M. NADEEM TRADING COMPANY VS COLLECTOR OF CUSTOMS (EXPORTS), 2016 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 1613 (2015)

2016 P T D (Trib.) 1613

[Customs Appellate Tribunal]

Before Adnan Ahmed, Member Judicial-II

M. NADEEM TRADING COMPANY and another

Versus

COLLECTOR OF CUSTOMS (EXPORTS)

Customs Appeals Nos.K-1586 and K-1587 of 2014, decided on 27/02/2015.

(a) Customs Act (IV of 1969)---

----S. 180 ---Show-cause notice---Essentials and scope---Show-cause notice was a basic document which should be prepared with utmost care as foundation of entire proceedings stand on show-cause notice---If show-cause notice was defective, sketchy and vague, subsequent proceedings ought to crumble down---Show-cause notice had to be issued well supported by tangible evidence as the same was a fundamental document which comprehensively described the case made a out against tax payer by making reference to evidence collected in support of same and with narration of facts along with supportive evidence which determined an offence attracted to a particular case---Show-cause notice was not a casual correspondence or a tool or a license to commence a rowing inquiry into the affair based on assumption and speculation but was a fundamental document that carried definitive legal and factual position of department against tax payer, legal enforceability and jurisdictional validity of a show-cause notice vested from its context ---Show-cause notice, in the present case, was very sketchy and vague as evident from fact that inspite of levelling allegation of mis-declaration under S. 32 of Customs Act, 1969, nothing had been said as to how an importer mis-declared transmitted declaration therewith---Such type of show-cause notice was palpably illegal and without any lawful authority and jurisdiction.

Case-law referred.

(b) Customs Act (IV of 1969)---

----S.131---Customs Rules, 2001, R.444---Clearance for exportation---Procedure---Owner of any goods to be exported had to make a Goods Declaration for export under S. 131(a)(1) of Customs Act, 1969 and transmit it online in terms of R. 444 of Customs Rules, 2001---Principles.

(c) Customs Act (IV of 1969)---

----S.25(15)---Foreign Exchange Regulation Act (VII of 1947), S. 12---Valuation of exported goods---Determination---Scope---Matter of valuation was between seller and buyer to agree to prices----Scheduled Bank, State Bank of Pakistan or customs department had no authority to dispute the declared value---Determination of export value fell within the ambit of State Bank of Pakistan under S. 12, Foreign Exchange Regulation Act, 1947---If it was found that export value was not in accordance with specification of goods, department could only issue order to Terminal to retain consignment as enunciated in S. 12(5) of Foreign Exchange Regulation Act, 1947---Department was also empowered to determine value of exported goods under S. 25(15) of Customs Act, 1969 which laid down the concept of "open market" value of goods at prescribed time---Term "open market" had laid down parameters as to what was a sale in "open market" between buyer and seller independent of each other---In view of such specific provisions regarding method and mechanism for determination of value of export consignment, value in the present case, had been determined in arbitrary/unilateral manner which was alien to provision of S. 25(15) of Customs Act, 1969.

Case law referred.

(d) Customs Act (IV of 1969)---

----Ss. 26, 29, 130, 131 & 205---Customs Rules, 2001, Rr. 444, 450(2) & 450(3)---Information to be furnished---Re-assesment---Scope---According to S. 26 of Customs Act, 1969, Department could ask for supply of documents or information corresponding to any import or export for determination of its veracity/correctness---No documents or information were sought by Department under S. 26 of Customs Act, 1969, instead demand was made for submission of another Form "E" for US$ 117,526.00---Scheduled Bank was not authorized to issue a supplementary Form "E" to already attested Form "E" through which shipment was affected---Issuing of supplementary Form "E" was not permitted under Foreign Exchange Regulation Act, 1947 ---Demand made by Department was unrealistic and of no lawful authority---Department tried to amend goods declaration which was not permitted under S.29 of Customs Act, 1969 and R. 444 of Customs Rules, 2001---No amendment under S. 205 of Customs Act, 1969 was allowed in column of declared value, quantity or description after removal of goods from customs area---Exporter was barred to obtain amendment post-filing of Goods Declaration and after shipment of goods---Term "assessed for duty" laid restriction on department not to amend the contents of Goods Declaration after shipment under S. 130 of Customs Act, 1969 on strength of valid assessment order by appropriate authority under S. 131 and R. 450 of Customs Rules, 2001---Such acts and omissions of department were without lawful authority being in derogation of S. 131(c) of Customs Act, 1969---Intention of Legislature was not as interpreted by the Department---Once goods were cleared for shipment, no reassessment was permitted under S. 131 of Customs Act, 1969---Reassessment was permitted prior to passing of order of clearance under S. 131 and R.450(2) of Customs Rules, 2001 upon filing of review by exporter under R.450(3) of Customs Rules, 2001 against assessment orders of Appraiser/Principal Appraiser and Assistant/ Deputy/ Collector as the case may be.

(e) Customs Act (IV of 1969)---

----S. 131(c)---Customs Rules 2001, R. 450(2)---Clearance for exportation---If it was considered that Department was empowered to reassess Goods Declaration after shipment in terms of R.450(2) of Customs Rules, 2001, it would render S. 131(c) of Customs Act, 1969 redundant---Section 131(c) of Customs Act, 1969 had to prevail over R.450(2) of Customs Rules, 2001.

Case-law referred.

(f) Customs Act (IV of 1969)---

---Ss. 26 & 215---Information to be furnished---Scope---Contention of importer was that department had referred S. 26 of Customs Act, 1969 in show-cause notice but no copy of notice had been placed on record confirming that neither inquiry was initiated, nor a notice was served within meaning of S. 215 of Customs Act, 1969---Held, that Department was shooting in dark and making fishing and rowing inquiry through the show-cause notice which was not permitted by law---Appeal was allowed in circumstance.

Case-law referred.

(g) Interpretation of statutes---

----Conflict of Rules with parent Act---Act to prevail.

Nadeem Ahmed Mirza, Obayd Mirza and Mirza Muhammad Abeer Nadeem for Appellants.

Tariq Mehmood, Appraiser for Respondent.

Date of hearing: 17th December, 2014.

JUDGMENT

ADNAN AHMED, MEMBER (JUDICIAL-II).---Through this common order, I intend to dispose off Appeals Nos. K-1586 and 1587 of 2014 filed under section 194-A of the Customs Act, 1969 against the Order No.266214 dated 24.09.2014 of the Collector of Customs, Exports (here-in-after to be referred as respondent).

2.Briefly, facts of the case as stated in the impugned order by the respondent are that Messrs Nadeem Trading Company, Offices No.38-A/3, Latif Cloth Market, Saleh Muhammad Street, (NTN 0093892) filed Goods Declaration (GD) No.KEPX-SB-110159/07-04-2014, through this authorization clearing agent M/s. O.K. International CHAL 1851 for export of cotton dyed /Printed Boys/girls Trousers and Shirts Cap and Under Garments Man Made Dyed/Printed Fabric (Assorted under PCT 6201.9200. cotton dyed/printed boys/Girls Trousers and Shirts and PCT 5512.1900 (Man Made Dyed /printed Fabric 50/52") PCT 6214.9090 (Cap and Under Garments at Total US$. 17809.80. form E No. SMBL0016812 and dated 07/04/2014 for stuffed in one containers to Jabel Ali (UAE). On examination/assessment the goods were found as per declaration. However, total declared value US$. 17809.80 for Cotton dyed/Printed Boys/Girls, Trousers and Shirts Cap and Under Garments Man Made Dyed/Printed Fabric. Accessories and total assessed value US$. 135336.00. The difference of value is US$. 117526.00 which become 660% under invoiced. The exporter has failed to submit additional form "E" for the difference of value. The under invoicing and non submission of Form E attracts the provisions of Section 26 and Sections 32-1(a) and 32-1 (c) of the Customs Act, 1969, read with Section 22 Foreign Exchange Regulation Act, 1947, which is punishable under clause 14 of Section 156(1) of the Customs Act 1969 read with section 23 Foreign Exchange Regulation Act, 1947. Had this gone undetected the national exchequer would have suffered a loss of Foreign Exchange to the tune of US$. 117526 (Rs.11517548). Whereas M/s. M. Nadeem Trading Company, Office at No. 38-A/3, Latif Cloth Market, Saleh Muhammad Street, (NTN 0093892) filed Goods Declaration (GD) No.KEPX-SB110159/07-04-2014, through their authorization clearing agent M/s. O.K. International CHAL 1851, are hereby called upon to show cause as to why penal action under the aforesaid provisions of the Customs Act, 1969 should not be taken against them for committing of aforesaid acts. A written reply to the show cause notice may reach this office within seven days from the date of issuance. The appellant consultant submitted the reply to the show cause notice vide letter dated 12.06.2014 through which he controverted the allegation as of no substance and so the jurisdiction of the respondent. Similarly, attended the hearing fixed for 12.06.2014 with that the hearing stood concluded the respondent on 24.09.2014 passed order-in-original against the appellant, while holding in para 4 that:--

