AJMAIR TRADERS VS COLLECTOR OF CUSTOMS (EXPORTS), 2017 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 1450 (2017)

Customs Act (IV of 1969)---

----Ss. 14-A, 16, 19, 32, 32-A, 131, 179, 180, 194-A & 198---Customs Rules, 2001, Rr.444, 445, 447 & 452---S.R.O. No.499(I)/2009, dated 13-6-2009---S.R.O. No. 886(I)/2012, dated 18-7-2012---Export of goods---Selection of Goods Declaration for examination---Mis-declaration---Confiscation of goods---Redemption on payment of fine and taxes---Issuance of show-cause notice exporter prepared invoice/packing list and dispatched those to the clearing agent for transmitting Goods Declaration for export in terms of S.131 of the Customs Act, 1969 and clearing agent did accordingly---Said Goods Declaration was selected for examination---Concerned Official instead of conducting the examination on the basis of correct invoice and packing list, opted to consider the invoice/packing list, which had no nexus with the goods; which led him to form opinion that the goods stuffed in the containers were contrary to the declaration and that the exporter had committed act of misdeclaration---Confiscation of goods was ordered subject to redemption on payment of 20% and penalty---Show-cause notice issued by the Authority was unique in nature, as same was transmitted to importer company abroad---Said show-cause notice though contained different events of the case and opinion of Collector of Customs (Exports) and certain provisions of the Act/Rules, but it did not contain any direction to submit reply, which defect was not curable---Proper/valid and legal show-cause notice was to contain comprehensive description of the events on the basis of which case had been made out against the exporter by making reference to the evidence collected in supportive evidence and the attracted provisions of the Act and Penal clauses---Show-cause notice was not a casual correspondence or a tool or a licence to commence a rowing inquiry into the affair based on assumption and speculation, but was a fundamental document that carried definitive legal and factual position of the department against the exporter---No valid show-cause notice in the present case had been served/transmitted, rendering the order so passed by Collector of Customs (Adjudication) as void ab initio, coram non judice and of no legal effect and jurisdiction---No loss of revenue was apparent, because the case pertained to export consignment on which no duty and taxes were leviable---Case, therefore, fell within sub-para (d) of para (iii) of S.R.O. No.886(I)/2012, dated 18-7-2012---Cases of such nature were ought to be adjudicated by the Executive Collectorate---By laying hands on the exclusive domain of Executive Collectorate, Collector of Customs (Adjudication) had encroached the jurisdiction, which act was transgression, which was not permitted under law rendering the entire proceedings without powers/jurisdiction, void ab initio and coram non judice---Where there was no revenue loss, case had to be adjudicated by the Principal Appraiser in terms of S.131 of the Customs Act, 1969---By laying hands on the present case, the Deputy Collector usurped the powers of Principal Appraiser of Executive Collectorate---Purported show-cause notice and order-in-original in the present case were without any powers/jurisdiction rendering the entire act right from show-cause notice as void ab initio and ab initio wrong and suffered from legal infirmity liable to be struck down as of no legal effect and nullity of law and non existent---Impugned show-cause notice was vacated impugned order passed thereon, was set aside---Collector of Customs (Exports), was directed to issue delay and detention certification under S.14-A(2) of the Customs Act, 1969 accordingly.

Case-law referred.

Nadeem Ahmed Mirza for Appellant.

Nasim Nisar for Respondents.

Date of hearing: 1st November, 2016.

JUDGMENT

MUHAMMAD NADEEM QURESHI, MEMBER (JUDICIAL-I).--Through this order, we intend to dispose off Appeal bearing No.K-958/ 2016 filed against Order-in-Original No. 578517 dated 26.09.2016 passed by Collector of Customs, Adjudication-II, Custom House, Karachi.

2.Brief facts of the case are that the appellant is a manufacturer of iron and steel pipes and operates a manufacturing warehouse No.25/LHR/MFG/2003 at Lahore, under which he imports (i) HR Coils (ii) C.R. Coil (iii) Galvanized Coil for manufacture of MS Pipes, Strips and same state goods for export. In the month of June 2016 he got an order from Messrs Mian Muhammad and Company, Madina Munawara, Saudi Arabia for export of 137585 kgs of hot rolled strips/coils, for which his officials prepared invoice/packing list No.AT/786/MB/366 dated 15.07.2016 and dispatched those to his clearing agent M/s. Trade Link International, Karachi for transmitting Goods Declaration for export in terms of Section 131 of the Customs Act, 1969 (here-in-after to be referred as Act) and Rule 444 of Chapter IV of Chapter XXI of Customs Rules, 2001 (here-in-after to be referred as Rules), with the MCC of Export- Karachi. The clearing agent on the strength of documents, transmitted GD which was numbered as KPEX-SB-3741-18072016 and message under Rule 447 of the Rules was received on his desktop for passing of the containers which was complied. Immediately, after passing in off the container, the official Incharge of Export of the appellant realized his mistake committed inadvertently in regards to the actual description of the goods stuffed in containers. Resultant, he prepared fresh invoice and packing list and forwarded to the clearing agent with the direction to upload these in the reservoir of the Goods Declaration for making part and parcel of the declaration. The Goods Declaration was selected for examination in terms of Section 198 and Rule 452(1) of the Act/Rule, the concerned official instead of conducting the examination on the basis of correct invoice and packing list opted to consider the invoice/packing list, which have no nexus with the goods. This led him to form the opinion that the goods stuffed in the containers are contrary to the declaration and has committed an act of misdeclaration and reported the said opinion to the Collector of Customs Exports (here-in-after referred as respondent No. 1), who directed to frame contravention report, which he did and the respondent No. 1 transmitted that to respondent No. 2, who forwarded to concerned adjudicating officer, who transmitted a communication dated 17.08.2016 in the capacity of Principal Appraiser, alleging that the appellant with mala fide intention attempted to export 114000 kgs of hot rolled coils in same state and 51020 kgs of hot rolled strips and as such is instrumental in causing loss to the exchequer to the tune of Rs.3,400,915.00 attracting the provision of Sections 16, 19, 32(1), 32(2), 32A and 131 of the Act and Rule 343 of Rules. The advocate of the appellant replied to the communication vide reply dated 24.08.2016, which failed to impress respondent No. 2 and he passed order dated 26.09.2016, through which he held the charges leveled in the communication as established and ordered outright confiscation of the goods, subject to redemption of those on payment of 20% fine of Rs. 1223887.00 in terms of clause (f) of S.R.O. 499(I)/2009 dated 13.06.2009 and penalty of Rs. 500,000.00 in addition of worked out loss of revenue. Paras. 22 to 24 are relevant and are reproduced:--

