DEPUTY COLLECTOR OF CUSTOMS, KARACHI VS MUNEEB STEEL, LAHORE
2019 P T D (Trib.) 165
[Customs Appellate Tribunal]
Before Muhammad Nazim Saleem, Member (Technical-II)
DEPUTY COLLECTOR OF CUSTOMS, KARACHI
Versus
Messrs MUNEEB STEEL, LAHORE and another
Customs Appeal No.K-15 of 2017, decided on 10/06/2017.
Customs Act (IV of 1969)---
----Ss. 19-A, 33 & 81---Provisional assessment of duty---Refund---Consignment was declared to contain "cold rolled Steel Sheets and Coils in Secondary Quality" under PCT heading 7209.1610 at unit value of US $ 400 PMT---Subject goods were assessed provisionally at US $ 494 PMT by securing differential amount of duty and taxes in shape of post dated cheque, pending clarification of value from the Directorate General of Customs Valuation---Directorate General of Customs Valuation directed that contracts/LCs opened on or after 1.3.2009 up to 31.5.2009 could be assessed at US $ 345 PMT---Declared value of the importer at US $ 400 PMT was higher than the value determined by the Directorate General of Customs Valuation---Importer approached Securities Section of the Collector for release/refund of their Security (cheque), but security cheque was got en-cashed by the department on 21-6-2012 as the provisional assessment was made on 22-5-2009, and the time period of provisional assessment had expired much before the encashment of the cheque in question---Subsequently, the Collectorate directed the importer to furnish the documents in support of his refund claim, proving thereby that incidence of duty and taxes had not been passed on to the end consumer in terms of S.19-A read with S.33 of Customs Act, 1969---Importer instead of furnishing the same, contested the matter that S.19-A of Customs Act, 1969 was not applicable to his case as the differential amount of duty and taxes were secured provisionally---Adjudicating Officer vide order-in-original held that charges against the importer was proved---Appellate authority set aside the order of Adjudicating Officer---Validity---Appellant department had complicated case by getting cheque encashed perhaps in a drive for "earning" revenue---Department, instead of finalizing the provisional determination within six months, as required under S.81(2) of the Customs Act, 1969, after three years got encashed the post-dated cheque---Department was bound to finalize assessment by 21.11.2009 as the provisional assessment was done on 22.5.2009---Said final determination could have been done much before expiry of mandatory period of six months; as the Directorate General, Customs Valuation had decided the matter vide letter dated 13.6.2001 by advising the appellant department to assess the goods at value US $ 345 PMT---Department'sfailuretocomplywithmandatoryprovisionoflawwasa serious omission---Directorate General Customs Valuation, had directedthedepartmentthattwoamountsweretoberefunded/ returned to the importer; (i)differencebetween US $400PMTandUS $494PMT(Postdatedcheque);and(ii)differencebetweenUS $ 354 PMTand US $ 400 PMT---Importerhaddepositeddutyand taxes as per declared value US $ 400 PMT---Said process shouldhave been completed within few days/weeks of receiving advice from the Directorate General, Customs Valuation on---Department had attended the case, not only in the extremely non-professional manner, but had deprived the importer of his legitimate money for long 8 years for no fault of him, which was quite disturbing and detestable---Collector of Customs was directed to immediately return both the amounts to the importer without any loss of time.
Nemo for Appellant.
Adeel Awan for Respondent No.1.
Date of hearing: 30th May, 2017.
JUDGMENT
MUHAMMAD NAZIM SALEEM, MEMBER (TECHNICAL-II).--ThisJudgmentdisposesofCustomsAppealNo.K-15/2017filedbytheAppellantDepartmentagainstOrder-in-AppealNo. 1136/2016dated 01.11.2016 passed by the Collector of Customs (Appeals), Karachi.
