FORT TILES VS ADDITIONAL COLLECTOR OF CUSTOMS, MCC OF PaCCS, 2016 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 384 (2014)

2016 P T D (Trib.) 384

[Customs Appellate Tribunal]

Before Adnan Ahmed, Member (Judicial-II)

Messrs FORT TILES

Versus

ADDITIONAL COLLECTOR OF CUSTOMS, MCC OF PaCCS and another

Customs Appeals Nos.K-236 to 270 of 2012, decided on 02/07/2014.

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

----Ss. 162 & 163---Search warrant and arrest without warrant, powers of---Every search under S. 163 of Customs Act, 1969 had to be made by officer concerned strictly in accordance with spirit of its expression after exhausting recourse of obtaining a search warrant in terms of S.162 of Customs Act, 1969, from Judicial Magistrate on basis of an application by a Gazetted Officer of the Department, stating the grounds of his belief that goods liable to be confiscated or documents or things, which in his opinion should be useful evidence in proceeding under the Customs Act, 1969 and those were hidden in some secret place where search had to be made---Judicial Magistrate after going through such request, if he deems appropriate; would issue search warrant, which had to be executed in same way and had same effect as of search warrant issued under Criminal Procedure Code, 1898.

Messrs Ihsan Yousaf Textile Mills v. Federation of Pakistan 2003 PTD 2037; N.P Water Proof Textile Mills (Pvt.) Limited v. Federation of Pakistan 2004 PTD 2952; Collector of Sales Tax and Central v. Messrs Mega Tecch (Pvt.) Ltd. 2005 PTD 1933; Federation of Pakistan v. Messrs Master Enterprises (Pvt.) Ltd. 2003 PTD 1034; Collector of Customs (Preventive) v. Muhammad Mahfooz PLD 1991 SC 630; A.M.Z. Spinning and Weaving Mills (Pvt.) Ltd. v. Federation of Pakistan 2009 PTD 1083 and 2007 SCMR 1039 rel.

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

----S. 163---Issue of search warrant, dispensation of---Scope---Requirement for issuance of search warrant by Judicial Magistrate could be dispensed with under S. 163 of Customs Act, 1969 which empowered Assistant Collector of Customs or any other officer of like rank to make search without warrant---If the officer was satisfied that there was danger of removal of goods, if search warrant was obtained then he had to record such reason in statement so prepared in writing containing grounds of his belief.

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

----Ss. 26A, 26B, 32, 32(3)(A), 179, 80 & 83---Customs Rules, 2001, Rr. 438 & 442---S.R.O. No.500(I)/2009 dated 13-6-2009---Audit---Post clearance audit---Sections 26A, 26B, 32 & 32(3)(A) of Customs Act, 1969 had delegated powers to Post Clearance Audit Department to conduct audit of goods declaration through S.R.O. No. 500(I)/2009 dated 13-6-2009---Department was competent to conduct audit, issue audit observations and thereafter prepare contravention report for purpose of adjudication by competent authority empowered under S.179 of Customs Act, 1969---Officials of MCC of PaCCS, by laying hands on goods declaration through framing of contravention report in initiation of adjudication/Appellate proceedings, corresponding to consignments which had been cleared after passing of valid assessment and clearance orders by competent authority defined in S. 2(a) under Ss. 80 & 83 of Customs Act, 1969 and Rr. 438 & 442 of Sub-Chapter III of Chapter XXI of Customs Rules, 2001 tried to conduct audit of consignments after clearance to which they were not empowered----Officials transgressed the jurisdiction of Post Clearance Audit Department and rendered their act without powers/jurisdiction and as such coram non judice.

Major Syed Walayat Shah v. Muzaffar Khan and 2 others PLD 1971 SC 184; Omer and Company v. Controller of Customs, (Valuation): 1992 ALD 449 (1); Karachi AAA Steel Mills Ltd. v. Collector of Sales Tax and Central Excise Collectorate of Sales Tax 2004 PTD 624; PLD 1976 SC 514, Ali Muhammad v. Hussain Buksh and others PLD 2001 SC 514; Land Acquisition Collector Noshehra and others v. Sarfraz Khan and others 2006 PTD 2237 and Pak Suzuki Motors Company Ltd, Karachi v. Collector of Customs, Karachi 2009 PTD (Trib.) 1996 and 2010 PTD (Trib.) 832 rel.

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

----Ss.25, 25A, 32 & 202---CGO 12 of 2002, dated 15-6-2002, para 44---Directorate General Valuation had been delegated powers under Notification No. 495(I)/2007 dated 9-6-2007 to adjudicate cases falling under Ss. 25, 25A & 32 of Customs Act, 1969 and to initiate action for recovery of government dues thereafter under S. 202 of Customs Act, 1969 read with CGO 12 of 2002 dated 15-6-2002, para 44--- Held, that in Notification No. 495(I)/2007 dated 9-6-2007 department was figured nowhere and by laying hands on matter relating to Ss. 25 & 25A of Customs Act, 1969 and issuance of order for recovery under S. 202 of Customs Act, 1969, department encroached specific notified territory of Directorate General of Valuation---Order passed by the department were declared as ab initio, null and void.

Major Syed Walayat Shah v. Muzaffar Khan and 2 others PLD 1971 SC 184; Omer and Company v. Controller of Customs, (Valuation): 1992 ALD 449 (1); Karachi AAA Steel Mills Ltd. v. Collector of Sales Tax and Central Excise Collectorate of Sales Tax 2004 PTD 624; PLD 1976 SC 514, Ali Muhammad v. Hussain Buksh and others and PLD 2001 SC 514; Land Acquisition Collector Noshehra and others v. Sarfraz Khan and others 2006 PTD 2237 and Pak Suzuki Motors Company Ltd, Karachi v. Collector of Customs, Karachi 2009 PTD (Trib.) 1996 and 2010 PTD (Trib.) 832 rel.

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

----S.202---Recovery of government dues---Contention of importer was that department had taken into account leviable amount of Sales Tax and Income Tax by invoking S. 33 of Sales Tax Act, 1990 and S. 148 of Income Tax Ordinance, 2001 while ignoring the fact that S. 33 of Sales Tax Act, 1990 contained pitch of penalties to be imposed on contravention of respective provision of charging section of Sales Tax Act, 1990 and was synonymous to S. 156(I) of Customs Act, 1969---On the other hand, S. 148 of Income Tax Ordinance, 2001 specifically dealt with collection of duty and taxes at import stage, hence, department was empowered to collect Income Tax and Sales Tax at import stage under S. 6 of Sales Tax Act, 1990 and S. 148 of Income Tax Ordinance, 2001 and were not empowered to adjudicate cases of Sales Tax and Income Tax under S. 36 of Sales Tax Act, 1990 and S.162(I) of Income Tax Ordinance, 2001---Validity---According to S.6 of Sales Tax Act, 1990 and S. 148 of Income Tax Ordinance, 2001, it was established that department was empowered only to collect taxes on import of goods as like customs duty on value determined under S. 25 of Customs Act, 1969---Said sections had not empowered department to initiate adjudication/recovery proceeding for short collected/paid Sales Tax and Income Tax either due to collusion or connivance or inadvertent, error or misconstruction---Inland Revenue and Commissioner of Income tax were empowered for proceeding for such types of recoveries through a show-cause notice issued under S. 36 of Sales Tax Act, 1990 and S. 162(1) of Income Tax Ordinance, 2001.

Major Syed Walayat Shah v. Muzaffar Khan and 2 others PLD 1971 SC 184; Omer and Company v. Controller of Customs, (Valuation): 1992 ALD 449 (1); Karachi AAA; Steel Mills Ltd. v. Collector of Sales Tax and Central Excise Collectorate of Sales Tax 2004 PTD 624; PLD 1976 SC 514, Ali Muhammad v. Hussain Buksh and others and PLD 2001 SC 514; Land Acquisition Collector Noshehra and others v. Sarfraz Khan and others 2006 PTD 2237 and Pak Suzuki Motors Company Ltd, Karachi v. Collector of Customs, Karachi 2009 PTD (Trib.) 1996 and 2010 PTD (Trib.) 832 rel.

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

----Ss.32 & 80---Qanun-e-Shahadat (10 of 1984), Arts. 117 & 121---Burden of Proof---Scope---Ultimate burden of proof was upon department---Department had to prove allegations in terms of Arts.117 & 121 of Qanun-e-Shahadat, 1984.

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

----Ss. 80, 193, 195 & 195(2)---Constitution of Pakistan, Art. 13---Assessment orders passed by department under S. 80 of Customs Act, 1990 and R. 438 of Customs Rules, 2001 were appealable orders under S.193 of Customs Act, 1969---Prior to amendment through Finance Act, 2012, no right of appeal was available under S. 193 of Customs Act, 1969---Only recourse left was to reopen assessment orders by department in exercise of powers conferred upon it under S.195 of Customs Act, 1969 within two years as expressed in S.195(2)---Assessment order was passed on or before 19-08-2008 and period for reopening of orders expired on 18-10-2010---Initial assessment order attained finality by virtue of expiry of stipulated period expressed in S.195(2) of Customs Act, 1969 and as such held field---No subsequent order was allowed to pile upon initial assessment order as it was not permitted and would tantamount to double jeopardy barred under Art. 13 of the Constitution.

Messrs World Trade Corporation v. Central Board of Revenue 1989 MLD 4310; Messrs Glaxo Smith Kline Pakistan Limited Karachi v. Collector of Customs, Sales Tax and Central Excise (Adjudication), Karachi-III, Government of Pakistan, Karachi 2004 PTD 3020 and Messrs Edulji Dinshaw Limited v. Income Tax Officer 1990 PTD 155 ref.

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

----Ss. 32 & 195---Contention of Department was that S. 32 of Customs Act, 1969 overlapped with S. 195 of Customs Act, 1969---Validity---Both Ss. 32 & 195 of the Customs Act, 1969 were independent of each other---Section 195 of Customs Act, 1969 was a machinery section containing procedure for reopening of an order not charging, whereas S. 32 was a charging section under which charge had to be levelled---Under S. 195 of Customs Act, 1969 Department was empowered to reopen decision/order of his subordinate for determination of legality and propriety---If an order was re-opened, for passing fresh order, a show-cause notice had to be issued under S. 195(2) of Customs Act, 1969---Department could invoke any of charging sections of Customs Act, 1969 as it thought fit on the basis of fact of case in show-cause notice.

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

----S. 32---False Statement---Scope---Contention of importer was that department had invoked S. 32 of Customs Act, 1969 without specifying relevant subsection despite its pre-requisite---Non-mentioning of relevant subsection rendered the show-cause notice vague, defective and not in conformity with law, therefore same had no legal effect.

Assistant 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. Additional Collector 2002 MLD 180; State Cement v. Collector PTCL 2001 CL 558; Kashmir Sugar v. Collector 1992 SCMR 1898; CBR and Sarwar International v. Addl. Collector of Customs 2013 PTD 813 rel.

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

----Ss. 155A, 155C, 155E, 155F & 25---Charge of misdeclaration of value---Contention of importer was that Ss. 155A, 155C, 155E & 155F of the Customs Act, 1969 had been invoked in show-cause notice by department without realizing that no charge could be made under said section as these were machinery sections and defined procedures---No charge under S. 25 of Customs Act, 1969 had been invoked inspite of the fact that whole charge revolved around misdeclaration of value---Such inapt approach rendered show-cause notice palpably illegal and as such void ab initio by virtue of invoking erroneous sections instead of invoking the correct provision.

