ALIZ INTERNATIONAL VS COLLECTOR OF CUSTOMS, MMC OF PMBQ, CUSTOMS HOUSE, KARACHI, 2016 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 1706 (2015)

(a) Words and phrases---

----"Dis-mental"---Meaning---Dismental means to take to pieces, to destroy the integrity or functioning, to come to an end.

(b) Words and phrases---

----"Scrap"---Meaning---Scrap means waste; anything discarded as worn out, out to date, useless, cease to use, do away with and abandon.

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

----S. 80---Customs Rules, 2001, R.438---S.R.O. 886(I)/2012, dated on 18.07.2012---Assessment of duty---Jurisdiction of Customs Authority---Department calculated the loss of revenue by terming the imported scrap as fresh goods---Imported goods were subject to passing of assessment order under S. 80 of Customs Act, 1969 and R. 438 of Customs Rules, 2001, hence, no loss of revenue existed---Validity---When there was no revenue loss, the case stood ousted from the jurisdiction of Department and fell within the powers of Principal Appraiser of Executive Collectorate in terms of S.R.O. No. 886(I)/2012 dated 18-7-2012---Department usurped the jurisdiction of Executive Collectorate and also powers of Principal Appraiser which was not permitted under any circumstances---Superior Authority could not exercise the power of its sub-ordinates for adjudication purpose---Exercise of jurisdiction by Department was mandatory requirement and its non-fulfillment would entail entire proceedings to be coram non-judice.

The State v. Zia-ur-Rehman and others PLD 1973 SC 49 and 2009 PTD 1083 rel.

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

----S. 180---Show-cause notice, not disclosing grounds and reasons for proposed action---Show-cause notice contained the amount of Sales Tax and Income Tax and did not contain the relevant provisions of Sales Tax Act, 1990 and Income Tax Ordinance, 2001---Effect---Held, that no charge can be leveled or upheld without invoking relevant provisions of law---Order of adjudication being ultimately based on ground which was not mentioned in the show-cause notice was palpably illegal on the face of it.

Collector Central Excise and Land Customs and others v. Rahmdin 1997 SCMR 1840 rel.

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 and Rose Color v. Chairman, CBR 2013 PTD 813 ref.

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

----S. 27A---Customs Rules, 2001 R.593---Interpretation of S.27A of Customs Act 1969 and Rule 593 of Customs Rules, 2001---Mutilation/scraping of imported goods---Appellant's request of mutilation/scraping was declined by Department on the basis of R. 593 of Customs Rules, 2001---Rule 593 of Customs Rules, 2001 permitted that the importer or his clearing agent has to submit a request to the Assistant Collector or Deputy Collector for mutilation/scraping before filing of goods declaration and if that was not done, the same shall not be entertained---Validity---Provision of Section 27A of the Customs Act, 1969 was to be read and interpreted as expressed/phrased, which permitted mutilation or scraping of the imported goods on the request of importer without any conditionality---Rule 593 of Customs Rules, 2001 was in conflict with the expression of S. 27-A of Customs Act, 1969---Provision of S. 27A of Customs Act, 1969 and R. 593 of Customs Rules, 2001 had to be adhered in letter and spirit and for the benefit of tax payer and both the provisions were directory in nature and could not be construed as mandatory.

Messrs Nishat Mills Ltd. v. Superintendent of Central Excise Circle-II PLD 1989 SC 222; Superior Textile Mills Ltd. v. FOP 2000 PTD 399; Messrs Arjun Salt Chemical v. UC Gharo 1982 SCMR 522 and Atta Muhammad Qureshi v. The Settlement Commissioner, Lahore Division Lahore and 2 others PLD 1971 SC 61 rel.

Lt. General (Retd) Shah Rafi Alam v. Lahore Race Club 2004 CLD 373; Khalid Qureshi v. UBL 2001 SCMR 103; East West Steamship v. Queen Land Insurance PLD 1963 SC 663 and Sahibzada Sharfuddin v. Town Committee 1984 CLC 1517 ref.

(f) Interpretation of statutes---

----Rules under statute---Purpose---Rules were subordinate to the statute and were made for promotion of the Act and to be used as "stepping stones" and not to be operated as "stumbling blocks"---Where rules were in conflict with parent Act, the former must yield to the latter and the rules to the extent of inconsistency would be void.