2.Brief facts of the case as reported in the order-in-appeal are that the Appellant imported a consignment and declared to contain "Cold rolled Steel Sheets and Coils in Secondary Quality" and filed a Goods Declaration No.I. HC-1006244 dated 15.05.2009 under PCT heading 7209.1610 at unit value of US$ 400/PMT against Letter of Credit (L/C) No. CSLC2572/090037 dated 17.03.2000. Since, there was dispute of value, therefore, the subject goods were assessed provisionally under section 81 of the Customs Act, 1969 at US$ 494/PMT by securing differential amount of duty and taxes to the tune of Rs.1,670,596/- in shape of post dated Cheque No. 1003195 dated 28.05.2012 pending clarification from the Directorate General of Customs Valuation, Karachi. Subsequently, the Directorate General of Customs Valuation, Karachi vide letter C.No. Misc/32/2009-IVA/1255, dated 13.06.2009 directed that Contracts/LCs opened on or after 1st March, 2009 upto 31.05.2009 may be assessed as under:--
| IRON AND STEEL SECONDARY QUALITY P | PRODUCTS |
| II.R.C. | C.R.C. | G.P |
| (US$/MT) | (US$/MT) | (US$/MT) |
| 325 | 345 | 425 |
The declared value of the Appellant at US$ 400/MT was higher than the value determined by the Directorate General of Customs Valuation, Karachi vide aforesaid letter dated 13.06.2009. It is, however, admitted to the extent that the importer has approached securities section of the Collectorate for release/refund of their security (cheque), however, it was that their secured cheque was got en-cashed manually on 21.06.2012, as the provisional assessment in the instant case was made on 22.05.2009 and the time period of provisional assessment had expired much before the encashment. Subsequently, the Collectorate vide letter dated 29.04.2016 directed the importer to furnish the documents in support of his refund claim proving thereby that incidence of duty and taxes have not been passed on to the end consumer in terms of Section 19-A of the Customs Act, 1969 read with section 33 ibid. Instead of furnishing the same, the importer contested the matter vide letter dated 30.04.2016 that Section 19-A is not applicable in their case as the differential amount of duty and taxes were secured provisionally.
3.The adjudicating officer vide Order-in-Original No.11/2016-MCC (East) dated 22.07.2016 held that the charges against the Respondent party is proved. The operative part of the impugned order reads as under:--
"I have examined the record of the case. The importer was requested vide to furnish the documents in terms of Section 19-A of the Customs Act, 1969 to prove that the incidence of duties and taxes have not been passed on to the end consumer. But instead of providing the same, they have contested that application of Section 19-A is not relevant in their case. This aspect of the importer cannot be accepted. In this regard, reliance is placed on reported judgments by the Hon'ble Superior Courts i.e. in the case of Messrs Facto Belarus Tractors (2005 PTD 2286), M/s. Pak Suzuki Motor Co. Ltd. (2007 PTC 426) and Messrs Orient Colour Lab. (200 TPCT 1594), where under identical circumstances it was held that party was required to discharge its burden of proof to show that incidence has not been passed on to the end consumer, as required under section 19-A of the Customs Act, 1969. In view of the above, this office is of the considered opinion that in the instant case, the importer has passed on the incidence, of duties and taxes to the end consumer and therefore, the refund claim of the importer is rejected."
4.On appeal filed by the Respondent party against the above order-in-original, the, Collector of Customs (Appeals), Karachi vide Order-in-Appeal No.1136/2016 dated 01.11.2016, passed the following order:--
"I have examined the record. The appellants imported CRC secondary quality vide G.D 1006244, dated 15.05.2009 at the declared transaction value of US$ 400/MT, the transaction value was not accepted and provisional determination was made under section 81 of the Customs Act, 1969 with anticipated value @ US$ 494/MT. The differential amount of duty was secured vide cheque No. 1003195. Subsequently Directorate General of Valuation vide ruling dated 13.06.2009 determined value of such goods imported against contracts/LCs between 01.03.2009 to 31.05.2009, as US$ 345/MT. The appellants declared transaction stood validated. The responding department was required to pass a final assessment order as envisaged under section 81(5) of the Act and to return the security. Later, after a time lag of three years, the cheque was encashed by the respondents. Now vide impugned order it has been held that incidence of duty and taxes was passed on by the importer. It is amazing that appellants had been only requesting release of their security furnished vide the above cheque, but the respondents have converted the same into refund claim. There was no payment made either through inadvertence, error or misconstruction. The department did not apply better judgment as how a cheque encashed in 2012 can become part of price of goods imported and sold in 2009. It is also perplexing why a cheque of three years post date was accepted, when the limitation period under section 81 could not go beyond nine months. It is evident that the order has been passed mechanically to cover up the illegal encashment of the impugned cheque. The same is held to be arbitrary and set aside. The appeal is successful."