"Hearing in this were fixed on 12.06.2014, 14.07.2014 and 04.06.2014. Neither any reply to the show cause notice was received nor did anyone appear for hearing to defend the case since the case cannot be kept pending indefinitely in the presence of Section 179 of the Customs Act, 1969. I am therefore, constrained to decide the matter ex-parte on the basis of available evidence and record. The contention of the department against the exporter is found tenable on the basis that even on per kg basis i.e. US$. 1.46/kg, the declaration of value is very low. Hence the charge of under invoicing stands established against the exporter and the clearing agent under subsection (14) of Section 156(1) of the Customs Act, 1969. I, therefore, hereby order the exporter to submit additional Form "E" amounting to US$. 117,526.00 i.e. Total Form "E"s shall amount to US$. 135,336.00 (US$. 11.10/kg). a penalty of Rs.100000/- (rupees one hundred thousand) is also imposed upon the exporter for violating the provisions of law as quoted above. A penalty of Rs. 25,000.00 (rupees twenty five thousand) is also imposed upon the clearing agent for colluding with the exporter in violating the provisions of law. Furthermore, the PA- Examination /Assessment is directed to ensure that for "E" is submitted within 30 days of issuance of this order and both the form -Es are verified from the concerned Bank. In case of non-compliance of this order in the aforesaid period recovery proceedings under Section 202 of the Customs Act, 1969 shall be initiated."

3.The appellant Messrs M. Nadeem Trading Company, Karachi has challenged the order of the respondent No.3 by way of the instant appeal the consultants/advocates argued on the strength of the grounds incorporated in the memo of appeal and which are inter aliea:

(i)That the show cause notice is self proves inefficiency and malice as evident from the fact that the show cause notice contained the name of Magic Pearl General Trading, UAE (who is importer and to whom no show cause notice can be issued) under the provision of Customs Act, 1969. Whereas, no show cause notice has been issued in principle as evident from the name of the respondent to the appellant. Resultant, no order can be passed in the absence of non serving of show cause notice as this is not permitted under law.

(ii)The impugned Order-in-Original has been passed by Dr. Wasif Ali Memon Collector of Customs Export Karachi on 24.09.2014, irrespective of the fact that he stood transferred through Notification No. 1387-C-1/2014 dated 18.07.2014 to Collector, Model Customs Collectorate, Hyderabad and he relinquished the charge on 07.08.2014 as evident from Notification No.1536-C-1/2014. And Mr. Mansoor Hussain Memon who was also transferred through the referred notification assumed the charge of the Collector, Model Custom Collectorate of Export on 06.08.2014 vide Notification No.1518-C-1/2014. Confirming that the Order has not been passed by Dr. Wasif Ali Memon instead by a ghost authority, rendering it of no legal effect and as such void and ab-initio and holds no grounds for enforcement.

(iii)The Government of Pakistan in exercise of power conferred under section 3 of Customs Act, 1969 (VI of 1969) read with Section 179 thereof has withdrawn the power of adjudication from the Executive Collectorate and has formed Collectorate of Customs (Adjudication) vide S.R.O. No. 886(I)/2012 dated 18.07.2012, which is effective from 01.08.2012, Meaning thereby that every adjudication wherein loss of revenue is visible or calculated even on the basis of presumption has to be done by the officer of Collectorate of Customs (Adjudication) after 01.08.2012 and not by the Executive Collectorate. While issuing Show Cause Notice and passing order-in-original dated 04.06.2014 and 24.09.2014 respectively, the respondent has transgressed the authority vested with the Collectorate of Customs (Adjudication II), who are empowered to adjudicate the case corresponding to the MCC of Export, Karachi rendering both being issued and passed in-flagrant violation of law and as such coram non judice, hence void and ab-initio.

(iv)Upon scrupulous study of the show cause notice it has been observed that your authority issued the subject show cause notice on wrong presumption i.e. since the appellant has not submitted Form "E" for the additional amount, he as stated under declared the value of the exported goods, which should had been US$.135, 336.00 as against declared US$. 17,809.80 which is contravention of Sections 32(1)(a) and 32(1)(c) of the Customs Act, 1969 read with Section 22 of Foreign Exchange Regulation Act, 1947 punishable under clause 14 of Section 156(1) of the Customs Act, 1969 read with Section 23 of the Foreign Exchange Regulation Act, 1947 and the said act of his resulted in impugned loss of Foreign Exchange to the tune of US$. 117,526.00.

(v)That the demand of amended Form-E post Shipment by the Respondent is not warranted and neither it is possible as this is not permitted under Foreign Exchange Regulation Act, 1947. Beside, the Respondent lost sight of Section 29 of the Customs Act, 1969, under which amendment in value of the goods is not permitted after the goods have been allowed for Shipment/out of charge. Rendering the direction of submitting Form-E for the excess amount to the declared value in form "E" and Goods Declaration is in derogation of the explicit expression of Section 29 of the Customs Act, 1969, rendering it nullity to law as of no legal effect.

(vi)That the Respondent's opinion in regards to value based on presumption and had no legal force by virtue of the fact that for leveling such type of allegation, it is mandated upon him to annex with the show cause notice evidential invoice of the same product as were exported by the appellant of the period expressed in Rule 107(a) of Customs Rules, 2001 as directed in para 78 of CGO 12/2002 dated 15.06.2002 of the country of import confirming that the goods exported from Pakistan were cleared in UAE on the value relied upon in the show cause notice served on the appellant. No evidential invoice as per mandated requirement of law is annexed, rendering the show cause notice deficient and as of no substance, hence void and ab-initio and as such of no legal effect.

(vii)Notwithstanding to the above legal proposition, if the Respondent's subordinate has determined the value on their own then on what basis in the absence of availability of samples, which are pre-requisite for determining the price of the exported goods as expressed in Section 25(15) of the Customs Act, 1969, which read as follows:--

25(15) Customs Value of the exported goods:---The custom value of any exported goods shall be the value at the prescribed time on a sale in open market for exportation to the country to which the goods are consigned having regards to the following provisions, namely :-

(a)That the goods are treated as having been delivered to the buyer on Board the conveyance in which they are exported and,

(b)That the seller will bear all packing, commission, transport loading and other cost, charges and expenses including any regulatory duty which may be chargeable under subsection (3) of Section 18 incidental to the sale and to the delivery of the goods on Board the conveyance in which they are to be exported and will be included in the customs value;

(c)That where goods are manufactured in accordance with any patented invention or are goods to which any protected design has been applied, the custom value shall be determined taken into consideration of the value of right to use design in respect of the goods;

(d)That where goods are exported for sale, other disposal or use, whether or not after further manufacture, under a Pakistani Trademark the customs value shall be determined taken into consideration the value of the right to use patent, design or trademark in respect of the goods.

