JIUZHOU HENGTONG MACHINERY, ISLAMABAD VS ASSISTANT COLLECTOR OF CUSTOMS
2019 P T D (Trib.) 66
[Customs Appellate Tribunal]
Before Jehanzaib Wahlah, Member Judicial-III
Messrs JIUZHOU HENGTONG MACHINERY, ISLAMABAD
versus
ASSISTANT COLLECTOR OF CUSTOMS and another
Custom Appeal No.K-04 of 2018, decided on 18/10/2018.
(a) Customs Act (IV of 1969)---
----Ss. 2(a)(Kka), 25, 32, 79 & 80---Customs Rules, 2001, Rr.433 & 438---SRO No.. 371(I)/2002,dated5-6-2002---ImportPolicyOrder,2016-2018---Customs value of good---Determination---Mis-declaration---Scope---Importer, delivered respective documents to the clearing Agent and as per pre-requisite deposited upfront duty---Nominated examiner opined that the goods imported were old and used which were banned items---Nominated Officer passed assessment order for levy of duty and taxes and referred the same to the Principal Appraiser with the remarks based on examination report, who framed contravention report with the allegation that importer had imported "Auto Parts" as against 'Drill Machine Spare Parts" falling under PCT Heading 8431.4300, and as such not importable under Import Policy Order, 2016-2018 which were liable to be confiscated and referred the matter to Additional Collector Law, who approved the same and transmitted to Collector of Customs, who passed order-in-original on the same date and ordered confiscation of "drilling spare parts" out-rightly on the premise that those were not importable and penalty was imposed---Validity---Alleged order-in-original had not been passed with application of mind independently, instead on pre-determined/formed opinion, having no warrant of law, rendering the order based, suffered from the vice of self-interest or tardy, indolence and incompetence---Vital lapses, illegalities committed by collector of customs which were visibly floating on the surface of impugned orderconfirmed that it had not been passed on objective consideration, rather on extraneous---Such type of orders were always deemed to be treated as illegal, void, arbitrary and a result of misuse of authority vested in public functionary---Order passed by collector of customs was in violation of basic principles of good governance and mandatory requirement of S.24-A of General Clauses Act---In the present case no misdeclaration was apparent---Collector of Customs was not empowered to issue show-cause notice in the case where there existed no revenue lose---Cases of such nature, were to be dealt by the competent authority as defined in S.2(a) of the Customs Act, 1969, whereas collector of customs was non entity---Examining official attended the goods in question in very callous and haphazard manner, rendering some of the goods as rusty, otherwise those were new---Even, if it was considered that goods were old and used (second hand), those were importable and least fell within the ambit of Serial No.7 of Appendix-C to the "Import Policy Order 2016, 2018" by virtue of the fact that those fell under Cl.(3) of Para 9(ii) of the Import Policy Order, 2016, which with clarity expressed in regard to imports of second hand and re-conditioned parts of plant machinery and equipment---Appellant was entitled to import even old and used spare parts itself or through its sub-contractor without any restriction---Department was assessing the old and used machinery/spare parts in negation to the devised procedure, on the basis of some devised criteria having no warrant of law---Appellant had been needlessly dragged into litigation despite not warranted under law---Impugned show-cause notice was vacated and order passed by Collector of Customs was set aside being illegal and void ab initio---Collector of Customs was directed to issue delay detention certificate in terms of S.14-A(2) of the Customs Act, 1969.
