BUTT MACHINERY STORE VS ASSISTANT COLLECTOR OF CUSTOMS, 2015 PTD-KARACHI-HIGH-COURT-SINDH 2510 (2015)

Customs Act (IV of 1969)---

----S.196---Income Tax Ordinance (XLIX of 2001), S.133---Sales Tax Act (VII of 1990), S. 47---Federal Excise Act (VII of 2005), S.34-A---Reference to High Court---Scope---Appellate Tribunal, finding of fact by---Principle---Importer was aggrieved of judgment passed by Appellate Tribunal, whereby order passed by Appellate authority was set aside---Validity---Finding of fact recorded by Appellate Tribunal provided under taxing statutes such as Income Tax Ordinance, 2001, Customs Act, 1969 and Sales Tax Act, 1990, could not be disputed unless the same was found to be perverse or patently illegal---High Court, while exercising its authority under jurisdiction in terms of S.196 of Customs Act, 1969, S. 133 of Income Tax Ordinance, 2001, S.47 of Sales Tax Act, 1990, or S. 34-A of Federal Excise Act, 2005, could not ignore if decision of Appellate Tribunal was based on some perverse and totally incorrect finding of fact which was contrary to material available on record or which was based on surmises and conjectures---Decision based on such erroneous finding of fact could be corrected by High Court in order to resolve actual legal controversy which could be involved in the case---Customs Appellate Tribunal, in the present case,was not able to point out any error or illegality in the order passed by Appellate authority and had simply replaced its finding on facts by placing reliance entirely on purported opinion of a company which certificate was otherwise not a conclusive evidence nor even suggested that importer made mis-declaration or had mentioned incorrect PCT Heading in the case---High Court answered the question in negative in favour of importer and against the department---Reference was allowed in circumstances.

Sohail Muzaffar and Fauzia Rasheed for Applicant.

Ghulam Haider Shaikh for Respondent.

Date of hearing: 29th January, 2015.

ORDER

AQEEL AHMED ABBASI, J.---Being aggrieved and dis-satisfied by the order dated 21-12-2011 passed by the Customs Appellate Tribunal, Bench-III, Karachi in Customs Appeal No.K-465/2011, whereby, the appeal filed by the respondent against Order-in-Appeal No.5087/2011 dated 8-3-2011, has been allowed and the order passed by the learned Collector has been set-aside the applicant has filed instant Reference Application under Section 196 of the Customs Act, 1969, and proposed eight questions, whereas, on 4-12-2012 when the matter was taken up for hearing, pre-admission Notice was issued to the respondent in respect of questions Nos.3, 4 and 5 only, which read as follows:--

(3) Whether the wrong mentioning of PCT Heading in respect of generators was an offence under section 32 of the Customs Act, 1969?

(4) Whether the staff of the Directorate General, Intelligence and investigation, Federal Board of Revenue was competent to carry out the examination of the generators sets while at Port?

(5) Whether the staff of the Directorate General, Intelligence and Investigation, FBR has any powers to exercise under section 32 of the Customs Act, 1969?

2. However, at the time of making his submissions before this Court by referring to impugned order passed by the Customs Appellate Tribunal, the learned counsel for the applicant has contended that the legal issue as formulated by the Customs Appellate Tribunal in the instant case while deciding the appeal filed by the Collector of Customs, is infact the main controversy, and if such legal issue may be treated as question of law and may be answered by this Court, it will resolve the controversy involved in the instant case. It will be relevant to reproduce such legal issue as formulated by the Customs Appellate Tribunal while deciding the aforesaid appeal, which reads as follows:--

"Whether the respondent has misdeclared the capacity, specification and classification of the goods, imported by them, if 'yes' what is its effect?"

