ABDUL JABBAR VS DIRECTOR, 2017 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 2435 (2016)

Customs Act (IV of 1969)---

----Ss. 32, 32-A, 79, 80, 156(1)(14)(14-A), 179 & 194-A---SRO No.1125(I)/2011, dated 31-12-2011---Misdeclaration and fiscal fraud---Appellant was alleged to be involved in import and clearance of textile material without payment of leviable sales tax, Value Addition Tax and consequential Withholding Tax against false declaration of a manufacturing unit---Further allegation against appellant was that he, in collusion with their clearing agents, had misdeclared their status and fraudulently and unduly claimed benefit of zero-rating of sales tax under S.R.O. No.1125(I)/2011, dated 31-12-2011; that appellant and clearing agent had committed offence of mis-declaration and fiscal fraud under Ss.32(1(2), 32-A, 79, 80 of the Customs Act, 1969---Adjudicating Authority ordered the appellant to deposit recoverable amount into the Government Treasury; personal penalty was also imposed on the appellant---Controversy in the appeal, revolved around the issues that whether any material had been placed on record to establish evasion of sales tax, Value Addition Tax and consequential Withholding Tax by the appellant and appellant wrongfully claimed benefit of the SRO; that whether alleged evasion of sales tax, even at import stage, could entail initiation of proceedings under the penal provisions of the Customs Act, 1969; that whether Officers of the Directorate General of Intelligence and Investigation had the authority to take action in the matter of the alleged evasion of sales tax; that whether order-in-original passed by the adjudicating authority was bad and unsustainable in law---Held, there were three requirements for a person to be ellegible for claiming benefits of S.R.O. No.1125(I)/2011, dated 31-12-2011; said person should be doing business in one of five specific sections (leather, textile, carpets, sports and surgical goods); person should be registered with the Inland Revenue Authority and manufacturer, importer, exporter and name of person should appear on the Active Taxpayers' list---Appellant fulfilled all said conditions---Penalty had been imposed on the appellant in terms of commission of the offence of mis-declaration only under S.32 of the Customs Act, 1969, there was no allegation against the appellant as to mis-stating and/or under-stating the description, weight, value and/or quantity, or for that purpose making any other false statement---Allegation of commission of an offence under S.32 of the Customs Act, 1969 could not be made against the appellant---Order-in-original passed by the adjudicating authority, was time barred, having been passed in violation of S.179(3) of the Customs Act, 1969---Courts were required to maintain the norms of justice and equity; litigants were to be respected not on account of courts' power to legalize injustice on technical grounds, but to remove injustice---In the present case, orders passed by the hierarchy of the customs, were infested with patent illegalities which were set aside being void and without lawful authority---Appeal was allowed, in circumstances.

Al-Haj Industrial Corporation (Pvt.) Ltd. v. Collector of Customs 2004 PTD 801; Shujabad Agro Industries (Pvt.) Ltd. v. Collector of Customs and others 2014 PTD 1963; Philip Morris (Pakistan) Ltd. v. Additional Collector and others 2016 PTD (Trib.) 1008; 2009 PTD 762; 2008 PTD 578 and PTCL 2005 CL 841 ref.

Zain A. Jatoi for Appellant.

Saud hasan, I.O. and Aqil Alam for Respondent.

Date of hearing: 19th July, 2016.

JUDGMENT

MUHAMMAD NADEEM QURESHI, MEMBER (JUDICIAL-I).--By this judgment we intend to dispose of the instant appeal filed by the appellant against the Order-in-Original No. 27 of 2013-14 dated 08.02.2014, passed by the Collector of Customs (Adjudication-II), Karachi.