Assistant Director v. B.R. Herman Mohata Ltd. PLD 1992 SC 485; Central Insurance v. CBR 1993 SCMR 1232; Collector of Customs, Peshawar v. Collector of Customs (Appeals) Peshawar 2011 PTD (Trib.) 2114; Messrs Wawa Garments Industries (Pvt.) Ltd. v. The Additional Collector of Customs, Export, Karachi 2011 PTD (Trib.) 2557; 2002 PTD 976; 2002 SCMR 312 and 2009 PTD 1507 ref.

Obaydullah Mirza and Mirza Muhammad Abeer Nadeem for Appellants.

Imdad Ali Appraisers for Respondent No.1.

Dates of hearing: 14th, 22nd and 26th January, 2015.

ORDER

ADNAN AHMED, MEMBER (JUDICIAL-II).---Through this order, I intend to dispose off Appeal No. K-1678/2014 filed under Section 194-A of the Customs Act, 1969 against the order of the Collector of Customs (Appeals), Karachi (here-in-after to be referred as respondent No. 3) bearing No. 9382/2014 dated 07.11.2014 maintaining the order passed by Assistant Collector of Customs, Adjudication-I, Customs House, Karachi (here-in-after to be referred as respondent No. 2).

2.Briefly, facts of the case as stated in the impugned order by the respondent No. 2 are that the appellant imported a consignment declaring to be (I) IRON and STEEL RE-MELLTABLE SCRAP (CUT INTO PIECES) (II) USED HARVESTER ENGINE, QTY = 1 PIECE. In the import documents as well as Goods Declaration. The appellant filed home consumption GD vide machine No. KPPI-HC-8647-15082014 under PCT heading 7204.4990 and 8408.9000. the goods were examined under 1st examination system for verification of quantity, description and weight on physical examination. The shed staff reported undeclared item as follows:-

"01 OLD AND USED HARVESTER IN DIS-MENTAL CONDITION: BRAUDA, MODEL NO. 604 QTY: 01 UNIT, APPROX WEIGHT 5000 KGS PCT:8433.5100---(2) OLD AND USED 04 CYLINDER HARVESTER ENGINE QUANTITY 01 UNITS APPROX. WEIGHT 4000 KGS PCT 8408.9000 (3) EXCAVATOR BODY AND PARTS PCT: 7204.4990 CHECKED WEIGHT 100% VIDE QICT WEIGHT SLIP NO. 2569195 DATED 16.08.2014. FOUND WEIGHT 16150 KGS.....GROUP TO CHECK PCT, VALUE AND ALL OTHER ASPECTS .. IMAGES ARE ATTACHED."

Therefore, the appellant has willfully and deliberately mis-declared the description and classification of the goods, had this willful and deliberate offence gone un-detected and the goods have been released in the garb of declared weight and the government would had suffered a loss of revenue amounting to Rs. 37328.00 a show cause notice was issued to the appellant vide dated 28.08.2014, which was replied by the appellant consultant vide dated 28.08.2014, which failed to convince the respondent No. 2 and he passed order dated 05.09.2014, the operative part of the impugned order read as:--

"I have gone through the case and heard the written as well as verbal submission of the Traders. The perusal of the case transpired that during the course of examination revealed that OLD AND "USED HARVESTER IN DISMENTAL CONDITION, BRAND BRAUDA , MODEL NO. 604, QTY: 1 UNIT, APPROX. WEIGHT 5000 KGS, PCT 8433.5100 was found from the container. However, the representative of the Traders stated that the impugned goods were imported as scrap for the purpose of re-melting. Furthermore, the representative of the Trader stated that importer has no objection whatsoever if the customs mutilate/deshape or dis-figure the same to the extent of scrap. For which he is ready to pay duty and taxes involved. It is, however, not the job of the department to do so. Moreover as per the Rule 2(a) of the General Rules for interpretation: " Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished shall be taken to include a reference to that Article incomplete or unfinished, provided that as essential character of the completed or finished article... prevented un-assembled - dis assembled." Moreover, the DR submitted that the impugned goods i.e. Old and Used Harvester in Dismental condition under PCT heading 8433.5100 are regular import at Port Qasim and they are always in dis-mental condition in containers. The charges leveled in the show cause notice are therefore, fully found established. Hence, the impugned goods are liable to be confiscated. However, an option to get the goods redeemed is given to the importer on payment of redemption fine of 35% of the offending value of the impugned goods because of the mis-declaration of the goods in the light of SRO 499(I)/2009 i.e. Rs. 291,314.00 and a personal penalty of Rs. 25,000.00 is also imposed on the trader. The trader is strictly warned to be careful in future regarding the declaration of the goods, the assessing officer is directed to assess the goods on the basis of ER, finalized the goods on the payment of redemption fine, payment of duty and taxes involved and correct VR , PCT and SRO applicable. The case is dispose of in the above terms.

