COLLECTOR OF CUSTOMS VS HUSSAIN TRADING CO., 2015 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 1451 (2014)

Customs Act (IV of 1969)---

----Ss. 32, 32-A, 79, 80, 156, 181 & 194-A--- S.R.O. No.283(I)/2011---S.R.O. No.638(I)/2005, S.R.O. 499(I)/2009, Heading 6306.2200---Mis-declaration---Confiscation of goods---Redemption of goods on payment of fine---Importer of goods filed goods declaration and determined his tax liability on his own and got clearance thereof under S.79(1) of Customs Act, 1969---Goods declaration was selected for scrutiny in terms of S.80 of the Customs Act, 1969, and importer was charged for having mis-declared classification of goods; who allegedly attempted to unlawfully obtain benefits of S.R.O. No.283(I)/2011 and S.R.O. No.638(I)/2005, with a view to defrauding the Exchequer---Adjudicating Officer, vide order-in-original confiscated goods under S.156(1)(14)(14-A) of Customs Act, 1969---Importer, was given option under S.181 of Customs Act, 1969 to redeem goods on payment of fine along with duty, taxes and penalty---Show-cause notice was disposed of in said terms---Moot questions required to be taken into consideration were; (i) as to whether the importable goods were classified under PCT Heading 6306.2200 as claimed by the importer and (ii) as to whether claim of PCT Heading, if proved incorrect, would constitute an offence of misdeclaration under S.32 of the Customs Act, 1969---Data made available and evidence placed on record, confirmed that the identical goods had been cleared consistently under the said PCT Heading, without any contest or dispute---Merely claiming the benefit of particular PCT Heading, or sub-Heading, would not amount to mis-declaration---Incorrect interpretation of notification, was not misstatement, when no mala fide had been proved or established---Determination of PCT Heading, in fact was the sole opinion of the Customs Officer---Importer only assisted the department by stating the PCT Heading of the goods, which could be accepted or rejected by the competent Authority, but same was not a punishable offence under any of the provisions of Customs Act, 1969, or notification issued---Alleging the charge of mis-declaration on the basis of wrong classification of Heading, would not constitute offence within the framework of S.32 of the Customs Act, 1969, as there was no false material in the statement/declaration made by the importer---Customs Authorities mis-conceived and mis-read the description and difference available between both PCT Headings, one which was claimed by the importer, and other which was allegedly charged by the department---No legal infirmity was found in the order passed by Appellate Authority---Ends of justice would be met by maintaining said order---Appeal filed by the department, being without substance, was dismissed, in circumstances.

Abdul Ghani, E.O. for Appellant.

M.H. Awan for Respondents.

Syed A. Rauf for the State.

Date of hearing: 20th August, 2014.

ORDER

MUHAMMAD NADEEM QURESHI, MEMBER-I.---By this order I intend to dispose of the instant appeal filed by appellant, against the Order-in-Appeal No. 5633/2011 dated 5-8-2011, passed by the Collector of Customs (Appeals) Karachi.

2.Brief facts of the case as reported are that the respondent electronically filed Goods Declaration (GD) vide CRN No. I-HC-1871373 for import of goods declared as Tent (Size 30x70) and Pagoda Tent (Size 5x5m) at total invoice value of US$ 12400. He determined his tax liability on his own and sought clearance thereof under section 79(1) of the Customs Act, 1969 (hereinafter the Act). However, in order to check as to whether the respondent had paid the correct amount of duty/ taxes the aforesaid GD was selected for scrutiny in terms of section 80 of the Act. physical examination of the consignment established that the goods actually imported in this case were complete Big Tent in unassembled conditions consisting of Roof Beam, Upright Support, Top connection, Roof Cover, Bolts, Rain gutter, Roof Cable, Tension Strip, Long Cover, Tension Bolt, Setup Rope, made of Roof Cover Double Size PVC coated Fabric and Structure of Iron and Steel and Aluminum with all standard accessories. Size EBT30Mx70M under HS Code 9406.0090 chargeable to customs duty @ 25% besides levy of sale tax and advance income tax whereas the appellant had claimed classification of the goods under PCT heading 6306.2200 where under rate of customs duty was 25%. Moreover, the respondent had also unlawfully claimed benefit of Notifications S.R.O. 283(I)/2011 and S.R.O. 638(I)/2005, he was accordingly charged under the relevant provisions of law for having mis-declared classification of the goods and attempted to unlawfully obtain benefit of Notifications S.R.O. 283(I)/2011 and S.R.O. 638(I)/2005 with a view to defrauding the Exchequer of an amount of Rs.1,560,538 and the adjudicating officer held vide impugned Order-in-Original that "the imported goods are accordingly confiscated in terms of clauses (14) and (14A) of Section 156(1) of Customs Act, 1969. However, under section 181 of Customs Act, 1969, the importer is given an option to redeem the goods on payment of fine of Rs. 636889 of the value of the offending goods amounting to Rs. 318447.50 under S.R.O. 499(I)/2009 dated 13th June, 2009 along with duty and taxes leviable thereon. In addition a penalty of Rs. 200000 is also imposed on the importer/NTN holder. The show-cause notice is disposed of in above terms with the orders to assess the goods under heading 9406.0090."