2.Brief facts of the case as reported by the Directorate General of Intelligence and Investigation-FBR, Regional office, Karachi are that a credible information was received that Messrs AI Abid Enterprises (NTN-2926155-4) (hereinafter referred called as "respondent") registered as importer, exporter and manufacturers were involved in huge evasion of Sales Tax, Value Addition Tax and consequential Withholding Tax on commercial imports of textile materials including various types of yarn of polyester, ryan, nylon, viscose and metallic threads through un-due claim of total zero-rating of Sales Tax under S.R.O. 1125(I)/2011 dated 31.12.2011 as admissible to actual manufacturers of textile goods. It was further learnt that the importer had declared his textile manufacturing unit located at 5G 82/12, Saeedabad. Baldia Town, Karachi which, in fact, belonged to some other industry namely Messrs Shehzad Industries, Karachi owned by one Muhammad Shehzad having NTN 286728-9. Reportedly, Messrs Al-Abid Enterprises, Karachi were mis-using making imports of textile materials for purported manufacturing at the afore said unit of Messrs Shahzad Industries to claim benefit of total zero-rating of Sales Tax under S.R.O. ll25(I)/2011 dated 31.12.2011, whereas, the goods imported by them were subsequently disposed off in local markets and such goods being commercial imports were chargeable to Sales Tax @ 2 % and Value Addition Tax @ 1% as per condition (iv) of the afore-said S.R.O. According to the source, both the levies were being evaded by the importers at import stage. It has been stated that perusal of the S.R.O. 1125(1)/2011 dated 31.12.2011 reveals that zero-rating of Sales Tax on the goods mentioned in the Table to the SRO is primarily meant for five exports oriented zero-rated sectors including leather, textile, carpets, sports and surgical goods. However, goods imported by other than the manufacturers. Perusal of the S.R.O. 1125(I)/2011 dated 31.12.2011 reveals that zero-rating of Sales Tax on the goods mentioned in the Table to S.R.O. is primarily meant for five exports oriented zero rated sectors including leather, textile, carpets, sports and surgical goods. However, goods imported by commercial importers as usable in-puts for any of aforementioned industrial sectors, are chargeable to Sales Tax @ 2 % and Value Addition Tax @ 1%. Further, the goods imported by or supplies made to manufacturers other than the manufacturers mentioned in condition (i) of the afore-said SRO are required to be charged Sales 5 %. Likewise, import of finished goods ready for use by general public or supply to un-registered person/retailers are chargeable to 5% and Value Addition Tax @ 1%. Scrutiny of import data of M/s. Al-Abid Enterprises, Karachi for the period 01.01.2012 to 26.12.2012 revealed that during the afore-said period, the said importer imported 432 consignments weighing 7,780,864 kgs of various types of yarns /metallic threads valued at Rs.2,589.599 million which were got cleared through Automated Customs Computerized Clearance System WeBOC, MCC (PaCCS), Custom House, Karachi on self-assessment basis claiming zero-rating of Sales Tax and Value Addition Tax under S.R.O. 1125(I)/2011 dated 31.12.2011. Out of these 428 consignments only four consignments were cleared as self clearance arid the rest through the Clearing Agents. Reporting Agency has stated that subsequent to investigation carried out, it revealed that the owner of M/s. AI Abid Enterprise, Mr. Abdul Jabbar and his accomplice, Owais, were involved in import and clearance of textile materials without payment of leviable Sales Tax, Value Addition Tax and consequential Withholding Tax against false declaration of a manufacturing unit located at 82/12, Saeedabad, Baldia Town, Karachi. In fact, no manufacturing unit by the name of AI Abid enterprise was existent at the declared address. Instead, as revealed on physical verification, another industrial unit namely Shahzad Industries is located at the given address which is owned by one Muhammad Shahzad having NTN No. 2867628-9. This is a small textile manufacturing unit operating with 32 looms installed at the premises. The owner of M/s. Shahzad Industries denied having received any imported raw-materials/yarns, etc, for manufacturing from anyone including Owais or Abdul Jabbar of Messrs AI-Abid Enterprises, Karachi. Reporting Agency has alleged that AI-Abid Enterprises, Karachi, in collusion with their Clearing Agents have mis-declared their status while importing 432 consignments of various types of yarns through Customs Computerized Clearance System of WeBOC of MCC (PaCCS) on self-assessment basis and fraudulently and unduly claimed benefit of zero-rating of Sales Tax under S.R.O. 1125(I)/2011 dated 31.12.2011 to the tune of Rs.83,686,448/-. They and their Clearing agents have committed offence of mis-declaration and fiscal fraud under Sections 32(1) & (2), 32A, 79 and 80 of the Customs Act, 1969, read with Sections 4,6, 7A(2) and 71 of the Sales Tax Act, 1990, further read with Sections 148 and 161(2) of the Income Tax Ordinance, 2001, punishable under clauses (14) and (14A) of Section 156(1) of the Customs Act, 1969, read with Sections 33, 34 and 36 of the Sales Tax Act, 1990.