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

----S. 179(3)---Order-in-Original, passing of---Limitation---Show-cause notice was issued on 22-03-2011---Order under S. 179(3) of Customs Act, 1969 had to be passed by department within 120 days i.e. on or before 20-07-2011 from date of show-cause notice or within further extended period of 60 days by department, prior to lapse of initial period of 120 days and after serving a notice to importer and thereafter recording reasons for extension---Contention of department was that extension was granted by Collector under S. 179(3) of Customs Act, 1969 as mentioned in the order---Order was silent as to whether prior to extension, any notice was served on importer as per mandated requirement of law and whether extension was granted prior to expiry of initial 120 days and whether there were exceptional circumstances and those were recorded by department---Order being not in accordance with essence of S. 179(3) of Customs Act, 1969 was declared void, ab initio and barred by time.

Khalid Mahmood v. Collector of Customs 1993 SCMR 1881; Messrs Super Asia Muhammad Din Sons (Pvt.) Ltd. v. Collector of Sales Tax, Gujranwala 2008 PTD 60; Messrs Hanif Strawboard Factory v. Additional Collector (Adjudication) Customs, Sales Tax and Central Excise Gujranwala 2008 PTD 578; Messrs Tanveer Weaving Mills v. Deputy Collector Sales Tax and 4 others 2009 PTD 762; Messrs Syed Bhai Lighting Limited, Lahore v. Collector of Sales Tax and Federal Excise, Lahore and 2 others 2009 PTD (Trib.) 1263; Leo Enterprises v. President of Pakistan and others 2009 PTD 1978; Innovative Impex, v. Collector of Customs, Sales Tax and Federal Excise (Appeal) 2010 PTD (Trib) 1010; Fazal Ellahi v. Additional Collector of Customs, MCC of PaCCS 2011 PTD (Trib) 79; Unique Wire Industries v. Additional Collector of Customs, MCC of PaCCS 2011 PTD (Trib) 987; Kaka Traders v. Additional Collector of Post Clearance Audit 2011 PTD (Trib.)1146; Pak Electron Ltd. v. Collector of Customs, Lahore and others 2012 PTD (Trib.) 1650 and 1990 SCMR 1072 ref.

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

----S. 193A---Order-in-appeal, passing of---Limitation---Importer filed appeal on 04-11-2011---Order under S. 193-A(3) of Customs Act, 1969 had to be passed within 120 days from date of filing of appeals i.e. on or before 04-03-2012 or within further period of 60 days prior to expiry of initial period of 120 days with reasons to be record for extension---No extension was granted by department and order was passed on 15-03-2012 after expiry of 11 days of initial period, thus, order was without powers/jurisdiction and barred by time.

Messrs Super Asia Muhammad Din Sons (Pvt.) Ltd. v. Collector of Sales Tax, Gujranwala 2008 PTD 60; Messrs Hanif Strawboard Factory v. Additional Collector (Adjudication) Customs, Sales Tax and Central Excise Gujranwala 2008 PTD 578; Messrs Tanveer Weaving Mills v. Deputy Collector Sales Tax and 4 others 2009 PTD 762; Messrs Syed Bhai Lighting Limited, Lahore v. Collector of Sales Tax and Federal Excise, Lahore and 2 others 2009 PTD (Trib.) 1263; Leo Enterprises v. President of Pakistan and others 2009 PTD 1978; Innovative Impex, v. Collector of Customs, Sales Tax and Federal Excise (Appeal) 2010 PTD (Trib) 1010; Fazal Ellahi v. Additional Collector of Customs, MCC of PaCCS 2011 PTD (Trib) 79; Unique Wire Industries v. Additional Collector of Customs, MCC of PaCCS 2011 PTD (Trib) 987; Kaka Traders v. Additional Collector of Post Clearance Audit 2011 PTD (Trib.) 1146 and Pak Electron Ltd. v. Collector of Customs, Lahore and others 2012 PTD (Trib.) 1650 rel.

Nadeem Ahmed Mirza and Obaydullah Mirza for Appellant.

Kauser Hussain (Appraiser) for Respondents.

Dates of hearing: 28th April, 20th and 23rd May, 2014.

ORDER

ADNAN AHMED, MEMBER (JUDICIAL-II).---Through this order, I intend to dispose off 35 Customs Appeals Nos. K-236 to 270/2012 filed under Section 194-A of the Customs Act, 1969 against Order-in-Appeals Nos. 5883 to 5917 dated 15.03.2012 maintaining Order-in-Original Nos. 72462/2011, 72464/2011, 72532/2011, 72487/2011, 72488 dated 29.06.2011, 72588/2011, 72688/2011 to 72691/2011 dated 30.06.2011, 74089/2011, 74091 to 74093/2011 dated 14.07.2011, 74304/2011 dated 16.07.2011, 78217/2011, 78219, 78221, 78226, 78228 and 78294/2011 dated 18.08.2011, 79569/2011 dated 29.08.2011, 80388/2011 dated 10.09.2011, 81103/2011 dated 17.09.2011, 81533/2011, 81567, 81570 and 81571/2011 dated 20.09.2011, 83814/2011 dated 07.10.2011, 84955/2011 dated 20.10.2011, 85732/2011, 85748/2011, 85746/2011 dated 28.10.2011 and 85880/2011-85881/2011 dated 29.10.2011 passed by respondent No.1.

By this order I intend disposing of 35 Appeals order containing similar facts and question of law and it is needless to reproduce facts of each case, therefore for reference the facts/grounds of Appeal No.K- 236/2012 is taken for decisions, which are:-

2.The appellant electronically filed Goods Declaration declared to contain Porcelain Polished Tiles etc at total declared invoice value of US$ 49940.5040. He sought clearance of the same under Section 79(1) of the Customs Act, 1969, by determining the liability of duty and taxes at his own. Subsequently the goods were released from the PaCCS in the light of the declaration. Meantime, a credible information was received in the Collectorate that appellant case in connivance with his clearing agent was actively involved in the fraudulent clearance of the under reference consignment by filing forged and fabricated under valued import invoice. On receipt of the above information, the Collectorate carried out a search of the office premises of the Clearing Agent under Section 163 of the Custom Act, 1969, which led to recovery of a number of original invoices mostly negotiated through various commercial banks. Subsequently the record was also obtained from the concerned banks. The invoice related to the instant consignment negotiated through Arif Habib Bank Karachi for US$ 97486.64, and the appellant has mis-declared the original value by feeding forged invoice showing a highly under invoiced value as US$ 499405040. It is pertinent to mention that while filing the online GD, it is mandatory for the importers/appellant to file correct relevant information/data as the Custom Duty and other taxes are paid in advance by the importer on his own, but the appellant deliberately deceived the automated environment by submitting wrong particulars/data of the case to evade duty and taxes. The appellant in active association with his customs agent has therefore, caused a colossal loss to the government exchequer. The evaded amount of customs duty and other leviable taxes for under reference case amounts to Rs.2925967/-.

3.That since the show cause notices were not served on the appellant in terms of sections 155Q and 215 of the Customs Act, 1969 due to blockage of his user ID in exercise of the power vested under Section 155F ibid, the appellant filed no reply to the show cause notice and the respondent No. 1 passed order dated 17.09.2011, which was also not served upon him, relevant paras reproduced here-in-below:--

Contravention report was prepared and SCN was issued to the importer/Clearing Agent through the PaCCS System. No one appeared nor was any reply received from the importer or the clearing agent. System generated hearing notices were issued in the importers ID i.e. (TrFor7071-1) but no response was received. Extension of 60 days in the time limit to decide he case were granted by the Collector of Customs PaCCS under section 179(3) of the Customs Act, 1969, to enable the importer and the Clearing agent to attend the hearings. Still no one appeared. Finally a manual hearing notice was issued on the given address of the importer through Leopards Courier Service (Pvt.) Limited; vide slip number 82992439 in 24/08111 but without any result. Undersigned is fully aware of the judicial dictum "audi alteram partem". No one should be condemned unheard, however the case cannot be kept pending indefinitely, on account of lack of interest of the importers/agents. In view of the above the case is decided ex-parte, on the basis of available record and on its merits. The department in this case was represented by Mr. Muhammad Naeem Afridi, Appraising/ Investigating Officer. He placed on record the following documents. (A) Declared LIC No. 121/ULO/CPU59/08 Dated:-08-02-2008 worth of US$ 49940.5040. Through Bank Al-Falah (B) Original Bill of Lading No. 121/ULC//CPU59/08 dated 08-02-2008 worth of US$ 97486.64 through Arif Habib Bank (Summit Bank), Plot No. 8/C- 1, Mumtaz Hassan Road, Off. I.I. Chundrigar Road, Karachi (C) Bank provides a commercial Invoice number SD050808-FT1C dated 21-07-2008 shows total consignment of US$ 97486. All the above documents provide material evidence to show the actual transaction value of the instant goods. The importers file Goods Declaration under section 79(1) of the Customs Act, 1969, where they are required to assess/determine their liabilities of duties/taxes and other charges and file the Goods Declaration form. The GD is the true declaration of goods, along with the correct particulars of such goods, including description, Value, duty, taxes and origin etc, duly supported by the required documents, which are required for the re-assessment and checking/verification under section 80 of the Customs Act, 1969. It is, in fact a self assessment system wherein by opting to file GD the importer under takes upon him, all liabilities and responsibilities, which may accrue. I have gone through facts of the case, material evidence on record, heard importers reply and departments contention. It is proved that the importer in connivance with the Clearing agent have deliberately, knowingly and with mala fide intentions, made an untrue statement and submitted false documents. They have attempted to defraud the Government of its legitimate revenue by mis-declaring the value of the goods. The charges leveled in the Show cause notice therefore stand established. The imported goods were liable to be confiscated in terms of clauses (14) and (14A) of Section 156(1) of Customs Act, 1969, however since the goods have already been released therefore the entire amount is to be recovered as personal penalty from the importer. A personal penalty of Rs. 35,00000/- is imposed on the Importers/NTN holder under S.R.O. 499(I)/2009 dated 13th June 2009, along with duty and taxes leviable thereon. In addition a penalty of Rs. 10,00,000/- is imposed on the Clearing Agent M/S Kanwal Enterprises CHAL 1917. Total penalty = 35,00,000 + 10,00,000.

