Adjudication Collectorate became functional, the Federal Board of Revenue extend the aforesaid specific authorization from time to time. Therefore respondent acted under the direction of Board adjudicated upon the matter and passed the impugned order, which order in all fairness is legal and valid order. He further contended that respondent had all the powers to adjudicated upon the matter, which relates to levy of Sales Taxand Income Taxat import stage and the learned respondent did not commit any legality as alleged by the appellant. The case-law of the Superior Courts cited by the appellant is therefore not applicable. He further contended and argued that no one was allowed to violate the law and if any one found involved in any offence committed by him, an action in accordance with law was taken against him as in the case of the appellant. The respondent had not deviated from the prescribed procedure and power conferred upon him under the Act. He also argued that the show cause notice was issued on glaring mis-declaration on actual description of the goods, which is an offence under section 32(1) of the Customs Act, 1969. The leviable duty, sales tax and income tax was accordingly recoverable under the relevant provision of the Customs Act, 1969, Sales Tax Act, 1990 and Income Tax Ordinance, 2001 leviable there upon at import stage.He further argued that the appellant mis-declared the physical description to get the clearance of the goods on lower value as against the actual value in terms of the Valuation Ruling. The imported goods (as per found description) were assessable on higher value as per the valuation ruling as against the declared description. The appellant has misdeclared the actual description of the goods in order to evade legitimate revenue of the government exchequer and had made a clear attempt to get the goods on lower value by way of this evident misdeclaration. He further stated that the Show Cause Notice and order passed thereon are well within the ambit of law and passed after the detail scrutiny of the evidence available on record and as such observations made thereon by the learned Collector Customs at the time of passing the order-in-original are in conformity with the legal requirements and needs not to be interfere and pray to maintain the order-in-original and reject the appeal in better interest of justice.

6.Rival parties heard and case records perused prior to dilating upon other issues the objection raised into maintainability of the appeal is taken for decision.Upon perusal of the record of the appeal, it has been found that the appellant himself and for arguing the case before the Tribunal, the learned Consultant has been duly authorized by the appellant, hence the preliminary objection raised by the respondent is without any substance and overruled as the appeal has been validly filed under the provision of section 194-A of the Customs Act, 1969.