That since the value of the goods exported by the appellant has to be determined in accordance with clauses (a) and (b) of Section 25(15) of the Customs Act, 1969. The break up needs to be annexed with the show cause notice, to be prepared in association with the appellant no exercise can be under taken at the back of the appellant, rendering the determination of the value nullity to the Section 25(15) and fail the test of judicial scrutiny and no charge on the basis of said determined value can be leveled as held by Superior Judicial Fora in umpteenth reported judgment.

(viii) That the Respondent has also invoked the provision of Section 22 of the Foreign Exchange Regulation Act, 1947, which read as:--

S. 22: False Statement:---No person shall, when complying to any order or direction under Section 19, or when making any application or declaration to any authority or person for any purpose under this Act, give any information or make any statement which he knows or has reasonable cause to believe to be false, or not to in any material particular

That the said section revolve around section 19 which speaks about to call for information and under the said section the appropriate authority is Federal Government or State Bank of Pakistan which can ask the appellant to submit the desired information and by none else. The authority to adjudicate the contravention of both the section has been defined in Section 23B, which read as follows:

23B. Authorization of Adjudication Officer and their Powers etc.:----(1) the Federal Government may by notification in the official Gazette, authorized in relation to any area specified in the notification any officer of the State Bank to act as the Director of Adjudication an Additional Director of Adjudication, a Senior Deputy Director of Adjudication, a Deputy Director of Adjudication and Assistant Director of Adjudication ( in this Act refer to as the adjudicating officer)

(viii) That in terms of Section 23B, the Respondent is not empowered to issue show cause notice. It is for the authorities defined therein, rendering the show cause notice under Section 22 of the Foreign Exchange Regulation Act, 1947 without power/jurisdiction, hence null, void and ab-initio and as such coram non judice. The assuming of jurisdiction is of great importance and power has to be exercised within the allotted sphere, acting contrary to that is incurable rather fatal for the health of the case and this has been countless time held by the Hon'ble Supreme Court of Pakistan that in case of assuming wrong jurisdiction, the structure built thereon ought to crumble down, reference is placed on the reported judgment 2001 SCMR 1822 Ali Muhammad v. Chief Settlement Commissioner, wherein the Hon'ble Chief Justice of Pakistan Mr. Iftikhar Muhammad Choudhry presiding a bench in the capacity of Judge of Supreme Court held that :-

"whenever order are passed by an officer without caring whether jurisdiction vests in him or not, it is prima facie reflect on his conduct as well as competency. It is also to be noted that whenever authority is exercise in such a manner then no other inference can be drawn except that the functionary has transgressed his jurisdiction for the consideration other than judicial one and the Courts seized with such orders may recommend any action against the said officer because neither the executive authorities nor judicial forum will pass a wrong order because the jurisdiction in both the capacities is conferred upon such authorities to discharge their function in accordance with law which has bestowed upon them to function in that capacity and if there is abuse of power by such officer then no hesitation should be felt in passing stringent stricture against officer keeping in view of norms of justice."

Their lordship also held in reported judgment PLD 2004 Supreme Court 600 All Pakistan Newspaper Society and others v. FOP and others that "determination of jurisdiction by Court seized with the matters is one of the important element in administration of justice as if justice has been provided basing upon corum non judice order then same would have no legal sanction behind." And in PLD 2005 Supreme Court 842 Khyber Tractor (Pvt). Ltd., v. Pakistan Through Ministry of Finance, Revenue and Economic Affairs that "question of jurisdiction of a forum is always considered to be very important and any order passed by a Court or a forum having no jurisdiction, even if it is found to be correct on merit is not sustainable. Jurisdiction of a Court lays down a foundation stone for a judicial or a quasi judicial functionary to exercise its power/authority and no sooner the question of jurisdiction is determined in negative the whole edifice built on such defective proceeding, is bound to crumble down."

(ix)That invoking of Section 32(1)(a) & (c) of the Customs Act, 1969 by the Respondent are also erroneous by virtue of the fact that subsection (1) is not to be read in isolation, instead in conjunction with Section 32(2) or (3), i.e. due to the mis-declaration within the meaning of section 32(1), there should be revenue loss and when due to mis-statement or misdeclaration no injury is being inflicted to the exchequer, no charge for misdeclaration under the provision of Section 32(1) can be invoked and the case of the appellant is on the same pedestal. The said stance stood validated from the reported judgment 2003 PTD 552 Messrs Al-Hamd Edible Oil Ltd. and others v. Collector of Customs and others wherein, their lordship held:

"A bare reading of Section clearly indicate that it relates to a situation where a person makes any statement or files any documents which is false in any material particular by reason of which any duty or charge is not levied or is short levied or refunded. In such event/Customs authorities is empowered to issue to the person concerned a notice to show cause that why he should not pay the loss of revenue suffered by the department and after giving him a hearing, beside any other action under law order payment of the same, if a case is made out. The entire provision revolves around the central point of loss of revenue suffered by the Customs Department on account of the conduct of any person. Mr. Iqbal has not urged that the Department has suffered any loss on account of the conduct of the Appellant. The question of applicability of Section 32 in the present circumstances apparently does not arise."

The Hon'ble High Court of Sindh in another Landmark judgment reported at PLD 1996 Karachi 68 Messrs Kamran Industry v. the Collector of Customs (Export) and 4 others held in un-equivocal terms:

"In the present case the accused has categorically taken the stand that any mis-declaration or under valuation was of no fiscal consequence. Such is also the admitted position which is not disputed where a person submit a declaration in the context of customs clearance and there can possibility be no fiscal consequence contingent upon his declaration and that contingency of no fiscal consequence is either undeniable or regarding which the accused has demonstrated his knowledge or reason to belief that he thought no tax was leviable, by no figment of imagination could it be said that the said person had any knowledge or reason to believe that his declaration/ statement was false or untrue in any material particular. In this context the contention that no penalty under Section 32(1) is leviable for any alleged undervaluation and mis-description where there can be no motive to evade tax and where such declaration would carry no fiscal consequences is correct. Any other interpretation would also give rise to an absurd situation, where although no tax would be leviable on the main/basic assessment but there could be no possibility of imposition of penalty. Mere allegation without any concrete or positive evidence produced by the customs authority cannot warrant a finding of falsity to the declaration in material particular in context of section 32(1) of the Customs Act, 1969 and its comparable provisions. The Customs authorities were not justified to levy penalty under section 32(1) when admittedly there was no motive on the part of the accused to evade tax."

The said opinion was endorsed by the Hon'ble Supreme Court of Pakistan in reported judgment 2007 PTD 2215 Collector of Customs Exports and another v. R.A Hosiery Works wherein the bench presided by their lordship Justice Rana Bhagwandas held that:-

"Provision of Section 32 (1) of the Customs Act, 1969 would be attracted only when the mis-declaration or misstatement was made with a view to obtain illegal gain by evasion of payment of custom duties and other taxes or by causing loss to the government revenue. Misdeclaration alleged to have been made in the case, was neither for evasion of payment of Customs duty or other taxes /charges nor the same had caused any financial loss to the Government. Petition for leave to Appeal by the authority being without merit, was dismissed."

(x)Irrespective of the above illegalities, it is not out of place to add that if the goods exported by the appellant would had been of the value as opined by the Respondent, he would have definitely exported the same on the said value because in that case he would have been entitled for duty drawback under the respective notification and refund of Sales Tax under Section 10 of the Sales Tax Act, 1990 and these are beneficial for him. Since, the case in question has been initiated by the Respondent in the capacity of Collector of Customs Export, the appellant is restricted to the extent of custom revenue i.e. the appellant would had been entitled for duty drawback amounting to Rs.109,646.00 (@ 0.92% and 0.52% i.e. Rs. 97,760.00 and 4,886.00) as against entitled on the basis of declaration made by him in the good declaration, which is Rs. 13,705.00 @ 0.92% and 0.52% i.e. Rs. 12,134.00 and 1,571.00 respectively). Confirming that he is at loss of Rs. 95,941.00 as against the exchequer, which lost nothing. The loss of foreign exchange is merely based on surmises, presumptions and conjectures, on the basis of which no charges can be invoked.

