ABDUL AZIZ AND BROTHERS, KARACHI VS DIRECTORATE GENERAL I&I
2016 P T D (Trib.) 925
[Customs Appellate Tribunal]
Before Mohammad Yahya Member (Technical-I)
Messrs ABDUL AZIZ AND BROTHERS, KARACHI
Versus
DIRECTORATE GENERAL I&I and 2 others
Customs Appeal No.K-03 of 2015, decided on 26/06/2015.
(a) Customs Act (IV of 1969)---
----Ss.25 & 156(1)---Sales Tax Act (VII of 1990), Ss.6 & 11---Income Tax Ordinance (XLIX of 2001), Ss.148 & 162(1)---Federal Excise Act (VII of 2005), S.3---Adjudication proceedings for short/paid sales, income tax and federal excise duty---Scope---Section 6 of Sales Tax Act, 1990, S.148 of Income Tax Ordinance, 2001 and S.3 of Federal Excise Act, 2005 had made it clear that customs Department was empowered to collect taxes and federal excise duty on import of goods like duty of customs on value determined under S. 25 of Customs Act, 1969---Said provisions did not empower Customs Department to initiate adjudication/recovery proceedings for short collected/paid sales tax, income tax and federal excise tax either due to collusion or connivance or inadvertence, error or misconstruction and for proceedings for such type of recovery; a show cause notice had to be issued under S.11 of Sales Tax Act, 1990 and S.162(1) of Income Tax Ordinance, 2001---Authorities which were to issue show cause notices under S.11 of Sales Tax Act, 1990 and S.162(1) of Income Tax Ordinance, 2001 were officers of Inland Revenue and not Customs officers---Customs Department while adjudicating the present case had invoked S.156(1) of Customs Act, 1969 which was patently unlawful for imposing penalty in terms of Income Tax and Sales Tax, and such matters were exclusive to penal provisions contained in Sales Tax Act, 1990 and Income Tax Ordinance, 2001 for which Customs Department was not empowered.
Case Law Referred.
(b) Customs Act (IV of 1969)---
----Ss.32(1) & 32(2)---Sales Tax Act (VII of 1990), S.11---Income Tax Ordinance (XLIX of 2001), S.3---False statement---Assumption of jurisdiction by Customs Authorities in for sales tax and withholding tax matters---Scope---In presence of specific provisions of Sales Tax Act, 1990 and Income Tax Ordinance, 2001, assumption of jurisdiction by customs department under Ss.32(1) and 32(2) of the Customs Act, 1969 for sales tax and withholding tax was void ab-initio and unlawful.
(c) Customs Act (IV of 1969)---
----Ss.32(1), 32(2), 25A, 79 & 80---Sales Tax Act (VII of 1990), Ss.3, 6, 33, 34 & 36---Income Tax Ordinance (XLIX of 2001), S.148(1)---Directorate General of Intelligence and Investigation, powers of---Directorate General of Intelligence and Investigation did not have any legal authority to proceed against anybody in case of violation of Ss.32(1), 32(2), 25A, 79 & 80 of Customs Act, 1969 read with Ss.3, 6, 33, 34 & 36 of Sales Tax Act, 1990 and S.148(1) of Income Tax Ordinance, 2001.
Case-law referred.
Nadeem Mirza for Appellant.
Siddique Zia, A.O., Abdul Rashid, I.O. and Anwar Farooque, I.O. for Respondents.
Date of hearing: 20th May, 2015.
ORDER
MOHAMMAD YAHYA, MEMBER (TECHNICAL-I).---By this order I intend to dispose of the Customs Appeal No. K-03/2015 filed, under Section 194-A of the Customs Act, 1969, by Messrs Abdul Aziz and Brothers, Karachi against the impugned Order-in-Original No.199/2014-15 dated 07.11.2014 passed by the Additional Collector of Customs (Adjudication-I), Karachi.
2.Brief facts of the case as reported in Show Cause Notice No.ADJ-I/ADC/DIT/18/2013-14 dated (sic).05.2014 are that it has been reported by Directorate General of Intelligence and Investigation-FBR, Regional Office, Karachi that on 21.04.2014 the staff of Directorate intercepted a container No.YMLU-8165248(40') at Kohinoor Electronic Centre, Abdullah Haroon Road, Karachi imported by M/s. Abdul Aziz & Brothers (NTN: 3099660), which was cleared through MCC Appraise-ment (West), Karachi against GD No.KAPW-HC-134035-15042014. The container was brought to office of Directorate General, Intelligence and Investigation-FBR, for detailed examination.
3.Whereas, the container was examined on 23.04.2014 in presence of the importer and witnesses. On examination the goods were found grossly mis-declared as per detailed inventory and representative samples of found items were drawn. In order to ascertain correct HS Codes and assessable value of the found items, the representative samples and inventory of goods was forwarded to MCC Appraisement (West), Karachi. Based on the applicable HS Codes and values provided by the Collectorate, the total assessable value has been worked out to Rs.10,215,797/- against Rs.5,034,013/- assessed by the Collectorate. The total short-levied/evaded amount of duty/taxes has been worked out to Rs.2,512,824/- (CD Rs.896,106/-, ST/AST Rs.1,215,577/-, IT Rs.401,141/-) which is recoverable from the importer. The goods have been seized on 29.04.2014 under Section 168(1) of the Customs Act, 1969 after completion of legal formalities.
4.Whereas, Messrs Abdul Aziz and Brothers by clearing consignment of mobile accessories etc. through mis-declaration of description, HS Code, quantity and value evading government's legitimate revenue of Rs.2,512,824/- have committed offence of mis-declaration and evasion of taxes under Sections 32(1) and (2), 25A, 79 and 80 of the Customs Act, 1969, read with Sections 3, 6, 33, 34 and 36 of the Sales Tax Act, 1990, and Section 148(1) of the Income Tax Ordinance, 2001, punishable under clause (14) of Section 156(1) of the Customs Act, 1969.
5.In the light of above reported facts the importer Messrs Abdul Aziz and Brothers were called upon to show cause as to why the goods should not be confiscated and penal action warranted under the aforementioned provisions of law may not be taken against him under the aforesaid provisions of law.
6.The importer Messrs Abdul Aziz and Brothers, Karachi, filed the written reply of Show Cause Notice on 22.05.2014. On the basis of reply of Show Cause Notice, the Additional Collector of Customs (Adjudication-I), Karachi passed an Order-in-Original No.199/2014-15 dated 07.11.2014. The operative part of this order is reproduced as under:--
"I have gone through the record and considered written/verbal arguments of both the sides. As regards contention of the respondent that the legal position as far as the matter of exercise of investigation powers by the staff of the Directorate General is concerned in terms of S.R.O. 486(I)/2007 dated 09.06.2007, the officers of Directorate General are competent to intercept, detain and seize the mis-declared goods at any stage. In this regard, reliance is placed on judgment reported as 2008 PTD 1365, passed by the Honorable Lahore High Court, whereby, regarding exercise of powers by the Directorate General it has been held that: "Where there is no doubt to the extent of misstatement, understatement and mis-declaration of goods low provides ample and wide powers to Directorate of Intelligence and Investigation to stop the clearance of any consignment even if the same was out of charge. Directorate of Intelligence and Investigation has full powers to investigate even after the process of appraisement by the Customs Collectorate if it has reasons to believe that the goods are mis-declared." I have examined the legal position and of the opinion that mis-declaration confirmed through by the staff of Directorate General in the presence of the importer. On examination the goods were found grossly mis-declared as per detailed inventory and representative samples (declared items 14 and found items were 36) were drawn after completion of legal formalities and of the opinion that mis-declaration was confirmed on the part of the importer from the time of filing of Goods Declaration and submission of relevant import documents to evade duty and taxes. Hence, the charge leveled in the Show Cause Notice stands established that the respondent by clearing consignment of mobile accessories, through mis-declaration of description, HS Code, quantity and value evading thereby government's legitimate revenue have committed offence of mis-declaration and evasion of duty/taxes under Section 32(1) and (2) read with Sections 25A, 79 and 80 of the Customs Act, 1969, read with Sections 3, 6, 33, 34 and 36 of the Sales Tax Act, 1990 and Section 148(1) of the Income Tax Ordinance, 2001, punishable under clause (14) of Section 156(1) of the Customs Act, 1969. I, therefore, order confiscation of the goods for violation of aforementioned provisions of law. However, an option is given to the respondents to redeem the confiscated goods on payment of 35% Redemption Fine in terms of S.R.O. 499(I)/2009 dated 13.06.2009 of the value determined by the department along with payment of duty and taxes livable thereon. A penalty of Rs.200,000/- (Rupees Two Hundred Thousand) is also imposed on the importer.