I have gone through the case record and written as well as verbal submission of the respondent and the department as well. The main allegation on the respondent is that he attempted to export the goods from his manufacturing bond which were no specified in his analysis certificate issued under Rule 351 of the Customs Rules, 2001 issued vide S.R.O. 450(I)/2001 dated 18.06.2001. The description of the goods being exported was also found misdeclared as exporter declared only "Hot Rolled Coils in Strips" whereas the goods being exported also contain 95 tons i.e. major portion of consignment as "Hot Rolled Steel Coils". The respondent in the written reply has attributed this misdeclaration of description to the ignorance of labour who could not recognize the difference between the two and loaded almost 2/3rd of the consignment with wrong goods this contention does not seems to hold grounds as in his written reply, the respondent had stated that when they failed to export finished goods to Afghanistan they obtained a purchase order of "HR Strips" from Sauid Arabia and goods were being exported to fulfill that order. It is quite un-acceptable that goods other than agreed were being exported and exporter relied on his ignorant labour to fulfill such large order and did not even try to counter check as to whether or not the right goods were being supplied to the buyer abroad. This is an afterthought and willful attempt with mala fide intention to cover up the misdeclaration of description. The other allegation on the exporter is that of attempting to export the goods not specified in his Analysis Certificate. As per the prosecution, the manufacturing bond issued to the respondent vide license No. 25/LHR/MFG/2003 dated 28.10.2004 granted by the MCC Lahore allows the manufacturer to export "M.S.Pipe & G.I. Pipe" only whereas he tried to export "Hot Rolled Strips in Coils and Hot rolled Steel Coils in terms of provisions of Chapter XV of Customs Rules ibid, the input goods for production of finished goods of the specification approved by the Collector are procured by the licensee without payment of duty and taxes. This exemption from duty and taxes is granted on the ground that the exempt goods so procured shall be used in the production of goods specified in the license, which were to be exported subsequently. The Customs Rules, 2001 do allow export of same state goods but not without permission by the regulatory Collectorate. The exporters plea that this misdeclaration and export of same state goods is just a procedural/technical violation is not tenable. Had there been any bona fide, the licensee must have get the permission of the concerned authority before export of goods. It was only after the attempt to export the same state goods under Customs Rules ibid. "Moreover, no permission from the regulatory Collectorate has been submitted to the adjudicating authority in respect of the subject goods. In the light of aforesaid facts, it stands proved beyond any doubt that the exporter not only mis-declares the description of goods but also attempted to export goods under his manufacturing non license which were not specified in the Analysis Certificate and could only be exported after proper approval from the Regulatory Collectorate which approval was not available at the time of Goods Declaration (GD) for export was filed. This approval is required under law for the export of same state goods under SRO 450(I)/2001 and its absence can not be treated as procedural or technical error. Therefore keeping in view the above discussion the charges mentioned in the show cause notice stand established, therefore the subject goods are confiscated in exercise of the powers rover conferred under sections 16, 19, 32(1), 32(2), 32A, 131 and 209 of the Customs Act, 1969, read with clause (f) of SRO 499(I)/2009 dated 13.06.2009. However, the exporter is given an option to redeem the subject goods on payment of fine equal to 20% of the value of Rs. 1223887./- (20% of the ascertained value of impugned goods Rs. 6119434/-) in terms of clause (f) of SRO 499(I)/2009 dated 13.06.2009 along with payment of duty and taxes which were exempted at the time of import of subject goods in terms of Rules 343 and 358 of SRO 450(I)/2001 dated 18.06.2001. A penalty of Rs. 5 lac (Rs. Five hundred thousand only) is also imposed on the exporter in terms of clauses 1, 9, 10A, 14, 14A, 58, of Section 156(1) of the Customs Act, 1969.

3.The appellant has challenged the order of the respondent No. 2 by way of the instant appeal the consultants/advocates argued on the strength of the grounds incorporated in the memo of appeal and which are inter alia taken on record:---

(i)That the show cause notice is in unique in nature, and this stood validated from the fact that it has been transmitted to M/s. Mian Muhammad & Company (who is an importer and to whom no show-cause notice can be issued under the provision of Customs Act, 1969). Whereas, no show cause notice has been issued in principle to the appellant as evident from the contents of the communication which although contains different events and opinion based on whims and wishes of the subordinate of respondent No. 1 and the provision of the Act/Rules for increasing the gravity. This at no where direct the appellant to submit reply to the formed opinion based on inapt interpretation of law. Resultant, it is infact not served for submission of reply, instead it is a document prepared by the officials of respondent No. 1 for themselves for record.

