LEATHER COTEX VS COLLECTOR OF CUSTOMS (ADJUDICATION-II), 2016 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 2157 (2015)

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

----S. 195---Re-opening of past and closed matter by customs authorities---Scope---Assessment---Order of assessment by department had attained finality---In order to reopen such past and closed transaction, only recourse available was that Collector of Customs to initiate action under S. 195 of Customs Act, 1969.

Glaxo Smith Kline Pakistan Ltd. v. Federation of Pakistan and other 2004 PTD 3020 ref.

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

----S. 195---Mis-declaration---Assessment order had attained finality---Once an order was passed which had attained finality, same could not be subject to show-cause notice again, when no appeal or revision was filed against the first order.

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

----Ss. 80 & 32---Assessment of duty---Essentials---Perusal of S. 80 of Customs Act, 1969 indicated that during process of assessment it was duty of the Department to not only examine goods and to consider any extra information available on Goods Declaration in order to arrive at a correct assessment of duty and taxes---Assumption that quoting a wrong PCT Heading amounted to mis-declaration would not be a correct approach in view of S. 32 of Customs Act, 1969, where emphasis was on the word "material particulars" which meant something "going to the root cause of basic declaration".

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

----Ss. 32, 32(3)(A) & 131---Mis-declaration---Incorrect quoting of PCT Heading by Department---Untrue statement---Goods declarations were filed by importer with correct description of goods---Department found no false statement or any collusion and no evidence was brought on record through show-cause notice---Validity---Alleging a charge of mis-declaration on basis of a wrong classification heading did not constitute an offence within framework of S. 32 of Customs Act, 1969, when there was no material falsity in statement made by the Importer---Incorrect quoting of PCT Heading did not tantamount to mis-declaration within ambit of Ss. 32 & 32(3)(A) of Customs Act, 1969---Positive assertion of facts was pre-requisite for bringing charges of mis-declaration against Importer---If wisdom of Department for invoking S. 32 of Customs Act, 1969 in case of incorrect citing of PCT Heading was acceded to, no responsibility devolved upon Department to levy and assess duty according to law, and S. 131 of Customs Act, 1969 would become redundant.

Messrs Falcon Enterprises v. Collector of Customs vide Appeal No. K-723 of 2007; Customs Appeal Nos. K-432 and State Cement v. Government of Pakistan 2002 MLD 180 ref.

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

----S. 26---Power to require information to be furnished---Object of S. 26 of Customs Act, 1969 was to empower department to ask for information or require production of documents to inspect same in order to determine legality or illegality of importation or exportation of goods which had been imported or exported.

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

----Ss. 32, 32(1), 32(2) & 32(3)(A)---Untrue statement, requirements of---Untrue statement, criminal in nature---Careful observations of S. 32(1)(2) & S. 32(3)(A) of Customs Act, 1969 were required in the light of obligations made or attributed against importer---Section 32 did not merely contained punitive provisions but it dealt with recovery of duties and charges payable to exchequer either on account of fraudulent act of persons liable to pay or through errors of department---Section 32(1)(2) and (3)(A) required that untrue statement must be made in connection with any material of customs and would be false in any material particular---Section 32 of Customs Act, 1969 was penal/criminal in nature---Basic requirements of S. 32 would have to be determined and then execute the same accordingly---Penal/criminal provisions were divided into provisions prescribing "actus reus" i.e. act in question and "mens rea" i.e. requisite mental element and it was not essential for a penal provision to contain both such ingredients as provisions which committed mens rea were called strict liability offences---Penal proceedings were criminal in nature and required a higher standard of proof and could only be tainted with legality if independent and cogent evidence was led in accordance with law---Section 32(3)(A) of Customs Act, 1969 was only to be invoked as a result of an audit or examination of an importer's accounts and not against exporter.

2014 PTD (Trib.) 52; 2014 PTD (Trib.) 76; 2014 PTD (Trib.) 52; 2014 PTD (Trib.) 76; 1996 (82) ELT 441 (SC); 1997 (94) ELT 9 (SC) Para 15; 1984 (18) ELT 3 (Tribunal); 1997 (92) ELT 451 (SC); 1993 (68) ELT 82 (Tribunal) and 1988(35) ELT 434 (Tribunal) and 2001 SCMR 838 ref.

(g) Administration of justice---

----Where initial order or notice was void, all subsequent proceedings, orders or superstructure built on it were also void.