During the course of hearing the counsel of the respondent argued that the value of goods has been assessed by the department higher than the data available for valuation purposes. The department may examine their claim about the valuation of goods in the light of Valuation Ruling/available data."
7.Being aggrieved and dis-satisfied with the impugned Order-in-Original No. 199/2014-15 dated 07.11.2014, passed by the Additional Collector of Customs (Adjudication-I), Karachi, the appellant filed the instant appeal before this Tribunal on the grounds incorporated in the Memo of Appeal which are reproduced as under:--
(a)That prior to commenting upon the legal aspects of the case it is advantageous to state that indeed the respondent No. 1 are appointed and designated as "Officer of Customs" under Section 3A of the Customs Act, 1969 and they derived power for functioning from Notification No. S.R.O 486(I)/2007 dated 09.06.2007 within the Territory of Pakistan for thwarting the act of smuggling but this doesn't means that they can intercept and detain the goods transported within city or Territory of Pakistan and their jurisdiction in principle is restricted to the area not falling within the ambit of Sections 9 and 10 of the Customs Act, 1969 and beyond 5 kilometer of the border of India and Iran in terms of Section 177 of the Customs Act, 1969 to be read with notification SRO No. 188(I)/83 dated 12.12.1983. The goods of the appellant does not at all falls within the ambit of Section 2(s) and section 177 of the Customs Act, 1969, instead are lawfully imported and cleared after completion of all the codal formalities, hence, the act of detention/seizure and preparation of contravention report by the official of respondent No. 1 in the case of appellant is without lawful authority and as such void ab-initio and coram non judice.
(b)The official of respondent No. 1 have no powers under Sections 16, 25, 25A, 32, 79, 80, 83 and 195 of the Customs Act, 1969 as notified in SRO 486(I)/2007 dated 09.06.2007 issued by the Board through which powers have been delegated. Intercepting consignment after clearance on the pretext of mis-declaration of description, PCT and value importability by the officials of respondent No. 1 from lack of jurisdiction and power, rendering their act as transgression to the vested powers under the respective section otherwise not vested to them by the Board. In these circumstances the impugned detention/seizure notice, contravention report and show cause notice and all the subsequent proceeding there on deems to be illegal and void. Nobody is allowed to act beyond his jurisdiction and all the acts or deeds beyond the scope of jurisdiction are null and void in the eyes of law. Reliance is placed on the reported judgments 2002 PTD 2457, PLD 1971 Supreme Court 61, PLD 1973 Supreme Court 236, PLD 1964 SC 536, 2001 SCMR 838 and 2003 SCMR 1505, In PLD 1996 Karachi 68, 2006 PTD 978 and PLD 1971 Supreme Court 184.
(c)That the official of respondent No. 1 are indeed empowered to conduct examination under section 198 of the Customs Act, 1969 as notified in SRO No. 486(I)/2007 dated 09.06.2007 but within the premises of the port/terminal and that also after having approval of the Chief Collector (South) as clarified by the Board vide letter C.No. 2(2) L&P/2014 dated 29.12.2009. Which they failed to obtain in the instant case, resultant, the carried out examination is nullity to law and direction of the Board to be adhered by the field formation in terms of the expression of Section 223 ibid. it is imperative to state that outside the premises of the port/terminal the power vested under section 198 of the Customs Act, 1969 are not operative unless charge of smuggling is leveled against the person, which is non-existent in the case of appellant as no such charges has been leveled in the show cause notice. In the cases not following within the ambit of Section 2(s), the respondent is not empowered to seize the goods under Section 168(I) and the cases therefore has to be dealt under the respective provision of C.P.C. or Cr.P.C., rendering the examination of the goods after post clearance outside the premise of the port/terminal being in derogation of Section 198 of the Customs Act, 1969 and as such void ab-initio. Any case made on the strength of such examination report nullity to law and not to be relied upon.
(d)The official of respondent No. 1 are not appointed/designated an "Officer of Inland Revenue" under Section 30A of the Sales Tax Act, 1990 and Section 230 of the Income Tax Ordinance 2001 under which Directorate General Investigation Inland Revenue has been designated as officer of Inland Revenue and they had been delegated powers under different section of the Sales Tax Act, 1990 through Notification No.S.R.O.776(I)/2011 dated 19.08.2011 and Section 207 of the Income Tax Ordinance, 2001. Resultant, the official of respondent No. 1 acted without powers/jurisdiction, rendering their act of detention, seizure and subsequently preparation of contravention report, null, and void ab-initio, hence "coram non-judice" as held in reported judgment Major Syed Walayat Shah v. Muzaffar Khan and 2 others (PLD 1971 SC 184), Omer and Company v. Controller of Customs, (Valuation): (1992 ALD 449 (1) Karachi AAA Steel Mills Ltd. v. Collector of Sales Tax and Central Excise Collectorate of Sales Tax (2004 PTD 624), PLD 1976 Supreme Court 514 Ali Muhammad v. Hussain Buksh and others and PLD 2001 Supreme Court 514 Land Acquisition Collector, Noshehra and others v. Sarfraz Khan and others, 2006 PTD 2237; Pak Suzuki Motors Company Ltd., Karachi v. Collector of Customs, Karachi, 2009 PTD (Trib) 1996 and 2010 PTD (Trib) 832 and 2014 PTD 1733; Waseem Ahmed and others v. FOP and another.
(e)Notwithstanding to the referred in above submission, it is added that the official of respondent No. 1 has formed opinion in the seizure/contravention report in regards to clearance of the goods under wrong description, PCT and non applicability of valuation ruling after clearance of the goods i.e. post clearance, therefore their act falls within the ambit of term "audit". The legislature has inserted Section 3DD in the Customs Act, 1969 under which Directorate of Post Clearance Audit was created and the official of the Directorate were delegated powers under S.R.O. No. 500(I)/2009 dated 13.06.2009 for conducting audit of the importers record/Goods Declaration under the provision of Sections 26A, 26B, 32 and 32(3A) of the Customs Act, 1969 and to issue audit observation and thereafter prepare contravention report for the purpose of adjudication by the competent authority empowered under the provision of Section 179 of the Customs Act, 1969. The audit under Section 26A of the Customs Act, 1969 could only be conducted of the imported consignment post clearance by the Official of Directorate General of Post Clearance Audit and by none else. The official of respondent No. 1 while usurping the powers of DG-PCA infact conducted the audit of the appellant goods declaration, rendering their act in derogation of Section 3DD of the Act and neither in the Notification No. 500(I)/2009 dated 13.06.2009. Hence without power jurisdiction, and as such of no legal effect, hence void ab initio coram non Judice as held in umpteenth reported judgments of the superior judicial fora.
(f)That upon conclusion of transaction, under the provision of sections 80 and 83 of the Customs Act, 1969 and 438 and 442 of Customs Rules, 2001, the order so passed under the said provision of the Act became appealable order under Section 193 of the Customs Act, 1969 before Collector of Customs (Appeals) and the Director of respondent No. 1 is empowered under the said Section through Notification No. 486(I)/2007 dated 09.06.2007. If they had any reservation against the passed assessment orders, the appropriate course of action was to assail the said order before the Collector of Customs Appeals. Which had not been done within the stipulated period and order so passed by the competent authority defined in Section 2(a) under Section 80 of the Customs Act, 1969 became final and cannot be disturbed by any authority. To the contrary, the Directorate General of Intelligence and Investigation-FBR detained, seized the goods, which is not permitted under law.
(g)That upon filing of the appeal by the officials of respondent No.1 before the Collector of Customs Appeals under Section 193 of the Customs Act, 1969 emanating the facts of the case and the relevant provision of law. Who upon receipt of the appeal as mandated upon him to go through the fact and ground of the appeal and thereafter if he think fit that in the case under adjudication correct duty and taxes has not been either not levied or short paid on the basis of found goods, is empowered to issue a notice under Section 32 of the Customs Act, 1969 to the respondent and after receipt of reply to the said notice the Collector of Customs will decide the appeal in the light of the issued show cause notice and reply. In the instant case no appeal has been filed by the Directorate General of Intelligence and Investigation-FBR despite mandated under law, instead assumed the powers under Section 195 of the Customs Act, 1969 and reopened a valid passed order under section 80 ibid. Neither the officials of respondent No. 1 nor respondent No. 3 are empowered to reopen an order, hence both acted without power/jurisdiction, rendering their act without any lawful authority and as such ab-initio, null and void as held by Superior Judicial Foras in umpteenth reported judgments e.g. 2014 PTD 1256 Messrs Paramount International (Pvt.) Ltd. v. FOP and others.