PLD 1964 SC (Pak) 673; 2005 YLR 1019; 2007 PTD 2500; 2004 PTD 1973; 2005 YLR 1719; 2003 PTD 777; 2003 PTD (Trib.) 2369; 2002 MLD 357; 1983 CLC 2882; 2005 PTD 2519; 2005 PTD 1189; PLD 1995 SC (Pak) 272; PLD 1970 SC 158; PLD 1970 SC 173; 1984 SCMR 1014; 2012 PTD (Trib.) 619; PLD 1971 SC 184; PLD 1976 SC 514; 1992 ALD 449; 2004 PTD 624; PLD 2004 SC 600; PLD 2005 SC 842; 2009 PTD 1112; 2010 PTD 465; 2010 PTD (Trib.) 1636; Messrs Paramount International (Pvt.) Ltd. v. FOP and others 2014 PTD 1256; Izhar Alam Farooqi Advocate v. Sheikh Abdul Sattar Lasi and others 2008 SCMR 240; Sardar Ahmed Yar Khan Jogzai v. Province of Balochistan 2002 SCMR 1022; Faqir Abdul Majeed Khan v. District Returning Officer and others 2006 SCMR 1713; Ali Muhammad v. Chief Settlement Commissioner 2001 SCMR 1822; PLD 1958 SC 104; PLD 1973 SC 326; PLD 2002 SC 630; 2003 SCMR 50; 2004 SCMR 25; 2004 SCMR 1798; PLD 2005 SC 842; CollectorExcise andLand Customs and others v. Rehm Din 1987 SCMR 1840; Syed Muhammad Razi v. Collector of Customs, (Appraisement), Karachi and 2 others 2003 PTD 2821; AIR 1954 SC 747; AIR 1963 SC 1811; AIR 1970 SC 1453; AIR 1971 SC 1017 and PLD 2005 SC 193 ref.
(b) Administration of justice---
----Finding of fact not based on material available on record was illegal and arbitrarily---Such finding without discussing and considering material available was violative of established principles of appreciation of evidence on record and not sustainable in law---Principle that every judicial or quasi judicial finding should be based on reasons containing the justification for the finding in order itself was an established principle of dispensation of justice.
Nadeem Ahmed Mirza for Appellant.
Jam Muhammad Akram, A.O. for Respondents.
Date of hearing: 26th September, 2018.
ORDER
JEHANZAIB WAHLAH, (MEMBER JUDICIAL-III).---Through this order, I intend to dispose off Appeal No. K-04/2018 directed against Order-in-Original No. 770139 dated 04.11.2017passed by Collector of Customs, MCC of Appraisement, (East) Karachi.
2.Briefly facts of the case are that, the appellant is sub-contractor of China State Engineering Corporation, Ltd, Islamabad, (CSECL) who are registeredwith the Pakistan Engineering Councilvide license No. 0101 in category FC-A in the capacity ofForeign Contractor/Operatorand are engaged indrillingin Thar Energy CoalPower a project ofChina Pakistan Economic Corridor (CPEC), for their drilling machineoperatingthere Messrs CSECLorderedthe appellant for import ofspare parts. The appellantin fulfillment of the contract imported thesefrom Chinaagainstinvoice No.JZH-8291 dated 13.09.2017 valuing to US$. 9,999.00and B/L No.142701178291 dated 22.09.2017,upon receipt ofthoseforwarded letter bearing No. JHMEL-405-25-09-2017-DMS/KHI dated 25.09.2017annexed with invoice and B/Lto CSECL for issuance of recommendation letter, CSECL accordingly forwarded the sameto respondent No. 2vide letter dated28.09.2017. Upon confirmation of the said factappellantdelivered respective documentsdesired for submitting declarationas defined inSection 2(kka) of the CustomsAct, 1969 (Act)to his clearing agentMessrs Usman Enterprises, Karachi fortransmitting Goods Declaration (GD) with the MCC of Appraisement-East under the provision of Section 79(1)of the ActandRule 433 of Sub-Chapter III of Chapter XXI of Customs Rules, 2001 (Rules) , which he didand as per pre-requisitefor availing the regimeof Customs Computerized System (CCS)deposited upfront dutyof Rs. 347,621.00 on09.10.2017, consequent to which GD was numbered KAPE-HC-65249-09102017.Upon appearance of which on his desktop the nominated Appraiser opted to get the goods examined first prior to passing of assessment order under Section 80and Rule 438 ibid., to proceed withhe adducedhisopinion/reasoningfor getting the goods examined as enunciated in Section 198and Rule 433 of the Act/Rules andtransmitted that to the Deputy Collector of the Group, who assentedand routed the GDto the Deputy Collector of Customs, Examination, PICT, whonominated the examiner of hischoice, whocarried out the physical examinationand opinedthat thegoodsimported by the appellantareold and usedas againstdeclaredand report so prepared reading as "Assessment alert: Import Policy Violation goods are imported in second hand condition which is banned as per Appendix-C , Serial No. 7 of IPO, 2016 container No. AITU-178459 KAPE-HC-65249-09102017 no commercial invoice and packing list found