MUBASHIR AHMED MAGOON VS COLLECTOR OF CUSTOMS (APPEALS-I), 2014 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 830 (2013)

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

----Ss.32, 156(14) & 193---General Clauses Act (X of 1897), S.24A---Mis-declaration---Benefit of the judgment of similar consignment---Mutatis mutandis, principle of---Scope---Appellant/importer was given show-cause notice on account of mis-declaration of origin of imported goods---Customs authorities ordered for confiscation of imported goods through order-in-original---Appeal before Collector of Customs (Appeals) was dismissed---Contention of the appellant was that his case was identical in facts and points of law with the case of an other importer, therefore order passed in favour of said other importer had to be applied in appellant's case---Validity---Contention of the appellant was repelled as the case of other importer revolved around mis-declaration of description and value as against the appellant's case which related to mis-declaration of origin of goods---Tendency of customs authorities to finalize the cases on the basis of the concept of mutatis mutandis was depreciated---Customs authorities were supposed to pass separate orders in each case---Litigant had right that his case should be disposed of on its own factual position and not on the factual position of the case of any other importer, despite the position that the facts would be the same.

Pakistan Telephone Cable Ltd. v. FOP 2011 PTD 2849 and Collector of Sales Tax, Faisalabad v. Mian Ghous Bux (Pvt.) Ltd., Faisalabad 2011 PTD (Trib.) 424 rel.

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

----Ss.25, 179 & 181---S.R.O. 574(I)/2005 dated 6-6-2005---Mis-declaration---Confiscation of imported goods---Option to pay fine in lieu of confiscation---Calculation of redemption fine---Scope---Customs authorities ordered for confiscation of goods imported by appellant on account of mis-declaration, however, the appellant was given option to redeem confiscated imported goods on payment of 30% of redemption fine equivalent to ascertained Customs value of goods---Appellant challenged the order-in-original in appeal, which was dismissed---Contention of the appellant was that the redemption fine was to be worked out with reference to duties and taxes attempted to be evaded and not the duties and taxes on the whole consignment---Validity---Option given to the appellant to redeem the goods on payment of all levialbe duty and taxes as well as redemption fine of 30% of the offending value of goods was against the essence of S.R.O. 574(I)/ 2005, dated 6-6-2005---Redemption fine was not to be worked out with reference to the duty and taxes attempted to be evaded and not on the duty and taxes leviable on the whole consignment---"Customs value" meant that the amount of duty and taxes said to be evaded through the impugned consignment---Fine had to be imposed on the amount arrived at said to be short paid/evaded and not on the basis of value of the consignment or duty and taxes leviable on the whole consignment---Appellate Tribunal modified the redemption fine in accordance with S.181 of the Customs Act, 1969---Impugned order was modified accordingly---Appeal was disposed of.

2004 PTD 2981; Messrs Weave and Knit (Pvt.) Ltd. Karachi v. Additional Collector of Customs (Adjudication) Karachi 2004 PTD 2981; Superior Textile Mills Ltd. v. FOP 2000 PTD 399; The Collector of Sales Tax and others v. Superior Textile Mills Ltd. and others PLD 2001 SC 600 and Saleem Raza v. FOP and others 2012 PTD 302 rel.

Usman Shaikh for Appellant.

Ghulam Yasin, Principal Appraiser for Respondents.

Date of hearing: 4th September, 2014.

ORDER

GHULAM AHMED, MEMBER (TECHNICAL-II).---By this order, we dispose off Customs Appeal No.K-525 of 2011 filed by the appellant against Order-in-Appeal No.11 of 2006 dated 3-1-2006 passed by the respondent No.1, wherein he maintained Order-in-Original No.8 of 2005 dated 31-10-2005.

