SIKANDAR AND CO., KARACHI VS COLLECTOR OF CUSTOMS, COLLECTORATE OF CUSTOMS, 2018 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 1225 (2017)

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

----Ss. 3-DD, 26-A, 32, 79, 80 & 83---S.R.O. No.500(I)/2009, dated 13-6-2009---Mis-declaration---Fourteen consignments were imported documents corresponding to said imports were delivered to Clearing Agent for transmitting goods declaration with the Collector of Customs (Appraisement)---Clearing Agent on the strength of description available on the import documents, transmitted goods declarations accordingly---Out of said 14 goods declaration, 6 were released by the System itself upon that the declarations were correct and true---Rest of the declarations were either selected for examination by the System or appeared on the desktop of the Monitor of the Appraiser---Goods in question, after examination were found in accordance with the declarations and the reports so prepared were posted in the reservoir of the goods declaration for perusal of the Assessing Officer, who passed the assessment order---Clearing Agent, thereafter obtained delivery orders from the shipping company and after paying the dues of the terminals obtained the deliveries of the goods and transmitted those to the warehouse of the importer---After post clearance purportedly an information was received by the office of Collector of Customs, MCC of Appraisement that certain unscrupulous importers were obtaining clearance of goods classifiable under PCT Heading No.8407.9090 on which the leviable amount of duty and taxes, were 20% customs duty---Collectorate MCC of Appraisement on the basis of said information opined that, the present importer, in connivance and collusion of his Clearing Agent, mis-declared the description of the goods in question and caused loss to exchequer in the shape of short payment of duty and taxes, which act fell within the ambit of violation of Ss.32(1)(2), 32-A, 79 & 80 of the Customs Act, 1969 punishable under S.156(1)(14)(14-A) of said Act and framed contravention report; Collectorate issued show-cause notice to the importer---Collector of Customs, thereafter passed order-in-original through which he held the charges levelled in the show-cause notice as established against the importer and ordered the importer to deposit amount of duty and taxes along with penalty---Validity---Upon passing of assessment order under S.80 of the Customs Act, 1969 by competent Authority, same could not be disturbed by any Authority for preparing contraventions report overlapping assessment orders for initiation of adjudication proceedings; on the basis of which Collector of Customs issued show-cause notice and passed order-in-original---Only course available under law for Collectorate of MCC of Appraisement was to challenge the assessment orders before the Collector of Customs (Appeals) under S.193 of the Customs Act, 1969 in exercise of the powers delegated upon him---Instead of adhering to the prescribed procedure available in the Act, authorities reopened the assessment/clearance order under S.195 of the Customs Act, 1969, under which no powers were vested either of the authorities---When the right of appeal had been accorded by the legislature under the provisions of S.193 of the Customs Act, 1969, the provisions of S.195 thereof was un-operational and could not be exercised---Collecotrate of Appraisement implicated and the collector customs charged the importers for mis-declaration under the provisions of S.32 of the Customs Act, 1969, merely on the basis of assumption/ presumption, that the importers had transmitted goods declaration on the basis of erroneous description and PCT heading in order to hoodwink the customs and to evade the amount of duty and taxes---Importer had no part to play while conduction of examination---Case against the importer, was based on presumptions, assumptions, conjectures and rowing and fishing inquiry which failed the test of judicial scrutiny---Appellate Tribunal, allowing appeal, vacated the show-cause notice and set aside the order-in-original.

[Case-law referred].

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

----Ss. 207, 208 & 209---Liability of Clearing Agent during the course of clearance of consignment---Scope---Such liability was to be evaluated under the provisions of Ss.207, 208, 209 of the Customs Act, 1969, which indicated that an Agent would represent his principal and until and unless any direct evidence was attributed against him, or when department was not able to prove any criminal intent on his part, he could not be penalized under the general provisions of the Customs Act, 1969, unless he would violate the governing conditions of his license.

Sardar Muhammad Ishaque for Appellants.

Saeed Soomro, PA/D/R for Respondents.

