BABAR WAHEED VS FEDERATION OF PAKISTAN through Secretary, Federal Board of Revenue, Government of Pakistan, Islamabad
2015 P T D (Trib.) 30
[Customs Appellate Tribunal]
Before Adnan Ahmed, Member (Judicial-II) and Ghulam Ahmed, Member (Technical-II)
BABAR WAHEED
Versus
FEDERATION OF PAKISTAN through Secretary, Federal Board of Revenue, Government of Pakistan, Islamabad and 3 others
Customs Appeal No.K-286 of 2008, decided on 09/12/2013.
(a) Administration of justice---
----Proper place of procedure in any system of administration of justice is to help and not to thwart the grant of their rights to people---Technicalities have to be avoided unless essential to comply on grounds of public policy.
PLD 1963 SC 382 rel.
(b) Interpretation of statutes---
----Statute is understood to be directory when it contains matter merely of direction, but not if the directions are followed by an express provision to the effect that in case of default to follow said provision, action shall be null and void.
Niaz Muhammad Khan v. Mian Fazal Raqib PLD 1974 SC 134 rel.
(c) Customs Rules, 2001---
----R.298---Duty and tax remission for export scheme---Approval for availing benefit---Procedure---Person desirous of availing the facility of Duty and Tax Remission for Export Scheme (DTRE) submitted an application for obtaining DTRE approval on the basis of specific export or supply contract or order, Collector, who, after going through the application and recommendations of the processing authorities approves the application for import of goods to be utilized in the manufacture of goods for export without payment of leviable Customs duty and taxes on the said item notified in the Pakistan Customs Tariff.
(d) Customs Act (IV of 1969)---
----Ss.32(1)(2) & 32(a)---Customs Rules, 2001, Rr.298 & 307-E(4)---Mis-declaration---Act contrary to the promise---Doctrine of promissory estoppel, benefit of---Scope---Appellant obtained approval of Duty and Tax Remission for Export Scheme (DTRE) for the importation of zinc for the manufacturing of sanitary fitting for export---Appellant imported zinc but exported copper coated wire instead of sanitary fitting---Customs authorities found the appellant guilty of misusing and abusing the facility of DTRE and causing loss to public exchequer of regulatory duty---Appellant was served with show cause notice on account of mis-declaration and fiscal fraud---Additional Collector of Customs through impugned Order in Original ordered for confiscation of seized goods, imposed penalty and also recommended for cancellation of DTRE approval along with initiation of recovery proceedings---Appeal filed by appellant against the impugned order in original was dismissed---Contention of the appellant was that he was given DTRE approval by the authorities, therefore impugned orders were illegal as he was protected under the doctrine of promissory estoppel---Validity---Appellant submitted application with the Collector who notified the approval as per which the appellant was to import zinc for manufacture and export of Sanitary fitting---Appellant, in his application and approval, made a statement and promise to import the goods mentioned in the application and likewise to export the goods mentioned in DTRE approval---Appellant imported the goods as declared in application but exported the goods namely copper coated wire to which he was not permitted---Appellant was duty bound to adhere to the promise made in the application of exporting sanitary fitting manufactured from alloy comprising of copper and zinc---Copper coated wire could not be termed as sanitary fitting even through a figment of imagination, therefore the act of appellant was in derogation of the DTRE approval and amounted to mis-declaration and fiscal fraud---Doctrine of promissory estoppel was infact squarely applicable on the appellant as he was not allowed to export the goods contrary to the promise made in the DTRE approval---Taking shelter behind the doctrine of promissory estoppel was misplaced as it was for the appellant to adhere to his declaration/promise and not for the authorities in any manner---Appeal was dismissed.
PLD 1991 SC 546; AIR 1980 SC 1285; AIR 1986 SC 806 and 1986 SCMR 916 distinguished.
Army Welfare Sugar Mill Ltd. and others v. Federation of Pakistan and others 1992 SCMR 1652 rel.
(e) Estoppel---
----Promissory estoppel---Doctrine of promissory estoppel is based on equitable principles.
Army Welfare Sugar Mill Ltd. and others v. Federation of Pakistan and others 1992 SCMR 1652 rel.
G.A. Khan for Appellant.
Allauddin Paracha for Respondent.
Date of hearing: 2nd July, 2013.
ORDER
GHULAM AHMED, MEMBER (TECHNICAL-II).---By this order, we dispose of Customs Appeal No. K-286/2008 filed by the appellant against Order-in-Appeal No. 1020/2008 dated 2-5-2008 passed by Collector of Customs, Sales Tax and Federal Excise (Appeals, Karachi.
2.Brief facts of the case are that the Model Customs Collectorate of Exports received a credible information to the effect that an attempt was being made to deprive the public exchequer of its legitimate revenue by availing duty free import of raw material under the facilities of DTRE Scheme unlawfully and by evading Regular Duty chargeable on export of lead ingots by mis-declaring the description of goods to be exported. In pursuance to the information, eight consignments related to Goods Declarations Nos.25606, 25607, 25608, 25609, 25610, 25613, 26202 and 26203 all dated 26-11-2007 were examined by a team comprised for this purpose. For the exportation of 8 consignments stuffed in four Containers No.PMLU-202044-3, PKLU-202341-6, PMLU-202119-9 and GESU-216966-9, six Goods Declarations were filed by Messrs Pakland Trading Corporation (CHAL No. 1507) and two Goods Declarations were filed by Messrs Freight Ship Services (CHAL No. 2027) on behalf of exporter Messrs Admiral Sanitary Fittings, Gujranwala. Detailed examination of all the eight (8) consignments was conducted in the presence of two witnesses namely Mr. Salamat Ali, Assistant Collector of Customs (Exports/QICT) and Mr. Rashid Minhas, Senior Operation Officer, QICT. Upon re-examination, Container No.PMLU-202044-3 was found to contain PVC Scrap and Lead Ingots instead of declared goods i.e. "Copper Coated Wire (20% Copper 80% Zinc based Alloy) besides mis-declaration of weight of goods in other three containers as per following details:--
| S. No. | GD | Date | Declared Quantity and Description | Ascertained Quantity and Description of goods |
| 1 | 25610 | 26-11-2007 | 24000 Kg PVC Scrap | 24940 Kg copper wire |
| 2 | 25609 | 26-11-2007 | 2500 Kg lead ingots | |
| 3 | 26202 | 26-11-2007 | 24500 Kg PVC Scrap | 24515 kg lead ingots |
| 4 | 26203 | 26-11-2007 | 2000 Kg lead ingots | 1370 kg PVC scrap |
| 5 | 25607 | 26-11-2007 | 23500 Kg PVC Scrap | 24975 kg lead ingots |
| 6 | 25608 | 26-11-2007 | 3000 Kg lead ingots | 1050 kg PVC scrap |
| 7 | 25613 | 26-11-2007 | Copper coated wire (20% copper 80% zine based alloy) | 24915 kg lead ingots |
| 8 | 25606 | 26-11-2007 | Copper coated wire (20% copper 80% zine based alloy) | 940 kg PVC scrap |
