G.A. POLYMER (PVT.) LTD. VS COLLECTOR, COLLECTORATE OF CUSTOMS (APPEALS)
2016 P T D (Trib.) 1570
[Customs Appellate Tribunal]
Before Tahir Zia Member (Judicial-II)
Messrs G.A. POLYMER (PVT.) LTD.
Versus
COLLECTOR, COLLECTORATE OF CUSTOMS (APPEALS) and 2 others
Customs Appeal No.K-1305 of 2015, decided on 05/03/2016.
Customs Act (IV of 1969)---
----S. 179---Pecuniary jurisdiction of Assistant Collector Customs---In the present case, customs duty and taxes involved were Rs.5,40,084, whereas under S.179 of Customs Act, 1969 the Assistant Collector Customs, who passed the order-in-original, had power to adjudicate a case wherein involvement of duty and taxes was less than Rs.5,00,000---Assistant Collector Customs, in circumstances, had no jurisdiction; and not competent to issue show-cause notice and pass order in the matter---Power vested in any Authority, could only be exercised by that very Authority; in default whereof, the entire action would be without jurisdiction and void ab initio; and of no legal effect---Things required by law to be done in certain manner as prescribed by law, was to be done accordingly---Where the mandatory condition of exercise of jurisdiction by a court, Tribunal or authority, was not fulfilled, then the entire proceedings would become illegal; and all subsequent orders would be without jurisdiction---Requirements, of law were absolute and violation of the same would invalidate the whole procedure---Imposition of redemption fine and penalty on the importer was very harsh; same were ordered to be remitted; and orders passed by the Customs Authorities, were modified to that extent only, in circumstances.
Government of Sindh v. Nizakat Ali 2011 SCMR 592; M. Hussain Shah v. Abdul Qayyum 2011 SCMR 743; WAWA Garments Industries (Pvt.) Ltd. Karachi's case 2011 PTD (Trib.) 2557; Azhar Hussain Gillani v. Chief Election Commissioner 2011 CLC 1109; Aluminum Processing Industrial International (Pvt.) Ltd. v. Pakistan 2011 PTD 2128; Victor Electronic Appliances Industries (Pvt.) Ltd. v. Habib Bank Ltd. 2011 SCMR 806; Munir Hussain Bhatti Advocate v. Federation of Pakistan PLD 2011 SC 407; Muhammad Hussain Shah v. Abdul Qayyum 2011 SCMR 743; Kamran Industries v. Collector of Customs Export PLD 1996 Kar. 68; PLD 1995 Kar. 587 and Messrs Khyber Tractors (Pvt.) Ltd. v. Government of Pakistan PLD 2005 SC 482 ref.
M.H. Awan for Appellant.
Siddique Zia for Respondents.
Date of hearing: 3rd December, 2015.
ORDER
TAHIR ZIA (MEMBER JUDICIAL-II).---By this order, I intend to dispose of Customs Appeal No.K-1305/2015 filed by the appellant against Order-in-Appeal No.10218 of 2015 dated 16.06.2015 passed by Collector of Customs (Appeals), Karachi.
2.Brief facts of the case are that the importer M/s. GA Polymer (Private) Limited, Company has electronically filed Goods Declaration No.KAPW-HC-107824-20-02-2014 and declared to contain Coated Calcium Carbonate Grade HC 161 at a value of US$ 0.56/kg from Thailand under U.S. Code/PCT heading: 3824.9094 at a total invoice consignment value of US$ 14000/-. The importer determined his liability of payment of applicable duties and taxes and sought clearance under Section 79(1) of the Customs Act, 1969. In order to check as to whether the importer has correctly paid the legitimate amount of duties and taxes the under reference GD was selected for scrutiny in terms of Section 80 of the Customs Act, 1969 and was referred to Examination for confirmation of goods. Perusal of the case in the light examination the sample was forwarded to Customs House Laboratory for test. The Lab has reported that the sample on test is found to be calcium carbonate 82% Plastic medium ...18%. It is in the form of white granules. Suggested PCT: 3824.9099" Accordingly the goods classifiable under PCT heading 3824.9099, which attracts customs duty @ 10% instead of 3824.9094 which attracts Customs duty @ 5%. For ease of reference examination report is reproduced as under:-
"EXAMINATION REPORT"