Date of hearing: 6th June, 2017.

JUDGMENT

TAHIR ZIA, MEMBER (JUDICIAL-II).---Through this order, I intend to dispose of Appeal bearing Nos. K-131/2016 directed against Order-in-Original No. 301/2015-16 dated 10.12.2015 passed by Collector of Customs, Adjudication-I, Customs House, Karachi.

2.Briefly facts of the case are the appellant No. 1 imported 14 consignments of Marine Engines from China, the documents corresponding to the said imports were delivered by him either to appellant No. 2 or 3, who act as clearing agents , for transmitting Goods Declaration (here-in-after to be referred as GD) with the Collectorate of Customs Appraisement (West) in terms of Section 79(1) of the Customs Act, 1969 (here-in-after to be referred as Act) and Rule 433 of Sub-chapter III of Chapter XXI of Customs Rules, 2001 (here-in-after to be referred as Rules). They on the strength of the description available on the import documents transmitted GDs under either PCT 8407.2100 or 8407.2900 and claim for extending benefit of reduced amount of duty and taxes under the regime of Free Trade Agreement between Pakistan and China (FTA) notified to SRO 659(I)/2007 dated 30.06.2007 and while doing so deposited upfront duty and taxes worked out on the basis of declaration after obtaining pay order from the appellant No. 1 in the NBP against different Cash numbers dated as GDs are dated , which were numbered and dated as KAPW-HC-4600-17072013, KAPW-HC-25875-30082013, KAPW-HC-83841-04012014, KAPW-HC-101780-10022014, KAPW-HC-141877-14032015, KAPW-HC-125305-31032014, KAPW-HC-155818-09042015, KAPW-HC-141276-29042014, KAPW-HC-156568-27052014, KAPW-HC-174885-30062014, KAPW-HC-57154-20102014, KAPW-HC-178100-14052015, KAPW-HC-187841-28052015, KAPW-HC-188812-29052015. With the exception of 06 GDs bearing Nos. KAPW-HC-57154-20102014, KAPW-HC-141877-14032015, KAPW-HC-155818-09042015, KAPW-HC-178100-14052015, KAPW-HC-187841-28052015 and KAPW-HC-188812-29052015. Out of these 06 were released by the system itself upon evaluating that the declaration in all aspect of the goods imported by appellant No. 1 are correct and true, rest were either selected for examination by the system or if appeared on the desktop of the monitor of the Appraiser , he opted to get the goods examined under the provision of Section 198 and Rule 435 of the Act/Rules and to proceed with after adducing his opinion referred the GDs to the Deputy Collector of the Group who gave his assent and routed the GDs to the Deputy Collector of Terminal, who marked those to either examiner or Appraiser posted there for conduction of examination for verification of the declaration. The goods after examination were found in accordance with the declaration and the reports so prepared were posted in the reservoir of the GD for perusal of the Assessing Officers. Who upon appearance of GD on his desktop with the posted examination reports, perused those and if found the goods as per declaration passed the assessment order under Section 80 and Rule 438 in case of any doubt transmitted view messages under Rule 437 to the appellants for scanning of additional documents e.g. catalogue/ literature. Appellant No. 1 either on his own or through appellants Nos. 2 and 3 scanned/uploaded the requisite in the reservoir of the GD's. After perusal of those the assessing Officer passed the valid assessment order under the respective provisions of the Act/Rules and in case of enhancement of value as against declared transmitted view messages for payment of additional amount of duty and taxes, which were paid by the appellant No. 1, consequent to which the inbuilt authority of the WeBOC passed Clearance Orders as per the enunciation of Section 83 and Rule 442 of the Act/Rules. Thereafter the concerned appellant i.e. either 2 or 3 obtained delivery orders from the shipping company and after paying the dues of the terminals obtained the deliveries of the goods and transported those to the warehouse of appellant No. 1.