As a result of re-examination, the aggregate weight of PVC Scrap was ascertained to be 3,360 Kg, that of Lead Ingots to be 74,225 Kg and that of Copper Wire 24,940 Kgs. Representative samples were also drawn from the consignments and forwarded to Messrs Pakistan Steel Mills for ascertairmlent of composition of goods for which the benefit of DTRE scheme was claimed. Messrs Pakistan Steel confirmed vide their report No.PS/PL/2203/XRF-376 dated 14-12-2007 that the goods were 99.30% copper wire instead of '20% copper 80% zinc based alloy' as claimed by the exporter. Keeping in view the outcome of examinations of consignments stuffed in Container Nos.PMLU-202341-6, PMLU-202119-9 and GESU-216966-9 and re-examination of Container No. PMLU-202044-3, and the aforesaid laboratory report it was established that none of the consignments contained 'Copper Coated Wire' i.e. 20% copper 80% zinc based alloy which was to be exported under DTRE Scheme vide DTRE Approval No. STG/1676/06062007 dated 6-6-2007 issued by the Collectorate of Sales Tax and Federal Excise, Gujranwala under DTRE Scheme availing the concession of Customs Duty/taxes chargeable at import stage. The case was 'lodged before the Honourable Court of Special Judge (Customs and Taxation), Karachi and investigation of the case was carried out by Investigating Officer so designated for the purpose. During the course of investigation accused Babar Waheed, Proprietor of Messrs Admiral Sanitary and Fittings, Gujranwala was examined vis-a-vis material available on case file. As a result of this exercise it transpired that the above named accused established a firm viz; Messrs Admiral Sanitary and Fittings at Gujranwala in the year 1995 for the manufacturing of various products of Sanitary Fittings and in the year of 2007 obtained approval of DTRE for the importation of 500 tons of Zinc and reportedly made export of 275 tons of copper coated wire and different sanitary fittings. However, there is nothing on record which could rationalize imports under DTRE and exports of finished goods as required under aforesaid scheme. Taking into consideration the export documents, Goods Declarations, examination and re-examination of consignments it is established that the exporter deliberately Prepared untrue export documents and stuffed the goods as per his whims in all four containers except the goods to be exported under DTRE Scheme. It is thus prima facie established that the above named exporter misused and abused the facility of DTRE Scheme and attempted to deprive the public exchequer of Regulatory Duty amounting to Rs.2,504,872 chargeable on export of Lead Ingots besides evasion of duty/taxes amounting to Rs.1,273,935 payable on the import of raw materials claimed to be used in the export of finished goods, as per following break-up:--
| S. No. | GD No. | Date | Declared Quantity and Description | Ascertained Quantity and Description of goods | Evasion of Regulatory Duty involved Rs. | |
| 1 | 25610 | 26-11-2007 | 24000 Kg PVC Scrap | 24940 Kg copper wire | 0 | 0 |
| 2 | 25610 | 26-11-2007 | 2500 Kg lead ingots | | | |
| 3 | 26202 | 26-11-2007 | 24500 Kg PVC scrap | 24515 kg | 827308 | 0 |
| 4 | 26203 | 26-11-2007 | 2000 Kg lead ingots | Lead ingots | | |
| 5 | 25607 | 26-11-2007 | 23500 Kg PVC scrap | 24795 Kg Lead ingots | 836757 | 0 |
| 6 | 25608 | 26-11-2007 | 3000 Kg lead ingots | 1050 kg PVC scrap | | |
| 7 | 25613 | 26-11-2007 | Copper coated wire (20% copper 80% zine based alloy) | 24915 kg Lead ingots | 840807 | 1273935 |
| 8 | 25606 | 26-11-2007 | Copper coated wire (20% copper 80% zinc based alloy) | 940 kg PVC scrap | 0 | 0 |
| | | | | Total | 2504872 | 1273935 |
The material on file prima facie established that accused Amir Aijaz Malik and Zafar Iqbal Hajveri, Proprietors of Messrs Freight Ship Services (CHAL No.2027) and Messrs Pakland Trading Corporation (CHAL No. 1507) respectively were in league with the exporter and tried to pave way for materialization of his attempt to export goods chargeable under Regulatory Duty under the guise of DTRE Scheme with a view to deprive the public exchequer from its legitimate revenue to the tune of Rs.2,504,872 on account of export regulatory duty and Rs.1,273,935 on account of duty and taxes goods imported under DTRE cover (total Rs.3,778,807). Under the circumstances, it is established that both the above named clearing agents were having prior knowledge with regard to contents of goods stuffed in seized consignments thus are squarely responsible for the commission of offence. Accordingly the license issuing authority has been asked to initiate necessary action against these agents. The role of Customs staff is also being investigated to detemline their connivance with exporter and clearing agent in commission of the offence. On the basis of record available on file coupled with the outcomes of investigation carried out so far, it is established that the exporter with the connivance of clearing agents attempted to deprive the public exchequer of its legitimate revenue to the tune of Rs.3,778,807. Hence, they have committed an offence which attracts the provisions of sections 16, 32(1), 32A(1)(c) of the Customs Act, 1969, read with section 3(1) of the Imports and Exports (Control) Act 1950 and Sub-Chapter (7) of Chapter XII of Customs Rules, 2001 punishable under Clauses (1), (9), (10A), (14) and (14A) of section 156 of the Customs Act, 1969 read with section 3(3) of the Import and Export (Control) Act, 1950.
3.On the strength of above facts appellant was called upon to show cause vide No. SI/MISC/66/2007-Exp/PQ dated 14-2-2008, the advocate replied to the show-cause notice vide dated 23-2-2008, through which he controverted the allegation levelled in the show-cause notice and prayed for the vacation of the show-cause notice. The respondent No. 4 after consideration of the submissions, disagreed and passed Order-in-Original No. 02/2008 dated 22-3-2008, paras 13 to 16 of the order passed order-in-Original No.2 of 2008 dated 22-3-2008, para 13 to 16 of the order are relevant which states inter alia:--
" .In view of the position elucidated above it is established that the exporter Messrs Admiral Sanitary Fittings, Gujranwala and both clearing agents, Messrs Pakland Trading Corporation (CHAL No. 1507) and Messrs Freight Ship Services (CHAL No. 2027) were in league with each other and attempted to defraud the public exchequer by way of gross mis-declaration to evade regulatory duty leviable on export of lead ingots and duty/taxes on the imported Zinc ingots as raw material which was allowed free of import duty I taxes under DTRE Scheme which is otherwise chargeable to prevailing rate of taxes at import stage. Now, therefore, I am of the considered opinion that they have committed offence of mis-declaration under sections 16, 32, 32A(1)(c) of the Customs Act, 1969, read with section 3(1) of the Imports and Exports (Control) Act, 1950 and Sub-Chapter (7) of Chapter XII of Customs Rules, 2001 punishable under Clauses (1), (9), (10A), (14) and (14A) of section 156 of the Customs Act, 1969 read with section 3(3) of the Import and Export (Control) Act, 1950. I therefore, order confiscation of seized goods in terms of section 180 of the Customs Act, 1969. However, an option to redeem the goods is provided to the exporter in terms of section 181 of the Customs Act, 1969 on payment of chargeable duty/taxes and fine to the tune of 50% of the ascertained value of the goods subject to the permission of the Special Judge of the Customs and Taxation Court, Karachi. I also impose personal penalty of Rs.2,500,00 (Rupees twenty five lac only) upon the exporter and Rs.1,000,000 (Rupees ten lac only) each upon both the clearing agents. It is also recommended that the DTRE Approval No. STG/1676/06062007 dated 6-6-2007 issued by the Collectorate of Sales Tax and Federal Excise, Gujranwala under DTRE Scheme for availing the concession of Custom duty I Taxes chargeable at import stage to Messrs Admiral Sanitary Fittings, Gujranwala, may be cancelled forthwith to avoid further misuse of this facility and initiate recovery of Custom Duty I taxes, if any on the imported raw material for not manufactur-ing and exporting the goods as per the said DTRE approval."
