CLASSIC TRADING CORPORATION, KARACHI VS ADDITIONAL COLLECTOR OF CUSTOMS, KARACHI, 2015 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 694 (2014)

Customs Act (IV of 1969)---

----Ss. 32(1) (2), 79(1) & 156(1) (14)---Sales Tax Act (VII of 1990), S.33---Income Tax Ordinance (XLIX of 2001), S. 148---Qanun-e-Shahadat (10 of 1984), Art. 73---S.R.O. No. 499(I)/2009 dated 13-6-2009---False statement, error etc.---Importer was charged on the ground that he had mis-declared the origin of goods and attempted to clear the goods on lower value for evading legitimate duty and taxes---Importer contended that there was no mis-declaration of origin in presence of certificate of origin issued and duly certified by the China Council for the Promotion of International Trade and charge of mis-declaration of origin was not viable; that when a charge of mis-declaration was alleged then material terms of charge were to be proved by the prosecution and that mere making a statement did not qualify the charge under the provisions of S.32 of the Customs Act, 1969---Validity---Importer produced Certificate of origin and department failed to prove the same as non-genuine---Department had enough time to get it verified which had not been done and no plausible explanation for the same had been brought on record---Certificate in unequivocal terms denoted the country of origin as China and there was no doubt that the goods had been imported from China and bill of lading was also issued from shipping company of China---Provisions of Art. 73 of the Qanun-e-Shahadat, 1984 stated that notwithstanding anything contained therein, a court shall presume within the meaning of that Art. that a document specified in Part-I of the Schedule to the Qanun-e-Shahadat had been duly made by or under the appropriate authority, was so made and that the statements contained therein were accurate---Accuracy of Commercial documents produced in support of country of origin was to be presumed and it will be against the principles of law and natural justice to discard commercial documents merely on the basis of unspecific and vague examination report of Customs---Violation of the provisions of Qanun-e-Shahadat, 1984 applicable for the purpose of evidence had been committed by the Department---Adjudicating officer had failed to scrutinize the certificate of origin issued by China Council for Promotion of International Trade, shipment of goods and bill of lading by a shipping company of China---Lower forum also failed to apply its mind inasmuch as that the available evidence was not given due consideration---Appeal was allowed with certain modifications and also remitted the redemption fine and penalty---Appellant would also be entitled for "delay and detention certificate", if so required.

2003 PTD 2090; 2005 PTD (Trib.) 1321; 2005 PTD (Trib.) 1826; 2006 PTD 651; Customs Appeal No.412 of 2001 and Special Customs Reference Application No.189 of 2012 rel.

Farooq Talib Hussain for Appellant.

Abdul Aziz, A.O., for Respondents.

Date of hearing: 19th August, 2014.

ORDER

ADNAN AHMED, MEMBER JUDICIAL-II.---This order will dispose of Customs Appeal No.K-681 of 2014 filed by the appellant against the Order-in-Original No.217924 dated 29-5-2014 passed by the Additional Collector of Customs, (Adjudication), Karachi.

2.Brief facts of the case are that appellant electronically filed GD No.KAPW-HC-131777 dated 11-4-2014 and declared the goods as HTV parts under their respective HS Codes at a total invoice value of US $ 7411.71 by determining his tax liability on its own and sought clearance under section 79(1) of the Custom Act, 1969 as China origin. In order to check, the description, quantity, origin and correct payment of duty and taxes, the GD was selected for scrutiny. On examination, the impugned goods were found as engine genuine parts HTV of Nissan, Hino, Isuzu i.e. (i) Head Gaskets (ii) Gaskets (iii) Value Cove Gasket (iv) Liner "O" Ring, all in bulk (weighing 8450 kgs) for different models. The origin of country was printed on the packing/labels made in Japan. The importer has mis-declared the origin of goods and attempted to clear the goods on lower value for evading legitimate duty and taxes of Rs.2,977,239, therefore, the importer was charged under provisions of sections 32(1)(2), 79(1) of the Customs, Act, 1969 read with section 33 of the Sales Tax Act, 1990 and section 148 of the Income Tax Ordinance, 2001, punishable under clause (14) of Section 156(1) of the Custom Act, 1969 read with S.R.O. 499(I)/2009 dated 13-6-2009.