2.Brief facts of the case are that MessrsMubashir Ahmad Magoon, Magoon Brothers, NTN 1056808,81-Bahadur Shah Market, M.A. Jinnah Road, Karachi imported a consignment of screw wrenches, spanners, Oil Can, goggles etc under PCT Heading 8204.1100 from China at declared value of US $ 9033 and filed a Goods Declaration electronically vide CRN I-HC-18651-081005 elated 8-10-2005 through their Clearing agent MessrsNawab and Sons, CHAL.No. KAPR-0859, Mian Chamber, 2nd Floor Room No.15, Shahrah-e-Liaquat, Karachi. The Importer declared on his Goods Declaration 16 items in total, out of which 04 items were declared as of German Origin and the remaining 12 items were declared as of China Origin. During the physical examination of imported goods all 16 items were found to be of European Origin. No Packing List or invoice, were found inside the Container, as required by Customs Rules, 2001, dated 18-6-2001 as amended from time to time. The packing list provided by the importer also indicated that tile goods are of European Origin. Details of the discrepancy found in the examination report are given in the Table below:--

MessrsMubashir Ahmad Magoon, Magoon Brothers, NTN 1056808, 81-Bahadur Shah Market, M. A. Jinnah Road, Karachi and Clearing Agent, Messrs Nawab and Sons, CHAL.No. KAPR-0859, Mian Chamber, 2nd Floor Room No.15, Shahrah-e-Liaquat, Karachi had mis-declaration tile origin of the imported goods. The importer and the Clearing Agent were therefore called upon to show cause as to why action may not be initiated under provisions of sections 32(1) and (2) of Customs read with sections 33(4), 34(1) and 36(1) of Sales Tax Act, 1990 and section 148 of the Income Tax Ordinance, 2001, punishable under Clause 14 of section 156 of the Customs Act, 1969 read with sections 33 (S) C, 34(1) and 36(3) of Sales Tax Act, 1990 and S.R.O. 574(I)/2005 dated 6-6-2005. Had this mis-declaration gone undetected the government would have been deprived from its legitimate revenue to the tune of Rs.560,770.

3.On the basis of allegation levelled referred in above the appellant was called upon for show-cause, which were contested upon and the respondent No. 2passed Order-in-Original No. 08/2005 dated 31-10-2005, para 5 of the orderis relevantand the same is reproduced herein below:--

"I have heard the verbal arguments put forth by the respondents and department, carefully read the written reply and the whole case record. It stands established that the respondents have mis-declared the origin of the goods exept 03 items, viz; Paper Dust Mask, Safety Goggles and Welding Goggles which do dot show any foreign origin labeling or printing. Their goods as well as their own packing list Indicate that the goods are of European Origin. The importer, MessrsMubashir Ahmad Magoon, MagoonBrothers,NTN 1056808,81-BahadurShahMarket,M. A. Jinnah Road, Karachi and Clearing Agent, MessrsNawab and Sons, CHAL.No. KAPR-0859, Mian Chamber, 2nd Floor Room No.15, Shahrah-e-Liaquat, Karachi have thus violated the provisions of section 32(1) & (2) or Customs read with sections 33(4), 34(1) and 36(1) of Sales Tax Act, 1990 and section 148 of the income Tax Ordinance, 2001, punishable under clause 14 of section 156 of the Customs Act, 1969 read with sections 33(5) C, 34(1) and 36(3) of Sales Tax Act, 1990 and S.R.O. 574 (I)/2005 dated 6-6-2005. I therefore, order confiscation of the imported offending goods in terms or clause 14 of section 156 of the Customs Act, 1969 and clause 1(a)(ii) of S.R.O. 574(I)/2005 dated 6-6-2005. However an option is given to the importer to redeem his goods on payment of 30% redemption fine equivalent to the ascertained Customs value of the offending goods. The Clearing agent is warned to be careful In future and advised to declare correct information on the goods Declaration."

4.The appellantassailed the said order before respondent No. 1 under the provision of section 193 of the Customs Act, 1969, who rejected the appeal vide order dated 3-1-2006through para 6 of the order-in-appealreading as " this order shall also be applicable to appeal No. AC-596/2005-MCC (MCC-65-18651-Adj-05) filed by MessrsMubashir Ahmed Magoon involving identical facts and points of law."