5.Being aggrieved and dissatisfied with the Order-in-Appeal, the Appellant Department filed the instant appeal before this Tribunal on the grounds, which arc reproduced as under:--
A.That the impugned Order-in-Appeal is ab-initio illegal, unjust and with wrong/absurd interpretation of the case, hence, liable to be set aside forthwith.
B.That the Order-in-Appeal has been passed without considering the view point of the department hence the same becomes ex-parte in nature. It is submitted that the Respondent No.2 decided the case in favour of the importer merely on the fabricated ground that "appellant had been only requesting release of their security furnished vide the above cheque, but the respondent have converted the same into refund claim. There was no payment made either through inadvertence, error or misconstruction. The department did not apply better judgment as how a cheque encashed in 2012 can become part of price of goods imported and sold in 2009. It is also perplexing why a cheque of three years postdate was accepted, when the limitation period under the section 81 could not go beyond nine months. It is evident that the order has been passed Mechanically to cover up the illegal encashment of the impugned cheque. The same is held to be arbitrary and set aside".
C.That the Collector (Appeal) failed to consider that under Section 19A of the Customs Act, 1969 no person qualify for refund of duty taxes unless he/she is deemed to pass on the full incident unless he proves contrary Section 19A is reproduced as under:
D.That it is specifically mentioned here that in an identical case Bearing No.K-1559/2016, the Honourable Member of Bench-III accepted department's point of view and dismissed the Appeal, wherein importer failed to prove that the incident of duty and taxes had not been passed on to the end consumer.
In view of the aforesaid submissions, it is respectfully prayed that this Honorable Appellate Tribunal may be pleased to:
i.Declare that the impugned order is ab-initio void, illegal and therefore, liable to be set-aside.
ii.Declare that the provision of Section 19A is very rightly applicable in the instant case specifically in the light of Superior Courts Orders.
iii.Declare that the Order passed by the Adjudicating Officer was correct and in accordance with law.
6.The Respondent party has filed their para-wise comments on the Memo. of Appeal filed by the Appellant, which are reproduced as under:-
A.That the contents of ground A are vehemently denied.
B.That the contents of ground B are mis-stated and simply the Order-in-Appeal has been re-produced as there are no legal grounds which can cover the mis-conduct and arbitrary acts of the appellant.
C.That the contracts of ground C are mis-conceived as the facts and laws of the case simply proves that the instant matter was that of release of security cheque under section 81(5) of the Customs Act, 1969, as the same provisional determination was finalized in consequence to the findings by Directorate General of Customs Valuation on the specific reference by the appellant in case of the respondent No.1, and the same declared transaction value was already much higher than the ascertained by competent authority. Hence, there is no question of presumption under section 19A ibid. arise in case of release of seemity cheque.
D.That the contents of ground D are false, frivolous and misconceived, the undersigned counsel was also the counsel in appeal referred to in para and the same has no nexus or relation with the issue in hand. The referred appeal was against the refund application against over-payment of duty and taxes inadvertently and through error at the time of filing of G.D. Hence, the findings by this Hon'ble Tribunal in referred case has no similarity of facts and laws of the case in hand.
It is, therefore, humbly prayed on behalf of replying respondent No. 1 that this Hon'ble Tribunal may kindly dismiss the captioned appeal with an order as to;
1)Declare that the presumption under section 19A of the Customs Act, 1969, does not operate in the case of release of security amount under section 81(5) against the final determination by the competent authority, as there was no payment through error, inadvertence or mis-construction;
2)Declare that the act of Appellant Collectorate to en-cash a security cheque after a period of more than three (03) months with fabrication is an act culpable crime under the law;
3)Direct the appellant to release/refund the amount against security cheque without further delaying tactics.