7.The Government of Pakistan in exercise of power conferred under section 3 of Customs Act, 1969 (IV of 1969) read with section 179 thereof has withdrawn the power of adjudication from the Executive Collectorate and has formedCollectorate of Customs (Adjudication) vide S.R.O. No. 886(I)/2012 dated 18-7-2012, which is effective from1-8-2012, copy of which is available as Exhibit "H" at pages 25-27 of the memo. of appeal. The respondentin the capacity of Additional Collector of Customs, MCC of PMBQ (Executive Collectorate) is non-existentauthorityintheS.R.O. 886(I)/2012 dated18-7-2012 w.e.f.1-8-201?, instead he issued show cause notice dated4-9-2012 beyond31-7-2012, whenhe was empowered to adjudicate the cases of such type. Rendering, the whole exercise is coram-non-judice as contended by the appellant consultant carries weight. Resultant, he is non-existent authority under section 179 of the Customs Act, 1969. Such authority cannot adjudicate the case opted to issue show cause notice to the appellant, despite not warranted. The argument that the Board has issued directions through letters to adjudicate cases beyond 1-8-2012, hold no ground as order so issued by the Board is also illegal by virtue of the fact that a notification can be amended through a subsequent notification and not by any executive order. On this issue we have already held in Customs Appeal No. K-24/2013 MessrsParamount Corporation v. Additional Collector of Customs (Adjudication) MCC (PaCCS) and Customs Appeal No. K-471/2012 MessrsS.S. Trading vAdditional Collector ofCustoms (Adjudication) MCC (PaCCS) that "the Board can only amend a notificationin terms ofsection 5(1)read with section 179(2) of the Customs Act, through notification for dispensation of the powers, to overcome the exceptional circumstances caused during the transitional periodfaced by the respondent Collectorate. The subject legal infirmities were communicated officially through official correspondence to the Board by the Executive Collectorate even then the Board has not made any compliance, the Board had not made any plausible efforts to address the said situation and never tried to issue notification for entrustment of powers for conducting the adjudication proceeding in accordance with law. Further stood validated from the reported judgments2002 PTD 2457, PLD 1971 Supreme Court 61, PLD1973 Supreme Court 236, PLD 1964 SC 536, 2001 SCMR838, 2003 SCMR 1505, 2006 SCMR 129, PLD 1996 Karachi 68,2006 PTD 978 and PLD 1971 Supreme Court 184. The respondent is not designated an Officer of Inland Revenueunder the provision of, Clause (c) of subsection (3) of section 25 of the Sales Tax Act, 1990andSection 120of the Income Tax Ordinance, 2001 and as such is not empoweredto issue show cause notice and pass order-in-original in respect ofmatterrelating to Sales Tax and Income Taxand section 36 of the Sales Tax Act, 1990and sections 192and 195 of Income Tax Ordinance, 2001.Hence, by issuing show cause notice and passing order-in-originalthe respondent usurpedthe power ofOfficer of Inland Revenue to which he is not vested, Rendering the issuance of show cause notice and order-in-original being a flagrant violation of lawand as such coram non-judice. The action is taken in the absence of availability of powers or show cause notice or order-in-original has been passedwithoutjurisdiction/ power, such orderareof no legal effect as held by theirLordship of Supreme Courtof Pakistanthat "it is an element toprinciplethat if a mandatory condition for the exercise of jurisdictionby Court, Tribunal or Authority is not fulfilled then the entireproceeding which follows become illegal and suffer from want of jurisdiction/powers. Any order passed in continuation of these proceedings in appeals or revisions equally suffers from illegality and are withoutjurisdiction" Major Syed Walayat Shah v. Muzaffar Khan and 2 others (PLD 1971 SC 184), Omer and Company v. Controller of Customs, (Valuation): (1992 ALD 449 (1) Karachi AAA Steel Mills Ltd. v. Collector of Sales Tax and Central Excise Collectorate of Sales Tax (2004 PTD 624), PLD 1976 Supreme Court 514 Ali Muhammad v. Hussain Buksh and others and PLD 2001 Supreme Court 514 Land Acquisition Collector, Noshehra and others v. Sarfraz Khan and others, S.T.A. 444/03, S.T.A. 465/07, 2010 PTD (Trib.) 1636, [(2010) 101 TAX 221 (H.C. Kar)] and 2010 PTD 465,2010 PTD (Trib.) 2158,2011 PTD (Trib.) 1010, 2011 PTD (Trib.) 1680, 2011 PTD (Trib.) 2086. It is well settled principle of law that,if the law hadprescribed method for doing of a thing in a particular manner such provision of law is to be followed in letterand spirit and achieving or attaining the objectives of performing or doing of a thing in a manner other than provided by law would not be permitted as declared in the landmark judgment of Director, Directorate General of Intelligence and Investigations and others v. MessrsAl-Faiz Industries (Pvt.) Ltd., and othersreported as 2006 SCMR 129. For invoking provisions of misdeclaration under section 32 of the Customs Act, 1969 prima facie, an element of "mens rea" should be present i.e. there should be an attempt of wilful and deliberate false declaration. The importers may not be charged for mis-declaration under section 32 of the Customs, Act, 1969, in the following situation:--

(a)Where an importer makes a correct declaration on bill of entry or opts for 1st appraisement for determination of correct description, PCT heading of quantity of goods.

(b)When a consignment is found to contain goods for description other than the one declared falling under separate PCT heading but chargeable to same rate of duty.

(c)Where the description of goods is as per declaration but incorrect PCT heading has been mentioned in the bill of entry no mis-declaration case under section 32 of the Customs Act, 1969, be made out provided there is no changein the rate of customs duty as a result of ascertained PCT heading.