4.The appellant against Orders-in-Original filed appeal before respondent No. 2, who disposed off these through single common order dated 15.03.2012. Which is read as under:--

I have carefully considered the written as well as verbal submissions made by both the sides. In this case the appellants electronically filed Goods Declaration (GD) declared to contain Porcelain Polished Tiles etc at a total declared invoice value of US$ 49940.50. They determined their tax liability on their own and sought clearance thereof under Section 79(1) of the Customs Act, 1969. Subsequently, credible information was received to the effect that the appellants, in connivance with their clearing agent, had cleared the abovementioned consignments on the strength of fake and fabricated invoices. In pursuance of this information, the Collectorate carried out a search of the office premises of the Clearing Agents of the appellants under section 163 of the Customs Act, 1969 which led to recovery of a number of original invoices mostly negotiated through various commercial banks. These original documents were scrutinized and juxtaposed with those documents and information submitted by the appellants for clearance of their imported goods in terms of the Goods Declaration filed electronically. This comparison of the documents and information conclusively established that this was a blatant case of fraud committed by the appellants in active connivance with their Clearing Agents. They had submitted false and fabricated invoices and thus had succeeded in defrauding the public exchequer of a massive amount to the tune of Rs.2,925,967/-. The basic plea of the learned counsel for the appellants as elaborated in the grounds of appeal as well as verbal submissions is that the case has been made on the basis of alleged search under section 163 of the Customs Act, 1969 Act) on the office of the Custom Agent of the appellants and it has been held in the impugned order that the search was carried out in terms of section 163 of the Customs Act, 1969. However, no details of the search with date or any other particulars have been stated in the impugned order which makes the search illegal. It was further submitted by the learned counsel that search could only be carried out by the Deputy Collector if he believes that there is a danger that before a search could be carried out in terms of section 162 of the Act after obtaining a search warrant from the Magistrate, the documents or things or goods liable for confiscation would be removed from the said place, he after preparing a statement in writing of the grounds of his belief and of the goods, documents or things for which search is to be made, search or cause search to be made for such goods, documents or things in that place. However no such details of search were provided to the appellants nor any due process of law was ever disclosed to the appellants and hence the search on the basis of which the whole case has been made out was illegal and all subsequent acts of the respondent including the show cause notice and the impugned order are liable to be set aside on this ground alone. It is now a well settled proposition of law the search carried out in terms of section 163 of the Customs Act, 1969 without recourse to the mandatory provisions of section 162 of the Act ibid, the same is illegal and any case made out on the basis of documents seized on the basis of such search cannot be used against the person from whose premises the same have been obtained. The following case law is reproduced in support of the above contention and therefore the whole case made out against the appellant is illegal, mala fide, tainted with colorful exercise of use of unfair discretion and hence liable to be set aside. The respondents on the other hand state that this is crystal clear case of criminal fraud which has been established beyond any doubt, since the search was made strictly in accordance with the relevant provisions of the Customs Act, 1969. Moreover, an FIR was also lodged by Customs against the appellant and their Clearing Agents which is pending before the Honourable Special Judge Customs. The appellants were just trying to confuse the matter by going into mere technicalities of the case which it appears because they did not have any thing whatsoever in their defense except trying to prove that search was illegal. I find the arguments of the appellants quite interesting in the legal sense. Firstly they state that they had no illegal nexus with their Clearing Agents. In the same breath they are indirectly trying to defend their Agents by citing various judgments of the Honourable Superior Courts which in my opinion bears no semblance with the facts and circumstances of this particular case. It is pertinent to mention here that the search was conducted on the premises of the Agent's office and not theirs. Thus, in my view, by trying to prove that the search was conducted illegally they are infact indirectly trying to prove their Agents innocence also since if it is assumed that the search is found to be illegal than logically their Agents would also benefit and would be free of conducting any fiscal fraud and the case would become infructuous ab initio. However, in all likelihood this might never occur since to me the vinculum between the two partners in fraud is beyond any doubt. Indeed it also appears that not only this action on the part of the appellants tantamount to "killing two birds with one stone" but also circuitously implies that both the appellants and their Clearing Agent have a definite association. In view of forgoing facts and circumstances of this case I am of the firm opinion that this is an evident and crystal clear case of fiscal fraud. The appellants adopted the modus operandi of mis-declaration of values of imported goods by submitting false and fabricated documents to the concerned Customs authorities in active connivance with their Clearing Agent. The written and oral arguments put forth by the learned appellant's counsel do not carry any weight whatsoever. I therefore, find no reason to interfere with the impugned Order-in-Original No. 81103 of 2011 dated 17.09.2011 and the same is upheld in toto. The appeal being devoid of any merit is rejected accordingly. This order shall apply mutatis mutandis on the following cases having exactly the same facts, circumstances and points of law on appeal No. Cus/2966/2011/PaCCS to Cus/3124/2011/ PaCCS.

5.The appellant has now challenged the above order by way of this appeal on the basis of the following grounds:--

(a)That the Learned Collector Appeals has miserably failed to apply his independent mind while passing the impugned order and has not considered the arguments put forth by the appellant in the memo of appeal as well as at the time of hearing of the appeal. Therefore the impugned order is not sustainable in the eyes of law.

(b)That the Collector Appeal has failed to appreciate that it was never the case of the Appellant to defend the Custom Agent of the appellant as observed in the impugned order. What the appellant had submitted was, that without prejudice to the contention that the search was never carried out on the appellant's premises, and was done at premises of the Customs Agent, even then the same was not in accordance with law specially the provisions of sections 162 and 163 of the Customs Act, 1969, and hence, the very basis on which the case was made out was illegal and hence all subsequent acts of issuance of show cause notice and ONO were corum non judice and liable to be declared so.

(c)That the Collector Appeals has failed to appreciate, that it is a trite law, that if the search is not carried out in accordance with law and the dictum laid down by the Honorable Supreme Court in a number of judgments, then the whole foundation of the case falls on the ground, and, here in the instant case no search was ever carried out on the appellant's premises, but on the premises of the Customs Agent, who in fact deals with number of other persons/Importer and hence the appellant cannot be burdened with any illegal activity, if so carried out by the Customs Agent in discharge of his business activity.

(d)That the case has been made on the basis of an alleged search under Section 163 of the Customs Act, 1969 on the office of the Custom Agent of the appellant and it has been stated in the impugned order that the search was carried out in terms of section 163 of the Customs Act, 1969. However no details of the search with date or any other particulars have been stated in the impugned order which makes the search illegal. It is further submitted that search could only be carried out by the Deputy Collector if he believes that there is a danger that before a search could be carried out in terms of section 162 after obtaining a search warrant from the Magistrate, the documents or things or goods liable for confiscation would be removed from the said place, he after preparing a statement in writing of the grounds of his belief and of the goods, documents or things for which search is to be made, search or cause search to be made for such goods, documents or things in that place. However no such details of search were provided to the appellants nor any due process of law was ever disclosed to the appellants and hence the search on the basis of which the whole case has been made out was illegal and all subsequent acts of the respondent including the show cause notice and the impugned order are liable to be set aside on this ground alone. It is now a well settled proposition of law that the search carried out in terms of section 163 of the Customs Act, 1969 without recourse to the mandatory provisions of section 162 of the Act ibid, the same is illegal and any case made out on the basis of documents seized on the basis of such search cannot be used against the person from whose premises the same have been obtained. The following case law is reproduced in support of the above contention and therefore the whole case made out against the appellant is illegal, mala fide, tainted with colorful exercise of use of unfair discretion and hence liable to be set aside.

"2003 PTD 2037 M/s Ihsan Yousaf Textile Mills v. Federation of Pakistan, 2004 PTD 2952 N. P. Water Proof Textile Mills (Pvt.) Limited v. Federation of Pakistan, 2005 PTD 1933 Collector of Sales Tax And Central v. M/s. Mega Tecch (Pvt.) Ltd., 2003 PTD 1034 Federation of Pakistan v. M/s. Master Enterprises (Pvt.) Ltd., PLD 1991 SC 630 Collector of Customs Preventive v. Muhammad Mahfooz, 2009 PTD 1083 A.M.Z. Spinning and Weaving Mills (Pvt.) Ltd. v. Federation of Pakistan."

(e)That it is further submitted that the very issuance of show cause notice in the instant case is illegal, without jurisdiction and mala fide as the consignment in question was duly examined, assessed to duty and out of charge by the respective appropriate officers of the respondent and had attained finality and could only be reassessed once the same is Reopened in terms of section 195 of the Customs Act, 1969 for which the appropriate officer is the Collector of Customs. In the instant case the show cause notice has been issued without any such order being passed and the jurisdiction assumed by the Respondent is illegal and hence the whole case made out against the appellant is corum non judice and without any jurisdiction and liable to be set aside on this ground.

(f)That the assessment order passed in the instant case is an order within the meaning of section 80 of the Customs Act, 1969 which is subject to appeal before the Collector of Customs in terms of section 193 of the Customs Act, 1969. Since admittedly no appeal has been preferred in terms of section 193 of the Act ibid, the only remedy under the law was to Re open the same in terms of section 195 of the Customs Act, hence the impugned order is illegal and tries to invade in to a passed and closed transaction.

(g)That the without prejudice to the above it is submitted that the case has been made out on the basis of these documents and an inference has been drawn that untrue values were declared for assessment whereas different invoices were found from the office premises so raided and further the same have also been confirmed by the Bank. It is vehemently denied that any untrue declarations were made to the Customs, rather all the assessment have been made by the respondents on the basis of their own fixed values and at no occasion it was a case of the department to accept the Transactional Values since the fixed values were being applied across the board by them to all the importers and hence no case of mis-declaration is made out against the appellants.

(h)That at no stage it was determined by the customs staff that under what provisions of law, the assessment/valuation of the subject goods was being done. At present the concept of transactional value as notified vide section 25 (amended) of the Customs Act, 1969 is in vogue and there are 7 different methods adopted in this section to make assessment/valuation of goods. In the instant case the authorities have not given any express opinion that under which subsection the assessment of the goods was being done. The Show Cause Notice, and, neither the order in original, indicates the rule under which the valuation of the subject goods was sought to be fixed, which raises doubts and is liable to be set aside. It is pertinent to note that the assessment of goods in terms of section 25 (amended) has to be done in a sequential order, that is, if the same could not be done in terms of subsection (1), only then the provisions of subsection (2) could be invoked and so on and so forth. It is submitted that in the instant case the assessment was already done on the basis of agreed/fixed values and therefore the same attained finality and cannot be re-opened in terms of Section 32 of the Custom Act 1969 and could have only be re-opened in terms of Section 195 of the Custom Act, 1969 by the Collector of Customs. Hence the action of the Respondent in terms of Section 32 is wholly without jurisdiction and is liable to be set aside.

(i)That the case of the department is based on section 32 of the Customs Act, 1969, for alleged mis-declaration of value whereas in the impugned order the provisions of section 25 of the Customs Act, 1969 has not been alleged to have been violated which in fact has not been mentioned in the show cause notice and there is no allegation to that effect. Hence the impugned order has traveled beyond the scope of the show cause notice and is not maintainable on this ground alone.

(j)That the Respondent has not enforced any demand of duty and taxes in the impugned order as required in terms of section 32(4) of the Customs Act, 1969 and hence the same is liable to be declared to be in favour of the appellant in so far as recovery of duty and taxes are concerned. It is further submitted that the learned respondent has erred in law by imposing penalty in terms of SRO 499(I)/2009 dated 13-6-2009 as penalty cannot be imposed under this SRO which relates to redemption fine on confiscated goods. Since the goods were also not available, neither confiscation could be done nor fine could be imposed, hence the imposition of penalty in terms of SRO issued for minimum fine is illegal and liable to be set aside.

(k)That the learned adjudicating authority has miserably failed to apply the correct law in as much as even fine for redemption has been imposed in various order, although the goods were neither available nor could have been confiscated, and hence imposition of or option of redemption fine does not arise. Hence the impugned orders are liable to be set aside on this ground as well.

(l)That the appellants craves leave of the Honorable Collector (Appeals) to alter, add, modify and submit any further arguments at the time of hearing.

6.No cross objection under subsection (4) of Section 194-A of the Customs Act, 1969 has been submitted by the department within the stipulated period, instead filed comments dated nil, which are taken for consideration in order to meet the ends of justice and are reproduced herein below:--

(a)That the contents of para (1) of Grounds of the appeal are incorrect, hence, denied.

(b)That, without prejudice to the above and for arguments' sake, even if the "search" was not in accordance with the manner prescribed in law, as interpreted by the appellants, in that situation too the bank's documents are substantiating the deliberate mis-declaration of value, submissions of wrong invoice and inflicting/caused loss to the public exchequer, hence, proving the mala fides and wrong doing on part of the appellants. Thus, the contents of para (2) of Grounds of the appeal are incorrect, hence, denied.