3.The Collector of Customs (Adjudication-II), Karachi passed the impugned Order-in-Original No. 27 of 2013-14 dated 08.02.2014. The operative part of the same is reproduced as under:--

"I have gone through facts and record of the, written and verbal submissions made by representative of the importer, clearing agents and also the Departmental Representative from the detecting agency. Their respective contentions during the course of hearing have also been taken into consideration. The crux of the case is that as to whether the importer can claim the facility of S.R.O. 1125(I)/2011 dated 31.12.2011 as per its conditions (i & ii) by registering himself as a manufacturer of textile sector when they are not involved in any activity of manufacturing of textiles and textile articles. The available record confirms that the importer Mr. Abdul Jabbar owner of Messrs AI-Abid Enterprises (NTN-2926155-4) and his accomplice, Mr Owais managed to get their company registered as a manufacturer of textiles from the Inland Revenue on the basis of fake documentation and premises. Whereas importer was not involved in any activity of manufacturing of finished goods of textiles and textiles articles. The motive was to avail the undue benefit of zero rating sales tax under condition No. (i) of the S.R.O. 1125(I)/2011 dated 31.12.2011 on import of textiles raw materials i.e., yarn of polyester, ryan; nylon and metallic threads etc. The importer filed electronically four hundred thirty two (432) goods declaration through clearing agents{respondents Nos. 3 to 10) and determined their liability of payment of applicable duty and taxes and sought clearance under section 79(1) of the Customs Act, 1969, in the environment of Automated Customs Computerized Clearance System WeBOC/ Model Customs Collectorate of Customs (PaCCS), Karachi on self assessment basis. The notification of S.R.O. 1125(I)/2011 dated 31.12.2011 allows zero rating benefit to five sectors i.e., textile, carpets, leather sport and surgical goods. Those importers registered in these above-mentioned five sectors and are involved in manufacturing activities are charged zero rating sales tax under condition Nos. (i) & (ii) on import of raw-materials mentioned in column (2) of the table of the S.R.O. 1125(I)/2011 dated 31.12.2011. Whereas the commercial importers are charged sales tax @ 2% along with 1% value addition tax in addition to income tax thereon at the import stage under condition (iv) on import of raw materials mentioned in column (2) of the table of S.R.O. 1125(I)/2011 dated 31.12.2011. Since the respondent importer was not engaged in any activity of manufacturing of goods and was found in commercial activities in selling the textiles raw material in domestic market without going through any process of manufacturing, therefore, the conditions (i) & (ii) is not available to them but they were required to pay Sales Tax @ 2% along with value addition tax @ 1% and Income Tax thereon as per condition (iv) of the said Notification S.R.O. 1125(I)/2011: As regard their contention with reference to challenging the Authority of the Directorate of Intelligence and Investigation, FBR. Karachi, the same is totally untenable. Similarly under the law, the relevant Customs Authorities empowered to levy and collect all duties and taxes leviable on imported goods at the import stage. To raise such objections on behalf of the respondents in their defense is nothing but to divert attention of the Adjudicating Authority from the actual issue of evasion of legitimate government revenue. As far as role of clearing agents licensed under section 207 of the Customs Act 1969 (respondents Nos. 3 to 10) it was binding on them under rules 101 and 102 of Chapter VIII of Customs Rules, 2001 (i) not to withhold any information from the Customs relating to clearances of goods and from their client i.e., importer or exporter (ii) provide earnest and persistent application to ascertain the correctness of any information and declaration that imparts to the Customs department or to a importer with reference to any Customs business (iii) in case of knowledge of that their client has not complied with the law or has made any error or omission in any document immediately bring the matter of such non-compliance, error or omission to the notice of the appropriate officer of Customs. It is also pertinent that section 209 of the Customs Act, 1969 clearly provides that the clearing agent who has been provided granted License under section 207 of the said Act would be thought to be a owner of such goods for which the importer has authorized him to file goods declaration on their behalf. But respondent Clearing Agents did not take cognizance to the activity of importer being manufacture or commercial and did not provide him information that in such cases when their client was involved in the activities of manufacturing showed their sheer negligence while filing the goods declaration on the basis of documents. Ten (10) clearing agents (respondents Nos. 3 to 12) provided services and transacted the business of clearances of textiles raw material to the importer during a period of one (01) year and not a single one of them has taken a notice of such illegal activity of the importer. This confirms that all the clearing agents were involved playing their role on technical grounds of registration of importer as a manufacturers. Their plea that they filed goods declaration on the basis of documents and on retrieving the information from the FBR website is not tenable. In view of above said discussion, the charges leveled in the show-cause notice are established against the importer as well as against the clearing agent. I, therefore, order the importer to deposit the recoverable amounting to Rs. 83686448/- (Sales Tax amounting to Rs. 82857867/- and Income Tax amounting to Rs. 828581/-) into the government treasury. A personal penalty of Rs. 5000000/- (rupees Five Million only) also imposed on the importer under clause 14 of Section 156(I) of the Customs Act, 1969. A penalty is also imposed on the clearing agents as shown against them in the table of the ONO considering their volume of transactions under clause 14 of section 156(1) of the Customs Act, 1969.