inside the container, goods examinedand detailed as under: declared description : Drill Machine Spare Part Qty: 1829 CTNS Total Weight: 22150 kgs it is noted that goods are old and used and seems to be recondition and repainted model is re-written on the plate, brand and origin: notshown , 100% weight at PICT Weigh Bridge foundCargo Weight22150 Kgsvide PICT SLIP No. 639692dated 12.10.2017, further confirmation through attachedimages Groupmay checkPCTandall otheraspect including IPO and IPR" was uploaded that in the reservoir of the GD.The nominated officer upon receipt of reporton his desktop passedassessment orderdated 19.10.2016under the provision of Section 80 and Rule 438for levy of duty and taxes , while construingtheunit value of per cartonshown in the invoice as US$. 5.47 as of kg, which was infactUS$.0.48/kg and referred that to the Principal Appraiserwith the remarks based on examination reportreading as "DV, whereas as per ER this is pertinent to mention that "assessment alert"Import Policy violationgoods are imported in second hand condition which is bannedas per Appendix-C Serial No. 7 of IPO".Who aftergoing through the examination reportand assessment sheet/note framed contravention reportwith the allegation that appellant imported"Auto Parts" (finding no place in the examination report) as against "Drill Machine Spare Parts" falling under PCT Heading 8431.4300 and as such notimportableunder Serial No. 7 of Appendix-C of the Import Policy Order, 2016-2018,which are liable to be confiscated and referred that to Additional Collector Law, who approved that and transmitted it to respondent No.2, who on the strength of same transmitted show-cause notice dated 26.10.2017 narrating the facts and invoked provision of the Act/IPO as were incorporated in the contravention reportwithout any slightest change of comma and full stop and appellant was askedto submit reply to thaton 04.11.2017, on which date of hearing was fixed. Upon appearance of show-cause notice on his home page appellant started consultation with his consultant/ advocateand so the exporterfor preparing reply to the show-cause notice, in addition to attendance of hearing. The respondent No. 2 passed order-in-original on the same date, through which he ordered confiscation of the appellant drilling spare parts out-rightly on the premise that these are not importable, in addition to imposition of penalty of Rs.500,000.00,the operative part of theorder is reproduced here-in-under:--
"On the basis of examination report the goods are found as usedauto partsdrill machine spare partsunder PCT heading 8431.4300, which are not importablevide Appendix-C of the Import Policy Order, 2016 and liable to be confiscated. A show-cause notice was accordingly issued online to the importer for deliberately concealing the banned goods with mala fide intention and for violating Section 16 of the Customs Act, 1969 punishable under clause (9) of Section 156(1) of the Customs Act, 1969. No response to the SCN was received nor anyone appeared to defend their case despite multiple opportunities of hearing offered to the importers through online hearing notices. Since the case cannot be kept pending indefinitely. I have no option but to decide the case on the basis of available record and relevant law. The imported goods are in old/used condition which are notimportable in terms of prevailing condition of import Policy Order, 2016 as detailed above. No response has been submitted by the importer which confirms thathe has nothing to state in his defense. The charges framed in the SCNnoticetherefore , stand established and impugned goods are confiscated outright without any option for release. A personal penalty of Rs. 500,000/- is also imposed on the importer violating the above legal provision."
3.The appellant filed the instant appeal on the basis of grounds enumerated therein, the consultant/advocateson the date of hearing arguedthe casestrictlyin accordance with those. No cross objection under subsection (4) of Section 194A of the Acthas been filed within the stipulated period of 30 days by the respondent No. 1, instead comments, which are not in any manner qualify memo. of cross-objection, deemed to be termed as cross appeal filed under subsection (3) by the department as expressed inaforesaidSection.Therefore,these are to be consideredmerely as opinion, having no binding force, nevertheless,placed on record of the case.