(ii)The transmitted communication in no manner can be considered as a show-cause notice, basic requirement of that is that it should comprehensively describe the case made out against the tax payer by making reference to the evidence collected in support of the same and with a narration of facts in the show-cause notice along with supportive evidence which determined the offence attracted. Show-cause notice is not a casual correspondence or a tool or a license to commence a rowing inquiry into the affair based on assumption and speculation but is a fundamental document that carries definitive legal and factual position of the department against the tax payer, legal enforceability and jurisdictional validity of a show-cause notice vested from its context, that was, the facts suppose to be tangible evidence referred to in the show-cause notice and not from the cosmetic show causing of statutory provision or from the use of statutory keywords in the show-cause notice. No valid show-cause notice in the instant case of the appellant has been served/transmitted. Rendering the order so passed by the respondent No. 2, as void and ab-initio, hence, coram non judice and of no legal effect and jurisdiction as held in reported judgment PTCL 2004 CL 2005, PLD 1961 SC 237, PLD 1964 SC 410, PLD 1964 SC 536, PLD 1965 Supreme Court 90, 1983 SCMR 1208, PLD 1987 Supreme Court 304, 1994 SCMR 2232, 2003 SCMR 1505, 2006 SCMR 129, 2006 SCMR 1023, 2013 PTD (Trib.) 353 and [(2015) 111 Tax 231(Trib.)]

(iii)The Government of Pakistan has not withdrawn the powers vested to Custom Officers of Executive Collectorate under section 179 of the Custom Act, 1969 through S.R.O. No. 886(I)/ 2012 dated 18.07.2012, (Exhibit "L") in the cases involving technical violation of import or export restrictions without any involvement of any evasion of duty and taxes as evident from Sub-Para (d) of Para 3. In the instant case there is no revenue loss stood proved from the charter of the communication that the goods were imported in manufacturing bond without payment of duty and taxes and were exported from there on export no duty or taxes are leviable. The entire case is based on error and omission or technical violation i.e. instead of exporting strips, it has been alleged that the appellant tried to export coil. Meaning thereby, that the case in question is based on technical violation of Chapter XV of Customs Rules, 2001, such case has to be adjudicated by the Executive Collectorate. While laying hand on the instant case the respondent No. 2 has transgressed the authority vested with the Officer of the Executive Collectorate, rendering the issuance of show-cause notice and Order-in-Original being in-flagrant violation of law and as such coram non judice, hence void and ab-initio as held in 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.

(iv)That the power to adjudicate the subject case rest with the Principal Appraiser, who while exercising his powers vested under S.R.O. 371(I)/2002 dated 15.06.2002 at the time of shipment in terms of clause (a) of Sub-Clause (iii) of section 131 of the Customs Act, 1969 has to take into consideration the conducted examination and where there is no loss of duty drawback, but an element of mis-declaration is apparent took the cognizance of the case himself and issue show-cause notice to the exporter, for the contravention for adjudication and this stood validated from the communication which state with clarity that it has been transmitted to the appellant by the Principal Appraiser. The fact of matter is that the show-cause notice has to be issued by the Principal Appraiser of the Executive Collectorate, not by the Collectorate of Adjudication-II. By issuing show-cause notice by the Principal Appraiser of Adjudication Collectorate (for the purpose of record the appellant state that no principal Appraiser is being posted to this date in the Adjudication Collectorate), render the communication said to be impugned show-cause notice without power/ jurisdiction and as such void and ab-initio and as such coram non judice and this has been held by the Superior Judicial Fora in the judgment referred in paras supra.

(v)That the impugned communication said to be show-cause notice in the case of the appellant has been issued by Mr. Basit Hussain, who is Deputy Collector of the Collectorate of Customs, Adjudication and this stood validated from the Serial No. 16 of Notification No. 2426-C-II/2015 dated 14.10.2015. The powers of adjudication are specific and has to be used by the authority being empowered and by none else. By issuing show cause notice by the Deputy Collector, he on one hand transgressed the powers of the Principal Appraiser of the Executive Collectorate and on the other hand of Collectorate of Adjudication. While exercising the powers of adjudication has to be used by the person to whom powers are vested i.e. Principal Appraiser, no superior authority is empowered to exercise the powers of his subordinate in the course of adjudication, as it is settled elementary principle of law that action of the authority is to be restricted to the specific sphere permitted by the statute. Rendering the show cause notice as well as the structure built thereupon in the shape of order-in-original without power/jurisdiction, hence null void and ab-initio and this have been held in countless reported judgments by the Superior Judicial Fora, refer to Lt. General (Retd) Shah Rafi Alam v. Lahore Race Club, 2004 CLD 373), Khalid Qureshi v. UBL 2001 SCMR 103), East West Steamship v. Queen Land Insurance PLD 1963 SC 663, Sahibzada Sharfuddin v. Town Committee, 1984 CLC 1517, Abida Rashid v. Secretary, Government of Sindh PLD 1995 Kar. 587, Assistant Director v. B.R. Herman Mohata Ltd. PLD 1992 SC 485, Central Insurance v. CBR 1993 SCMR 1232, 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 and Order-in-Custom Appeal NoH-510/ 2008 Dewan Farooque Motors Ltd. v. Collector of Customs (Appeal) and 2014 PTD 199 Collector of Customs, Lahore v. South East Trading.

(vi)That the order-in-original in the instant case has been passed by respondent No. 2, while exercising the powers of Deputy Collector in terms of section 5(2) of the Customs Act, 1969 as observed by him in para 19 of the order. The said observation/interpretation by the respondent No. 2 is absurd/inapt. Under the said subsection powers are vested with the Board, which can through an order can direct the Director General and Collector and any other officer of Customs to exercise within any specified area any of the powers of the Director General, Director or Collector or any other officer of the Customs under this Act. Meaning thereby the Board through an order can direct the respondent No. 2 to exercise the powers of any of the Collector or Director in addition to his present designation not of any subordinates. In the absence of any order of the Board the respondent No. 2 was not empowered to assume the powers of Deputy Collector himself. Notwithstanding, this section relates to administrative job not adjudication. He could had laid hands in the case for decision, if the Board would had authorized him through a notification as expressed in sub-section (2) of Section 179 of the Customs Act, 1969. In the absence of any notification passing of order by the respondent No. 2 is without lawful authority and jurisdiction, void and ab-initio and coram non judice as held in host of judgments by the Superior Judicial Fora.

