DUA TRADERS VS COLECTOR OF CUSTOMS (APPEALS), KARACHI, 2016 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 1294 (2014)

Customs Act (IV of 1969)---

----Ss. 25(5)(6), 32(3-A), 36, 156 & 194-A---Determination of customs value of imported goods---Short levy of duty and taxes---Transaction of identical goods---Imposition of penalty---Directorate General of Post Clearance Audit, reported that importers, imported consignments and got cleared from customs vide Goods Declaration at a very low value, as compared to the value of similar/identical goods imported by other importers from same source and that importers had caused substantial loss to the Government revenue and national Exchequer, which was a violation of the provisions of S.32(3-A) of the Customs Act, 1969, punishable under provisions of S.156(1) of the Customs Act, 1969---Adjudicating Authority vide order-in-original found that importers had tried to mis-declare the actual value of the goods; and ordered payment of short-levied amount of taxes under S.32(3-A) of Customs Act, 1969---Appellate Authority having dismissed appeal of importers against order of Adjudicating Authority---Consignment was out of charge, when department issued show-cause notice and invoked the provisions of S.32(3-A) of Customs Act, 1969---Departmental Representative could not produce evidence to establish the charges levelled against importers in the show-cause notice---Law did not authorize any Authority to initiate proceedings against any person on the basis of presumption---Section 32(1)(2) of Customs Act, 1969, would not attract, where no allegation had been made that any forged document had been filed, or the goods were released illegally after joining hands with the customs authorities---Where case was neither of a forgery nor of fraud, same would fall within the ambit of S.32(3) of Customs Act, 1969---Provisions of said section were mandatory in nature---In the present case, the show-cause notice was issued after lapse of about 4 years---Such delay in issuance of show-cause notice was exceptional, inordinate and unexplained---Impugned orders were set aside and show-cause notice was vacated, in circumstances.

Sardar Faisal Zafar for Appellant.

Khalid Pervez, A.O., for Respondents.

Date of hearing: 29th October, 2014.

JUDGMENT

CHAUDHRY MUHAMMAD TARIQ, CHAIRMAN:---These appeals under section 194-A of the Customs Act, 1969, have been directed against Order-in-Original Nos.4373 to 4378 of 2010, dated 20-9-2010, passed by the Collector of Customs (Appeals), Karachi. Since the issue involved in all the above appeals is identical, therefore, all the above appeals are decided by this single consolidate judgment.

2.Brief facts of the case as narrated in show cause notice are that it was reported by the Directorate General of Post Clearance Audit, Karachi that appellants/importers imported consignments of 'Sodium Saceharin' from China and got it cleared from Customs vide Goods Declarations at a very low value as compared to the value of similar/ identical goods imported by other importers from same source. Whereas, Post Clearance Audit of the data of Sodium Saccharin conducted by the Directorate General Post Clearance Audit, under the provisions of Section 32(3-A) read with Section 26-A of the Customs Act, 1969 revealed that the value of the similar/identical goods as available in the historical data base for the relevant periods import at about the same commercial level of quantities from the same source was exorbitantly higher than the value declared by the importers. Actual value of these goods available in the data base for the same commercial levels from the same source was US$ 3.28/kg. Whereas value of the instant goods determined under Section 25(5) & 25(6) of the Customs Act, 1969 revealed that appellants/importers have thus caused substantial loss to the government revenue and national exchequer which is a violation of the provisions of Section 32(3-A) of the Customs Act, 1969 punishable under the provisions of Section 156(1) of the Customs Act, 1969. Appellants/importers and their Customs Agents were called upon vide show cause notice dated 27-07-2009 and were directed to explain that why they should not pay the short levied amount of taxes under Section 32(3A) of the Customs Act, 1969, read with Section 36(2) of the Sales Tax Act, 1990 and Section 148 of the Income Tax Ordinance, 2001.