(c)That in the light of submissions made above and considering the established facts and circumstances of the case the contents of para (3) of Grounds of the appeal are incorrect, hence, denied. It is further submitted that the whole appeal is based on the "technical" arguments, instead of merits, and the merits are confirming that it is a clear case of fraud and mis-declaration. Further the law settled by the apex Court the merits of the case cannot be scrapped merely on sheer technicalities.

(d)That in the light of submissions made above and considering the established facts about mis-declaration of value, the contents of para (4) of Grounds of the appeal require no further comments, hence, denied.

(e)That the contents of para (5) of the Grounds of the appeal are incorrect, hence, vehemently denied. It is respectfully submitted that the amended provision of Section 32 and after promulgation of Section 32-A of the Act, it is clear that the provisions of Sections 32, 32-A and 195 of the Act, are independent of each other and having respective areas of jurisdiction, thus, the appellant's contention about the "past and close" and "re-opening" of the assessment is incorrect. Further the provisions of Section 195 of the Act, have no over-riding effect on Section 32 of the Act. This position is confirmed from the periods stipulated in Sections 195 and 32 of the Act, respectively. The provisions of Section 32 of the Act, can be invoked within three years or five years, as the case may be, whereas the provision of Section 195 of the Act, can only be invoked within two years, thus, it is clear that if the appellant's contention is accepted than it is not possible to invoke the provisions of Section 195 of the Act, if a demand for short levied amount is to be raised after two years. This sole position of the statute and proposition of law is confirming that the provision of Section 195 of the Act, has neither any relevancy nor any over riding effect on the provision of Sections 32 and 80 of the Act. Thirdly, the provisions of Section 195 of the Act, is discretionary in nature and it "may" only be invoked sparingly at discretion by the Collector or the Board, as the case may be, as a "suo-motu" action on the matters pertaining to the adjudicated cases and the said provision of law cannot be used by the Collector for each and every G. D. which is covered under Sections 80, 32 and 32-A of the Act, for recovery of short levied revenue. Without prejudice to above for the sake of the arguments if the contention of the appellants is accepted then neither the re-assessments can be made under Section 80 of the Act, nor the recoveries could be made in terms of Sections 32 and 32-A of the Act, and infact these provisions of law would become redundant. Even the self-assessments/payments made under Section 79(1)(b) of the Act, also cannot be checked/re-assessed in terms of amended Section 80 of the Act, without re-opening by the Collector under Section 195 of the Act. The assessment/ re-assessment is a procedural act and any decision in this regard cannot be termed as "past and closed" final order. In the presence of Sections 32, 32-A and 80(3) of the Act, no assessment can be termed as past and closed transaction till next five years. Therefore, taking into consideration the plaint reading of the Sections 32 and 32-A of the Act, the appellant's argument about Section 195 of the Act, are incorrect, hence, denied. It is pertinent to mention here that in recent past in no less than 67 Special Customs Reference Application (S.C.R.A.) Nos.159 to 225/2010 the Honourable High Court has rejected the plea of importers counsel vide para 13 of the judgment dated 23-12-2011, which reads as under:--

"---Similarly, the contention of the counsel that the clearance of goods through PaCCS system is a past and closed transaction, and cannot be amenable to the provision of Section 32, is equally misconceived. Section 32 of the Customs Act, 1969, specifically provides for taking action against any person in connection with any matters of customs who makes, signs or delivers to an officer of custom any declaration, notice, certificate or other document whatsoever or makes a statement or submits any false statement or document electronically through automated clearance system knowingly or having reason to believe that such document or statement is false in any material particular, he shall be guilty of offence under this Section. It further provides that where, by reason of any such document or statement as aforesaid or by reason of some collusion, any duty or charge has not be levied or has been short levied or has been erroneously refunded, the person liable to pay any amount on that account shall be served with a notice within 05 years of the relevant period. Similarly, where, by reason of any inadvertence, error or misconstruction, any duty or charge has not been levied or short-levied or has been erroneously refunded, the person liable to pay any amount on that account shall be served with a notice within 03 years of the relevant period."

7.Mr. Nadeem Ahmed Mirza and Mr. Obaydullah Mirza in exercise of their guaranteed rights to rebut on the comments of the respondent submitted advance rebuttal/arguments dated 20.04.2014 and laid emphasis on those during the course of hearing on 23.05.2014 in addition to the grounds taken in memo. of appeal and which are enumerated here-in-below as reference:--

(i)That when as per dictum laid down by the Superior Judicial fora in reported judgment PLD 1991 SC 630, 2003 PTD 1034, 2003 PTD 2037, 2004 PTD 2952, 2005 PTD 1933 and 2009 PTD 1083 it has been held that the search carried out in terms of Section 163 of the Customs Act, 1969 without recourse to the mandated provision of Section 162 of the Act ibid the same is illegal and any case made out on the basis of documents seized on the basis of such search cannot be used against the person from whose premises the same have been obtained. The case of the appellant has been made out on the basis of search under section 163 of the Customs Act, 1969 in the premises of his clearing agent without following the provision of Section 162, such act is patently illegal, mala fide tainted with colorful exercise and unfair discretion and the documents so obtained during the search cannot be utilized even against the clearing agent then how those could be used against the appellant. This is not permissible under law, rendering the initiation of case as of no substance instead illegal, mala fide and as such of no legal effect.

(ii)The Directorate General, Post Clearance Audit has been delegated power by the FBR to conduct audit after clearance of the goods under the provision of Sections 26A, 26B, 32 and 32(3A) of the Customs Act, 1969 read with Notification No.500(I)/2009 dated 13.06.2009 (Exhibit "A") and to issue audit observation and thereafter prepare contravention report for the purpose of adjudication by the competent authority empowered under the provision of Section 179 of the Customs Act, 1969. That none of the officials of MCC of PaCCS including the respondent No. 1 figures in the provision of Section 3DD of the Act and neither in the Notification No.500(I)/2009 dated 13.06.2009, hence both acted in transgression of the powers vested with the DG PCA, hence without power jurisdiction, and as such of no legal effect, hence Void ab initio coram non Judice as held in umpteenth reported judgments of the superior judicial fora.

(iii)That the power under Section 32 of the Customs Act, 1969 after Post Clearance of the imported consignments in regards to the value rest with Directorate General of Valuation under SRO. 495(I)/2007 dated 09.06.2007 read with para 44 of Customs General Order 12/2002 dated 15.06.2002 (Exhibit "B" & "C"). Rendering the whole act of the respondent No.1, suffers from lack of powers/jurisdiction, hence the contravention report/show cause notice and order-in-original/appeals are ab-initio, null and void as held in the reported judgment Major Syed Walayat Shah v. Muzaffar Khan and 2 others (PLD 1971 SC 184), Omer and Company v. Controller of Customs, (Valuation): (1992 A.L.D. 449 (1) Karachi AAA Steel Mills Ltd. v. Collector of Sales Tax and Central Excise Collectorate of Sales Tax (2004 PTD 624), PLD 1976 Supreme Court 514, Ali Muhammad v. Hussain Buksh and others and PLD 2001 Supreme Court 514, Land Acquisition Collector, Noshehra and others v. Sarfraz Khan and others, 2006 PTD 2237, Pak Suzuki Motors Company Ltd, Karachi v. Collector of Customs, Karachi, 2009 PTD (Trib) 1996 and 2010 PTD (Trib.) 832.

(iv)That for evasion or fraud or for short payment of Sales Tax and Income Tax Section 36 and so the Section 162(1) of the Sales Tax Act, 1990 and Income Tax Ordinance, 2001 (Exhibit "D" & "E") have to be invoked instead of section 33, which contains penalty clauses synonymous to section 156(1) of the Customs Act, 1969 and section 148 of the Income Tax Ordinance, 2001 which empowers the Custom Officer to collect income tax upon clearance of the goods. The competent authority for adjudication cases of such offences are the "Officer of Inland Revenue/Commissioner". The respondent No. 1 figures no where in the aforesaid provisions of the Act/Ordinance. Rendering the issuance of show cause notice and passing of order-in-original as being in flagrant violation of law and as such coram non judice, rendering these void and ab-inito as held in reported judgments Major Syed Walayat Shah v. Muzaffar Khan and 2 others (PLD 1971 SC 184), Omer and Company v. Controller of Customs, (Valuation): (1992 ALD 449 (1) Karachi AAA Steel Mills Ltd V/s Collector of Sales Tax and Central Excise Collectorate of Sales Tax (2004 PTD 624), PLD 1976 Supreme Court 514, Ali Muhammad v/s Hussain Buksh and others and PLD 2001 Supreme Court 514, Land Acquisition Collector, Noshehra and others v/s Sarfraz Khan and others, 2006 PTD 2237 Pak Suzuki Motors Company Ltd, Karachi v. Collector of Customs, Karachi, 2009 PTD (Trib.) 1996 and 2010 PTD (Trib.) 832

(v)The appellant transmitted good declaration under section 79(1) of Customs Act, 1969 and Rule 433 of Sub-Chapter III of Chapter XXI of Customs Rules, 2001 (Exhibit "F") with the MCC of PaCCS containing description "Porcelain Unpolished Tiles etc" falling under PCT heading 6908.9010 on the basis of commodity name in letter of credit, invoice, B/L, Certificate of Origin and he incorporated the said information in the column of financial information of the GD,. The software of the PaCCS has been designed by the agility in such a manner that upon receipt of the good declaration, either the system referred the same to examination in terms of Section 198 of the Customs Act, 1969 and Rule 435 of the Customs Rules, 2001 or to the assessing officer for completion of assessment, after completion of all the formalities, embodied in Rules 435 to 442, the competent officer/system defined in Section 2(a) ibid., passed assessment/clearance order in exercise of its inbuilt vested authority under Sections 80 and 83 of Customs Act, 1969 and Rules 438 and 442 of Customs Rules, 2001 and this fact stood validated from the GD confirming the said fact, prior to assessment necessary documents were also called upon by the authority in terms of Rule 437 ibid., and those were scanned and are available in the record of the MCC of PaCCS as enunciated in Section 155G ibid. Such order are assailable before the Collector of Customs, Appeals under Section 193 of the Customs Act, 1969 which read as prior to substitution through Finance Act, 2012 that "Any person other than officer of customs aggrieved by any decision or order passed under sections 79, 80 and 179 of this Act by an officer of Customs not below the rank of an Assistant Collector may prefer appeal to the Collector (Appeals) within 30 days of the date of communication to him of such decision or order:"

(vi)That since at that point of time, when the assessment/clearance orders were passed by the authority defined in Section 2(a) ibid, no right of appeal was available with the officer of Customs under Section 193 of the Customs Act, 1969, the only recourse left was to reopen the order by the Collector of Customs, in exercise of the power conferred upon him under section 195 of the Customs Act, 1969 within 02 years as expressed in subsection (2) ibid. In the instant case of the appellant the assessment/clearance order was passed on 19.08.2008 in the period for reopening of the order expired on 18.10.2010 and the assessment order passed by the authority attained finality and it become closed and past transaction and cannot be disturbed or reopened by any authority or court as held in reported judgment 1989 MLD 4310 (Messrs World Trade Corporation v. Central Board of Revenue), Whereas the Karachi High Court in its reported judgment 2004 PTD 3020 (M/s. Glaxo Smith Kline Pakistan Limited Karachi v. Collector of Customs, Sales Tax and Central Excise (Adjudication), Karachi-III, Government of Pakistan, Karachi) and the Supreme Court of Pakistan held in the reported judgment 1990 PTD 155 (M/s. Edulji Dinshaw Limited v. Income Tax Officer).