3.The Additional Collector of Customs (Adjudication), Karachi did not agree with the replies and passed an Order-in-Original No.217924 dated 29-5-2014 as under:--

"I have gone through the case record and considered the written/verbal argument of the respondent and the department. It is observed that the respondent has imported "Engine Part for HTV Nissan, Hino and Isuzu Genuine Parts". The respondent declared the imported goods as of 'China' origin. However, as per Examination Report the goods were found to be of 'Japan' origin. The offence of mis-declaration of origin, thus, stands established. I, therefore, order confiscation of the offending goods under section 156(1) clause 14, read with section 32(1) & (2) of the Customs Act, 1969. However, an option under section 181 of the Customs Act, 1969 is given to the importer to redeem the confiscated goods on payment of 20% fine on the value of offending goods Rs.634,499 (Six hundred thirty four thousand four hundred and ninety nine) in terms of SRO.499(I)/2009 dated 13-6-2009 in addition to payment of duty and taxes chargeable thereon. I also impose a penalty of Rs.10,000 (One hundred thousand) on the importer".

4.The appellant was not satisfied with the impugned order and filed this appeal before this Tribunal. The case was fixed for hearing on 19-8-2014. Mr. Farooq Talib Hussain, Consultant appeared on behalf of appellant and Mr. Abdul Aziz, A.O. represented the respondent.

5.The counsel for the appellant while arguing the case pleaded that the impugned goods are of China origin and examined under Ist examination, it is the duty of respondent to determine the description, quality, quantity and rate of duty and taxes at that time. He also asserted that there is no mis-declaration of origin in presence of certificate of origin vide Sr.No.CCPIT700-1300032950 issued by (Shenzhen) and duly certified by the China Council for the Promotion of International Trade and charge of mis-declaration of origin is not viable. It is also well settled principle of law that where a charge of mis-declaration is alleged then material terms of charge should be proved by the prosecution, mere making a statement does not qualify the charge under the provisions of section 32(1) and (2) of the Customs Act, 1969 as held by the Superior Courts in judgments reported as 2003 PTD 2090, 2005 PTD (Trib.) 1321 and 2005 PTD (Trib.) 1826.

6.He vigorously emphasized that the appellant has imported Chinese origin Auto parts from China vide bill of lading No.00LU2541845920 dated 19-12-2013 which was issued by a shipping company of China named Messrs Orient Overseas Container Line Ltd. which has been alleged to be of Japan origin. He further argued that the commercial documents along with certificate of origin are sufficient proof to establish Chinese origin goods in terms of the judgment of Appellate Tribunal and Sindh High Court where goods bearing Indian inscription of origin has been released on basis of certificate of Chinese Origin. He also argued that the appellant has imported Chinese origin Auto Parts 8450 kgs from China against valid Commercial Documents along with Certificate of Origin bearing No.CCPIT-1300032960 dated 10-12-2013 (also produced a copy thereof which is placed on record) issued by the China Council for the Promotion of International Trade (Shen Zhen) confirming the Auto Parts to be of Chinese origin. He further argued that in view of the provisions of section 3 of the Commercial Documents Evidence Act, 1939 a certificate of origin is a document, the correctness of which shall be presumed by the Court. The Customs examination staff has treated the Auto Parts as of Japan origin without any logical evidence. The learned Consultant in support of his contention also relied on a judgment passed by this Tribunal in Customs Appeal No.K-1112/05, Ali Enterprises v Collector of Customs which was later on upheld by the Hon'ble High Court of Sindh at Karachi vide order dated 19-12-2005 and reported as 2006 PTD 651 and prayed that following the rule of consistency and dictum laid down by the above higher forums, the appeal may be allowed and Auto Parts may be released on normal duty and taxes.

