INAYAT INTERNATIONAL TRADING CO., PESHAWAR VS The COLLECTOR OF CUSTOMS (APPEALS), KARACHI
2019 P T D (Trib.) 135
[Customs Appellate Tribunal]
Before Muhammad Nazim Saleem, Member (Technical-II)
Messrs INAYAT INTERNATIONAL TRADING CO., PESHAWAR
versus
The COLLECTOR OF CUSTOMS (APPEALS), KARACHI and another
Customs Appeal No.K-820 of 2016, decided on 10/06/2017.
Customs Act (IV of 1969)---
----Ss. 18 & 25---Customs Value of goods---Determination---"High Efficiency Agricultural Irrigation Submersible Pump", were imported declaring at the rate of unit value of US $ 15.5000; whereas correct description of goods was "Deep Well Submersible Pump with Built-in Motor made of Stainless Steel Body along with Pump" assessable at value of US $ 30.000---Importer had not declared correct description of the goods---Department assessed the value at US $ 30 per piece based on relevant data available---Value of goods was changed with the change in description which showed that importer deliberately misdeclared description so that same could be assessed at lower value---Importer had not rebutted the argument of department that some of the Pumps had size and specification, which were used for domestic purpose and not for agriculture---Exemption of customs duty and sales tax in Fifth Schedule to the Customs Act, 1969 and Sixth Schedule to the Sales Tax Act, 1990, respectively was subject to the condition that the goods were used for "agriculture purpose"---Goods in question were also manufactured locally---Preamble of the Fifth Schedule to Customs Act, 1969, clearly stipulated that the benefit of the Schedule was not available to locally manufactured goods---Importer had contended that locally manufactured Pumps were made of stainless steel, whereas in imported Pumps only outer body was made of steel---Importer could not justify said claim with any certification from the Engineering Development Board---No legal or factual reason existed to interfere with the impugned order-in-appeal, which was upheld being a lawful order, in circumstances.
Adeel Awan for Appellant.
Noor Alam Durani, Principal Appraiser for Respondents.
Date of hearing: 30th May, 2017.
JUDGMENT
MUHAMMAD NAZIM SALEEM, MEMBER (TECHNICAL-II).--This judgment disposes off Customs Appeal No.K-820/2016 filed by the Appellant against Order-in-Appeal No.57/2016, dated 26.1.2016 passed by the Collector of Customs (Appeals), Karachi.
2.Brief facts of the case as reported in the impugned order-in-appeal are that the appellant imported a consignment of "High Efficiency Agricultural Irrigation Submersible pump" from China against GD Machine No.KAPE-HC-64575-13-11-2015 under the HS Code 8413.7010 was declared at the rate of unit value of US$ 15.5000 whereas correct description was "Deep Well Submersible Pump with Built in Motor made of Stainless Steel Body along with Pump" assessable at value US$ 30.000.
3.On appeals filed by the Appellant against the assessment of goods finalized under Goods Declarationbearing No.KAPE-HC-64575-13-11-2015 by the Model Customs Collectorate of Appraisement-East, Custom House, Karachi, the Collector of Customs (Appeals), Karachi vide Order-in-Appeal No.57/2016 dated 26.01.2016, passed the following order:-
"I have examined the case record. The appellants are aggrieved on two counts that they were not allowed the concession admissible to them under 5th Schedule to the Customs Act, 1969 and 6th Schedule to the Sales Tax Act, 1990, also their customs value was enhanced. The responding department during the hearing proceedings claimed that the appellants have not established that the goods were for specific use in Agriculture, some of the sizes are for domestic/ house hold use, above all these goods are manufactured locally, therefore the aforesaid concessions are not admissible. The appellants stated that locally manufactured pumps are all made of stainless steel, whereas in imported goods, only outer body is made of steel, however they could not justify this claim with any certification from EDB. Being made of stainless steel, determination of customs value by the respondents is at par with similar goods. I do not find any reason to disturb the assessment. The appeal being without merit fails."
