NORTH WEST CORPORATION, KARACHI VS SUPERINTENDENT, DIRECTORATE GENERAL OF INTELLIGENCE AND INVESTIGATIONS-FBR, 2016 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 22 (2015)

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

----Ss. 18, 32 & 202---Sales Tax Act (VII of 1990), Ss. 6 & 11---Income Tax Ordinance (XLIX of 2001), S. 162(1)---Collection of sales tax and income tax by Customs authorities as "recoveries"---Procedure---According to S. 6 of Sales Tax Act, 1990 and S.140 of Income Tax Ordinance, 2001, Customs Department was empowered to collect taxes on imported goods in the capacity of collecting agent and recover escaped/short payment customs duty and regulatory duty levied on imported goods under Ss. 18 & 202 of Customs Act, 1969 after due process of law---Law did not empower the Department to initiate adjudication/recovery proceeding for short collected/paid sales tax and income tax either due to collusion or connivance or inadvertence, error or misconstruction---In order to initiate adjudication/recovery proceeding, a show cause notice had to be issued under S. 11 of Sales Tax Act, 1990 and S. 162(1) of Income Tax Ordinance, 2001 by Officer of Inland Revenue and Commissioner of Income Tax---Customs Department had no powers to adjudicate the cases of short recovery of Sales Tax and Income Tax under S. 11 of Sales Tax Act, 1990 and S. 162(1) of Income Tax Ordinance, 2001.

M/s. Moon Enterprises v. Collector of Customs MCC (PaCCS) and others Customs Appeal No. K-903/2011; M/s. Fort Tiles v. Additional Collector of Customs, MCC of PaCCS and another K-236-270/2012; M/s. M.I. Traders, Lahore v. Additional Collector, MCC of PMBQ, Karachi K-460 2012 MCC of Paces and another 2014 PTD (Trib.) 299, Collector of Customs, Rawalpindi v. Global Marketing and Services and others Customs Reference No. 01/2010; Customs Appeal No. 187/CU/IB/2008 dated 31.07.2009 and M/s. Lucky Cement Ltd. Karachi v. Federation of Pakistan and others C.P.No.D-216/2013 rel.

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

----Ss. 32(1), 32(2) & 32A---False statement---Show-cause notice---Nature and scope---Mere mentioning of Ss. 32(1), 32(2) & 32-A of Customs Act, 1969, in show-cause notice would not vest adjudicating authority with jurisdiction to invoke S. 32(1), S. 32(2) & 32-A of Customs Act, 1969---Validity of show-cause notice would depend on its context that was facts supported by tangible evidence referred to in show-cause notice and not from cosmetic show-cause of statutory provisions or from use of statutory key words in show-cause notice---Sections 32(1) & 32(2) of Customs Act, 1969, could not be invoked in absence of strong evidence of mens rea and mis-declaration in description, value, quantity, origin etc.---Section 32 of Customs Act, 1969 would be applied where collusion was established and action against delinquent staff/officers had been taken by department.

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

----S. 179(3)---Order-in-original was time barred---Department issued a show-cause notice on 31-10-2013 whereas order was passed on 8-5-2014---Importer contended that order was barred by time by 7 months---Held, that when a period was provided by a special statute, it had to be taken within stipulated period and within the parameters of such statutory provisions---Department passed an order after prescribed period of limitation which was not justified, and was without jurisdiction and of no legal effect---Appeal disposed of, accordingly.

2009 PTD 2004; 2009 PTD 1978; 2009 PTD 762; 2008 PTD 2025; 2008 PTD 981; 2008 PTD 60; 2007 PTD 1337 and Federation v. Ibrahim Textile 1992 SCMR 1898 rel.

(d) Interpretation of statutes---

----Financial statute---If a law prescribed period of time for recovery of money, after its lapse recovery was not enforceable through courts---While construing a financial statute, its terms were strictly to be followed.

(e) Administration of justice----

----Court, being custodian of law was required to maintain norms of justice and equity---Litigants were to be respected not on account of court's power to legalize injustice on technical grounds but to remove injustice.

Nadeem Ahmed Mirza along with Obaydullah Mirza for Appellants (in Customs Appeal No.H-728 of 2014).