(vii)That as commented by the respondent subordinate that Sections 32 and 195 are independent of each other, the appellant agrees to the said extent, but with respect states that they loss sight of the fact that Section 195 is a machinery Section and no charge can be leveled under that, whereas Section 32 is a charging Section under which a charge has to be invoked. The Collector of Customs, reopens the decision/order of his subordinate for determining legality and propriety in exercise of power vested upon him under Section 195 of the Customs Act, 1969 and take up the case himself for passing of fresh order and to proceed with he issues show cause notice in terms of Subsection (2) ibid and while doing so he is at liberty to invoke as many charging sections of the Act including Section 32 as he deem fit on the basis of the facts and contravention committed. Under the said provision of the Act he is not empowered to delegate his powers. In the instant case of the appellant no show cause has been issued by the Collector of Customs himself instead the assessment order passed under Section 80 and Rule 438 of the Act/Rules has been reopened by the respondent No.1 through issuance of show cause notice and subsequently passing order-in-original, to which he was not empowered, rendering the show cause notice and order-in-original and order subsequent to that passed by Appellate Authority without power/jurisdiction, abinitio, ab-initio wrong and void and as such corum non judice.

(viii) That the respondent No.1 has invoked the entire Section 32 of the Customs Act, 1969, which is serious illegality, this is not permitted as per law laid down by the Superior Judicial Fora, the show cause notice ought to be specific in regards to invoking of different subsection of Section 32. Non invoking the correct subsection of Section 32, rendered the show cause notice invalid and of no legal effect 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.

(ix)That the respondent No. 1 has also invoked Section 155A, C, E & F in the show cause notice, which are machinery section as these defined procedure for obtaining User ID etc. No charge can be invoked under the said section, resultant no show cause notice can be issued by any authority under the said provision of the Act, rendering the show cause notice as void and ab-inito as held by Superior Judicial Fora in reported judgment 2001 SCMR 838 and 2006 SCMR 1519 and the orders so passed is palpably illegal, hence void and ab-intio.

(x)That in terms of Article 18 of the Constitution of Islamic Republic of Pakistan every person has been guaranteed freedom of Trade, business or profession and as per sub-clause (b), the regulation of Trade, Commerce or Industry in the interest of free competition therein the condition laid on the appellant to declare the correct value of the goods shown in the L/C for levy of duty and taxes as against his competitor not to do so and their goods were cleared on the basis of value given in letter dated 29.04.2006 of Directorate General of Customs Valuation and PCA, despite not qualifying ruling within the meaning of section 25A of the Customs Act, 1969 negated the level playing field and fair competition inspite of importing of identical goods, appellant has to pay excess duty and taxes as against his competitor, the letter dated 29.04.2006 and the act of the official of MCC of PaCCS are in derogation of Article 18 of the Constitution and this is not permissible as held in reported judgment AIR 1954 SC 747 R.M Seshedri v. District Magistrate Tanjore, AIR 1963 SC 1811 State Trading Corporation of India Ltd. Commercial Tax Officer, AIR 1970 SC 1453 Harakchand Ratanchand Bantbia v. Union of India, AIR 1971 SC 1017 Ram Krishna Huri Hegde v. Market Committee Strsi, PLD 2005 SC 193 Arshad Mahmood and others v. Government of Punjab and others.

(xi)That the show cause notice in the instant case was issued on 22.03.2011 by the respondent No.1 and an order under the proviso of subsection (3) of Section 179 of the Customs Act, 1969 should had been passed by him within 120 days i.e. on or before 20.07.2011 from the date of show cause notice or within a further extended period of 60 days by the Collector of Customs, prior to lapse of initial period of 120 days after serving a notice to the person concerned and thereafter recording reasons for the extension based on "exceptional circumstances" as held by Hon'ble Supreme Court of Pakistan in reported judgment 1993 SCMR 1881 Khalid Mahmood v. Collector of Customs. The insertion made by the respondent No. 1 in 5th para from down to up of the order that extension was granted by the Collector under Section 179(3) it is silent that whether prior to extension any notice was served on appellant as per mandated requirement of law and as to whether the extension was granted prior to expiry of initial period of 120 days and to the fact that whether there were exceptional circumstances and those were recorded by the Collector as per law laid down by the Superior Judicial Fora in umpteenth reported judgment, resultant, the extension is void, ab-initio and hold no ground. Rendering the order-in-original dated 17.09.2011 barred by time by 59 days, hence without power/jurisdiction and not enforceable as held in reported judgments 2008 PTD 60 Messrs Super Asia Muhammad Din Sons (Pvt.) Ltd. v. Collector of Sales Tax,. Gujranwala and 2008 PTD 578 M/s. Hanif Strawboard Factory v. Additional Collector (Adjudication) Customs, Sales Tax and Central Excise Gujranwala, 2009 PTD 762 Messrs Tanveer Weaving Mills v. Deputy Collector Sales Tax and 4 others and 2009 PTD (Trib.) 1263, M/s. Syed Bhai Lighting Limited, Lahore v. Collector of Sales Tax and Federal Excise, Lahore and 2 others and 2009 PTD 1978 Leo Enterprises v. President of Pakistan and others, 2010 PTD (Trib) 1010 Innovative Impex, v. Collector of Customs, Sales Tax and Federal Excise (Appeal), 2011 PTD (Trib) 79 Fazal Ellahi v. Additional Collector of Customs, MCC of PaCCS, 2011 PTD (Trib) 987 Unique Wire Industries v. Additional Collector of Customs, MCC of PaCCS, 2011 PTD (Trib.)1146 Kaka Traders v. Additional Collector of Post Clearance Audit and 2012 PTD (Trib.) 1650 Pak Electron Ltd. v. Collector of Customs, Lahore and others.

(xii)That the appeal with the respondent No. 2 was filed on 04.11.2011 and an order under the proviso of subsection (3) of Section 193-A of the Customs Act, 1969 should had been passed within 120 days from the date of filing of appeal i.e. on or before 04.03.2012 or within a further extended period of 60 days during the initial period of 120 days with reason to be recorded for extension in writing. No extension was granted by respondent No. 2 as evident from the order. Contrary the order-in-appeal was passed on 15.03.2012 i.e. after expiry of 11 days of the initial period. Rendering the order-in-appeal barred by time by 11 days. Hence, without power/jurisdiction, therefore ab-initio void as held in reported judgments 2008 PTD 60 M/s. Super Asia Muhammad Din Sons (Pvt) Ltd v. Collector of Sales Tax,. Gujranwala and 2008 PTD 578 Messrs Hanif Strawboard Factory v. Additional Collector (Adjudication) Customs, Sales Tax and Central Excise Gujranwala, 2009 PTD 762 M/s. Tanveer Weaving Mills v. Deputy Collector Sales Tax and 4 others and 2009 PTD (Trib.) 1263 M/s. Syed Bhai Lighting Limited, Lahore v. Collector of Sales Tax and Federal Excise, Lahore and 2 others and 2009 PTD 1978 Leo Enterprises v. President of Pakistan and others, 2010 PTD (Trib.) 1010 Innovative Impex, v. Collector of Customs, Sales Tax and Federal Excise (Appeal), 2011 PTD (Trib.) 79 Fazal Ellahi v. Additional Collector of Customs, MCC of PaCCS, 2011 PTD (Trib.) 987 Unique Wire Industries v. Additional Collector of Customs, MCC of PaCCS, 2011 PTD (Trib.)1146 Kaka Traders v. Additional Collector of Post Clearance Audit and 2012 PTD (Trib.) 1650 Pak Electron Ltd v. Collector of Customs, Lahore and others.

(xiii) That the show cause notice and the impugned orders of the respondent are discriminatory and violative of the principle of natural justice/mandatory provision of law due to the reason that at the time of passing earlier assessment orders, goods were assessed for levy of duty and taxes for clearance on the basis of the letter of DGV and PCA for maintaining uniformity in spite of indication of mention of L/C Nos. in financial column of GDs and scanning of the respective documents upon receipt of view messages under Rule 437 of Custom Rules, 2001 and subsequently on the basis of value given in L/C i.e. on higher value i.e. as against to his competitor/other importer importing the identical goods not to do so and there goods were assessed/cleared by the official of MCC of PaCCS on the basis of indicative value given in letter dated 29.04.2006 i.e. on payment of lesser amount of duty and taxes, rendering the appellant goods expensive and not viable in comparison to theirs. This act amounts to giving differential treatment given to the appellant is in violation of Article 25 of the Constitution as well as rulings delivered by the Superior Courts delivered in umpteenth numbers of judgments despite standing on the same pedestal, wherein their lordship held with clarity that there is no power to target incident of tax in such a way that similarly placed persons are dealt with discrimination or facility allowed to one and denied to other, amounts to discrimination. Reference is placed to, 1990 SCMR P. 1072, 2005 SCMR 492 and in reported 2010 SCMR 431, 2002 SCMR 312, 2002 PTD 976, 2007 PTD 361 and 2009 PTD 1507.

8.Rival parties heard and case records perused, on the strength of which following issues are framed for decision:

(i)Whether documents resumed from the premises of Tax Payer upon direct search in terms of Section 163 of the Customs Act, 1969 without recourse to Section 162 ibid is valid and can be used against the Tax Payer in the light of the principle laid down by the Superior Judicial fora in umpteenth reported judgments?

(ii)Whether the official of respondent Collectorate (MCC of PaCCS were/are empowered to conduct audit of goods declaration after clearance in exercise of the powers defined in Sections 26A, 26B, 32 and 32(3A) of the Customs Act, 1969 and Notification No. SRO 500(I)/2009 dated 13.06.2009?

(iii)Whether the respondent No. 1 (Additional Collector of Customs, PaCCS) has powers to adjudicate the case of value falling under the provision of Section 25 of the Customs Act, 1969 read with SRO No. 495(I)/2007 dated 09.06.2007 further read with para 44 of CGO 12/2002 dated 15.06.2002 ?

(iv)Whether any of the officer of Customs inclusive of the respondent No. 1 are empowered to adjudicate the cases of short recovery of Sales Tax in terms of Section 36 of the Sales Tax Act, 1990 and Income Tax in terms of Section 162(1) of the Income Tax Ordinance, 2001 and can recover these taxes under section 202 of the Customs Act, 1969?

(v)Whether the respondent's Collectorate succeeded in proving in terms of Articles 117 and 121 of the Qanun-e-Shahadat that the declaration made by the appellant under Sections 79(1) and 84 of the Customs Act, 1969 and Rule 433 of Sub-Chapter (III) of Chapter XXI of Customs Rules, 2001 was false in material particular as alleged?

(vi)Whether cases in which assessment orders have been passed under Section 80, Rules 433, 435, 437, 438 of Sub-Chapter (III) of Chapter XXI of Customs Rules, 2001 and Section 2(kka) and so the orders of clearance under Section 83 and Rule 442 ibid can be adjudicated upon in terms of section 179 ibid after issuance of show cause notice?

(vii)Whether whole of Section 32 can be invoked in the show cause notice in derogation of the law laid down by the Superior Judicial fora in umpteenth reported judgment and tax payer can be charged for the contravention of Section 155A, C, E & F of the Customs Act, 1969?

(viii) Whether appellant was provided by the respondent Collectorate with level playing field for conduction of his business activities in accordance with the guarantee outline by the legislature in Article 18 of the Constitution of Islamic Republic of Pakistan, 1973?