3.Being dis-satisfied by the Order-in-Original the present appellant filed an appeal before the Collector (Appeals), Karachi, which was contested and Order-in-Appeal was passed against the appellant. After exhausting the customs hierarchy the present appellant assailed the said impugned Order-in-Appeal before the Tribunal by filing the subject appeal.

4.The case was fixed for hearing on 20-8-2014. Mr. Abdul Ghani, E.O. appeared on behalf the appellants. He contested the case, relied on the grounds placed on record in the Memo. of Appeal and further contended that the Marquee is also a building and nothing else, therefore, there is no question to classify the same under sub-heading 63.06. Further even otherwise a consignment consisting of 95% of the goods as Aluminum, Iron and Steel Structure and Electrical Fittings Light Fixtures can not be classified as tents of sub-heading 63.04. He also submitted that the Chapter-94 is not confined only industrialized buildings as it is very clearly and loudly stated in the Notes that "this heading covers prefabricated buildings, also known as "industrialized buildings" of all materials. These buildings, which can be designed for a verity, of uses, such as housing work site accommodation, offices, schools, shops, sheds, garages and greenhouses, are generally presented in the form of complete buildings, fully assembled, ready for use un-assembled, whether or not assembled, having the essential character of pre fabricated buildings. The housing accommodation, offices, schools, shops and greenhouses can not be termed as an industry. He further contended that the tents of sub-heading 63.06 should primarily be made of textile and articles thereof and only includes the poles, pegs, ropes and other like accessories to an extent require for erection of a tent whereas admittedly proof bead, upright support, electrical fittings / light fixtures, etc., which are neither covered nor required for the type of tents mentioned in sub-heading 63.06. Most important difference between the tents of sub-heading 63.06 and the temporary buildings I Marquees of Chapter-94 are the beams and electrical fittings/light fixtures, which excludes the goods from the definition of tents rather should be called prefabricated buildings in un-assembled form, as such the S.R.O. 283(I)/2011 and S.R.O. 638(I)/2005 are prescribed only for Textile material and not for tents hence the claim of the respondent is wrong, subject goods fall under Chapter 94 and not under Chapter 63 of the harmonized code.

5.Mr. M. H. Awan, Advocate appeared on behalf of the respondent apart from filing the counter objections which are already on record, and in support of the same he further contended and argued that the charges of mis-declaration is allegedly attributed against the respondent are not correct due to the reason that examination report which accordingly conducted by the competent authority and declared that the description given in the goods declaration as tents is assessable under PCT heading 6306.2200, in support of his argument, he also pointed out that the adjudicating officer at the time of passing the Order-in-Original confirms that there was no mis-declaration as mentioned in para 10 of page 7 of Order-in-Original. He further pointed out the contention of the appellant that the subject impugned consignment is 'prefabricated building' instead of `tent/marquee' is ill founded and does not synchronize with the explanatory notes to HS code pertaining to prefabricated building under PCT 94.06, but after process of examination it found that the said subject consignment consist of tents and its ingredients comply with as per the dictates of PCT heading 63.06. He further contended that there is no considerable literature available on 'industrialized building' which has not been observed in proper context of its parameters. The important element to differentiate the identify of the imported impugned subject consignment 'prefabricated' or 'industrialized' building or in fact consist of prefabricated segments and such segments are joined with nails glues, plasters, mortars, tubes, pipes or paints, while the subject impugned consignment consist of frame of hard pressed executed aluminum and PVC fabric and no nails, glues, plaster or mortar is needed to put various segments of it together and as such it does not classifiable as prefabricated building alleged by the department. He also referred the evidences submitted along with his counter objections in support of his argument. The subject evidences reflected that the customs department has been released a same kind of consignments of 'Tent' under PCT Heading 6306.2200 along with benefit of subject SRO's, refusing the same benefit to respondent/importer in discrimination which is against the law.