(vii)That the provision of Sections 32(1) and (2) of the Customs Act, 1969 could only be invoked by the respondents, where there exist any revenue loss. In the instant case although the loss of duty and taxes has been calculated but those were leviable at import stage and to be paid in case of filing of Goods Declaration for home consumption as against the Goods Declaration filed by the appellant for clearance for production in manufacturing bond, without payment of duty and taxes. On export no duty and taxes are leviable. Therefore, there exist no revenue loss, when there is no revenue loss the provision of Section 32 cannot be invoked as held in reported judgment 2003 PTD 552 Messrs Al-Hamd Edible Oil Ltd and others v. Collector of Customs and others wherein, their lordship held:

"A bare reading of Section clearly indicate that it relates to a situation where a person makes any statement or files any documents which is false in any material particular by reason of which any duty or charge is not levied or is short levied or refunded. In such event Customs authorities is empowered to issue to the person concerned a notice to show cause that why he should not pay the loss of revenue suffered by the department and after giving him a hearing, beside any other action under law order payment of the same, if a case is made out. The entire provision revolves around the central point of loss of revenue suffered by the Customs Department on account of the conduct of any person. Mr. Iqbal has not urged that the Department has suffered any loss on account of the conduct of the Appellant. The question of applicability of Section 32 in the present circumstances apparently does not arise."

The Hon'ble High Court of Sindh in another Landmark judgment reported at PLD 1996 Karachi 68 Messrs Kamran Industry v. The Collector of Customs (Export) and 4 others held in un-equivocal terms:--

"In the present case the accused has categorically taken the stand that any mis-declaration or under valuation was of no fiscal consequence. Such is also the admitted position which is not disputed where a person submit a declaration in the context of customs clearance and there can possibility be no fiscal consequence contingent upon his declaration and that contingency of no fiscal consequence is either undeniable or regarding which the accused has demonstrated his knowledge or reason to belief that he thought no tax was leviable, by no figment of imagination could it be said that the said person had any knowledge or reason to believe that his declaration/ statement was false or untrue in any material particular. In this context the contention that no penalty under section 32(1) is leviable for any alleged under-valuation and misdescription where there can be no motive to evade tax and where such declaration would carry no fiscal consequences is correct. Any other interpretation would also give rise to an absurd situation, where although no tax would be leviable on the main/basic assessment but there could be no possibility of imposition of penalty. Mere allegation without any concrete or positive evidence produced by the customs authority cannot warrant a finding of falasity to the declaration in material particular in context of section 32(1) of the Customs Act, 1969 and its comparable provisions. The Customs authorities were not justified to levy penalty under section 32(1) when admittedly there was no motive on the part of the accused to evade tax."

The said opinion was endorsed by the Hon'ble Supreme Court of Pakistan in reported judgment 2007 PTD 2215 Collector of Customs Exports and another v. R.A Hosiery Works wherein the bench presided by their lordship Justice Rana Bhagwandas held that:-

"Provision of Section S.32 (1) of the Customs Act, 1969 would be attracted only when the misdeclaration or misstatement was made with a view to obtain illegal gain by evasion of payment of custom duties and other taxes or by causing loss to the government revenue. Misdeclaration alleged to have been made in the case, was neither for evasion of payment of Customs duty or other taxes /charges nor the same had caused any financial loss to the Government. Petition for leave to Appeal by the authority being without merit, was dismissed."

(viii) Notwithstanding to the submission made here-in-above, it is imperative for the appellant to state that the respondents have made out the mountain out of mole hill and this stood validated from the fact that the relevant invoices and packing list answering the description and quantity of the exported goods were also scanned and are available in reservoir of the GD and those are deems to be declaration of the appellant in terms of Section 2(kka) of the Customs Act, 1969 and form integral part of the Goods Declaration of export transmitted under Section 131 ibid and Rule 444 of the Rules.

[{kka} "documents means a goods declaration, application for claim of refund, duty drawback or repayment of duty, import or export general manifest passenger manifest, bill of lading, airway bill, commercial invoice and packing list or similar other forms or documents used for customs clearance or making a declaration to customs, whether or not signed or initiated or otherwise authenticated, and also includes:--

(i)any form of writing on material, data or information recorded, transmitted, or stored by means of a tape recorder, computer or any other device, and material subsequently derived from information so recorded, transmitted or stored;

ii)a label, marking or other form of writing that identifies anything of which it forms part for to which it is attached by any means;

iii)a book, map, plan, graph or drawing, and

iv)a photograph, film, negative, tape or other device in which one or more visual images are embodied so as to be capable (with or without the aid of some other equipment of being reproduced; and)]