4.Being aggrieved and dissatisfied with the Order-in-Original, the appellants filed the instant appeal before this Tribunal on the grounds mentioned in the Memo of Appeal.

5.On the date of hearing Mr. Zain A. Jatoi, Advocate appeared on behalf of the appellant and reiterated the contents of the appeal and contended that, the in terms of the said Notification (S.R.O. 1125(I)/2011 dated 31.12.2011, the benefit as to payment of Sales Tax at reduced rate and/or zero percent at import stage is depended, under condition No. (xiii) of the said notification, upon two prerequisites viz. (i) the person availing of such benefit should be "registered" with the Sales Tax authority; and (ii) such person should also "appear on active taxpayers" list (ATL) on the website of Federal Board of Revenue". It will be appreciated that the appellant, at the relevant time, was duly registered with the Inland Revenue Authority as a "manufacturer" his status on the FBR's website also figured in active taxpayers' list. It is further referred that having complied with the prerequisites under the said notification, no question could arise as to the appellant's alleged misuse of the said notification notwithstanding the fact that the allegations of the respondent's officers are even otherwise false, fabricated and untenable. He further contended that in the wake of creation of Directorate General of Intelligence and Investigation-IR (the IR Directorate), the Directorate General of Intelligence and Investigation-FBR (the respondent's Directorate) could not take any action in a matter allegedly pertaining to evasion of Sales Tax even at the import stage insofar as the IR Directorate is vested with the exclusive jurisdiction under the Sales Tax Act whereas the respondent's Directorate is vested with authority only under the Customs Act. The Hon'ble superior courts have consistently held that in a matter allegedly of Sales Tax, no action can be taken under the Customs Act. As a matter of fact even the pretext of the alleged evasion of Sales Tax at import stage is not available to the respondent's Directorate on account of the fact that the payment of Sales Tax at the same time as payment of Customs Duty does not convert the Sales Tax into Customs Duty any contravention in terms of liability thereof is to be dealt with under the Sales Tax Act and not the Customs Act. That on this count the adjudication proceedings, which culminated in passing of the impugned order-in-original, stand vitiated on account of having been commenced under the Customs Act. Reverting to the factual aspect of the impugned Order-in-Original, it is referred that the Adjudicating Authority failed to appreciate that the appellant's manufacturing unit situated at 5-G, 82/12, Saeedabad, Baldia Town, Karachi, was being managed and run by the answering respondent and not by Messrs Shehzad Industries as is alleged in the SCN and the impugned Order-in-Original. In support of the appellant's such contention, the Adjudicating Authority failed to take into consideration that "M/s. Shehzad Industries although had been issued the NTN (2867628-9) Certificate, they were not registered under the Sales Tax Act. It will be appreciated that without the registration as stated, M/s. Shehzad Industries could neither carry out the business of import nor that of manufacturing and accordingly any allegation that the manufacturing unit was being run by them stood repelled. That the appellant had been the tenant in respect of the manufacturing unit since 01.06.2010 and having acquired the same from the owner thereof, Abdul Sattar, the appellant rendered it operational and got registered with the Inland Revenue Authority as "manufacturer" on 15.07.2010. The sequence as described in this paragraph clearly establishes the appellant's contention as right and the findings in the impugned order-in-original as wrong. Further credence as to the answering respondent's contention that he had been running and managing the said manufacturing unit wherein the goods imported under the said notification were duly consumed, could be had from the fact that the appellant had been continuously paying the electricity bills and had also been regularly filing the monthly Sales Tax Returns where the stated consumption is duly depicted on monthly basis and, therefore the finding as to misuse of the said notification stands repelled. He also argued that the Adjudicating Authority did not seek any evidence - since none had been furnished by the respondent's staff - as to the alleged disposal/sale of the goods by the appellant in the local market. Being the first fact-finding forum under the hierarchy of the Customs Act, 1969, the Adjudicating Authority committed a serious error of law by taking as true the allegation - without any evidence - based on unsubstantiated allegations. He further prayed that the Hon'ble Appellate Tribunal may kindly be pleased to call for Record and Proceedings from the office of the Adjudicating Authority and having afforded an opportunity to the appellant to be heard, and having examined the legality and the propriety of the impugned Order in Original No. 27 of 2013-2014 dated 08.02.2014, may further be pleased to set-aside the same.