(h) Administration of justice---

----Law required credible grounds for impregnating a stance forwarded with purpose to implement certain sections of law on basis of equal treatment emanating from natural course of justice---Principle for recovery of short levied duties was that all were equal before law, whether citizen or State.

(i) Limitation---

----Limitation, starting of---Period of limitation would not commence from date of discovery of short levy---No law existed to the effect that period of limitation should commence from date of discovery of short levy---If department was negligent and was not able to detect short levy of customs duty within period of limitation provided in law then only course open for department was to initiate appropriate disciplinary proceedings against departmental officers.

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

----S. 190---Show-cause notice---Essentials---Allegation of mis-declaration---Show-cause notice must disclose material facts on basis of which charges of mis-declaration, connivance, suppression or fraud were intended to be raised.

(k) Interpretation of statutes---

----Taxing statute---Charging provisions imposed charge of tax and machinery provisions provided machinery for clarification of charge levied and collection of tax in respect of charge so imposed---Machinery provisions did not impose charge or extend or restrain charge elsewhere clearly imposed---Courts were expected to construe machinery sections in such a manner that charge for taxes not defeated---Specific provisions to impose charge against importer were not mentioned nor invoked.

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

----S.32(3A)---Delay/limitation time---Section 32(3)(A) of Customs Act, 1969 was invoked only to cover delay/limitation of time---Such intent on part of department did not have any support or warrant of law---Appeal was allowed in circumstances.

(m) Administration of justice---

----To maintain administration of justice and not to prejudice anyone, courts were required to do justice between parties in accordance with law---Litigant who approached court for relief was bound to substantiate procedure adopted by him.

(n) Administration of justice---

----If a particular thing was required to be done in a particular manner, it must be done in that manner.

(o) Interpretation of statutes---

----Fiscal statute---What had not been expressly written by legislature, same could not be implied.

2012 PTD 337; 2002 PTD 877; 1993 SCMR 274 and 1993 PTD 69 ref.

M.H. Awan for Appellant.

Dr. Jam Imran and Nadeem AO for Respondents.

Date of hearing: 10th February, 2015.

ORDER

MUHAMMAD NADEEM QURESHI, MEMBER JUDICIAL-I.---This order shall dispose of the instant appeal filed by Messrs Leather Cotex, against the Order-in-Original No. 70/2014-2015 dated 19-09.2014, passed by the Collector of Customs (Adjudication-II) Karachi.

2.Brief facts of the case as reported by the Model Customs Colectorate of PaCCS, Karachi no Model Customs Collectorate of Appraisement (East) Karachi vide its contravention report No.9(6)Exports/RD/Non-Payment/PaCCS/2013 dated 15-03-2013 that upon scrutiny of export data of Wet Blue Leather it was observed that Messrs Leather Cotex exported twelve consignments of Wet Blue Leather vide Goods Declarations bearing CRN Nos.(1) 295837, (2) 445565, (3) 610752, (4) 813982, (5) 843993, (6) 1099613, (7) 1114915, (8) 1216439, (9) 1384747, (10) 1455007, (11) 1455957 and (12) 1460567 without payment of Regulatory Duty @ 20% ad. Value leviable, in terms of S.R.O. 1011(I)/2005 dated 27-09-2005. The non-payment of Regulatory Duty has resulted in a loss to National Exchequer to the tune of Rs.5,861,823/-.

3.Whereas Messrs Leather Cotex willfully and with mala fide intentions exported the goods without paying the regulatory duty leviable in terms of Section 18 of the Customs Act, 1969 read with S.R.O. 1011(I)/2005 dated 27-09-2005 which tantamount to violation of Sections 18(3), 32(3A) and 207 and 209 of the Customs Act, 1969, and clause 101 of the Customs Rules, 2001 punishable under clauses (14), 14A of Section 156(1) of the Customs Act, 1969 and clause 102 of the Customs Rules, 2001.