Jahanzaib FOR Respondents (in Customs Appeal No.H-728 of 2014).

Jahanzaib for Appellant (in Customs Appeal No.H-671 of 2014).

Nadeem Ahmed Mirza along with Obaydullah Mirza for Respondents (in Customs Appeal No.H-671 of 2014).

Date of hearing: 28th January, 2015.

JUDGMENT

MUHAMMAD NADEEM QURESHI, MEMBER (JUDICIAL-I).--By this judgment, I will dispose off Customs Appeal No. H-728/2014 filed by Messrs North West Corporation and cross appeal No.K-671/ 2014 filed by Deputy Director, Directorate General, Intelligence and Investigation, Karachi against Order-in-Original No. 335 of 2014 dated 29.05.2014 and corrigendum dated 12.06.2014 passed by the Collector of Customs (Adjudication) Quetta at Hyderabad.

2. Brief facts as reported by the Superintendent FIU, Directorate of Intelligence and Investigation-FBR, Hyderabad that "An information was received from a credible source that Messrs North West Corporation, Karachi, (NTN-2391544), Office No. 32, 1st Floor, Gul Plaza, M.A. Jinnah Road, Karachi is involved in import and clearance of consignment of miscellaneous item including restricted medicine through mis-declaration of description, quantity, weight and value in connivance with other associates-in-crime evading thereby huge amount of government legitimate duty and taxes. It was also disclosed by the source that such consignment would be cleared through Customs Computerized system from MCC, Dry Port, Hyderabad". In pursuance of the information 1x40" container No. PCLU-8530216, imported by the said importer was identified which was cleared through Customs computerized clearance system (WeBOC) of MCC of Hyderabad, vide GD No. HC-SI-HC-252 dated 04.11.2013, a designated team of the Directorate General of Intelligence and Investigation-FBR, Field Investigation Unit, Hyderabad on 11.011.2013 intercepted container No. PCLU-8530216 loaded on Trailer bearing Registration No. TLB-482, at Toll Plaza, Hyderabad. At the time of interception, Syed Muhammad Naqi along with Gohar Abbass came after sometime and introduced himself as a representative of M/s. North West Corporation, M.A. Jinnah Road, Karachi. He stated that the container was cleared from MCC of Dry Port, Hyderabad on filing of Goods Declaration and payment of duty and taxes thereof. Since, de-stuffing of containerized goods for examination was not practicable on the spot, therefore the same was escorted to the office of Field Investigation Unit, Hyderabad situated at MCC, Custom House, Hyderabad, against proper Mushirnama duly signed by the witnesses the consignment was detained for production of import documents and physical examination thereof to verify the veracity of the information. The representative of M/s. North West Corporation, Karachi subsequently produced office copy of the good declaration along with relevant invoice, packing list and other documents in the presence of Gohar Abbass from the scrutiny of the goods declaration it revealed that the consignment declared to contain miscellaneous items like Shampoos, hand and body wash, conditioner, face lotion energy savor lamps, portable children Video Games, Mini Portable printer, Eyeliner, Mascara, flour, disposable canola , children coloring books , refrigerant gas cylinder, cosmetics and 02 pieces 50" LCD Tv's etc. weighing 15.78MT was cleared on payment of total duty and taxes amounting to Rs.547,148 online scrutiny of GD further reveals that the consignment was examined 100% by the concerned examination staff as per examination report, the declared description and quantity of the goods was confirmed on the basis of declaration, on the basis of which GD was completed by assessing staff of MCC, Dry Port , Hyderabad, where after goods were cleared. The Superintendent has further reported that "the consignment was thereafter examined by the Staff of Directorate General of Investigation and Intelligence-FBR, Regional Officer, Karachi and Field Intelligence Unit, Hyderabad on 12/13/11-2013 in the presence of Syed Muhammad Naqi and Gohar Abbass. The physical re-examination of 1x40" container No. TCLU-8530216 resulted into recovery of "Penecra" 100 mg Tablets of Indian origin, totaling 1100800 along with other medicine of Foreign origin and mis-declared and under assessed misc. goods. Penecra Tablets is known as Sex stimulant and their import is banned. The value of mis-declared medicine alone comes to Rs.44.710 millions involving duty and taxes to the tune of Rs. 17.410 millions while the incidence of total evasion of duty and taxes in respect of aforesaid container comes to Rs. 17.672 millions. The total value of under reference consignment is worked out to Rs. 46.245 millions. Representative samples of the goods were also drawn. It has been further reported that "during the course of preliminary investigation it came on service that Syed Muhammad Naqi is the front man and representative of the owner of the seized goods recovered from the aforesaid container No. TCLU-8530216 cleared vide Goods Declaration No. HC-SI-HC-252 dated 04.11.2013 from Dry Port, Hyderabad. He remained present through out entire process of examination with the staff of Directorate General. It is also not worthy that in the subject consignment no clearing agency was utilized and it was a consignment cleared on self basis and preliminary investigation has revealed that even at the Hyderabad, Dry Port the consignment was facilitated to be cleared by Syed Muhammad Naqi. From the facts narrated above, it is evident that accused Nazimuddin, Proprietor of Messrs North West Corporation, Karachi (NTN-2391544), Office No. 32, 1st Floor, Gul Plaza, M.A. Jinnah Road, Karachi, Syed Muhammad Naqi and Mr. Gohar Abbass inclusion and connivance with the customs officials and their other associates in crime by clearing import consignment of miscellaneous item and banned/ restricted medicines, import of which is not permissible through mis-declaration of description, quantity weight and value evading thereby government's legitimate Revenue to the tune of Rupees (17.672 millions), have committed offence of mis-declaration under sections 16, 32(1) & (2), 32A read with Sections 79 and 80 of the Customs Act, 1969 Section 2 of Imports and Exports Control Act, 1950 read with IPO 2013 and Sections 3, 6 and 7A of the Sales Tax Act, 1990 and Section 148(1) of the Income Tax Ordinance, 2001, punishable under clauses (9), (14), (14A), (43), (81) & (82) of section 156(1) of the Customs Act, 1969 and Section 3(3) of Import and Export Trade Control , 1950 and Sections 33, 34 and 36 of the Sales Tax Act, 1990 the under reference consignment being liable for confiscation have been seized along with 1x40" container No. TCLU-8530216 under section 168 of the Customs Act, 1969, against proper inventory and mushirnama duly signed by the witnesses and other participant. Notice under section 177 of the Customs Act, 1969, has been sent to the importer through post.