3.The appellants/importers, replied the show cause notice and the matter was referred to the adjudicating officer who vide Order-in-Original dated 07-05-2010 decided the matter in following terms:--

"I have examined the case record, given anxious and adequate consideration to the written submissions of the importer in reply to the Show Cause notice and arguments of the departmental representatives. Perusal of the record and evidences for and against the issue involved provided ample understanding of the fact that the importers have tried to mis-declare the actual value of the goods and the value found as per the historical data base i.e. US $ 3.28/ Kg is the actual value of these goods. I am, therefore, constrained to order payment of the short levied amount of taxes amounting to Rs.536296/ -, under Section 32 (3A) of the Customs Act, 1969 and Section 36 (2) of the Sales Tax Act, 1990 read with Section 148 of the Income Tax Ordinance, 2001. In case the short paid amount of taxes is not paid within thirty days of the issuance of this order, it should be recovered under Section 202 of the Customs Act, 1969. It is also pertinent to mention that the Show Cause Notice was issued by Additional Collector of Customs as the Assistant Collector was posted at that time in the Group and later on Deputy Collector of Customs adjudicated the case falling in his jurisdiction."

4.The appellants/importers assailed the Order-in-Original before the Collector Customs Appeals, Karachi, who vide Order-in-Appeal dated 20-09-2010 dismissed the appeal and maintained the Order-in-Original passed by the Deputy Collector-II, Model Customs Collcctorate of Appraisement, Karachi. The operative part of Order-in-Appeal is reproduced as under:--

"I have examined the entire case record and given due consideration to the arguments made before me. There is overwhelming evidence on record to the effect that customs value of the identical goods during the relevant period was US$ 3.25/ kg and the evidence presented by the departmental representative squarely measures up to the 90-day criterion laid down under Rule 107-A of Customs Rules, 2001 read with subsection (5) of section 25 of the Customs Act, 1969. Therefore, customs value of the impugned goods was US$ 3.25/ kg and not less than a dollar on which the appellant had managed to clear the same. Under the provisions of law contained in section 32 of the Customs Act, 1969, the appropriate officers of customs have been authorized to initiate recovery proceedings in cases of revenue loss such as the instant one. The learned counsel's plea to the contrary is, therefore, untenable because cases of short levy of duty/ taxes cannot be treated as closed transactions. Therefore, I rule that the arguments advanced by the learned counsel are not tenable and the case laws relied upon by him are not relevant to the facts and circumstances of the instant case. I, therefore, hold that the impugned order is correct in law and on facts and there is no reason to interfere with the same. The appeal is rejected accordingly."

Hence these appeals on the grounds mentioned therein.

5.Learned counsel for the appellants has emphasized that on 26-8-2005, he filed the GDs and after payment of duty and taxes the goods were released to them, thereafter, on 27-7-2009, the respondent issued the show cause notice which is badly barred by time. Learned counsel appearing on behalf of the appellants further contended that Section 32(3A) of the Customs Act, 1969, was wrongly invoked and further contended that the respondents passed impugned orders in violation of criteria laid down in the directives of CBR given in General Manual of Customs Law and prayed that the appeals be accepted as prayed and the impugned orders be set aside.

6.Conversely, the D/R not only controverted the arguments advanced by the appellants side but argued in favour of the impugned orders and prayed that the appeals be dismissed and impugned orders be maintained.

7.Arguments heard, record perused.

8.The record of file highlight that the appellants/importers imported consignment of 'Sodium Saccharin' and filed GD on 26-8-2005. On payment of duty and taxes the consignment was released then without any objection. The consignment was out of charge when respondents on 27-7-2009, issued show cause notice and invoked the provisions of subsection (3A) of Section 32 of the Customs Act, 1969.

9.Whcn confronted, the D/R appearing on behalf of the respondents, could not satisfy this Tribunal, nor could point out evidence to establish the charges leveled in the show cause notice.

10.Law does not authorize any authority to initiate proceedings against any person on the basis of presumption. The language of Section 32 of the Customs Act, 1969 is plain and simple which do not require a philosophical interpretation.

11.Subsection 1 and subsection (2) of Section 32 of the Customs Act, 1969 do not attract where no allegation has been made that any forged document has been filed or the goods were released illegally after joining hands with the customs authorities. Meaning thereby that where the case is neither of a forgery nor of fraud, the same falls within the ambit of Section 32(3) of the Customs Act, 1969, which provides that the show cause notice shall be issued within 180 days. The provisions of subsection 3 of Section 32 are mandatory in nature. In the case in hand, the show cause notice was issued after lapse of about 04 years. The delay in issuance of show cause notice is exceptional, inordinate and unexplained.

12.The upshot of the above discussion is that all the above appeals arc accepted, impugned Order-in-Original and Order-in-Original are set aside and show cause notice is vacated.

13.Announced.

HBT/177/Tax(Trib.)Appeals accepted.