3.The order was challenged before Respondent No.3 by the appellant vide Appeal No. Cus-6251/2014/PQ, who also vide his order dated 07.11.2014 rejected the appeal by observing in para 5 that:--

"I have examined the case record. It is an admitted as well as established position that old and used harvester was found on examination, whereas the same has not been declared in the Goods Declaration. The respondent officer has rightly adjudged it as an offence under section 32(1) of the Customs Act, 1969. There is no infirmity in the order, therefore it is upheld. The appellant plea to mutilate the harvester and convert the same into scrap cannot be accepted at this stage, the appeal being without merit is rejected."

4.The appellant Messrs Aliz International, 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 alia:

(i)That the case of appellant is in fact not of mis-declaration , attracting section 32 of the Customs Act, 1969 in any manner as the declared weight is found as 16150 kgs as against declared of 18000 kgs and duty and taxes were paid on declared weight, nullifying the allegation of declaration as no revenue loss is apparently visible in the instant .

(ii)That by virtue of no revenue loss the case of appellant falls within the ambit of importability and in such like cases the adjudication proceeding is initiated by the competent authority empowered under section 80 of the Customs Act, 1969 and Rule 438 of Sub-Chapter (III) of Customs Rules, 2001. The appropriate authority to issue show cause notice is therefore Principal Appraiser as defined in Section 2(a) and Serial No. 80 of Notification No. 371(I)/2002 dated 15.06.2002 and the case in question stood ousted from the jurisdiction of respondent No. 2 as evident from para 2 of Notification No. 886(I)/2012 dated 18.07.2012, rendering the show cause notice, order-in-original and order-in-appeal void ab-initio and coram non judice. The powers of adjudication are specific and empowered by the statute. It is an elementary principle of law that where there is a conflict between special and general provision of law, the special provision shall prevails (reference is invited to the case of Lt. General (Retd.) Shah Rafi Alam v. Lahore Race Club, 2004 CLD 373 adjudication, as already observed is special in nature. This cannot be eclipsed by any other general provision. Even otherwise there is another settled principle of interpretation of statute i.e. that the courts can supply construction with a view to avoiding absurdity (reference is invited to the case of Khalid Qureshi v. UBL 2001 SCMR 103). Equally it must be kept in mind that if it is held that sections 4 and 179 occupy the same fields, there is likely to be redundancy in respect of powers conferred under section 179 and S.R.O. 371(I)/2002 dated 15.06.2002. The Supreme Court in the case of East West Steamship v. Queen Land Insurance PLD 1963 SC 663 has been pleased to hold that redundancy is to be avoided in respect of any provision of the statute. There is also plethora of case law on the point that where there is a conflict between two provisions of the statutes, the later provision prevails and has to be given precedents (reference is invited to the case of Sahibzada Sharfuddin v. Town Committee, 1984 CLC 1517. Apart from this law, favour actions of the authorities to be confined to their own spheres of jurisdiction conferred by the statute. An action taken by a state functionary beyond the ambit of his jurisdiction is nullity. In this respect the judgment reported as Abida Rashid v. Secretary, Government of Sindh PLD 1995 Kar. 587 is referred. Their lordship observed as under:--

"it is trite law that power vested in an authority should only be exercised by that authority, in default whereof, the exercise of power and authority becomes without jurisdiction, illegal, void, ab-initio and of no legal effect. The term "without jurisdiction" has been judicially interpreted to include usurpation of power unwarranted by law (the Chief Settlement Commissioner Lahore v. Raja Muhammad Fazil Khan and others PLD 1975 SC 331 @ p.339) an act done which the person doing it has no jurisdiction at all to do or which was clearly outside the sphere of his activities (The State v. Zia-ur-Rehman PLD 1973 SC 49); and a judgment or order delivered by a court or a judicial or a quasi judicial authority not competent to deliver it (Muhammad Saleh and others v. Messrs United Grain and Fooder Agencies PLD 1964 SC 97). The Constitution jurisdiction can thus be exercise when it is shown that the order is passed without jurisdiction or in excess of jurisdiction. As observed earlier the respondent No. 1 has no jurisdiction to pass the impugned order. As such we declare the same to be of no legal effect. Accordingly, we allow this petition but leave the parties to bear their own cost".