6.No Cross objections under subsection (4) of section 194-A of the Customs Act, 1969 were submitted by the department/respondents. However, on behalf of the Respondents, Mr. Saud Hasan, I.O. along with Mr. Aqil Alam, I.O., appeared and contended that, benefit of zero-rating/reduced rate of tax under S.R.O. 1124(I)/2011 dated 31.12.2011 was/is admissible to the persons registered with the Sales Tax authority and appearing on Active Taxpayer List subject to the conditions mentioned in the S.R.O. Although the appellants were registered as "manufacturer" with the Sales Tax authority, however, neither they had any manufacturing unit at the given address nor actually involved in manufacturing of textile goods rather the import of raw-materials like yarns, etc, were being made by them as commercial importers for disposal of the same in the local markets. Accordingly, under condition (iv) of the S.R.O., they were required to pay 2% sales tax along with value addition (plus consequential withholding tax) on their imports. However, they unduly availed the benefit of condition (i) of the S.R.O. which provided for zero-rating instead of reduced rate and meant for actual manufacturers (having manufacturing unit and in-house facilities for manufacturing of textile goods). The registration of appellants as 'manufacturers' with the Sales Tax authority is itself highly questionable in the absence of their manufacturing unit. They further contented that the Directorate General of Intelligence and investigation-FBR is fully empowered to detect, investigate and report cases of evasion of levies of import stage on imported goods cleared through Customs. Inland Revenue authorities have no jurisdiction to assess, collect, adjudge or recover escape revenue on imported goods which fall under the jurisdiction of clearance Collectorate of Customs. Further, there is no legal bar on reporting of cases of evasion of duties and taxes on imported goods to concerned clearance Collectorate/competent adjudication authority to proceed further to adjudge and recover such evaded amount after necessary adjudication. The existing unit located at SG-82/12, Saeedabad, Baldia Town, Karachi is being owned, manage and run by Messrs Shahazad Industries (NTN-2867628-9), as categorically admitted by the owner of said industry. The respondents' contention that unit of Shahzad Industries can neither carry out business of import nor manufacturing, supports the fact that imported consignments were neither received at the said unit nor utilized manufacturing. On the spot investigations revealed that the types of looms installed at the unit are not capable for further processing of imported yarns for further manufacture. The documents referred to in the para are clearly manipulated documents to show that respondents are manufacturers. In fact, they have failed to produce any cogent evidence to the effect that imported consignments cleared without payment of Sales Tax were ever utilized by them for further manufacturing of textile products. The claimed premises were never used for manufacture of any textile products from imported in-puts nor the respondents have any tenable evidence to that affect. As evident from the contents of show-cause notice that during 01.01.2012 to 26.12.2012, respondents imported and cleared 432 consignments weighing 7,780,864 kgs of yams ought to be utilized at their unit, whereas, there is no tenable evidence or any other material available on record to confirm that such a huge quantity was ever utilized at the claimed manufacturing unit which is owned and run by Shahzad Industries. The respondents have failed to produce even a single evidence regarding subsequent disposal of imported materials in support of their contention. They further contended that, the appellants have failed to put forth any tangible evidence to the effect that impugned consignments were actually used/ consumed by them in manufacturing of textile goods at their purported manufacturing unit (which factually did not exist). They also failed to provide throughout the adjudication any proof/Sales Tax Invoices or relevant Returns showing disposal of purported value added manufactured products. Hence, the leveled in the show-cause notice that imported raw-materials were commercially disposed off in local markets stood established. Hence, the impugned Order-in-Original is lawful and justified. They prayed that subject appeal may kindly be dismissed in the interest of justice.