7.I have heard arguments of the learned Counsel of the Appellant as well as the learned Representative for the Respondent Department besides examining the relevant record. My observation is that the Appellant Department has complicated this case perhaps in a drive for "earning" revenue. As per Memo of Appeal, a post-dated cheque dated 28.05.2009 amounting to Rs.1,670,596/- was obtained by the Appellant Department from the Respondent party for securing the differential amount of duty and taxes between declared value of US$ 400/M.T and provisional assessment at US$ 494/M.T. Subsequently, the Directorate General of Customs Valuation, Karachi vide letter dated 13.06.2009 confirmed that contracts/Letter of Credits opened on or after 01.03.2009 upto 31.05.2009 may be assessed at US$ 345/M.T. The above cheque was, however, got encashed by the Appellant Department manually on 21.06.2012 as the provisional assessment was done on 22.05.2009 and the time period of provisional assessment had expired much before the encashment. The Memo. of Appeal further states that the "Collectorate vide letter dated 29.04.2016 requested the importer to furnish the documents in support of his refund claim proving thereby that incidence of duty and taxes have not been passed on to the end consumer in terms of section 19-A read with section 33 of the Customs Act, 1969." Here, I feel baffled to observe that instead of finalizing the provisional determination within six months, as required under section 81(2) of the Customs Act, 1969, the Appellant Department after three years encashed the post-dated cheque dated 28.05.2009 on 21.06.2012. It was mandatory on the Appellant Department to finalize assessment by 21.11.2009 as the provisional assessment was done on 22.05.2009. Infact, the said final determination could have been done much before expiry of mandatory period of six months as the Director General, Customs Valuation had decided the matter vide letter dated 13.06.2009 by advising the Appellant Department to assess the goods at value US$ 345/M.T. The aforestated position reflects that the assessment could have been finalized within one month of provisional assessment done on 22.05.2009. The Appellant Department's failure to comply with mandatory provision of law is serious omission on their part. More disturbing fact is that instead of finalizing determination and returning the amount secured in the Form of a post-dated cheque to the Respondent party, the Appellant Department encashed the post-dated cheque after about three years in 2012. In my assessment, this is height of non-professionalism and high-handedness on the part of Appellant Department.
8.The question of passing of incidence in terms of section 19-A of the Customs Act, 1969 is absolutely irrelevant in this context. It is important to reproduce the said provision of law which is detailed hereunder:--
"19A. Presumption that incidence of duty has been passed on to the buyer.---Every person who has paid the customs duty and other levies on any goods under this Act shall, unless the contrary is proved by him, be deemed to have passed on the full incidence of such customs duty and other levies to the buyer as a part of the price of such goods."
The study of section 19-A clearly shows that it is relevant where the customs duty and other levies have been paid. In the instant case, the customs duty and taxes were not "paid" because the Appellant Department got from them a post-dated cheque as a security instrument so that the same could be encashed if the value was determined higher than the declared value. The matter was pending with the Appellant Department to finalize assessment as the goods had been released on provisional assessment. In this case, the Respondent party had declared value of their goods as US$ 400/M.T whereas the Directorate General, Customs Valuation advised the Appellant Department to assess the goods against US$ 345/M.T. It may be mentioned here that the security in the form of post-dated cheque was for the differential amount between US$ 400/M.T and US$ 494/M.T. This was simple preposition, therefore, Appellant Department was required to return/ refund the amount of duty and taxes worked out between US$ 345/M.T and US$ 494/M.T. Here, it is quite significant to point out that as per advice of the Director General, Customs Valuation, Karachi, two amounts were to be returned/ refunded to the Respondent party (i) difference between USD 400/M.T. and USD 494/M.T. (post-dated cheque) and (ii) difference between USD 354/M.T and USD 400/M.T as the Respondent party had deposited duty and taxes as per declared value USD 400/M.T. This process should have been completed within few days/weeks of receiving advice from the Directorate General, Customs Valuation on 13.06.2009. Here, I fully endorse views of the learned Collector of Customs (Appeals), Karachi that "It is amazing that appellant had been only requesting release of their security furnished vide the above cheque, but the respondents have converted the same into refunds claim. There was no payment made either through inadvertence, error or misconstruction".
9.The position detailed in the preceding para leads me to conclude that the Appellant Department has attended this case not only in an extremely non-professional manner but has deprived the Respondent party of his legitimate money for long (08) years for no fault of theirs which is quite disturbing and detestable. Surprizingly, the Appellant Department had enough guts to file an appeal against the lawful Order of the learned Collector, Customs (Appeal), Karachi who had appreciated this case in its true perspective. The Collector of Customs Appraisement (East), Karachi is directed to immediately return both the amounts, as mentioned in the preceding para, to the respondent party without loss of time. He is further directed to hold an inquiry into this case with a view to fix responsibility for non-professional handling of this case and unjust/ unfair treatment meted out to the respondent party for a long period of eight (08) years and take appropriate action against the delinquent officers of the Collectorate.
10.In view of above, the impugned order-in-appeal is upheld as a valid order. The appeal is dismissed being absolutely contrary to law and facts.
11.Announced.
HBT/67/Tax(Trib.)Appeal dismissed.