5.The appellant has now challenged the above order by way of this appeal. Mr. Usman Shaikh Advocate appeared on behalf of the appellant who reiterated the arguments incorporated in the memo. of appeal and he emphasis on the grounds of appeal and stated inter-alia:--

(a)That the impugned Order-in-Appeal passed by the learned respondent No.1, is illegal, unlawful without jurisdiction and corum non-judice, contrary to laws and facts available on record and the same is liable to be set aside.

(b)That it is respectfully submitted that consignment was imported from China. As per the Packing list the goods which are of German origin had clearly been mentioned as "MADE IN GERMANY" where as the goods which were China made on them only the brand name like "BRAND MAX TOP FRANCE, BRAND PRESOL GERMANY AND BRAND ECLIPSE ENGLAND" is written on them. Copy of the Packing List is annexed as annexure "E".

(c)It is most respectfully submitting that by putting the name of Country which is for the sake of discussion can also be the name of the brand cannot be ipso fecto considered to be the county of origin.

(d)It is further most respectfully submitted that this Hon'ble Collectorate in the past had allowed number of identical cases in which the only the name of country is mentioned but it has not been mentioned that the same goods had been made by that Country. The evidence of the same will be submitted before this Hon'ble forum at the time of hearing.

(e)It is most respectfully submitted that the name of the country had been engraved on the goods as "France/Germany or England" but it is pertinent to mention here that no where it has been mentioned that the same are made in that county and this fact can also be verified by the report indorsed on the back of GO which clearly states that even the Appraising officer had not mentioned that the consignments which had been imported shows that the goods are of "FRANCE/GERMAN/ENGLAND ORIGIN" but the it had been said that only the name of county had been engraved which does not amount that this consignment is of country which name had been engraved on the goods of the consignment. Copy of the GD and other import documents are annexed as annexure "F & F-1".

(f)That it is also submitted that the importer had submitted the packing list which clearly mentions the origin and for the sake of discussion if he had any mala fide intention or mensrea then instead of declaring the few goods as of different origin then he would have declared all the goods as of Chines Origin would had declared all the items as China Origin. But instead of doing this he had declared all the goods as China Origin and as well as German Origin. The if there is any mala fide or mensrea on the part of importer then instead of declaring the this clearly shows that in the tight of above observation there is no justification and the demand cum show-cause notice cumulating to Order-in-Original may kindly be quashed/set aside.

(g)That it seems that the learned respondent No. 1 having no reasons to dismissed the appeal filed by the appellant had dismissed the appeal filed by the appellant without even touching the appeal filed before him as he did not even bothered to give even a single finding against the appellant which is quite evident from the Order-in-Appeal.

6.The respondent No. 2 submitted comments on the memo. of appeal and Mr. Ghulam Yasin, Principal Appraiser, argued in accordance with the sameand read as:--

(i)That the contents of Ground (a) are incorrect, hence, denied.

(ii)That after the inclusion of Hong Kong in China the import of other origin goods from China is not a difficult task, hence, import from China does not means that the goods are of China origin. If the goods were of China origin than why "Made-in-China" was not written on the goods and as to why no certificate of origin has been provided? These irrefutable facts and the packing list are proving that the contents of Ground (b) are incorrect.

(iii)That in the light of submissions made above the contents of Ground (c) require no further comments, hence, denied.

(iv)That the appellants have failed to substantiate their statement with any corroborative documents, hence, denied. Without prejudice to above even otherwise two wrongs can not make one right.

(v)That in the light of submissions made above the contents of Ground (e) of the appeal are incorrect, hence, denied. The appellant has no answer as to why there was no "China" of the goods.