CONTAINER NO. TGHU0503131 INVOICE AND PACKING LIST NOT FOUND EXAMINED THE GOODS IN THE LIGHT OF GD RETRIVED FROM SYSTEM, DESCRIPTION. COATED CALCIUM CARBONATE GRANULAR FROM (PRINTED ON THE PP BAC1S).GRADE: HC 161 (PRINTED ON LABEL PASTED ON THE BAGS). LOT NO.MFG AND EXP: NOT FOUND BRAND: Q PLAS.I/O: THAILAND. WEIGHT: 25 KGS NET EAH BAG TOTAL WEIGHT 25KGS X1000 NAGS 25000KGS NET. 100% WEIGHT 25255KGS VID KICT WEIGHT MENT SAMPLES ARE FORWARDED TO CUSTOM HOUSE LAB FOR TEST .. The aforesaid proved that the importer has deliberately concealed the value of the goods and has misdeclared in classification / PCT in order to get the assessment on suppressed value of goods and to evade legitimate amount of Customs duty and other Taxes to the tune of Rs.540,084/-. The value of offending goods comes to Rs. 1,496,961/-. The importer has therefore contravened the following Acts: Laws Violated / Contravened Acts Section (a) Customs Act, 1969, sections 32(1) & (2) 79(1) (b) Sales Tax Act, 1990 Section 33(c) Income Tax Ordinance, 2001 14R Punishable: Acts Section (a) Customs Act, 1969 Clauses 14 and 45 of Section 156 (1) (b) Sales Tax Act, 1990, Clause 11 (C) of Section 33 (c) Income Tax Ordinance, 2001 148 6. The case is submitted for adjudication in terms of SRO 499(I)/2009 dated 13.06.2009 Please.
3.After issuing show cause notice to the appellant, the matter was adjudicated by the respondent (Assistant Collector Adjudication), who did not agree with reply of the appellant and passed the Order-in-Original No.184177 dated 28.02.2014, operative part of the said O-N-O is reproduced as under:--
"I have gone through the case and heard the written as well as verbal submissions of the trader. If is submitted that after examination the sample was forwarded to Custom House, Laboratory for test. The Lab has reported that 'The sample on test is found to be calcium carbonate dispersed in a plastic medium. Calcium carbonate . 82% Plastic medium .... 18%. It is in the form of while granules, Suggested PCT: 3824. 9099". Accordingly, the goods classifiable under heading 3824.9099 which attracts Customs duty @ 10% instead of 24.9094 which attracts Customs duty @ 5%. Hence, charges level in show cause notice regarding the mis-declaration of classification where ascertained PCT attracts higher rate of duty is found established. Hence, the impugned goods are liable to be confiscated. However, an option to get the goods .redeemed under section 181 of the Custom Act, 1969, is given to the trader on the payment of 20% redemption fine of the offending value of the impugned goods because of the mis-declaration of classification where ascertained PCT attracts higher rate of duty. Hence, in the light of SRO-499(I)/2009, 20% redemption fine is imposed on the trader i.e. Rs.299339/- and a personal penalty of Rs.50,000/- is also imposed on the trader. The assessing officer is directed to assess the goods, collect the fine penalty, collect the duty and taxes involved, and apply correct VR, PCT, SRO applicable. The case is disposed of on the above terms".
4.Being aggrieved and dissatisfied with the Order-in-Original No.184177 dated 28.02.2014 passed by the Assistant Collector of Customs, Adjudication, Custom House Karachi. The present appellant filed an appeal before the Collector of Customs, (Appeals), Karachi, who passed an Order-in-Appeal No.10218/2015 dated 16.06.2015, the operative part of order is reproduced as under:--
"I have examined the case record. The laboratory report is categorical as it confirms that goods are calcium carborate dispersed in plastic medium, which is a different commodity than that declared by the importer. The appellants have thus given correct declaration to escape higher rate of duty. I therefore do not subscribe to the contention of the appellants as they cannot justify the act of misdeclaration. The original order is accordingly upheld and appeal being without merit is rejected."
5.Being aggrieved and dissatisfied with the Order-in-Appeal, the appellant filed the instant appeal before this Tribunal on the grounds as under:--
(i)That the appellant is a manufacturer under the name and style Messrs G.A. Polymer (Pvt.) Ltd. Industrial Estate Hayatabad Peshawar. The consignment was imported against irrevocable letter of credit No. 2003 LC 25979/2014 dated 21.01.2014, wherein PCT Heading is mentioned as 3824.9094, which was reproduced/declared on the GD as such, there was no misdeclaration on the part of appellant importer.