(xi)The appellant craves his right to add any fresh grounds at the time of hearing beside placing any valid incriminating evidence/ documents.

4.The clearing agent namely M/s. O.K. International, challenged the order of the respondent imposing penalty upon him vide Appeal No. K-1587/2014 on the strength of following grounds similar to the appellant No. 1 with the exception of following on the strength of which the consultant/advocate argued at the time of hearing:--

(i)That the appellant in the capacity of clearing agent has no part to play. The entire transaction is between the exporter/importer and the customs. The clearing agent only provides services to the exporter/importer on very nominal charges and extends co-operation to the Customs officials for carrying out their job. i.e. examining the consignment in terms of Sections 198 and 131 of the Customs Act 1969 and the rules and the regulation framed there-under. To be most precise, a clearing agent act as a post office or transit station between these two.

(ii)That in support of the above submission. It is felt appropriate to place reliance on the judgment of Customs, Excise and Sales Tax Appellate Tribunal, Karachi in a similar nature of cases pertaining to M/S Shoaib Enterprises, Karachi and Sakro Corporation, Karachi, wherein in Order-in-Appeals Nos.K-1833/01 dated 19.01.2002 and K-538/2003 (K-2) dated 25.10.2003, it has been held that provisions of Section 209 of the Customs Act, 1969 provide immunity and limited liability against the agent and an agent cannot be charged for mis-declaration under Section 32 of the Customs Act, 1969 if he filed documents and further held that the action taken by the Customs of charging agent and thereafter leveling penalty without any fault or default on his part is not only unfair but also illegal. The Lahore High Court in the case of M/s. Ports Ways Custom House Agent and another's v. Collector of Customs and another's reported at 2002 YLR 2651 held that:--

The imposition of penalty on the clearing agent/appellant No.1 was all the more unjustified. To hold the clearing agent liable for the act of commissions and omissions on the part of the importer will require clear finding based upon legally acceptable evidence of his being an active and conscious party to the manipulation. In normal course of his business, a clearing agent files a bill based upon the document and information provided by the importer. He cannot be presumed to be a privy to any illegal arrangement, which the importer may have coined or had intended in his mind. For that purpose some evidence of his direct involvement will have to be brought on record. Particularly when it is not shown that the clearing agent was directly or indirectly a beneficiary of invasion of taxes. In the present case no attempt whatsoever was ever made to bring home guilt to the clearing agent. The appeal is accepted to the extent of clearing agent.

(iii) The appellant craves his right to add any fresh grounds at the time of hearing beside placing any valid incriminating evidence/documents.

5.No cross objection under subsection (4) of Section 194A has been filed by the respondent within the period specified therein not till the date of hearing. Instead representatives of the respondent submitted comments signed by Madam Mona Iffat Baloch, Deputy Collector on the facts and grounds, since the facts are admitted, preliminary submission and comments on grounds are reproduced here-in-below:--

Preliminary Submission:

(i)The appeal barred by Section 217 of the Customs Act, 1969. The contents and texts of the appeal as well as reply of show cause notice are against the spirit of Section 217 of the Customs Act, 1969.

(ii)The appellant has mis-conceived 131 of the Customs Act, 1969.

(iii)That in the automated system of WeBOC the cargo is selected by system for examination and loading is allowed after completion of the examination to facilitate the exporters.

(iv)That the GD was not finally out of charge. It was routed to assessment officer for assessment. While section 29 deals with the goods declaration which were finally out of customs charge by all means. In the entire case goods were assessed after release as per para meter adopted in the system to facilitate Pakistani Exporter.

(v)The computerized clearance is a expressed facility for quick clearance of export cargo and avoid port congestion. However, some unscrupulous exporters and clearing agent attempt to mis-use it and the legal consultant for mere fee encourage such offenders to get advantage from the facility of computerized system.

(vi)That the minor technicalities could not change the facts of the case, the offence of gross under invoicing was committed by the appellant and the clearing agent and was apprehended at the time of assessment by the customs.

GROUNDS

Para 1 WeBOC system in its initials phase had some minor teething problems. Due to software issues importer name came which has been now rectified. It is unnecessary to raise this points at this stage to divert the attention from the actual issue. The appellant himself admitted vide para-d of the fact that they received a show cause notice on their user ID. The appellant contention is only to twist the issue of under invoicing and attempting to divert the attention from the actual issue. The appellant himself admitted vide para d.

(a)Denied. it is submitted that the referred GD was assessed provisionally under section 81 of the Customs Act, 1969 on 18.01.2012 and finalized by this Directorate General on 27.03.2012, which is well within time period as envisaged under section 81(2) of the Customs Act, 1969.

Para - (b) Denied. In this regards, it is submitted that this Directorate General finalized the assessment in the light of amendment dated 16.02.2012.

Para - (c) Denied .... Accordingly to section 81(2) of the Customs Act, 1969 the provisional Assessment shall be determined within 06 months of the date of provisional determination and the assessment was finalized by this Directorate General on 27.03.2012, which is well within time period.

Para (d) Denied.... As above para C.

Paras - (e), (f) , (g) & (h) : Need no comments being related to respondent No. 2.

Para (i) : Denied. It is submitted that the case was under process before the respondent No. 1 who issued valuation Ruling No.423/01.02.2012 for assessment of under reference goods. As request for provisional assessment was made by the importer themselves, therefore the time spent on proceeding and issuance of valuation ruling can be taken as commutation period required for finalization under section 81(2) of the Customs Act, 1969.

Para - (j) Needs no comments being related to Respondent No. 2.

Para - (k) the contents of paras (k)(i) to (xi) are related to respondent No.2. it is stated that the appellant has made a commentary on the point of payment of dues deposited with respondent No. 2. It Is mentioned that procedure for assessment of goods under section 81 carries a requirement for provisional deposit of customs dues, which is subjected to determination of final assessment. Therefore, such process of a finalization is wholly fair and justified and the respondent has completed the assessment with the vested provisions of law.

Paras (I), (m) & (n). Need no comments being related to respondent No. 2.

Para (o) Need no comments being related to further grounds at the time of hearing.

6.That similarly, no cross objection subsection (4) of Section 194A of the Customs Act, 1969 has been submitted by the respondent No. 2 within the period stipulated therein nor to-date. Even comments have not been submitted instead the representative of the respondent No.2 supported the order passed by the respondent being correct in fact and law.

7.Rival parties heard case record perused.

