NIMIR INDUSTRIAL CHEMICALS LTD., SHEIKHUPURA VS COLLECTOR OF CUSTOMS (APPEALS), KARACHI, 2015 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 753 (2014)

Customs Act (IV of 1969)---

----Ss. 15, 16, 17, 82, 179(3), 193 & 194-A---Failure of importer to get clearance of imported goods from the port within prescribed period---Order of confiscation of goods---Appeal---Limitation---Importer having failed to get clearance of imported goods from the Port within prescribed period, Adjudicating Authority, vide order-in-original confiscated the goods---Validity---Appeal filed by importer against order of Adjudicating Authority, which under S.193(3) of Customs Act, 1969, was to be decided by Appellate Authority within 120 days from the date of filing of appeal, was decided after 11 months and 8 days i.e. 344 days---Order-in-appeal passed by Appellate Authority below, was illegal void and against the settled law and was liable to be set aside---Importer, could not be refused to get released the goods against payment of duty and taxes---Appeal filed by importer was allowed by the Appellate Tribunal with the directions to importer to file Goods Declaration, get the goods released after payment of duty and taxes, in circumstances.

2006 PTD 340; PTCL 2005 CL 848 and Javed Hassan v. Central Board of Revenue 1975 Law Notes Lahore 85 ref.

M. H. Awan for Appellant.

Sidiq Zia, A.O., for Respondent.

Date of hearing: 22nd September, 2014.

ORDER

ADNAN AHMED, MEMBER (JUDICIAL-II).---By this order, I will dispose off Customs Appeal No.K-680/2014 filed by the appellant against Order-in-Appeal No.5763 of 2014 dated 16-6-2014, passed by the Collector of Customs (Appeals), Karachi.

2.Brief facts of the case as reported to the undersigned are that Messrs Nimir Industrial Chemical Ltd., 51-1 Industrial Area, Gurmanmngat Road, Lahore had imported a consignment of Heat Exchanger falling under PCT heading 8419.5000 vide I.G.M. No.5643/09 dated 3-6-2009, Index No.129 but failed to get the clearance of the same within the specified time prescribed under section 82 of the Customs Act, 1969. The importer was served upon a notice under section 82 ibid but the importer has failed to respond. The proceedings under the law has been initiated to put the goods for auction provided Under the Customs Rules, S.R.O. 450(I)/2001, dated 18-6-2001. And whereas, in order to ascertain the reserved price under afore-said auction rules, the goods were examined and upon examination the goods were found of Indian Origin. The Indian Origin goods of above mentioned description and classification are banned for importation into the country within the meaning of clause 5(b)(iii) of the Import Policy Order, 2008-2009, read with Appendix-G thereof. This deliberate act of the importer constitutes the contravention of the Import Policy Order, read with the section 3(1) of the Import and Export (Control) Act, 1950 and Section 16 of the Customs Act, 1969. The offence is punishable under section 156(1)(9) of the Customs Act, 1969, read with the section 3(3) of the Import and Export (Control) Act, 1950. An amount of leviable duty and taxes amounting to Rs.174,484 is recoverable from the importer.

3.The Additional Collector of Customs, Karachi, did not agree with replies of the appellant respondent and passed the Order-in-Original No. 323/2012-2013 dated 7-5-2013. The operative part of the order is reproduced as under:--

"I have gone through the record of the case and considered the written as well as verbal submissions of the importers advocate. It is an admitted fact that the importer had imported a component namely "Heat Exchanger" as replacement of the defective one earlier imported complete Soap making machine capacity 1000 KG/HR falling under PTC heading No. 8419.5000 but of Indian Origin without an exemption certificate of Ministry of Commerce, Islamabad which remained lying at the port un-cleared despite the issuance of notices under section 82 of the Customs Act, 1969 for availing the benefit of PCT Code 9916 of Customs Tariff and Trade Controls Part-I, Sub-Chapter-IV, Import or Replacement Goods. Thus they have clearly violated the provisions of section 16 of the Act ibid with clause 5(b) (iii) of the Import Policy Order 2012-2013 of Appenaix-G thereof further read with section 3(i), (iii) of the Import and Export (Control) Act, 1950. Therefore, the charges as levelled against the importer in the Show-Cause Notice stands fully established. I therefore, order for outright confiscation of the "Heat Exchanger" for violating the above provisions of law."