4.Rival parties heard and case record perused, in addition with the relied upon citations. Prior to dilating upon otherfactual and legal aspects, it is of vital importance to adduce opinion on the manner/ attitudeadopted by the respondent No. 2in handling the instant case. Upon examination of the show-cause notice/order-in-originalit has beenobserved that these smacks of mala fide, evident from the narrationmade therein that"nor anyone appeared to defend their case despite multiple opportunities of hearing offered tothe importersthrough online hearing notices. Since the case cannot be kept pending indefinitely." Astonishingly, show-cause notice was issued by respondent No. 2 on 26.10.2017and hearing against which was fixedfor 04.11.2017i.e.just after9 days, which is not in any manner a reasonable timenarratedinclause (iii)of para 78 of CGO 12/2002dated 15.06.2002, no further hearingwhatsoever was given to the appellant by the respondentNo. 2 as evident fromthe record of the case. To the contrary,the respondent No. 2opted to adducein the orderthat"despite multiple opportunities of hearing offered tothe importersthrough online hearing notices".On the strength of these formed opinion proceeded inpassing an ex-parte orderdated 04.11.2017 , while registering non appearance of the appellant. The said observation itselfprovesthe state of mindof the respondent No. 2, that he did not even remember that the order was passed by him on 04.11.2017, which was the solitary date of hearing given tothe appellant, further validated from the narrationcase cannot be kept pending indefinitely. The question arise that whether 9 days from the date of issuance of show-cause notice, could be termed as indefinite periodthrough any definition as against allotted time of 120days,which could be further extended by 60 daysupon availability of "exceptional circumstances"and recording of those as expressed inSection 179of the Act. The soleaimof the respondent No. 2 seems to becausemental torture and financial loss to the appellant and to thwartcompletion ofproject undertookby the Chinese investor underthe regime ofbilateral agreementof CPEC timely,subduing intentionallyhis powersbydeciding the casein haste and in derogation ofthe well known maximof audi-alterampartem ( no body should be condemnedunheard)/clause (c) of para 2 of the guideline issued by the Board vide C. No. Dy. 730-M(L)2002dated 15.06.2002for adherence by the adjudicating authorities, (non adherence is defiance of Section 223 of the Act) , application ofthe said maxim has been universallyrecognizedas ruled by the Supreme Court (PLD 1964 SC (Pak) 673) and many othersreported judgments of the Superior Judicial Fora.The order passed by the respondent No. 2confirmswithout any ambiguity that ithas not been passed with application of mind/independently , instead onpre-determinedformed opinion, having nowarrant of lawconfirmingthathe lack courageto do justice without fear and favour. Rendering the order biased,suffers fromthe vice of self interest ortardy , indolentand incompetentand showsthathehas nourge , will , passionand ability to decide the case/disputeput before himfor decisionfairly and judiciously. Hence,in nullityto the mandated requirement of Section 24A of the General Clauses Act, 1897. Vital lapses/illegalitiescommitted by respondent No. 2 apparently visiblyfloating on the surface of the orderalso conformthat it has not been passed on objective consideration instead on extraneous. Such type of ordersarealways deems to betreatedas illegal, void arbitraryand a result of misuse of authority vested in public functionary. No room was available for such illegal, void and arbitrarily orders in any system of law. If any authority Court or Tribunal gave a finding of fact which was not based on material available on record was illegal arbitrarily without discussing and considering the material available on record,it became perverse and a perverse finding of fact which is violative of the established principle of appreciation of evidence on record was not sustainable in law. The principle that every judicial or quasi-judicial finding should be based on reasons containing the justification for the finding in the order itself is an established principle of dispensation of justice. The order passed by respondent No. 2is in violation ofbasic principle of the goods governance and mandatory requirement of Section 24A of the General Clauses Act, is not only illegal and void but also not sustainable under law. The said position is also fortified by the judgments of Superior Courts reported as 2005 YLR 1019, 2007 PTD 2500, 2004 PTD 1973, 2005 YLR 1719, 2003 PTD 777, 2003 PTD(Trib) 2369, 2002 MLD 357, 1983 CLC2882, 2005 PTD2519, 2005 PTD 1189, 2003 PTD 2369 and PLD 1995 SC (Pak) 272, PLD 1970 SC 158, PLD 1970 SC 173, 1984 SCMR 1014 and 2012 PTD (Trib.) 619