8.This case could be decided on the short point arising of the fact that as to whether a non-existent authority could pass an order which has been done in the instant case. The show cause notice to the appellant was issued by Dr. Wasif Ali Memon, Collector of Customs on 04.06.2014 in the capacity of Collector of Customs, Exports, reply to show cause notice was submitted by the consultant vide letter dated 12.06.2014 and hearing so fixed on the same date was attended. Since, the reply was comprehensive, it was mandated upon the authority to issue order, no order was issued by Mr. Wasif Ali Memon till 18.07.2014, on which date he was transferred as Collector of Model Customs Collectorate, Hyderabad by the Board vide Notification No. 1387-C-1/2014 dated 18.07.2014 and he relanguished the charge of Collector, Model Customs Collectorate of Export, Karachi on 21.07.2014 and assumed the charge of Collector, Model Customs Collectorate, Hyderabad on 23.07.2014 in confirmation of which Board issued Notification No. 1536-C-1-/2014 Mr. Manzoor Hussain Memon was posted as Collector, MCC of Export vide notification dated 18.07.2014 and he assumed the charge on 06.08.2014 as notified by the Board in notification No. 1518-C-1/2014. With the relinguish of charge by Dr. Wasif Ali Memon of Collector of Customs, Export and assumption of charge by Mr. Manzoor Hussain Memon as Collector of Customs, Exports, Dr. Wasif Ali Memon became a functus officio and he was not competent to pass an order under any circumstances, unless authorized by the Board through notification in exercise with of Subsection (2) of Section 179 of the Customs Act, 1969. In the absence of any notification, he cannot lay hand on any case inspite being the show cause issuing authority because it is for the authority working as Collector/Adjudicating authority on the said point of time to pass an order. In the case in hand the order-in-original has been passed by Dr. Wasif Ali Memon on 24.09.2014 i.e. after 02 months from the date of relinguish of charge of Collector, Model Customs Collectorate of Export, Karachi being not competent/authorized. To controvert the said vital fact, the respondent in the comments has stated that the order has been passed by Mr. Manzoor Hussain Memon, who prior to order refixed the case on 18.08.2014, but no one appeared either from the appellant or from the clearing agent side. This arguments stood negated from the computer sheet itself which shows that the Order-in-Original was issued on 24.09.2014 by Mr. Manzoor Hussain Memon Collector, Adjudication and not by the Collector Incharge of the MCC of Export. Further stood substantiated from the fact that the purported hearing notice i.e. 18.08.2014 was not dispatched to the consultant, who submitted the reply and attended the hearing with due authorization. Once an importer or exporter execute an attorney/authorization for contesting the allegation leveled in the show cause notice. Hearing Notice has to be transmitted or served upon the consultant/advocate as per judicial norms, unless he withdraw his attorney/authorization/ vakalatnama, rendering the notice so forwarded as being not served within the meaning of section 215 of the Customs Act, 1969. The computer sheet further shows that the Order-in-Original was issued by Mr. Manzoor Hussain Memon but was not passed by him instead by Dr. Wasif Ali Memon subscribed on 1st page of the Order-in-Original. This vital fact render the order-in-original dated 24.09.2014 being passed without lawful authority and jurisdiction, hence, void and ab-initio and therefore can not be enforced under law.

9.Coming to the validity of the show cause notice and the order-in-original under the legal parlance, the Board in exercise of the powers conferred upon it under section 3 of the Customs Act, 1969 established a separate forum namely Collectorate of Customs Adjudication through Notification No. 886(I)/2012 dated 18.07.2012 for adjudication of the cases of mis-declaration, causing revenue loss under the provision of Section 179 of the Customs Act, 1969 w.e.f. 01.08.2012. From perusal of the show cause notice, it has been observed that the allegation has been leveled on the appellant for mis-declaring the export value, which should had to be US$. 135809.80 as against declared 17809.80, resultant cause loss of foreign exchange to the tune of US$. 117526.00. The under declaration of value attracts the provision of Sections 32(1)(a) and 32(1)(c) of the Customs Act, 1969 and Section 22 of Foreign Exchange Regulation Act, 1947. The allegation and the invoked provision oust the case from the jurisdiction of Executive Collectorate and falls under the jurisdiction of Collectorate of Customs, Adjudication. Inspite of clarity of the allegation, the show cause notice and order has been issued/passed by the respondent, who is a Collector on Executive Side i.e. MCC of Export, Karachi. Since, the respondent is not Collector of Customs Adjudication, he is not empowered either to issue show cause notice or pass order-in-original. To the contrary, he issued show cause notice and passed order-in-original by transgressing the exclusive and notified jurisdiction of Collectorate of Customs (Adjudication-II), rendering the show cause notice and order-in-original without power/jurisdiction. Hence, void and ab-initio and as such of no legal effect as held in reported judgments PTCL 2004 CL 2005(sic), PLD 1961 SC 237, PLD 1964 SC 410, PLD 1964 SC 536, PLD 1965 Supreme Court 90, 1983 SCMR 1208, PLD 1987 Supreme Court 304, 1994 SCMR 2232, 2003 SCMR 1505, 2006 SCMR 129, 2006 SCMR 1023, 2013 PTD (Trib.) 353 and [(2015) 111 Tax 231 (Trib.)]

10.The show cause notice is a basic documents and which should be prepared with utmost care, as on this the foundation of the entire proceeding stands, if it is defective, sketchy and vague, the subsequent proceeding no matter how strong it may be ought to crumble down. The show cause notice has to be issued well supported by tangible evidence referred in the show cause notice as the show cause notice is a fundamental document which comprehensively describes the case made out against the tax payer by making reference to the evidence collected in support of the same and with a narration of facts in the show cause notice along with supportive evidence which determined the offence attracted to a particular case. Beside, it is of paramount importance to adduce further that show cause notice is not a casual correspondence or a tool or a license to commence a rowing inquiry into the affair based on assumption and speculation but is a fundamental documents that carried definitive legal and factual position of the department against the tax payer, legal enforceability and jurisdictional validity of a show cause notice vested from its context, that was, the fact suppose to be tangible evidence referred to in the show cause notice and not from the cosmetic show causing of statutory provision or from the use of statutory keywords in the show cause notice. In the instant case show causes notice is very sketchy and vague as evident from the fact that inspite of leveling allegation of mis-declaration under the provision of Section 32 of the Customs Act, 1969, nothing has been said that how the appellant mis-declared the transmitted declaration of the export consignment nor any tangible evidence has been annexed therewith. Such type of show cause notice is palpably illegal and without any lawful authority and jurisdiction as held by the Superior Judicial Fora in reported judgment Asst. Collector v. Khyber Elec. Lamps 2003 PTD 1275, D.G. Khan Cement v. Collector of Customs 2005 PTD 480, Caltex v. Collector 2003 PTD 1593, Union Playing Card Company v. Collector of Customs 2002 MLD 130, Atlas Tyres v. Addl. Collector 2002 MLD 180, State Cement v. Collector PTCL 2001 CL 558, Kashmir Sugar v. Collector 1992 SCMR 1898, Rose Color v. Chairman, CBR and 2013 PTD 813 Sarwar International v. Addl. Collector of Customs.

11.Notwithstanding, to the above legal infirmity, it is a vital importance for me to deliberate upon the relevant Sections and Rules framed for export first and then on the invoked provision of Sections 26 and 32 in the show cause notice. It is deemed vital to reproduce relevant Sections 130 and 131 of the Customs Act, 1969 and WeBOC Rules embodied in Chapter-IV of Chapter XXI of Customs Rules, 2001 for easement:--

Section 130: No goods to be loaded on a conveyance till entry outwards or permission granted:---No goods other than passengers' baggage or mail bags or ballast urgently required for a vessel's safety shall be loaded or water borne to be loaded on a conveyance at a place in a customs station approved for the purpose under clause (b) of section 10 untill an order under section 50 in respect of the conveyance has been given or permission in this behalf in writing has been granted by the appropriate officer.

Section 131 Clearance for exportation:---(I) No goods shall be loaded for exportation until:

(a)The owner any goods to be exported has made a declaration in such form and manner as prescribed by the Board, by filing a goods declaration to Customs containing correct and complete particulars of his goods, and assessed and paid his liability of duty, taxes and other charges, if any,

(b)The claim of duty drawback, if any, has been calculated and reflected in the declaration filed for export through PACCS.

(c)Customs has, on the receipt of goods declaration under clause (a) satisfied itself regarding the correctness of the particulars of export including declaration, assessment and payment of duty and taxes and other charges and verified the admissibility of the duty drawback claimed as specified in clause (b) and

(d)The appropriate officer has permitted passenger's baggage or mail bags, to be exported notwithstanding clauses (a), (b) and (c)

(2)If any goods or class of goods imported and lying within the port area are intended to be exported by this owner, the Collector may allow the export subject to the condition as the Board may, from time to time notify:

Provided that the Board may in the case of any customs station or wharf, by notification in the official Gazette, and subject to such restrictions and conditions, if any as it thinks fit, exempt any specified goods or class of goods or any specified person or class of persons, from all or any of the provisions of this section:

Provided further that the Collector, where Customs Computerized System has not been introduced for reasons to be recorded in writing may cause the examination of goods or any class of goods or goods belonging to a particular exporter or class of exporters at a designated place as he deems fit and proper.)

