SUPREME PLASTIC INDUSTRIES VS The DEPUTY COLLECTOR OF CUSTOMS, 2017 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 2250 (2017)

Customs Act (IV of 1969)---

----Ss. 25, 32, 79 & 80---Misdeclaration---Declaration was filed at total invoice value of US $ 6250---Importer sought clearance of the same by determining the liability of taxes on his own---Goods declaration was selected for scrutiny---Images attached and scrutiny of the examination report, had revealed that value given was Indian rupees 2,504,200 which came to US $ 37,629 and final value came to US $ 38000; which clearly manifested under invoicing to the extent of 508 %---Said facts had shown that the importer had deliberately concealed the actual contents of the goods by mis-declaring the value of the goods in order to suppress duty/taxes and with mala fide intention and had attempted to evade the legitimate revenue amounting to Rs.654512---Adjudicating authority, found that charges against the importer stood established and in exercise of powers under Ss.32(1)(2) & 79(1) of Customs Act, 1969, importer was given an option to redeem the same on payment of leviable duty/taxes and redemption fine, with penalty of Rs.50,000---Validity---Adjudicating authority, had adjudged duty/taxes on the 'ICEGATE' invoice by stating in the impugned order that the importer had admitted the charges of under-invoicing and showed willingness to pay the differential duty/taxes---Said conclusion was found to be factually incorrect as record, did not reveal any such act or statement by the importer; rather he had contested the charges and depended his declaration and documents furnished with the goods declaration at all stages of adjudication and appeal---Evidence of actual payment also supported the declaration of the importer---Supplier had also confirmed the transaction value for the impugned goods at US $ 6,250, whatever information was given at the Indian Web-site, could not over-rule or set aside the transaction value, unless the department evidently would prove that such a consideration had been exchanged for which the provisions of S.25 of the Customs Act, 1969, were required to be followed---Impugned order had no legal premise to stand---Appeal having merit, was allowed.

Nadeem Mirza for Appellant.

Syed Kareem Adil, D.C. along with Saeed Durrani, A.O. for Respondent.

Date of hearing: 19th April, 2017.

JUDGMENT

ZULFIQAR A. KAZMI, MEMBER (TECHNICAL-I).---This judgement will dispose of Customs Appeal No. K-2195/2016 filed by the appellant against the Order-in-Original No. 603361/2016 dated 25.11.2016, passed by Additional Collector of Customs (Adjudication-II), Karachi.

2.Facts on record are that the appellant filed Goods Declaration No. KAPE-HC-57900-05-11-2016, declared to contain "BLOW MOULDING MACHINE WITH STANDARD ACCESSORIES", from India at total invoice value of US$6250/-. The importer sought clearance of the same under section 79(1) of the Customs Act, 1969 by determining the liability of taxes at their own. In order to check as to whether the importer has correctly paid the duties/taxes and importability of the subject goods, the GD was selected for scrutiny in terms of Section 80 of the Customs Act, 1969 and the Examination conducted found "Automatic Continues Parison Double Station Type Blow Moulding Machine with all Standard Accessories, Model; JM-1000D = 01Unit Brand Jagmohan. Origin India. 100% weight found 4595Kgs vide PICT Weighment Certificate No. 519917 dated 05.11.2016." Images attached and scrutiny of the examination report and as per transactional value found on icegate website revealed that fob value given was Indian rupees 2,504,200 which comes to US Dollar 37,629 loading for freight aspect because the said value is FOB and the final value comes to US$ 38000 which clearly manifest under invoicing to the extent of 508%. The aforesaid facts showed that the importer has deliberately concealed the actual contents of the GD by mis-declaring the value of the goods in order to suppress duty/taxes and with mala fide intention and have attempted to evade the Government legitimate revenue amounting to Rs. 654512/-.

3.Accordingly, a Show Cause Notice was served upon the appellant under relevant provisions of law and the case was adjudicated vide the impugned Order-in-Original No. 603361 dated 25.11.2016. The following was ordered:--

"I have gone through the case record and the verbal submissions of the respondent. The respondent has admitted the charges of under invoicing the value of the goods and has shown his willingness to pay differential amount of duty and taxes. Thus the charges leveled in the show cause notice stand established. In exercise of the powers of 32(1), 32(2) and 79(1). However, the importer is given an option to redeem the same on payment of leviable duty/taxes and redemption fine equivalent to 35% i.e Rs. 1404500 of the value of offending goods as contained in clause 1(d) of SRO 499(I)/2009 dated 13.06.2009 and subject to the condition that the same are otherwise importable. A penalty of Rs. 50,000/- is also imposed upon the importer."