4.The appellant assailed the said order before Collector of Customs (Appeals) under the provision of section 193 of the Customs Act, 1969, who rejected the appeal vide order dated 2-5-2008 on the strength of opinion formed in paras 4 to 13 of the order reading as:--
I have considered submissions of both the sides and also examined the case record. Although all the main grounds agitated at the original stage were properly and adequately considered and discussed in the impugned order-in-original, yet the appellants have raised the same issues at this appellate level as well. Three core and main issues involved in the case, are highlighted and discussed as under:- (i) Whether or not the appellants had made correct and complete declaration of the goods on GD meant for export? (ii) Whether or not the appellants attempted to evade the legitimate public revenue by violating and misusing the facility of DTRE and Regulatory duty? (iii) Whether or not the time bar issue of the show-cause notice and other legal aspects were properly considered at the original level? The first and the foremost issue of serious proportion about mis-declaration of description of goods merits to be considered. Perusal of the appellants contention show that they have hardly denied the charge of mis-declaration. It is rather tacitly admitted. The Collectorate conducted in-depth examination and re-examination of the impugned items. Laboratory test was also got conducted from the Pakistan Steel Mills and the entire matter was properly ascertained and determined by sifting and segregating each and every item as per the graphic details provided in the charts in the impugned Order-in-Original. The appellants have advanced hardly any convincing or tangible arguments, hence their version is too weak to rebut the formidable and strong evidence produced by the department. The appellants have rather tried to side track the issue of mis-declaration. It is thus proved beyond a shadow of doubt that the appellants willfully resorted to massive mis-declaration of the description of the goods aimed for exports. Considering seriousness of the charges F.I.R. was also registered against the exporters and the case is reportedly pending before the Special Judge of the Customs and Taxation, Karachi. The second issue of DTRE violation and evasion of regulatory duty is also examined. The appellants have failed to provide any evidence in support of their contention that they did not flout or misuse the DTRE facility. They were required to properly account for and establish that the raw material/goods imported by them without duty and taxes under the umbrella of DTRE concessions were fully used in the manufacture of the impugned export goods. This needed to be convincingly and thoroughly proved at the stage of exports. Even at this appellate stage they have, though raised various untenable other points but their appeal is devoid of serious and convincing explanation on this specific, main and important issue of DTRE misuse. In the absence of material evidence it can safely be held that the appellants attempted to evade the amount of duties and taxes involved in remissions against the DTRE facility accorded to them. This aspect is indeed too serious to be ignored even by the concerned Sales Tax Collectorate. The appellants contention that the lead ingot and other items are not subjected to the imposition of Regulatory duty on export is also in-correct. They have either not properly studied the S.R.O. 482(I)/2007 dated 9th June, 2007 or attempted to mislead the adjudication/appellate authorities. The impugned items liable to regulatory duty are enlisted in the two tables of the subject Notification. The lead ingots classifiable under HS Code 78.01 are also clearly placed at Sr. No. 14 of Table-II of the subject Notification S.R.O. 482(I)/2007. It can definitely be held that the appellants deliberately resorted to evade the regulatory duty on the impugned items as specified in the Order-in-Original by mis-declaration of the description of the goods. There is more than sufficient evidence to establish the charges of evasion of duties taxes in the case of DTRE besides the regulatory duty and has been correctly proved in the impugned Order-in-Original. The issue of show-cause notice, confiscation aspects of goods in terms of section 180 of the Customs Act, 1969 as per para 15 of the impugned Order-in-Original referred by the learned Counsel are considered. Infact all the relevant provisions of the Customs law, rules made there under and sections of Import and Export (Control) Act, 1950 invoked and applied in the case have been adequately quoted at para-14 of the order. Section 180 of the Act mentioned at para-15 appears to be bona fide typographical error. This part of the order does not have any purpose and connotation other than confiscation of the goods ordered by the learned adjudicating officer. Moreover the goods became liable for confiscation owing to massive and complete mis-declaration and flouting of the provisions of sections 32, 32(1)(c) of the Customs Act, 1969. It is accordingly held that the impugned order-in-original did not on this account suffer any legal infirmity. The issue of show-cause notice needs in depth examination and consideration. The evidence produced in the case show that the containers were detained vide two letters 81/Misc/11/2005-Exp-PQ issued by the Principal Appraiser Customs (Export) on 5th December, 2007. While the date of occurrence has been reported as 6th December, 2007 in the F.I.R. No. 01 of 2008 vide No. SI/Misc/ 66/2007/Exp-PQ lodged by the MCC Exports Custom House, Karachi. Although the appellants have seriously referred the dates on which the goods were actually examined as the relevant date for counting the limitation period. This contention is not acceptable as reasonable time period was genuinely consumed in the process of examination, re-examination of the impugned goods. The date of occurrence reported as 6th December, 2007 by the Collectorate would be the crucial date to start reckoning of the two months period needed for issuance of the show-cause notice in terms of section 168 of the Customs Act, 1969. The show-cause notice was issued on 11th Febuary, 2008 which undoubtedly crossed the bar envisaged under section 168 of the Act. Two months period is the mandatory requirement which essentially needed to be fulfilled. In case of unavoidable situation extention could be obtained from the Collector in terms of first proviso to subsection (2) of section 168 of the Act. The Order-in-Original is however, silent on this issue. There is also no explanation or discussion in the impugned order about the aspect of delay in the show-cause notice. This was very important case warranted even registration of F.I.R. How could the critical period of two months was allowed to cross or lapse without timely issuance of the notice. The Collectorate may like to look into it. There is more than sufficient evidence produced on the issue of time barred show-cause notice. Several judgments of different for as have been referred whereby lapse of non-issuance of the show-cause notice within the mandatory period was seriously considered. In case of only one day exceeding the limitation period the Honorable Supreme Court of Pakistan did not allow the Review Petition filed by the Collector and it was dismissed (PTCL 2003 L. 723). There is an other judgment of the Honorable Sindh High Court in Constitutional Petition No. D-713 of 2003 wherein the delay of just 2-3 days in issuance of show-cause notice was not accepted and the case decided against the Collector of Customs (Appraisement). An other judgment of the Honourable Sindh High Court passed in Constitutional Petitions Nos. D-646, D-647, D-648, D-649 and D-650 of 2006 is also equally applicable in this case. The case is accordingly hit by the limitation specified in section 168(2) of the Customs Act, 1969. It is thus very strong, compelling and un-ignorable evidence. The judgments are binding and quite applicable in this case. The extent of repercussions and implications on the case emanating from the situation of the time barred show-cause notice merit to be considered. The appellants contention that owing to the proven time bar aspect the goods should be returned in terms of section 168(2) of the Customs Act, 1969 as held in the above referred judgments. The learned counsel also forcefully argued against imposition of the fine and penalty in the case. According to him, legally and as per the judgments of the Honourable Supreme Court, the Sindh High Court and section 168(2) of the Act will have no legal benefit until and unless the unlawful confiscation and imposition of fine and penalty are not done away with the counsel added. The appellants above contention surpasses the limits and scope of the judgments. The non-issuance of the show-cause notice within the mandatory period of two months would not vitiate or invalidate the entire proceedings. The judgments of the honourable Superior Courts and section 168(2) of the Act are confined and related to the issue of the goods only. Legally, the issue revolves and the discussion hovers around the vires of section 168 of the Customs Act, 1969 only. The appellants, cannot be absolved from their legal responsibility of the impugned violations, which are proved and established beyond a shadow of doubt. The appellants shall only be entitled for the benefit permitted by the law. In view of the above facts, circumstances and principles of law the amount of fine is waived but the penalty is reduced to fifty percent only against the appellants. The order about duties and taxes determined and ascertained against the DTRE misuse and the Regulatory Duty evasion by the learned adjudicating officer in the case/Order-in-Original is upheld. The appellants are allowed to export the goods subject to payment of the full and total amount of duties and taxes plus the re-adjudged penalty. Few samples of the impugned goods may be retained, as modified to the above extent only and the appeal is disposed of.
5.The appellant has now challenged the above order by way of this appeal. Mr. G.A. Khan Advocate appeared on behalf of the appellant and emphasized in the arguments incorporated in the memo. of appeal reading as:--
(i)That the appellant is engaged in the manufacturing of "Sanitary fittings" for the past more than ten years and has deployed about 150 skilled and unskilled workforce. The appellant is also making exports of various waste and scrap of alloy metals and is also a regular Exporter of Copper Wire and has exported 225 MT during Nov-Dec, 2007 alone. Besides, the appellant is regularly exporting copper coated wire of zinc and sanitary fittings under temporary import facility of raw material for subsequent export in finished form under DTRE i.e. Duty and Tax Remission scheme.
(ii)That in the normal course of his business, the appellate submitted documents for export of eight consignments of PVC Scrap, Remeltable lead ingot and copper coated wire as detailed in the following G.Ds. Interestingly it may be recorded that none of these export items involve any rebate claim.
| 1. GD 25610/26-11-2007 | 24000 Kg PVC Scrap | |
| 2. GD 25609/26-11-2007 | 2500 Kg Remeltable Lead Ingot | |
| 3. GD 26202/29-11-2007 | 24500 Kg PVC Scrap | |
| 4. GD 26203/29-11-2007 | 2000 Kg Remeltable Lead Ingot | |
| 5. GD 25607/26-11-2007 | 23500 Kg PVC Scrap | |
| 6. GD 25608/26-11-2007 | 3000 Kg Remeltable lead Ingots | |
| 7. GD 25613/26-11-2007 | 12500 Kg Copper Coated Wire | |
| 8. GD 25606/26-11-2007 | 12500 Kg Copper Coated Wire | |
| Total | PVC Scrap 72000 kgs | Remeltable Lead Ingot 7500 Kgs | Copper Coated Wire Under DTRE 25000 kgs |
| | | | | | |
(iii)That the containers of the six consignments of S. Nos. 1-6 were not readily traceable for examination whereas consignments of S. Nos. 7 and 8 stuffed in Container No. GESU-216966-9 were available and examined by Customs Examination officers on 3-12-2007 and after being satisfied with the declaration, recorded their findings on the GD and subsequently the container was also allowed loading on 4-12-2007.
Copies of eight G.Ds. with Invoice are annexed and marked as Annexures "A" "B" "C" "D" "E" "F" "G" & "H".
