FATIMA INDUSTRIES (PVT.) LTD., KARACHI VS DEPUTY COLLECTOR
2019 P T D (Trib.) 469
[Customs Appellate Tribunal]
Before Syed Tanvir Ahmed, Member Technical-III
FATIMA INDUSTRIES (PVT.) LTD., KARACHI
Versus
DEPUTY COLLECTOR and 2 others
Customs Appeal No.K-448 of 2018, decided on 30/08/2018.
(a) Customs Act (IV of 1969)---
----Ss.79, 32, 45, 25(1) & 166---Customs Rules, 2001, Rr. 113 & 433---Customs General Order No. 12 of 2002 dated 12.06.2002 Para.78---S.R.O. No.499(I)/2009 dated 13.06.2009---Declaration---False statement---Knowledge of declarant---Scope---Transaction value of imported goods---Determination---Power to summon persons to give evidence and produce documents---Scope---Method of valuation---Price actually paid or payable---Import General Manifest---Shipping Company, duty of---Issuance of show-cause notice---Procedure---Appellant imported old and used crimping machine at declared value of US $ 2000 whereas invoice of a higher value of US $ 20,000 was found in the container---Deputy Collector of Customs (Adjudication) vide order-in-original confiscated the machine, imposed redemption fine and personal penalty---Appeal filed before Collector of Customs (Appeals) was dismissed---Validity---Appellant had produced a letter of supplier in which it was stated that its staff negligently made mistake by typing wrong value of US $ 20,000 in invoice instead of correct value---Department rejected the document of supplier but did not verify the letter or send email or conducted inquiry to confirm its veracity---Invoice found in the container could not be treated as direct evidence---Invoice did not qualify as "transaction value" in the absence of any evidence or proof---Appellant/importer was not responsible for invoice found in the container he had no knowledge of said invoice, therefore there was no reason to believe that the declaration submitted by him was false in material particulars---Shipping companies were to place invoice of the shipped goods for filing Import General Manifest---Appellate Tribunal allowed the appeal and vacated the show-cause notice.
Fazal Kader Chowdri v. Crown PLD 1952 FC 19 ref.
(b) Customs Rules, 2001---
----Rr. 113 & 433---Customs General Order No. 12 of 2002 dated 12.06.2002, Para. 41---Customs Act (IV of 1969), S. 223---Constitution of Pakistan, Arts. 18 & 25---Imports declaration---Method of valuation---Price actually paid or payable---Valuation of second hand machinery---Officers of Customs to follow Federal Board of Revenue's orders---Freedom of trade---Discrimination among importers---Scope---Appellant imported old and used crimping machine at declared value of US $ 2000 whereas invoice of a higher value of US $ 20,000 was found in the container---Department assessed his imported old and used machinery at the rate of US $ 38.46/kg for levy of duty and taxes as against his competitors whose old and used machinery of the same origin had been assessed for levy of duty and taxes at the rate of US $ 1.4 to 1.46/kg depending on their condition---Attitude of department negated the level playing field for maintaining of healthy and fair competition---Assessment of other importer's consignments of the same origin for payment of lesser amount of duty and taxes as against appellant was infringement of his fundamental rights, being in derogation of Art. 18 of the Constitution---Determination of value for levy of duty and taxes of the imported old and used machinery under any other method contrary to Para. 41 of Customs General Order No. 12 of 2002 dated 12.06.2002 was a nullity, tantamounting to defianceoftheorderof the Federal Board of Revenue---Adherencetotheinstructions,directionsandordersoftheBoardwasmandatoryon the field formations during the performance of their prescribed duty in terms of S. 223, Customs Act, 1969---No defiance was permitted under any pretext or circumstances---Deviation from orders rendered the whole proceedings without lawful authority and jurisdiction---Machinery was ordered to be assessed on the basis of 90 days data and invoice value---Appeal was allowed accordingly.
2010 SCMR 431 ref.
2002 PTD 976; 2002 SCMR 312; 2009 PTD 1507; 2005 SCMR 492; Syed Muhammad Razi v. Colletor of Customs, (Appraisement) Karachi and 2 others 2003 PTD 2821 and Muhammad Waheed v. Customs Appellate Tribunal 2016 PTD 35 foll.