5.That the expression ofSection 179 of the Act is unambiguousin regards to assumption of powers by the adjudicating authoritieson the basis of involved amount of duty and taxes "amount of duty and taxes involved excluding the conveyance"in the cases of import , whereasin case of export twice to the monitory limit expressed in subsection (1) of Section 179,involvingmisdeclarationas contemplated inSection 32 of the Act.In the instant case no misdeclaration is apparentand so the revenue loss as evident from show-cause notice which is completely silent in this regard with the exception of offending value of the goods (which are of no consequence. Resultant, respondent No. 2was not empoweredto issue show-cause notice to the appellant under the saidprovision of the Act. Rendering the issuance of show-cause notice by respondent No. 2 is without lawful authority and jurisdiction. Hence void and ab-initio and as such coram no judice and so the super structurebuild upon that through order-in-original as held in Order inSales Tax Appeal No. 444/03, S.T.A. 465/07and judgments reportedatPLD 1971 SC 184, PLD 1976 Supreme Court 514 , 1992 A.L.D. 449, 2004 PTD 624, PLD 2004 Supreme Court 600, PLD 2005 Supreme Court 842, 2009 PTD 1112,2010 PTD465and 2010 PTD (Trib.) 1636.
6.In addition to the referred in above illegality, neither respondent No. 2 nor any otherauthority is empoweredto issue show-cause notice in the casewherethere existno revenue loss i.e. of importability, whichis the case of the appellant, cases of such nature are to be dealtby the competentauthoritydefined in Section 2(a)of theAct at the time ofpassing assessment order under Section 80and Rule 438 of the Act/Rules, which isPrincipal Appraiser,who has jurisdiction in terms ofS.R.O. 371(I)/2002 dated 15.06.2002 and none else.Whereas,in the instant caseshow-cause notice has been issued by Respondent No. 2, who is a non entity.By laying handson the instantcaseby usurping the powers of hissubordinate i.e. Principal Appraiser , which he could have only exercised under Section 4 of the Actduring the course of administrative work notfor the purpose of adjudication, which are to be exercised exclusivelyby the authority empowered to do so and this stands validatedfrom the reported judgments2014 PTD1256 MessrsParamount International (Pvt.) Ltd. v. FOP and others, corresponding to thecase of restrictionlaid upon on the imported goodsunder the Import Policy Order, 2013-2016i.e. importability and was adjudicated by the Principal Appraiser, which was reopened and subsequently adjudicated by the Additional Collector, the Hon'ble High Court of Sindh held the subsequent proceeding as ofno legal effect/jurisdictionand allowed the petition. This order was assailed before the Hon'ble Supreme Court of Pakistan vide C.P.L.A. No. 105-K of 2014by the Collector of Customs, MCC of Appraisement-West, leave to appeal was refusedand petition was dismissed, further stood validatedby thejudgments relied uponthe Appellant and are incorporatedin ground (iv) of Memo of appeal.Rendering theissuance of show-cause notice andpassing of order-in-originalbyRespondent No. 2withoutlawful authority/jurisdiction.Thisproposition of lawstands further validatedby the Hon'bleSupreme Court of Pakistanin the case "Izhar Alam Farooqi Advocate v. Sheikh Abdul Sattar Lasi and others" (2008 SCMR 240) has held that the Institution specifically barred to adjudicate any matter to the extent of certain mandatory limits shall not be competentandhad no jurisdiction to deal with any such matter exceeding the limit subscribeunder the law. Hon'ble Supreme Court of Pakistan has held in the case of "Sardar Ahmed Yar Khan Jogzai v. Province of Balochistan"2002 SCMR 1022 that "where essential features for assumptions of jurisdictionis contravened or forum exercises powersnot vested in itor exceedauthority beyond limitprescribed by law, the judgment is rendered coram non judice and in operative." Hon'ble Supreme Court of Pakistan in re "Faqir Abdul Majeed Khan v. District Returning Officer and others"2006 SCMR 1713 has observed that "by now it is well settled that any order which suffers from patent illegality or without jurisdiction, deserve to be knock down.Whereas, the Hon'ble Supreme Court took a very serious notice in reported judgment 2001 SCMR 1822 Ali Muhammad v. Chief Settlement Commissioner, whereinthe Hon'bleChief Justice presiding aBench in the capacity ofJudge of Supreme Courtas was then their lordshipwasheld that "whenever