4.Accordingly a show cause notice was issued to the appellants and the matter was referred to the adjudicating officer, who concluded his observations as follows:--

"7. A plain reading of the Notification indicates that a Regulatory Duty at the rate of twenty percent ad-valorem has been levied on the export of raw and wet blue hides and skins. Perusal of the case record indicates that the respondents exported Wet Blue hides and skins. The case of the respondents, therefore, falls squarely within the ambit of Notification No. SRO 101(I)/2005 dated 27-09-2005. The advocate of the respondent has tried to exclude the goods that were exported from the category of "raw and wet blue hides and skins" but the arguments presented were not convincing. A copy of letter dated 04.07.2009 sent to the Federal Board of Revenue by the Collector, Model Customs Collectorate Lahore has been furnished wherein the Collector has given an opinion to the Board, but the Board it appears has not confirmed this viewpoint as no such clarification has been produced by the respondent. The lawyer has further argued that the case is time barred, but section 32(3A) clearly lays down the time period for serving a notice for duty not charged or levied or short levied or erroneously refunded in cases discovered as a result of audit as five years from the relevant date. The relevant date where clearance of goods has been made through computerized system under section 32(5e) is the date of detection. As such the Show Cause Notice issued is within time and lawful.

8. In view of the above facts, I hold that the charges leveled in the show cause notice stand established. Messrs Leather Cotex (NTN - 2539591), Near Ghousia Masjid Nagar Kasur, Pakistan are ordered to pay Rs. 5,861,823/ -, as Regulatory Duty. A penalty of Rs. 100,000/ - under clause 14 of Section 156(1) of the Customs Act, 1969, is imposed on the respondent."

5.Dis-satisfied with the Order-in-Original the appellant filed an appeal before this Tribunal on the grounds mentioned in the memo of appeal.

6.Mr. M.H. Awan, advocate for appellant contended that the appellant/exporter is a registered manufacturer and exporter of leather products and earning foreign exchange for Pakistan for the last many years. The details of Goods exported without payment of regulatory duty, audit observations, details of duty and taxes recoverable and export GD numbers with dates are not mentioned in the show cause notice, therefore, the show cause notice is defective, illegal, void, untrue and without force of law, hence liable to be set-aside. He in this context relied upon the judgments passed by Superior Courts i.e. 2014 PTD (Trib.) 52, 2014 PTD (Trib.) 76, 2014 PTD (Trib.) 52, 1996 (82) ELT 441 (SC), 1997 (94) ELT 9(SC) Para 15, 1984 (18) ELT 3 (Tribunal), 1997 (92) ELT 451 (SC), 1993 (68) ELT 82 (Tribunal) and 1988(35) ELT 434 (Tribunal). Advocate for appellant further contended that 20% regulatory duty was chargeable to Customs Regulatory duty. The Customs authorities had confirmed the description of exported goods and allowed loading without raising any objection at the time of export, therefore there was no mis-declaration on the part of exporter/appellant. He further contended that as per their record neither any consignment chargeable to regulatory duty was ever exported nor mis-declared description. HS Code and other particulars in export documents. The consignments with the declared declaration were allowed to export. The question is as to why the consignments with wrong declaration were allowed for export. Actually the declaration was correct and that is why no objection was raised by the Customs to export the said consignments with declared description as "cow single but split leather". The appellant made a declaration in the form and manner prescribed by the Board by filing a goods declaration to Customs containing correct and complete particulars of exports goods. The same were made out of charge with the same declaration. The appellant never made any mis-declaration before the customs. It is also asserted that as per goods declaration, the impugned good were declared as wet blue cow single butt split leather but while issuing a show cause notice the said goods were mentioned as wet blue leather. The provision of 32(3A) also irrelevant as it relates, to imported goods. Therefore, the show cause notice being vague, defective and not in conformity with taw is liable to be set aside in the light of orders passed in judgment reported as 2001 SCMR 838. The learned adjudication officer while passing impugned Order-in-Original observed that as per said SRO the regulatory duty has been levied on the export of raw and wet blue hides/skins but the copies of purchase order, proforma invoices and other documents clearly indicate that the appellant exported wet blue cow single butt split leather. The said observations facts and law clearly indicate that the appellant never exported wet blue leather. The exports were made of wet blue drop and split leather which is clearly a distinct category and beyond the scope of the said SRO. The learned Collector (Adjudication) passed the impugned order on the basis of presumption and intendment. In order to reach a fair decision it would be useful to understand the reason for imposition of RD on goods meant for export by the exchequer. Evidently this is done to discourage and restrict the export of items which are in their basic or crude form and thus are not value added. In the instant case RD of 20% has been imposed by the Government on the export of "wet blue raw hides and skins" since this kind of leather is in its basic form and when the same is used for making "leather garments" there is considerable amount of value addition. Hence for arguments and assuming sake, and assuming the definition of the exported goods as "wet blue cow single butt split leather" as claimed by the appellants, by applying simple logic, it can be safely deduced that anything which is less value added, i.e. would evidently come under the purview of the said notification S.R.O. 1011(I)/2005 if the said analogy is to be relied upon. Learned counsel for appellant further added that impugned order is against the law and facts. Nobody can be penalized merely on the basis of presumptions and assumptions as there is no room for any intendment in fiscal matter and there is no presumption as to tax (2012 PTD 337). It is also claimed that where two interpretations are possible, one favourable to the tax payer would prevail. (2002 PTD 877, 1993 SCMR 274, 1993 PTD 69). It is also contended that it is not a case of exemption rather it is case of levy of regulatory duty under the said SRO issued by the government therefore the customs is bound to established that the impugned goods were liable to be charged as regulatory duty but the department has failed to do the needful and two appeals of similar and identical consignments were decided by this Tribunal vide Customs Appeal No. K-31/2013 dated 27-06-2013, which were allowed in favour of exporter. This appeal being identical nature deserves same treatment.