(ii)That the case was adjudicated by an Assistant collector who was not competent to adjudicate this case for want of pecuniary jurisdiction. An Assistant Collector has powers under Section 179 of the Custom Act, 1969 to adjudicate a case wherein involvement of duty and taxes is less than Rs.5,00,000/- whereas in this particular case-involvement of duty and taxes as calculated by the Assistant Collector himself is Rs.5,40,084/- therefore, Order-in-Original is illegal and void ab anitio but learned Collector (Appeals) has not given any importance towards the jurisdiction, ever he did not discuss the question of jurisdiction in his impugned Order-in-Appeals, hence, this impugned Order-in-Appeals is liable to be set aside. The Appellant relied on the following reported Judgments of Apex Courts:--
(a)Government of Sindh v. Nizakat Ali 2011 SCMR 592.
(b)M. Hussain Shah v. Abdul Qayyum 2011 SCMR 743(b)
(c)WAWA Garments Industries (Pvt.) Ltd. Karachi, 2011 PTD (Trib.) 2557(k).
(d)Azhar Hussain Gillani v. Chief Election Commissioner 2011 CLC 1109 (HC (AJ&K)).
(e)Aluminum Processing Industrial International (Pvt.) Ltd. v. Pakistan 2011 PTD 2128(b) (SHC)
(f)Victor Electronic Appliances Industries (Pvt.) Ltd. v. Habib Bank Ltd. 2011 SCMR 806(b).
(g)Munir Hussain Bhatti Advocate v. Federation of Pakistan PLD 2011 SC 407(i).
(h)Muhammad Hussain Shah v. Abdul Qayyum, 2011 SCMR 743(b).
(iii)That Goods Declaration was filed by the Appellant with correct description of goods which was confirmed by Examination Report which is reproduced as under:--
Container No.TGHU-0503131 invoice and packing list not found examined the goods in the light of GD retrieved from system, description. Coated Calcium Carbonate granular from (printed on the pp bags), grade: HC 161 (printed on label pasted on the bags) lot No. mfg and exp: not found brand: q plas. i/o: Thailand, weight: 25 kgs net each bag total weight : 25kgs x 1000 Kgs=25000 kgs net. 100% weight 25255kgs vide kict weightment slip No. 393039 dt. 21.02.14. images attached representative samples are forwarded to custom house lab for test. (exhibit-i)
(iv)(a) That on the Charge of misdeclaration of PCT Heading section 32 of Customs Act, 1969 does not invoke, no case of classification of goods can be made out under the provisions of section 32 of the Customs Act, 1969 in the light of observations of Honorable Customs, Excise and Sales Tax Appellate Tribunal Karachi in the judgment of Messrs Falcon Enterprises v. Collector of Customs vide Appeal No.K-723/07, wherein it is observed:--
"alleging a charge of misdeclaration on the basis of a wrong classification heading does not constitute an offence within the framework of section 32 of the Customs Act, 1969 as there is no material falsity in the statement made by the Appellant."
(b)Moreover, the similar issue of classification was also decided vide Customs Appeal No. K-432 which went up to the Apex Court and the orders of the Tribunal passed was maintained in which it was held:--
"The difference of opinion with respect to classification does not fall within the mischief of Section 32 of the Customs Act, 1969. The confiscation and imposition of penalty in this count therefore is ab-initio void and illegal."
(c)In addition to above the incorrect quoting of P.C.T is not tantamount to misdeclaration within the ambit of mischief of Sections 32 (1), 32(2) and 32(A) of the Customs Act, 1969 since a positive assertion of facts is a pre-requisite for bringing charges of misdeclaration against the tax payer. If the wisdom of the Customs Authorities for invoking Section 32 in cases of incorrect citing of P.C.T Heading is acceded to no responsibility obviously devolve upon the hierarchy of the Customs Officials to levy and assess the duty according to law. The provisions of Section 79 and Section 80 of the Customs Act, 1969 in such a state of mind would become redundant and the observation of the Honourable Late Justice Salimuddin Ahmed in the case of State Cement v. Government of Pakistan reported as C.A. No. 43 of 1909 would once again ridicule the irrational approach of the Customs Authorities. The observation verbatim states.
"We are rather amazed at the line of reasoning put forward to the effect that while an assessment is required to interpret the law and relevant notification correctly and could be held guilty of a penal offence for not doing so in terms of section 32(1) of the Customs Act no responsibility of any kind would devolve on the customs officials".