Sub-Chapter IV

Procedure of Export through (WeBOC)

443. Procedure for exports: Subject to the provision here-in-laid down, the procedure for export including Subject to the provision here-in-laid down, the procedure for export including every activity there against online shall apply to CY FCL and CY LCL container as may be operated from any container terminal whereat PACCS is operational

444. Filing and validity of Export good Declaration: Every declaration in relation to each consignment of to-be exported goods shall be filed with PACCS online by the exporter or his agent which shall be deems to have been submitted to Customs only where duty and taxes leviable thereon, if any have been paid or discharged through pre-Pact as self assessed by the person declaring it and after claiming duty drawback if any.

Every export declaration shall be valid for a maximum period of 15 days from its submission

445. Amendment to good declaration: Subject to the following condition, a declaration for export filed under Rule 444 may be amended by the exporter or his agent who initially filed the goods declaration:

(a)a good declaration for export once completed cannot be amended:

(b)good declaration that has already been canceled cannot be amended:

(c)information relating to a container that has already passed into customs area cannot be amended :

(d)new items may not be added to a Good Declaration as amendment,

(e)an export declaration cannot be amended where its validity has expired

And none of the container relating thereto have passed into the port:

Explanation: 1- an export declaration shall be deems to be complete in case :

(i)All the container relating to export declaration have passed into the port :

(ii)The exporter or his agent specifically complete the export declaration: and

(iii)Some of the container in the Good Declaration have passed into the port and the validity of the Good Declaration has expired in such cases the exporter or his agent shall be at liberty to file a new Good Declaration for the remaining cargo on same form "E".

Explanation: 2: allow loading shall only be granted to the container for which the good declaration are complete.

447. Passed-in authorization of the container:---soon after filing of the export good declaration under rule 444, the Terminal operator shall be authorized online to allow pass-in of the container as specified in such declaration provided that each container is :

(a)accompanied with consignment note as provided in Chapter XVIII; and

(b)sealed except the container falling under certain type where seals cannot be applied, like one door open , open top , flat rack etc.

450(1) Examination of the export goods: The terminal operator shall make arrangement for the examination of the export goods after the goods pass-in which includes their weighing, sampling, inspecting and scanning in accordance with the requirement of these rules.

(2): Assessment by Customs: Where any good declaration has been filed under rule 444 the Customs shall satisfy itself as to its correctness including its value, classification, claim of exemption , payment of duty and taxes , repayment of duty drawback etc. , and may re-assess the goods during or after release.

(3). Review of Assessment: the exporter or his agent may filed request for a review to Customs online giving detailed reason for disagreement with the customs. Customs shall review the assessment on the basis of submission by the exporters or his agent.

452. (1). Allow loading: Each consignment i.e. allowed loading by the Customs shall be intimated online by the Terminal Operator as well as the exporter or the agent. Allow loading shall only be granted to the cargo for which the goods declaration has been completed.

(2) Loading of Cargo: (a) the Terminal Operator shall load container on the vessel on the basis of 'loading allowed' message from PACCS and shall intimate the event of loading of each container to PACCS online. Loading allowed for a container shall be independent of vessel, a container i.e. allowed loading may be loaded on any vessel from the terminal as per arrangement of the exporter with the carrier. No subsequent authorization for allow loading for any left out container will be required.

(b)Terminal Operator shall allow loading only to those container for which documents if any, as are required for export of the cargo and as are electronically intimated to the exporter or his agent at the time of filing of a goods declaration to the Customs have been collected by the Terminal Operator.

Section 26 Obligation to produce documents and provide information: (1) Any person, as and when required in writing, by an officer of customs not below the rank of an Assistant Collector, shall,

(a)Furnish information relating to importation, exportation, purchase, sales transportation, storage or handling of any goods imported or exported;

(b)Produce for examination, documents or records that the appropriate officer considers necessary or relevant to the audit, inquiry or investigation under the Act.

(c)Allow the appropriate officer of customs to take extracts from or make copies of documents or records; and

(d)Appear before an officer of customs and answer any question put to him concerning goods, documents, records and transaction relating to the audit or inquiry or investigation.

(2)The appropriate officer of customs conducting an audit inquiry or investigation as the case may be, under this Act, may require in writing any person department , company or organization to furnish such information as is held to that person, department company or organization which in the opinion of the appropriate officer is required for the completion of such audit, inquiry or investigation.

(3)the Board may require in writing any person, department, company or organization, as the case may be to provide information held by that person department, company or organization as the case may be to provide information held by that person, department company or organization, which in the opinion of the Board is required for purposes of formulation of policy or administering the laws of customs. Sales Tax, Federal excise or Income Tax.

(4)Every person department, company or orgpnization shall furnish the information requisitioned by the Board or the appropriate officer with the time specified in the notice.

Section 32: False statement, error etc. (1) if any person in connection with any matter of customs:-

(a): Makes or sign or causes to be made or signed, or delivers or causes to be deliver to an officer of customs, any declaration notice certificate or other documents whatsoever, or

(c): submit any false statement or documents electronically through automated clearance system regarding any matter of customs, knowing or having reason to believe that such documents or statement is falls in any material particular he shall be guilty of an offence under this section.

12.The provision of Section 131 of the Customs Act, 1969 states that the owner of any goods to be exported has to make a declaration in the Goods Declaration for export under clause (a) of subsection (1) of Section 131 and transmit that online in terms of Rule 444 of Sub-Chapter IV of Chapter XXI of the Customs Rules, 2001 and that declaration should be containing correct and complete particulars of his goods and the owner himself has to assess and pay the leviable duty, taxes and other charges, if any and in terms of clause (b) the owner has to claim duty drawback, if any under the relevant notification and calculation to the said effect be reflected in the declaration filed for export through Web based One Customs (WeBOC). The system upon receipt of Goods Declaration for export allots thereupon a number and the terminal operator immediately transmits a view message to the exporter and his clearing agent to pass in the container in terms of authorization given to him by the Customs under Rule 447 ibid., for completion of customs procedure. If the GD is selected for examination, the Terminal Operator arranges for examination under Section 198 of the Customs Act, 1969 and Rule 450(1)ibid., vice versa the Goods Declaration is referred to the assessing officer, who completes the assessment of the consignment in enunciation of clause (c) of Section 131(1) and Rule 450(2) ibid. In case of examination, the GD is referred to the assessing officer after uploading the examination report, who on the strength of that completes the assessment under the respective clause of Section 131 and Sub-Rule (2) of Rule 450 ibid. As per devised procedure the assessment of the consignment is completed prior to export of the consignment either through System or after examination by the competent authority. Once the said procedure is completed, the System or the Appropriate Officer who is delegated the powers under Section 130 of the Customs Act, 1969 and with Rule 452(1) allows loading of the consignment on the vessel. Consequent to which the container is loaded on the vessel by the Shipping Company from the Terminal as enunciated in Section 130 and Sub-Rule (2) of Rule 452 ibid.