(h)That similarly respondent No. 3 is not designated an "Officer of Inland Revenue" under the provision of Section 30 of the Sales Tax Act, 1990 and Sections 207 and 230 of the Income Tax Ordinance, 2001 and as such is not empowered to issue show cause notice under Section 36, (which stood omitted from the Act through Finance Act, 2012) and the appropriate Section is Section 11 and respective Section 162(1) not 148 of the Income Tax Ordinance, 2001. Therefore he also usurped the power not vested with, rendering the show cause notice and order-in-original to be passed without power/jurisdiction, hence void and ab-initio and coram non judice as held in reported judgment Major Syed Walayat Shah v. Muzaffar Khan and 2 others (PLD 1971 SC 184), Omer and Company v. Controller of Customs, (Valuation): (1992 ALD 449 (1) Karachi AAA Steel Mills Ltd v. Collector of Sales Tax and Central Excise Collectorate of Sales Tax (2004 PTD 624), PLD 1976 Supreme Court 514 Ali Muhammad v. Hussain Buksh and others and PLD 2001 Supreme Court 514 Land Acquisition Collector, Noshehra and others v. Sarfraz Khan and others, 2006 PTD 2237, Pak Suzuki Motors Company Ltd., Karachi v. Collector of Customs, Karachi, 2009 PTD (Trib.) 1996 and 2010 PTD (Trib.) 832.
(i)That in the matter relating to value attracting Section 25 mis-declaration of the imported consignment after audit falling within the ambit of Section 32 of the Customs Act, 1969 rest with Directorate General of Valuation under S.R.O. 495(I)/2007 dated 09.06.2007 read with para 44 of Customs General Order 12/2002 dated 15.06.2002. The respondent No. 2 issued show cause notice and subsequently passed order-in-original based on the opinion that the Valuation Ruling was not applied correctly by the official of respondent No. 2 in the absence of availability of powers. Nobody is allowed to usurp the powers of notified adjudicating authority as held by Superior Judicial Fora. That the respondent No. 3 acted in transgression of the powers vested with the officials of Directorate General of Valuation, therefore his act is without any power/jurisdiction, rendering the issued show cause notice and passed order-in-original void ab-initio and as such coram non judice as held by umpteenth reported judgment, few of which are quoted in the referred in above grounds.
(j)Needless to state that the expression of Section 179 of the Customs Act, 1969 is very clear in regards to appropriate Adjudicating Authority on the basis of "amount of duty and taxes involved excluding the conveyance." Not on the basis of "amount of evaded duty and taxes". In the instant case of appellant the involved amounts of duty and taxes are Rs.4019,449.00 (upfront duty Rs.1032071.00 + additional amount of duty and taxes + Rs.2512,824.00 shown in show cause notice). Meaning thereby the competent authority to adjudicate the case in question under clause (i) of section 179(1) is Collector. To the contrary, respondent No.3 issued the show cause notices and passed order-in-original while usurping the powers of his Superior (Collector), which is not permitted under law. Rendering both suffers from lack of powers/jurisdiction, hence, ab-initio null and void and coram non judice.
(k)The powers of adjudication are specific and empowered by the statute. It is an elementary principle of law that where there is a conflict between special and general provision of law, the special provision shall prevails (reference is invited to the case of Lt. General (Retd.) Shah Rafi Alam v. Lahore Race Club, 2004 CLD 373. The power of adjudication, as already observed is special in nature. This cannot be eclipsed by any other general provision. Even otherwise there is another settled principal of interpretation of statute i.e. that the courts can supply construction with a view to avoiding absurdity (reference is invited to the case of Khalid Qureshi v. UBL 2001 SCMR 103). Equally it must be kept in mind that if it is held that sections 4 and 179 occupy the same fields, there is likely to be redundancy in respect of powers conferred under section 179. The Supreme Court in the case of East West Steamship v. Queen Land Insurance PLD 1963 SC 663 has been pleased to hold that redundancy is to be avoided in respect of any provision of the statute. There is also plethora of case law on the point that where there is a conflict between two provision of the statutes, the later provision prevails and has to be given precedents (reference is invited to the case of Sahibzada Sharfuddin v. Town Committee, 1984 CLC 1517). Apart from this law favour actions of the authorities to be confined to their own spheres of jurisdiction conferred by the statute. An action taken by a state functionary beyond the ambit of his jurisdiction is nullity. In this respect the judgment reported as Abida Rashid v. Secretary, Government of Sindh PLD 1995 Kar. 587 is referred. Their lordship observed as under:--
"it is trite law that power vested in an authority should only be exercised by that authority, in default whereof, the exercise of power and authority becomes without jurisdiction, illegal, void, ab-initio and of no legal effect. The term "without jurisdiction" has been judicially interpreted to include usurpation of power warranted by law (The Chief Settlement Commissioner Lahore v. Raja Muhammad Fazil Khan and others PLD 1975 SC 331 at p.339) an act done which the person doing it has no jurisdiction at all to do or which was clearly outside the sphere of his activities (The State v. Zia-ur-Rehman PLD 1973 SC 49) and a judgment or order delivered by a court or a judicial or a quasi judicial authority not competent to deliver it (Muhammad Saleh and others v. Messrs United Grain and Fooder Agencies PLD 1964 SC 97). The Constitutional jurisdiction can thus be exercise when it is shown that the order is passed without jurisdiction or in excess of jurisdiction. As observed earlier the respondent No. 1 has no jurisdiction to pass the impugned order. As such we declare the same to be of no legal effect. Accordingly, we allow this petition but leave the parties to bear their own costs".
(l)That while dealing with the powers of adjudication, it is needless to observe, that our Supreme Court has also jealously guarded the same. In Assistant Director v. B.R. Herman Mohata Ltd. PLD 1992 SC 485 a full Bench of Supreme Court was pleased to observe that section 223 of the Customs Act, 1969 could not be employed so as to interfere with the judicial or quasi judicial functionaries. It was clearly observed that the power of the CBR as to prescribed guideline were not relevant for the exercise of judicial function. To similar effect is the judgment of Supreme Court reported as Central Insurance v. CBR 1993 SCMR 1232. In this case the CBR issued direction for the reopening of Income Tax Assessment under section 65 of the Income Tax Ordinance, 1979. It was held by the Supreme Court that the CBR did not figure in the hierarchy of the officer provided in the statute for the purpose of assessment and adjudication. On the basis of this it was held that the directions of the CBR to reopen the assessment were without jurisdiction and the adjudication officer was directed to apply its own mind. Reliance is placed on the order of the Tribunal in S.T. Appeal No. 176/2007 Messrs Muller and Phipps Pakistan (Pvt.) Ltd. v. the Collector of Sales Tax Enforcement LTU, Karachi and 2011 PTD (Trib) 2114 Collector of Customs, Peshawar v. Collector of Customs (Appeals) Peshawar and 2011 PTD (Trib.) 2557 Messrs Wawa Garments Industries (Pvt) Ltd. v. The Additional Collector of Customs, Export, Karachi.
(m)That it is imperative for the appellant to invite the attention of the Honorable Appellate Tribunal that where order has been made without any powers/jurisdiction, irrespective of the merit of the case, such order is coram non-judice as held by High Court of Sindh in Customs Reference No. 101 and C.M.A No. 1281 of 2009 reported as 2010 PTD 465 Collector of Customs, Model Customs Collectorate v. Messrs Kapron Overseas Supplies Co., (Pvt.) Ltd. filed on the question of law that whether passing of order without jurisdiction is a technical defect and does not render the proceeding as ab-initio void. The Hon'ble High Court dismissed the reference while holding that "any transgression of such jurisdiction for not being a technical defect would render entire exercise of authority to be ab-initio, void and illegal", without discussing the merit of the case, which relates to origin of imported goods and the Hon'ble High Court further held that "the exercise of jurisdiction by an authority is a mandatory requirement and its non fulfillment would entail the entire proceeding to be "coram non judice." The said defect render the show cause notice as well as order-in-original ab-initio, null and void by virtue of suffer of lack of power/jurisdiction. Hence coram non judice and needs to be struck down.