4.The appellant being aggrieved and dissatisfied with the Order-in-Original No. 323/2012-2013 dated 7-5-2013, filed an appeal before the Collector of Customs, (Appeals) Karachi. The Collector of Customs (Appeals) rejected the appeal as under:--

"I have carefully considered the written as well as verbal submissions made from both sides. It has been noted that as per clause 13.3 of the agreement between appellant and supplier the defective part shall become the property of supplier, the appellants have not complied with the agreement and did not export the defective respondent to the supplier. It is further noted that goods are at port since 30-6-2009 and the appellants did not file GD as late as 2013, therefore they did not claim concession within one year of the first import, therefore concession under 9916 is not admissible to them. The appeal having no merit is rejected accordingly."

5.Being aggrieved and dissatisfied with the Order-in-Appeal, the appellant filed the instant appeal before this Tribunal on the grounds as under:--

(i)That the appeal should have been decided within stipulated period of 120 days from the date of filling of appeal before the Collector (Appeals) under section 193 subsection (3) of the Customs Act, 1969. The appeal was filed on 3-7-2013 and impugned Order-in-Appeal passed on 11-6-2014 (exhibited "A") after 11 months and 8 days i.e. 344-days. The impugned Order-in-Appeal is therefore, illegal, void and against the prevailing practice of law and liable to be set-aside only on this ground.

(ii)That there is no involvement of foreign exchange or evasion of customs duty and other taxes, as the imported component was supplied by the foreign exporter free of cost.

(iii)That the clearing agents Messrs Mufid Corporation, Karachi CHAL No. 382 did not file GD due to some unknown reasons. It was learnt that he was involved in some criminal cases and later on he absconded.

(iv)That the replacement (Heat Exchanger) was imported within stipulated warranty period of one year. Under the benefit of H.S. Code No. 9916 but due to inefficiency and negligence of Customs Clearing Agent the case was not pleaded properly and consequently imported consignment could not be released which is lying at port for want of Judicial orders.

(v)That appellant Messrs Nimir Industrial Chemical Ltd, Lahore are ready to deposit the defective "Heat Exchanger" with the Customs authorities as required under PCT Code No. 9916 of Sub-Chapter-TV of Customs Import Tariff as and when Customs authorities allow to file the GD under section 82 of the Customs Act, 1969.

(vi)That there is no restriction to import replacement of any part or component within warranty period under HS Code No. 9916 of Pakistan Customs Tariff.

(vii)That there is no restriction to file GD of un-cleared imported Goods under section 82 of the Customs Act, 1969 which is reproduced as under:--

Procedure in case of goods not cleared or warehoused or transshipped or exported or removed from the port within 8 twenty days after unloading or filing of declaring.---If any goods are not cleared for home- consumption or warehoused or transshipped or are not loaded on the conveyance for export or removed from the port area within ⁸[twenty days] of their arrival at a customs station or within such extended period not exceeding 9[ten] days, an officer not below the rank of Assistant Collector may allow, and such goods may, after the due notice given to the owner if his address could be ascertained, or after due notice to the carrier, shipping or customs agent, custodian of the goods, as the case may be, if his address could not be ascertained, may be sold in auction or taken into custody by Customs and removed from the port to a Customs warehouse for auction under the order of the Assistant Collector notwithstanding the fact that adjudication of the case under section 179, or an appeal under section 193, or 196, or a proceeding in any court is pending:

Provided that:-

(a)animals and perishable and hazardous goods may, with the permission of the appropriate officer, be sold or destroyed at any time;