3. The Collector of Customs Adjudication, Quetta issued show case notice dated 19.12.2013, the Advocate of the appellant in Appeal No. H-728/2014 replied to the allegations, who after providing proper opportunity of hearing passed Order-in-Original dated 29.05.2014. operative part of the order are reproduced as under:

"22- I have gone through written as well as verbal submission made by the DR and the respondents.

23- The respondents have raised question of jurisdiction of seizing agency. Section 168 deals with the seizure of things liable to confiscation. The Directorate has been empowered to exercise powers under this section. The seizing agency has invoked sections 32(1) and (2) and 32A of the Customs Act, 1969 and the related penal clauses viz section 156(1), (14) (14A) prescribed confiscation of the goods besides other punitive measures. So Directorate has acted well within law on the basics of reasoning made above. The Sales Tax Law, 1990 and Federal Excise Act, 2005 prescribed that these tax/duty will be collected in a manner as if these were customs duty and all provision of Customs Act, will apply. Infact at import stage customs authorities realized tax/duties by invoking these provisions of law.

24- The S.R.O. 486(I)/2007 dated 09.06.2007 (beside mention of specific provisions of law) also empowered the Directorate to invoke all relevant provisions of the said Act and Rules made there under if so warranted.

25- During proceedings of hearings it has been established that quantity and description of television sets were mis-declared. The staff of Directorate has recovered five (5) LED TV's as against declared and assessed quantity of two (2) LCD sets.

26- Another item, which also contain discrepancy is Nipra Needle (surgical). The importer declared quantity and description as 6750 pcs of disposable cannula, whereas 250000 pieces of needles were recovered.