(n)That the consignment in question had undergone the procedure of clearance as evident from the fact that the appropriate officer in the capacity of adjudicating authority defined in Section 2(a) of the Customs Act, 1969 in exercise of the powers vested upon him under Sections 80 and Rule 438 of Sub-Chapter (III) of Chapter XXI of Customs Rules, 2001 and Notification No.371(I)/2002 dated 15.06.2002 passed assessment order for levy of duty and taxes, which were paid by the appellant, consequent to which the authority defined in Section 83 of the Customs Act, 1969 passed Clearance Order. Subsequently the official of respondent No.1 detained the goods sent later on seized those and framed contravention report for adjudication under section 179 of the Customs Act, 1969 by the respondent No. 3 by issuing show cause notice and subsequently passing of order-in-original i.e. piling of fresh order on the existing order, while reopening of the order of assessment, in exercise of the power under the provision of Section 195, specifically vested with the Board or Collector. Neither the official of respondent No. 1 nor respondent No. 3 is empowered to reopen an order under Section 195 of the Customs Act, 1969 of the officials of respondent No. 2. Both usurped the powers not vested with them rendering the preparation of contravention report, show cause notice and the impugned order in original without power/jurisdiction, hence void ab-initio and as such coram non judice and this stood validated from the reported judgment Messrs Smith Kline French v. Pakistan reported as 2004 PTD 3020 held that "once an order is passed, which attains finality, the same cannot be subject to a show cause notice again, considering that no appeal or revision is filed against the first order. This was held by the learned High Court to be in derogation of the principles of administration of justice" and 2014 PTD 1256 Messrs Paramount International (Pvt.) Ltd. v. FOP and another in which it has been held that "1st order in original passed in the subject matter was an appealable order for both the parties therefore option to reopen an order passed under the adjudicating hierarchy was not available to the Collector,---Even the Collector of Customs Adjudication could not over see or exercise any right of reopening of an order, which has been passed by an officer lower in rank but acting as an adjudicating authority. Impugned order was set aside." The cases referred are squarely applicable on the appellant case.
(o)That it is also imperative to add further that assessment orders in the subject case has been passed by the competent authority on 21.04.2014 and the appeal against which could had been filed by the respondent No. 1 on or before 20.05.2014 but had not filed by the officials of respondent No. 1 to this date and the passed assessment order attained finality and became closed and past transaction and cannot be disturbed or reopened by any authority or court as held in reported judgment 1989 MLD 4310 Messrs World Trade Corporation v. Central Board of Revenue that "if the order has attained finality through limitation. A fortiori; the Central Board of Revenue could not open up an order that had attained finality under the Sea Customs Act, 1878, and against which suo motu revision lay under the Act" and 2004 PTD 3020, Glaxo Smith Kline Pakistan Ltd, Karachi v. Collector of Customs, Sales Tax Central Excise, Karachi "that department could not re-agitate which had been decided against him---said order could be assailed in appeal or revisional proceedings, which in the present case was not initiated and therefore the same held the field and in the presence of earlier order another order contrary to the said earlier order could not be allowed hold the field for the simple reason that two contrary orders could not exists at one and a same time---in the light of the settled law the initial assessment order attain finality by virtue of expiry of stipulated period expressed in subsection (2) and as such hold field and no subsequent order on these to be allowed to be piled upon these as this is not permitted beside tantamount to double jeopardy barred under Article 13 of Constitution of Islamic Republic of Pakistan.
(p)That in terms of proviso of subsection (3) of section 179 of the Customs Act, 1969 the adjudication proceeding has to be completed within 120 days of the issuance of show cause notice or within such period extended by the Collector for which reason shall be recorded in writing as held by Supreme Court of Pakistan in reported judgment 2009 PTD 1881 but such extended period shall in no case exceed 60 days provided that any period during which the proceeding are adjourned on the account of stay or alternative dispute resolution proceeding or the time taken through adjournment by the appellant not exceeding 30 days shall be excluded for the computation of the aforesaid period meaning thereby, the total period can be extended from 120 days to 180 days or 210 days.
(q)In the instant case the show cause notice was issued on 15.05.2014 and the order should had been passed by the respondent within 120 days i.e. by 12.09.2014, whereas order has been passed on 07.11.2014 without any extension and the said fact stood validated from the operative part of the order, which is silent in this regards rendering it barred by time by 56 days. Rendering it without power/jurisdiction, hence ab-initio void and as such not enforceable under law as held in reported judgments 2008 PTD 60 M/s. Super Asia Muhammad Din Sons (Pvt.) Ltd. v. Collector of Sales Tax, Gujranwala and 2008 PTD 578 Messrs Hanif Strawboard Factory v. Additional Collector (Adjudication) Customs, Sales Tax and Central Excise Gujranwala, 2009 PTD 762 Messrs Tanveer Weaving Mills v. Deputy Collector Sales Tax and 4 others and 2009 PTD (Trib.) 1263 M/s. Syed Bhai Lighting Limited, Lahore v. Collector of Sales Tax and Federal Excise, Lahore and 2 others and 2009 PTD 1978 Leo Enterprises v. President of Pakistan and others, 2010 PTD (Trib) 1010 Innovative Impex, v. Collector of Customs, Sales Tax and Federal Excise (Appeal), 2011 PTD (Trib) 79 Fazal Ellahi v. Additional Collector of Customs, MCC of PaCCS, 2011 PTD (Trib) 987 Unique Wire Industries v. Additional Collector of Customs, MCC of PaCCS, 2011 PTD (Trib.)1146 Kaka Traders v. Additional Collector of Post Clearance Audit and 2012 PTD (Trib.) 1650 Pak Electron Ltd. v. Collector of Customs, Lahore and others.
(r)Notwithstanding, to what has been stated above, appellant add further that the officials of respondent No. 1 have ascertained the excess quantity in the contravention report while splitting different items of invoice/GD in many others for substantiating their malicious intention which stood proved from the chart reproduced here-in-below for the perusal of Appellate Tribunal and for the confirmation of the fact that there was no infact excess quantity in the consignment simply for substantiating their malicious act of detention, seizure and preparation of contravention report:
| Item#. | Declared Quantity | Ascertained Quantity |
| 06 | Assorted mobile pouches -2998 dozens | (a) mobile pouches | 2934 dozens |
| | | (b) mobile pouches | 80 dozens |
| | | (c) Tablet casing | 66 dozens |
| | | (d) Tablet Casing | 50 dozens |
| | | (e) IPod Casing | 27 dozens |
| | | (f) mobile pouches | 71 dozens |
| | | TOTAL | 3228 Dozens |
| | | Excess | 230 Dozens |
| | | ================= |
| 09 | Assorted mobile connector 645 Kgs With mini wire and cable | (a) T. Charger Connector | 364kgs |
| | | (b) Data/charging Cable | 685kgs |
| | | TOTAL | 1049 Kgs |
| | | Excess | 404 kgs |
| | | ===================== |
| 10 | Printed Packing Screen Protector 50 Kgs. | (a) M. Screen Protector | 25 kgs |
| | P.E.Packing for battery and chargers | (b) IPod Protector | 30kgs |
| | | TOTAL | 55 Kgs |
| | | Excess | 05 kgs |
| | | =================== |
| 11 | CC TV mini Camera Advance Technology 5142 pcs | (a) CCTV Camera | 4480 Pcs |
| | | (b) CCTV Camera | 360 Pcs |
| | | (c) CCTV Camera | 200Pcs |
| | | TOTAL | 5040Pcs |
| | | Short | 102 Pcs |
| | | ==================== |
| 14 | Packing material 216 kgs | (a) Packing material | 435 kgs |
| | | (b) Packing material | 30kgs |
| | | TOTAL | 465 kgs |
| | | Excess | 249 kgs |
| | | ==================== |
| | | | | |
(s)That as regard the mis-declaration of PCT heading i.e. also without any substance as the assessing officer completing the assessment after going through the examination report and confirmation of the Pakistan Customs Tariff and utilizing his wisdom, his determination of PCT heading cannot be disputed upon by the officials of respondent No. 1 as they are not vested with the power of determination of PCT heading and this has been held countless time by the Superior Judicial Fora right from the case of Monno Industries Ltd. v. GOP corresponding to C.P. No. 199/1984 to Messrs Sadaat Khan v. FOP and others reported at 2014 PTD 1615. In these principle has been laid down that mentioning of erroneous PCT heading in the Goods Declaration or transmitting the same least fall under the ambit of mis-declaration. Reference is made to the reported judgment 2003 PTD (Trib.) 293 of the Customs Excise and Sales Tax Appellate Tribunal, Karachi Bench held in similar nature of case judgment:
"We believe that clearing agents while filing a bill of entry is required to fill the PCT column for the easement and assistance of the Assessing Officer. The perusal of section 80 of the Customs Act, 1969, indicates that during the process of assessment it is the duty of the Assessing Officer not only to examine the goods but also to tally the description, its weight and value of the goods thereof, and to consider any extra information available on the bill of entry in order to arrive at a correct assessment of duty and taxes. Simply assuming that a wrong PCT heading amount to misdeclaration would not be a correct approach to interpret section 32, where emphasis is on the word "material particular" which means something going to root cause of the basic declaration. To our mind, a mis-declaration in material particulars terms has not been made by the appellant."