That upon availability of 02 sets of invoices and packing lists, it was mandated upon the subordinates of respondent No. 1 to transmit a view message to the appellant for justification of scanning invoices and packing lists pole apart from each other, upon receipt of the justification, instead of construing the human error as an act of misdeclaration, falling under the provision of Section 32 ibid, which is not applicable in the case of the appellant as evident from the deliberation made in paras supra, it would had been just and proper, if the subordinate of respondent No. 1 would had amended the Goods Declaration as per the expression of Section 205 ibid. Wherein a custom officer can allow amendment of any discrepancy upon either pointation of the importer/exporter or observed by the customs officer prior to allow of shipment. This Section express that "except in the cases provided for by Sections 29, 45, 53 and 88, an officer of customs not below the rank of an Assistant Collector of Customs may, in his discretion upon payment of a fee of Rs. 100/- authorize any document after it has been presented at the Custom House to be amended". Rule 445, which prohibit amendment after filing of the Goods Declaration is in conflict with section 205 ibid. it is settled proposition of law that Rules are made for the promotion of the Act and to be used as "stepping stones" and not to be applied and operated as "stumbling blocks". They should also be not used to trap people by technicalities of these rules instead of advancing the purpose for which they are framed as held by Supreme Court of Pakistan in its reported judgment PLD 1989 Supreme Court 222 in the case of Messrs Nishat Mills Ltd. v. Superintendent of Central Excise Circle-II. Beside rule 434 is ultra virus and in-consistence as it conflict with the provision of sections 29 and 205 of the Customs Act, 1969. Their lordship in its reported judgment 2000 PTD 399 Superior Textile Mills Ltd. v. FOP held that where rules were in-conflict with parent Act, the former must yield to the later and the rules to the extent of inconsistency would be void. The said opinion is further fortified by the Supreme Court in its reported judgment 1982 SCMR 522 Messrs Arjun Salt Chemical v. UC Gharo, wherein their lordship of Supreme Court settled the ratio while observing that "It is now well established principal or statute that rule which are merely subordinate legislation cannot override or prevalent on the parent statute and when ever there is inconsistency b/w the rule and statute the later must prevail". Resultant, as per laid down by the Superior Courts Rule 444 does not override the provision of Section 205 of the Customs Act, 1969, and case Section 205 of the Customs Act, 1969 and it has to prevail over rule 444 of Sub-Chapter IV of Chapter XXI of the Customs Rules, 2001.

(ix)The appellant craves his right to add any fresh grounds at the time of hearing beside placing any valid incriminating evidence/documents.

4.The appellant consultant/advocate in terms of ground (ix) reproduced in para 3 supra contended that the order passed by the respondent No. 2 is palpably illegal as evident from the fact that while passing order he travelled beyond the charter of show cause notice and this stood validated from commentary made in para 24 that "the exporter not only mis-declares the description of goods but also attempted to export goods under his manufacturing bond license which were not specified in the Analysis Certificate and could only be exported after proper approval from the Regulatory Collectorate which approval was not available at the time of Goods Declaration (GD) for export was filed" and referred Rules 343 and 358 and S.R.O. 499(I)/2009 dated 13.06.2009. The said charge and Rules and SRO are not available in the communication purported to be show-cause notice. Such type of orders are always declared by the Superior Judicial Fora being passed without any lawful authority by virtue of the fact that no order can be passed outside the charter of show-cause notice, this defect render the Order-in-Original void and ab-initio as held on countless occasion by the Superior Judicial Fora.

5.No cross-objection were submitted within the stipulated period given in Subsection (4) of Section 194A of the Customs Act, 1969. However, the representative of the respondents supported the order passed by respondent No. 2, when confronted about the legal defects observed by the Tribunal in the said to be show cause notice and order-in-original, he has no answer to those. Upon conclusion of hearing, he was directed that if the respondent has anything to say in the said effect and desire to place any authority/citation for controverting the argument of the appellant, same should be supplied within 02 days for placing on record of the case. Inspite lapse of more than two weeks, neither any written submission or authority has been supplied by the respondent. Resultant, the Tribunal take up the case for decision on the strength of available record, arguments advanced by the appellant and referred in paras. 3 and 4 supra and the citation/judgments supplied in support of those.

6.Rival parties heard and case records perused.

7.Upon perusal of the communication purported to show cause notice, we have observed that it is unique in nature and was transmitted to Messrs Mian Muhammad and Company, who is an importer and to whom show cause notice cannot be issued under the provision of Customs Act, 1969 and this stands validated from the preliminary of Chapter 1 of the Customs Act, 1969, Subsection (2) which with clarity expresses that "it extends to the whole of Pakistan". Meaning thereby, that the provisions of the Act are applicable on any person who is a citizen of Pakistan and is engaged in the business of Import or Export or manufacturing and during the course of his business activities commits any contravention of the provisions of the Act, shall be proceeded against under the relevant applicable provisions of the Act and the Rules framed there-under. Notwithstanding, the purported show cause notice although contains different events, of the case and opinion of the respondent No. 1 and certain provisions of the Act/Rules it least contains any phrase show causing the appellant and direction to submit reply, this defect is un-curable. The proper/valid and legal show cause notice should contain comprehensive description of the events on the basis of which case has been made out against the tax payer by making reference to the evidence collected in support of the same and with the narration of the fact along with supportive evidence and the attracted provision of the Act and so the penal clauses Show cause notice is not a casual correspondence or a tool or a license to commence a rowing inquiry into the affair based on assumption and speculation but is a fundamental document that carries definitive legal and factual position of the department against the tax payer, legal enforceability and jurisdictional validity of a show cause notice vested from its context, that was, the facts suppose to be tangible evidence referred to in the show cause notice and not from the cosmetic show causing of statutory provision or from the use of statutory keywords in the show cause notice. No valid show cause notice in the instant case of the appellant has been served/transmitted. Rendering the order so passed by the respondent No. 2, as void and ab-initio, hence, coram non judice and of no legal effect and jurisdiction as held in reported judgments referred by the appellant and referred in para 3(ii) supra and which are applicable with full force on the instant case.

8.The Federal Government through notification No. S.R.O. 886(I)/ 2012 dated 18.07.2012 formed Collectorate of Customs Adjudication for adjudication of the cases wherein, revenue loss to the exchequer is visible attracting Sections 32(1) and (2) and 32A of the Act. We have noted that in the instant case no loss of revenue is apparent because the case pertains to export consignment, on which no duty and taxes are leviable. Resultant, it falls within sub-para (d) of para (iii) of S.R.O. 886(I)/2012 dated 18.07.2012 and cases of such nature are ought to be adjudicated by the Executive Collectorate. By laying hands on the exclusive domain of Executive Collectorate, the respondent No. 2 encroached the jurisdiction this act is transgression, which is not permitted under law, rendering the entire proceeding without powers/jurisdiction, void and ab-initio and coram non judice and this stood validated from the judgments relied upon by the appellant and are incorporated in para 3(iii) supra.