(iv)That when the appellant's Clearing Agent went to Port Qasim on 6-12-2007 to get the other six consignments at S. Nos. 1 to 6 examined, he came to know that the two earlier out of charged consignments consisting of Copper Coated Wire of Zinc stuffed in Container No. GESU 2169669 of S. Nos. 7 and 8 were seized by Customs Authorities. Besides it was also known that the same examination staff had also examined the six consignments of PVC scrap and Remeltable lead ingot of S. Nos. 1 to 6 of preceding Para 3 and these were also seized. Thus all the eight consignments were seized illegally without determination whether or not the goods are liable to confiscation more particularly when the goods of the six GDs of S.Nos.1 to 6 were yet to be examined under first appraisement. It is a matter of record that entire proceeding of seizure was conducted in absence of appellant or his Agent.
(v)That reportedly the goods of the eight seized consignments were examined by Examination Staff detailed by respondent No. 4, who furnished a consolidated report of all the eight consignments stating that they consist of PVC Scrap, Lead Ingot and Copper Wire. The import status and tariff classification of the three items stand a under:-
| 1.PVC Scrap | 3360 Kgs | 3916.9000 | Not leviable to Regulatory Duty | No export restriction |
| 2. Legal Ingot | 94225 Kgs | 7801.9900 | Not leviable to Regulatory Duty | No export Restriction |
| 3. Copper Wire | 24940 Kgs | 7408.2100 | Not leviable to Regulatory Duty | No export restriction |
(vi)That Federal Government has levied Regulatory Duty at 25% ad. Val on some wastes and scraps but none of the aforesaid items are subjected to levy of Regulatory Duty under the Notification. Similarly all the three items are also exportable and are not banned or restricted for export. Copies of S.R.O. 482(I)/2007 dated 9-6-2007 and relevant pages of Export Policy order are annexed and marked as Annexures 'I' & 'J'.
(vii)That surprisingly despite the above Examination findings respondent No.4 served a Show-Cause Notice alleging that appellant has attempted to deprive government in a sum of Rs.37,78,807 by:-
"His attempt to export goods chargeable under Regulatory Duty under guise of DTRE scheme" Copy of Show-Cause Notice is annexed and marked as Annexure 'K'"
(viii) That a detailed reply was furnished wherein it was particularly explained that exports of PVC scrap and Remeltable scrap are not being affected under DTRE scheme as alleged which is evident from the declaration on GDs concerned but are being exported under normal commercial exports. Also the two variety of exports do not levy any Regulatory Duty and exports rebate incentives. It was also pointed out that no basis of determined weight has been disclosed. As regards Copper Coated
Wire being exported under DTRE, this was duly examined on 3-12-2007 by Customs Examination staff who verified the declaration and allowed export. It was also explained that the alleged drawal and testing of samples carried out in absence and without participation of appellant or his Agents is illegal and such findings cannot constitute the basis of issue of Show-Cause Notice. It was also pressed that since show-cause notice has been issued after expiry of limitation prescribed under section 168(2) of Customs Act, the goods should be returned forthwith. It was further explained that fixed values cannot be applied to export goods, as applied in appellants case, as section 25B which had empowered the Customs Authorities to fix value has been withdrawn long before on 30-6-2004. As a result application of any fixed value on export consignment is clearly illegal and violative of section 25(15) of the Act.
Copy of reply to Show-Cause Notice is annexed and marked as Annexure 'L'
(ix)That it is interesting to point out that appellant's have imported the Zinc Ingots allowed to them under DTRE during the period from July 2007 to December 2007, at an average price of US$ 3500/PMT while prices of Copper in LME during the February- March 2008, which is the period of appellant's export was US$ 8611-PMT. There is therefore no logic by exporting Copper Wire an item of far higher value under the garb of Zinc Wire manufactured from Zinc Ingot imported under DTRE at a far lesser value.
Copy of LME Graph indicating the price trend of Copper and Zinc at 'M'
(x)Attention was also invited to inaccurate examination findings of goods reported by staff of adjudication authority while correct position was conveyed by appellant as under:--
| S. No. | GD and Chal No. | Date | Declared Quantity and Description | Declared Weight | Ascertained Quantity and Description of goods |
| 1 | 25610 CHAL 2027 | 26-11-2007 | PVC Scrap | 24000 Kg | 24940 Kg copper wire |
| 2 | 25609 CHAL 2027 | 26-11-2007 | Remelted lead ingots | 2500 Kg | |
| 3 | 25202 CHAL 2027 | 26-11-2007 | PVC Scrap | 24500 Kg | 24515 kg lead ingots |
| 4 | 26203 CHAL 2027 | 26-11-2007 | Remelted lead ingots | 2000 Kg | 1370 Kg PVC scrap |
| 5 | 25607 CHAL 2027 | 26-11-2007 | PVC Scrap | 23500 Kg | 24795 kg lead ingots |
| 6 | 25608 CHAL 2027 | 26-11-2007 | Remelted lead ingots | 3000 Kg | 3000 kg PVC scrap |
| 7 | 25613 CHAL 1507 | 26-11-2007 | Copper coated wire (20% coper 80% zinc based alloy) | 12500 Kg | 24915 kg lead ingots |
| 8 | 25606 CHAL 1507 | 26-11-2007 | Copper coated wire (20% copper 80% zinc based alloy) | 12500 Kg | 940 kg PVC scrap |
(xi)It is very important to point out that respondent No. 4 did not controvert the aforesaid position yet it was held that there was no need for re-examination as the Examination was held in presence of two witnesses, and insisted the correctness of allegations made in show-cause notice and passed the adjudication order without application of judicial mind. It is a matter of record that respondent No. 4 had never provided Mushirnama of witnesses. The goods were ordered to be confiscated under a totally irrelevant provision of Act namely Section 180 of the Customs Act. However, the goods were ordered to be redeemed upon payment of 50% fine of the ascertained value and payment of Taxes in a sum of Rs.25,04,872 on account of Regulatory Duty and Rs.12,73,935 on account of duty and taxes payable on the imported raw material under DTRE.
Copy of Order-in-Original No. 02/08 dated 22-3-2008 is annexed and marked as Annexure 'N'.
(xii)That an appeal was filed before Collector Appeal wherein legal infirmities in the exercise of powers under section 168 of Customs Act were pointed out besides challenging the levy of illegal Regulatory Duty on Lead Ingot of HS 7801.9900 and determination of Export value under section 25(15) of Customs Act.
Copy of Memorandum of appeal is annexed and marked as Annexure '0'.
(xiii) That the learned Collector Appeal allowed a hearing when the arguments advanced in Memo. of appeal were pressed into it was additionally emphasized that the description initially ascertained by a team of Customs Examining Officers as "Copper Coated Wire" was not controverted by a qualified Test Report prescribed under the law. It was also urged upon the appellate authority that "Lead Ingot" is classifiable under HS 7801.9900 while Regulatory 25% is only leviable on HS 78.01 on "UNWROUGHT LEAD" while both the items are not synonymous having different characteristics and nature. It was further urged that Notification has clearly mentioned the Sub Headings of a HS where Regulatory Duty is intended to be levied on the goods of any sub-heading of HS by S.R.O.482(I)/2007 dated 9-6-2007, whereas in the present case HS heading 7801.9900 covering lead ingot does not appear in Table II of S.R.O. 482(I)/2007 dated 9-6-2007. As a result lead ingot is not subject to Tax.
(xiv) That impugned appellate order in para 6 has quite conveniently avoided to take cognizance of exports of Copper Coated Wires under DTRE affected by appellant in the past available on record which was furnished to department by respondent No. 3 in consequence of an enquiry conducted by respondent No. 4. Besides physical verification report of manufacturing facility of premises of the unit was also conducted on 27-12-2007. The factual position is as under:-
| 1. | Sanction for import of Zinc Ingot under DTRE. | 500,000-Kgs |
| 2. | Import of Zinc under DTRE Export under DTRE | 496,190-Kgs |
| 3. | Export under DTRE (excluding present export of 25M. Tons) | (-) 275,357-Kgs |
The balance quantity of UNUTILIZED ZINC INGOT is available in appellant's ware house.
Details of Exports under DTRE and Report of manufacturing facility are annexed and marked as Annexure 'P'
(xv)That as far as export of present consignments of 25 M.T. is concerned, the appellant, right from the initial forum, has contested the credence of sample tested at the back of appellant without his participation which is one of the subject matter of appeal. The findings in the para are therefore baseless and have no substance on the face of appellant's Export records. The Test Repot obtained and applied on appellant's case is illegal and without jurisdiction.