In Customs Appeal No.K-333/06 Umme Kulsoom Trading Co. v.Collector of Customs Appeals and others. The Division Bench of Customs Tribunal did observe in the following terms:
"It is gathered from the record that only charge against the appellant is that he misquoted PCT heading for which he is being charged for mis-declaration within the frame work of Customs Law. It is now well-settled law that to constitute a criminal act an element of mens rea and intentional knowledge is necessary and the offending act must be one in which material particulars have been wrongly given or provided to the Customs authorities. It is evident from the record that in the goods declaration all the entries relating to description, quantity and nature of goods were found true and no charge has been framed against the appellant on that count. In such circumstances, alleging a charge of misdeclaration particularly on the basis of wrong classification heading does not constitute an offence within the framework of section 32 of the Customs Act, 1969 as there is no material falsity in the statement made by the appellant. In these circumstances, we would like to allow the appeal and set aside the impugned order as no case has been made out against him."
That the similar issue of classification was also decided vide Customs Appeal No. K-432 and others, which went up to the Apex Court and the order of the Tribunal passed were maintained in which it was held:--
"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 ab-initio void and illegal."
The Hon'ble High Court of in reported judgment at 2002 MLD 1980 State Cement Corporation v. GOP held that:--
"if the wisdom of Customs Authorities for invoking Section 32 for not giving correct declaration is acceded to and that no responsibility lays upon the hierarchy of the Customs officials to levy and assess the duty according to law. The provisions of Section 80(1) of the Customs Act, 1969 in such a state of mind would become redundant."
In the same judgment the observation of Honourable (Late) Justice Sabihuddin Ahmed is worth reading as it ridicule the irrational approach of the Customs Authorities, in the following words
"We are rather amazed at the line of reasoning put forward to the effect that while an assessee is required to interpret the law and relevant notification correctly and could be held guilty of a penal offence for not doing so in terms of Section 32(1) of the Customs Act, no responsibility of any kind would devolve on the Customs officials, indicate that the entire exercise was mala fide"
The Hon'ble High Court of Sindh in the case of Messrs Sadaat Khan v. FOP and others reported at 2014 PTD 1615.
"It is settle proposition of law that an interpretation of a notification as well as the classification of the goods does not fall within the definition of mis-declaration."
(t)That no charge of mis-declaration of value can be leveled on any importer appellant on the basis of valuation ruling issued by the Director, Directorate General of Valuation under section 25A of the Customs Act, 1969, i.e. only for the purpose of assessment and neither on the basis of data maintained under Rule 110 of the period expressed in Rule 107(a) of Customs Rules, 2001. If that would had been the case, not a single consignment would had been cleared by any Collectorate because in every case the value is enhanced on the basis of Valuation Ruling or data without the charges of mis-declaration. Therefore, the charge of mis-declaration of value is without any substance and nullity to the provision of Act and existing practice and as such hold no ground.
(u)That even otherwise no charge of value mis-declaration can be leveled unless direct evidence of import is available which has to be supplied in support of allegation as per direction contained in para 78 of CGO 12/2002 dated 15.06.2002. Thereafter in such like situation the difference should be more than 30% between declared and the evidence as directed in sub-para (3) of para 101 of CGO 12/2002 and Serial No. (d) of Notification No. SRO 499(I)/2009 dated 15.06.2009. In the instant case of our client the allegation of value mis-declaration is on the basis of either Valuation Ruling or data or ascertaining of value unilaterally/arbitrarily, which fall within the ambit of prohibited method expressed in Rule 110 of Customs Rules, 2001.
(v)That as discussed above, it is confirmed without any shadow of doubt that section 32 can only be applied on the basis of documents delivered, furnished by the importer or the statement given by him before the customs authorities. The data maintained by the customs under Rule 110 of the period expressed in Rule 107(a) of the Customs Rules, 2001 or the Valuation Ruling issued by Director of Directorate General of Valuation under Section 25-A of the Customs Act, 1969 cannot be considered as a documents furnished by an importer or reply in answer to the queries raised by the Customs Authorities to the importer and this stood validated from the prescribed form of the goods declaration containing no column for declaring the applicable Valuation Ruling on the consignment under clearance. Therefore, no charge of mis-declaration can be leveled for any reason i.e. for assessment or adjudication purpose, hence invoking of section 32 by the respondent on the appellant and holding such charges as valid for imposition of fine and penalty is nothing more than an act of mala fide, high handedness and extortion, such act has never been appreciated by the Superior Judicial Fora being in violation of the statute and the dictum/principle laid down in plethora of reported judgments.
(w)That the stance of appellant stood endorsed by the reported judgment 2014 PTD (Trib.) 1190 M/s. Shoaib Tayyab International v. Additional Collector of Customs, Karachi, which has been implemented and attained finality. The Hon'ble Member of the Bench held in clear terms that"
"The insertion of para 78 in CGO 12/2002 dated 15.06.2002 has been made on the basis of numerous reported judgments of the Superior Judicial Fora that for leveling allegation of mis-declaration of value, it is upon the department leveling the allegation to substantiate through an incriminating undisput-able direct evidence in the shape of evidential invoice of the said product of the period expressed in Rules 107(a) of Customs Rules, 2001, re-validated by the Board through sub para (3) of para. 101 and clause (d) of notification No. SRO 499(I)/2009 dated 15.06.2009. No evidence has been produced by the respondent as directed in para 78 at any stage i.e. preparation of contravention report, during the adjudication proceeding or before the Tribunal, irrespective of the fact that for disputing the said value of the imported goods, it was mandated upon the official of MCC of PaCCS to transmit view messages under Sub-Rule (1) of Rule 109 of Chapter IX and 437 of Sub-Chapter (III) of Chapter XXI of Custom Rules, 2001 to the appellant for transmitting/scanning additional documents. On the contrary no such exercise was undertaken either of the officials, as evident from the fact that no copies of the transmitted view messages have been placed on record by them with the respondent and the Tribunal despite, shifting burden of proof. No decision was also communicated with grounds as enunciated in sub-rule (3) of Rule 109 confirming that no evidence was available with the official of MCC of PaCCS for leveling the charge of allegation. The department has miserably failed to discharge the onus of establishing that the price declared by the Appellants of the imported goods are not fair and been mis-declared within the meaning of Section 32 of the Customs Act, 1969 through concrete and positive evidence, rendering the allegation of value mis-declaration on the basis of arbitrary/unilateral determined value as positive evidence rather the said value is without any concrete and positive evidence and this cannot warrant a finding of falsity to the declaration in "material particular". Hence the charges of mis-declaration of value are declared to be unsubstantiated and as such of no legal effect, rendering the contravention report, show cause notice and order-in-original as ab initio void. The same view has been taken by the Hon'ble Supreme Court of Pakistan and High Courts and Tribunal in judgments reported Customs Appeal No.K-249/ 2000/13372, Customs Appeal No. K-35/2002, Customs Appeal No. K-1670/2001, 2005 PTD (Trib) 617, 1668/LB and 1669/LB of 2002, Customs Appeal No. K-1281/05, 1986 MLD 790 Karachi PLD 1996 Karachi 68, 2006 PTD 909, 2002 PTD 2957, 2007 SCMR 1357 = 2007 PTD 1858, 1992 SCMR 1083, 2008 PTD 1250 and 2008 SCMR 438".