3. After post clearance purportedly an information was received by the Office of Collector of Customs, MCC of Appraisement-West (here-in-after to be referred as respondent No. 2 that certain unscrupulous importer are obtaining clearance of Internal Combustion Petrol Engines, classifiable under PCT 8407.9090 on which the leviable amount of duty and taxes are @ 20% Customs Duty, 17% Sales Tax, 3% Additional Sales Tax & 6% Income Tax, under the garb of Marine Engine of PCT heading 8407.2100 or 8407.2900 attracting rate of Customs Duty @ 5% and 0% under FTA regime, 17% Sales Tax , 3% Additional Sales Tax and 6% Income Tax. Resultant, scrutiny of the import clearance through the MCC of Appraisement-West was made, which transpired that appellant No. 1 imported 14 consignments against the GDs referred in para 2 supra of Marine Engine under PCT 8407.2100 and 8407.2900. Hence, audit of the GDs and uploaded documents/literature available in there reservoir were conducted, upon scrupulous perusal of the examination report and uploaded images the official of respondent No. 2 reached at the conclusion that the engine so imported by appellant are not Marine Engine as features of marine engine are quite different and specific in contrast to the engine meant for vehicle/ other such as Gear Box, Propeller and Steering Device which constitute a single indevisable unit and have low RPM. Similarly, other Marine Engine of heading 8407.2900 are also combined with a block holding a Steering and Propeller fixed to it etc. as against an Internal Combustion Piston Engine which only merit classification under the PCT specified for Marine Engine 8407.2000. If it has certain technical pre-requisite of a Marine Engine and is manufactured as purposed bill. These Gasoline Engine fitted with Petrol Tank were for General purpose. Further the literature of the impugned imported engine as available on internet (at the manufacture's Website) clearly indicates that these engine are general purpose engine and at the best suitable for use in Generator Set, Water Pump, Lawn Movers etc. It was further revealed that these engine were originally being used by the manufacturer Loncin Industries in their Generators and Water Pumps. It is further pointed out that the appellant is also importing Loncin Brand Generators and Water Pumps fixed with similar/identical engine, which he import separately under the garb of Marine Engine e.g. in GD No. KAPW-HC-156568-27052014, he imported aluminum Die-Cast Water Pumps and Petrol Engine, Engines were mis-declared and misclassified as Marine Engine Propulsion and cleared by paying "NIL" or 0% custom duty. On the basis of the said finding the Official of MCC of Appraisement-West opined that the appellant No. 1 in connivance and collusion of appellants Nos. 2 and 3 mis-declared the description of the engine and caused loss to the exchequer to the tune of Rs. 4703807.00 in the shape of short payment of duty and taxes and the said act of the appellant falls within the ambit of violation of Sections 32(1), (2), 32(A), 79 and 80 of the Act, Section 6 of the Sales Tax Act, 1990 and Section 148 of the Income Tax Ordinance, 2001 punishable under clauses (1), (14) & 14(A) of Section 156 of the Act and framed contravention report No. SI/ MISC/2016/2005/VI dated 06.07.2015 and forwarded to respondent No. 2 for approval, who after approving forwarded that to respondent No. 1, who issued show-cause notice dated 10.08.2015 containing narrated facts and invoked provision of the Act/Ordinance in the contravention report and appellant were asked to submit reply to the allegation levelled therein. The appellant No. 1 through letter dated 25.08.2015 requested the respondent No. 1 to supply certain documents listed in para 2, enabling him to submit a comprehensive reply to the show-cause notice, the respondent No. 1 instead of complying with the request forwarded yet another hearing notice dated 10.08.2015 intimating the date of hearing as 04.09.2015, against which the Advocate forwarded letter through which request was renewed for supply of the documents, which was supplied thereafter, on the strength of which appellant's advocate submitted reply to the show-cause notice, which failed to get the acceptance of respondent No. 1 and he passed order-in-original dated 10.12.2015 , through which he held the charges levelled in the show-cause notice as established against the appellants and ordered appellant No. 1 to deposit Rs. 4,703,087.00 against evaded amount of duty and taxes along with imposed penalty of Rs. 500,000.00. The appellants Nos. 2 and 3 were also slapped with the penalty of Rs.100,000.00 each paras 6 to 13 of the order are relevant , which are reproduced here-in-under:--

"6. I have examined the case record and considered written/verbal arguments of the advocate for the respondent and representative of the departments. At the outset the advocate contended that SRO 886(I)/2012 does not empowers the undersigned the jurisdiction of the Appraisement Collectorate is based on wrong assumption. The SRO clearly empowers the Collector Adjudication to decide the cases of Appraisement West as being adjudicated since long and many apex fora have decided appeals of this Collectorate in original jurisdiction without objection on the jurisdiction of Collectorate.