9.The cases where there is no revenue loss, stood confirmed from para 19 of the order has to be adjudicated by the Principal Appraiser in terms of Section 131 of the Act, in exercise of the powers vested upon him through notification No. S.R.O. 371(I)/2002 dated 15.06.2002 and for that reason the designation given in the purported show cause notice is Principal Appraiser. Inspite of clear indication of designation of Principal Appraiser, which should be of Executive Collectorate, has been transmitted by Mr. Basit Hussain, who is Deputy Collector of Customs, Collectorate of Customs Adjudication, stood confirmed from para 19 of the order and Transfer and Posting Notification of the FBR issued vide No. 2426-C-II/2015 dated 14.10.2015. Therefore, he is non entity. By laying hands on the instant case the Deputy Collector usurped the powers of Principal Appraiser of Executive Collectorate, which he could not exercised under any circumstances and are to be exercised exclusively by the authority, empowered to do so and this stood validated from the reported judgments 2014 PTD 1256 Messrs Paramount International (Pvt.) Ltd. v. FOP and others, that case was of restriction laid upon on the imported goods under the Import Policy Order, 2013-2015 i.e. importability and was adjudicated by the Principal Appraiser, which was reopened and subsequently adjudicated by the Additional Collector, the Hon'ble High Court of Sindh held the subsequent proceeding as of no legal effect/jurisdiction and allowed the petition. This order was assailed before the Hon'ble Supreme Court of Pakistan vide C.P.L.A. No. 105-K of 2014 by the Collector of Customs, MCC of Appraisement-West, leave to appeal was refused and petition was dismissed, further stood validated by the judgments relied upon the appellant and are incorporated in para 3(v) supra. Rendering the issuance of purported show cause notice by Deputy Collector without lawful authority/jurisdiction and super structure built there upon by way of order-in-original by the Collector of Customs, Adjudication-II as well without power/jurisdiction and coram non judice. This proposition of law have the validation of Superior Judicial Fora. The Hon'ble Supreme Court of Pakistan in the case "Izhar Alam Farooqi Advocate v. Sheikh Abdul Sattar Lasi and others" (2008 SCMR 240) has held that the Institution specifically barred to adjudicate any matter to the extent of certain mandatory limits shall not be competent and had no jurisdiction to deal with any such matter exceeding the limit subscribe under the law. Hon'ble Supreme Court of Pakistan has held in the case of "Sardar Ahmed Yar Khan Jogzai v. Province of Balochistan" 2002 SCMR 1022 that "where essential features for assumptions of jurisdiction is contravened or forum exercises powers not vested in it or exceed authority beyond limit prescribed by law, the judgment is rendered coram non judice and in operative." Hon'ble Supreme Court of Pakistan in re "Faqir Abdul Majeed Khan v. District Returning Officer and others" 2006 SCMR 1713 has observed that "by now it is well settled that any order which suffers from patent illegality or without jurisdiction, deserve to be knock down. Whereas, the Hon'ble Supreme Court took a very serious notice in reported judgment 2001 SCMR 1822 Ali Muhammad v. Chief Settlement Commissioner, wherein the Hon'ble Chief Justice presiding a Bench in the capacity of Judge of Supreme Court as was then their lordship was held that "whenever order are passed by an Officer without caring whether jurisdiction vests in him or not, it is prima facie reflect on his conduct as well as competency. It is also to be noted that whenever authority is exercised in such a manner then no other inference can be drawn except that the functionary has transgressed his jurisdiction for the consideration other than judicial one and the Courts seized with such orders may recommend any action against the said Officer because neither the executive authorities nor judicial forum will pass a wrong order because the jurisdiction in both the capacities is conferred upon such authorities to discharge their function in accordance with law which has bestowed upon them to function in that capacity and if there is abuse of power by such officer then no hesitation should be felt in passing stringent stricture against officer keeping in view of norms of justice" re: PLD 1958 SC 104, PLD 1973 SC 326, PLD 2002 SC 630, 2003 SCMR 50, 2004 SCMR 25, 2004 SCMR 1798, and PLD 2005 Supreme Court 842. We therefore, declared the show cause notice and order-in-original without power/jurisdiction on this count also. Hence, void and ab-initio and coram non judice.

10.We are also amazed to note that the order in the instant case has been passed by the respondent No. 2 by transgressing the powers simultaneously of the authority issuing purported show cause notice and the Principal Appraiser of Executive Collectorate and for doing so he opined in para 19 reading as "a seizure/contravention case was framed against M/s. Ajmair Traders by Model Customs Collectorate of Export for Karachi for misuse of DTRE facility. As the duty and taxes involved in the contravention as shown in the system were "Zero" therefore, the case was assigned to the folder of Principal Appraiser and Mr. Basit Hussain (Deputy Collector) issued show cause notice thereon. As Mr. Basit Hussain has proceeded on Mid Carrier Management Course (MCMC) at National Institute Management, Karachi the power of adjudication were delegated to Mr. Shafique Ahmed Latki, Additional Collector under Section 5(2) of the Customs Act, 1969, however, the Additional Collector has informed that FOB value of the goods in the case is 6.119 million which falls within the adjudication powers of Collector of Customs (Adjudication) as per Section 179 of the Customs Act, 1969. Therefore, the subject case has been adjudicated by the undersigned as per Section 179 of the Customs Act, 1969". For laying rest to the formed opinion of the respondent No. 2, it is beneficial to reproduce verbatim of Section 5 and Section 179 of the Act.

5- "Delegation of powers:---The Board may, by notification in the official Gazette and subject to such limitation or conditions as may be specified therein empowers by name or designation.