(iii)That while dealing with the powers of adjudication, it is needless to observe, that our Supreme Court has jealously guarded the same. In Assistant Director v. B.R. Herman Mohata Ltd., PLD 1992 SC 485 a full bench of Supreme Court was pleased to observe that section 223 of the Customs Act, 1969 could not be employed so as to interfere with the judicial or quasi judicial functionaries. It was clearly observed that the power of the CBR as to prescribed guideline were not relevant for the exercise of judicial function. To similar effect is the judgment of Supreme Court reported as Central Insurance v. CBR 1993 SCMR 1232. In this case the CBR issued direction for the reopening of Income Tax Assessment under section 65 of the Income tax Ordinance 1979. It was held by the Supreme Court that the CBR did not figure in the hierarchy of the officer provided in the statute for the purpose of assessment and adjudication. On the basis of this it was held that the directions of the CBR to reopen the assessment was without jurisdiction and the adjudication officer was directed to apply its own mind. Reliance is placed on the order of the Tribunal in S.T. Appeal No. 176/2007 Messrs Muller and Phipps Pakistan (Pvt.) Ltd. v. The Collector of Sales Tax Enforcement LTU, Karachi and 2011 PTD (Trib.) 2114 Collector of Customs, Peshawar v. Collector of Customs (Appeals) Peshawar and 2011 PTD (Trib.) 2557 Messrs Wawa Garments Industries (Pvt.) Ltd. v. The Additional Collector of Customs, Export, Karachi and Order in Custom Appeal No.H-510/2008 Dewan Farooque Motors Ltd. v. Collector of Customs (Appeal).

(iv)That in the show cause notice the respondent No. 2 has referred the amount of the leviable Sales Tax of Rs.148,570.00, additional Sales Tax Rs.26,218.00 and Income Tax Rs.62,924.00 which is alleged to be loss of revenue despite not. Incorporating the amount of Sales Tax and Income Tax in the absence of invoking the relevant provision of Sales Tax Act, 1990 and Income Tax Ordinance, 2001 renders the show cause notice ab-initio void as held 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.

(v)Notwithstanding with the referred illegality, it is appropriate for the appellant to state that the opinion of the examiner and respondent are erroneous as the appellant have imported the goods in question as scrap for the purpose of re-melting and this stood validated from the remarks of in "dismantled condition", meaning thereby that it is not in working condition, neither can be repaired with the exception that it is to be used solely as scrap terming the same as a complete built unit is mala fide.

(vi)Needless to say that no other opinion can be formed to the fact that the disputed harvester is scrap but for the satisfaction of officials of respondent No. 1, the appellant has no objection, whatsoever if the customs mutilate/de-shape or disfigure the same to the extent of scrap, for which he is ready to pay the expenses so incurred as this is nothing new instead a practice invoked with the Collectorate as evident from the passed order-in-original in the case of Messrs F.F. Trading Corporation, Karachi in Goods Declaration No. KPPI-HC-7362-09082014. Through which the learned Deputy Collector, Adjudication ordered mutilation of the imported goods and release the same as scrap and likewise in the case of M/s. Atlantic International, corresponding to GD No. KAPE-HC-21465-26.08.2014, wherein the Executive Collectorate allowed cutting of scrap paper containing international edible brand not importable under Serial No. 11 of Part II of Appendix-B of the Import Policy Order without initiation of contravention proceeding.

(vii)That the appellant has been given a differential treatment by way of preparation of contravention report and subsequently through issuance of show cause notice and passing of order-in-original/Appeal, despite standing on the same pedestal as were the importer namely referred in the above ground in negation Articles 4 and 25 of Constitution of Islamic Republic of Pakistan and in derogation of the law laid down by the High Court of Sindh in its reported judgment 2002 PTD 976 held that "vacating the show cause notice in one case and taking action against another person in similar situation, is amount to discrimination which is hit by Article 25". In reported judgment 2002 SCMR 312 and 2009 PTD 1507 the Hon'ble Superior Courts, "there exist no power to target incidence of tax in such a way that similarly placed person be dealt not only this similarly, but discriminatingly". Whereas, in reported judgment 2005 SCMR 492 the Hon'ble Supreme Court held that "A facility allowed to some one and denied to other is discrimination". The Apex Court further held in reported judgment 2010 SCMR 431 that:

"doctrine of equality, as contained in Art. 25 of the constitution, enshrine golden rules of Islam and states that every citizen, no matter how high so ever, must be accorded equal treatment with similarly situated persons---State may classify persons and objects for the purpose of legislation and make laws applicable only to persons or objects within a class-- In fact all legislations involve some kind of classification whereby some people acquire rights or suffer disabilities whereas others do not---What however, is prohibited under principle of reasonable classification, is legislation favouring some within a class and unduly burdening others---Basic rule for exercise of such discretion and reasonable classification is that all persons laced in similar circumstances must be treated alike and reasonable classification must be based on reasonable grounds in given set of circumstances but the same in any case must not offend spirit of Art. 25 of the Constitution."