7. It has been alleged by the detecting MCC that respondents Messrs Sikander and Co., Karachi In association with Clearing Agents Messrs Quick Shipping and Messrs Bilal International have indulged in misdeclaration of description and PCT to avoid correct levy of duty/taxes and in the process have evaded less payment of duty/taxes amounting to Rs. 4703807/-. Scrutiny of import data of the subject consignments revealed that the examination reports images of consignments examined at the time of import/clearance do not render the engines as "Marine Engines" in respect of their physical characteristics. The features of marine engines are quite different and specific in contrast to the engines meant for vehicles/others such as Gearbox , Propeller and Steering Devices, whole constituting a single individual unit and have low RPM (less than 1500 RPM). Similarly, other marine engines are also combined with a block holding a steering and propeller fixed to it etc. On the other hand these Gasoline Engines fitted with Petrol Tanks were for general purposes. Further the literature of impugned imported engines as available on Internet (at the manufacturer's Websites), clearly indicated that these engines are general purpose engine and at the best suitable for use in generators sets water pumps, lawn movers. These engines were originally being used by the manufactures M/s. Loncin Industries in their Generators and water pumps. As per internet information these are general purpose engines having wide range of application like garden, engineering agriculture animal husbandry, fishery, generator, water pumps, mini tiller cleaning machine road cutting machine, tamping machine, chipping machine, pressure washer etc.

8.Even for the sake of arguments if the contention of the importer is considered that these engine can be used as marine/boat engine, the classification would be done in terms of rule 3(c) for of rules for general interpretation of the harmonized system which is reproduced as :

9.When by application of Rule 2(b) or for any other reason , goods are, prima facie classifiable under two or more headings, classification shall be affected as follows:--

a)The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the material or substances contained in mixed or composite goods or to part only of the items in set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.

b)Mixture, composite goods consisting of different material or made up of different components and goods put up in sets for components which gives them their essential character, insofar as this criterion is applicable.

c)When goods cannot be classified by reference to 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.

10.As per arrangement of heading 8407, marine engine are covered under heading 8407.2100 and 8407.2900 and other engine are classifiable under PCT 8404.9090. As the imported goods are general purpose engine having wide range of application and are appropriately classifiable under PCT heading 8404.9090 which also occurs last in numerical order after the heading of boat/marine engine.

11.The features of a Marine Engine are quite different and specific such as Motor, Transmission, Gearbox, Propeller and Steering Device, Low RMP (less than 1500 RMP). Internet Combustion Petrol Engines, classifiable under PCT 8407.9090 (CD % 20%) were imported under the garb of marine engines of heading 8407.2100 and 8407.2900 attracting rate of Customs duty and 5% and 0% under Pak China FTA Regime. The subject case does not fall under the category of past practice as contended by the counsel of the respondent.

12.This is a case of misdeclaration of actual description. The importer cleared his goods by mis-declaring the actual description/classification of the goods. The importer has misused the facility of green chanel under WeBOC system. The WeBOC system is an online real tine basis process where correct declaration is essential for any declaration, any material or descriptive declaration which is incorrect or its omission is liable for legal action provided in the act. It is also important to mention that any mis-declaration in context of declaration will link with Risk Management System (RMS) which works on certain predefined parameters at the back end and hood winking it also distract the whole scheme of things in the automated process.