7.Having heard the respective contentions of the parties' representatives at length and having perused the material on record, the controversy in the present appeal could be seen to revolve around the issues, (i) whether any material has been placed on record to establish evasion of Sales Tax, Value Addition Tax and consequential Withholding Tax by the appellant on commercial imports of textiles during the year 2012 by wrongfully claiming the benefit of S.R.O. 1125(I)/2011 dated: 31.12.2011? (ii) Whether the alleged evasion of Sales Tax, even at import stage, could entail initiation of proceedings under the penal provisions of the Customs Act, 1969? And, whether the officers of the Directorate General of Intelligence and Investigation-FBR have the authority to take action in the matter of the alleged evasion of Sales Tax? (iii) Whether the Order-in-Original is bad and thus unsustainable in law on the basis, among others, that the Adjudicating Authority failed in complying with the time limitation/periodicity as provided under section 179(3) of the Customs, Act, 1969? For concluding the subject questions and issues, we find it convenient that the Notification bearing S.R.O. No. 1125(I)/2011 dated 31.12.2011 be examined so as to look into the conditions fulfilment of which is necessary for claiming the benefit thereunder. It appears that there are three requirements for a person to be eligible viz. (i) the person should be doing business in one of the five specific sectors; (ii) he should be registered with the Inland Revenue Authority as manufacturer, importer, exporter and/or wholesaler; and (iii) his name should appear on the Active Taxpayers' List (ATL) of the FBR's web portal. Upon being asked specifically as to whether the appellant did not fulfil any of the conditions envisaged in the Notification, the learned DR replied in negative contending that upon physical verification of the appellant's manufacturing unit, it had been found to be non-existent and another person, namely, Muhammad Shehzad was found carrying out his manufacturing unit in the name and style of M/s. Shehzad Industries. As per the DR's contention, it was on account of such statement by a third party it was clearly obvious that the appellant had committed the offence of misdeclaration and fiscal fraud in respect of such consignments where-for the appellant had claimed, and then availed, the benefit under the said Notification. The appellant's counsel, on the other hand, contended that the said Muhammad Shehzad had filed a constitutional petition before the honourable Sindh High Court against the officers of the Detecting Agency, pleading harassment on their part in forcing him to give statement against the appellant. This fact was also not denied by the DR.

8.In the first instance, we note that while the allegation of commission of offences of misdeclaration and fiscal fraud, defined under sections 32 and 32A punishable under Clauses (14) and (14A) of section 156(1) of the Customs Act, 1969, had been made in the show-cause Notice, however, the penalty has been imposed in terms of commission of the offence of misdeclaration only as under Section 32 of the Act supra. While we do not see that there being any allegation against the importer as to mis-stating and/or under-stating the description, weight, value and/or quantity, or for that purpose making any other false statement, how an allegation of commission of an offence under Section 32 could be made. If at all in the Detecting Agency's view the wrong-doing on the appellant's part emanated from seeking and obtaining the manufacturing status from the Inland Revenue Authority, then it was for such Authority to have proceeded against the appellant and only under penal provisions of such statute where-under the appellant was granted the manufacturing status. Accordingly, the appellant having relied on such document the authenticity and issuance by the competent authority of which was not disputed by the Detecting Agency, the appellant, in our opinion, could not have been proceeded against under Section 32 of the Customs Act, 1969, for the alleged commission of the offence of Misdeclaration.

9.We would like to discuss another point here. Having gone through the record of the case it transpires that the purportedly offending import transactions took place in the year 2012, which raises a serious question as to the legality of initiation of penal proceedings under the provisions of the Customs Act, 1969, for recovery of Sales Tax payable at import stage on the basis that the Customs Authority is authorized to collect the same in terms of Section 6 of the Sales Tax Act, 1990. It is noted that the expression "taxes" was added in Section 32(2) of the Customs Act, 1969, with effect from 01.07.2014 by virtue of the Finance Act, 2014, meaning thereby that before the referred date it was only the evasion of the Customs Duty which fell within the mischief of Section 32 of the Customs Act, 1969. Accordingly, invocation of the said provision for recovery of Sales Tax, and other consequential taxes, on the subject impugned imports, which took place (in the year 2012) before the coming into being of the provision as it stands now, would amount to giving retrospective effect to a provision in a manner not intended the legislature and such a situation is neither warranted nor permissible under the law. We are also mindful of the fact that the honourable Superior Courts have consistently held initiation of penal provisions under the Customs Act, 1969, for recovery of Advance Income Tax at import stage to be as without the mandate of law. Such principle is also aptly applicable to in the matter of imposition of Sales Tax at import stage. Guidance in this regard has been had from the decisions reported at 2004 PTD 801 (Al-Haj Industrial Corporation (Pvt.) Ltd. v. Collector of Customs), 2014 PTD 1963 (Shujabad Agro Industries (Pvt.) Ltd. v. Collector of Customs and others), 2016 PTD (Trib.) 1008 (Philip Morris (Pakistan) Ltd. v. Additional Collector and others) and the unreported Judgment dated: 08.02.2013 passed by a Division Bench of the honourable Sindh High Court in the case of Lucky Cement Ltd. v. Federation of Pakistan and others. We, accordingly, hold the initiation of penal proceedings under the provisions of the Customs Act, 1969, in the matter of the alleged evasion of Sales Tax, at import stage, to be as outright illegal and thus without the force of law.