3. Learned counsel for the applicant while stating the brief facts of the case, submits that the applicant imported used generators by declaring correct particulars of the consignment, including the PCT Heading in the goods declaration submitted before the Customs Authorities. However, the respondent department, instead of processing the G.D. as per declaration conducted joint examination by associating the personnel of Directorate of Intelligence and Investigation, and referred the matter to MessrsSiemens Pakistan Engineering Company Ltd., for verification of specification and capacity of the Generator and managed an opinion, and on the basis of such opinion of MessrsSiemens Pakistan Engineering Company Ltd. have made the case of mis-declaration. Per learned counsel, from perusal of the record, it may be ascertained that there is no allegation by the respondent against the applicant that they have either made any tempering in the plate affixed on the Generator nor there is any allegation with regard to removal or replacement of original plate with any other forged plate, in order to either mis-declare or to make an attempt to avoid any customs duty and taxes. It is further contended by the learned counsel that initially, the G.D. was duly processed and assessed, goods were out of charge, and thereafter, same were intercepted by the Directorate of Intelligence without any lawful basis or material available with them. It is further contended by the learned counsel that even in the purported opinion of MessrsSiemens Pakistan Engineering Company Ltd., who is also manufacturer of the Generator, and competitor of the applicant, it has not been opined with certainty that the applicant has made a mis-declaration relating to output rating. Learned counsel for the applicant in support of his contention has referred to the decision of the Collector of Customs (Appeals) with particular reference to para-5 of the order, wherein, according to learned counsel for the applicant, the Collector of Customs (Appeals) has categorically held that since there is no conclusive material or even report/opinion from MessrsSiemens Pakistan Engineering Company Ltd. to support the allegation of the respondent, therefore, it cannot be termed as the case of mis-declaration, whereas, it has been further held that the release of the consignment may be allowed under PCT Heading 8502.1310 as per declaration made by the applicant. Per learned counsel, Customs Appellate Tribunal, while setting-aside such finding of the Collector of Customs (Appeals) has not referred to any material or evidence except the report of MessrsSiemens Pakistan Engineering Company Ltd. and has reversed such finding of fact without any justification, hence, such finding is erroneous and contrary to the facts and the material available on record. Learned counsel further submits that the entire case of mis-declaration made by the respondent in the instant case is based on surmises and conjecture, whereas, there is no material available on record, which may show that the applicant has made any mis-declaration. It is prayed that the impugned order may be set-aside and the question as referred to hereinabove may be answered in favour of the applicant and against the respondent department.

4. Conversely, learned counsel for the respondent has opposed the contention of the learned counsel for the applicant and contended that no question of law arises from the impugned order passed by the Customs Appellate Tribunal, the decision of the Tribunal is based on finding of fact. However, while confronted as to a query as to whether the respondent department had any evidence or material which could establish the allegation of mis-declaration against the applicant, except the purported opinion of Messrs Siemens Pakistan Engineering Company Ltd, the learned counsel for the respondent could not refer to any such material or evidence. Similarly, while confronted as to whether the adjudicating officer has recorded any finding to effect that the applicant has replaced the original specification plate affixed from on the generator imported by the applicant by another fake plate, or there has been any tampering in the original plate by the applicant, with intention to evade customs duty and taxes through misdeclaration, the learned counsel for the respondent could not refer to any such finding recorded by the adjudicating officer in this regard.

5. We have heard both the learned counsel for the parties, perused the record and the impugned order passed by the Customs Appellate Tribunal in the instant case with their assistance. Admittedly, G.D. filed by the applicant was duly assessed to tax, whereafter, duty and taxes were paid, and the consignment of the applicant was out of charge. Whereafter, the Directorate of Intelligence and Investigation intercepted the consignment, and re-examination was made. However, since the respondents could not find out any material discrepancy in the goods declaration, therefore, referred the matter to MessrsSiemens Pakistan Engineering Company Ltd. for its opinion with regard to output capacity of the Generators imported by the applicant, which according to learned counsel for the respondent, was mis-declared. It appears that MessrsSiemens Pakistan Engineering Company Limited who is also a manufacturer of the Generators, is not a legally authorized organization or the forum to decide the dispute with regard to specification or output capacity of Generator, whereas, the element of bias, in view of being local manufacturers of generator and engaged in the same business as of the applicant i.e. sale of generators, can also not be ignored. We have also observed that even the purported opinion of MessrsSiemens Pakistan Engineering Company Ltd. also does not conclusively suggest that the Generator imported by the applicant was not of the exact specification as per declaration, whereas, it requires further tests, which were not admittedly made in the instant case. It will be advantageous to refer to such opinion of MessrsSiemens Pakistan Engineering Company Ltd. available at page 19 of the file, which reads as follows:--

"Power Panel

ACB =16 Amp.