8.By virtue of the said fact appellants case falls within the four corners of sub-para(B) (ii) of para 101 of CGO. 12/2002 dated 15-6-2002andjudgmentinfieldofCESAT,Bench IIIinCustomsAppealNo.K-151/2006 dated 28-1-2008 and reported judgment 2010 PTD (Trib.). 1983 MessrsKhawaja Metals v. Collector of Customs (Appeals) and 2010 PTD (Trib.) 2576 of MessrsIqbal Traders v. Collector of Customs (Appeals) supports the same preposition.

9.Perusal of show cause notice and comments of the respondent's representative, ithas been noticed that the respondent hastaken into account the leviable amount of Sales Tax, Income Tax and Federal Excise duty, but no provision of the Act/Ordinancehas been spelled outin the show cause notice due to the reason that he was well aware of the fact that the Customs has only the power to collect sales taxat import stage under section 6 ofthe Sales Tax Act, 1990, section 148 of the Income Tax Ordinance andsection 3 of the Federal Excise Act, 2005,but notempowered to adjudicate the casesof Sales Tax, Income Tax and Federal Excise Dutyunder section 11 ofSales Tax Act, 1990,section 162(1) of the Income Tax Ordinance, 2001 and section 14 of Federal Excise Act, 2005 and this stood validatedfrom the expression of these Sections reproduced here-in-below:--

Section 6 of the Sales Tax Act 1990. Time and manner of payment:---(1)The tax in respectof goodsimported into Pakistan shall be charged and paidin the same manner and at the same time as if it were a duty of customs payable under the Customs Act, 1969 (and the provisions of the said Act (including section 31Athereof)shall so far as they relate to collection, paymentand enforcement of tax under this Acton such goods where nospecificprovisions exist in the Act apply;"

Section 148 of the Income Tax Ordinance 2001:- Imports.---(1) The Collector of Customs shall collect advancetax from every importerof goodson the value of the goods at the ratespecified in Part II of the First Schedule.

(2)Nothing contained in subsection (1) shall apply to any goods or class of goods or persons or class of persons importing such goods or class of goods as may be specified by the Board.

(5)Advancetax shall be collected in the samemanner and at the same time as the customs dutypayable in respect of the importor, if the goodsareexempt from customs duty, at the time customs duty would be payableif the goods were dutiable.

(6)The provisions of the Customs Act, 1969 (IV of 1969), in so far as relevant, shall apply to the collection of tax under the section.

(7)Thetax collected under this section shall be final tax on the incomeof theimporterarising from the importer subject to subsection (1) and this subsection shall not apply in the case of import of :-

(a)raw material, plant, machinery, equipment and parts by an industrial undertaking for its own use;

(b)fertilizerby manufacturerof fertilizer and

(c){motorvehicles in CBUcondition by manufacturer of{motor vehicles}

(d)Large import houses , who---

(i)Have paid-up capital of exceeding Rs.{250} millions

(ii)Have imports exceeding Rs.500 million during the tax year;

(iii)Own total assets exceeding Rs.{350} millions at the close of the tax year.

(iv)Is single object company

(v)Maintain computerized records of imports and sale of goods;

(vi)Maintainasystemforissuanceof 100%cashreceiptsonsales.

(vii)Present accounts for tax audit every year

(viii)Is registered with Sales Tax Department; and

(ix)Make sales of industrial raw material of manufacturer registeredfor sales tax purposes}

(8)the tax collected from a person underthis section on the import of edible oil {and packing material for a tax year shall be (minimum tax)

(9)In this section---

"Collector of Customs" meansthe person appointed as Collector of Customs under section 3 of the Customs Act, 1969 (IV of 1969), and includes a Deputy Collector of Customsin Additional Collector of Customs or an officer of customs appointed as such under the aforesaid section;

[Value of goods" means the value of the goods as determined under the Customs Act, 1969 (IV of 1969), as if the goods were subject to ad valorem duty increased by the customs dutyfederal excise duty and sales tax, if any payable in respect of theimport of the goods.

