The COLLECTOR OF CUSTOMS VS FACO INDUSTRIES, 2017 PTD-KARACHI-HIGH-COURT-SINDH 2474 (2016)

Customs Act (IV of 1969)---

----Ss. 32, 80, 81(4) & 196---Assessment of duty---Mis-declaration---Reference to High Court---Classification and description of the consignment---Importer had declared the goods under PCT 7220.9090, whereas, the same had been assessed by the department under PCT 7220.9010---Difference of 5% additional value between declared and assessed value under respective PCT headings---Consignment was physically examined by the department and same was found as per the declaration---No case of misdeclaration was made out---Department had disputed the classification of goods---Provisional assessment having not been finalized by the department which reflected that in terms of subsection (4) of S.81 of the Customs Act, 1969, the provisional determination as per goods declaration, stood finalized---No case of mis-declaration having been established by the department, no justification existed for imposing any redemption fine, or penalty upon the importer when there was no evasion or even difference of duty and taxes in the case---Impugned order passed by the Customs Appellate Tribunal, did not suffer from any error or illegality; whereas it was based on finding of facts, which was neither perverse nor suffering from mis-reading or non-reading of the evidence, but it depicted correct legal position---Reference application, being devoid of any merits, was dismissed, in circumstances.

Messrs Salman Tin Merchant, Karachi v. Collector of Customs, Karachi 2014 PTD 438 and 2011 PTD 79 ref.

Iqbal Khurram for Applicant.

Ghulam Ahmed Khan for Respondent.

Muhammad Javed K.K., Standing Counsel for Respondent.

Date of hearing: 22nd September, 2016.

ORDER

AQEEL AHMED ABBASI, J.---Through instant reference application, the applicant department initially proposed four questions, however, after having read out the questions and the impugned order passed by the Customs Appellate Tribunal, Karachi Bench-I, in Customs Appeal No.K-785 of 2014, learned counsel for the applicant submits that the applicant pressed only first two questions, which according to learned counsel, are questions of law arising from the impugned order dated 05.06.2015 passed by the Customs Appellate Tribunal, Karachi Bench-I, in the instant case, which read as follows:-

(i)Whether on the facts and circumstances of the case the imported goods i.e. Cold Rolled Stainless Steel Strips in Coils (Non Magnetic), Series: 301, Prime Quality, are classifiable under PCT heading 7220- 9010?

(ii)Whether on the facts and circumstances of the case and keeping in view the very admitted fact that the provisional release order was passed by the Adjudicating Authority during the adjudication proceedings under Section 179 of the Act, the Appellate Tribunal erred in law to hold that the goods were released as per orders passed under provisional assessment proceedings of Section 81 of the Act?

2.Learned counsel for the applicant has read out the impugned order passed by the Customs Appellate Tribunal, Karachi Bench-I, in the instant case, as well as the orders of two authorities below and submits that the learned Customs Appellate Tribunal, Karachi Bench-I, was not justified to hold that the proceedings in the instant case were violative of statutory provisions of law, whereas, no case of mis-declaration is made out. Per learned counsel, the respondent imported Cold Rolled Stainless Steel Strips in Coils and declared HS Code 7220.9090, whereas, the imported goods were classifiable under PCT 7220.9010 attracting customs duty at the rate of 5% additional value under FTA regime instead of customs duty at the rate of 0% additional value paid up front, therefore, the impugned action taken by the department, under the facts and circumstances of the instant case, was justified in law and facts. It has been further contended by the learned counsel that the respondent deliberately mis-declared the subject consignment, therefore, the imposition of redemption fine of 20% of the value of goods and personal penalty upon the respondent in the sum of Rs.50,000/- was made in accordance with law. It has been prayed that the impugned, order passed by the Customs Appellate Tribunal, Karachi Bench-I, may be set-aside and the questions proposed may be answered in favour of the applicant and against the respondent.

3.Conversely, learned counsel for the respondent at the very outset submits that no question of law arises from the impugned order passed by the Customs Appellate Tribunal, Karachi Bench-I, which according to learned counsel, is based on proper appreciation of facts and correct application of law, hence, does not require any interference by this Court while exercising its reference jurisdiction. It has been contended by the learned counsel for the respondent that the applicant department could not make out a case of mis-declaration, whereas, there is no dispute with regard to duty and taxes. However, per learned counsel, the subject goods imported were released provisionally by the applicant department in terms of Section 81 of the Customs Act, 1969, whereas, the matter was to be referred for verification of classification and description of the goods under the proper HS Code. Per learned counsel, thereafter, applicant department neither finalized provisional assessment nor adjudication proceedings were initiated, therefore, the provisional assessment stood finalized on the expiry of the period provide for its finalization in terms of Section 81(4) of the Customs Act, 1969. It has been contended by the learned counsel for the respondent that since no reasons whatsoever, were given by the department while imposing redemption of 20% of the value of goods, and personal penalty, therefore, the same have rightly been remitted by the Collector (Appeals), whereas, such decision has also rightly been confirmed by the Customs Appellate Tribunal, Karachi Bench-I, through impugned order. Per learned counsel, instant reference application is devoid on merits, which may be dismissed in limine.