order are passed by an Officer without caringwhether jurisdiction vests in him or not, it is prima-faciereflect on his conduct as well ascompetency. It is also to be noted that wheneverauthority is exercised in such a manner then no other inference can be drawnexcept thatthe functionary has transgressed his jurisdiction for the consideration other thanjudicial one and the Courts seized with such orders may recommendany action against the said Officerbecause neither the executive authorities nor judicial forum will pass a wrong order because the jurisdiction in both the capacities is conferred upon such authoritiesto discharge their function in accordance with law which has bestowed upon them to function inthat capacity and if there is abuse of power by such officerthen no hesitation should be felt in passing stringent strictureagainst officerkeeping in view of norms of justice" re: PLD 1958 SC 104 , PLD 1973 SC 326, PLD 2002 SC 630, 2003 SCMR 50, 2004 SCMR 25, 2004 SCMR 1798 and PLD 2005 Supreme Court 842. I, therefore, declare the show-cause notice and order-in-original/appeal without power/jurisdictionon this count also. Hence,void and ab-initio and coram non judice.
7.Revertingback to contentiousissueof the case, upon perusal of the photographs of the goods placed on record during the course of hearing by the appellantas those were at port of loadingwere new evident fromtheir wrapping,whichwere torn downduring the course of examinationandleftin the same condition unattended, rendering some of the goods lightly rusty, this isa normal behavior of base metal goods as these are exposed to hot and humid environment, excessive humidity generate process of oxidationand rusting. The fact of matter isthat the examining officialattended the goods invery callous andhap hazard manner rendering some of the goodsas rustyotherwise these were/are new, validated from theplates affixedthereupon. I am also flabbergasted to noteand observe from the photographtaken by the appellant at the time of loading at the port of exportandimagestakenby the examining officialat the terminal, wherein the goods arrivedthat these aresparesof drilling machine,without any exception notold and usedauto-parts in any manner and eventhrough appearance,this is ruthless lie /slanderous on the part of the respondents, veracity of the said facthas not been disputed by the representative of the respondents, rendering the examination report andthe formed opinion by the subordinate of respondents as of no substance/legal effectand as such void and ab-initio.Notwithstanding to theadumbration made here-in above, which rendered the goods importable without any exception. Even, if it is consideredfor the sake of arguments that the goods as opined by the respondents are old and used (second hand), these areimportable and leastfallswithin the ambit ofSerial No. 7 of Appendix C to the ImportPolicyOrder,2016-2018 by virtue of thefact that thesefalls underclause (3) of para 9(ii)of the Import Policy Order, 2016, which with clarityexpress in regards to imports of second hand and re-condition parts of plant machinery and equipment as clause (1) , which are not restrictedunder para 7(ii) ofAppendix-Cof the Import Policy Order, 2016-2018. The appellant being sub-contractorof MessrsCSCECL isentitledforimporting old and used parts as per condition (3) reading as "second hand/re-condition parts of the plant machinery and equipment by construction, mining and petroleumsector companies (paragraph 9(ii)(3) refers), which is construction, mining and petroleumsector companies are also allowed to import secondhand or re-conditionedparts of the plant, machinery and equipment as clause (1). "Constructioncompaniesduly registered with Pakistan EngineeringCouncil, mining, oil and gas and petroleum sector companies are allowed to import second handplant,machinery and equipmentactually required for their projects in Pakistan subject to the prior pre-shipment inspection in theexporting country by any of theinternationallyrecognizedpre-inspection companieslisted at Appendix-H to theeffectthatthe plant , machineryand equipmentare in good workingcondition and they are not older than ten years." Messrs CSCECLis duly registered with the PakistanEngineering Councilin the capacity of foreign constructor /operatorvide license No. 0101 in category FC-A,this vital facthas neither been deniedor controvertedby the representative of the respondent. Hence, deems to be admitted, resultant, Messrs CSCECL is entitledtoimportevenold and used spare partsitselfor throughtheir sub-contractor without any restriction. Rendering the opinion formed in this contextalsoof no substance/legal effect.