"The Tribunal also observed that the field formations level no charges of mis-declaration on the importer when the officials complete the assessment of the consignment on the basis of Valuation Ruling issued by Directorate General of Valuation under section 25A of the Customs Act, 1969. This is so because of the fact that value of the goods is to be assessed as per Valuation Ruling in field and in vogue irrespective of the value declared. The Valuation Ruling can only be over ruled where there is an evidence of higher value undisputed as per legal mechanism provided there-under. By virtue of the fact that proving of charge of mis-declaration of value needs high standard of proof, a direct evidence not the valuation ruling, or the value of identical/similar goods available in the data. Additionally, in case of leveling charges of mis-declaration of value on each importer based on valuation ruling or identical/similar assessed value (instead of import) in the data, not a single consignment would had been cleared by any field formation in Pakistan and their job would had been only to frame contravention reports, adjudicating authorities would had been piled with the cases and the port/dry port would had been chocked to their capacity due to non timely clearance of consignments. The Tribunal failed to digest the wisdom of respondent shown in the order which on one hand ordered completion of the assessment of the appellant consignment @ US$. 1.62/kg on the basis of Valuation ruling No. 481/2012 dated 24.10.2012, whereas, on the other hand holding the appellant guilty of mis-declaration of value and imposition of a fine on the appellant @ 35% while completely ignoring the fact that the good declaration contain no column for giving declaration to the fact of valuation ruling, provision of Section 32 of the Customs Act, 1969, direction of the Board contained in para 78 and Sub-para (3) of para 101 of CGO 12/2002 dated 15.06.2002 and clause (d) of Notification No. S.R.O.466(I)/2009 dated 15.06.2009. Thus rendering, the charge of mis-declaration of value without any substance and nullity to the provision of Act and Rules and regulation framed there-under and existing practice in vogue within the field formations."
"In view of the forgoing discussion we hold that the impugned order as well as proceedings held in hierarchy of the respondent department are patently infested with legal and factual impropriety and therefore are to be null and void. The appeal is allowed as no order to cost."
(x)That the entire case in short has been built upon by the official of respondent No. 1 is that that the item No. 12 of the invoice namely DVR is infact a DVD Recorder, which has to be assessed @ US$. 60.00 under Valuation Ruling No. 363 dated 06.08.2011. Regretted to state that the opinion of official of respondent No. 1 and respondent No. 3 is erroneous and based on inapt interpretation of the Valuation Ruling and the definition of DVDR and DVR, the valuation ruling in question cannot be applied beyond 90 days as held by the Hon'ble High Court of Sindh in reported judgment PTCL 2014 CL 537 Messrs Sadia Traders, Karachi and 06 others v. FOP and 2014 PTD 176 Goodwill Traders, Karachi v. FOP. Resultant it is not applicable beyond 04.11.2011, hence putting reliance on a stale documents is devoid from legality and as such of no legal effect, hence void ab-initio.
(y)Reverting back to the opinion that DVDR and DVR are one and the same thing this also prove lack of knowledge and in-efficiency of the respondents Nos. 1 and 3 because they are comparing an apple with an eye. DVDR and DVR are two separate and distinguishable equipment and entirely different from each other and as such valuation ruling No. 363 dated 06.08.2011 despite being stale is not applicable on the imported DVR of the appellant and to prove his stance definition of both obtained from Wikipedia Encyclopedia are enumerate here-in below
(i)DVD Recorder:
DVD Recorder is an optical disc recorder and uses optical disc recording technologies to digitally record analog or digital signal on to blank writeable DVD media. Such devices are available as either installable derive for computer or as standalone component for use in television studio or home theatre system
(ii)Digital Video Recorder (DVR)
A digital video recorder sometime referred to by the merchandising terms personal video recorder (PVR), is a consumer electronic device or application software that record video in a digital format to a disc drive, USB Flash derive, SD Memory Card, SSD or other local or network mass storage devise the term include set-top boxes (STB) with direct to disc recording facility, portable media player (PMP) with recording, recorders (PMR) as camcorders that record on to Secure digital memory cards and software for personal computers which enable video capture and playback to and from a hard disk drive. A television set with built-in digital video recording facilities.
(z)Lastly, it is of vital importance to add further that in case all the allegations of the officials of respondent No. 1 are considered valid for a while of course not conceding, only for the sake of arguments even then the assessment made by the official of respondent No. 2 is correct and on the basis of applicable Valuation Ruling and data of identical and similar goods as defined in Section 25(5) and (6) of the Customs Act, 1969 maintained as ordered in rule 110 of the period given in Rule 107 (a) ibid, clause (d) of Section 25(5) says that the lowest available value has to be applied while completing assessment. Whereas in the case of appellant the reassessment made by the official of respondents Nos. 1 and 2, despite having no power to do so under section 80(3) is in derogation of clause (d) of section 25(5) and (6) of the Customs Act, 1969 and Rules 117 and 118 of Customs Rules, 2001. Even in that case the appellant had paid Rs. 21,435.59 in excess as against leviable on the basis of declaration and re-examination by the officials of respondent No. 1 and to substantiate his stance the appellant has prepared a statement to the said effect, which is annexed with the copies of data and the Ruling applicable on the imported goods of the appellant, same are annexed for the perusal of Hon'ble Tribunal.
(aa)In the light of above grounds and the exhibits it is proved with clarity that the officials of respondent No. 1 are of the view that the appellant assessment orders should be made according to their whims and wishes while ignoring the fact that the similar goods imported by other importers were/are assessed in the past and even now not on the basis of Valuation Ruling instead on data without any hitch or hindrance. The appellant despite standing on the same pedestal, appellant is been given a differential treatment, which is tantamount to discrimination barred under Article 25 of Constitution of Islamic Republic of Pakistan and the law laid down by the Superior Judicial Fora and this has been held in reported judgments 1990 SCMR 1059, 2002 SCMR 312, 2002 PTD 976, 2007 PTD 361 and 2009 PTD 1507 i.e. 2005 SCMR 492 and 2010 SCMR 431 "A facility allowed to someone and denied to other is discrimination" as held by Hon'ble Apex Court that:
"doctrine of equality, as contained in Art. 25 of the constitution, enshrine golden Rules of Islam and states that every citizen, no matter how high so ever, must be accorded equal treatment with similarly situated persons---State may classify persons and objects for the purpose of legislation and make laws applicable only to persons or objects within a class---In fact all legislations involve some kind of classification whereby some people acquire rights or suffer disabilities whereas others do not---What however, is prohibited under principle of reasonable classification, is legislation favouring some within a class and unduly burdening others---Basic rule for exercise of such discretion and reasonable classification is that all persons placed in similar circumstances must be treated alike and reasonable classification must be based on reasonable grounds in given set of circumstances but the same in any case must not offend spirit of Art. 25 of the Constitution."
(bb)The respondents Nos. 1 and 3 are of the opinion that the official of respondent No. 1 are empowered to detain, seize and subsequently prepare contravention report of the goods imported while putting reliance on reported judgment 2008 PTD 1365. The opinion formed while ignoring Notification No. 486(I)/2007 dated 09.06.2007 and essence of the relied upon judgment is misplaced as that speaks about the powers of the Directorate of Intelligence and Investigation within the premises of Port/Terminal prior to out of charge QUOTE "Law provide ample and wide powers to Directorate of Intelligence and Investigation to stop the clearance of any consignments even if the same was out of charge---Directorate of Intelligence and Investigation have full powers to investigate after the process of Appraisement by the Customs Collectorate if it has reasons to believe that the goods are mis-declared" UNQUOTE. This judgment is not applicable in the case of appellant as it is distinguishable by virtue of the fact that his consignment was not detained in the premises of port/terminal instead outside the premises of both, which cannot be detained or seized as evident from the deliberation made in para supra in regard to power/jurisdiction of the official of respondent No. 1.