(xvi) That the appellate authority only agreed with the illegal application of section 168 of Customs Act and remitted the entire redemption fine and also reduced the penalty at Rs.12,50,000 which was initially imposed at Rs.25,00,000 but did not agree with the classification of "Lead Ingot" under HS 7801.9900 without assigning any reasons and in total disregard of General Rules for Interpretation of classification under Harmonized, system held that lead ingot is chargeable to Regulatory Duty @ 25% under S.R.O. 482(I)/2007 dated
9-6-2007. The goods were however allowed export subject to drawal of samples and payment of Regulatory Duty on lead ingot in a sum of Rs.25,04,872 and Rs.12,73,935 on alleged misuse of DTRE. The order did not make any findings in respect of illegality committed by drawal of sample in utter disregard of Rules on the subject and obtaining a Test Report at the back of appellant from an outside laboratory instead of Custom House. The entire exercise lacked jurisdiction but the appellate Authority conveniently ignored all these facts including illegal application of fixed value on Lead Ingot.
Copy of Order-in-Appeal is annexed and marked as Annexure 'Q'
(xvii) That before export of goods was allowed in consequence of impugned appellate order the appellant were forced to give a written statement that they will not make an appeal under section 194-A of Customs Act before Customs Tribunal, which was done under duress to protect from further losses. The department's demand to seek appellant's statement as above, admittedly demonstrates the fear of the invalidity of their actions taken on false and baseless assumptions.
(xviii) That in view of the above facts it is clear that impugned order is void, ab-initio and liable to be set aside on the following grounds:--
(1)Drawal of samples in absence of appellant or his agent and obtaining a Test Report based on such samples from a laboratory other than Custom House laboratory, without following the prescribed Rules and Procedure at the back of appellant cannot be made applicable to appellant's consignment;
(2)No Regulatory Duty is leviable on "Lead Ingot" classifiable under HS 7801.9900 as the said HS does not appear in TABLE-II of S.R.O. 482(I)/2007 of 9-6-2007.
(3)No cognizance of section 32 for imposition of Penalty for mis-declaration can be taken based on a Test Report obtained without jurisdiction.
(4)No cognizance of section 32 for imposition of Penalty can be taken as the Six GDs in respect of Scarp material were to be processed under first appraisement system in terms of Para 101 of C.G.O. 12/2002 dated 15-6-2002.
(5)Customs Values of export goods cannot be fixed after omission of section 25-B from Customs Act from 30-6-2004.
6.The Deputy Collector of the Customs, Export, submitted comments on the memo. of appeal dated 14-10-2008 and Mr. Allauddin Paracha Appraiser, argued in accordance with the same which reproduced herein below:--
(i)That the appellant being aggrieved by Order-in-Appeal No.1020/2008 passed by the learned Collector (Appeals) prefer this Appeal but interestingly did not mention him as respondent in the Memo. of Appeal for the reasons best known to him. Kind attention of this Honourable Tribunal is invited to letter dated 7th May, 2008 addressed to the Additional Collector of Customs, MCC-Exports, Karachi by the appellant wherein the appellant stated that "no appeal will be filed against the Order-in-Appeal referred to above." This intention was given by the appellant when he was absolutely free to do anything and there was pressure or influence upon him to do so. This state of affairs clearly establishes that the appellant has committed breach of his own commitment; therefore, submissions made by him in the Memo. of Appeal cannot be relied upon.
(ii)That the contents of Para 2 are admitted to the extent that the appellant has been availing DTRE Facilities for the importation of raw material meant for manufacturing of finished goods to be exported. The institution of case against the appellant sufficiently dilate upon the issue that he has bluntly misused and abused the facility of DTRE extended by the Government for boosting export trade and earning foreign exchange for the country.
(iii)That it is not matter of any interest that the goods declared by the appellant for exports involve any rebate claim and that it has not been matter of issue in any way so far this case concerned. Admittedly, Goods Declaration mentioned in this Para were filed by the concerned Clearing agent on behalf of the appellant but Goods Declarations cited at Paras 7 and 8 indicating availability of 'Copper Coated Wire' in the consignments is absolutely incorrect. Contrary to this claim, not a single piece of 'copper coated wire' was found in both the consignments what to speak about availability of 25000 Kg of Copper Coated Wire in the consignments.
(iv)That it is incorrect to suggest that six consignments mentioned at S. Nos. 1 to 6 at Para 3 of the Memo. of Appeal were not readily traceable for examination. Amazingly, two consignments stuffed in Container No. GESU-216966-9 said to contain 'copper coated wire' were available for examination which was done and loading was allowed accordingly. As a matter of fact all four containers containing eight consignments were available at QICT but the appellant and his Clearing agents were looking to the fate of container which contained goods other than declared one. So far findings of examining officer on the reverse of Goods Declarations is concerned it is to submit that the clearing agent succeeded in obtaining the same in clandestine manners. However, claim of the appellant that aforementioned container was containing "copper coated wire" came into lime light when both the consignments were re-examined on receipt of credible information.
(v)That appellant's clearing agent might have gone to Port Qasim to get other six consignments examined but he did not approach any custom authority in this behalf. The concerned clearing agent might have information from his colleague clearing agents with regard to the seizure of goods contained in Container No. GESU2169669 said to contain 'copper coated wire'. When said container was re-examined and found to contain goods other than declared goods, six other consignments of the appellant were traced out and were examined accordingly in presence of two witnesses. As a result of examination of six consignments stuffed in other containers and re-examination of goods stuffed aforementioned container led to the recovery of goods in excess quantity even that copper coated wire was not found in any of the consignments. So far presence of the appellant or his clearing agents is concerned; it is to submit that both the clearing agents after having knew recovery of goods other than declared goods from the aforesaid container opted to keep themselves away from customs authorities what to speak about the appellant who was based at Gujranwala. The process of examination and re-examination leading to the seizure of goods was witnessed by two witnesses whereby required legal formalities were fulfilled. Despite the fact that goods were liable to confiscation or not, if goods covered under Goods Declaration mentioned at S. Nos. 1 to 6 at Para 3 of the Memo of Appeal were to be examined under First Appraisement, as to why same were not presented before the customs authorities by the clearing agent himself. The simple answer to this question is that the concerned clearing agent was awaiting the fate of two consignments, examination report of which was obtained in clandestine manners, when came to know recovery of goods other than copper coated wire, he deliberately avoided to present said consignments for examination as all six consignments were also containing excess quantity of lead ingots therein which were to be exported under the garb of PVC Scrap.
(vi)That it is admitted fact that there is no restriction on the exportation of PVC Scrap, Lead Ingots and Copper Wire, however, exportation of Lead Ingots is subject to levy of Regulatory Duty in terms of Sr. No. 14 of Table-II of S.R.O. 482(I)/2007. At this stage, mentioning of import status and tariff classification of aforesaid three items is nothing but to create some sort of confusion.
(vii)That the appellant through this Para has tried to mislead this honourable Tribunal with regard to levy of Regulatory Duty @ 25% on the exportation of Lead Ingots. As a matter of fact and record the Lead Ingots are classifiable under HS Code 78.01 in terms of S.R.O. 482(I)/2007 (Sr. No. 14 of Table-II of the S.R.O. refers). In presence of this undeniable legal position levy of Regulatory Duty cannot be overruled and thus the appellant deliberately attempted to evade it with a view to cause colossal loss to the public exchequer.
(viii) That as a result of re-examination of container said to contain 'Copper Coated Wire' and recovered of goods other than declared goods on the face of Goods Declarations and subsequent recovery of other goods i.e. Lead Ingots in excess quantity from other consignments, show-cause notice was rightly issued to the appellant. So far examination findings are concerned with regard to consignments said to contain 'copper coated wires' it is to submit that such findings were obtained by the clearing agent in clandestine manners which fact was proven as a result of re-examination of said two consignments. It is an admitted position that the appellant had attempted to deprive the government exchequer from its legitimate revenue which was chargeable in shape of Regulatory Duty on the exportation of Lead Ingots.
(ix)That export rebate incentives were not questioned in this case while seizure and subsequent proceedings were initiated as against misuse of DTRE facility by showing the exportation of 'copper coated wire' and the goods chargeable under Regulatory Duty. The appellant has again tried to mislead this honourable Tribunal by mentioning the term of PVC scrap and Remeltable scrap. The term remeltable scrap has been used for Lead Ingots exportation of which is subject to levy of Regulatory Duty @ 25%. So far limitation period for issuance of show-cause notice is concerned it has categorically been discussed by the learned Collector (Appeals) in the order-in-apeal which has become part of record.
(x)That the appellant failed to produce any account with regard to the importation of raw material under DTRE Facility and quantum of exports of goods made out from the imported raw material. Moreover, copper wire has been found in the consignments therefore, logic of exporting it can be explained by the appellant or his counsel.