8.That as regards to the determination ofvalue of the imported goods for levy ofduty and taxesthroughassessment order dated19.10.2017 and connectedshow-cause noticeand order-in-original, declared valuehas been accepted as fairwith the exception thatthe subordinate of the respondentsconstrued thedeclared unit valueon the basis ofper cartoni.e. US$. 5.47 asper kg , without conversion of thevalue ofUS$. 9999/-with the application of the imported weight of 22150 kgsconfirmed in the examination report, which comes to US$. 0.45/kg, which should had been the basis of assessment, same could not at this stagebe disputed uponasnothingin regards to the said fact/groundhas been spelled out in the charter of show-cause notice. Reassessment shall be tantamount to travelling beyond the scope of show-cause notice, rendering the assessment order/order-in-original palpably illegalas held in the Hon'ble Supreme Court in reported judgment1987 SCMR1840CollectorExcise andLand Customs and others v. Rehm Dinthat "wherein it has been held that"Order of adjudication, beingultimatelybased on a groundwhich was mentioned in the show-cause notice is palpably illegal on the face ofit". Apart from this, it has also been noted thatdespite termingappellant goods as old and used machinery spare parts,the determination of value prior toframing of contravention was notcorrectlymade as orderedby the Boardin para 41 of CGO 12/2002 dated 15.06.2002, reading as:--
"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.
9.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 Act, no defiance is permitted under any pretext or circumstances. Deviation from that renders the whole proceeding without lawful authority and jurisdiction as held by the Hon'ble High Court of Sindh in 2003 PTD 2821 Syed Muhammad Razi v. Collector of Customs, (Appraisement), Karachi and 02 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 S. 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/spare partsunder 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.
10.To the contrary, the respondentsare assessing the old and used machinery/spare parts in negation to the devised procedure, on the basis of some devisedcriteria having no warrant of law @ US$.1.40/kgof China origin, despite being fake and fictitious, not permittedunder Rule 110 of Chapter IX of the Rulessame treatment needs to be given to the appellant being in consonancewith theArticles 4 and 25of the Constitution, which guarantees equal treatmentto all and sundriesand even Article 18 , which enunciatefreedom of trade, business or profession and Sub-Clause (b) of which restricts regulation of Trade, Commerce or Industry for safe guarding the interest of the citizen through healthy and faircompetition as held in reported judgmentsAIR 1954 SC 747, AIR 1963 SC 1811, AIR 1970 SC 1453, AIR 1971 SC 1017 and PLD 2005 SC 193.
11.What has been discussed hereinabove, particularly the interpretation of law, legal propositions and observations made thereon and to follow the ratio decidendi observed by the Superior Courts, by holdingthatthe appellant has been needlessly dragged intothe litigationdespite not warranted under lawby the respondentswith the sole purposeof shying awayforeign investmentand to thwartthe progressundertaken by them for overtake the deficiencyfaced by Pakistan in the power sectorunder the bilateral agreement under the protocol ofCPEC,I hereby vacate the impugned show-cause notice, and set aside the order passed by the respondentNo. 2being illegal, void and ab-initio, appeal isaccordingly allowed with no order as to cost. The respondent No. 1 is directed to issue delay detention certificate in terms of Section 14A (2) of theCustoms Act, 1969.
12.Judgment passed and announced accordingly.
HBT/95/Tax(Trib.)Appeal allowed.