(cc)That as evident from the above submission, the respondent No. 3 has committed a great injustice while relying upon the absurd opinion of the officials of respondent No. 1 and issued show cause notice as drafted and forwarded by them instead of going through the fact of the case and the applicable provision of the Act/Ordinance himself independently and fairly as mandated upon him as per law laid down by the Superior Judicial Fora and the FBR in direction contained in letter C.No 730-M(L)/ 2002 dated 15.06.2002. Such type of attitude/lapse on the part of adjudicating authority has never been appreciated as stood validated from the reported judgment 2004 PTD 369 issued by the High Court of Sindh in the case of Messrs Zeb Traders v. Federation of Pakistan. Their lordship of the High Court held that:
"The proceeding before Adjudicating Officer, under the Customs Act, 1969 are in the nature of quasi judicial proceedings and issuance of notice under section 180 of the Customs Act, is very important documents. The decision to issue show cause notice is to be taken by the Collector, Adjudication, by application of independent mind and not merely signing the draft show cause notice submitted by the investigation agency separate from the Adjudication Department and each category of officers are required to perform their respective functions/duties under the law. The practice to submit draft show cause notice by the Director General of Intelligence and Investigation to the Collector Adjudication is depreciated."
(dd)The order passed by the respondents No. 3 shows that it has not been passed with the application of mind and provision of the Act. Instead is a non speaking order and did not conforms to the mandated requirement of S.24-A of the General Clauses Act, 1897 and this stood validated from the fact that no rebuttal on the grounds of reply to the show cause notice dated 23.08.2014 and additional arguments dated 06.09.2014 has been given as evident from para 4 of the order, this lapse proves that the order has been passed on personal biased opinion contrary to law and that too also is not containing substantial reasons and did not show it was passed on objective consideration. Such type of orders are deems to be always treated as illegal, void arbitrary and a result of misuse of authority vested in public functionary. No room was available for such illegal, void and arbitrarily order in any system of law. If any authority Court or Tribunal gave a finding of fact which was not based on material available on record was illegal arbitrarily without discussing and considering the material available on record it became perverse and a perverse finding of fact which is violative of the established principle of appreciation of evidence on record was not sustainable in law. The principle that every judicial or quasi-judicial finding should be based on reasons containing the justification for the finding in the order itself is an established principle of dispensation of justice. The Adjudication/Appellate orders are being violation of basic principle of the goods governance and mandatory requirement of Section 24A of the General Clauses Act, is not only illegal and void but also not sustainable under law. The said position is also fortified by the judgments of Superior Courts reported as 2005 YLR 1019, 2007 PTD 2500, 2004 PTD 1973, 2005 YLR 1719, 2003 PTD 777, 2003 PTD (Trib) 2369, 2002 MLD 357, 1983 CLC 2882, 2005 PTD 2519, 2005 PTD 1189, 2003 PTD 2369 and PLD 1995 SC (Pak) 272, PLD 1970 SC 158, PLD 1970 SC 173, 1984 SCMR 1014 and 2012 PTD (Trib.) 619.
(ee)That it is settled proposition of law that a thing should be done as it is required to be done or not at all as held by Superior Court of Pakistan in umpteenth reported judgments.The Hon'ble High Court of Sindh held in 2002 PTD 2457 that "the thing should be done as they are required to be done, or not at all". Whereas, the Apex Court held in judgment PLD 1971 Supreme Court 61 "neglect of plane requirement of an absolute statutory enactment prescribing how something is to be done, would invalidate thing being done in some other manner". In PLD 1973 Supreme Court 236 "it is now well established that where an inferior Tribunal or Court has acted wholly without jurisdiction or taken any action "beyond the sphere allotted to the Tribunal by law and therefore outside the area within which to law recognizes a privilege to err" then such action amounts to a "usurpation of power warranted by law" and as such an act is a nullity that is to say the result of a purported exercise of authority which has no legal effect whatsoever" in such a case, it is well established that a Superior Court is not bound to give effect to it." The said ratio was maintained, in the case of E.A Avans reported as PLD 1964 SC 536 "where it has been unambiguously and categorically held that if the doing of a thing is made lawful in a manner than doing of that thing in conflict with the manner prescribed will be unlawful." The Hon'ble Apex Court in 2001 SCMR 838 and 2003 SCMR 1505 held that "while considering the impact of violation or non-observance of the method prescribed by law for doing an act in a particular manner or mode, such provision of law is to be followed in letter and spirit and achieving or attaining the objective of performing or doing of a thing in a manner other than provided by law would not be permitted. The same observation has been made by the Hon'ble Supreme Court of Pakistan in the Civil Petition filed by Director General of Intelligence and Investigation and others v. Messrs Al-Faiz Industries (Pvt.) Ltd. and others reported as 2006 SCMR 129 "if the law had prescribed method for doing of a thing in a particular manner, such provision of law is to be followed in letter and spirit and achieving or attaining the objective of performing or doing of a thing in a manner other than provided by law would not be permitted." The super structure built on such foundation no matter how strong it is has to fall. Refer to PLD 1996 Karachi 68, which laid down that "where the initial order or notice was void all subsequent proceedings, orders or super structure built on it were also void. In reported judgment 2006 PTD 978 it is held that "the entire proceeding initiated by the Adjudicating authority and further super structure thereon including the order passed by the learned Tribunal are without jurisdiction void and in-operative." The Apex Court in PLD 1971 Supreme Court 184 held that "order of a Tribunal found to be without jurisdiction---all successive orders based upon it illegal and liable to be quashed". In the light of law laid down, the contravention reports prepared by the respondent No.1 and show cause notice/order-in-original issued/passed by respondent No. 2 are ab-initio, illegal and void and needs to be struck down as of no legal effect.
8.Heard the arguments of the appellant, respondent and gone through the complete record of the case. I shall first discuss the issue of jurisdiction of Directorate General of Intelligence and Investigation - FBR. S.R.O. 486(I)/2007 dated 09.06.2007 clearly spells out the powers under Customs Act, 1969, entrusted to different officers of the Directorate General of Intelligence and Investigation - FBR. One must know as to whether the Directorate General of Intelligence and Investigation - FBR has been entrusted with powers to take cognizance of matter regarding valuation and mis-declaration? as the Collector (Adjudication) while issuing the show cause notice has mentioned that the appellant has committed offence of mis-declaration and evasion of taxes under Section 32(1) and (2) read with Sections 25A, 79 and 80 of the Customs Act, 1969, read with Sections 3, 6, 33, 34 and 36 of the Sales Tax Act, 1990 and Section 148(1) of the Income Tax Ordinance, 2001. Even a plain reading of the SRO shows that powers under none of sections incorporated in the show cause notice have been entrusted to the Directorate General of Intelligence and Investigation - FBR through the Customs Act or through any notification. Regarding the issues pertaining to Sales Tax and Withholding Tax, the respondent No. 3 in the Order-in-Original No.199/2014-15 dated 07.11.2014 while adjudicating the case vide Show Cause Notice No. ADJ-I/ADC/DIT/18/2013-14 dated (sic).05.2014 has invoked numerous sections of Customs Act, 1969, Sales Tax Act, 1990 and Income Tax Ordinance, 2001 and has invoked clause (14) of Section 156(1) of the Customs Act, 1969 while ordering the confiscation of impugned goods. I am convinced that at first place the Directorate General of Intelligence and Investigation - FBR has exercised powers under different sections of Customs Act, 1969 for which they are not empowered. As regards the provisions of Sales Tax Act, 1990 and Income Tax Ordinance, 2001. The Honorable Peshawar High Court in the case title Messrs Nadeem Electronics v. Collector of Customs etc. has observed as under:--
"Qazi Muhammad Ghazanfar learned counsel for the department claimed that Section 32 of the Customs Act was not applicable and that the department had made a recovery within the prescribed period provided by Section 36 of the Sales Tax Act, 1990, itself. This aspect of the case was discussed at length and was seriously attended to. After having gone though Sections 6 and 36 of the Sales Tax Act, 1990 and Section 32 of the Customs Act, 1969 we are of the considered view that Section 6 of the Sales Tax Act provides only for the time and manner of recovery, in the normal course of conduct. Through such Section the time and manner of recovery has been made similar to that of the recovery of Customs Duty. There is a detailed procedure of the recovery of Customs Duty which also required to be recovered within a specified period. Instead of repeating that lengthy procedure and office routines, it was simply provided in Section 6 of the Sales Tax Act that the time and manner shall be similar to that of recovery made under the Customs Act.
The law was not unmindful of the extraordinary circumstances under which the customs duty or the sales tax might not be levied at all, might be short levied, erroneously refunded by reason of any untrue statement, error, inadvertence, misconstruction, misrepresentation, collusion or a deliberate act. If such circumstances aforesaid arise in connection with the recovery of customs duty, the same shall be recovered according to the procedure laid down in Section 32 of the Customs Act, 1969 but if such circumstances or certain specific circumstances have resulted into the non levying, short-levying or the erroneous refunding of the sales tax, the recovery shall be resorted to in accordance with the procedure laid down in Section 36 of the Sales Tax Act, 1990. A perusal of Section 32 of the Customs Act and Section 36 of the Sales Tax would clearly indicate that there are few circumstances which are different in the two sections.
