ZAMSUN STEEL INDUSTRIES VS COLLECTOR OF CUSTOMS, 2017 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 453 (2015)

Customs Act (IV of 1969)---

----Ss. 32(1)(2), 79, 181 & 194-A---Mis-declaration of description and P.C.T. heading of imported goods---Importer filed Goods Declaration declaring the goods as (i) Iron and Steel Remeltable Scrap 94,750 KG (P.C.T. heading 7204.4990) and, (ii) Iron and Steel Rollable Scrap 8,000 KG (P.C.T. heading 7204.4910) and sought clearance of the goods through his clearing agent---Consignments were examined for verification of description/P.C.T./quality/weight and other physical attributes of the goods---Shed staff reported as:- (i) Iron and Steel Remeltable Scrap (5,135 Kg) (P.C.T. 7204.4990), (ii) Iron and Steel Re-Rollable Scrap (34,400 Kg) (P.C.T. 7204.4910), and (iii) Over Size Iron and Steel Round Bar 963,215 Kg) (P.C.T. 7214.2010)---Quality of goods as mentioned at (ii) were found mis-declared; while the goods mentioned at (iii) had been found undeclared/mis-declared, within the over all total declared weight of 10,2750 KG---Importers were charged for wilfully and deliberately mis-declaring the description and P.C.T. heading of the goods to evade duty/taxes which involved a loss of Rs.32,77,647 to the exchequer---Issue was about the part of the consignment in which Iron Scrap containing bars had been found larger in size compared to the specification/definition of the waste and scrap, given in the Import Policy Order---Department's charge upon the importer, was that the over-sized bars did not meet the definition of scrap; hence not entitled to the import status of tariff treatment available to the scrap---Part of the consignment though consisted the bars exceeded the size provided for the waste and scrap in the Import Policy Order, but entire consignment was put to '1st Examination' which was a standing Policy for all kinds of scrap---Consignment was purchased and supplied by the supplier to the buyer, and supplier did not understandably take care for the size applicable to the bars (treated as scrap) in Pakistan---No essential element of misdeclaration was found on the part of importer, in circumstances---In the absence of any clear mens rea, it would be fair to give a benefit of doubt to the importer---Importer's request for mutilation/scrapping of offending bars, was reasonable and fair, in circumstances---Appellate Tribunal directed that the offending part of the consignment, be subjected to mutilation/scrapping; and duty and taxes be charged as imposed on waste/scrap of iron in the value ascertained as per customs standardized practice for the scrap---Redemption fine imposed vide impugned order-in-original, was remitted accordingly---Appeal was allowed to that extent---Delay and detention certificate, could also be issued to the importer.

Afzal Awan and Adeel Awan for Appellant.

Mubasher Hasan, A.O. for Respondent.

Date of hearing: 5th October, 2015.

ORDER

TAHIR ZIA, MEMBER JUDICIAL-II.---This order disposes of Customs Appeal No.K-1300/2015 directed against Order-in-Original No.386902 dated 29.06.2015 passed by the Additional Collector of Customs (Adjudication), Karachi.

2.Brief facts of the case are that it has been reported by MCC-Port Muhammad Bin Qasim that the appellants imported a consignment vide IGM No.225 dated 12.05.2015 Index No.130. The importer filed Goods Declaration No.KPPI-HC-57533 dated 13.05.2015 by declaring the goods as (i) Iron and Steel Remeltable Scrap 94,750kg (PCT heading 7204.4990) and (ii) Iron and Steel Rollable Scrap 8,000 kg (PCT heading 7204.4910) and sought clearance of the goods through his clearing agent. The consignments were examined for verification of description/PCT/ quantity/weight and other physical attributes of the goods. The shed staff reported as follows:--

i)Iron and Steel Remeltable Scrap (5,135 kg) (PCT 7204.4990)

ii)Iron and Steel Re-Rollable Scrap (34,400 kg) (PCT 7204.4910)

iii)Over Size Iron and Steel Round Bar (63,215 kg) (PCT 7214.2010)

3.The quantity of goods as mentioned at sub-para (ii) above were found mis-declared while the goods mentioned at sub-para (iii) above had been found undeclared/misdeclared within the overall total declared weight of 10,2750kg. The importers were charged for willfully and deliberately misdeclaring the description and PCT heading of the goods to evade duty/taxes. The act involved a loss of Rs.32,77,647/- to the exchequer.