13.Accordingly based on the aforegoing deliberations, the stance of the respondent is not tenable and not maintainable in the light of evidence and material available on record. In view of the above, it is concluded that the charges as mentioned in the Show-Cause Notice stand established against the respondents. I hereby order as under:

a)The evaded amount of duty and taxes to the tune of Rs.4703087.00 is adjudged against the respondents for violation of the provisions of Sections 32(1), (2) and 79(1) of the Customs Act, 1969 Messrs Sikander and Co., Karachi are directed to deposit the aforesaid amount in the Government Treasury failing which action may be initiated against respondents under section 202 of the Customs Act, 1969 read with Chapter XI (Recovery Rules) of the Customs Rules, 2001 notified vide S.R.O. No. 450(I)/2001 dated 18.06.2001.

b)A penalty of Rs. 500,000/- (Rupees five hundred thousand) is also imposed upon M/s. Sikander and Co., Karachi in terms of clause (14) of Section 156 (1) of the Customs Act, 1969.

c)A penalty of Rs. 100,000/- (Rupees one hundred thousand) is also imposed upon each of the Clearing Agents M/s. Quick Shippers (CHAL No. 435) and M/s. Bilal International (CHAL No. 2156) in terms of clause (14) of Section 156 (1) of the Customs Act, 1969 as they have also been fault guilty of committing offence in terms of relevant provision of law referred to above read with Customs Agent Licensing Rules, 2001.

Collectorate is also advised to carryout audit of other identical imports to ascertain mis-declaration or otherwise .

4.Being aggrieved and dissatisfied with the Order-in-Original, the appellant filed the instant appeal before this Tribunal on the grounds incorporated in the memo. of appeal and the counsel of the appellant Advocate on the date of hearing argued strictly in accordance with those and stated further that:

a)The Federal Government has inserted section 3DD in the Customs Act, 1969 through which Directorate General of Post Clearance Audit was created for conducting audit of the accounts/books of an importer in terms of Section 26A ibid by its officials, to whom the Board empowered vide S.R.O. 500(I)/2009 dated 13.06.2009. That while scrutinizing the data of the GD of the appellant No. 1, by the subordinate of respondent No. 2, infact committed an act of conduction of audit, which does not falls under their jurisdiction/pars while posted at the Clearance Collectorate. Resultant, they usurped the powers of the Officials of Post Clearance Audit without any lawful authority, this is not permitted under any circumstances/law. Hence, scrutinizing/conduction of audit with the usurpation of powers of the officials of PCA is without power/jurisdiction, therefore null and void and as such of no legal effect.

b)The respondent No. 1 while issuing show-cause notice has invoked the provision of Section (sic) of the Sales Tax Act, 1990, whereas Section 6 is a machinery section that lays down the procedure relating to collection of Sales Tax at the import stage by the customs authorities hence cannot be used to charge anyone for an offence. Similarly, Section 148 of the Income Tax Ordinance, 2001 is also a machinery Section synonymous to Section 6 of the Sales Tax Act, 1990 and Section 3 of Federal Excise Ordinance, 2005. Therefore, no show-cause notice can be issued on the basis of these sections. Issuance of show-cause notice on the basis of irrelevant/erroneous sections render it void, ab-initio and of no legal effect.

c)That even otherwise the respondent No. 1 is not designated as an Officer of Inland Revenue under Section 30 of the Sales Tax Act, 1990 and under any Section of the ITO, 2001. Therefore, is not empowered to exercise powers as defined therein and Section 207 of the ITO, 2001. Meaning thereby that Respondent No 3 is not empowered to exercise power in terms of section 11 of the STA, 1990 and Section 162(1) of ITO 2001 under which order for recovery of the short paid or evaded amount of duty and taxes have to be passed by the authority defined therein namely Officer of Inland Revenue/Commissioner of Income Tax, issuance of show-cause notice for the recovery of Sales Tax/Income Tax not collected at the time of clearance as per the expression of Sections 6 and 148 of the Income Tax Ordinance, 2001 by respondent No. 1 is without lawful authority being without jurisdiction /powers Rendering the Show-Cause Notice and Order-in-original without power/jurisdiction, hence void and ab-initio and coram non judice.