4.We have heard the learned counsel for the parties, perused the record, as well as the impugned order passed by the Customs Appellate Tribunal, Karachi Bench-I, and the orders of two authorities below with their assistance. Since there is no dispute with regard to the facts of the case, we would not dilate upon the facts of the case in detail. Precise controversy involved in the instant case, relates to a dispute regarding classification and description of the subject consignment, which was declared by the respondent under PCT 7220.9090, whereas, the same has been assessed by the applicant department under PCT 7220.9010. Admittedly, there is no dispute with regard to customs duty and taxes under aforesaid PCT headings except difference of 5% additional value under FTA regime. Admittedly, the subject consignment was physically examined by the applicant department and the subject consignment was found as per declaration, whereas, no case of mis-declaration was made out. However, it appears that the applicant department created a dispute regarding classification of goods under the aforesaid HS Code. The consignment was provisionally released pursuant to ONO dated 07.03.2013, whereas, it was admitted by the applicant department that for the purposes of final determination of classification of goods, the matter is to be referred to the laboratory for its decision, however, while confronted as to whether the subject consignment was referred to any laboratory for verification of proper HS Code, the learned counsel for the applicant has not been able to point out any subsequent developments, if any, made by the applicant department in this regard. Admittedly, in the instant case, the provisional assessment made by the department has not been finalized, which reflects that in terms of subsection (4) of section 81 of the Customs Act, 1969, the provisional determination as per goods declaration stood finalized.

5.It will be advantageous to reproduce the relevant finding of the Appellate Tribunal, which reads as follows:--

"10. In this case, final determination was made after expiry of the stipulated period of six months. In a number of judgments, superior courts have held such assessment as void and unlawful. The Hon'ble Sindh High Court in the judgment referred to in para 14 supra has further held;

"If the final determination is not completed within the stipulated period, then the provisional determination becomes final, and this does not include the "additional amount". In the facts and circumstances of the present case, we hold that the stipulated period was not extended in terms of the proviso to subsection (2), and hence expired at the end of nine months. Since there was no final determination within the nine months, the provisional determination became final. Furthermore, since the petitioner had discharged its liability in terms of the provisional determination, no other amount was payable by it, with the result that any cheques given by the petitioner for securing the "additional amount" cannot be encashed and must be forthwith returned to it by the Department."

11. In Messrs Salman Tin Merchant, Karachi v. Collector of Customs, Karachi (2014 PTD 438) the Hon'ble Sindh High Court observed:

"Consequently, as stated earlier, we are of the opinion that the initial assessment was made under section 81 of the Act, but was not finalized within the stipulated period as required under subsection (2) of section 81 of the Act, therefore, the provisional assessment made on the basis of the declaration made by the 'applicant, has attained finality---"

12. Similar view has been held in a number of judgments passed by the Hon'ble Supreme Court of Pakistan, Hon'ble Sindh High Court and the Hon'ble Lahore High Court on the issue of determination of duty and taxes finalized after the expiry of stipulated period. In M/s. Wall Master v. The Collector of Customs Appraisement, Karachi (2005 PTD 2573), the Hon'ble Sindh High Court has observed "No final assessment order has been made under section 80 of the Customs Act and, therefore, by virtue of the provisions contained in Section 81(4) of the Customs Act, the provisional assessment made under section 81(1) has attained finality. There is no dispute on the fact that the period of one year (reduced to six months under Finance Act, 2005) specified in subsection (2) of section 81, from the date of provisional assessment has expired and there is no order extending the period of final assessment by 90 days by the Collector of Customs. Thus the provisional assessment orders have attained finality". In the light of the above, I hold the final determination of duty and taxes in this case as time barred.

13. It is also important to refer and observe that the determination of PCT heading is the sole function of the Customs Officers, importer is only, would assist the customs in citing the PCT heading of the goods. As per the dictum under the citation 2011 PTD 79, the appropriate/ relevant part of the observation made by the Honorable High Court is reproduced as under:-

"Point for consideration was, whether citing of a wrong PCT heading in respect of classification of imported goods would constitute an act of mis-declaration within the ambit of mischief of S.32 of the Customs Act, 1969---Additional Collector had failed to consider that determination of PCT Heading was a sole function of the Customs Officers and importer only would assist the customs in citing PCT heading of the goods---Request of the importer could be accepted or rejected by the competent authority, but it was not a punishable offence under any of the provisions of Customs Act, 1969 or notification issued thereunder-Citation of a particular PCT heading in the Bill of Entry , would, not amount to mis-declaration---Allegations under S.32(1)(2) of the Customs Act, 1969, in circumstances were unwarranted."

14. By getting the strength from the above referred observations and ratio decidendi observed and decided by the Honorable Superior Courts thereon, I am of the considered view that the proceedings in the subject case are infested with patent deficiencies and violations of statutory requirements are hereby declared illegal, void, ab-initio and accordingly set aside, appeal is, therefore, allowed as prayed with no order as to cost.

15. Order passed and announced accordingly."

Since, no case of mis-declaration could be established by the department, therefore; there was no justification whatsoever, for imposing any redemption fine, or penalty upon the importer, particularly, when there is no evasion or even difference of duty and taxes in the instant case. While confronted with the above factual and legal position, learned counsel for the applicant has not been able to controvert the same. We are of the opinion that the impugned order passed by the Customs Appellate Tribunal, Karachi Bench-I, does not suffer from any error or illegality, whereas, it is based on finding on facts, which is neither per-verse nor suffers from mis-reading or non-reading of the evidence, moreover, it depicts correct legal position. Accordingly, instant reference application being devoid of any merits, is hereby dismissed in limine along with listed application, whereas, the questions proposed hereinabove do not arise from the impugned order passed by the Customs Appellate Tribunal, as the decision of the Appellate Tribunal is based upon concurrent finding on facts relating to imposition of redemption fine and personal penalty upon the respondent in the absence of mis-declaration.

HBT/C-25/Sindh Application dismissed.