27- Regarding items mentioned at serial Nos. 1 to 10, the importer has disowned proprietorship of the goods. Whereas, Mr. Muhammad Naqi during hearing proceedings argued that the goods were stuffed by somebody else and were placed at the front of the container when it was opened after detention by the seizing agency. Mr. Muhammad Naqi's statement contradicts written reply that these goods were stuffed by the Directorate staff. It is incomprehensible that such goods of high value and banned items in the container can be stuffed in the container without consent of the owner. The mot points is whether these goods were originally cleared through the instant GD or were late stuffed in the container. The inventory of recovered goods indicates that certain goods declared from Customs Station. Given the time lag and physical distance b/w customs station and place of seizure, it is not conclusively established that goods mentioned at serial Nos. (1) to (10) were present in the container at the time of customs clearance.

28- On the basis of narration mentioned above, the goods mentioned at Serial Nos. (11) and (24) are confiscated under Section 156(1) (14) of the Customs Act, 1969. However, an option to redeem the goods under section 181 of the Customs Act, 1969 is offered against payment of 35% redemption fine in addition to duties and taxes leviable thereon. A personal penalty of Rs. 50,000.00 (Rupees Fifty Thousand ) is imposed on the importer under the above mentioned provisions of law.

29- For items mentioned at Sr. Nos. 1 to 10, the charges leveled under section 16 of the Customs Act, 1969 read with section 3(1) of Imports and Exports (Control) Act, 1950 further read with IPO, 2013 are established. Accordingly these goods are confiscated in terms of clause (9) of section 156(1) of the Customs Act, 1969. A personal penalty of Rs. 200,000.00 (Rupees Two hundred thousand) is imposed on Mr. Nizamuddin, owner of M/s. North West Corporation, M.A. Jinnah Road, Karachi. The charges of misdeclaration leveled in the show cause notice stand established accordingly these goods are confiscated in terms of Clause (9) of Section 156(1) of the Customs Act, 1969. A personal penalty of Rs. 200,000.00 (Rs.Two hundred thousand) is imposed on the owner of Messrs North West Corporation, M.A. Jinnah Road, Karachi."

4. The respondent subsequently on 12.06.2014 issued corrigendum dated 24.05.2014, wherein he made addition at the end of para 29, after the word "Karachi" be added and which read as under:--

"Regarding the remaining item, the respondents have successfully demonstrated that duty and taxes have been paid by the GD mentioned earlier I, therefore, order unconditional release of these goods to its lawful owner."

5. The appellant being aggrieved from the order filed Appeal No. H-728/2014 and respondent Appeal No. 671/2014 before the Tribunal for decision on the strength of the grounds taken in the Memo of Appeal.

6. On the date of hearing Mr. Nadeem Mirza, Consultant appeared on behalf of the appellant, M/s. North West Corporation, reiterated the contents of the appeal and contended that prior to commenting upon the legal aspects of the case it is advantageous to state that indeed the respondents are appointed and designated as "Officer of Customs" under Section 3A of the Customs Act, 1969 and they derived power for functioning under Notification No. S.R.O 486(I)/2007 dated 09.06.2007 said to be within the territory of Pakistan for thwarting the act of smuggling but this doesn't means that they can intercept and detain the goods transported within city or Pakistan and their jurisdiction in principal is restricted to the territory not falling within the ambit of Sections 9 and 10 of the Customs Act, 1969 and beyond 5 kilometer of the border of India and Iran in terms of Section 177 of the Customs Act, 1969 to be read with Notification S.R.O. No.188(I)/83 dated 12.12.1983. The goods in question does not at all falls with in the ambit of Section 2(s) and section 177 of the Customs Act, 1969, instead are lawfully imported and cleared after completion of all the codal formalities. He further contended that the official of respondents are not empowered to ask from the person, who is transporting the goods or the driver copy of Good Declaration or purchase receipt of the transported goods within the city or within territory of Pakistan, unless there exist any provision in the Act or notified through an SRO that the person who intent or transporting the goods or the carrier within the territory of Pakistan has to keep with him Good Declaration or purchase receipt of the goods. The respondents have no powers under Sections 16, 32, 79, 80, 83, 195 and 198 of the Customs Act, 1969 through Notification No. 486(I)/2007 dated 09.06.2007 issued by the Board delegating the powers to the officers of DGI&I-FBR. Intercepting consignment after clearance on the pretext of importability by the officials of DGI&I suffer from lack of jurisdiction and power, rendering their act as transgression to the vested powers. In these circumstances the impugned contravention report and show cause notice and all the subsequent proceeding there on deems to be illegal and void. No body is allowed to act beyond his jurisdiction and all the acts or deeds beyond the scope of jurisdiction are null and void in the eyes of law. The respondents are not appointed/designated an "Officer of Inland Revenue" under Section 30A of the Sales Tax Act, 1990 and Section 230 of the Income Tax Ordinance, 2001 under which Directorate General Investigation Inland Revenue has been designated as officer of Inland Revenue and they had been delegated powers under different section of the Sales Tax Act, 1990 through Notification No. S.R.O. 776(I)/2011 dated 19.08.2011 and Section 207 of the Income Tax Ordinance, 2001.