(xi)That correct position with regard to the goods being exported by the appellant was ascertained by the examining officer which examination was conducted in presence of two witnesses.
(xii) That on receipt of credible information, re-examination of consignments was felt imperative for the reasons that examination findings available on the reverse of relevant Goods Declaration were found dubious. The musheernama of recovery and seizure was accordingly prepared by the Seizing Officer as it was integral part of seizure which ultimately led to lodging of F.I.R. in the honourable Court of Special Judge (Customs and Taxation), Karachi, therefore, contention of the appellant with respect to Musheernama is not tenable. So far payment of RD, duty and taxes on the imported raw material under DTRE and payment of fine amount is concerned, it is a matter of record and require no comments.
(xiii) That admittedly, the appellant filed Appeal before the learned Collector (Appeals) and that the learned appellate authority has very rightly passed order-in-appeal which has been agitated before this honourable Tribunal by the appellant but interestingly the learned Collector (Appeal) is not included in the respondents.
(xiv) No comments, as aspect of Regulatory Duty in terms of S.R.O. 482(I)/2007 have categorically been discussed in the preceding paragraphs.
(xv)That the past record pertaining to exportation of 'Copper Coated Wires under DTRE' might have been based on true facts. But the fact in this case is that the appellant attempted to export Lead Ingots stuffed in the Container said to contain 'Copper Coated Wires', therefore, has committed an act of gross mis-declaration which attract the provisions of the Customs Act, 1969. The record pertaining to DTRE was provided by the appellant to the respondent No.3, though matter was inquired by respondent No.4 but no visible record was provide by them and that the record so provided does not reflect proper reconciliation of imported raw material and the export of finished goods.
(xvi) That in order to remove all suspicions, samples was forwarded to the reputed institution credence of which is not questionable in any sense. The institute of Pakistan Steel is well equipped with sophisticated equipments, therefore, report there-from is reliable and has rightly been applied in the case of appellant.
(xvii) That the appellant through this Para has admitted that he has been granted relief by the appellant authority, whereas, application of provisions available in S.R.O. 482(I)/2007 as detailed herein above have rightly been applied by the learned appellate authority. It is a matter of common prudent that whenever question of getting tested some substances is arises out; the laboratory or institution well equipped with sophisticated equipments is always preferred. For this reason alone, sample was got tested from the laboratory other than customs laboratory, therefore, question of jurisdiction is out of question.
(xviii) That it is grossly incorrect that the appellant was forced to give any written statement. The appellant was neither in customs custody nor was under any obligation to accept the version of customs authorities as alleged in this Para. Whatever, given in writing by the appellant to the customs authorities was based on his sole discretion but to circumvent them which is evident from filing of instant appeal before this honourable Tribunal. Moreover, allegations with regard to taking actions on false and baseless assumption is vehemently denied for the reason that the learned appellate authority vide Para 5 of order-in-appeal observed that:--
"Perusal of appellants contention shows that they have hardly denied the charge of mis-declaration. It is rather tacitly admitted. The appellants have rather tried to side track the issue of mis-declaration. It is thus proved beyond a shadow of doubt that the appellants willfully resorted to massive mis-declaration of the description of the goods aimed for exports."
In presence of valued observations of the learned appellate authority coupled with facts and circumstances of the case, the attempt of mis-declaration is established without an iota of doubt.
(xix) That in the light of above submissions, together with the facts and circumstances of the case, the order passed by the learned Appellate authority is lawful and maintainable in the eye of law.
(xx)That on the basis of above humble submissions, the Appeal preferred by the appellant may kindly dismissed without granting any relief.
(xix) That the appellant to the best of his knowledge and belief has preferred instant Appeal, therefore, is deemed to be well conversant with the facts and circumstances leading to filing this appeal, hence, this Honourable Tribunal may be pleased not to allow the appellant to add or delete any portion or portions of the appeal in any manner.
7.The appellant advocate in exercise of his guaranteed right submitted rejoinder comments through which he laid emphasized that:--
PARA WITHOUT ANY TITLE AND NUMBER:
(i)The contents of the para are not denied. A separate application is being made to implead Collector Appeal as a necessary party. The omission is, however, regretted.
PARA 1 OF "FACTS OF THE CASE":
(ii)The respondents have conveniently followed an unreliable information furnished to them on account of trade rivalry without examining the credence of information and deliberately ignoring the material fact of past exports performance of appellant under DTRE. Surprisingly the department did not try to go on internet and website of Gujranwala Collectorate which furnishes detailed information in respect of appellant's entire activities under DTRE. Gujranwala Collectorate of Customs are the issuing Authority of DTRE facility and maintain entire records of imports under DTRE affected by appellant. The allegations against appellant have, in fact, emanated in the result of unilateral, action of respondents by completely ignoring the requirements of law and departmentally prescribed instructions. No effort was ever undertaken to pay attention on Rules of Interpretation for classification of goods to justify levy of Export Duty. The alleged Test Report of a single item, instead of all the three items, was obtained from an outside laboratory, which is not authorized to test Customs samples. Samples were drawn in absence and at the back of appellant which is absolutely an illegal act.
PARA 2 OF "FACTS OF THE CASE":
(iii)The respondents have smartly ignored to make any comments that the two seized consignments in container No. GESU. 2169669 had already been examined by Customs Examination Staff and were reported as Copper Wire (20% Copper 80% Zinc based alloy) unfortunately there is no Re-Examination findings and drawal of samples by Re-examination Staff.
PARA 3 OF "FACTS OF THE CASE":
(iv)The para is not denied.
PARA 4 OF "FACTS OF THE CASE":
(v)Since no examination was conducted in presence of appellant or his representative, no comments can be made.
PARA 5 OF "FACTS OF THE CASE":
(vi)The respondents have never been able to justify the ascertained weight and nomenclature of the three items. Test Report in respect of Copper Coated Wire (20% Copper 80% Zinc based alloy) is already in dispute. As a result, the present appeal has covered the disputes to be resolved in respect of determination of description, classification and weight of the goods.
PARA 6 OF "FACTS OF THE CASE":
(vii)It is denied that there was any connivance with clearing Agent or any others. As explained in preceding paras the appellant have already exported a sizeable Quantity of Copper Coated Wire in terms of DTRE facility in the past. Similarly present export of Copper Wire is also linked with the said DTRE facility. However, description, classification and weight of other export goods are subject matter of present appeal.
PARA 7 OF "FACTS OF THE CASE":
(viii) The alleged connivance with the clearing Agent is denied. Proceedings lodged by prosecution in the Court of competent jurisdictions are in progress and it will only be thereafter that any positive conclusion can be drawn.
PARA 1 OF "PARAWISE COMMENTS":
(ix)The contents of the Para are misconceived. It is regretted that the appellate Collector has not been cited as party out of sheer mistake. However, a separate a separate application is being filed to implead Collector (Appeal) as a necessary party. It is the norm of justice that an appellate order should be complied forthwith except when a stay should have been obtained from the next higher forum. The respondent have quite conveniently avoided to disclose the reasons which enabled the appellant to submit a statement that no appeal will be filed. The statement was obtained under duress. However, in any case provision of section 194-A of Customs Act do not prevent the appellant by filing the present appeal in the given circumstances.
PARA 2 OF "PARAWISE COMMENTS":
(x)The contents of the Para are denied. Allegation of misuse of DIRE facility is only one sided without considering the, Arguments furnished by appellant based on legally sustainable grounds. However, since the dispute is already before the Tribunal, it will only be just and proper to await a judicial pronouncement.
PARA 3 OF "PARAWISE COMMENTS":
(xi)The contents of the para are denied. As stated in the preceding para, factual determination of export goods could have only be arrived at if samples had been drawn and sent for test in participation of appellant or his Representative. Not only that no result of Examination findings by the respondent is available on the relevant copies of GDs. concerned. Replies of Paras 7 and 8, referred to in-appropriately in this para, have been replied against the two aforesaid paras.
PARA 4 OF "PARAWISE COMMENTS":
(xii)The contents of the para are only based on hypothetical assumptions. It is informed that even if containers are traceable they are not grounded for quite some time due to short of space. As regards two consignments of Copper Coated Wire, these had already been grounded and accordingly their examination had been finalized by Customs Examination Staff and were loaded on vessel as these were found in accordance with the declaration. The allegation of respondent as to the incorrect declaration is denied and is the subject matter of present appeal for a judgement on the subject.