"Section 3 of Federal Excise Act, 2005:Duties specified in the First Schedule to be leveled.---(I) Subjectto the provisions of this Actand rules made there-under, there shall belevied and collected in such manner as may be prescribedduties of excise on----

(a)goods produced or manufactured in Pakistan,

(b)goods imported into Pakistan,

(c)such goods as the Federal Government may, by notification in the official Gazette, specify as are produced or manufactured in the non-tariff areas for sale or consumption therein ; and

(d)[services provided in Pakistan including the services originated outsidebut rendered in Pakistan]

At the rate of [fifteen]per cent of ad valorem except the goods and services specified in the First Schedule, which shall be charged to Federal Exciseduty as , and at the rates, set forth therein.

(2)duty in respect ofgoods imported into Pakistan shall be levied and collected in the same manner and at the same time as ifitwere a duty ofcustoms payableunder the Customs Act, 1969 (IVof 1969)and the provisions of the said Actincluding section 31A thereof shall apply.

(3)TheBoard may, benotification in the official Gazette on lieuof levyingand collecting under subsection (1) dutiesof excise on goods and services, as the case may be, levy and collect duties:-

(a)On the production capacity plants, machinery undertaking, establishment or installation producing or manufacturing such goods or

(b)On fixed basis, as it may deem fit, on any goods or class of goods or on anyservices or class of services, payable by any establishment or undertaking producing or manufacturing such goods or providingor rendering such services.

(4)Without prejudice to other provisions of this Act, the Federal Government may levy and collect duty on any class or classes of goods or services by notification in the officials Gazette at such higher or lower rate or rates as may be specified in such notification.

(5)The liability to pay duty shall be:-

(a)In case of goods produced or manufactured in Pakistan, of the person manufacturing or producing such goods.

(b)In case of goods imported into Pakistan, of the person importing such goods

(c)In case of services provided or rendered in Pakistan, of the person providing or rendering such services "[provided where services are rendered by the person out of Pakistan, the recipient of such services in Pakistan shall beliable to pay duty ]; and

(d)In case of goods produced or manufactured in non-tariff areas and brought to tariff area for sale or consumption therein, of the person bringing or causing to bring such goods to tariff areas.]

Explanation:- Subject to subsection (1) for the purpose of this section "goods" means the goods specified in CHAPTERS 1 to 97 and "services" means the servicesspecified in CHAPTER 98 of the First Schedule to the Customs Act, 1969 (IV of 1969).

Section 14 ofFederal Excise Act, 2005:Recovery of unpaidduty or of erroneously refunded duty or arrear of duty etc.---(1)Where any person has not levied or paidany duty or has short levied or short paid such duty or where anyamount of duty has been refunded erroneously, such person shall be servedwith notice requiring him to show causefor payment of such duty provided that such notice shall be issued within {five} yearsfrom the relevant date.

(2)The {Federal Excise Officer} empowered in this behalf, shall after considering the objectionof the person served with a notice to show causeunder subsection (1) determine the amount of duty payable by him and such person shallpay theamount so determined along with default surcharge and penalty as specified by such officer under the provisions of this Act. [:]

Provided that an order under this section shall be made within one hundred and twenty days of issuance of show cause notice or within such extended period as the Commissioner may, for reasons to be recorded in writing, fix, provided that such extended period shall in no case exceed sixty days:

Provided further that any period during which the proceedings are adjourned on account of a stay order or AlternativeDispute Resolution proceedings or the time taken through adjournment by the petitioner not exceeding thirty daysshall beexcluded from the computation of the period specified in the first proviso]

(3)Where any amount ofduty levied and penalty imposed or any other amount payable under this Act is due fromany person , such amount or sumshall be recovered in such manner as is prescribed under this Act or Rules made there-under:

(4)Notwithstanding, anything contained under any other law for the time being in force where any business or activity involving liability to charge, levy and pay duty under this Act is sold discontinued or liquidated, the amount ofunpaid or recoverable duty shall be the first charge on the assets of the business.