Thus, we are of the view that the recovery of sales tax not being normal but under abnormal and specific circumstances given in section 36 of the Act shall be recovered under that section alone and not under Section 6 of the Sales Tax Act, 1990 or under Section 32 of the Customs Act, 1969. If the time and manner of recoveries under Section 6 of the Sales Tax Act could have been deemed to have been fully covered by Section 32 of the Customs Act, 1969, there was no need at all to have enacted Section 36 of the Sales Tax Act. If the argument of the petitioner accepted to be correct, the enactment of Section 36 of the Sales Tax Act would appear to be a complete superfluity. Rather, if we place reliance on Section 32 of the Customs Act, 1969, the petitioner would be lodged in trouble for making wrong statement in the letter of credit knowing or having reasons to believe that such statement was false.
Consequently we are of the view that the special circumstances of non-levying, shot levying or erogenous refunding mentioned in Section 32 of the Customs Act are different from circumstances mentioned in Section 36 of the Sales Tax Act. That if such specific circumstances arise concerning the recovery of Customs Duty, such Custom Duties shall be recovered under Section 32 of the Customs Act, 1969. But if such circumstances arise regarding the recovery of sales tax, the same shall be recovered under Section 36 of the Sales Tax Act, 1990."
9.The Honorable Karachi High Court vide 2004 PTD 901 in the case title Hashwani Hotel Ltd. v. Government of Pakistan has also observed as under:--
"The position of law prevailing for the purpose of sales tax shall be discussed by us presently. However, it is not the end of matter, for the reason that the question for consideration before us, pertains to the sales tax and not to the customs duty. Although it is provided in Section 6 of the Sales Tax Act, that the tax in respect of goods imported into Pakistan shall be charged and paid in the same manner and at the same time as if it were a duty of customs payable under the Customs Act, 1969, but this provision shall not change the nature of tax and therefore, except the provision pertaining to the collection of sales tax, no other provision in the Customs Act, is attracted and particularly the provisions pertaining to the assessment or exemption of sales tax shall still be dealt with under the provision of the Sales Tax Act."
10.From conscientious study of section 6 of the Sales Tax Act, 1990 and 148 of the Income Tax Ordinance, 2001 and Section 3, of the Federal Excise Act, 2005, it is clear that the customs is empowered to collect the Taxes and Federal Excise Duty on import of the goods like duty of custom on the value determined under Section 25 of the Customs Act, 1969. The said sections does not empower the customs authorities to initiate adjudication/recovery proceeding for the short collected/paid Sales Tax, Income Tax and Federal Excise Duty, either due to collusion or connivance or inadvertence, error or misconstruction. For proceeding for this type of recovery a show cause notice has to be issued under Section 11 of the Sales Tax Act, 1990, Section 162(1) of the Income Tax Ordinance, 2001, the authority to issue show cause notice under Section 11 of the Sales Tax Act, 1990 and Section 162(1) of the Income Tax Ordinance, 2001, are Officers of Inland Revenue and not the Customs Officers. In this case the Additional Collector of Customs while adjudicating the case has invoked clause (14) of Section 156(1) of the Customs Act, 1969, which is patently unlawful for imposing penalty in Income Tax and Sales Tax matters as there are exclusive penal provisions in Sales Tax Act, 1990 and Income Tax Ordinance, 2001 for which Customs Authorities are not empowered. On the strength of above deliberations, my considered opinion is that customs authorities do have the authority to collect Sales Tax, Income Tax and Federal Excise Duty at import stage, but not empowered to adjudicate the cases of short payment/recovery due to any reason as expressed in the respective Sections of the Acts/Ordinance. In the instant case at the very first place the act of Directorate General Intelligence and Investigation - FBR to take cognizance is devoid of lawful authority, not tenable in the eyes of the law, instead ab-initio void and coram non judice as the Directorate General is not an authority of Customs for sections invoked by them in the instant case. Same holds true for the adjudicating officer who has adjudicated the impugned goods by taking cognizance under various sections of Income Tax Ordinance, 2001 and Sales Tax Act, 1990 for which he is not empowered. As held by the Hon'ble High Court of Sindh in reported judgment as 2010 PTD 465 Collector of Customs, Model Customs Collectorate v. Messrs Kapron Overseas Suppliers Co., (Pvt.) Ltd., that assuming power despite non render the proceeding as ab-initio void. The Hon'ble High Court dismissed the reference while holding that "any transgression of such jurisdiction for not being a technical defect would render entire exercise of authority to be ab-initio, void and illegal." "The exercise of jurisdiction by an authority is a mandatory requirement and its non fulfillment would entale the entire proceeding to be "coram non judice." In PLD 2004 Supreme Court 600 All Pakistan Newspaper Society and others v. FOP and others the Hon'ble Chief Justice of Pakistan while presiding as Judge held in clear term that "determination of jurisdiction by court seized with the matter is one of the important elements in administration of justice as if justice has been provided basing upon coram non judice order then same would have no legal sanction behind it." Whereas, the Hon'ble Supreme Court of Pakistan in yet another landmark judgment reported at 2006 SCMR 129 titled as DG I&I and others v. Al-Faiz Industries (Pvt.) Ltd., and others held that:--
"If the law have prescribed method for doing a thing in a particular manner such provision of law is to be followed in letter and spirit and achieving or retaining the objective of performing or doing of a thing in a manner other than provided by law would not be permitted---each and every words appearing in a section is to be given effect and no other word is to be rendered as redundant or surplus - when the legislature required the doing of a thing in a particular manner then it is to be done in that manner and all other manner or modes of doing or performing that things are barred - if the doing of a thing is made lawful in a particular manner the doing of that thing in conflict with the manner prescribed will be unlawful as per maxim "Expressum facit cessare tacitum."
11.In view of the above discussion and driving strength from the above referred judgments of Honorable Peshawar High Court and the Honorable Sindh High Court, my considered opinion is that in the instant case besides customs duty issue involves of short levy of Sales Tax and Withholding tax also, therefore, in the presence of specific provisions of Sales Tax Act, 1990 and Income Tax Ordinance, 2001 the assumption of the jurisdiction by customs authorities under Sections 32(1) and 32(2) of the Customs Act, 1969 for Sales Tax and Withholding Tax is unlawful rather ab-initio void.
12.In the first place the Directorate General of Intelligence and Investigation - FBR has no powers under Sections 32(1) and (2), 25A, 79 and 80 of the Customs Act, 1969, read with Sections 3, 6, 33, 34 and 36 of the Sales Tax Act, 1990, and Section 148(1) of the Income Tax Ordinance, 2001 as such their action is also unlawful and ab-initio void.
13.The Directorate General of Intelligence and Investigation - FBR does not have any legal authority to proceed against anybody in case of violation of Sections 32(1) and (2), 25A, 79 and 80 of the Customs Act, 1969, read with Sections 3, 6, 33, 34 and 36 of the Sales Tax Act, 1990, and Section 148(1) of the Income Tax Ordinance, 2001, as such their action in the instant case also become unlawful and ab-initio void. It is astonishing to observe that the learned Collector (Adjudication) without applying himself has ordered the confiscation of impugned goods under clause (14) of Section 156(1) of the Customs Act, 1969. Although there are exclusive punitive provisions in the Sales Tax Act, 1990 and Income Tax Ordinance, 2001 but for which the customs authorities are again have not been empowered. At best the Directorate General of Intelligence and Investigation - FBR could have informed the Collector having jurisdiction for taking cognizance and at the same time informed the concerned authorities of Inland Revenue Service for taking cognizance of matters pertaining to Withholding Tax and Sales Tax which they never did.
14.In view of the above observations, discussions I set aside the Show Cause Notice No.ADJ-I/ADC/DIT/18/2013-14 dated (sic).05.2014 and the Order-in-Original No.199/2014-15 dated 07.11.2014. The appeal is accepted with no order as to cost. The respondent No. 1 is at liberty to take a appropriate action permissible under the law.
15.Order passed and announced accordingly.
RR/97/Tax(Trib.)Appeal accepted.