(c) Customs Act (IV of 1969)---
----Preamble---Declaration---Meaning---Declaration referred to the nature, description and value of goods so that assessing officer could apply appropriate tariff rate for assessment and charging of duty and taxes levied thereon.
Vithoba Syamna v. Union of India AIR 1957 Bom. 321 ref.
Nadeem Ahmed Mirza for Appellant.
Wasif Ullah for Respondents.
Date of hearing: 30th August, 2018.
JUDGMENT
SYED TANVIR AHMED, MEMBER TECHNICAL-III.---This Judgment disposes of Customs Appeal No.K-448/2018 filed by the Appellant against Order-in-Appeal No.1070/2018 dated 17.04.2018, passed by the Collector of Customs (Appeals), Karachi.
2.Briefly, facts of the case are that the appellants electronically filed Goods Declaration No. KAPW-HC-74062-02-11-2017 and declared old and used crimping machine under PCT heading 8479.8100 valuing US$ 2025. During examination a higher value invoice of US$ 20000/- was found in the consignment. Thus the importer was alleged to have deliberately concealed/mis-declared the value of the goods to get the goods assessed on suppressed value and weight for evading legitimate amount of taxes to the tune of Rs. 525,787/-. The adjudicating officer held that the charges against the appellant had been proved. The operative part of the impugned order reads as under:--
"I have gone through the case record and have perused the written statements made by the representative of the importer at the time of hearing as well as departments comments. The Shed staff reported that a higher invoice of US$ 20000/- found in the consignment as against declared value US$ 2025/-. The difference is US$ 17975/- (887.70%). The act of mis-dedaration of value has been established, thus, the importer has violated section 32(1)(2) of the Customs Act, 1969, read with S.R.O. 499(I)/2009 dated 13.06.2009 punishable under of Section 156(1) sub-clause 14 of the Customs Act, 1969, read with section 11(3) of the Sales Tax Act, 1990, and Section 148 of Income Tax Ordinance, 2001. I, hereby order that the contravened goods are confiscated under section 156(1)(14) read with section 181 of the Customs Act, 1969. However, the importer has the right to get his goods released/redeemed on payment of 35% redemption fine on the offending value of the goods as per Section 181 of the Customs Act, 1969 read with S.R.O. 499/2009 dated 13.06.2009 amounting to Rs.753,701/- (mis-declaration of Value) is imposed on the importer along with the personal penalty of Rs.70,000/-. Moreover, the importer is warned to be careful in future, and if there is any recurrence in future, the importer and his associates would be dealt with stern action. Furthermore, the assessing staff is required to finalize the assessment on the basis of this order and recover legitimate leviable amount of duty and taxes and other charges on the mis- declaration of Value".
3.The appellant aggrieved and dissatisfied with the above order passed by the Deputy Collector of Customs (Adjudication), Customs House, Karachi and filed an appeal before the Collector of Customs (Appeals) Karachi and the same was dismissed by the Collector of Customs (Appeals), Karachi.