PARA 5 OF "PARAWISE COMMENTS":
(xiii) The contents of the para have no credence on the basis of explanation furnished in the preceding para. It is denied that examination report in respect of Copper Coated Wire was obtained in clandestine manner. There is nothing to corroborate the allegation. It is also denied that there was any avoidance from examination in respect of six other consignments. The consignments were seized by respondents officer without joining the appellants or his representative who is invariably available in Port Qasim in relation to other day to-day business. The action of seizure even otherwise was illegal as held by appellate Collector' and that being the reason shipment of all the consignments were allowed being in violation of seizure affected under section 168 of Customs Act.
PARA 6 OF "PARAWISE COMMENTS":
(xiv) It is denied that lead ingot is subjected to levy of Regulatory Duty. In this context Rules for Interpretation of classification of goods be referred. Lead Ingot are classifiable under HS 7801.9900 and in absence of appearance of the said HS in Table-II of S.R.O. 482(I)/2007 dated 9-6-2007, Lead Ingot is not leviable to any Regulatory Duty.
PARA 7 OF "PARAWISE COMMENTS":
(xv)The contents of the para are denied on the basis of explanation tendered in the preceding para.
PARA 8 OF "PARAWISE COMMENTS":
(xvi) The contents of the para are denied being one sided story which has not taken into consideration the explanation tendered by appellant at initial adjudication forum and also before Appellate Collector. It has already been explained earlier that "Lead Ingot" is classifiable under HS 7910.9900 which is not subject to levy of any Regulatory Duty. Secondly the solution for factual determination of any goods is the chemical test to be obtained as prescribed under the law which was not resorted to by respondent. It is, therefore, clear that accusations made against appellant are not sustainable. As a result the judgment in present appeal should be awaited.
PARA 9 OF "PARAWISE COMMENTS":
(xvii) The contents of the Para are repetition of earlier para and have not placed on record any material to justify their stand.
PARA 10 OF "PARAWISE COMMENTS":
(xviii) The contents of the para are denied. In this context it is stated that the appellant have already furnished complete details of import of Raw Material and Export thereof in manufactured form as under:-
| 1. Sanction of import of Zinc Ingot under DTRE | 500,000 Kgs |
| 2. Import of Zinc Ingot under DTRE | 4,96,190 Kgs |
| 3. Export under DTRE (-) (Excluding present consignment) | 2,75,375 Kgs |
| 4. Balance | Available with appellant. |
The aforesaid details were divulged by respondent No. 3 in consequence of physical verification report of manufacturing facility of premises of appellant's unit. Further the said information is also available at the website of Gujranwala Collectorate. The nomenclature of exported wire, alleged as "Copper Wire" is the issue to be settled by his Honourable Court in the present appeal. The appellant's version in para 10 of the Memorandum of appeal, in relation to higher prices of Copper in international market as compared to Zinc implies the bona fide of export' that why the appellant may export Copper Wire by importing Copper of higher value when the Zinc was available at far cheaper prices and was permitted to be imported by appellant free of Customs duty and Sales Tax under DTRE Scheme.
PARA 11 OF "PARAWISE COMMENTS":
(xix) The contents of the para have not controverted the statement made by appellant in Para 11 of Memorandum of appeal. The statement of respondents in contradiction therefore and that too without any basis is of no consequence.
PARA 12 OF "PARAWISE COMMENTS":
(xx)The respondents did not appose the factual position furnished by appellant with reference to nomenclature and weight of the eight consignments. Correspondingly precise details of incorrect determination of the aforesaid particulars stated by department were also pointed out by appellant. It is denied that six consignments of PVC and Lead Ingot were actually re-examined. In fact these were never examined before, while two consignments of Copper Coated Wire which were initially examined should have been re-examined but the appellant were not associated in any proceedings of examination and alleged re-examination. Documents relating to seizure of consignment were never provided to appellant.
PARA 13 OF "PARAWISE COMMENTS":
(xxi) The appellate order has been assailed in the present appeal. Since the order- in- appeal has been challenged and is impugned before this Tribunal; it cannot be anticipated that this was passed rightly.
PARA 14 OF "PARAWISE COMMENTS":
(xxii) The respondents have nowhere denied the statement of appellant in respect of application of a non-qualified Test Report to Copper Coated Wire for export and non-levy of Regulatory Duty on Lead Ingot by virtue of its classification under HS 7801.9900. Resultantly any statement made contrary to admitted position is of no avail.
PARA 15 OF "PARAWISE COMMENTS":
(xxiii) The contents of the para have no substance. The respondent have not denied the past export of Copper Coated Wire made by appellant.
(xxiv) On the face of precise details of exports in Annexure 'P', with further reconciliation of accounts made in this para, supported by appellant's statement that all such record has been provided to respondent No.3, the credence of appellant's performance in obligation of DTRE facility is not questionable.
(xxv) It is also known to respondents that all particulars of Export Performance are available on the website of Gujranwala Collectorate and can be referred throughout the world.
(xxvi) Details of exports of eight consignments provided in Para 11 at pages 15 and 17, cast no doubt on the bona fide of Exports.
PARA 16 OF "PARAWISE COMMENTS":
(xxvii) The reply furnished has not denied the appellant's statement that test findings obtained at the back of Exporter are illegal and without jurisdiction. Drawal of sample and its testing is also subjected to a prescribed method and procedure which was not followed in this case.
PARA 17 OF "PARAWISE COMMENTS"
(xxviii) It is denied that appellant has stated the action of appellate Collector as "right". The statement in respect of "Testing of Samples" made by respondent is clearly in violation of Rules, Regulation and statutory provision of law. The appellant will further adopt his arguments on the point during the hearing.
PARA 18 OF "PARAWISE COMMENTS"
(xxix) The contents of the para are vehemently denied. There is no provision of law which bind the appellant to furnish a written consent that he will not file an appeal against impugned appellate order of Collector. Provisions of section 194-A of Customs Act also do not provide any conditionality of such a nature.
(xxx) As regards findings of learned Collector appeal, reproduced by respondents it is respectfully submitted that these findings can not be termed as a final verdict as long as these have been challenged before a competent appellate Forum in the present case. A judgment of this honourable Court has to be awaited.
PARAS 19 TO 20 OF "PARAWISE COMMENTS"
(xxxi) The appellant have complete faith in the wisdom of this honourable Court. The fate of the appeal is therefore linked with the learned judgment in appeal.
PARA 21 OF "PARAWISE COMMENTS"
(xxxi) It is not denied that appellants are fully conversant with the facts of the present case as exist till to-day. The appellants may however also like to place on record such further material which may be obtained in pursuance of on-going investigation being carried out by appellant himself.
8.The advocate of the appellant also submitted additional arguments while submitting citation in respect of promissory estoppels through which he reiterated that:-
(a)That it was directed by the learned D.B. to submit the following Citations, referred to during hearing on 2-6-2013 by the undersigned in respect of PROMISSORY ESTOPPEL referred to by undersigned:-
(1)PLD 1991 Supreme Court 546, (2) AIR 1980 SC 1285, (3) AIR 1986 SC 806 and (4) 1986 SCMR 916
Copies of Citations are annexed and marked as Annexures "A", "B", "C" and "D" respectively
(b)That while availing the opportunity of submitting the aforesaid Citations the undersigned also re-iterates the arguments very shortly adopted in the hearing in defence of appellant. The arguments were supported by documents against each allegation.
(i)Allegation of Misuse of DTRE
The allegation was negated by production of appellants Profile on FBR website Taxpayers Facilitation Portal in confirmation that the entire quantity of 500 M.T. of Zinc which was allowed under DTRE, Free of Taxes, has already been exported, having no balance to export now. As a result the allegation is only baseless and seems to have been framed without conducting any factual investigation As regards consignment covered by present appeal, Metallurgy Division of A.Q. Khan Research Laboratories Rawalpindi has not reported any material contrary to declaration. This test was allowed to be carried out by Tribunal at the request of Department as they had no faith in earlier tests. The lab in their report has confirmed the basic material as Zinc, which was allowed as Taxes Free under DTRE and used as "Internal Rod" while Copper, Ferrous and Aluminum (acquired locally) have been used as external sheath which is called Copper Coating. The T.R. has replied the only questions which were asked by Department.
(ii)Allegation of levy of 25% R.D. on Lead Ingot Classifiable under H.S. 7801-990
It was pointed out to learned DB that Lead Ingot being classified under H.S. 7801-99 is not subjected to 25% RD as Table II of S.R.O. 482(I)/2007 dated 9-6-2007 does not include the aforesaid H.S. Code. No tax can he imposed unless the related custom classification number is specifically shown in the notification. In order to support contention of classification under H.S. 7801.99 copies of Explanatory Notes of HS 78.01 Section XV, Chapter 78 and copy of Alphabetical Index of H.S. Codes indicating the classification of Lead Ingot under HS. 7801.99, were duly produced by undersigned to be retained on record.