(a)Any Additional Collector of Customs or Deputy Collector of Customs to exercise any of the powers of a Collector of Customs under this Act;

(b)Any Deputy Collector of Customs or Assistant Collector of Customs to exercise any of the powers of a Collector of Customs under this Act;

(c)Any Assistant Collector of Customs to exercise any of the powers of a Deputy Collector of Customs under this Act and ;

(d)Any other officer of customs with any other designation

179 Power of adjudication:---(1) Subject to subsection (2) in cases involving confiscation of goods or recovery of duty and other taxes not levied, short levied or erroneously refunded, imposition of penalty or any other contravention under this Act or the rules made there-under, the jurisdiction and powers of the officers of Customs in terms of amount of duties and other taxes involved, excluding the conveyance, shall be as follows, namely:--

(i)Collectorno limit

(ii)Additional Collector not exceeding three million rupees

(iii)Deputy Collector not exceeding one million rupees

(iv)Assistant Collector not exceeding five hundred thousand rupees

(v)Superintendent not exceeding fifty thousand rupees

(vi)Principal Appraiser not exceeding fifty thousand rupees.

[Provided that in cases of goods to be exported, the above officers of customs shall have their jurisdiction and powers in terms of FOB value and twice their respective monetary limit.]

(2) Notwithstanding the provisions of subsection (1), the Board may, by notification in the officials Gazette, fix or vary the jurisdiction and powers of any officer of Customs or a class of officers, and may also assigns or transfer {by an order} any case to any {officer} of customs, irrespective of the territorial jurisdiction. (emphasis supplied)

From conscientious study of section 5, it is abundantly clear that the Board through notification in official Gazette may empower by name or designation any Additional Collector of Customs or Deputy Collector of Customs, or Assistant Collector of Customs or any Officer of the Customs to exercise powers of Collector of Custom or Additional Collector of Customs or Deputy Collector of Customs, or with any other designation in the course of performance of duty in executive side for clearance/or for collection of leviable duty and taxes under the First Schedule to the Customs Act, 1969 upon non availability of the Collector of Customs, Additional Collector of Customs or Deputy Collector of Customs or any other officer of Customs as expressed in Subsection (1). Whereas, in terms of Subsection (2) the Board may direct any Director General, Director or Collector to authorize any officer to exercise within any specific area the powers of Director General, Director, Collector or any other officer of the Customs under the Act. This has to be done through a notification and again the essence and spirit of this subsection is performing the powers/duties at executive side. This subsection no where empowers the Collector i.e. respondent No. 2 to exercise the powers of his subordinate in the absence of availability of orders/direction of the Board at his own. This subsection has nothing to do with the adjudication, which falls within the ambit of Section 179 of the Act. In case the Board is desirous of fixing or varying the jurisdiction and powers of any Officer of Customs or a class of Officers, it through a notification in official Gazette can do that by assigning or transfer any case to any Officer of Customs irrespective of designation or territorial jurisdiction. In the instant case no notification of the Board was/is available either under Section 5 or Subsection (2) of Section 179 of the Act with the respondent No. 2 for exercising powers of his subordinate or territory of MCC of Export or Principal Appraiser of the Executive Collectorate. He assumed the powers of the Board himself in derogation of Section 5 and Subsection (2) of Section 179 ibid. He could not assume the quasi judicial power and jurisdiction to which he was not entitle under Section 179(1) or Notification No. S.R.O. 371(I)/2002 dated 15.06.2002 because while performing their duties as quasi judicial authorities they cannot be termed as subordinate to the higher officer and they are quite independent in performing their officials duties as adjudicating officers. This lapse render the order without lawful authority and jurisdiction. Hence, ab-initio, void and ab-initio wrong.

11.That the purported show cause notice and order-in-original in the instant case are without any powers/jurisdiction rendering the entire act right from show cause notice as void, ab-initio and ab-initio wrong. Resultant, these suffers from legal infirmity. Any order passed on the basis of that is also liable to be struck down as of no legal effect and nullity to law and non existent. The Hon'ble High Court of Sindh held in PTCL 2003 CL 345 held "the thing should be done as they are required to be done, or not at all". Whereas, the Apex Court held in reported 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 by the Superior Courts of Pakistan, in the case of E.A Avans reported as PLD 1964 SC 536 it is held that "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 their judgment reported as 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 in achieving or attaining the objective of performing or doing of a thing in a manner other than provided by law would not be permitted." In the light of referred judgments we declared that the order-in-original passed by respondent No. 2 is without powers/ jurisdiction and as such of no legal effect. Hence, ab-initio, void, further validated from the judgments reported at PLD 1996 Karachi 68, 2006 PTD 978 and PLD 1971 Supreme Court 184.

12.That while passing order-in-original, it is mandated upon the adjudicating authority to examine the charter of show cause notice and remain within its ambit while passing order, in case order so passed is beyond the charter of the show cause notice, it is deemed to be illegal and the Appellate Authority is left with no other option but to declare it as suffering from legal infirmity and as such void. While examining order passed by the respondent No. 2, we have observed that he has adduced a phrase reading as "the exporter not only mis-declares the description of goods but also attempted to export goods under his manufacturing bond license which were not specified in the Analysis Certificate and could only be exported after proper approval from the Regulatory Collectorate which approval was not available at the time of Goods Declaration (GD) for export was filed" and to Rules 343 and 358 and SRO 499(I)/2009 dated 13.06.2009, inspite of the fact that the purported show cause notice is silent in this context. Hence order has been passed beyond the scope of purported show cause notice. Such type of order are always declared by the Superior Judicial Fora being passed without any lawful authority by virtue of the fact that no order can be passed outside the charter of show cause notice, this defect render the Order-in-Original void and ab-initio. Reference is placed to the judgment reported at Collector Excise and Land Customs and others v. Rehm Din reported at 1987 SCMR 1840 and Adam v. Collector of Customs, Karachi PLD 1969 Supreme Court 446, Muhammad Sadqain v. Collector of Customs (Appraisement ) 2006 PTD 2742 and Messrs Exide Pakistan Ltd. v. Deputy Collector of Customs (Adjudication-III), Karachi, 2004 PTD 1449, "wherein it has been held that "Order of adjudication, being ultimately based on a ground which was mentioned in the show cause notice is palpably illegal on the face of it".