4.The appellant aggrieved and dissatisfied with the above order-in-appeal, and filed appeal before this Tribunal on the grounds that the Respondent No 2 has issued Show-Cause Notice under the provision of Section 32(1) of the Customs Act, 1969 in isolation, the said provision can only be invoked along with either Section 32(2) or (3). By non-invoking either of the sub sections, the respondent No. 2 admitted categorically that there exists no deliberate act on the part of appellant, nor the act of connivance either with the clearing agent or with the Customs Officials and the invoice so retrieved has no legal value being immaterial as the assessment has to be made for levy of duty and taxes on the basis of procedure laid down in para 41 in CGO 12/2002 dated 15.06.2002. Meaning thereby no show-cause notice under Section 32(1) could be issued without invoking subsection (2) or (3) of the Act. This lapse renders the show-cause notice void and ab-initio and of no legal effect as held in reported judgment judgments Asst. Collectin' v. Kltyber Elec. Lamps 2003 PIP 1273. I) (I Khan Cement v. Collector of Customs 2005 PTD 330, Caltex v. Collector (2003) 33 Taxation 123 (Lull), Union Playing Card Company v. Collector of Customs 2002 MLD 130, Atlas Tyres v. Addl. Collector 2002 MLD(sic) ISO, State Cement v. Collector PTCL 2001 CL 558, Kashmir Sugar v. Collector 1992 SCMR 1898, Hose Color Chairman, CBR and 2013 PTD 813 Sarwar International v. Addl. Collector of Customs. That Respondent No 2 invoked the provision of Section 32(1) in the show-cause notice on the basis of retrieved invoice said to be pasted in the container in terms of Rule 389 of sub-chapter (I) of Chapter XVII of the Customs Rules, 2001, for the transportation of cargo by the shipping company and the cargo declaration at the port of arrival. Meaning thereby it is mandatory for the shipping company to paste the invoice and submit declaration while filing Import General Manifest (IGM) on the basis of the said invoice. Under section 32(1) relates to untrue and false statement to be made by the importer/exporter and by the clearing agent or by any person submitting document with the customs in connection with any matter of customs "Knowing or having reason to believe". The provision of Section 32 contemplate the existence of a personal "knowledge" believe being a conviction of mind arising not from actual perception. It Fazal Kader Chowdri v. Crown PLD 1952 FC 19 whereas, the term "reason to believe", has to classified at a "higher pedestal, then mere suspicion and allegation, but not equivalent to prove evidence. Even the strongest suspicion cannot transform in "reason to believe". The criteria laid down (to differentiate between mere suspicion and reason to believe) has to be, that some tangible evidence is available against the accused, which if left un-rebutted, may leave to the inference of guilt." Reliance is placed on reported Judgment 2011 PTD (Trib.) 2220 and 2011 PTD (Trib.) 2220.
5.For levelling allegation for mis-declaration of value, direct evidence of the imports is warranted i.e., an invoice of the same product of the same period and of the other importer (sans retrieved invoice which is of no legal effect) as directed by the Board in Para 78 of CGO 12/2002 dated 15.06.2002 and Clause (d) of S.R.O. 499(I)/2009 dated 13.06.2009, which is not available. Hence, no charge of mis-declaration in the absence of availability of direct, valid, tangible, admissible under law evidence. Rendering the charge of mis-declaration of value a mere hearsay and as such of no legal effect hence void and ab-initio as held by superior Judicial fora in umpteenth reported judgments. It is erroneous on the part of the Respondents to consider that the retrieved invoice is the actual invoice of the goods imported by appellant and construed as declaration. The appellant transmitted actual invoice under Section 79(1) of the Customs Act. 1969 as scanned documents, being integral part of the declaration in terms of Section 2(kka) of the Customs Act, 1969. The retrieved invoice is not a declaration, hence it is outside the ambit of Section 32 of the Customs Act, 1969 and no charge can be levelled on the basis of the said invoice. Terming the retrieved invoice as appellant declaration is in fact in derogation of the definition of the word "declaration" and section 79(1) of the Customs Act, 1969 and Rules 433 and 437 of Custom Rules, 2001.
6.Applying the retrieved invoice value for the purpose of assessment for levy of duty and taxes of the appellant's machinery is patently illegal as not a single machinery prior to the instant nor subsequently imported by the appellant's competitors have been assessed with the application of said value. The basis of criteria devised by the Respondent was US$ 2/kg in negation of the order of the Board enumerated in para 41 of CGO 12/2002 dated 15.06.2002. The said act of the respondents are in derogation of Para 41 and Article 18 besides tantamount to giving a partial treatment which is prohibited under Articles 4 and 25 of the Constitution 2002 PTD 976 held that "vacating the show-cause notice in one case and taking action against another person in similar situation, amounts to discrimination which is hit by Article 25". In reported judgment 2002 SCMR 312 and 2009 PTD 1507 the Hon'ble Superior Courts that there exist no power to target incidence of tax in such a way that same person in same situation be dealt similarly, but discriminatingly. Whereas, in reported judgment 2005 SCMR 492 the Hon'ble Supreme Court held that "A facility allowed to some one and denied to other is discrimination". The Apex Court further held in reported judgment 2010 SCMR 431 that:--
"Doctrine of equality, as contained in Art. 25 of the constitution, enshrine golden rules of Islam and states that every citizen, no matter how highsoever, must be accorded equal treatment with similarly situated persons- State may classify persons and objects for the purpose of legislation and make law s applicable only to persons or objects within a class- - In fact all legislations involve some kind of classification whereby some people acquire rights or suffer disabilities whereas others do not- What however, is prohibited under principle of reasonable classification, is legislation favouring some within a class and unduly burdening others- Basic rule for exercise of such discretion and reasonable classification is that all persons laced in similar circumstances must be treated alike and reasonable classification must be based on reasonable grounds in given set of circumstances but the same in any case must not offend spirit of Art. 25 of the Constitution."