4.Feeling aggrieved and dissatisfied with the above order, the Appellants filed an appeal before this Tribunal on the following grounds:-
A.That the value of the impugned goods was enhanced in violation to mandate of subsection (1) of Section 25 of Customs Act, 1969. The transaction value (the prices paid) was not rebutted by the respondents. The transaction value of the impugned goods is correct and the same is the Customs value under the law for payment of duty taxes.
B.That the respondents have frustrated, the genuine transaction value, arbitrarily and enhanced the same equal to twice of the transaction value, without disclosing the basis for same. The respondents did not issue notice for enhancement of the value as mandated under Section 25(4) ibid, and acted in violation to Article 10-A of the Constitution vide citation 2008 SCMR 438.
C.That the respondents, as per prevailing practice, had been assessing the value of the impugned goods as per the transaction value. Moreover, the respondents have been assessing the same commodity at the transaction value even after the date of assessment made in the impugned G. D.
D.That the major, main and typical working parts such as (i) impeller, (ii) diffuser, and (iii) non-return valve of the subject consignment are made of thermoplastic resin are molded produced. Whereas M/s. HMA fabricate the said items from stainless steel, an expensive process, moreover, it has annual manufacturing capacity for production of same capacity pumps equal to 600 pieces.
E.That the demand and import, of the same capacity submersible pumps, in Pakistan is more than 500,000 units annually and a manufacturer having 600 pieces annually cannot cater the demand of 500,000 pieces being imported into Pakistan from worldwide sources. The goods under the present case are of China Origin, the price paid in the present case is verifiable through the Embassy of Pakistan in China and the international inspecting agency SGS etc.
F.That the respondent under apparent non-bona fides, for undue enrichment, did not opt for independent inquiry for verification of genuineness of the transaction value, which was the customs value under Section 25(1) of the Customs Act, 1969. The act of omission or commission for frustration of the transaction value is unlawful, unconstitutional, without jurisdiction under misuse of authority as to cause injury to the appellant.
G.That the appellant has imported the submersible pumps for agricultural purposes, and the same are being used in agricultural usage, including but not limited to watering or dewatering from under soil or soil. The respondent has no authority to deny the usage and purpose of imported goods for apparent non-bona fide for denial of right of exemption available to the appellant.
H.That the submersible pumps (falling under HS Code 8413.7040) are equally useable for agricultural purposes, hence qualifies the concessionary rate of customs duty as prescribed under Section 18 (1A) of the Customs Act, 1969 instead of Section 18(l) ibid. The condition of local manufacturing is not applicable, on the subject goods, because the submersible pumps are made of plastic parts, which are not being manufactured locally.
I.That the submersible pumps (classifiable under HS Code 8413.7010) under import are exempt from the levy of Sales Tax under the mandate of Section 13 of the Sales Tax Act, 1990 at SerialNo.113 of the Sixth Schedule.Thereisnoconditionof local manufacturing, for exemption from payment of sales tax, is prescribed under the Sixth Schedule to the Sales Tax Act, 1990.
It is, therefore, humbly prayed that kindly pass an order as to:
annul the impugned Order-in-Appeal as well as Assessment Order, passed by the respondents, without determination of facts and laws of the appellant's case, rather the assessment was made on refusal to accept the evidences of past clearances and applicable laws;
directions to the respondent No. 2 to refund the exceeded amount of duty and taxes to the appellant forthwith.
5The Respondent Department have submitted their counter-objections/comments in terms of 194-A (4) of the Customs Act, 1969 which are reproduced as under:--
A)That the contents of Para (A) are absolutely false and baseless, hence vehemently denied. The fact is that since the value declared was found incorrect and at lower side, accordingly the same was enhanced on the basis of cogent evidences and data and as such the same is neither arbitrarily nor the declared value is actual transaction value in terms of Section 25(1) of the Customs Act, 1969.