(viii) The appellant carves 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 after hearing the respondent representative delivered the comments in the office, although same are not admissible under law but for the sake of justice and fairplay are reproduced here-in-below to the extent of rebuttal on grounds of the appellant:--

(i)That the contents of para 1 are absolutely false, baseless concocted and are not correct rather the same are based on self interpretation. The fact is that this is a case of mis-declaration on the part of the appellant as old and used harvester was found on examination whereas the same had not been declared in the goods declaration and as such the offence under Section 32(1) of the Customs Act, 1969 has been attempted by the Appellant.

(ii)That the contents of para 2 are also based on imagination and on wrong interpretation of laws of the Customs Act, 1969. The fact is that the show cause notice issued to the appellant absolutely in accordance with law as no where in Notification No. 371(I)/2002 dated 15.06.2002 restrained the Assistant Collector Adjudication from issuing the show cause notice as has been alleged in para under reply. It is also mentioned here that there is no conflict between special and general provisions so the question of prevailing of special provisions does not arise. The case reported by the superior courts as mentioned in para under reply have no relevancy with the present case.

(iii)That regarding the contents of para 3 it is submitted that the learned counsel for the appellant has unnecessarily referred the case laws reported in different cases as the same have no relevancy with the instant case the fact is that the instant case is a clear cut case of misdeclaration on the part of the appellant and as such the show cause notice, order-in-original and order-in-appeal has been notice, order-in-original and order-in-appeal has been passed absolutely in accordance with law under the relevant provisions of Customs Act, 1969 and powers delegated to the officers of customs.

(iv)That the contents of para 4 are also based on self imagination and self interpretation. The fact is that in the show cause notice the details of government revenue in respect of offending goods have been mentioned under the relevant respective provisions of Act and Ordinance and as such the same is not void ab-initio as alleged in para under reply. The case laws reported in different case as mentioned in para under reply are also not relevant with the present case.

(v)That regarding the contents of Para 5, it is submitted that the counsel for the appellant has taken absolutely false contentions in para under reply by saying that the opinion of the examiner and the respondent is erroneous. The fact is that the appellant has deliberately and intentionally mis-declared the description of the goods and also the classification of the goods in order to deprive the government from its legitimate revenue. It is pertinent to mention here that old and used harvester in dismantled condition under PCT heading 4333.5100 are regular import at Port Qasim and they are always in dismantled condition in containers.

(vi)That the contents of para 6 are an attempt to divert the attention from the present case by saying that the appellant is ready to incurred the expenses in case the respondents mutilate/de-shape or dis-figured the same to the extent of scrap. This practice would surely waste the time of the department as there is no doubt about the actual description of the goods as reported by the shed staff. The reference made by the appellant in the para under reply are just an attempt to prove the wrong of the appellant to be right and to cover their offence under the grab of these reference which in fact has no relevancy with the present case.

(vii)That the contents of para 7 are absolutely false and baseless, hence vehemently denied by the answering respondent. The fact is that the appellant has not be treated differently and as such the contravention report, show cause notice and order-in-original and order-in-appeal are absolutely in accordance with law as it is the case of clear mis-declaration. The representative of the appellant has totally failed before every forum to submit and advance the justification of the mis-declaration made by them. It is pertinent to mention here that in the entire appeal the counsel of the appellant has referred different case laws passed in different cases which does not relates to the present case and referring these case law are just in order to impress this Honourable Tribunal otherwise the appellant itself is very much aware that these case laws have no relevancy with the present case as regards the Articles 4 and 25 of the Constitution of Islamic Republic of Pakistan, 1973. It is submitted that the said Articles are very much clear and no violation of these Articles or any other Articles of the said Constitution has been made by the respondents. There is no discrimination on the part of the respondents and the appellant has treated equally with similarly situated person.

(viii) That the content of para 8 being formal need no reply.

6.Rival parties heard case record perused.