7.On the other hand the representative appearing on behalf of respondent has vehemently opposed the grounds mentioned in the memo of appeal as well arguments advanced, which were submitted by the learned representative of the appellant. Respondent No.2 filed preliminary submissions which arc available on record. At the time of hearing, representative of the respondent reiterated the same and argued that the appellant exported the wet blue leather and misused the facility of newly introduced automated self clearance system and caused loss to the government exchequer. He referred the copies of the different GDs where the other exporters were paying regulatory duty on the export of same item. Two samples items were also brought for perusal before the Tribunal during the hearing. He further contended that charges leveled against the appellant as per the show cause notice were well within the ambit of law, and during the hierarchy of the Customs the same were established against the appellant. He further argued that the "wet blue split leather" and "wet blue drop split leather" falls within the ambit of regulatory duty and the same facts were endorsed by the Pakistan Transfers Association and also referred that the Board also forwarded these representations to the respondent Collectorate through letter dated 14-07-2010, explaining the process of wet blue leather and its quality/category and classified the same under Headings 4104 to 4016. The Board vide letter dated 15-07-2010 directed the Collectorate of Customs, Lahore to re-examine the issue and there were no final decision by the Collectorate of Customs, Lahore. Hence the issue of classification raised by the appellant stands established as per the show cause notice in favour of the respondent and as such in the light of these submissions it was prayed that this Tribunal may graciously direct the appellant to pay the regulatory duty and penalty and appeal be dismissed and the impugned Order-in-Appeal be upheld in the interest of justice.

8.After going through the contents mentioned in the memo of appeal as well as the arguments extended by both the parties it has been observed that the Model Customs Collectorate PaCCS being the reporting agency through report No. 09(6)Exports/RD/Non-Payment/ PaCCS/2013 dated 15-03-2013 referred the contravention and in response to that show cause notice was issued on 09-06-2014. The subject show cause notice was issued against 12 consignments, which were exported by the present appellant in the year 2009 without the payment of regulatory duty as levied under S.R.O. 1011(I)/2005 dated 25-09-2009. Later on appellant was charged through show cause notice, in violation of Sections 18(3), 32(3A), 207 and 209 of the Customs Act, 1969 and clauses 101 and 102 of the Customs Rules, 2001 punishable under clauses (14), (14A) of Section 156(1) of the Customs Act, 1969. The said allegations were detected on the grounds that the regulatory duty @ 20% was chargeable on "raw and wet blue hides and skins". Whereas the description of exported goods as per the Goods Declaration was "wet blue cow single butt split leather" as such due to difference in the category of goods the exported goods not falls under the liability of the regulatory duty as alleged by the Department, that is why the subject consignments were allowed for export and the contravention caused and created later on by the Customs officials through show cause notice are questionable and requires legal consideration under the parameters of prescribed law.

9.For explaining the subject controversy, we prefer to refer the judgment which was passed by the Divisional Bench of Tribunal in Customs Appeal No.K-31/2013 which was accordingly assailed by the Department before the Hon'ble High Court and filed the Customs Reference Application No.278/2013 which was pending and no order has been passed by the Hon'ble Sindh High Court.