7.The departmental representative argued that the appellant filed a electronically GD and declared the goods as (i) Head Gaskets (ii) Gaskets (iii) Value Cove Gasket (iv) Liner "O" Ring, all in commercial quantity of different models weighing 8450 legs of China origin vide GD No.KAPW.HC.131777 dated 11-4-2014 at total invoice value of US $ 7411.71 for clearance on payment of duty taxes as determined under self assessment scheme. On physical examination, it was revealed that the importer has mis-declared the origin of the goods as to avoid from correct payment of duty and taxes. The impugned genuine auto parts were of Japan origin instead of China origin as visible from the labels pasted on the impugned parts, this deliberate mis-declaration on part of importer shows that the importer was intended to clear genuine auto parts on much lower value, therefore, he was rightly charged under sections 32(1), 32(2) and 79(1) of the Customs Act, 1969 read with section 33 of the Sales Tax Act, 1990 and Section 148 of the Income Tax Ordinance, 2001 punishable clause 14 of section 156(1) of the Customs Act, 1969 read with S.R.O.499(I)/2009 dated 13-6-2009. The respondent side has also filed para-wise comments wherein comments are mostly same as pleaded during the hearing of case.

8.Parties were heard. Case record perused. The following questions/point are arise / framed and needs consideration of this Tribunal:-

(i)Whether the certificate of origin dated 10-12-2013 produced by the appellant is acceptable in terms of Qanun-e-Shahadat Order, 1984?

(ii)Whether the respondent has produced any incriminating evidence to establish the origin of goods as Japan?

(iii)Whether the judgments relied upon by the counsel are relevant in this matter?

(iv)Whether the section 32(1) and (2) of the Customs Act, 1969 are applicable on the goods of appellant?

9.As regards question/point No.(i), the appellant has produced Certificate of Origin No.CCPIT-700-1300032950 dated 10-12-2013 issued by the China Council for the Promotion of International Trade (Shen Zhen) and department has failed to prove its non genuineness. The respondent had enough time to get it verified but which has not been done and no plausible explanation has been brought on record. The above referred certificate in unequivocal terms in column No.11 denotes the country of origin as China and there is no doubt that the goods have been imported from China and bill lading bearing No.00LU2541845920 dated 19-12-2013 was also issued from shipping company of China named Messrs Orient Overseas Container Line Ltd. In this respect the provisions of Article, 73 of the Qanun-e-Shahadat, 1984 state that for the purpose of notwithstanding anything contained therein, a Court shall presume within the meaning of that Act that a document specified in Part-I of the Schedule to the Act has been duly made by or under the appropriate authority, was so made and that the statements contained therein are accurate. In Part-I of the Schedule entry No.18 reads:--

"...18, Certificate of origin of goods issued (but not merely attested) by a recognized Chamber of Commerce or by a Pakistan or British Consular-Office or Pakistan or British Commissioner or Agent..."

In circumstances of commercial documents produced in support of country of origin, the accuracy of which is to be presumed by the Court. It will be against the principles of law and natural justice to discard commercial documents merely on the basis of unspecific and vague examination report of Customs. It is very unfortunate that the Federal Board of Revenue as well as the heads of concerned Customs Administrations do not seem keen to implement the orders of the Superior Courts in letter and spirit to avoid such situation where revenue is jeopardized due to non-implementation of Court's orders.

10.As regards question/point No. (ii), the departmental representatives failed to falsify the commercial documents submitted by the appellant as well as his declarations made in the GD. The Customs documents on record nowhere indicates that Auto Parts are marked with Japan origin.

11.As regards question/point No. (iii), the judgments relied upon by the learned counsel are very much relevant to the issue in hand and I am in full agreement of the earlier order of this Tribunal which was subsequently endorsed by the Hon'ble High Court of Sindh also. The department could not produce any authority overruling said judgments.

12.As regards question/point No (iv): The GD of impugned goods was electronically filed under section 79(1) read with Rule 433 of the Customs Rules, 2001 and value was declared US $ 7411.71, the value, origin and PCT heading was proper so charge of mis-declaration under section 32 (1) and (2) was illegal. As per sub-clauses (ii) (iii) of clause (B) to S.No.101 of CGO 12/2002 which are binding on customs authorities under the provisions of section 223 of the Customs Act, 1969 as also held by the Superior Courts. The Apex Court uphold the order of Tribunal in Customs Appeal No.K.432 says that "The difference of opinion with respect to classification does not fall within the mischief of section 32 of the Customs, Act, 1969 the confiscation and imposition of penalty in this count, therefore, is ab initio void and illegal.". The impugned goods were assessed under Ist Appraisement System so charge of mis-declaration can not be alleged as held by the Hon'ble High Court of Sindh in cases reported as 2003 PTD 2090, 2005 PTD (Trib.) 1321 and 2005 PTD (Trib.) 1826. It is necessary for charging an importer under aforesaid section where element of mens rea and intentional knowledge is necessary and the offending act must be one in which material particulars have wrongly been given or provided to the customs authorities. The origin of impugned goods were also certified by the China Council for the Promotion of International Trade (Shen Zen) by issuing a certificate, now there is no doubt that the imported goods are pertains to China as declared by the appellant.