7.On merits of the case the appellants contended that the retrieved invoice least corresponds to the appellant's consignment and has been placed therein due to the "inadvertent omission " on the part of the shipper's staff, namely Messrs Bei E MFG Co. Ltd., Taiwan, who has admitted in categorical terms that the said lapse was on the part of their staff's negligence as was evident from letter dated 17.11.2017 that they shipped to the appellant 07 years old without refurbishment valuing to US$. 2000/-. This categorical confirmation lays to rest the veracity of the alleged retrieved invoice. The order passed by respondents Nos. 2 and 3 shows that these are mala fide Orders based on imported grounds, finding no place in the reply to show-cause notice / ground of memo. of appeal, validated from incorporation of arguments of appellant in order-in-original.
8.The Respondent department has not submitted cross objections ontheMemo.ofAppealfiledbytheAppellantintermsofsection 194-A(3) of the Customs Act, 1969. However para wise comments were submitted. The respondent stated that the act of the importer reflects his malafide intention as they have mis-declared goods in terms of value. Hence it is evident that importer and clearing agent has vivid guilt intent and therefore does appear element of mens-rea. The aforesaid facts prove that the importer and clearing agent has deliberately concealed the actual contents of the GD by mis-declaring the value in order tosuppress the legitimate government revenue willfully and with mala fide intention and have attempted to defraud the Government from its legitimate revenue, hence the judgment cited by the appellants are not relevant in the instant case. It is submitted that the importer has deliberately attempted to mis-declared the value with an intent to evade the duty and taxes and clearly violated the provision of Section 32 of the Customs Act, 1969 read with Rules 389 of Customs Rules, 2001, the law settled by the Honourable Supreme Court of Pakistan in the case of Junaid Traders v. Additional Collector of Customs reported in 2012 SCMR 1876.
9.Arguments heard and record perused. Briefly the appellant imported old and used crimping machine at declared value of US$ 2000 whereas invoice was found in the container of a higher value of US$ 20,000. The adjudicating authority passed order against the appellants determining Rs. 5257787/- as short paid amount of duty and taxes. The contention of the appellant is that invoice in no manner can be termed as declaration of the importer under section 79(1) of the Customs Act, 1969 and Rule 433 read with section 2(kka). Section 2(kka) defines the documents. The appellant denied the existence of any invoice.
10.The case of the appellant is that the impugned invoice does not relate to this consignment. They produced letter of the supplier in which it was stated that his staff negligently made mistake by mistyping wrong value of US $ 20,000 in invoice instead of "correct value US $ 2000". In this letter the supplier disregarded the documents found and confirmed that actual price of the shipment is US $ 2000 and they had sold old and used machine and arroneously typed wrong value. The respondent department rejected the document of the supplier. They did not verify the letter or sent some e-mail or conducted inquiry to confirm its veracity. As for the valuation aspect of the item, the appellant said that as per decision of the Higher Courts, the value fixed through Valuation Rulings or that prevailed in last 90 days shall be applicable irrespective of any value determined by the department. The appellants have rightly pointed out that in the absence of valuation ruling, 90 days data should be applicable on their imports to avoid discrimination.