Explanation.---For the purpose of this section [refund includeddrawback of duty and ] the expression "relevant date" means the date on which the payment of duty was due under subsection (3) and in case where any amount of duty has been erroneously refunded, the date of its refund.

"Section 11 of the Sales Tax Act 1990:---Assessment of Tax and Recovery of Tax not levied or short levied or erroneously refunded:-(3) Where by reason of somecollusionor a deliberateactany tax or charges has not been leviedor made or has been shortleviedor has been erroneouslyrefunded, thepersonliable to pay any amount of thetax or chargeor the amount of refund erroneouslymade shall be served with anotice, requiring him to show causefor payment of theamount specified in thenotice.

(4)Where, by reason of any inadvertence, error or misconstruction, are tax or chargehas not beenleviedor made or has been short leviedor has been erroneouslyrefunded, theperson liable to pay theamount of tax or charge or the amount of refund erroneously made, shall be served with anotice requiring him toshowcause for payment of the amount specifiedin the notice:

Provided that, where a tax or charge has not been levied under this subsection, the amount of tax shall be recovered as tax fraction of the value of supply

(5)No order under this section shall be made by an officer of Inland Revenue unless a notice to show cause is given within 5 years, of the relevant date, to the person in default specifying the grounds on which it is intended to proceed against him and the officer of Sales Tax shall take into consideration the representation made by such person and provide him with an opportunity of being heard.

{Providedthat order under thesection shall be made within {one hundred and twenty} days of issuance of show cause notice or within such extended period as {the Commission{} may, for reason to be recorded in writing, fix provided that such extended periodshall in no case exceed [ninetydays]:

[Provided further that any period during which the proceedings are adjourned on account of a stay order or Alternative Dispute. Resolution proceedings or the time taken through adjournment by the petitioner not exceeding sixty days shall be excluded from the computation of the periods specified in the first proviso]

Section Income Tax Ordinance, 2001:162 Recovery of tax from the person from whom tax was not collected or deducted:---(1) Where a person fails to collect tax as required under Division II of this Part{or ChapterXIIIor deducttax from a paymentas required under Division III of this Part[or Chapter XII] , the Commissioner may {pass an order to that effect and} recover the amount not collected or deducted from the person from whom the tax should have been collected or to whom the payment was made.

(2)The recovery of tax under subsection (1)does notabsolve the person who failed to deduct tax as required under Division III ofthis Part{or Chapter XII] from any other legal action in relation to the failure, or from a charge of additional tax or the disallowanceof a deduction for the expense towhich the failure relates, as provided for under this Ordinance.( Emphasis is ours)

Section14Aof the Federal Excise Act, 2005 ..Short paid amounts recoverable.---Notwithstanding the provisions of this Actor the rulesmade there-under, where a registered person pays the amount ofduty less than the duty due as indicated in his return , the short paid amount of duty along with default surchargeshall be recovered from such person by stopping removal of any goods from his business premises and through attachment of his business bank accounts without prejudice to any other action under this Act or the rules made there-under:

Provided that no penalty under this Act or rules made there-under shall be imposed unless a show cause notice is given to such person.