13.In this case, the appellant filed goods declaration under the provision of Clause (a) and subsection (1) of Section 131 and Rule 444 of Sub-Chapter (IV) of Chapter XXI of Customs Rules, 2001. The system upon receipt of good declaration, found the contents and declaration as correct and allotted number to that and forwarded view message to the appellant/clearing agent to pass in the container for completion of codal formalities. Accordingly, the container stuffed with the goods anticipated to be exported was passed-in in the Terminal, which was selected for examination and nothing contrary was found in regards to declaration upon physical examination. Consequent to which the competent assessing officer passed the assessment order in terms of clause (c) of Section 131 of the Customs Act, 1969 and Rule 450(2) ibid. and allowed loading of the container in terms of Section 130 of the Customs Act, 1969 and Rule 450(1) ibid and the Terminal Operator upon receipt of view message "loading allowed" loaded the container on the vessel in terms of Section 131 of the Customs Act, 1969 and Rule 450(2) ibid. It is observed that at the time of assessment nothing contrary to the declaration was found, which also included the declared value, in case there would had been any objection, assessment would had been completed and had transmitted to the appellant, who in exercise of his right given in Sub-Rule (3) of Rule 450 would had filed review, controverting the formed opinion. This was not done and consignment was allowed to be loaded, leaving no room for any dispute in regards to any context. Resultant, the demand for form "E" for US$. 117526.00 is erroneous beside suffers from legal infirmity. Hence void, ab-initio and ab-initio wrong.

14.It is between the seller and the buyer to agree to the prices, neither Schedule Bank, State Bank of Pakistan or the respondent has any authority to dispute on the declared value. Even otherwise the determination of export value falls within the ambit of State Bank of Pakistan under the provision of Section 12 of the Foreign Exchange Regulation Act, 1947 and in case it found that the export value is not correct in accordance with the specification of the goods, it can only issue order to the terminal to retain the consignment as enunciated in Subsection (5) of Section 12 of the Foreign Exchange Regulation Act, 1947. However, this does not means that the customs is not empowered to determine the value of the exported goods under the provision of Section 25(15) of the Customs Act, 1969, which lays the concept of "open market " value of the goods at prescribed time as enunciated in Explanation-II of Section 25(15). The term "open market" has been further elaborated in Explanation-I and had laid down the parameters as to what is a sale in open market between a buyer and seller independent of each other. Therefore, it is explicitly clear that in view of this specific provision regarding the method and mechanism for determination of value of export consignment, it has been determined in arbitrary/ unilateral manner which is alien to the provision of Section 25(15) of the Customs Act, 1969 and this has been validated by the Hon'ble Supreme Court of Pakistan in reported judgment 2007 SCMR 1357 Collector of Customs (Valuation) and another v. Karachi Bulk Storage and Terminal Ltd., wherein CPLA No. 676-K/2004 was dismissed being of no merit while holding that:--

"In the case in hand, Division Bench of the High Court after examining the contention of the parties and material placed on record has come to a definite finding that there was no material on record as to what were the grounds or reasons which prompted the Customs authorities not accept the declared value of the molasses and for determining the same at US$. 54/MT as against the declared value. High Court found that in view of the lack of material, action of rejection of the declared value and fixing enhanced value molasses would appear to be arbitrary, whimsical, capricious and in complete disregard of Section 25 of the Customs Act, 1969, which require the relevant authority to disclose evidence and adequate material for rejecting the declared value and enhancing the same is to Rejection of declared value of the goods and fixation of its enhance value without disclosing adequate material or reason.

15.That despite mandated under law no evidential invoice of the goods identical to the appellant of the country of import has been annexed with the show cause notice for the confirmation of the fact that the value determined by the respondent was the actual value of the exported goods at the prescribed time on a sale in open market for exportation to the country to which the goods are consigned. In case the said opinion was communicated to the appellant prior to loading and shipping of the consignment, the appellant would had not agreed to that because nothing has been said in the provision of Section 25(15) that the exporter (appellant) is bound to agree to that, the appellant would had not shipped the consignment and had requested for dray out of the container because he has to ship the goods as per contracted price not inflated or on the price determined by the respondent or his subordinate in negation to the provision of Section 25(15) of the Customs Act, 1969. Such like situation is detrimental for the economy of Pakistan as this is required for retirement of debts and for defense purchases, earning of which has been thwart by the respondent and his subordinate by commission of illegal act. And this stood vindicated from the reported judgment 2014 PTD 894 Umer Farooq v. Federation of Pakistan.

"The crucial question is then what consequences follow and whether it is to be held that the respondent cannot thwart such an attempt of export or take any other action in such a situation and consequently allow export of such consignment, even though prima facie the value declared therein is substantially on the lower side. To us the answer is No, as in terms of section 131(1)/c of the Customs Act, 1969, no goods shall be allowed to be loaded for exportation, until the customs has satisfied itself regarding correctness of the particulars of the export, including assessment, which includes determination of value in terms of section 25(15) of the Customs Act, 1969. The respondent will be within their right not to allow exportation of such goods until and unless the exporter amends or correct the value as determined in terms of section 25(15) of the Act ibid. in the export documents including Form ("E") issued by the bank. In the alternative if buyer cannot be compelled by the exporter to agree to remit the value so determined, the exporter will be within its right to take the goods back and have them removed from the customs area, we may observed, that since we have hold that no penal action is permitted under the given fact and circumstances of this case, therefore we are left with no option to hold as such and consequently, through no show cause notice has been issued till date, due to the pendency of the instant petition as stated at the bar, even otherwise the respondent's have no authority or jurisdiction in the matter to issue any show cause notice for the reasons as stated above."

16.Although the issue relating to the case in hand stood settled as discussed by me in para supra. The issue of invoking of section 26 and Sections 32(1)(a) and 32(1)(c) need deliberation and for reaching at conclusion, it is observed that demanding of Form "E" for enhanced amount by the subordinate of respondent under the provision of Section 26 of the Customs Act, 1969 is mis-placed. Under the provision of Section 26 of the Customs Act, 1969 the Officer of Custom could ask for the supply of the documents or information corresponding to any import or export for determination of it veracity/correctness. No documents or information were sought by the respondent subordinate under the provision of Section 26 of the Customs Act, 1969 instead demand was made for submission of another form "E" for US$. 117,526.00 without realizing that the Schedule Bank is not authorized to issue a supplementary Form "E" to the already attested Form "E" through which the shipment was effected as the same is not permitted under the Foreign Exchange Regulation Act, 1947. Against a consignment a single Form "E" is permitted to be issued by the Schedule Bank, which was already issued and uploaded by the appellant along with the transmitted good declaration. Resultant, the demand is unrealistic and of no lawful authority. By doing so the subordinate of the respondent infact tried to amend the goods declaration which is not permitted under section 29 of the Customs Act, 1969 and Clause (c) or (d) of Rule 444 of Customs Rules, 2001 referred in para (12) and section 29 read as:--

Section 29: "restriction on amendment of goods declaration": except as provided in section 88 no amendment of goods declaration relating to goods assessed for duty on declared value, quantity or description thereof shall be allowed after such goods have been removed from the port area or assigned Customs Reference Number electronically, as the case may be."

The rational construction of the above expression is that no amendment under Section 205 of the Customs Act, 1969 is allowed in the column of the declared value, quantity or description after removal of the goods from the customs area or the Customs Reference Number is allotted to the goods declaration electronically and likewise (clauses (c) & (d) of Rule 444 through which amendment in regards to information relating to container that has already been passed into customs area and addition of new item to a Goods Declaration is prohibited. A cap has been laid on the exporter for obtaining amendment post filing of Goods Declaration and after shipment of the goods. Similarly, the word "assessed for duty" used in the expression lays restriction on the Customs not to amend itself the contents of Goods Declaration after shipment under Section 130 of Customs Act, 1969 by the authority notified at Serial No. 55 of S.R.O. 371(I)/2002 dated 15.06.2002 on the strength of valid assessment order by the appropriate authority under Section 131 and Rule 450(2) ibid. While making reassessment of the appellant's Goods Declaration after clearance of the goods the subordinate of respondent infact amended the Goods Declaration under Section 205 of the Customs Act, 1969 which is in derogation of Section 29 of the Customs Act, 1969 and Clauses (c) & (d) of Rule 444 ibid. as such not valid and fail the test of judicial scrutiny. If for the sake of arguments, it is considered that the officials of respondent are empowered to reassess a Goods Declaration after shipment in terms of Rule 450(2), it will render the provision of Clause (c) of Section 131 of the Customs Act, 1969 redundant. Where Rules are in conflict with the provision of the Act, the former has to yield, resultant, provision of clause (c) of Section 131 of the Customs Act, 1969 has to prevail on the Rule 450(2) ibid as per the law laid down by the Supreme Court of Pakistan in reported judgment 2000 PTD 399 Superior Textile Mills Ltd. v. FOP that where rules were in-conflict with parent Act, the former must yield to the later and the rules to the extent of inconsistency would be void. The said opinion is further fortified by the Supreme Court in its reported judgment 1982 SCMR 522 Messrs Arjun Salt Chemical v. UC Gharo, wherein their lordship of Supreme Court settled the ratio while observing that "It is now well established principal or statute that rule which are merely subordinate legislation cannot override or prevalent on the parent statute and whenever there is inconsistency b/w the rule and statute the later must prevail".