(d)Beside the same principle has been laid down by the Honorable High Court of Sindh at Karachi in the case of Kamran Industries v. Collector of Customs Export reported as PLD 1996 Karachi 68.
v.That the adjudicating officer has wrongly leveled charge of misdeclaration of value. As a matter of fact declared value and ascertained values are same as Rs.14,96,691/-, it is pointed out for consideration, if the declared and ascertained value of the consignment are same then, section 32 of the Customs Act, 1969 does not invoke vide Sr. No. 101 of the "Customs General Order 12/2002 dated 15.06.2002 / SRO-374(I)/2002, therefore, Order-in-Appeal is liable to be set aside.
vi.That assessment was made after the examination of goods and Lab test report appellant as defined under Sri. No. 101 of CGO 12 dated 15.06.2002.
vii.That as per prevailing practice of Customs House no case of Misdeclartion is made out against the importer in case description of goods is subject to Lab test sent for lab test Report and after the lab test Report PCT Heading was changed therefore, no penal action is warranted.
The appellant counsel further argued that on the basis of above said grounds and facts the instant appeal may kindly be accepted and the Order-in-Original No.184177 dated 28.02.2014, and Order-in-Appeal No.10218/2015 dated 16.06,2015 passed by the respondent No.1 may be set aside in the interest of justice.
6.The Respondent has submitted para wise comments/Preliminary Objections in reply to the memo. of appeal, as under:-
a)That in the light of submission made above, contents of the Para (i) of the ground are vehemently denied, after examination the sample was forwarded to Custom House Laboratory for test. The Lab has reported that "The sample on test is found to be calcium carbonate dispersed in a plastic medium. Calcium carbonate 82% plastic medium 18% it is in the form of white granules. Suggested PCT 3824.9090" Accordingly the goods classifiable under PCT heading 3824.9099 which attracted Customs Duty @ 10% instead of 3824.9094 which attracted Customs Duty @ 5%.
(b)That in the light of submission made above, contents of the Para (2) of the ground are vehemently denied, hence, there is no violation of any spirit of law in impugned orders passed by adjudicating authority. The aforementioned facts prove that the importer deliberately concealed the value of goods and mis-declared description and classification/PCT in order to get the assessment on suppressed value of goods and to evade legitimate amount of Customs Duty and other taxes to the tune of Rs.540.084/-. The value of offending goods comes to Rs.1,496,691/-.The importers have. Therefore, contravened the provisions of Sections 32(1) and (2), 79(1) of the Customs Act, 1969, Section 33 (c) of the Sales Tax Act, 1990 and Section 148 of the Income Tax Ordinance 2001, punishable under clauses 14 and 45 of Section 156(1) of the Customs Act, 1969. Clause II(c) of Section 33 (c) Sales Tax Act, 1990. It is respectfully submitted that the Honorable Supreme Court of Pakistan vide its order dated 10.11.2003 in Civil Petition No.775-K-2003 (Annex-A) held that "After having heard the learned counsel for parties at length, it transpired from scrutiny of record that the controversy has been dilated upon and decided on merits but the petitioner has been knocked out merely on the ground that notice was issued by the Assistant Collector instead of Additional Collector. It is always considered desirable that such matters should be decided on merit in accordance with law and not on sheer technicalities'.
c)The in the light of submission made above, contents of the Para (3) of the ground are vehemently denied. The lab report has confirmed that the importer misdeclared description and classification/PCT to get the goods assessed on suppressed value and Customs Duty @ 5% against the relevant payable custom duty @ 10% and evade Customs Duty and other taxes to the tune of Rs.540,0841-. The total value of offending goods comes to Rs.1,496,691/-.
d)That in the light of submissions made above contents of Para (4) of the ground of the appeal are vehemently denied. It is respectfully submitted that the judgments cited by the appellant are not relevant in the instant case as the importer had misdeclared material facts to evade legitimate government revenue.
e)The in the light of submission made above, contents of the para (5) of the ground are vehemently denied. It is respectfully submitted that the laboratory report is as it confirms that calcium carbonate dispersed in a plastic medium. Calcium carbonate 82% Plastic medium 18%, the importer declared Coated Calcium Carbonate Garde HC 161, therefore the importer deliberately mis-declared the description and classification and the adjudication has lawfully established the charges against the appellant and held that:--
"I have gone through the case and heard the written as well as verbal submission of the trader, it is submitted that after examination the sample was forwarded to Custom House Laboratory for test. The Lab has reported that "The sample on test is found to be calcium carbonate dispersed in a plastic medium. Calcium Carbonate 82% Plastic medium .. 18% it is in the form of white granules. Suggested PCT 3824.9090." Accordingly, the goods classificable under PCT heading 3824.9090 which attracts Customs Duty @ 10% instead of 3824.9094 which attracts Customs Duty @ 5%. Hence, charges level in show cause notice regarding the mis-declaration of classification where ascertained PCT attracts higher rate of duty is found established. Hence the impugned goods are liable to be confiscated. However, an option to get the goods redeemed under section 181 of the Customs Act, 1969 is given to the trader on the payment of 20% redemption fine of the offending value of the impugned goods because of the mis-declaration of classification where ascertained PCT attracts higher rate of duty. Hence in the light of S.R.O. 499(I)/2009, 20% redemption fine is imposed on the trader i.e. Rs.299339 and a personal penalty of Rs.50,000 is also imposed on the trader. The assessing officer is directed to assess the goods in the PCT determined by the Custom House Lab collect the fine penalty collect the duty and taxes involved and apply correct VR/PCT SRO applicable."