7. The learned Consultant argued that in terms of proviso of subsection (3) of section 179 of the Customs Act, 1969 the adjudication proceeding has to be completed within 120 days of the issuance of show cause notice or within such period extended by the Collector for which reason shall be recorded in writing but such extended period shall in no case exceed 60 days provided that any period during which the proceeding are adjourned on the account of stay or alternative dispute resolution proceeding or the time taken through adjournment by the petitioner not exceeding 30 days shall be excluded for the computation of the aforesaid period meaning thereby, the total period can be extended from 120 days to 180 days or 210 days. In the instant case the show cause notice was issued on 19.12.2013 and the order should had been passed by the respondent within 120 days i.e. by 18.04.2014, whereas order has been passed on 27.05.2014 to be read with corrigendum dated 12.06.2014 without any extension and the said fact stood validated from the operative part of the order, rendering it barred by time by 55 days. On the basis of the subject arguments appellant prayed the Honorable Tribunal may be please to declare the detention, seizure and contravention report illegal and corrigendum as void, illegal and ab-initio in the interest of justice.

8. On the other hand, the representative of department/respondents, Mr. Jahanzaib. I.O, appeared and contended that, the relief was allowed to the appellant, Messrs North West Corporation, Karachi, in the Order-in-Original No.335/2014 dated 29.05.2014 and corrigendum dated 12.06.2014 passed by the learned Collector of Customs, (Adjudication), Quetta at Hyderabad is not sustainable in law, the same has been passed without appreciating the facts on record and law applicable thereto. He further contended that the Learned Collector of Customs (Adjudication), while concluding the impugned order has failed to appreciate that the Directorate General have seized 80 items as per detail reflected under para 2 of the Show Cause Notice and Adjudication order was passed in respect of 12 items only and no finding regarding 68 items were given. However, on pointation of the appellant the corrigendum dated 20.06.2014 was issued concluding therein that the respondents have successfully demonstrated the duty and taxes have been paid vide good declaration mentioned earlier, whereas on contrary perusal of Goods Declarations and its comparison with the inventory of the recovered goods showed that although unconditionally released 68 items co-relate with the goods declaration but the quantity of the items were in excess against which no duty and taxes were paid. The department furnished a detailed assessment/comparative chat in respect of each and every item imported and declared in the goods declaration, clearly showing therein that the exact quantity and value of most of the item was neither declared nor the same were assessed to duty and taxes. The concerned Customs Examination Staff abated and connived with the importer and did not report the actual goods imported in the under reference consignment, rather in order to facilitate the clearance of the mis-declared goods and banned items confirms the declared description of the importer which caused huge loss of revenue to the state ex-chequer. He request to this Honorable Tribunal that the appeal of the appellant against the impugned Order-in-Original may kindly be set-aside and allow the cross appeal No. K-671/2014, of the respondent in the interest of justice.