17.The act and commission of the subordinate of respondent is without lawful authority being in derogation of clause (c) of Section 131 of the Customs Act, 1969. The intention of legislature was not as interpreted by the subordinate of respondent. The fact of matter is that no reassessment is permitted under Section 131 of the Customs Act, 1969 once the goods are cleared for shipment. The reassessment is permitted prior to passing of Order of clearance under Section 131 and Rule 450(2) ibid upon filing of review by the exporter under Sub-Rule (3) of Rule 450 ibid against the assessment orders of Appraiser/ Principal Appraiser before the Principal Appraiser and Assistant/Deputy Collector of the Group as the case may be. Therefore I hold that the reassessment made by Sub-ordinate of respondent is in derogation of Section 12 of the Foreign Exchange Regulation Act, 1947, Section 131(c) of the Customs Act, 1969, hence, without power/jurisdiction, hence void and ab-initio.

18.The respondent has referred Section 26 of the Customs Act, 1969 in the show cause notice but no copy of the notice has been placed on record of the Tribunal confirming that no inquiry was initiated, nor a notice was served within the meaning of Section 215 of the Customs Act, 1969, leading to the conclusion that the official of respondent were shooting in the dark and making fishing and rowing inquiry through the instant show cause notice, which is not permitted under law and as held by Hon'ble Supreme Court at PLD 1992 SC 484 Assistant Director, Intelligence and Investigation , Karachi v Herman Mohttas (Pvt.) Ltd., Karachi :

"the object of Section 26 of the Customs Act, 1969 is to empower the authority to ask for information or required the production of documents or inspect the same in order to determine the legality or illegality of importation or exportation of goods which have been imported or exported, the value of such goods, the nature, amount and source of the funds or the asset with which such goods were acquired and the customs duty chargeable therein or for deciding anything incidental there too. The authority can only for the specific purpose of determining the legality or illegality call for such information as required by section 26. The authorized officer can call upon any importer or exporter to furnish information in case where such determination is required. It cannot make a rowing inquiry or issue a notice by merely shooting in the dark in the hope that it will be able to find out sub-material out of those documents and then charge the party of irregularity or illegality. The authority has to state and disclose in the notice the purpose for which the party is required to produce those documents or supply information. Unless such purpose is specified in the notice, it will be a matter of anybody's guess and the accused party will be put to inquiry without any specific allegation or fact disclose to him. It does not permit any authority to employ the provision of Section 206 to make in discriminate rowing and fishing inquiry irrespective of the fact whether any determination of legality or illegality in import, export or funds with which the goods were acquired is to be determine. Even in cases of suspicion of commission of illegality, detail should be provided to the party to enable him to have an opportunity to produce all the relevant documents and disclose information. Depending on the facts and circumstances of a case, any notice without disclosing any fact or particular for which the information or documents are required will be in violation of the principal of natural justice and may be stuck down as illegal and without jurisdiction."

19.Upon examination of the export documents I have found that no mis-declaration of any sort has been made by the appellant in the export documents nor any false statement has been given, the allegation has been leveled merely on the basis of determination of value, which I have already declared as of no legal effect in the paras supra. For leveling allegation on the appellant the scanned Form "E" is made basis, without realizing to the fact that it was certified by the Schedule Bank in accordance with the provision of the Foreign Exchange Regulation Act, 1947 and Rules and Regulation framed there-under. Hence, if any one has to be charged for mis-declaration, it would had to be the Form "E" issuing and certifying bank not the appellant. Even otherwise, to take cognizance for false statement section 22 of the Foreign Exchange Regulation Act, 1947 is applicable and can be invoked by the appropriate authority enunciated in Section 23B ibid, which is reproduced in para 4(viii) supra. Neither respondent nor his subordinate figure anywhere, resultant, they assumed the power not vested with them and as such acted without power/jurisdiction which is not permitted under law as this amounts to usurpation and render the entire proceeding in valid due to lack of jurisdiction as held by the Hon'ble Supreme Court of Pakistan in reported judgment referred by the Appellant and incorporated in para 4(ix) supra.

20.That the appellant M/s. O.K. International, Karachi filed online Goods Declaration on the strength of the export documents supplied to it by M/s. M. Nadeem Trading Company, Karachi and the assessing officer passed the assessment order under Section 131(c) of the Customs Act, 1969 and Rule 450(2) Sub-Chapter (IV) of Chapter XXI of the Customs Rules, 2001 while scanning invoice, packing list and Form "E", which formed the integral part of the declaration made under section 131(a) and Rule 444 ibid., as defined in Section 2(kka) ibid , which read as follows:--

[2{kka} "documents means a goods declaration, application for claim of refund, duty drawback or repayment of duty , import or export general manifest passenger manifest, bill of lading, airway bill, commercial invoice and packing list or similar other forms or documents used for customs clearance or making a declaration to customs, whether or not signed or initialed or otherwise authenticated, and also includes:-

1.any form of writing on material, data or information recorded, transmitted, or stored by means of a tape recorder, computer or any other device, and material subsequently derived from information so recorded, transmitted or stored;

2.a label, marking or other form of writing that identifies anything of which it forms part or to which it is attached by any means;

3.a book, map, plan, graph or drawing, and

4.a photograph, film , negative, tape or other device in which one or more visual images are embodied so as to be capable (with or without the aid of some other equipment of being reproduced; and)]

21.Messrs O.K. International, Karachi in the capacity of Clearing Agent has no part to play in the said transaction as it is between the exporter (appellant No. 1) and the respondent. He only provided services to him on very nominal charges and assistance to the officials of respondent in conducting examination under section 198 of the Customs Act, 1969. On the basis of which the official of respondent pass the assessment/clearance order under sections 131(c) and 130 of the Customs Act, 1969 and Rules 450(2) and 452(1) of Custom Rules, 2001. From the record, it is apparent that he carried out his duties correctly as prescribed in the Act and Chapter VIII of Customs Rules, 2001. It is for the Official of Respondent to assess the goods under section 131(c) and Rule 450(2) ibid, which include correctness of the particular of the exports including declaration, exportability of the goods in question falls within the ambit of declaration/assessment and clearing agent is non entity in the said section. The Appellate Tribunal in umpteenth judgments in addition to relied upon by the appellant and are referred in para 5(ii). Nothing contrary to the prescribed duties were done by Messrs O.K. International, Karachi (appellant No. 2). Resultant, invoking of section 32 of the Customs Act, 1969 and imposition of penalty upon him was not warranted at all.

22.In view of the above narration, it is established that the entire proceedings are infested with inherent legal infirmities and substantive illegalities tantamount to patent violation of mandatory statutory provision and that too, in utter disregard of the provision of the Acts/Rules and Principle of law settled by the Superior Judicial Fora. The chronicle events right from passing of reassessment order by the subordinate of respondent and issuance of show cause notice and order-in-original passed by respondent on the forced construction of law are without power/jurisdiction hence ab-initio void and as such corum non judice therefore set aside and appeals are allowed.

RR/66-Tax(Trib.)Appeals allowed.