(ix)Whether order-in-original was passed within the period of 120 days given in subsection (3) of section 179 of the Customs Act, 1969 and the extension given by Collector of Customs as stated in 5th para from down to up of the order was valid and answer the condition laid down in subsection (3) ibid?

(x)Whether the order-in-appeal is barred by time and without powers/jurisdiction in terms of proviso to subsection (3) of Section 193-A of the Customs Act, 1969 being issued after 11 days of the stipulated period of 120 days?

(xi)Whether the imports of the appellant have been met out a differential treatment as compare to the imports of other importers of identical goods of the same origin, involving an element of discrimination in terms of Articles 4 and 25 of the Constitution of Pakistan read with number of judgments of the Superior Judicial fora?

9.That as regard to issue No. (i). Every search under section 163 of the Customs Act, 1969 has to be made by the officer concerned strictly in accordance with the spirit of its expression after exhausting recourse of obtaining a search warrant in terms of Section 162 ibid from the Judicial Magistrate on the basis of an application by a Gazetted Officer of the Customs, stating the grounds of his belief that the good liable to be confiscation or documents or things, which in his opinion shall be useful as evidence in proceeding under the Act and those are hidden in some secrete place where search has to be made after having knowledge of the place which was earlier a guarded secrete and the Judicial Magistrate after going though the request if felt appropriate issues search warrant, which has to be executed in the same way and have the same effect as of search warrant issued under the C.C.P. 1898. It is beneficial to reproduce Sections 162 and 163 of the Customs Act, 1969 prior to deliberation on the spirit and essence of Section 163 ibid:

162: Power to issue search warrant.---(1) Any Judicial Magistrate may, on application by a Gazetted Officer of Customs stating the ground of his belief that goods liable to confiscation or documents or things, which in his opinion will be useful as evidence in any proceeding under this Act are secreted in any place within the local limits of the jurisdiction of such magistrate, issue a warrant to search for such goods documents or things.

(2)Search warrant shall be executed in same way, and shall have the same effect as the search warrant issued under the Code of Criminal Procedure 1898 (Act V of 1898)

163. Power to search and arrest without warrant.---(1) Whenever any office of Customs not below the rank of an Assistant Collector of Customs, or any other officer of like rank duly employed for the prevention of smuggling having reasonable grounds for believing that any goods liable to confiscation or any documents or thing which in his opinion will be useful for or relevant to any proceeding under this Act are concealed or kept in any place and that there is danger that they may be removed before a search can be effected under Section 16, he may after preparing a statement in writing of the grounds of his belief and of the goods, documents or things for which search is to be made, search or cause search to be made for search goods, documents or things in that place.

(2)An officer or person who makes a search or causes a search to be made under subsection (1) shall leave a signed copy of the aforementioned statement in or about the place reached and shall at the time the search is made or as soon as practicable thereafter, deliver further more a signed copy of such statement to the occupier of the place at his last known address.

(3)All searches made under this section shall be carried out mutatis mutandis in accordance with the provision of the Code of Criminal Procedure 1898 (Act V of 1898)

(4)Notwithstanding anything contain in foregoing subsection and subject to previous authorization by an officer of customs not below the rank of an Assistant Collector of Customs, any officer of the Customs or any person duly empowered as such may be, with respect to an offence related to exportation of such goods as the Federal Government may, by notification in the official Gazette specified in this behalf-

(a)Arrest without warrant any person concerned in such offence or against whom reasonable suspicion exist that he is about to be concerned in such offence;

(b)Enter an search without warrant any premises to make an arrest under clause (a) or to seize any goods which are reasonably suspected to be intended for exportation contrary to any prohibition or restriction for the time being enforce, and all documents or things which in his opinion will be useful for relevant to any proceeding under this Act; and

(c)for the purpose of arresting, detaining or taking into custody or preventing the escape of any person concerned or likely to be concerned in such offence, or for the purpose of seizing or preventing the removal of any goods in respect of which any such offence has occurred or is likely to occur use or cause to be used such force to the extent of causing death as may be necessary.

(5)the provision of subsection (4) shall apply only to the areas within 5 mils of the land of frontier or Pakistan, and within 5 miles belt running along the sea coast of Pakistan.

(6)No suit, prosecution or other legal proceeding shall be instituted except with the previous sanction in writing of the Federal Government against any person in respect of anything done or purporting to be done in exercise of the power conferred by subsection (1) or subsection (2) or, in areas specified in subsection (5) by subsection (4).

The requirement of issue of search warrant by the Magistrate could be dispense with under Section 163 of the Customs Act, 1969, which empowers Assistant Collector of Customs or any other officer of like rank to make search without warrant, if he was satisfied that there was danger of removal of goods if search warrant was obtained and further he had to record such reason in the statement so prepared in writing containing the ground of his belief with regard to danger he apprehend that the goods would be removed before search could be made on the basis of search-warrant and secondly about the goods or documents or things for which the search was to be made. In the instant case no search was conducted on the premises of the appellant, instead in the office of clearing agent without recourse to the section 162 ibid rendering the search so made of no legal effect and documents so seized during the course of search are not permitted to be used against him even as per law laid down by the Superior Judicial Fora in reported judgments judgment PLD 1991 SC 630, 2003 PTD 1034,2003 PTD 2037, 2004 PTD 2952, 2005 PTD 1933, 2006 PTD 1884, 2007 SCMR 1039, 2009 PTD 1083. Ridiculously the instant case has been framed against the appellant on the basis of those documents, resumed from the premises of clearing agent, which are not to be relied upon against him. How those could had been relied upon for framing the cases against the appellant, the said act is palpably illegal on the face of it and render the whole exercise right from issuance of show cause notice and passing of order-in-original/appeal as without lawful authority, instead mala fide tainted with colorful exercise of discretion, rendering those without power/jurisdiction, hence ab-initio, ab-initio wrong, void and as such declared to be corum non judice the issue No.(i) is answered in negative.

10.The as regard to issue No. (ii), to conduct audit of the good declaration Post Clearance of the goods under the provision of Sections 26A, 26B and 32 and 32(3A) of the Customs Act, 1969 has been delegated power to the Directorate General, Post Clearance Audit through Notification No. 500(I)/2009 dated 13.06.2009. Its officers are competent to conduct audit, issue audit observation and thereafter prepare contravention report for the purpose of adjudication by the competent authority empowered under the provision of Section 179 of the Customs Act, 1969. None of the Officials of MCC of PaCCS including the respondent No. 1 figures in the provision of Section 3DD of the Act and neither in the Notification No. 500(I)/2009 dated 13.06.2009. By laying hands on the good declaration corresponding to the consignments which had been cleared after passing of valid assessment and clearance orders by the competent authority defined in Section 2(a) under Sections 80 and 83 of the Customs Act, 1969 and Rules 438 and 442 of Sub-Chapter III of Chapter XXI of Customs Rules, 2001. The officials of MCC of PaCCS and the respondents through framing of contravention report in initiation of adjudication/Appellate proceeding, tried to conduct audit of the consignments after clearance to which they are not empowered. They jointly transgressed the sovereign jurisdiction of the Directorate General of Post Clearance Audit extended in the Act and Notification No. 500(I)/2009 dated 13.06.2009. Render their act without powers/jurisdiction, and as such coram non judice and this opinion has been validated by the Superior Judicial Fora in judgment reported at PLD 1971 SC 184, 1992 ALD 449 (1) Karachi, 2004 PTD 624, PLD 1976 Supreme Court 514, PLD 2001 Supreme Court 514, 2006 PTD 2237; 2009 PTD (Trib.) 1996 and 2010 PTD (Trib.) 832. PLD 2004 Supreme Court 600, PLD 2005 Supreme Court 842 and 2014 PTD 199. The issue No. (ii) is answered in negative.

11.That as regard to issue No. (iii), the Directorate General of Valuation has been delegated powers under Notification No. 495(I)/2007 dated 09.06.2007 read with para 44 of CGO 12/2002 dated 15.06.2002 to adjudicate the cases falling under Sections 25, 25A and 32 of the Customs Act, 1969 and to initiate action for recovery of Government dues thereafter under Section 202 of the Customs Act, 1969 read with Recovery Rules embodied in Customs Rules, 2001. In the said Notification and para the respondent No.1 figures no where. By laying hands on the matter relating to Sections 25 and 25A of the Customs Act, 1969 and issuance of order for recovery under section 202 of the Customs Act, 1969, the respondent No. 1 encroached the specific notified territory of Directorate General of Valuation. Rendering the order passed by him and the subsequent order passed by respondent No.2 as without power/jurisdiction, hence ab initio, null and void as held by the Superior Judicial Fora in the judgment reported as PLD 1971 SC 184, PLD 1971 Supreme Court 197, PLD 1973 Supreme Court 236, PLD 1976 Supreme Court 514, 1992 ALD 449 (1) Karachi, 2004 PTD 624, 2006 PTD 2237, 2009 PTD (Trib.) 1926 and 2010 PTD (Trib.) 832, PLD 2004 Supreme Court 600, PLD 2005 Supreme Court 842 and 2014 PTD 199. The issue No. (iii) is answered in negative.

12.That as regard to issue No. (iv). Upon perusal of show cause notice and order-in-original, it has been noticed that the respondent No.1 has taken into account the leviable amount of Sales Tax and Income Tax by invoking Section 33 of the Sales Tax Act, 1990 and Section 148 of the Income Tax Ordinance, 2001, while ignoring the fact that Section 33 contains pitch of penalties to be imposed on contravention of the respective provision of charging section of Sales tax Act, 1990 and is synonymous to Section 156(1) of the Customs Act, 1969. Whereas, Section 148 specifically for the purpose of collection of duty and taxes at import stage. These sections are not charging sections. The fact of matter is the custom is empowered to collect 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 but not empowered to adjudicate the cases of Sales Tax and Income Tax under Section 36 of Sales Tax Act, 1990, Section 162(1) of the Income Tax Ordinance, 2001 and this stood validated from the expression of these Section reading inter alia:--

Section 6 of the Sales Tax Act 1990. Time and manner of payment:---(1) The tax in respect of goods imported into Pakistan shall be charged and paid in the same manner and at the same time as if it were a duty of customs payable under the Customs Act, 1969 (and the provisions of the said Act (including section 31A thereof) shall so far as they relate to collection, payment and enforcement of tax under this Act on such goods where no specific provisions exist in the Act apply!"

Section 148 of the Income Tax Ordinance 2001:- Imports.---(1) The Collector of Customs shall collect advance tax from every importer of goods on the value of the goods at the rate specified in Part II of the First Schedule.

(2)Nothing contained in subsection (1) shall apply to any goods or class of goods or persons or class of persons importing such goods or class of goods as may be specified by the Board.

(5) Advance tax shall be collected in the same manner and at the same time as the customs duty payable in respect of the import or, if the goods are exempt from customs duty, at the time customs duty would be payable if the goods were dutiable.

(6) The provisions of the Customs Act, 1969 (IV of 1969), in so far as relevant, shall apply to the collection of tax under the section.

(7) The tax collected under this section shall be final tax on the income of the importer arising from the importer subject to subsection (1) and this subsection shall not apply in the case of import of :-

(i)raw material, plant, machinery, equipment and parts by an industrial undertaking for its own use;

(ii)fertilizer by manufacturer of fertilizer and

(iii){motor vehicles in CBU condition by manufacturer of {motor vehicles}

(iv)Large import houses, who-

(v)Have paid-up capital of exceeding Rs. {250} millions

(vi)Have imports exceeding Rs. 500 million during the tax year;

(vii) Own total assets exceeding Rs. {350} millions at the close of the tax year.