(b)arms, ammunition or military stores may be sold or otherwise disposed of at such time and place and in such manner as the Board may, with the approval of this Federal Government, direct;

(c)in cases where goods are sold pending adjudication, appeal or decision of the court, the proceeds of sale shall be kept in deposit and if on such adjudication, or as the case may be, in such appeal or the decision of the court, the goods sold are found not to have been liable to confiscation, the entire sale proceeds, after necessary deduction of duties, taxes transportation and other charges or duties as provided in section 201, shall be handed over to the owner:

Provided further that where Customs removes such goods from the premises of the custodian for disposal, the charges due to the custodian shall be paid subsequently from the sale proceeds of the goods in the manner as provided under section 201:

Provided also that nothing in this section shall authorize removal for home consumption of any dutiable goods without payment of customs duties thereon.

(viii) That the appellant crave leave to argue and place before the adjudicating authority further and additional grounds, at the time of hearing.

6.The respondent No.3 has submitted their para-wise comments which are placed on record.

7.Mr. M. H. Awan, Advocate/counsel for the appellant has argued that the appeal filed before the lower forum which was not decided within stipulated period as provided in law. The impugned judgment was passed by the forum below after laps of 344 days hence the said judgment has no value in the eyes of law. Mr. Awan further contended that the appellant are ready to deposit defective "Heat Exchanger" with the customs authority as required under PCT Code No.9916 of Sub-Chapter IV of the Customs Tariff and Trade Control - Part-I and when customs authority to allow to file GD under section 82 of the Customs Act, 1969. He further pointed that para 7 of his grounds where he has reproduced the procedure of section 82 of the Customs Act, 1969. He prayed that the impugned order may be set aside and allow the appeal with the directions to the respondent for filing of GD for clearance of imported component under Exchanger Code with delay defention certificate.

8.Mr. Siddique Zia, A.O., representative of the respondent has vehemently opposed the ground mentioned in the memo. of appeal as well as advance arguments and stated that the impugned order is according to law and there is the concurrent findings against the appellant. The appellant has raised same grounds which were already argued before lower forum, hence, not entitled for relief which has claimed.

9.I have heard the learned counsel for the appellant and representative of the respondents and with their assistance, I come in a conclusion as under.

10.That the show-cause notice was issued by the respondent on 8-1-2013 and order-in-original was passed on 7-5-2013 which was challenged on 3-7-2013 before the Collector of Customs (Appeals) under section 193 of the Customs Act, 1969 and impugned order-in-appeal was passed/announced on 11-6-2014 by the Collector of Customs (Appeals) after lapse of 344 days.

11.The judgment of the Appellate Forum was passed in violation of section 179(3) of the Customs Act, 1969. In words of superior judicial fora time extension given in such cases is a kin to give a new leads of life entity. It is tantamount to flogging of a dead horse if an event or document has become dead on account of non-timely extension of time period prior to expiry of entire stipulated period.

12.The lower forum has not availed the opportunity as provided in law for further extension in writing from the competent authority. Since the entire period of 120 it's stood expire without any extension. The order-in-appeal becomes barred by limitation by 344 days rendering it and proceedings of order have without power/ jurisdiction hence ab initio null and void and not enforceable under the law. The said ratio was further fortified by the superior judicial fora in their judgments i.e. 2006 PTD 340, PTCL 2005 CL 848(sic).