It is respectfully submitted that the Honourable Supreme Court of Pakistan vide judgment in case of Messrs ACP Oil Mills (Pvt.) Ltd. v. The Additional Collector of Customs (Appraisement) and others reported in 2013 SCMR 638 (Annex-B) settled law and held declaration of incorrect PCT is a mis-declaration in the observation states: "The original invoices classified the goods under PCT headings 7210.1200, 7210.5110 and 7219.9000 whereas the photo copy of an invoice tendered earlier described the goods under PCT heading 7210.5000. The photo copies of the invoices obliged the petitioner to pay customs duty @ 10% and the original at 25%. This one leads to conclude that the photo copies of the invoices were tampered with. Additional all the four forums, including the High Court had upon factual determination held the petitioner to have intentionally made mis-declaration. On that score too we would be slow to interfere with the concurrent findings on facts. The petitions are, therefore, dismissed and leave declined.
That the adjudicating authority vide Order-in-Original dated 28.02.2014 had adjudicated the issue in favour of the department. That, prima Facie, the submissions made by the answering respondents are in their favour in accordance with law and balance of convenience is also lies in their favour.
The departmental representative further submitted that the Order-in-Original No.184177 dated 28.02.2014 passed by the respondent No.3 and Order-in-Appeal No.10218 of 2015 dated 16.06.2015 passed by the respondent No. 1 are correct and within the ambit of prevailing law, which are required to be upheld. He therefore requested that the instant appeal filed by the appellant may kindly be rejected.
7.I have gone through the available record and facts of the case carefully and heard both parties, my findings thereon are as under:-
It is rightly argued by the learned advocate for appellant that under section 179 of the Customs Act, 1969 the Assistant Collector Customs who passed the Order-in-Original has no jurisdiction and not competent to issue Show Cause Notice and pass order in the matter where involvement of duty and taxes are more than rupees five lac. In the instant case admittedly customs duty and taxes involved are Rs.5,40,084/-. I would like to thresh out that said relevant provision of the Customs Act, 1969 as under:--
[179. Power of adjudication:---(1) Subject to subsection (2), in cases involving confiscation of goods or recovery of duty and other taxes not levied, short levied or erroneously refunded, imposition of penalty or any other contravention under this Act or the rules made thereunder, the jurisdiction and powers of the officers of Customs in terms of amount of duties and other taxes involved, excluding the conveyance, shall be as follows, namely:--
1. | Collector | No limit |
2. | Additional Collector | Not exceeding three million rupees |
3. | Deputy Collector | not exceeding one million rupees |
4. | Assistant Collector | not exceeding five hundred thousand rupees |
5. | Superintendent | not exceeding fifty thousand rupees |
6. | Principal Appraiser | not exceeding fifty thousand rupees |
The case law relied upon by the learned advocate for the appellant are fully applicable in the instant case and the proceedings initiate on the basis of show-cause notice issued by an authority who is not competent to issue the same are defective and unlawful and without jurisdiction. I am fortified with a case law reported in PLD 1995 Karachi 587, wherein it was held that the power vested in any authority can only be exercised by the authority, in default whereof, the entire action would be without jurisdiction void ab initio and of no legal effect. The superior judiciary has always maintained that a thing required by law to be done in a certain manner as prescribed by law is to be done accordingly. It is well settled law that where the mandatory condition of exercise of jurisdiction by a court, Tribunal or authority was not fulfilled, then the entire proceedings would become illegal and all subsequent orders would be without jurisdiction as held by the Honourable Supreme Court of Pakistan in the case Messrs Khyber Tractors (Pvt.) Ltd. v. Government of Pakistan published in PLD 2005 SC 482. The above requirements are absolute and violation of the same will invalidate the whole procedure. In this case, imposition of redemption fine and penalty on the importer is very harsh.
In view of the above legal and factual position, the redemption fine and penalty amount are ordered to be remitted. The orders passed by the Customs Authorities are modified to this extent only.
Order passed and announced accordingly.
HBT/35/Tax(Trib.)Order accordingly.