9. The appellant being aggrieved from the impugned order filed present appeal on the contrary the respondents also assailed the said impugned order before the Tribunal under Appeal No.671/2014, both contestants were collectively heard. On the date of hearing, representatives of both the parties contended and reiterated the grounds of appeal taken as per Memo. of Appeal and extended the oral arguments. After considering the arguments from both the parties as well as perusal of the record, it has been observed that the learned Consultant for the appellant has taken a number of legal as well as factual grounds in the Memo of Appeal. He, further, focused his arguments mainly on two grounds. In the first instance, he contended and argued the point of jurisdiction as allegedly mentioned in the show cause notice and provisions invoked thereon and contended that the respondent has no jurisdiction to collect or recover the sales tax, income tax and federal excise duty, in the line of observations it is observed that the respondent has invoked Sections 3, 6 and 7A of the Sales Tax Act, 1990 and Section 148 of the Income Tax Ordinance, 2001. The respondent has not been appointed as officer of Inland Revenue under Section 30 of the Sales Tax Act, 1990 and Section 207 of the Income Tax Ordinance, 2001, has no powers to proceed in the matter of Sales Tax and Income Tax under the invoked sections as mentioned in the show cause notice for recovery. On the other hand the respondents are of the opinion that the customs is empowered to collect the Sales Tax and Income Tax at import stage under section 6 of the Sales Tax Act, 1990 and Section 148 of the Income Tax Ordinance, 2001 and can also recover the Taxes under the provision of Section 202 of the Customs Act, 1969. From conscientious study of Section 30 of Sales Tax Act, 1990 and Sections 228 to 230A of the Income Tax Ordinance, 2001, it is observed that the legislature appoints under the said sections different organs of the FBR as Officer of Inland Revenue for exercising powers under the respective Sections of the Act/Ordinance delegated through statutory notifications. In these Sections respondent figures confirming that he is not empowered to exercise powers under section 11 of the Sales Tax Act, 1990 and Section 162(1) of the Income Tax Ordinance, 2001.

10. To further elaborate and settling the issue to its logical conclusion, I add while referring to Section 6 of the Sales Tax Act, 1990 and 148 of the Income Tax Ordinance, 2001 through which the officers of customs are empowered to collect the Taxes on the imported goods as like custom duty on the value determined under Section 25 of the Customs Act, 1969. The said Sections least empowers the Officers of Customs to initiate adjudication/recovery proceeding for the short collected/paid Sales Tax and Income Tax either due to collusion or connivance or inadvertence, error or misconstruction. For proceeding of these type of recovery a show cause notice has to be issued under the Provision of Section 11 of the Sales Tax Act, 1990 and Section 162(1) of the Income Tax Ordinance, 2001, the authority to issue show cause notice under Section 11 of the Sales Tax Act, 1990 and Section 162(1) of the Income Tax Ordinance, 2001 are Officer of Inland Revenue and the Commissioner of Income Tax. The respondent assumed the powers not vested with him. Meaning thereby the Customs Collectorate have powers to collect sales tax and income tax as duty only at import stage and not post importation, as regards to the plea that customs is empowered to recover the short paid amount post clearance under section 202 of the Customs Act, 1969 is based on mistaken belief, infact the relevant authority/Collectorate could recover the short levied taxes upon receipt of notice from the Officer of Inland Revenue and Commissioner of Income Tax under Section 48 of Sales Tax Act, 1990 and Section 140 of the Income Tax Ordinance for recovery of the adjudged amount of taxes by the competent officer of LTU/RTO after due process of law. On the strength of above deliberation, it is my considered opinion that the Customs Collectorates does have the authority to collect Sales Tax and Income Tax at import stage in the capacity of collecting agent and can recover escaped/short payment paid Custom Duty and Regulatory Duty levied on the imported goods under Section 18 of the Customs Act, 1969 under Section 202 of the Customs Act, 1969 after due process of law, but have no powers to adjudicate the cases of short recovery of Sales Tax and Income Tax under sections 11 and 162(1) ibid of the Act/Ordinance respectively. Neither respondent nor respondents have the powers to recover the arrears of these Taxes at their own, unless they are in receipt of notice from the Officer of Inland Revenue and Commissioner of Income Tax under Sections 48 and 140 ibid. Resultant adjudication proceeding under section 11 of the Sales Tax 1990 and Section 148 of the Income Tax Ordinance, 2001, otherwise, it is not legal, justifiable and tenable in the eyes of the law and inconsonance with the order passed by this Tribunal in Customs Appeal No. K-903/2011 M/s. Moon Enterprises v. Collector of Customs MCC (PaCCS) and others K-236-270/2012 M/s. Fort Tiles v. Additional Collector of Customs, MCC of PaCCS and another and reported judgment 2014 PTD (Trib.) 299, K-460/2012 of M/s. M.I. Traders, Lahore v. Additional Collector, MCC of PMBQ, Karachi and by Hon'ble High Court of Islamabad in Customs Reference No. 01/2010 Collector of Customs, Rawalpindi v Global Marketing and Services etc, wherein order of the Tribunal in Customs Appeal No. 187/CU/IB/2008 dated 31.07.2009 on the said issue was maintained, similarly in recent judgment announced by the Hon'ble High Court of Sindh in Petition C.P.No.D-216/2013 of M/s Lucky Cement Ltd Karachi v. Federation of Pakistan and others it has been held:--