10.During the course of the arguments, the appellant's counsel had argued at length that the Order-in-Original was time-barred, however, such contention was rebutted by the learned Departmental Representative. We note that that the Show-Cause Notice having been issued on 27.01.2013 and the Order-in-Original having been passed on 08.02.2014, the Adjudication proceedings were completed in 377 days. As per paragraph 7 of the Order-in-Original, the Federal Board of Revenue, vide Order bearing No. 5(6)Cus.Jud/2014 dated: 09.01.2014, had extended the time-limit for the Adjudication proceedings up-to 31.03.2014 purportedly in terms of the power conferred vide section 179(4) of the Customs Act, 1969. Given such facts legal analysis of the relevant provisions (being subsections (3) and (4) of Section 179 of the Customs Act) is rendered imperative. A perusal of Section 179(3) makes it clear that the word "shall" has been employed therein for three purposes: (i) for adjudication to be carried out within 120 days; (ii) for extension of period to be no more than 60 days; and (iii) for recording reasons in writing for such extension, if any. The use of the word "shall" implies mandatory requirement under a statutory prescription, which cannot be allowed to be deviated from unless such deviation is provided for through an exception in a proviso or otherwise. It is the trite position of law that the action of the grant of extension should be undertaken during the continuance and subsistence of the originally stipulated period and not otherwise. Also, the requirement of "recording in writing" the "reasons" for such extension entails the premise of the same being relevant, cogent, genuine and not frivolous or perceived.

11.Having stated the benchmarks and thresholds as to periodicity and extension of adjudication proceedings in terms of Section 179(3) (and not Section 179(4) where-under the purported extension was granted), we now turn to examine the paragraph 7 of the Order-in-Original and note that while no reason whatsoever has been stated for grant of the extension yet it was effected 227 days (vide Order dated: 09.01.2014) after the lapse of mandatory period of 120 days (on 27.05.2013). Such a state of affairs is not in compliance of the stringency as is otherwise mandatorily required and could not have been embarked upon even under the garb of Section 179(4), which provision of law empowers the FBR "to regulate the system of adjudication and extension of time-limit in exceptional circumstances". It is appreciated that in terms of the referred provision the FBR has the authority to "regulate the system" of adjudication which clearly means that it is within the FBR's domain to administer, manage and guide the framework and policy as to the adjudication process as a whole, however, excluding an authority to interfere in individual adjudication proceedings, or on case to case basis, for if a different interpretation is to be deemed to have been envisaged under the law then it would have the effect of nullifying such part of Section 179(3) of the Customs Act, 1969, whereby the Collector is mandatorily required to reduce into writing the reasons for granting extensions in time-limits and that for a period of no more than sixty (60) days. We do not subscribe to the view and the interpretation that the FBR could have unbridled power in this regard there being no conditionality attached to its perceived authority to extend time-limit for any period of time and at any stage of adjudication proceedings. This, in our opinion, could not be the legislative intent as it even otherwise entails absurd consequences, which cannot be considered acceptable under any judicial system of adjudications. In view of the foregoing, and the principles stated in the authorities/decisions reported at 2009 PTD 762, 2008 PTD 578 and PTCL 2005 CL 841, we have no difficulty in concluding that the impugned Order-in-Original is time-barred, having been passed in violation of Section 179(3) of the Customs Act, 1969.

12.Being custodian of law the courts are required to maintain the norms of justice and equity, litigants are to be respected not on account of courts power to legalize injustice on technical grounds but to remove injustice. By doing so, and in respectful agreement with above findings and observations including the reason quoted above, orders passed during the hierarchy of the customs are infested with patent illegalities, set-aside being void and without lawful authority. Appeal is allowed with no order as to cost.

13.Judgement passed and announced accordingly.

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