7.The allegation leveled in the subject case is that the appellant mis-declared the quantity, description and weight of the goods, upon examination of the import documents and examination report, it transpired that the appellant made declaration of the quantity on the basis of unit of measurement notified in the Pakistan Customs Tariff, which is weight and it was declared as 18000 kgs, as against that found in the examination report after weighment vide slip dated 16.08.2014, as 16150 kgs i.e. less by 1850 kgs. Whereas, the upfront duty and taxes Rs.152,078.00 were paid vide Cash No. C-KPPI-002719-15082014, on the basis of 18000 kgs, resultant paid in excess by Rs.15,989.00. By virtue of the said fact the allegation of weight stood diluted. As regards to allegation of mis-declaration of description i.e. also of no substance as the goods imported or found during the course of examination are deemed to be scrap, unless contrary is proved. When the examining official transmitted in the examination report old and used harvester in dis-mental condition, the word "dis-mental" is sufficient to meet the criteria of scrap as the literal meaning of "dis-mental" is "to take to pieces, to destroy the integrity or functioning, to come to an end." There can be no purpose of the dismental machine with the exception of a scrap meant for re-claiming/recovery of metal after re-melting, giving any other meaning is absurdity. The found said to be machine in excess is of no substance as it weight is included in the declared weight. Since, it is useless, old and not useable harvester, it falls within the definition of "scrap", literal meaning of which is waste; anything discarded as worn out, out of date, useless, cease to use, do away with and abandon". Likewise the charge of mis-declaration of PCT is invalid because the assessing officer changed the description of scrap to harvester, obviously it falls under a different PCT, which is obviously not applicable as the goods imported by the appellant is scrap by all means. To justify his act of confiscating the goods of the appellant, the respondent No. 2 has relied upon on Rule 2(a) of the General Rules of Interpretation which read as "any reference in a heading of an Article shall be taken to include a reference to that Article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of complete or finished article. It shall also be taken to include a reference to that article complete or finished (or failing to be classified as complete or finished by virtue of this Rule), presented unassembled or dis-assembled." The said Rule is for classification of the new goods not imported as scrap, even otherwise under the said Rule the imported goods are scrap as discussed by me. The said Rule has to be read rationally as against read and interpreted by respondent No. 2. I, therefore hold that no inference contrary to the declaration of the appellant can be drawn, hence, preparation of contravention report, issuance of show cause notice and passing of order-in-original by respondent No. 2 and upholding of the same by the respondent No. 3 is not more than an act of gross un-justice done with the appellant on the basis of intentional and willful inapt interpretation of the word "scrap" and "mis-declaration". Therefore, the charges leveled in this regard are baseless and void.

8.That the official of Collector of Customs, Port Muhammad Bin Qasim (here-in-after to be referred as respondent of No. 1) has calculated the loss of revenue while terming the imported scrap as fresh goods and valuation of it has been done on the basis of said determined status. To the contrary, there exist no loss of revenue as the imported goods are subject to passing of assessment order under section 80 of Customs Act, 1969 and Rule 438 of Sub-Chapter (III) of Chapter XXI of Customs Rules, 2001. In accordance with the assessment order view message is transmitted to the importer (appellant) for payment of leviable duty and taxes. Which the importer/appellant pays, consequent to which Clearance Order under Section 83 and Rule 442 ibid is transmitted. How it is presumed that the appellant intention is to evade those, in the case in hand the loss is being calculated by the official of respondent No. 1 while changing the status of the imported goods, which is erroneous as deliberated me in para 7 supra. Apparently, there exist no revenue loss and when there is no revenue loss the case stood ousted from the jurisdiction of respondent No. 2 in terms of para 2 of notification S.R.O. No. 886(I)/2012 dated 18.07.2012 and falls within the powers of Principal Appraiser of the Executive Collectorate i.e. respondent No. 1, as he is the only appropriate authority to pass an assessment order under section 80 and Rule 438 ibid as evident from Serial No. 34 of notification No. S.R.O. 371(I)/2002 dated 15.06.2002. Likewise, the respondent No. 2 not only usurped the jurisdiction of Executive Collectorate even the powers of his subordinates i.e. Principal Appraiser, which is not permitted under any circumstances and this has been deliberated in length by the appellant in his arguments well supported by the applicable judgments and which are incorporated in para 4(i) & (iii) supra and in reported judgment PLD 1973 Supreme Court 49 The State v. Zia-ur-Rehman and others and 2009 PTD 1083 that "Superior authority cannot exercise the power of his subordinates for adjudication purpose .. powers of sub-ordinate exercised by superior authority is held as to be without jurisdiction beside usurpation". Rendering the show cause notice and order-in-original without power/ jurisdiction, hence ab-initio, null and void and coram non judice. It is also settled principle that the exercise of jurisdiction by an authority is mandatory requirement and its non fulfillment would entail the entire proceeding to be coram non judice.