6.After gathering the strength from the arguments of both the parties extended before the court as well as the written contents of the appeal and reply/objections filed by the respondent/importer. The crux of the matter is only to invoked the interpretation of mentioning a correct HS Code and claim of exemption through notification, for clarification of the same, two moot points required to be taken into consideration (i) as to whether the importable goods are classifiable under PCT Heading 6306.2200 as claimed by the respondent/importer (ii) as to whether claim of PCT Heading if proved incorrect constitute an offence of mis-declaration under Section 32 of the Customs Act, 1969.

7.Both the issues revolves around the heading 6306 as per the Explanatory Notes and Chapter 63 of the harmonized commodity description and coding system relates to tarpaulins, awnings and sunblind, tents, sails for boats etc. this heading further implies that articles falling thereunder of be predominantly made of textile materials and 'covers a range of textile articles usually made from strong, close woven canvas. Whereas the PCT Heading 9406.0090 relates to prefabricated buildings designed for a variety of uses, such as housing works sites, offices, schools, shops, sheds, garages besides fully assembled ready for use of unassembled. The description of components as per examination report clearly suggests that impugned goods are complete big tents in unassembled condition consisting of roof beam, upright support, top connection, roof cover, bolts, set-up rope, made of roof cover double side PVC coated fabric and structure, iron and steel, aluminum, with all standard accessories.

8.As per the data made available and evidences placed on record confirms that, the identical goods have been cleared consistently under the aforesaid PCT Heading without any contest or dispute. Merely claiming the benefit of particular PCT Heading or sub-heading a notification does not by, itself amounts to misdeclaration and incorrect interpretation of notification does not amount to misstatement and further more no mala fide has been proved or established. The interpretation of a notification by courts was a different matter and on that point the parties and the department's could differs but merely because if the department interpretation and view point was different from that of an importer/assess, if could not be said that the, importer/assess had mis-declared the goods and liable to be charged under the relevant provisions of law, because the determination of PCT Heading in fact is the sole opinion of the customs officer. The importer only assist the customs by stating the PCT Heading of the goods which means request may be accepted or rejected by the competent authority but is not a punishable offence under any of the provisions of Customs Act, 1969 or notification issued thereon. It is a well settled principle of law in customs jurisprudence which proves through a series of judgments of Superior Courts which declares that alleging the charge of mis-declaration on the basis of wrong classification heading does not constitute offence within the framework of section 32 of the Customs Act, 1969 as there is no material false in the statement/declaration made by the importer. It has also been held by the Courts that difference of opinion with respect of classification does not fall within the ambit of mischief of Section 32 of the Customs Act, 1969. The learned Collector at the time of passing the Order-in-Appeal rightly considered the subject controversy by mentioning or referring the examples of classification of EU and USA as ruling which are accordingly followed by the relevant quarters with collective deliberation. In the light of harmonized commodity description and coating system and considering the collective description of EU and USA customs it has been noticed and observed that the customs authorities misconceived and misread the description and differences rightly available in between both the PCT Headings, one which was claimed by the importer/respondent and other which was allegedly charged by the department as per the examination report it is clear that the subject impugned consignment in the goods imported in this case are not prefabricated building and also there is no reason to disregard the fair international practice.

9.By doing so there is no any legal infirmity found in the order passed by the learned Collector (Appeals) as such, I am of the considered view that the ends of justice would be met the maintain the said and hereby dismiss the subject appeal as the same is without substance, with no order as to cost.

HBT/142/Tax(Trib.)Appeal dismissed.