10.Being custodian of law, it is our duty to decide the matter entirely considering the facts and grounds of each case and decide the matter in accordance with law and in compliance of statutory obligations. It is evident from the record that at the time of export of the subject consignments the competent authority performed his duty in compliance of Section 131 of the Customs Act, 1969 and rules made there under. Consequent to which the containers were passed to the nominated officer. It is clear from the record that instead of allowing the shipment outrightly officer referred the containers for examination in terms of Section 198 of Sub-Rule (1) of Rule 450 ibid. Upon finding the goods as per declaration the official conducting the examination transmitted the examination report on line to the said officials. Who after satisfying themselves as to the correctness of declaration regarding value, classification, claim of exemption, payment of duty and taxes, repayment of duty drawback and in terms of Clause (c) of Section 131(1) of Customs Act, 1969 and Sub-Rule 450 and loading up the consignment was allowed subsequently in compliance of Clause (d) of Section 131(1) of the Customs Act, 1969 and Sub-Rule (1) of Rule 452 ibid and in accordance with further procedure the subject consignment was transmitted out of charge.

11.In compliance of the aforesaid proceedings, statutory obligations and rules thereon the order of assessment passed by the competent authority become a final order and since the subject order attains the finality and in order to reopen the past and closed transaction the only recourse available was with the Collector to initiate action under Section 195 of the Customs Act and in case of failure to-do-so. After the lapse of prescribed time on that point the Honourable High Court of Sindh in case of Glaxo Smith Kline Pakistan Ltd. v. Federation of Pakistan and others reported as 2004 PTD 3020 held that once an order is passed which attains finality, the same cannot be subject to a Show Cause Notice again, considering that no appeal or revision is filed against the first order is the clean act of transgression from the principles of administration of justice". We believe that clearing agent while filing a Goods Declaration (GD) is required to fill the PCT Column for the easement and assistance of the Assessing Officer. The perusal of Section 80 of the Customs Act, 1969 indicates that during the process of assessment it is the duty of the Assessing officer not only to examine the goods but also to tally the description, its weight and value of the goods thereof, and to consider any extra information available on the GD in order to arrive at a correct assessment of duty and taxes. Simply, assuming that a wrong PCT Heading amounts to mis-declaration would not be a correct approach to interpret Section 32, where emphasis is on the word "material particulars" which means something going to the root cause of the basic declaration. To our mind a mis-declaration in material term has not been made by the appellant.

12.It has been observed that through Show Cause Notice native respondent invoked the Section 32 (1) (2) & (3A) of the Customs Act, 1969 and charge the appellant thereon, such action has no warrant of law under the circumstances of the case. Correct goods declarations were filed by the appellant with correct description of goods which were found well within the ambit of prescribed law. In compliance of Section 131 of the Customs Act, 1969, Department performed their statutory duties and no false statement or any collusion with the officer of the Customs was found or noticed nor later on any evidence in this regard brought on record through show cause notice, no case can be made out under the provision of Sections 32 and 32 (3A) of the Customs Act, 1969. This was held by the Customs Excise and Sales Tax Appellate Tribunal Karachi in the judgment Messrs Falcon Enterprises v. Collector of Customs vide Appeal No. K-723 of 2007 "alleging a charge of mis-declaration on the basis of a wrong classification heading does not constitute an offence within the framework of Section 32 of the Customs Act, 1969, as there is no material falsity in the statement made by the Appellant." That the similar issue of classification was also decided, vide Customs Appeal Nos. K-432 which went up to the Apex Court and the orders of the Tribunal passed were maintained in which it was held "that difference of opinion with respect to classification does not fall within the mischief of Section 32 of the Customs Act, 1969 and as such the confiscation and imposition of penalty in this count, is ab-initio void and illegal. It is imperative to add further in addition to above that incorrect quoting of PCT Heading is not tantamount to mis-declaration within the ambit of mischief of Sections 32 and 32(3A) of the Customs Act, 1969 since a positive assertion of facts is a pre-requisite for bringing changes of mis-declaration against the Tax Payer. If the wisdom of the Customs Authorities for invoking section 32 in case of incorrect citing of PCT heading is acceded to no responsibility obviously devolve upon the hierarchy of the Customs officials to levy and assess the duty according to law. The provisions of Section 131 of the Customs Act, 1969 in such a state of mind would become redundant. The observation of the Honourable Late Justice Sabihuddin Ahmed in the case of State Cement v. Government of Pakistan reported as 2002 MLD 180 would once again ridicule the irrational approach of the Customs Authorities. The observation verbatyism states, "We are rather amazed at the line of reasoning put forward to the effect that while an assessee is required to interpret the law and relevant notification correctly and could be held guilty of a penal offence for not doing so in terms of Section 32(1) of the Customs Act, 1969, no responsibility of any kind would devolve on the customs officials". In the light of ratio settled by the Superior Fora the contravention report prepared by the Model Customs Collectorate of PaCCS, Karachi was unlawful, rendering these ab-initio, null and void.