(viii) Is single object company

(ix)Maintain computerized records of imports and sale of goods;

(x)Maintain a system for issuance of 100% cash receipts on sales.

(xi)Present accounts for tax audit every year

(xii) Is registered with Sales Tax Department; and

(xiii) Make sales of industrial raw material of manufacturer registered for sales tax purposes}

(8)the tax collected from a person under this section on the import of edible oil {and packing material for a tax year shall be (minimum tax)

(9)In this section-

"Collector of Customs" means the person appointed as Collector of Customs under section 3 of the Customs Act, 1969 (IV of 1969), and includes a Deputy Collector of Customs in Additional Collector of Customs or an officer of customs appointed as such under the aforesaid section;

"Value of goods" means the value of the goods as determined under the Customs Act, 1969 (IV of 1969), as if the goods were subject to ad valorem duty increased by the customs duty federal excise duty and sales tax, if any payable in respect of the import of the goods.

"Section 36 of the Sales Tax Act, 1990 : Recovery of tax not levied or short levied or erroneously refunded:---(1) Where by reason of some collusion or a deliberate act any tax or charges has not been levied or made or has been short levied or has been erroneously refunded, the person liable to pay any amount of tax or charge or the amount of refund erroneously made shall be served with a notice, within five years of the relevant date, requiring him to show cause for payment of the amount specified in the notice.

(2)Where, by reason of any inadvertence, error or misconstruction, are tax or charge has been levied or made or has been short levied or has been erroneously refunded, the person liable to pay the amount of tax or charge or the amount of refund erroneously made, shall be served with a notice within three years of the relevant date, requiring him to show cause for payment of the amount specified in the notice.

Provided that, where a tax or charge has not been levied under this subsection, the amount of tax shall be recovered as tax fraction of the value of supply.

(3)The Officer of Sales Tax empowered in this behalf shall, after considering the objections of the person served with a notice to show cause under subsection (1) or subsection (2) determine the amount of tax or charge payable by him and such person shall pay the amount so determined.

{Provided that order under the section shall be made within {one hundred and twenty} days of issuance of show cause notice or within such extended period as {the Collector { } may, for reason to be recorded in writing, fix provided that such extended period shall in no case exceed [sixty days]

[Provided further that any period during which the proceedings are adjourned on account of a stay order or Alternative Dispute. Resolution proceedings or the time taken through adjournment by the petitioner not exceeding thirty days shall be excluded from the computation of the periods specified in the first proviso]

(4)For the purpose of this section, the expression "relevant date" means:-

(a)the time of payment of tax or charge as provided under section 6, and

(b)in a case where tax or charge has been erroneously refunded, the date of its refund!

Section 162 of Income Tax Ordinance, 2001 Recovery of tax from the person from whom tax was not collected or deducted.---(1) Where a person fails to collect tax as required under Division II of this Part {or Chapter XIII or deduct tax from a payment as required under Division III of this Part [or Chapter XII], the Commissioner may {pass an order to that effect and} recover the amount not collected or deducted from the person from whom the tax should have been collected or to whom the payment was made.

(2)The recovery of tax under subsection (1) does not absolve the person who failed to deduct tax as required under Division III of this Part {or Chapter XII] from any other legal action in relation to the failure, or from a charge of additional tax or the disallowance of a deduction for the expense to which the failure relates, as provided for under this Ordinance.( Emphasis is ours)

13.From meticulous study of, Section 6 of the Sales Tax Act, 1990 and 148 of the Income Tax Ordinance, 2001, it is conclusively established without any shadow of doubt that the Customs is empowered only to collect the taxes on import of the goods as like custom duty on the value determined under section 25 of the Customs Act, 1969. These sections does not empower the customs to initiate adjudication/recovery proceeding for the short collected/paid Sales Tax and Income Tax either due to collusion or connivance or inadvertent, error or misconstruction. For proceeding for these type of recoveries show cause notices have to be issued under Section 36 of the Sales Tax Act, 1990 and Section 162(1) of the Income Tax Ordinance, 2001. The authorities to issue show cause notice under Section 36 of the Sales Tax Act, 1990 and Section 162(1) of the Income Tax Ordinance, 2001 are Officers of Inland Revenue and the Commissioner of Income Tax. Respondent No. 1 figures no where, he assumed the powers not vested with him under the provision of Section 36, of the, Sales Tax Act, 1990 and 162(1) Income Tax Ordinance, 2001 respectively.

14.On the strength of the above discussion it is my well considered and firm opinion that the official of customs indeed have the authority to collect Sales Tax and Income Tax at import stage in the capacity of collecting agent but not empowered including the respondent No. 1 to adjudicate the cases of short payment/recovery due to any reason as expressed in the respective Section of the Acts/Ordinance. Hence, the contention of the respondent representative that the Customs is empowered to adjudicate the cases of Sales Tax and Income Tax is not correct, justifiable, legal and tenable in the eyes of the law. Instead void and ab-inito and coram non judice and this has been held by the Tribunal in Customs Appeal No. K-903/2011 Messrs Moon Enterprises, v. Collector of Customs MCC (PaCCS) and others, and reported judgment 2014 PTD (Trib.) 299, M/s. 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 and others, 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 Messrs 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."

On the basis of the aforesaid deliberation the issue No. (iv) is answered in negative.

15.That as regard issue No. (v). Upon examination on the Goods Declaration annexed with the appeals that he transmitted these for home consumption or warehousing under Sections 79(1) and 84 of the Customs Act, 1969 and Rule 433 of Sub-Chapter (III) of Chapter XXI of Customs Rules, 2001 with the MCC of PaCCS containing description as Porcelain Unpolished Tiles etc under PCT heading 6908.9010, on the basis of Article name available in letter of credit invoice, B/L/Certificate of Origin and in the financial column of the good declaration indication to the said fact were made, these goods declarations were selected either by the system directly for assessment or examination in terms of Section 198 of the Customs Act, 1969 and Rule 435 ibid. The assessing officer in case of agreement passed assessment orders under Section 80 or 84 and Rule 438 of the Act/Rules and communicated the view messages to the appellant for payment of additional amount of duty and taxes or filing review against the assessment order under Rule 441 ibid. In case the assessing officer had doubt on the declaration, he suggested for conduction of examination under the respective section/rule and refer the same to the Assistant/Deputy Collector of the Group for endorsement, in case to the affirmation to the said fact, the Goods Declaration were referred for examination and the Officer of the customs posted at Terminal after conducting the examination of the goods physically, posted the report in the system for perusal of the Assessing Officers, who upon appearance of same on their desktop, if being satisfied completes the assessment orders and in case of further confirmation transmitted view messages under Rule 437 for scanning of additional documents, which are mandatory to be scanned being pre-requisite to the assessment as these form part of declaration under Section 2(kka) of the Customs Act, 1969 of the declaration made under Section 79 or 84 ibid and Rule 433 ibid. The assessment orders in the Goods Declaration corresponding to these appeals have been passed by the competent Authority defined in Section 2(a) under sections 80 and 84 ibid after receipt of examination report, scanned documents and after rejection/acceptance of the reviews filed under Rule 441 ibid. The representative of the respondent No.1 was confronted with the said fact, he took the plea that the assessment/clearance order under sections 80 and 83/104 and Rules 438 and 442 ibid were passed by the software itself, this is contrary to the devised system and the practice invogue adopted by the official of MCC of PaCCS for the clearance of Tiles. Notwithstanding, the representative of the MCC of PaCCS was asked to place before the Tribunal the record of each Goods Declaration and view messages transmitted to appellant under Section 155 Q of the Customs Act, 1969 and Rules 433, 435, 437, 438 and 442, in addition to the reviews filed by the appellant before the designated authority under Rule 441 ibid, which are to be kept in record by the Collectorate in terms of Section 155G ibid., in support of the allegations and stance taken in the comments on appeals and during the course of hearing on 20.05.2014 as it is on the Customs to prove the allegation in terms of Articles 117 and 121 of Qanun-e-Shahadat (10 of 1984), to which the answer was in negative, i.e. since the software of PaCCS has been off loaded, no record is available. This argument amazed me about the standard of adjudication and flagrant defiance of the provision of Section 155G and Law of Evidence.

16.That as per law laid down in PLD 1975 Kar. 458; PLD 1973 Kar 659; Cross on evidence 1967, 3rd Edn., London Butterworth; A Practical Approach to Evidence by Peter Murphy 1988 3rd Edn. London, Black Stone Press Ltd; The Modern Law of evidence by Adrian Kean 1985, 1st Den. Oxford, Professional Books Ltd; PLD 1965 Lah. 576; PLD 1980 Lahore 145; 1983 CLC 414; 1982 CLC 1286, 1984 CLC 325; PLD 1959 SC (Pak) 364; 1969 SCMR 708 and 1992 SCMR 1083. Ultimate burden of proof lay upon the Customs Authorities, which has not been discharged, I therefore hold that these cases are based on no evidence while putting reliance on the land mark reported judgments PLD 1952 Federal Court 19 and PLD 1996 Karachi 68 Kamran Industries v. Collector of Customs (Exports and PLD 1952 Federal Court 19). Wherein their Lordship of the High Court held:--

"For every offence for which the accused is charged under the Customs Act he shall have to disprove the allegation of the Customs Authorities is entirely without any obligation upon the Customs Department to adduce evidence, it would amount to affording unfettered, naked and arbitrary discretion to the authorities who may at their sweet will make out false cases against importers without the need of proving the sanctity of their actions. Such cannot be the intention of Parliament while the Courts are under an obligation to place such construction on statues which could be beneficial to the widest extent and which would make the legislation operate fairly, justly and equitably and not unreasonably (see Mst. Zainab v. Kamal Khan (PLD 1990 SC 1051). This Court is also of the view that a construction is to be placed upon statutes which would minimize the discretion vested upon the executive authorities. As absolute power corrupts an interpretation fettering the discretion of the executive authority would be more in line with the principles of equity and justice. The issue regarding the applicability of section 187 is to be looked from another angle i.e. in case we wee to hold that due to Section 187 the entire burden to dispute the entire case rest upon the accused alone. The executive authorities would be let loose and given a wide, naked and arbitrary discretion to operate without any guidelines which would then leave section 187 susceptible to a Constitutional challenge upon its vires on this score alone. By the interpretation as proposed above any redundancy or illegality would also be avoided.

With this the issue No. (v) is answered in negative.