"The word emphasized could be regarded as being in the nature of deeming provisions. If so, then (subject to the rules of interpretation that apply in such a situation) that nature of sales tax or excise duty on imports, for purpose of levy, charge or collection (as the case may be), may be regarded as a customs duty. Clearly, this would be a materially different situation than that which obtains in relation to advance income tax on imports. In our view, the jurisdiction of the customs authorities (i.e. the Collector of Customs) is limited to only the collection of the advance income tax. Furthermore, subsection (6) of section 148 emphasizes that provisions of the Customs Act apply only to the Collection of the tax and that too, only in so far as is relevant. Since there is a clear distinction between the collection of a tax on the one hand and its recovery or enforcement on the other, in our view, the provision of the Customs Act as relate to the latter are not applicable in relation to the jurisdiction conferred on the Customs Authorities under section 148."

11. According to the evidence available on record about the seizure and proceedings conducted thereon by the department, it has been observed that the show cause notice and charges leveled against the appellant are without lawful authority and does not have any warrant of law nor have any jurisdiction to be invoked. According to the appellant, the goods were legally imported and after due process of law, the subject consignment was released/out of charged, lateron the same was seized by the Directorate of Intelligence and Investigation, Hyderabad, on the credible information to the extent that M/s. North West Corporation is involved in import of clearance of consignment of miscellaneous items including restricted medicines through mis-declaration of description, quantity, weight and value in connivance with other associates-in-crime evading huge amount of legitimate duty and taxes and the department have the prior knowledge that the subject goods be cleared through computerized system, Dry Port, Hyderabad. The two crucial things are required to be determined, first is, if the seizing agency has a specific knowledge then, why they had not initiated the prompt action through the concerned clearance Collectorate against the appellant at clearance stage and secondly why the Investigation Unit Hyderabad on 11.11.2013 when intercepted the said container at toll plaza Hyderabad without referring or showing any specific evidence of connivance of appellant with any specifically named customs officials. Show cause Notice is absolutely silent on that issue. That aspect of the seizure caused serious doubts and the act of the seizing agency was transgressional. Admittedly after the search of the container the goods found thereon are duty paid, only two items mentioned at S. Nos. 11 and 24 of the show cause notice found mis-declared as per the quantity only. The goods mentioned at S. Nos. 1 to 10 recovered from container, the ownership of these goods have not been owned by the appellant, although, the mis-declaration of the goods mentioned in S. Nos.11 and 24 of the show cause notice are of minor nature but with effect of the recovery of goods mentioned at S. Nos. 1 to 10 affected the subject seizure. Evidently, no customs official or any affiliates from the customs department has been investigated or examined by the seizing agency in proof thereof to establish the fact that the importer has a connivance with customs officials or have direct involvement in the clearance of subject consignment which also causes the serious doubts about the said recovery. Mere mentioning of Sections 32(1) and (2), 32-A in the show cause notice would not vest the adjudicating authority with the jurisdiction to invoke Sections 32(1), (2) and 32-A of the Customs Act, 1969, Validity of a show cause notice vests from its context, i.e., the facts supported by tangible evidences referred to in the show cause notice and not from the cosmetic show causing of statutory provisions or from the use of statutory key words like "collusion" or "deliberate act" in the show cause notice. It is also erroneous on the part of Superintendent (FIU) Directorate of Intelligence and Investigation FBR Hyderabad of the Director General, Intelligence and Investigation FBR that the Directorate have the power under the provision of Section 32 of the Customs Act, 1969. The Directorate has been delegated with the power by the FBR through Notification S.R.O. 486(I)/2007 dated 09.06.2007. The notification is silent in this regards, powers under sections 25, 25A, 32, 80, 83 and 195 of the Customs Act, 1969. Sections 32(1) and 32(2) cannot be invoked in absence of strong evidence of mens-rea and mis-declaration in description, value, quantity, origin etc. Moreso Section 32 deals in cases where there is established collusion and where action against the delinquent staff/officers has been taken by the department, in other words the charges alleged against the appellant of misdeclaration under Sections 32 (1), 32(2) and 32-A is also uncalled for and unwarranted due to the facts and circumstances of the case.