4.The appellant had preferred this appeal on 02.12.2016, inter-alia, on the following grounds:--

i.The expression of Section 179 of the Customs Act, 1969 is very clear in regards to determination of the powers of the Adjudicating Authority on the basis of "amount of duty and taxes involved excluding the conveyance." Not "amount of evaded duty and taxes". In this case the amount involved is Rs.783,765. The competent authority to adjudicate the case of said amount under clause (v) of Section 179(1) is Deputy Collector of Customs. To the contrary, Respondent No. 2 inspite being Additional Collector have issued the show-cause notice and passed order-in-original while usurping the powers of the Deputy Collector. This is not permitted under any circumstances, hence, the show cause notice as well as suffers from lack of powers, therefore ab-initio void and so the superstructure built thereupon in the shape of subsequent order as held in Order in Sales Tax Appeal No. 444/03, STA 465/07 and judgments reported at PLD 1971 SC 184, PLD 1976 Supreme Court 514, 1992 A.L.D. 449, 2004 PTD 624, PLD 2004 Supreme Court 600, PLD 2005 Supreme Court 842, [(2009) 100 TAX 24 (H.C. Lah.)], 2010 PTD 465 and 2010 PTD (Trib.) 1636.

ii.That Respondent No. 2 has invoked Section 33 of the Sales Tax Act, 1990 and Section 148 Income Tax Ordinance, 2001 without going through Section 33 of the Sales Tax Act, 1990 is a Section containing penal clauses to be invoked on the contravention of charging/respective sections of the Sales Tax Act, 1990 and this Section is synonymous to Section 156(1) of the Customs Act, 1969. Meaning thereby, that the clauses of Section 33 cannot be invoked in isolation unless charging /relevant sections are invoked and the appropriate authority to proceed in the matter is Officer of Inland Revenue. Similarly, Section 148 of the Income Tax Ordinance, 2001 contains procedure for collection of Income Tax at import stage by the authorities referred therein. Meaning thereby that the said sections are independent under which no charge can be invoked. No show cause notice can be issued under these sections. Issuance of show cause notice on irrelevant sections renders it void and ab-initio and of no legal effect.

iii.That in order to crystallize our stance above, it is stated that even otherwise Respondent No. 2 is not designated as an "Officer of Inland Revenue" under the provision of Section 30 of the Sales Tax Act, 1990 and Section 207 of the Income Tax Ordinance, 2001 and as such is not empowered to issue show cause notice even under the charging Section 11 of the Sales Tax Act, 1990 and Section 162(1) of the Income Tax Ordinance, 2001 and not 148 ibid. Therefore, the instant show cause notice has been issued in usurpation of the powers not vested with, rendering the order-in-original without powers/jurisdiction, hence void, ab-initio and coram non judice as held in reported judgments.

iv.That attention is invited to the examination report, which is silent in regards to retrieval of invoice or availability of identical invoice of the goods imported by the Appellant as directed in paras 78 and 101 of CGO 12/2002 dated 15.06.2002, which is mandated to be supplied for leveling allegation of misdeclaration of value as i.e. direct evidence, this fact has been incorporated by the FBR in clause (d) of Serial No. 1 of Table of SRO 499(I)/2009 dated 15.06.2009. In the absence of direct evidence no charge of misdeclaration can be leveled, which is non existent in the case of the appellant. Rendering the show-cause notice and order-in-original as of no legal effect and based on no evidence as held by Hon'ble High Court of Sindh in reported judgment 1991 PTD 551

v.The stance taken in the para above, further stand validated from the fact that the Icegate Website prominently reflects the phrase "disclaimer" stating in no uncertain terms that the contents therein should not be construed as a statement of law or use for any legal purpose. The referred statement renders reliance of contents of Icegate Website a legal impossibility even in India, where it originate, much less in Pakistan, where contents there from cannot even deems to be constitute "information" and or "documents" under the Customs Act, 1969 and that too for the legal purpose such as framing of contravention report issuance/passing of show cause notice and order-in-original. Such information, it will be appreciated even otherwise cannot be deemed evidence in the evidence falling short of the statutory criteria stipulated under Qanun-e-Shahadat Order, 1984, in respect of foreign documents, reliance on Icegate is therefore totally misconceived and suffer from legal infirmity and cannot be made a tool for penalizing imported consignments inclusive of Appellant.

5.On appellant's request through an interim order dated 19.12.2016 release of goods upon deposit of Pay Order for the disputed amount of duty/taxes and Post Dated Cheque against fine and penalty was allowed and the case was taken up for regular hearing on 11.01.2017, 14.02.2017 and 19.04.2017 when Mr. Nadeem Mirza, Consultant, appeared for the appellant. He was heard at length. He reiterated and elaborated the arguments given in the grounds of appeal, as reproduced hereabove. The respondent was represented by Syed Kareem Adil, D.C and Mr. Saeed Durrarni, A.O. They defended the impugned Order contending that the evidence of value found on the Indian website should be taken as authentic and not the value declared on the given invoice.

6.Record has been perused and arguments putforth from both the sides have been duly considered. The adjudicating officer has adjudged duty/taxes on the ICEGATE invoice by stating in the impugned order that the appellant had admitted the charge of under-invoicing and showed their willingness to pay the differential duty/taxes. This conclusion is found to be factually incorrect as record does not reveal any such act or statement by the appellant. The appellant had rather contested the charges and defended his declaration and documents furnished with the GD at all stages of adjudication and appeal. Even otherwise the transaction value in this case is the one declared initially. Evidence of actual payment also supports the appellant's declaration. The supplier has also confirmed in writing the transaction value for the impugned goods at US$6,250/-. Therefore, whatever information is given at the Indian web-site cannot over-rule or set-aside the transaction value unless the respondent evidently proves that such a consideration has been exchanged for which the provisions of section 25 of the Customs Act, 1969 are required to be followed. Keeping in view the legal position under sections 79, 80, 25 and 32 of the Customs Act, 1969 the impugned Order has no legal premise to stand. The appeal is found to have merit, hence the same is hereby allowed.

7.Judgment passed and announced accordingly.

HBT/61/Tax(Trib.) Appeal allowed.