4.The learned Additional Collector of Customs (Adjudication), Karachi passed an Order-in-Original No.386902 dated 29.06.2015 as follows:--

"I have examined the case record and considered written/verbal arguments of the representative of the respondents. As per record the respondent declared the import consignment comprising (i) Iron and Steel Re-meltable Scrap, weight 94,750 kgs and (ii) Iron and Steel Re-rollable Scrap, weight 8,000 Kgs. On examination the weight and description of impugned goods was found as (i) Iron and Steel Re-meltable Scrap 5,135 kgs. (ii) Iron and Steel Re-rollable Scrap 34,400 kgs (iii) Oversize Iron and Steel Round Bar 63,215 Kgs. Therefore, the respondent misdeclared Iron and Steel Re-rollable Scrap and undeclared/ misdeclared oversize Iron Steel Round Bar 63,215 kgs in terms of Section 79(1) of the Customs Act, 1969 the importer is required to file correct declaration mentioning therein complete and correct particulars of the consignment and to pay duty and taxes as per declaration. It is obvious that the respondent mis-declared the quantity of Iron and Steel Re-rollable Scrap and undeclared 'Over size Iron and Steel Round Bar' to evade payment of legitimate amount of duty and taxes. In view of the above, the charge of mis-declaration as levelled in the Show Cause Notice stands established. I, therefore, order confiscation of the offending goods under section 156 (1) clause 14, read with section 32 (1) and (2) of the Customs Act, 1969. However, an option under section 181 of the Customs Act, 1969 is given to the importer to redeem the confiscated goods on payment of 35% Redemption Fine Rs.2,189,775/- (Rupees two million one hundred eight nine thousand and seven hundred and seventy five) in terms of S.R.O. 499(I)/2009 dated 13.06.2009 of the value of offending goods (as determined by the department) in addition to payment of duty and taxes leviable thereon. I also impose a total penalty of Rs.200,000/- on the importer for violation of above mentioned provisions of law."

5.Aggrieved, the appellants filed this appeal before this Tribunal on the following grounds:--

That the goods are iron and steel scrap and subjected to first appraisement and no cognizance warrants under the mandate of Section 32 of the Customs Act, 1969. There was no mens-rea on part of the appellant no punishment warrants.

That it is the sole authority of the appellant to avail the opportunity of mutilation within the port area at his own cost prior to clearance of the consignment by the customs for home consumption. Which legal right of the appellant was ignored and harsh order has been passed.

That the consignment is waste and scrap as it is. The respondent or their functionaries (i) do not possess expert/classified knowledge on scrap items, (ii) they are interested parties either under jobbery or bribery, (iii) their examination report is infested with non-bonafides and is not maintainable in the eyes of law.

That the respondents under apparent non-bonafides are bent upon to cause injury to the appellant in various counts (i) in terms of containers detention daily charges, (ii) port storage daily charges, (iii) financial costs, (iv) and others.

That the value of the goods was not assessed as per mandate of Section 25 of the Customs Act, 1969. The price of the Iron Steel Scrap is too low than those assessed by the respondents and their functionaries, the landed cost as escalated by the respondent. Which is in times higher to the prevailing cost of even new bars of the Iron Steel bars,

That the rusty bars exposed to humidity are bona fide waste and scrap as per standard and norms of construction industry. The Collector respondent himself will never dare to use such rusty waste bars in construction of his own dwelling place. The opinion of the respondent on quality of goods is seriously prejudiced.

That the value and quality attributes to the scrap consignment as ascertained by the respondents is not acceptable to the appellant. He offers the consignment to respondent at the transaction value/ declared value of the goods. This will give boost and enrichment to earnings of the Federal Government and Federal Board of Revenue.

It is, therefore, humbly prayed that kindly pass an order for annulment of the impugned Order-in-Original with direction for permission to the appellant to mutilate his consignment within port area before customs clearance of the consignment.

It is, further requested that kindly pass an order for issuance of delay and detention certificates under the mandate of Section 14-A of the Customs Act, 1969. The prayer is being made in the interest of justice.

6.The issue is about the part of the consignment in which Iron Scrap containing bars had been found larger in size compared to the specification/definition of the waste and scrap given in the Import Policy Order. The department/respondent's charge upon the appellants is that the over-sized bars did not meet the definition of scrap and hence not entitled to the import status of tariff treatment available to the scrap.

7.We have heard both the parties and examined the facts. It is true that the part of the consignment consisting bars exceeded the size provided for the waste and scrap in the Import Policy Order. At the same time, we find from the facts of the case that the entire consignment was put to 'Ist Examination' which is a standing policy for all kinds of scrap. We also understand from the case that the consignment was purchased and supplied by the supplier to the buyer, and the former did not understandably take care for the size applicable to the bars (treated as scrap) in Pakistan. We, therefore, do not find any essential element of misdeclaration on the part of the appellants under the circumstances; the appellants also knowing that their consignment would be put to detailed examination before assessment for the duty and taxes and clearance. In the absence of any clear mens rea, it would be fair to give a benefit of doubt to the appellants. Under the circumstances, we find appellant's request for mutilation/scrapping of the offending bars under Section 27-A of the Customs Act, 1969 as reasonable and fair. We direct that the offending part of the consignment be subjected to mutilation/scrapping under the said provision of the law, and charged to duty and taxes as imposed on waste/scrap of Iron on the value ascertained as per Customs standardized practice for the scrap. Redemption fine imposed vide impugned order-in-original is accordingly remitted. The appeal is allowed to the said extent. Delay and detention certificate may also be issued to the appellants.

HBT/8/Tax(Trib.) Appeal allowed.