(vi)That in the PaCCS's automated system most of the consignments are allowed release through computer without manual check in terms of amended provisions of section 79(1) of the Customs Act, 1969. For clearance of goods under PaCCS in terms of section 79(1) ibid the reliance is invariably made on the electronic declaration of the importer, however, only during checking in terms of section 80 of the Customs Act, 1969, the concerned officer may call the documents for verification of any statement/declaration made electronically through PaCCS by an importer. Thus, actually at initial stage the appellant took a chance to get his goods cleared through automated system of PaCCS that is why, even ignoring the clear mentioning of origins on the packing list, supplied by the seller, the mis-declared the origin as of China in a bid to get his goods cleared at lower value. It is pertinent to mention here that the European origin goods are always rendered costlier than the China origin goods in the trade parlance due to their durability and quality.

(vii)That in the light of submissions made above the contents of Ground (g) are incorrect, hence, denied.

7.The appellant consultant in exercise of his guaranteed right submitted rejoinder comments with the submission that:-

(a)That the contents of Para No.1 are denied as stated.

(b)That intention of the legislature is very clear while writing the language of section 32 of the Customs Act. Where the contents about section 32-A, and other sections are concerned it is most respectfully submitted that those sections have not been invoked in the show-cause notice therefore no comment.

(c)That with regard to the contents of Para No. 3 it is most respectfully submitted that section 79(1)(b) has not been invoked in the show-cause notice therefore no comment.

(d)That the contents of the Para No. 4 as stated is denied. It is respectfully submitted that under Article 25 of the Constitution of Pakistan all citizens are equal. If one person is given, treatments then the other person do deserve a same treatment. Even other this Para it self shows and proof that the department has accommodated some people at a criteria so why not the appellant deserve the same treatment.

(e)That it is most respectfully submitted that the Hon'ble Divisions bench of the High Court in a reported judgment 2004 PTD 2981 has held that,"IN CASE OF CONFISCATION OF GOODS THE REDEMPTION FINE WAS TO BE WORKED OUT WITH REFERENCE TO DUTIES AND TAXES ATTEMPTED TO BE EVADED AND NOT THE DUTIES AND TAXES ON THE WHOLE CONSIGNMENT).

(f)It is therefore prayed in the best interest of justice that this Hon'ble Tribunal may kindly allow the appeal filed by the appellant.

8.Rival parties heard and case records perused. Prior to dilating upon other issues, application of order of some other importer mutatis mutandi is taken into consideration. In the instant case the respondent No. 1 has applied the order of MessrsMuhammad Azam Malik bearing No.10/2006 dated 3-1-2006 mutatis mutandi on the applicant, while holding that the case of appellant is identical in facts and points of law with the case of Muhammad Azam Malik. The said opinion is nullity to the fact as the case of Muhammad Azam Malik revolves against mis-declaration ofdescription of crockery and value as against the case of the appellant which revolves around mis-declaration of "origin of the goods", meaning thereby the said case is all together different with the case of Muhammad Azam Malik and as such the said order is not applicable to the instant appeal and render the order as non speaking order and in derogation of section 24A of the General Clauses Act in 1897 andjudgments reported at2011 PTD 2849 Pakistan Telephone Cable Ltd. v. FOP, wherein their lordship of High Court held that "Tendency of the Customs Authorities to finalize the cases on the basis of the concept of mutatis mutandis wasdepreciated---Customs authorities were supposed to pass separate ordersin each case---Litigant had a right that his case should be disposed of on its own factual position of his case and not on the factual position of the case of any other litigant, despite the position that the facts would be the same".The Inland Revenue Appellate Tribunal in reported judgment 2011 PTD (Trib.)424 Collector of Sales Tax, Faisalabad v. Mian Ghous Bux (Pvt.) Ltd., Faisalabad held that "Such tendency of adjudicating the case at the original assessment level was not in accordance with law---Every casehas its own facts and circumstances and separate order for each case should be made by the adjudicating authority . there was not justification for passing the original orders in so many cases through one single order".It isalso of great importanceto add that whenever vested authority is exercised in such a cursory and wanton manner then no other inference can be drawn except that the functionary has transgressed his allotted sphere for considering the facts and the case other than the Judicial one and the court seized with such Order may recommend any action against the said officer because neither the executive authorities nor judicial forum will pass a wrong order because the norms of judicious approach which have been bestowed upon them to function in the capacity and if there is an abuse of power by such officer then no hesitation should be felt in passing stringent structure against the officer keeping in view norms of Justice.