10.From conscientious study of section6 of the Sales Tax Act, 1990and 148 of the Income Tax Ordinance2001and section 3, of the Federal Excise Act, 2005it isvividly clear that the customs is empowered tocollect the Taxes and Federal ExciseDutyon import of the goodsas likecustom dutyon the value determined under section 25 of the Customs Act, 1969. The said section does not empower the customs to initiate adjudication/recovery proceeding for the short collected/paid Sales Tax, Income Tax and Federal Excise Duty, either due to collusion or connivance or inadvertence, error or misconstruction. For proceeding for these type of recovery a show cause notice has to be issuedunder section 11 of the Sales Tax Act, 1990, section 162(1) of the Income Tax Ordinance, 2001 and Provision ofSection 14A ofFederal Excise Act, 2005the authorityto issue show cause noticeunder section 11 of the Sales Tax Act, 1990 and section 162(1) of the Income Tax Ordinance, 2001andsections 14 and 14A of the Federal Excise Act, 2005 are Officers of Inland Revenue and the Commissioner of Income Tax, in these section Additional Collector of Customs figures no where. He assumed the powernot vested with himunder the provision of sections 11, 162(1) and 14 of the, Sales Tax Act, 1990, Income Tax Ordinance, 2001 and Federal Excise Act, 2005respectively.

11.On the strength of above deliberation, it is my considered opinion that respondent does have the authority to collect Sales Tax Income Tax and Federal Excise Dutyat import stage in the capacity of collecting agentand is not empoweredto adjudicate the cases ofshortpayment/recoverydue to any reasonas expressed in the respective sections of the Acts/Ordinance, hence the contention of the respondent representative that custom is empowered to adjudicate the cases ofSales Tax, Income Tax and FederalExcise Duty is not legal, justifiable and not tenable in the eyes of the law.Instead void and ab-inito and coram non judice. As heldby the Hon'ble High Court of Sindh in reported judgmentas2010 PTD465Collector of Customs, Model Customs Collectorate v. MessrsKapron Overseas Supplies Co., (Pvt.) Ltd., that assuming power despite none render the proceeding as ab-inito void. The Hon'ble High Court dismissed the reference while holding that "any transgression of such jurisdiction for not being a technical defect would render entire exercise of authority to be ab-inito, void and illegal." "the exercise of jurisdiction by an authority is a mandatory requirement and its non fulfillment would entale the entire proceeding to be "coram non judice." In PLD 2004 Supreme Court 600 All Pakistan Newspaper Society and others v. FOP and others the Hon'bleChief Justice of Pakistanwhile presiding as Judge held in clear term that"determination of jurisdiction by courtseized with thematter is one of the important elements in administration ofjustice asif justicehas been provided basing upon coram non judiceorderthen same would have no legal sanctionbehind it.". Whereas, the Hon'ble Supreme Court of Pakistan in yet another landmark judgment reported at 2006 SCMR 129titled as DGI&I and others v. Al-Faiz Industries (Pvt.) Ltd., and others held that:--

"If the law have prescribed method for doing a thing in a particular manner such provision of law is to be followed in letter and spirit and achieving or retaining the objective ofperforming or doing of a thing in a manner other than provided by law would not be permitted---each and every words appearing in a section is to be given effect and no other word is to be rendered asredundant or surplus - when the legislature required the doing of a thing in a particular manner then it isto be done in that manner and all other manner or modesof doing or performing that things are barred --if the doing of a thing is made lawful in a particular manner the doing of that thing in conflict with the manner prescribed will beunlawful as per maxim"Expression facit cessare tacitum"

12.I, therefore hold that the exercise of jurisdiction on this point by the respondent in addition to adoption of recovery proceeding by them is declared as ab-initio void and as such coram non-judice.

13.Even otherwise, the show cause notice is without mentioning the applicable provisions of Sales Tax Act, 1990, Income Tax Ordinance, 2001 and Federal Excise Act, 2005, whereas charges against the appellant has been held by the respondent. Resultant, the respondent travelled beyond the charter of show cause notice, hence palpably illegal.It is settled law that where provisions in orders have/been invoked without their mention in the show cause notice, such orders are held void of law. In case of Collector Central Excise and Land Customs and others v. Rahmdin reported as 1987 SCMR 1840, the Apex Court has held that:--

" .... Order of adjudication being ultimately based on a ground which was not mentioned in the show cause notice was palpably illegal on the face of it."