Make=MG adjusted 0.88 (1408 Amp)

In the light of above data as the circuit breaker is of 1600 AMP therefore the DG set cannot be tested at 1250 KVA rating, if load testing required for finalization of actual KVA rating of DG set the circuit breaker must be replaced with at least 2000 AMP and the DG set."

6. The Collector of Customs (Appeals), while deciding the appeal in favour of the applicant has discarded the version of the respondent department and has recorded an elaborate finding in this regard in para-5 of its order, which reads as follows:--

"I have thoroughly examined the entire case record and have given very careful consideration to the arguments advanced before me. The evidence on record shows that the plate found affixed on the generating set clearly indicated that the out-put capacity of the same was as per declaration made by the appellant and it was on the strength of the aforesaid evidence that the Collectorate's stuff had initially assessed/released as per declaration made on the Goods Declaration. On the other hand, the inspection report of Messrs Siemens Pakistan Limited, issued in response to a reference made to them by the Directorate General, does not definitely, state that output capacity of the impugned generating set was less than 1100 KVA in fact, the above-referred report is inconclusive and significantly wanting in many respects and cannot be relied upon as a valid piece of evidence. Therefore, the adjudicating officer's conclusion, principally based on the aforesaid report, is not maintainable in law. I accordingly rule that the appellant's declaration with reference to output capacity of the generating set and its PCT classification has to be treated as correct. It is, therefore, ordered that the impugned generating set be assessed/released under PCT heading 8502.1390 as per declaration made by the appellant. Since the inordinate delay of over one year has not been caused by any fault of the appellant, it would be in accordance with law if delay/detention is issued in this case with a view to saving him from undue hardship which is most likely to be caused to him in terms of demurrage/port charges. For the foregoing reasons, the impugned order is set aside and the appeal is allowed accordingly."

7. We may observe that in view of such elaborate finding of fact as recorded by the Collector of Customs (Appeals), it was incumbent upon the Appellate Tribunal to either point out any error or material discrepancy in such finding of fact before discarding such finding, which has not been done by the Customs Appellate Tribunal while passing the impugned order, whereas, its finding is merely based on the purported opinion of MessrsSiemens Pakistan Engineering Company Ltd. We are mindful of the fact that the finding of fact recorded by the Appellate Tribunals provided under the taxing Statutes such as Income Tax Ordinance, 2001, Customs Act, 1969 and Sales Tax Act, 1990, cannot be disputed unless the same is found to be perverse or patently illegal, however, this Court, while exercising its authority under jurisdiction in terms of Section 196 of the Customs Act, 1969, Section 133 of the Income Tax Ordinance, 2001 section 47 of the Sales Tax Act, 1990 or section 34-A of Federal Excise Act, 2005 can also not ignore that if the decision of the Appellate Tribunal is based on some perverse and totally incorrect finding of fact, which is contrary to the material available on record, or which is based on surmises and conjectures, the decision based on such erroneous finding of fact can be corrected by this Court in order to resolve the actual legal controversy which may be involved in the case. We are inclined to entertain the question as referred to in para 2 herein above and to decide instant reference application by submitting our response to such question as it may settle the legal dispute involved in the case. After scrutiny and examination of the material available on record, we are of the opinion that the Customs Appellate Tribunal has erred in fact and law by setting-aside the order of the Collector of Customs (Appeals) in the instant case, which prima-facie depicts correct factual and legal position, whereas, the Customs Appellate Tribunal has not been able to point out any error or illegality in the order passed by the Collector of Customs (Appeals) and has simply replaced its finding on facts by placing reliance entirely on the purported opinion of MessrsSiemens Pakistan Engineering Company Ltd., which certificate is otherwise not a conclusive evidence nor even suggests that the applicant has made misdeclaration or has mentioned incorrect PCT Heading in the instant case.

7. In view of hereinabove facts, instant reference application is allowed and question proposed hereinabove is answered in negative in favour of the applicant and against the respondent department.

8. Copy of this order shall be sent under the seal of the Court to the Customs Appellate Tribunal, Bench-III, Karachi, in terms of section 196(5) of the Customs Act, 1969.

MH/B-3/SindhReference allowed.