17.That as regard to issue No. (vi), assessment orders passed by the authority defined in Section 2(a) of the Customs Act, 1969 under section 80 and Rule 438 of the Customs Act/Rules are appealable orders under Section 193 of the Customs Act, 1969, which read as "Any person other than officer of customs aggrieved by any decision or order passed under sections 79, 80 and 179 of this Act by an officer of Customs not below the rank of an Assistant Collector may prefer appeal to the Collector (Appeals) within 30 days of the date of communication to him of such decision or order:" That prior to substitution through Finance Act, 2012, no right of appeal was available with the Officer of Customs under Section 193 of the Customs Act, 1969, the only recourse left was to reopen the assessment orders by the Collector of Customs, in exercise of the powers conferred upon him under Section 195 of the Customs Act, 1969 within 2 years as expressed in subsection (2) ibid. In the instant cases assessment/clearance orders were passed on or before 19.08.2008 and the period for reopening of the orders expired on 18.10.2010 and the passed assessment orders attained finality and became closed and past transaction and cannot be disturbed or reopened by any authority or court as held in reported judgment 1989 MLD 4310 M/s. World Trade Corporation v. Central Board of Revenue that "if the order has attained finality through limitation. A fortiori; the Central Board of Revenue could not open up an order that had attained finality under the Sea Customs Act, 1878, and against which so sou motu revision lay under the Act" and 2004 PTD 3020, Glaxo Smith Kline Pakistan Ltd, Karachi v. Collector of Customs, Sales Tax Central Excise, Karachi "that department could not re-agitate which had been decided against him---said order could be assailed in appeal or revisional proceedings, which in the present case were not initiated and therefore the same held the field and in the presence of earlier order another order contrary to the said earlier order could not be allowed hold the field for the simple reason that two contrary orders could not exists at one and a same time--in the light of the settled law the initial assessment order attain finality by virtue of expiry of stipulated period expressed in subsection (2) and as such hold field and no subsequent order on these to be allowed to be pile upon these as this is not permitted beside tantamount to double jeopardy barred under Article 13 of Constitution of Islamic Republic of Pakistan.

18.It is also beneficial to settle the arguments taken in the comments and during the course of hearing by the representative of respondent No. 1 that section 32 of the Customs Act, 1969 overlap the provision of Section 195 ibid. It is a mistaken belief both sections are independent of each other, section 195 is a machinery Section containing procedure for reopening of an order not charging, whereas Section 32 is a charging section under which charge has to be leveled. Under Section 195 of the Customs Act, 1969 Collector is empowered to reopen decision/order of his subordinate for determination of legality and propriety and if i.e. apparent, he re-open the order and thereafter took up the case himself for passing fresh order after issuance of show cause notice under subsection (2) ibid, and in that he can invoke any of the charging section of the Act including Section 32 as he think fit on the basis of the fact of the case and the applicable section for the contravention and so the penal clauses enunciated in Section 156(1) ibid. In the cases under reference admittedly no show cause notice has been issued by the Collector of Customs, under the said Section. Neither Collector of Customs is empowered to delegate his vested powers to his subordinate. To the contrary the assessment order passed under Section 80 and Rule 438 of the Act/Rules has been reopened by the respondent No. 1 through issuance of show cause notice, against which order-in-original were passed for which he has no powers under the provision of Section 195 of the Customs Act, 1969, resultant, he usurped the powers of the Collector of Customs, rendering the show cause notice and order-in-original and subsequent orders by the Appellate Authority without power/jurisdiction, hence, void, ab-initio and as such corum non judice.

19.The same position has been taken by the Division Bench of Appellate Tribunal in their umpteenth reported judgments for the sake of reference judgment reported at SBLR 2002 Karachi 5 Messrs Unitex Towel Factory v. The Collector of Customs Appeals, Karachi and others corresponding to Appeal No.K-2352/99 is taken as any example. In this case it has been held that once claim of the appellants were scrutinized by the competent authority and after being satisfied with the legality and propriety the same were sanctioned, that could not be reopened as they are a past and closed transaction. The Tribunal went on to observe that show cause notice issued was incompetent and beyond jurisdiction in terms of judgment of the Hon'hIe Supreme Court reported as PLD 1971 SC 197. The relevant extract being as under:--

"Whether the Court is not properly constituted at all the proceedings must be held to be coram non judice and, therefore, non-existent in the eye of law. There can also be no doubt that in such circumstances " it could never be too late to admit and give effect to the plea that the order was a nullity", as was observed by the Privy Council in the case of Chief Kwame Asante, Tredahone v. Chief Kwame Tawia."

Whereas, in Raunaq Ali's case [PLD 1973 SC 236], their lordships of the Supreme Court did observe in the following terms:"

It is now well-settled that where an inferior tribunal or Court has acted wholly without jurisdiction or taken any action "beyond the sphere allotted to the tribunal by law and, therefore, outside the area within which the law recognizes a privilege to err", then such action amounts to a "usurpation of power unwarranted by law" and such an act is a nullity; that is to say, "the result of a purported exercise of authority which has no legal effect whatsoever". In such a case, it is well-established that a superior Court is not bound to give effect to it, particularly where the appeal is to the latter's discretionary jurisdiction. The Courts would refuse to perpetuate, in such circumstances, something which would be patently unjust or unlawful".

That in consonance with the settled principle, I answered the issue No. (vi) in negative.

20.That as regard to issue No. (vii), it has been noticed that the respondent No. 1 has invoked the entire Section 32 of the Customs Act, 1969 without specifying the relevant subsection despite pre requisite as held by Superior Judicial Fora in reported judgments 2003 PTD 1275, 2005 PTD 480, 2003 PTD 1593, 2002 MLD 130, 2002 MLD 180, PTCL 2001 CL 558, 1992 SCMR 1898 and 2013 PTD 813. Non mention of the relevant subsection render the show cause notice vague, defective and not in conformity with the law, therefore the same have no legal effect.

21.It is also noted with concern that section 155A, C, E & F have also been invoked in the show cause notice without realizing that no charge can be invoked under the said sections as these are machinery sections and define procedures for availing Pakistan Automated Custom Clearance System (PaCCS) e.g. applying for User ID, etc and no charge under the provision of Section 25 has been invoked in spite of the fact that the whole charge revolves around mis-declaration of value. The said inapt approach renders the show cause notice palpably illegal and as such void and ab-intio by virtue of invoking erroneous Section instead of invoking correct as held in reported judgments 2001 SCMR 838 and 2006 SCMR 1519. The issue No. (vii) is answered in negative.

22.That as regard to issue No. (viii), reference is made to Article 18 of the Constitution of the Islamic Republic of Pakistan 1973 which guarantees freedom of trade, business or profession and Sub-Clause (b) restricts regulation of Trade, Commerce or Industry for safe guarding the interest of the citizen through healthy and free competition. In the instant case the appellant was asked to declare the value of the goods shown in L/C (which he did in the financial column of the GDs) for levy of duty and taxes as against his competitor not to do so and their goods of identical nature of the same origin were assessed/cleared on the basis of value given in letter of Director General of Customs Valuation and PCA circulated vide dated 29.04.2006 despite not qualifying valuation ruling as enunciated in Section 25-A of the Customs Act, 1969. This act/attitude negated the level playing field for maintaining of healthy and fair competition, instead created monopoly. Rendering the letter dated 29.04.2006 and the assessment made of the other importers consignments of the identical goods of the same origin for payment of lesser amount of duty and taxes as against the appellant as infringement of his fundamental rights, this is not permissible under any circumstances being in derogation of Article18 of the Constitution and law laid down in the reported judgments AIR 1954 SC 747, AIR 1963 SC 1811, AIR 1970 SC 1453, AIR 1971 SC 1017, PLD 2005 SC 193. The issue No (viii) is answered in negative.

22.That as regard to issue No. (xi), The show cause notices in these cases were issued on 22.03.2011 by the respondent No. 1 and orders under the proviso of subsection (3) of Section 179 of the Customs Act, 1969 should had been passed by him within 120 days i.e. on or before 20.07.2011 from the date of show cause notice or within a further extended period of 60 days by the Collector of Customs, prior to lapse of initial period of 120 days after serving a notice to the person concerned and thereafter recording reasons for the extension based on "exceptional circumstances" as held by Hon'ble Supreme Court of Pakistan in reported judgment 1993 SCMR 1881 Khalid Mahmood v. Collector of Customs. The insertion made by the respondent No. 1 in 5th para from down to up of the order that extension was granted by the Collector under Section 179(3) ibid. It is silent that whether prior to extension any notice was served on appellant as per mandated requirement of law and as to whether the extension was granted prior to expiry of initial period of 120 days and to the fact that whether there were exceptional circumstances and those were recorded by the Collector as per law laid down by the Superior Judicial Fora in umpteenth reported judgment, rendering it vague and not in accordance with the essence of section 179(3) and the granted extension as void, ab-initio and the order-in-original dated 17.09.2011 barred by time by 59 days, therefore without power/jurisdiction and not enforceable as held in reported judgments 2008 PTD 60, 2008 PTD 578, 2009 PTD (sic), 2009 PTD (Trib.) 1263, 2009 PTD 1978, 2010 PTD (Trib) 1010, 2011 PTD (Trib) 79, 2011 PTD (Trib) 987, 2011 PTD (Trib.) 1146 and 2012 PTD (Trib.) 1650. The issue No. (ix) is answered in negative.

23.That as regard to issue No. (x), the appeals were filed with the respondent No. 2 on 04.11.2011 and orders under the proviso of subsection (3) of Section 193-A of the Customs Act, 1969 should had been passed within 120 days from the date of filing of appeals i.e. on or before 04.03.2012 or within further extended period of 60 days prior to expiry of initial period of 120 days with reason to be recorded for extension. No extension was granted by respondent No. 2 and orders were passed on 15.03.2012 after expiry of 11 days of the initial period. Rendering these barred by time, therefore without power/jurisdiction and as such ab-initio, void as held in pelothora of reported judgments of superior judicial fora holding field. The issue No. (x) is answered in affirmative.

24.That as regard to issue No. (xi), the show cause notices and the impugned orders of the respondent are discriminatory and violative of the principle of natural justice/mandatory provision of law due to the reason that at the time of passing earlier assessment/clearance orders, goods of the appellant were assessed for levy of duty and taxes on the strength of the letter of DGV & PCA for maintaining uniformity inspite mention of L/C Nos. in the financial column of GD's and scanned additional documents by the appellant upon receipt of view messages under Rule 437 of Custom Rules, 2001 . Whereas, through the impugned show cause notices and orders on the basis of value given in L/C's as against to his competitor/other companies importing the identical goods not to follow the same and their goods were assessed/cleared by the officials of MCC of PaCCS on the basis of indicative value given in letter dated 29.04.2006 i.e. for payment of lesser amount of duty and taxes, rendering the appellant goods expensive and not viable in comparison to theirs, in spite standing on the same pedestal, it is also a disturbing fact that in spite of confirmation that the value of goods are higher than the indicative price circulated by DGV & PCA. No action whatsoever was taken against the competitors of the appellant, nor started assessment of tiles forthwith on the basis of the value appearing in the L/C's as admitted by the representative of the respondent during the course of hearing. The said act is nothing than, malicious, partial, prejudice and discriminatory and violative of Article 25 of the Constitution of Islamic Republic of Pakistan and this hold strength from the reported judgment 2002 PTD 976 of High Court of Sindh, wherein it has been held that "vacating the show cause notice in one case and taking action against another person in similar situation, is amounts 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."

The treatment given to the appellant against the principle enshrine in Articles 4 and 25 of the Constitution of Pakistan and violate the principle of law settled by the Superior Court in further judgment reported as 1990 SCMR 1072, 1990 SCMR 1059, 1975 SCMR 352, PLD 1995 SC 396, 1998 SCMR 1404, PLD 1997 SC 582, PLD 1997 SC 334 and 1997 SCMR 1874.

The issue No. (xi) is answered in affirmative.

25.To what have been stated/discussed and observed herein above, particularly the interpretation of law and legal preposition discussed in the light of prescribed law and observations made thereon, I hold that, the appellant had been implicated unnecessarily in the cases despite unwarranted under the provisions of Customs Act, 1969, and penalized through impugned orders passed during the hierarchy of Customs, as such being suffering from grave legal infirmities, are declared to be illegal, null and void and hereby set-aside, after allowing the appeals accordingly.

26.Order passed accordingly with no cost.

RR/92/Tax(Trib.)Appeal accepted.