That no charge under section 32 of the Customs Act, 1969 can be invoked on the appellant (levelled in the show cause notice and held correct in order-in-original) as the rates of duty and taxes on the declared goods and found good are one and the same. This does in no way suggest the imposition of redemption fine for difference in declared and found goods.In consonance of the Act/Rules, sub-para B(ii) of para 101 of CGO 12/2002 dated 15-6-2002 is relevantandwhich directs the field formation that animporter may not be charged for misdeclaration under section 32 of the Customs Act, 1969, in the following situation:

(i)Where an importer makes a correct declaration on bill of entry or opts for 1st appraisement for determination of correct description, PCT heading of quantity of goods.

(ii)When a consignment is found to contain goods for description other than the one declared falling under separate PCT heading but chargeable to same rate of duty.

(iii)Where the description of goods is as per declaration but incorrect PCT heading has been mentioned in the bill of entry no mis-declaration case under section 32 of the Customs Act, 1969, be made out provided there is no changein the rate of customs duty as a result of ascertained PCT heading.

14.It is also observed with concern that the respondenthas over sight the contents of Para 78 in CGO, 12/2002 dated 15-6-2002, which had been incorporated by the Boardon the basis of numerous reported judgment of the Superior Judicial Fora that for leveling allegation of mis-declaration of value , it is upon the department to substantiate the allegations through an incriminatingundisputabledirectevidence in the shape of evidential invoice of the said product of the periodexpressed inRules 107(a) ofCustoms Rules, 2001, same was re-validatedby the Board through sub-para (3) of 101 and clause (d) of Notification No. S.R.O. 499(I)/2009 dated 15-6-2009. 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-IXand437 ofSub-Chapter III of Chapter XXI of Custom Rules, 2001 to the appellant for transmitting/scanningadditional documents. On the contrary no such exercise was conducted by either of the officials, as evident from the fact that no copies of the transmitted view messages have been placed on record by them or to be led or rebutted for appellant. 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 PMBQ for levelling the charges/allegations. The department has miserably failed to discharge the onus of establishing that the price declared by the appellant of the imported goods are not fair and been mis-declared within the meaning of section 32 of the Customs Act, 1969, rendering the allegation are merely without any concrete and positive evidence and this cannot warrant a finding of falsity to the declaration in "material particular".Hence the charges of misdeclaration of value are declared to be unsubstantiated and as such of no legal effect hence, 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-35/2002, 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 KarachiPLD 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.

15.It has further been observed from the record and proceedings 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 there-under. By virtue of the fact that proving of charge of mis-declaration of value needs high standard of proof. It is difficult to digest the wisdom of respondent shown in the order which on one hand ordered completion of the assessment of the appellant consignment on the basis of data maintainedunderRule 110 of the Customs Rules, 2001 andValuation Ruling No. 347dated 25-6-2011, whereas, on the other handholding the appellant guilty of mis-delcaration of value,while completely ignoring the fact thatthe good declaration contain no column forgiving declaration to the fact of valuation ruling. Thus rendering, the charge of mis-declaration of value is without any substance, and nullity to the provision of Act, Rules and regulations framed there-under and existing practice, this opinion stood validated from the judgment of Bench-II of this Tribunal in Customs Appeal No. 542 of 2013MessrsShoaib Tayyab International v Additional Collector , Collectorate of Customs (Adjudication-II),whichhas been complied with, consequent towhichitattains finalityand becamean order-in-rem.

16.Hence keeping in view, all such observations made above and the strength of judgments passed by the superior courts noted above and in conformity of aforesaid observations made thereon, I am of the considered view that the proceedings in the subject case are infestedwith patent deficiencies and violations of statutory requirements, regarding issuance of Show Cause Notice, all subsequent proceedings and orders passed thereon tantamount to substantive illegalities, adequate breach of natural justice has been equated with breach of law and super structure built thereon are hereby declared illegal, void, ab-initio and accordingly set aside, appeal is therefore allowed with no order as to cost.

17.Order passed accordingly.

JJK/190/Tax(Trib.)Appeal accepted.