9.That even otherwise, the show cause notice is without mentioning the provision of Sales Tax Act, 1990, Income Tax Ordinance, 2001 despite mentioning amount of the both taxes separately. No charge can be leveled or upheld when those were not invoked as held by the Superior Judicial Fora in reported judgment referred here-in-above in para 4(iv). The respondent No. 2 while holding charges for evasion of sales tax and income tax also traveled beyond the charter of show cause notice, rendering the order palpably illegal because it is settled law that where provision in order have been invoked without mentioning in the show cause notice, such orders are held void of law. In the case of Collector Central Excise and Land Customs and others v. Rahmdin reported at 1997 SCMR 1840 the Hon'ble Supreme Court of Pakistan held that "order of adjudication being ultimately based on the ground which was not mentioned in the show cause notice was palpably illegal on the face of it".

10.The respondent also ignored the request of the appellant of mutilation/scraping of the imported harvester despite not warranted. To overcome such lapses and difficulties legislature has inserted Section 27A in the Customs Act, 1969, verbatim of which is here-in-below:--

"allowing mutilation or scraping of goods:- At the request of the owner the mutilation or scraping of the goods as are notified by the Board may be allowed, in the manner as prescribed by rule and where such goods are so mutilated or scrapped they shall be chargeable to duty at such rates as may be applicable to the goods if they had been imported in mutilated form or scrap."

The Board framed rules for Mutilation/scrapping of the imported goods as expressed in Section 27A and inserted those in Chapter XXIV in the Custom Rules, 2001, through Notification SRO. 250(I)/2011 dated 16.03.2011 Comprising of Rules 592-597, which are:--

592. Goods allowed for mutilation or scrapping.---The following old and used items, if imported in serviceable condition alongwith the scrap consignments or imported separately as a scrap and found serviceable, may be allowed mutilation or scrapping, as the case may be, within the meanings of section 27A of the Act, namely:--

(i)pipes or tubes;683

(ii)bars or rods;

(iii)sheets or strips, slab, plates;

(iv)beams, sections, channels or girders, used and pitted railway tracks; 62 (Omitted)

(v)ship plates cutting of various sizes with rough edges and having welded joints 62;

(vi)foils or films; and

(vii)tyres or tubes.].

593. Application by importer or agent.---An importer or his agent (hereinafter referred to as the applicant) before filing the goods declaration shall make a request in writing to the Assistant or Deputy Collector of Customs in respect of items specified in rule 592 for the mutilation or scrapping thereof.

594. Applicant to provide all the necessary information with regard to mutilation or scrapping of goods.---The applicant shall furnish all the import related documents available to the Assistant or Deputy Collector of Customs.

595. Mutilation or scrapping under Customs Supervision.---All operations of mutilation or scrapping of goods shall be carried out by the applicant under the supervision of appropriate officer of Customs at such place as may be approved by the Assistant or Deputy Collector of Customs.

596. Drawal and testing of samples for laboratory test.---If a laboratory test is required, the applicant shall make arrangements for drawal of samples. The samples drawn shall be in adequate quantities to permit more than one test in case such a contingency arises. The result of such tests shall be made available to the applicant.

597. Fee for test and other charges incurred on mutilating or scrapping of goods to be paid by the applicant.---The applicant shall pay fee for supervision charges and all other expenses including incidental charges connected therewith in connection with the mutilation or scrapping of goods.]

The request of appellant was declined by the Respondent Nos. 1 and 2 on the basis of Rule 593, wherein it has been said that the importer or his clearing agent has to submit a request to the Assistant Collector or Deputy Collector for mutilation/scraping before filing of goods declaration and if that was not done, the same shall not to be entertained. This approach is not correct as the Rules are Subordinate to the statutes and these are made for the promotion of the Act and to be used as "stepping stones" and not to be applied and operated as "stumbling blocks". They may also not to be employed to harass the taxpayer on the basis of technicalities instead of advancing the purpose for which they are framed as held by Supreme Court of Pakistan in its reported judgment PLD 1989 Supreme Court 222 in the case of Messrs Nishat Mills Ltd. v. Superintendent of Central Excise Circle-II.