13.I would like to further clarify the aspects of case by quoting another unequivocal judgment passed by my learned predecessor Hon'ble Sister Member (Judicial), Bench-III of this Tribunal in Customs Appeal No.412/2001 filed by the Collector of Customs, MCC of PaCCS, Karachi against Messrs Aazmir Enterprises, Karachi and same was uphold by the Hon'ble High Court of Sindh. The findings of the Appellate Tribunal are as unuer:--

I have examined the case record and given due consideration to the oral submissions made by the rival parties. The appellant has contended that respondent No.2 has erred in his decision to remit, the fine and penalty as much as holding the impugned goods to be of Chinese origin but to be assessed on the values of identical goods of English or Italian order. Evidently from, record, there is no doubt that goods have been imported from China and certificate of origin to this effect has been produced before the respondent No. 2 during the hearing proceedings which has been relied upon. As per practice in vague in Trade and Industrial manufacturing, goods are manufactured in other countries by international brands through franchise licences and their value is taken at par with the brand owing countries and are considered to be same. Similarly in this case, the impugned, goods have been produced in China but have been subjected to be assessed on values at par with English Textiles product. Nowhere the element of mens rea has been established. The arguments placed before this forum are the reiteration of the same advanced before the respondent No.2 who has considered, them and clearly discussed in his judgment. No fresh substantive argument has been made in support of appellant claim. In view of above, I find the order of the respondent No.2 correct in law and therefore need, not interference in it. This being so, appeal is disallowed. No order as to cost.

14.The Customs Department filed a Special Customs Reference Application No.189 of 2012 before the Hon'ble High Court of Sindh against the aforesaid order of Tribunal which was dismissed in limine as under:--

From perusal of the above finding of the Appellate Tribunal, it appears that the Appellate Tribunal has categorically held that the goods were imported from China whereas as per the certificate of origin produced by the respondent it reflects that the goods were manufactured in China and not in Japan. There is clear finding of facts with regard to place of origin and shipment and the goods which were imported by the applicant, which reflects that the action taken by the respondent while assessing the value of the goods by considering the same as Japan origin was factually incorrect. I have further observed that the Collector Appeals has remitted the fine and penalty by observing that "from the circumstances of the case such as shipment of the goods from China and issuance, by the authorized chinese authorities, of the certificate of origin create a strong impression that the goods may actually have been manufactured in China with the word of Japan origin inscribed thereon, as reportedly happens with many goods manufactured in China".

Accordingly, we are of the opinion that finding of fact has been recorded by the forums below in the instant case which does not suffer from any factual or legal error, whereas no question of law arises from the impugned order passed, by the Appellate Tribunal, which may require any opinion of this Court.

In view of hereinabove, we do not find any substance in the instant Reference Application, which is accordingly dismissed in limine.

15.The above narration of legal and factual aspects reflects a pathetic state of affairs describing a arbitrary exercise of authority where blatant violation of the provisions of Qanun-e-Shahadat, 1984 applicable for the purposes of evidence has been committed by the respondent. The adjudicating officer failed to scrutinize the certificate of origin issued by China Council for Promotion of International Trade (Shen Zen), shipment of impugned goods and bill of lading issued by a shipping company of China named Messrs Orient Overseas Container Line Ltd. The lower forum also failed to apply his mind inasmuch as that the available evidence was not given due consideration. I hereby allow the appeal of appellant with certain modifications that the impugned goods be assessed @ US $ 2.27 (unit price) and also remit the redemption fine and penalty as imposed on the appellant. The appellant will also be entitled for delay and detention certificate, if so required. This order is passed to the extent of this case only for its particular facts and circumstances.

CMA/117/Tax(Trib.)Order accordingly.