13.The case under scrutiny is of export from manufacturing bond, wherein goods are imported without payment of leviable duty and taxes under the First Schedule to the Customs Act, 1969 and Sales Tax Act, 1990 and Income Tax Ordinance, 2001 and the Rules and Regulation framed there-under. The export from manufacturing bond is obviously without levy of any duty and taxes, whether the goods so exported are pipes, strips or same state i.e. coils, it is worth adducing that no duty on the goods exported from Pakistan are leviable with the exception of certain goods, wherein, regulatory duty is imposed through notifications, which is not the case under scrutiny. Meaning thereby, that the question of revenue loss is non existent and this stood validated from para 19 of the order stating with clarity that " as the duty and taxes involved in the contravention as shown in the system were "zero". It is settled proposition of law that where there is no revenue loss provision of Section 32(1)(2) or 32A of the Act are not applicable and this has been held in unequivocal terms by the Hon'ble High Court of Sindh and Supreme Court of Pakistan in judgments reported at PLD 1996 Karachi 68, 2003 PTD 52 and 2007 PTD 2215, referred in para 3(vii) supra and which are applicable with full force in the case of the appellant. We have also noted with concern that the respondent No. 2 imposed redemption fine @ 20% of the value of the goods under Notification No. S.R.O. 499(I)/2009 dated 13.06.2009, without realizing that it has been issued by the Board specifically for the imported goods, clearance of which is being sought by the importer for home consumption under the provision of Section 79(1) and Rule 433 of the Act/Rules and not on the exported goods, Goods Declaration for which has to be filed under Section 131 and Rule 444 of the Act/Rules and this stood validated from the provision that "the quantum of fine in lieu of confiscation in respect of offences specified in column (2) of the Table below shall be as specified in column (3) of the Table and shall be over and above the Customs Duties and other taxes and penalties imposed under the relevant law". Therefore, S.R.O. 499(I)/2009 dated 13.06.2009 has nothing to do with the exported goods, imposing penalty under the said notification is manifestly without lawful authority and jurisdiction. Hence, void and ab-initio and of no legal effect.

14.That upon examination of the reservoir of the GD, we have observed that the contention of appellant seems to be correct that he uploaded 02 sets of invoices/packing list, one of which were discrepant and other one was answering the description, quantity etc. of the passed in goods and those formed integral part of the declaration as defined in Section 2(kka), expression of which has been reproduced in para 3(viii) supra. When two sets of export documents are available, it would had been appropriate for the examining official to transmit view message to the appellant for justifying uploading of two sets of invoices/packing lists prior to conduction of examination under Section 198 and Rule 450 of the Act/Rules. Upon receipt of explanation, if the apparent discrepancy is confirmed, which is apparently there, it should had been treated a procedural lapse and a bona fide mistake instead terming it misdeclaration for invoking section 32 of Customs Act, 1969, which could otherwise can be leveled on the basis of material particular, which is missing in this case and amendment should had been allowed under section 205 of the Customs Act, 1969. The apparent discrepancy/error in the subject case could had been cured while invoking provision of section 205 of the Customs Act, 1969, wherein a custom officer can allow amendment of any discrepancy upon either pointation of the exporter or observed by the customs officer prior to allow of loading/ clearance of the consignment. The section 205 express that "except in the cases provided for by sections 29, 45, 53 and 88, an officer of customs not below the rank of an Assistant Collector of Customs may, in his discretion upon payment of a fee of Rs. 100/- authorize any document after it has been presented at the Custom House to be amended". The stance taken by the respondent Collectorate that Rule 445 prohibit amendment as expressed in its clauses is without any substance. As rules are made for the promotion of the Act and to be used as "stepping stones" and not to be applied and operated as "stumbling blocks". They should also be not used to trap people by technicalities of these rules instead of advancing the purpose for which they are framed as held by Supreme Court of Pakistan in its reported judgment PLD 1989 Supreme Court 222 in the case of Messrs Nishat Mills Ltd. v. Superintendent of Central Excise Circle-II. Beside rule 445 is ultra vires and in-consistence as it conflict with the provision of sections 29 and 205 of the Customs Act, 1969. Their lordship in its reported judgment 2000 PTD 399 Superior Textile Mills Ltd. v. FOP held that where rules were in-conflict with parent Act, the former must yield to the later and the rules to the extent of inconsistency would be void. The said opinion is further fortified by the Supreme Court in its reported judgment 1982 SCMR 522 Messrs Arjun Salt Chemical v. UC Gharo, wherein their lordship of Supreme Court settled the ratio while observing that "It is now well established principal or statute that rule which are merely subordinate legislation cannot override or prevalent on the parent statute and when ever there is inconsistency b/w the rule and statute the later must prevail". Resultant, as per laid down by the Superior Courts rule 445 does not at all override the provision of Section 205 of the Customs Act, 1969 and it has to prevail over rule 445 of sub-chapter IV of Chapter XXI of the Customs Rules, 2001.

15.What has been discussed hereinabove, particularly the interpretation of law, legal propositions and observations made thereon and to follow the ratio decidendi observed by the Superior Courts, we hereby vacate the impugned show cause notice, and set aside the order passed thereon, during the hierarchy of the customs being illegal, void and ab-initio, appeal is accordingly allowed with no order as to cost and direct the respondent No.1 to issue delay and detention certificate under section 14A(2) of the Act in duplicate to the appellant for submission with the respective shipping company and terminal for waiver of accumulated containers detention/rental and Terminal demurrage/storage charges due to needless adjudication proceeding.

16.Judgment passed and announced accordingly.

HBT/7/Tax(Trib.) Appeal allowed.