11.Reverting back to the core issue of mis-declaration of value under the provision of Section 32 of the Act, on the strength of invoice found in the packages in compliance of Rule 389 of the Rules. The appellant stated that said Rule has been incorporated in Sub-Chapter (I) of Chapter XVII of Rules and its speaks about transportation of cargo, an importer does not transport cargo, instead by shipping companies, who have been directed to place invoice of the shipped goods for filing Import General Manifest (IGM) under Section 45 of the Act on the strength of that. No consequences flows for an importer from the said impugned placed/found invoice, as an importer/appellant has to transmit declaration in the GD under Section 79(1) and Rule 433 of the Act/Rules on the basis of documents defined in Section 2(kka) of the Act. He further said that the word 'declaration' came to judicial scrutiny in the case of Vithoba Syamna v. Union of India reported as AIR 1957 Bom. 321. It was held in that case that the word "declaration" refers to the nature, description and value of goods so that assessing officer can apply appropriate Tariff rate for assessment and charging of duty and taxes levied thereon. The appellant stated that placed/ found invoice in no manner could be termed as declaration of the importer under Section 79(1) of the Act and Rule 433 based on prescribed/defined documents in Section 2(kka), hence, an importer can and should not be charged for mis-declaration on the basis of that, because the main ingredient in Section 32 is "knowing or having reason to believe that such documents or statement is false in material particular. In this case it was observed that the importer had no knowledge of invoice, therefore has no reason to believe that the declaration submitted by him electronically is false in material particular. Even otherwise the respondent No. 1 has not made any inquiry either from the shipper/ exporter about the veracity of the retrieved invoice or from the Embassy of Pakistan in Taiwan prior to framing contravention report and issuance of show-cause notice, which is pre-requisite. Even veracity of letter dated 17.11.2017 couriered directly to respondent No. 2 has not been denied, wherein, shipper in categorical terms stated that the invoice so placed in the package of the machine by their officials at the time of packing has no nexus with the imported machine of the appellant, as the same corresponds to the value of two (2) years old refurbished machine as against seven (7) years old and used (without refurbishing) machine shipped to the appellant. In this case department had not tried to verify the documents. Proper investigation/inquiry under section 166 should have been conducted. The aforementioned core issue of the case was not investigated by the respondent/seizing agency, even though, they have the power under Section 166 of the Customs Act, 1969 to summon the person, give evidence and produce documents or things. Neither the present appellants nor their supplier were approached for verification. Inspite of that the respondents agency and their representative failed to comply with the provisions of Section 165 of the Customs Act, 1969 which envisaged the power on to the Customs officials to examine the person during the course of an inquiry in connection with the case. The respondent also failed to issue any notice under Section 26 of the Customs Act, 1969 for production of documents for providing or calling any information from the present appellants. Even the respondents nor their representative during hierarchy of the proceedings the customs controverted the evidence submitted by the appellant in proof of their cases. As such the subject impugned show-cause notice was issued without any specific allegation and charges attributed against the appellant, being so, are without any warrant of law.
12.It is also noted with concern by me that prior to levelling charge of mis- declaration of value on the basis found invoice, while ignoring the direction contained in para 78 of CGO 12/2002 dated 15.06.2002 and clause (d) of S.R.O. 499(I)/2009 dated 13.06.2009, which speaks about direct evidence, found invoice in any manner cannot be treated as direct evidence, nor it qualifies as transaction value as per the expression of Section 25(1) of the Act, in the absence of any evidence of proof that the said price has been paid or payable as per the expression of Section 25(1) and Rule 113 of the Rules. No evidence to the said effect has been placed on record by the respondents as against the I-Form online transmitted by the Scheduled Bank corresponding to the import of the machinery by the appellant to the module of Customs Computerized System (CCS). In the absence of availability of the same neither importer or clearing agent can transmit GD to the CSS under the provision of Section 79(1) and Rule 433 of the Act/Rules.
13.Notwithstanding, for levy of duty and taxes on the import of old and used machinery has been ordered by the Board to be determined in accordance with the procedure/formula available in para 41 of CGO 12/ 2002 dated 15.06.2002, which is reproduced below:--
"Valuation of second hand machinery:- The assessable value of second hand machinery shall be determined in accordance with the following principles namely:-
If the original price of such machinery is available then the original price will be depreciated by 7.15% per each year of the age of such machinery, reaching a maximum depreciation of 50% of the original price in seven years to arrive at the F.O.B. value.