13.Before going further, we would like to emphasize on the correctness of the allegations with regard to their specification in lieu of the charge allegedly imposed against the appellant by referring the aforesaid Sections in the impugned show cause notice. In their case, no notice under Section 26 of the Customs Act, 1969, has ever been issued to the appellant before initiating the subject action against the appellant. The object of Section 26 of the Customs Act, 1969 is to empower the authority to ask for information or require the production of documents to inspect the same in order to determine the legality or illegality of importation or exportation of goods, which have been imported or exported, without doing such activity, merely shooting in the dark and conducting roving inquiry without having any iota of evidence, importantly in absence of any chemical report of exported goods in support of the claim allegedly attributed against the appellant. It is indeed, important to made careful observations of Section 32(1)(2) and (3A) of the Customs Act, 1969 in the light of obligations made or attributed against the Appellant. Section 32 does not merely contain punitive provisions basically it deals with recovery of duties and charges payable to the exchequer either on account of fraudulent acts of persons liable to pay or through errors of customs officials as is evident from a reading of Clauses (1), (2), and (3-A), Clause (1) of Section 32 requires that, the untrue statement must be made in connection with any material of customs and should be false in any material particular. This Section is penal/criminal in nature, like all other penal provisions, one should have to determine the basic requirements of the Section, then execute the same accordingly. The penal/criminal provisions are divided into the provisions prescribing the "actusreus" i.e., the act in question and the "mens rea" i.e., the requisite mental element. It is not essential for a penal provision to contain both such ingredients as the provisions which commit the mens rea are called strict liability offences. There is little doubt that the words "untrue" and "knowledge" and having reason to believe appearing in Section 32 of the Customs Act, clearly point out that, the same does not create a strict liability offence. Now, one thing is clear that penalty proceedings are criminal in nature requiring a higher standard of proof and can only be tainted with legality if independent and cogent evidence is led in accordance with law, which is unfounded in the instant case especially when the Section 32 (3A) of the Customs Act, 1969 shall only be invoked as a result of an audit or examination of an importer's accounts and not against the exporter and if it is so, the said act is obviously against the statutory obligations.

14.It has been further observed that in present case and preposition made thereon by the department/respondent is trite law and there can be no cavil with the aforesaid conditions and requirements of law described above. The evidence relied upon by the department to frame the charge against the Appellant can by itself not justify penal proceedings and in the instant case such an evidence which could leaves the standard of proof, has hardly been led. It is evident from the record of the case more specifically that contents of Show Cause Notice, did not reflected the allegations that the falsity resulted due to knowledge and belief of the appellant and falsity itself was a deviation in material particular. Although it was admitted that no such finding was recorded in the Show Cause Notice, but it may argue that the said issue become irrelevant as subsequently orders have been passed by the Collector and the Appellate authority. Such contention is devoid of merit as it is settled law that, where the initial order or notice is void all subsequent proceedings, orders or superstructure built on it are also void.

15.It is also evident from the record of this case, that wet blue split leather single or double butt and wet blue hides and skins are different from each other and not to be categorized under the same read and description. S.R.O. 1011(I)/2005 specifically describes and defines the category of goods as "raw and wet blue hides and skins". The word "raw" prescribes the status/condition of the leather not "finished in its form" but in "raw form" without an application of chemical process. There is no specific description of any "split" condition or "single or double butt" to the hides and skins described in subject SRO. Wisdom behind the mind of the legislature is very much clear from the facts that "wet blue raw hides and skins", since this kind of leather is in its basic form and not in finished form (grain leather) not ready for making value addition goods, clearly falls under distinctive category and beyond the scope of subject SRO. In absence of all such iota of evidence, only the presumptions and assumptions implied thereon, not a single legal aspect has been adjudged during the hierarchy of the customs and they had not made any cavil with the aforesaid contentions and requirements of the law described above.