13.As per record the main consignment Soap Making Machine Capacity 1000 Kg was imported against letter of Credit No.20:0024-00766/08 dated 6-12-2008 and the same was released by the Customs vide GD No. CRN-1-HC 877853 dated 24-1-2009 therefore, the agreement dated 21-8-2008 was the part and parcel of the import documents. The imported components i.e. Heat Exchanger; the part of the main machine was supplied by the manufacturer against defective Heat-Exchanger in compliance with Sr. No.13 of the agreement. The same was sent to the appellant and therefore, they are the legal owner of the said component as per PCT Code No. 9916 of the Customs Tariff and Trade Control Part-I Sub-Chapter (4). There is no restriction on the imported goods supplied free of cost as replacement of identical goods within the warranty period therefore, Import Policy Order and appendix- G thereof, does not apply on this item. It is correct that the importer should have filed GD for clearance of aforesaid component (Heat Exchanger) under HS Code 9916 within stipulated period as defined under section 82 of the Customs Act, 1969, but he failed to file the GD and that is why the said goods were put to auction. However he approached the Customs when a Show-Cause Notice was issued to him by the adjudicating officer and adjudicating officer did not bother to consider his request wherein he prayed for submission of GD under HS Code 9916 but he issued Order-in-Original No. 323/2012-2013 dated 7-5-2013. Instead of issuing Order-in-Original the adjudicating officer should have vacate the Show-Cause notice with the direction to importer to get released his imported goods after payment of duty and taxes. The impugned Order-in-Appeal No.5763/2014 dated 16-6-2014 does not indicate any restriction on the import of component (Heat Exchanger) under Import Policy Order, 2008-2009 rather the Collector (Appeals) is of the view that the importer should have filed the GD with in one year and export the defective part of the machine to supplier. Section 82 of the Customs Act, 1969 empowers Assistant Collector of Customs to allow the clearance of such goods to its importer. Section 82 of the Customs Act, 1969 is reproduced as under:--

82. Procedure in case of goods not cleared or warehoused or transshipped or exported or removed from the port within 8[twenty days] after unloading or filing of declaration.---If any goods are not cleared for home-consumption or warehoused or transshipped or are not loaded on the conveyance for export or removed from the port area within 8[twenty days] of their arrival at a customs station or within such extended period not exceeding 9[ten] days, an officer not below the rank of Assistant Collector may allow, and such goods may, after the due notice given to the owner if his address could be ascertained, or after due notice to the carrier, shipping or customs agent, custodian of the goods, as the case may be, if his address could not be ascertained, may be sold in auction or taken into custody by Customs and removed from the port to a Customs warehouse for auction under the order of the Assistant Collector notwithstanding the fact that adjudication of the case under section 179, or an appeal under section 193, or 196, or a proceeding in any court is pending:

Provided that---

(a)animals and perishable and hazardous goods may, with the permission of the appropriate officer, be sold or destroyed at any time;

(b)arms, ammunition or military stores may be sold or otherwise disposed of at such time and place and in such manner as the Board may, with the approval of the Federal Government, direct;

(c)in cases where goods are sold pending adjudication, appeal or decision of the court, the proceeds of sale shall be kept in deposit and if on such adjudication, or as the case may be, in such appeal or the decision of the court, the goods sold are found not to have been liable to confiscation, the entire sale proceeds, after necessary deduction of duties, taxes transportation and other charges or duties as provided in section 201, shall be handed over to the owner:

Provided further that where Customs removes such goods from the remises of the custodian for disposal, the charges due to the custodian shall be paid subsequently from the sale proceeds of the goods in the manner as provided under section 201:

Provided also that nothing in this section shall authorize removal for home consumption of any dutiable goods without payment of customs duties thereon.

14.Section 156 (47-A) provides if the GD is not filed within the prescribed period of 15 days the owner of such goods shall be liable to a penalty upto 15,000 (Rupees fifty-thousand).

15.The imported goods are the property of its legal importer as such he cannot be refused to get release of the same against payment of duty and taxes in the light of the judgment passed in Writ Petition No.1505 of 1973 (Javed Hassan v. C.B. Revenue 1975 Law Notes Lahore 85).

16.All the Orders issued by the lower forums are set aside and appeal is allowed with the directions to appellant to file GD, get the goods released after payment of duty and taxes, if any and the delay detention certificate is issued by the Customs. This order is applicable on this case only due to its particulars, facts and circumstances.

HBT/127/Tax(Trib.)Appeal allowed.