If the original price is not available, and if the price of the latest model of such machinery is available, then, the price of the latest model will be depreciated by 10% per each year for the first three years and 5% per each year for the remaining four years, of the age of the second hand machinery reaching a maximum depreciation 50% in value of the latest model to arrive at the F.O.B. value of the second hand machinery.
In other words, a seven year old machine will get the maximum concession of 50% free of its original price from the price of its latest model in case the original is not available.
If both these prices and the price of the latest model are available, then, the higher FOB value will be taken for assessment.
If both these prices are not available then the FOB value will be appraised on the basis of the following factors namely:-
a.Type of machinery.
b.Condition of machinery
c.County of origin/manufacture, and
d.Evidence of value of new, re-conditioned and old.
e.Machinery, available with the customs authorities
(i)If, such machinery is reconditioned, then 10% of the FOB value determined on the basis of the above principles will be added to arrive at the FOB value for assessment; and
(ii)Assessable value shall consist of the FOB value, as determined in accordance with the principles mentioned above plus freight, insurance, commission (if any) and 1% landing charges.
Conditions:
(i)The importer will provide information regarding the year of manufacture, country of origin, make and model number of the machinery and its original price.
(ii)No depreciation shall be allowed for age above 7 years from the year of manufacture of such machinery.
Explanation:-
"Original price means the normal selling price of the manufacturer of such machinery when it was originally manufactured.
14.Adherence to the instructions, directions and orders of the Board are mandatory on the field formations during the performance of their prescribed duty in terms of Section 223 of the Customs Act, 1969 no defiance is permitted under any pretext or circumstances. Deviation from that renders the whole proceeding without lawful authority and jurisdiction as held Hon'ble High Court of Sindh in 2003 PTD 2821 Syed Muhammad Razi v. Collector of Customs, (Appraisement), Karachi and 2 others that "in the wake of clear instruction contained in Customs General Order No. 12/2002, the importer may not be charged for mis-declaration under Section 32 of the Customs Act, 1969, the impugned action on the part of Customs Officials is not sustainable in law and liable to be struck down as illegal and without lawful authority" and in 2016 PTD 35 Muhammad Waheed v. Customs Appellate Tribunal, it was observed that "Direction contained in Customs General Order 12 of 2002 though not binding upon Field Officer of the Department in terms of section 223 of the Customs Act, 1969. Field Officer were required to follow such direction or guideline before making any contravention report/case against an importer any act of Field officer in violation of such direction would be of no legal consequences." Determination of value for levy of duty and taxes of the imported old and used machinery, under any other method contrary to the para. 41 of CGO 12/2002 dated 15.06.2002, is nullity, being tantamount to defiance of the order of the Board and renders the exercise so under taken as illegal and without lawful authority.
15.It has further been observed that the Collectorate is assessing old and used machinery on an average of US$2/kg. VR No. 571/2013 dated 24.7.2013 was produced which determines the criteria in the past and even now it is being followed. The table of VR is reproduced as under:-
Customs values of old and used second hand machinery hereinafter specified - shall assessed to duty / taxes on the customs values mentioned against them in the table below:-
| S.No. | Description of goods | PCT Heading | Proposed PCT for WeBoc | Origin | Customs value |
| 1 | Old and Used Second Hand Textile Machinery of stainless steel (Computerized) | Respective headings | Respective headings | Japan, Europe, USA All origins Excluding Japan, Europe, USA | US$5/kgUS$ 4/kg |
| 2 | Old and Used Second Hand Textile Machinery made of stainless steel (Non Computerized) | Respective headings | Respective headings | Japan, Europe, USA All origins Excluding Japan, Europe, USA | US$4.00/kg US$ 3.00/kg |
| 3 | Old and Used Second Hand Textile Machinery (non stainless steel and Computerized) | Respective headings | Respective headings | Japan, Europe, USA All origins Excluding Japan, Europe, USA | US$2.5/kg US$ 3.30/kg |
| 4 | Old and Used Second Hand Textile Machinery (non stainless steel and non computerized) | Respective headings | Respective headings | All origins Excluding Japan, Europe, USA Japan, Europe, USA | US$1.40/kgUS$ 1.65/kg |