9.It is not denied that the appellant transmitted the requisite Good Declaration in terms of section 79(1) of the Customs Act, 1969 and Rule 433 of Sub-Chapter (III) of Chapter XXI of Customs Rules, 2001 with the declaration that the imported goods were of "China Origin", which upon examination were found to be of "European Origin", when confronted in regards to the said facts, the appellant failed to scan certificate of origin and bill of lading in compliance to view message transmitted to him under Rule 437 ibid, instead scanned packing list which is not the proper document for the determination of the origin of the imported goods. He even failed to produce those before the respondents Nos. 2 and 3 during the course of adjudication/appeal and evenwith the Tribunal during the course of conduction of hearings spread over 5 years. The certificate of origin and B/L are vital documents for determination of origin of the goods in terms of Gatt Rules of Origin 1973 issued vide No. 2(13) 71-Gatt. dated 27-2-1973, confirming that the goods were neither shipped from China nor manufactured there instead they were shipped and manufactured from/inEuropean country, therefore, the charges of mis-declarationagainst the appellant has been rightly held as established by the respondent No. 2.

10.The respondent No.2 gave the appellant the option to redeem the goods on payment of all leviable duty and taxes as well as a redemption fine of 30% of the offending value of the goods. This is against the essenceofprovisionsofNotificationNo.S.R.O. 574(I)/2005dated6-6-2005.Beside this is not in conformity with the judgment of Honourable Sindh High Court Karachi in a case of MessrsWeave and Knit (Pvt.) Ltd. Karachi v. Additional Collector of Customs (Adjudication) Karachi reported as 2004 PTD 2981. In above cited case decided by the Honourable Court the adjudicating officer ordered for outright confiscation oftheconsignmentwithan option to redeem the goods against 100%fine ofthevalueoftheconsignmentasperS.R.O. 1347(I)/98dated17-12-1998. The issue before the Honourable High Court was:--

"Whether the learned Adjudication Officer as well as the learned Appellate Tribunal Customs, Sales Tax and Central Excise was justified in omitting to note that as per S.R.O. 1374(I)/1998, dated 17-12-1998 the 100% redemption fine provided therein is to be worked out with reference to the duties and taxes attempting to be evaded and not the duties and taxes leviable on the whole consignment?"

11.The Honourable High Court in this case observed and held in categorical terms that the redemption fine is not be worked with reference to the duty and taxes attempted to be evaded and not on the duty and taxes leviable on the whole consignment, inter alia, the Honourable High Court also did not agree with the Order-in-Original whereby the adjudicating officer ordered for outright confiscation with an option to redeem the goods against 100% fine of the value of the consignment as per S.R.O. 1374(I)/1998 dated 17-12-1998. This order of the Honourable High Court has attained finality as it was never appealed against by the respondent department in the Honourable Apex Court.

12.In order to comprehend the issue fully reference is made to section 181 of the Customs Act, 1969 which reads as under:--

181. Option to pay fine in lieu of confiscated goods.---Whenever an order for the confiscation of goods is passed under this Act, the officer passing the order may give the owner of the goods an option to pay in lieu of the confiscation of the goods such fine as the officer thinks fit 19[:]

Provided that the Board may, by an order, specify the goods or class of goods where such option shall not be given.

[Provided further that the Board may, by an order, fix the amount of fine which, in lieu of confiscation, shall be imposed on any goods or class of goods imported in violation of the provisions of section 15 or issued under section 16, or any other law for the time being in force.]

Explanation.---Any fine in lieu of confiscation of goodsimposed under this section shall be in addition to any duty and charges payable in respect of such goods, and of any penalty that might have been imposed in addition to the confiscation of goods.