B)That the contents of Para (B) are also absolutely false and baseless, hence vehemently denied. The fact is that since the value declared by the appellant was crystal clearly been found at lower side and the same cannot be said to be the actual transaction value, accordingly the same was enhanced on the basis of available data and evidences of the actual description of the goods. There is no violation of Section 25(4) of the Customs Act, 1969 and Article 10-A of the Constitution of Islamic Republic of Pakistan, 1973 as alleged. The case law reported has no relevancy with the instant case.
C)That the contents of Para (C) are repetition of Para 6 above for which reply has been given and as such this Para require no further comments.
D)That as regards the contents of Para (D) it is submitted that the appellant has immensely failed at the stage of assessment of goods to provide any substantive cogent documentary evidence to establish that the goods were for specific use in Agriculture, some of the sizes were for domestic/house hold use and as such the same does not justify the description as the appellant tried the appellant in Para under reply.
E)That the contents of Para (E) are self explanatory and are not in the knowledge of the answering respondent except that the consignment was imported from China, hence require no comments.
F)That the contents of Para (F) are also absolutely false and baseless, hence vehemently denied. The fact is that since the valid and available data and evidences are available for the assessment of the goods, there was no need for conducting any enquiry regarding the transaction value as alleged by the appellant in Para under reply.
G)That the contents of Para (G) are repetition of previous Para. It is however reiterated here that the appellant has immensely failed at the stage of assessment of goods to provide any substantive cogent documentary evidence to establish that the goods were for specific use in Agriculture, some of the sizes were for domestic/house hold use and as such the same does not justify the description as the appellant tried the appellant in Para under reply.
H)That the contents of Para (H) are repetition of previous Para for which reply has been given, hence this Para require no further comments.
I)That the contents of Para (I) are also false and baseless, hence vehemently denied. The fact is that the exemption of Sales Tax was also not available to the appellant. The appellant has incorrectly interpreted the 6th schedule to the Customs Act, 1969.
It is, therefore humbly prayed that this Honorable Tribunal may graciously dismiss the appeal of the appellant being devoid of merits.
6.I have heard both the contesting parties as well as examined the relevant record. As per record, the Appellant has not declared correct description of his goods. He declared the same as High Efficiency Agriculture Irrigation Submersible pump valuing US$ 15/Pieces. However, on examination by the Respondent Department, the same was found to be "Deep Well Submersible Pump with Built-in Motor made of Stainless Steel Body along with Pump". The Department assessed value at US$ 30/Piece based on relevant data available with them. With change of description, the value of goods was changed. The said position shows that the Appellant deliberately misdeclared description so that the same could be assessed at lower value i.e. USD 15/piece. On the issue of its use, the Appellant has not rebutted the arguments of the Respondent DepartmentthatsomeofthePumpshavesizeandspecificationwhichare used for domestic purpose and not for Agriculture. The exemption of customs duty and sales tax in Fifth Schedule to the Customs Act, 1969 and Sixth Schedule to the Sales Tax Act, 1990 respectively is subject to the condition that the goods are used for Agriculture purpose. Furthermore, the goods are also manufactured locallyasperC.G.O.11of 2007.ThepreambleoftheFifthScheduleto Customs Act, 1969 clearly stipulates that the benefit of the Schedule is not available to locally-manufactured goods. Regarding Appellant's contention that the locally-manufactured Pumps, are made of stainlesssteelwhereasinimportedPumpsonlyouterbodyismadeof steel, I subscribe to the observations of learned Collector of Customs (Appeals); Karachi that the Appellant could not justify this claim with any certification from the Engineering Development Board (EDB).
7.In view of above, I do not find any reason, legal or factual to interfere with the impugned order-in-appeal. The same is, therefore, upheld being a lawful Order. The appeal is dismissed for lacking in merit.
8.Announced.
HBT/68/Tax(Trib.)Appeal dismissed.