12. Apart from the above observations the another aspect of the present case which also falls against the ambit of prescribed period of limitation defined in clause (3) of Section 179 of the Customs Act, 1969, the show cause notice was issued on 31.10.2013 whereas the impugned order was passed on 08.05.2014, which is almost 7 months barred by time limitation. The superior courts have held in number of decisions and judgments that when a period of limitation is provided by a special statute, has to be taken within the stipulated period and within the parameters of such statutory provisions. The Order-in-Original passed in this case and tax liabilities have been created after the prescribed period of limitation, which is not justified, without jurisdiction and of no legal effect. The Hon'able Supreme Court of Pakistan has already held in case of Federation v. Ibrahim Textile 1992 SCMR 1898 that "if a law prescribed period of time for recovery of money, after its lapse recovery is not enforceable through Courts, while construing a financial statue, its terms are strictly to be followed." This principle has been followed by the other Courts in number of decisions/judgments referred as 2009 PTD 2004, 2009 PTD 1978, 2009 PTD 762, 2008 PTD 2025, 2008 PTD 981, 2008 PTD 60 and 2007 PTD 1337.

13. Be that as it may, the impugned Order-in-Original No.335/2014 was assailed before the Tribunal, either of the party, the appellant/importer as well as seizing agency/department. The department in their appeal along with other remedy graciously prayed to set aside the impugned order up to the extent of unconditional release of 13 items. Contrary to that prayer they seek alternate relief as per Para (i) and (ii) of their prayer clauses. On the other hand the importer/appellant prayed to set aside the impugned Order and the Corrigendum passed thereon dated 12.06.2014 as the same was unlawful, whimsical and without power of jurisdiction. The department has not placed any evidence in proof to establish their claim and prayer made thereof, even they have the option to-do-so. As such the ground of appeal mentioned at para 3 are not tangible to be considered admissible under the circumstances. Admittedly the subject goods were not seized from the customs limit or area, goods were intercepted at Toll Plaza, Hyderabad, inspite of the fact the provision of Section 2(s) of the Customs Act, 1969 were not invoked and in violation thereof, restricted/banned medicines recovered from the said container as such not dealt in accordance with law and prescribed statutory obligations and accordingly Show Cause Notice was issued, Order-in-Original was passed thereon and fine was imposed without considering the rational defined under Section 181 of the Customs Act, 1969, and in S.R.O. 499(I)/2009 dated 13.06.2009. In this present case, provisions of said S.R.O. were not invoked in the Show Cause Notice nor described in the Order-in-Original while imposing redemption fine, which is ultra vires and without lawful authority. Indeed the clauses of Section 156(1) defined the pitch of penalty and other actions, none of the clause is mandatory in nature, it is left over on to the Courts discretion.

14. Being custodian of law, the courts are required to maintain the norms of justice and equity, litigants are to be respected not on account of court's power to legalize injustice on technical grounds but to remove injustice. By doing so, and in respectful agreement with above findings and ratio decidendi, observed by the Apex Courts and my own additions including the reasons quoted above, I hereby order to remit the personal penalty and reduce the redemption fine upto 20% on the offending goods in addition to the duty and taxes leviable thereon. The impugned Order-in-Original is modified to this extent only, and appeal disposed off accordingly with no orders as to cost. Appeal No.K-671/2014 filed by the Collector, is without any substance, fails its merits as devoid from law, hereby rejected with no order as to cost.

15. Order passed and announced accordingly.

RR/79/Tax(Trib.)Order accordingly.