| 5 | Old and Used Looms (non stainless steel and non computerized) | 8446.3000 | 8446.3000.1000 8446.3000.1100 | All origins Excluding Japan, Europe, USA Japan, Europe, USA | US$1.40/kg US$ 1.65/kg |
| 6 | Old and Used Circular Knitting Machine (non stainless steel and non computerized) | 8447.0000 | 8447.0000.1000 8447.0000.1000 | All origins Excluding Japan, Europe, USA Japan, Europe, USA | US$1.40/kg US$ 1.65/kg |
| 7 | Old and Used Two for one twister/twisting Machine (non stainless steel and non computerized) | 8445.3000 | 8445.3000.1000 8445.3000.1100 | All origins Excluding Japan, Europe, USA Japan, Europe, USA | US$1.40/kg US$ 1.65/kg |
| 8 | Old and Used Winding Machine/Winder (non stainless steel and non computerized) | 8445.4000 | 8445.4000.1000 8445.4000.1100 | All origins Excluding Japan, Europe, USA Japan, Europe, USA | US$1.40/kg US$ 1.65/kg |
| 9 | Old and Used Dobbies/Jacquard (non stainless steel and non computerized) | 8448.1100 | 8448.1100.1000 8448.1100.1100 | All origins Excluding Japan, Europe, USA Japan, Europe, USA | US$1.40/kg US$ 1.65/kg |
| 10 | Old and Used Boilers (non stainless steel and non computerized) | 8402.0000 | 8402.0000.1000 8402.0000.1100 | All origins Excluding Japan, Europe, USA Japan, Europe, USA | US$1.40/kg US$ 1.65/kg |
| 11 | Old and Used printing Machine with standard accessories | 8443.5900 | 8443.5900.1000 | All origins | US$1.65/kg |
| 12 | Old and used Industrial Sewing Machine Juki MB and DL series | 8452.2100 | 8452.2100.1000 | Japan | US$300/unit |
| 13 | Old and Used Electric Motors | 8501.0000 | 8501.0000.1000 | All origins Excluding Japan, Europe, USA Japan, USA, Europe | US$4/per HP Or US$1.40/kg whichever is higher US$5/per HP Or US$1.65/kg whichever is higher US$ 1.65/kg |
16.We called data of the PRAL under Rule 110 of period given in Rule 107 (a) of the Rules, which is reproduced as under:--
110. Prohibited methods.- Where the value of imported goods cannot be determined under subsections (1), (5), (6), (7) and (8) of section 25 of the Act, the customs value shall be determined on the basis of data of imports available with the Customs Department However no value shall be determined under this chapter on the basis of --
(i)the selling price of the identical goods produced in Pakistan;
(ii)the price of the goods in the domestic market of the country of origin except after allowing deduction of local taxes and profits at each level of sale in the country or exportations;
(iii)arbitrary or fictitious values; or
(iv)the minimum customs values, except those notified under subsection (4) of section 25 of the Act.
17.The department told that they assess old and used machinery at times in the range of @ US$. 1.40 to US$ 1.65/kg of China origin on the basis of their condition. The said practice was not discontinued even after the impugned invoice was found in the package of the appellant imported machinery. Hence violation of Articles 4 and 25 of the Constitution of Islamic Republic of Pakistan and the law laid down by the Superior Judicial Fora in reported judgment 2002 PTD 976 of High Court of Sindh, wherein it has been held that "vacating the show-cause notice in one case and taking action against another person in similar situation, is amounts to discrimination which is hit by Article 25". In 2002 SCMR 312 and 2009 PTD 1507 it has been held that "there exist no power to target incidence of tax in such a way that similarly placed person be dealt not only this similarly, but discriminatingly" and in 2005 SCMR 492 the Hon'ble Supreme Court held that "A facility allowed to some one and denied to other is discrimination". Likewise in 2010 SCMR 431 Hon'ble Supreme Court of Pakistan held that doctrine of equality, as contained in Article 25 of the constitution, enshrine golden rules of Islam and states that every citizen, no matter how high soever, must be accorded equal treatment with similarly situated persons. In fact all legislations involve some kind of classification whereby basic rule for exercise of such discretion and reasonable classification is that all persons placed in similar circumstances must be treated alike and reasonable classification must be based on reasonable grounds in given set of circumstances but the same in any case must not offend spirit of Article 25 of the Constitution. The treatment given to the appellant against the principle enshrined in Articles 4 and 25 of the Constitution of Pakistan and violate the principle of law settled by the Superior Court in further judgment reported as 1990 SCMR 1072, 1990 SCMR 1059, 1975 SCMR 352, PLD 1995 SC 396, 1998 SCMR 1404, PLD 1997 SC 582, PLD 1997 SC 334 and 1997 SCMR 1874.