13.The above section does not specify the amount or value on the basis of which the owner of the goods may be given an option to pay in lieu of the confiscation of the goods such fine as the officer thinks fit. However, through 1st proviso the Boardthrough an ordercan specify the goods or classof goodswheresuch option shall not be given,whereas 2nd proviso of section 181 refers to the amount of fine which the Board may fix through issuance of an order be imposedon any goods or class of goodsimported in violation ofthe provisions of section 15 or under section 16,or anyother law for the time being in force. The 1st proviso limit the powers of the adjudicating authority in regards to certain goods or class of goods, wherein, no option for redemption of the goods be given, instead be out-rightly confiscated. In 2nd proviso the Board can notify the pitch of fine through a notification on the goods imported in violation of the provision of section 15 or under section 16. Confirming that the Board cannot fix any pitch of fine on any goods or class of goodsnot fallingwithin 1st and 2nd proviso of section 181 of the Customs Act, 1969. The goods imported through the instant consignment by the appellant are not those of section or any other law for the time being in force. Instead allowed tone imported freely for which Board is not empowered to issue notification with fixation of pitch of fine under section 181 ibid.The legislature intentionally left the imposition of fine on the discretion ofthe Adjudicating Authority, who has to usethat sparely and in the benefit of the tax payer as held by Superior Judicial Fora in plethora of reported judgment, rendering the fixation of redemption fine on the goods or class of goods other than ofsections 15and16ibidthrough Notification No. 574(I)/2005dated6-6-2005 as ultra vires to the provision of section 181 of the Customs Act, 1969 and as such without lawful authority as held inreported judgment 2000 PTD399 Superior Textile Mills Ltd. v. FOP,PLD 2001 SC 600 the Collector of Sales Tax and others v. Superior Textile Mills Ltd. and others, 2012 PTD 302 Saleem Raza v. FOPand others.

14.Notwithstanding to the fact, that it is for the legislature or the Board to revisit the provision of section 181 or the Notification No.574(I)/2005 dated 6-6-2005 in the light of observation made in the instant judgment. The Tribunalalsointend to resolvethebone of contentionthatwhat doesthe word "custom value"mean in the notification. Although this controversy already has been laid to rest by the Hon'ble Division Bench of the High Court of Sindh in reported judgment 2004 PTD 2981 MessrsWeave and Knit (Pvt.) Ltd. v. Additional Collector of Customs, (Adjudication) Karachi and others. In the said case the fine was imposed on the basis of total amount of duty and taxes of the consignment instead of the amount of duty and taxes evaded, under Notification No.1374(1)/98 dated 17-12-1998, which is the parent notification containing the word" value of the goods", which meantthe value defined in section 179 of the Customs Act, 1969 for assuming the jurisdiction for adjudication, in the said section the value mean the amount of duty and taxes said to be evaded through the said consignment i.e. the amount arrived at said to be short paid/evaded and fine has to be imposed in accordance with thatamount not on the basis of value of the consignment or duty and taxes leviable on the whole consignment.

15.The said notification was amended from time to time by the FBR and the Notification number 574(I)/2005 dated 6-6-2005 is one from the series. No drastic changes were made in the proceeding notifications instead of number and date, the column 3 of the notification remained the same since 1998 to 6-6-2005reading as "custom value"for levy of duty and taxes to bedetermined under section 25 of the Customs Act, 1969, this does not mean that the determined custom value is for levy of fineinstead for finethe valuehas to betaken as given in section 179ibid as this is in accordance with the provision of section 181 of the Customs Act, 1969 and intention of the legislature and the judgment of the High Court, even otherwise the notification has to be read in harmonious manner and for the benefit of the tax payer. Therefore, the redemption fine imposed by the respondent is modified in accordance with the essence of the notification and section 181 of the Customs Act, 1969 as Rs.168,231.00 being the 30% of the evaded duty and taxes of Rs.567.770.00.

16.This being so, the impugned order is modified to the extent of observation made above. The appeal is accordingly disposed off in above terms.

JJK/196/Tax(Trib.)Order accordingly.