The provision of Section 27A of the Customs Act, 1969 is to be read and interpreted as expressed/phrased, which permits mutilation or scraping of the imported goods on the request of the importer, without any conditionality, whereas the Rule 593 completely changed the Provision of Section 27A, resultant it is in conflict with the expression of Section 27A and as per settled law it has to prevail on the Rule 593, as held in the 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 of statute that rule which are merely subordinate legislation cannot override or prevalent on the parent statute and when ever there is inconsistency b/w the rule and statute the later must prevail"

The rational and judicial approach is that if the appellant has requested for mutilation or scraping of the goods even after filing of Goods Declaration or during the course of adjudication, it should had been allowed as it is the true essence and spirit of Section 27A and instrumental in collection of duty and taxes levied thereon for meeting the revenue target, instead of not allowing the request on technicalities and confiscation of the goods as this will serve no purpose, with the exception of unnecessarily retaining the goods, for the purpose of auction, through which the Customs will get very nominal amount as against the leviable duty and taxes, for which the Collectorate is not formed. Even otherwise the provision of Section 27A and Rules 593 have to be adhered in letter and spirit and for the benefit of the tax payer by virtue of the fact that these are directory in nature, as evident from the character of the language in which these are couched, the language of Section 27A and Rule 593 are in affirmative, resultant , these have to be construed as directory not mandatory as held by the Hon'ble Supreme Court of Pakistan in reported judgment PLD 1971 Supreme Court 61 Atta Muhammad Qureshi v. The Settlement Commissioner, Lahore Division, Lahore and 02 others that.

"It is well settled that the neglect of plain requirements of a statutory enactment, which prescribed how something is to be done, will invalidate the thing being done in some other manner if the enactment is absolute but not if it is merely directory. The real question which thus arises for consideration is when enactment to be considered as absolute and when as merely directory? It is not possible to lay down a general rule of universal application in this behalf, but the one which is suggested by reported authority in this connection is the affirmative or negative character of the language, in which the provision is couched. If it is negative, that is to say, if the statute enacts that certain action shall be taken in a certain manner and in no other manner it has been held that the requirement are absolute and that neglect to attempt them will invalidate the whole procedure. If on the other hand, the language is affirmative, it may be considered as directory provision."

The disallowing of denaturing and scraping by the respondents Nos. 2 and 3 is completely without lawful authority and of no legal effect being in derogation of the provision of Section 27A of the Customs Act, 1969, which prevails on Rule 593 and as such fails the test of judicial scrutiny.

11.Notwithstanding, to the above deliberation, it seems that the respondent Collectorate allow defacing, denaturing, mutilation and scraping of the goods in accordance with their likes and dislikes and their said act amounts to giving differential treatment, which is not permitted under Articles 4 and 25 of the Constitution of Islamic Republic of Pakistan and this stood validated from that in a similar nature of case wherein the importer namely M/s. Atlantic International imported a consignment of printed/misprinted aluminum poly coated/paper waste having brand of edible products in reels vide Goods Declaration No. KAPE-HC-21465-26082014 as against the condition of importing such type of waste given in column 3 of Serial No. 11 that such type of goods are importable only incompletely "cut into pieces" form so that no piece contains the complete brand name. The clearance of said goods were stopped as being in derogation of condition of the IPO, the importer submitted a request for defacing or cutting of the goods, the Collectorate of Customs -East allowed defacing/cutting the reels into pieces and the said fact was transmitted to the learned Deputy Collector, who completing the assessment of the goods as waste/scrap, stood validated from his assessment note reading as the information from the port staff uploaded and as per the information regarding fulfillment of IPO condition the GD is released". Likewise, in a case corresponding to GD No. KPPI-HC-7362-09082014 M/s. F. Trading Corporation, Karachi, the adjudicating authority allowed the release of the goods as scrap inspite of the opinion of the Official of MCC of PMBQ that the compressor imported as scrap are new, while holding that since the goods imported are operateable on alternate current (AC) not on direct current (DC) which is the mode of current in Pakistan, hence these are of no use with the exception of using as scrap for recovery of metal after re-melting. The appellant has been given differential treatment despite standing on the same pedestal as against other importers. This is not permitted under law as held by Superior Judicial Fora in umpteenth reported judgment, in addition to the relied upon judgment by the appellant and which are available in para 4(vii) supra.

12.In view of the above submission, the order passed by the hierarchy below suffers from inherent legal deficiency/infirmity and are therefore declared ab-initio void and hereby set aside and appeal is allowed with the direction to issue delay and detention certificate in terms of Section 14A(2) of the Customs Act, 1969 in duplicate for submission with the shipping company Messrs CMA CGM Pakistan (Pvt.) Ltd., and Qasim International Container Terminal (Pvt) Ltd, Karachi for waiver of accumulated container detention and rental and Terminal demurrage and storage charges and the Collector is further directed to ensure acceptance of the delay detention certificate by them.

RR/53/Tax(Trib.)Appeal accepted.