(iii)Allegation regarding declared weight of Lead Ingot.
It was argued that allegation of mis-declared weight of "Lead Ingot" is only fabricated and misconceived as the respondent have never carried out physical weight in their presence and have only shown hypothetical weights as demonstrated from the following Contradictions:-
| (i) | Weight of Lead Ingot Shown in Mushearnamas | 49910 kg |
| (ii) | Weight of Lead Ingot shown in order-in-original | 74225 kg |
| (iii) | Weight of Lead Ingot shown in 6 exhibits before Court of Special Judge Customs-Karachi in support of allegation of weight | 24940 kg |
| (iv) | Declared weight | 7500 kg |
9.Rival parties heard and case records perused. Prior to dilating upon the issues raised by the learned Advocate, it is advantageous to give opinion on the front page of memo. of appeal. On perusal of which; it is observed that the appellant has also made the Federation of Pakistan through its Secretary, Federal Board of Revenue, Government of Pakistan, Islamabad as respondent No.1, which is completely erroneous as Federation of Pakistan can only be made respondent while invoking the provision of Article 199 of the Constitution of Islamic Republic of Pakistan before the High Court of Sindh through a Constitutional Petition under Sub-Clause (ii) of clause (a) of Sub-Article (1) of Article 199 ibid. and not in the appeal filed before the Appellate Tribunal under section 194-A of the Customs Act, 1969, under which an appeal can be filed by an aggrieved person against the order of the authority listed at subsection (1) ibid. Likewise, despite filing appeal against the order of Collector of Customs, Sales Tax and Federal Excise, the appellant has not made him respondent, which is a major defect and render the appeal filed not validly and as such not maintainable as per settled proposition of law.
10.Notwithstanding to the said fact, since the appeal has been filed against Order-in-Appeal No. 1020/2008 dated 22-3-2008 passed by Collector of Customs, Sales Tax and Federal Excise against Order-in-Original No. 02/2008 dated 22-3-2008, with the passing the order by collector of customs Sales Tax and Federal Excise Appeals me Order-in-Original stood merged in the order-in-appeal as per theory of merger, hence we condone the factual and legal discrepancies as discussed above and take up the case for decision, while relying on the landmark judgment of Hon'ble Supreme Court of Pakistan reported in PLD 1963 Supreme Court 382 "that proper place of procedure in any system of administration of justice to help and not to thwart the grant to the people of their rights. All technicalities have to be avoided unless it be essential to comply with them on grounds of Public Policy" and PLD 1974 Supreme Court 134 Niaz Muhammad Khan v. Mian Fazal Raqib held that "A statute is understood to be directory when it contain matter merely of direction, but not when those directions are followed up by an expressed provision that " in default of following them, the facts shall be null and void. To put it differently, if the act is directory, its disobedience does not entail any invalidity, if the Act is mandatory, disobedience entails serious legal consequences amounting to the invalidity of the Act in disobedience to the provision".
11.The Duty and Tax Remission for Export Scheme is governed under Sub-Chapter (7) of Chapter XII of Customs Rules, 2001. The person desirous of availing the facility submit an application under Rule 298 of Sub-Chapter (7) for obtaining DTRE approval on the basis of specific export or supply contact or order with the regulatory Collector, who after going through the application and recommendation of the processing authorities approves the application for import of the goods to be utilized in the manufacture of goods for export without payment of leviable duty and taxes on the said item notified in Pakistan Customs Tariff. The appellant submitted application in terms of Rule 298 with the Collector of Collectorate of Sale Tax and Federal Excise, Gujranwala, who notified the approval vide No. STG/1676/06062007 as per which the appellant was allowed to import 500,000 kgs of Zinc (99.99%) following under PCT heading 7901.1100 for manufacture and export of Sanitary fitting having composition C.P. 20% copper 80% Zinc based alloy falling under PCT Heading 7408.2100. In the said application an approval the appellant made a statement and promise to import the goods mentioned in application and likewise to export the goods mentioned in DTRE Approval. He imported the goods as declared in application but exported the goods namely copper coated wire 20% copper, 80% zinc based alloy, to which he was not permitted as he was duty bound to adhere to the promised made in the application of exporting sanitary fitting manufactured from alloy comprising of 20% copper and 80% zinc, wire cannot be termed sanitary fitting even through a figment of imagination, this act of appellant is in derogation of the approved DTRE approval and attract action under Sub-Rule (4) of Rule 307 E ibid by the competent authority and under the provision of sections 32(1)(2) and 32(a) of the Customs Act, 1969 by virtue of indulgence in the act of mis-declaration and fiscal fraud. The plea taken by the appellant's advocate that the act of appellant is protected under the doctrine of promissory estoppel is totally misconceived and the judgment relied upon by him lends no support instead his act falls under the ambit of judgment of the Hon'ble Supreme Court of Pakistan in the case of Army Welfare Sugar Mill Ltd and others v. Federation of Pakistan and others reported as 1992 SCMR 1652 in which inter alia it has been held that doctrine of promissory estoppel is based on equitable principles, the relevant portion reads as follows:--
"8. Promissory estoppels is based on equitable principles.
5. Founded in equity.
When, first as counsel in Salisbury (marquees of) V. Gilmore (1942) 2 KB 38, and then as a judge of first instance in Central London Property Trust Ltd. v. High Trees House Ltd., (1947) KB 130 Lord Denning sought some means of escaping from the straight jacket of consideration, he found it in the relatively narrow confines of equitable estoppels, enunciated as he saw it in Hughes V. Metropolitan Rly. Co. (1877) 2 App. Cas 439 and Birmingham and District Land Co. (1888) 40 Ch.D.268. The equitable basis of the doctrine was a convenient means of justifying its existence as a necessary and complimentary gloss upon the rigidity of the common law. Thus, when the High Court finally gave its approval to the new doctrine in Legione v Hateley (1983) 152 CLR 406, Mason and Deans JJ, referred to "established equitable principle" as one of the factors which led them "to conclude that promissory estoppels should be accepted in Australia" (at 345)."
The above approach of the authors is also in consonance with the recent trend obtaining in England, namely, that the doctrine of promissory estoppels is pressed into service in order to prevent the exercises of legal right where it would be unconscionable for the possessor of those rights to do so."
12.That as discussed above the doctrine of promissory estoppel is infact squarely applicable on the appellant as he was not entitled to export goods contrary to the promise made in the DTRE approval, taking shelter behind the doctrine of promissory estoppel is misplaced, it is for the appellant to adhere to his declaration/promise not for the respondent in any manner and this fact stands validated from the fact that nothing is available on record proving that respondents Nos. 2-4 ordered the appellant to export the goods other than the ones promised in the DTRE application and the approval so issued. The fact of the matter is that it was the conscious and deliberate intention of the appellant to obtain the DTRE approval for misuse for financial gain contrary to the facility granted by the Federal Government through duty and tax remission for export notified in Sub-Chapter (7) of Chapter XII of Custom Rules, 2001.
13.That as regards to the plea of the advocate that the exported "Remelted lead ingots" are not subject to payment of regulatory duty in terms of Notification No. 482(I)/2007 dated 9-6-2007 as it falls under PCT heading 7801.9900 figures nowhere in the notification, instead PCT 78.01 reading as "unwrought lead" is incorporated in Table-II of the Notification. This is also nullity to the interpretation of the respective heading of the Pakistan Custom Tariff. Chapter 78 of the Custom Tariff is for Lead and articles thereof and this chapter starts from main headings 78.01 to 78.06, the main heading 78.01 indeed speaks about unwrought lead, but its sub-headings read as refined lead, others containing by weight antimony as the principle other element, and PCT 7801.9900 for others, which encompasses all the articles manufactured from the item specified in subheadings 7801.1000 and 7801.9100. There is no dispute that the lead ingots were exported and those were manufactured from the material specified in PCT 7801.1000 or 7801.9100, resultant these rightly fall under the declared PCT heading 7801.9900, subheading of main heading 78.01, export of which is subject to payment of regulatory duty at the rate of 25% ad valorem as notified in the Notification No. 482(I)/2007 dated 9-6-2007 rendering the plea as not tenable.
14.In view of the above, we hold that the order of the Collector of Custom, Sales Tax and Federal Excise is correct and just in the light of the facts of the case and is maintained, appeal is dismissed being of no substance and legal effect.
15.Order passed accordingly.
JJK/200/Tax(Trib.)Appeal dismissed.