16.It is also important to understand that law require credible grounds for impregnating a stance forwarded with a purpose to implement certain section of law on the basis of equal treatment emanating from the natural course of justice, the principle of law to be considered for recovery of short levied duties was that all are equal before law, whether citizen or state. In this instant case Appellant had no intention to deprive the state from its legitimate revenue and was not liable for any act or error, misconstruction, inadvertence or omission especially in absence of iota of evidence, GDs submitted by the respondent, have different description in particular and not in support of charge leveled through Show Cause Notice, specially on the grounds taken by the respondent in their arguments about the pendency of the subject issue about classification, for re-examining, before the Collector of Customs Lahore. Although the samples were brought before the Tribunal but for the reasons better known to the Department no chemical report or any authoritative evidence in proof thereof, brought before the Court which could distinguish the category of goods exported by the appellant, nor the claims of respondent.

17.Including all such, aforesaid observations, it is also important as first independent appellate forum to adjudge the controversy and paradoxical situation arising out of the action taken by the department/ respondent and to pass the order supported by reasoning and showing due application of judicious mind to the points of facts and law applicable. In this instant case export activity was finalized by the appellant during the year 2009 (GD filed on 06-08-2009) and show cause notice was issued on 09-06-2014, on the basis of contravention report dated 15-03-2013. The subject show cause notice is observed as barred by time, void, illegal and without lawful authority. It is important to observe that the liabilities, whatsoever calculated against the present appellant, were finalized on 06-08-2009, at that time the statutory period of limitation in Section 32 (3A) was three years, which was accordingly amended/substituted by the Finance Act, 2011, from three years to five years on 26-06-2011 and show cause notice was issued on 09-06-2014, after the statutory period of limitation.

18.It is mandatory to point out that the period of limitation would not commence from the date of discovery of short levy, there is no law to the effect that the period of limitation shall commence from the date of discovery of short levy, if the departmental representatives/officers were negligent and were not able to detect short levy of customs duty within the period of limitation provided in the law and the relevant time, the only course open for the department was to initiate appropriate disciplinary proceedings against the departmental officers. The action taken after the expiry of the statutory limitation period does not have any mandate under the law, as once the transaction become past and closed the issuance of show cause notice after the statutory period was palpably barred by time and no recovery could be made in pursuance thereof.

19.It is further observed that in the show cause notice purposely for reason better know to the respondent, the filing dates of GDs were not mentioned which was in fact mandatory requirement and the respondents are under statutory obligation to mention the complete details of the allegations under which the department- relied upon, the show cause notice must disclose the material facts on the basis of which charges of mis-declaration, connivance, suppression or fraud are intend to be raised, but on the contrary all this, important legal requirements are not been fulfilled by the respondent at the time of issuing the said impugned show cause notice. The element of disobedience from the statute is very much evident from the contents of show cause notice. It is important to distinguish between charging provisions, which impose the charge of tax and machinery provisions, which provide the machinery for clarification of the charge of levying and collection of tax in respect of the charge so imposed. Machinery provisions did not impose the charge or extend or restrain the charge elsewhere clearly imposed. The Courts are expected to construct the machinery sections in such manner that the charge to taxes not defeated but in this instant case, the specific provisions to impose the charge against the appellant are not mentioned nor invoked. Section 32(3A) was invoked only for to cover the delay/limitation of time, such intent on part of the respondent does not have any support or warrant of law and said impugned action is contrary to the legal obligations.

20.It is also settled principle that, to maintain the administration of justice, not to prejudice any one, courts are required to do justice between the parties in accordance with the provisions of law, as the litigants, who approaches the court for the relief is bound to substantiate that, the procedure has been adopted by him, in accordance with the law because it is elementary principle of law that, if a particular thing is required to be done in a particular manner it must be done in that manner, otherwise it should not be done at all. It is also a well settled principle of interpretation of fiscal statues that, what has not been expressly written by legislature could not be implied. Such standards of legal maxims are not maintained in this case.

21.Being the custodian of law and by getting the strength what have been discussed herein above, particularly the interpretation of law and legal propositions and observations made thereon and by following the ratio decidendi observed by the Superior Courts, we, therefore, hold that order passed during the hierarchy of the customs along with the show cause notice is based on adequate breach of natural justice and law, suffers from grave legal infirmities are declared illegal, ab initio and no legal effect on various accounts discussed and observed above and accordingly set aside, the appeal is allowed with no order as to cost.

22.Order passed and announced accordingly.

RR/56/Tax(Trib.)Order accordingly.