18.The act of the official of respondent Collectorate of assessing the appellant imported old and used machinery on higher side is also in derogation of Article 18 of the Constitution, which guarantees freedom of trade, business or profession and Sub-Clause (b) restricts regulation of Trade, Commerce or Industry for safe guarding the interest of the citizen through healthy and free competition. The appellant's contention carry weight that in the instant case the official of the respondent Collectorate assessed his imported old and used machinery weighing to 560 kgs @ US$. 38.46/kg C&F for levy of duty and taxes as against his competitors, whose old and used machinery of the same origin have been assessed for levy of duty and taxes @ US$. 1.40 to 1.65/kg depending on their condition. This act/ attitude negated the level playing field for maintaining of healthy and fair competition. The assessment made of the other importers consignments of old and used machinery of the same origin for payment of lesser amount of duty and taxes as against the appellant is infringement of his fundamental rights, not permissible under any circumstances being in derogation of Article 8 of the Constitution and law laid down in the reported judgments AIR 1954 SC 747, AIR 1963 SC 1811, AIR 1970 SC 1453, AIR 1971 SC 1017, PLD 2005 SC 193.
19.Even considering the equity, it has been noticed that in numerous cases invoice is found and department contended that invoice value was the actual transaction value. But after getting actual evidence, the department continues to assess similar / identical consignments on old values i.e., on 90 days data basis or on VR value. On query it was told by DR that no reference is sent to Valuation Directorate for revision of value of VR where invoices were found or new evidence was found. He stated that to fix values, the Directorate of Valuation is responsible for such revision. Though the Collector of Customs is also empowered to determine or to fix value under section 25 D but Collectors are generally evasive to fix value on higher side when they get actual evidence of value. The department is highly irresponsible on this account and they have no explanation as to why Collectorates and assessing officers, in particular, don't revise values upwardly when actual invoice is found as per Collectorate's contention. To point out one importer and charge duty on higher value on the basis of evidence of invoice found and continue to charge duty and taxes from rest of importer on low value on the pretext of 90 days data is highly discriminatory, objectionable and against the Article 4 of the Constitution of Pakistan whereby one importer is practically thrown out of market by application of different valuation for different importers. It was seen in some cases that a particular brand and size (ball bearing) was imported and actual invoice was found whereas VR was much on lower side but the department continued to assess all subsequent consignments on VR and 90 days data. It was argued by the DR that in some cases exact description does not match so value differs and department applies invoice value only for that particular consignment. It was asked whether any exercise was initiated to determine value of that class of goods in general on the basis of new evidence and whether any inquiry / investigation was carried out. The DR replied this is not the practice in the Collectorate or Directorate. The attitude of the department is too casual towards valuation aspect and methods of determination are at times, too crude and generalize in nature. The importers are not even asked as to why invoice is not available in container. In routine a fine of Rs. 5000/- is imposed by the computer system and then assessment is made as per 90 days evidence, which is sometimes manipulated data and based on the declared values of importers, which mostly does not depict correct values. Manipulated in the sense that sometimes importers declare 5-10% less than 90 days data and computer accepts the value but gradually the value comes down as group under invoicing.
20.For the foregoing deliberation/observation and in the light of prescribed law laid down by the Superior Judicial Fora and in adherence of the ratio decidendi, I allow the appeal and the Show-Cause Notice providing the basis thereof for impugned orders are hereby vacated /set-aside with no order as to costs. The machinery is ordered to be assessed on the basis of 90 days data and invoice value.
21.Judgment passed and announced accordingly.
HBT/80/Tax(Trib.)Appeal allowed.