d)That on conclusion of the transaction, under the provision of Sections 80 and 83 of the Act and 438 and 442 of Rules, the order so passed becomes an appealable order under Section 193 of the Act before the Collector of Customs (Appeals) and Respondent No. 2 is empowered to do so. If he had any reservations against the passed assessment orders, the proper course of action was to assail the said orders before the Collector of Customs Appeals. This has not been done within the stipulated period and orders so passed by the competent authority defined in Section 2(a) under Section 80 of the C.A. 1969 became final and that cannot be disturbed by any authority.

e)That in the light of the law laid down by the Hon'ble High Court of Sindh referred to in para supra, Assessment Orders in the subject case had been passed by the competent authorities and the appeal against which could have been filed by either Respondent No. 2 or his subordinates . Failure to do so led to the assessment orders attaining finality and becoming a past and closed transaction which cannot be disturbed or reopened by any authority or court. Despite the settled principal of law the subordinate of respondent No. 2 prepared contravention report and he approved that, on the basis of which Respondent No. 1 issued show-cause notice and passed impugned order-in-original subsequently. Rendering the whole exercise nullity in the eyes of law in the light of what has been discussed in the above paras. Beside said act is also tantamount to double jeopardy not permitted under Article 13 of the Constitution of Islamic Republic of Pakistan beside also being in derogation of the law laid down by the Superior Courts of Pakistan.

f)The appellant declared description namely "Marine Engines" and PCT 8407.2100 and 8407.2900 were found correct , on the basis of which valid assessment order were passed and so the clearance, no incriminating evidence as per mandated requirement of law has been supplied by either of the respondent in support of the allegation that the goods imported by the appellant were contrary to the declared description as required under Articles 117 and 121 of Qanun-e-Shahadat (10 of 1984) i.e. it is for the person levelling the allegation to prove that, which the respondent miserably failed. Whereas the appellant successfully negated the allegation by annexing Exhibit E to L15 with the memo. of appeal, veracity of which has not been disputed by the respondent in the comments, the said action is tantamount to admission in terms of law of evidence/ and judgment of the judicial fora.

g)That long tail boat engine sets are classified as out board motors by Wikipedia. Section of outboard motors from Wikipedia, the free encyclopedia confirm the imported engine to be a propulsion systems for long tail boats. A detail design with steering handle, motor and propeller explained from Wikipedia, catalogue of boat engine available from Loncin industries website and photographs of installed systems in boats meet all characteristics of outboard motors consisting of a handle, motor and propeller. Also the given photographs render the sets to qualify purpose built for marine boats. Customs Authorities on basis of examination report of GD No.KAPW-HC-189725 were incomplete sets without handle and propeller were sent by the manufacturer were of the view, additional duty from the importer should be collected. Despite that the above GD additional duty was paid by the importer without any documentary proof same modus operandi, as also mention in the show-cause notice was adopted for the rest of consignment which was technically wrong and lack any credible evidence. The importer filed the 14 GD's after scrutiny of description, classification and value and other all aspect by the Customs Department, pay the duty and taxes which were demanded by the Customs Department and out of charge the all GD's. The correct determination of description, classification, value and PCT Heading are sole responsibility of Customs Department under section 80(1) of the Customs Act, 1969, read-with Rule 438 of Sub-Chapter-III of Chapter 21 of Customs Rules, 2001. The Respondent No.2 against re-assessment the imported goods and against enhance the value against change the classification and further demanded the enhance duty and taxes, therefore, demand the enhance value regarding change the irrelevant classification as well as enhance duty and taxes, it is illegal and against the law. The Order-in-Original passed by the Collector of Customs (Adjudication-I), Custom House, Karachi, without considering the contentions of the Appellants, is unjustified and suffer from legal and factual improprieties, hence it is absolutely in-correct and against the law. After clearance of goods the subsequent charge of mis-declaration of value under Section 32(1)&(2) of the Customs Act, 1969 is illegal, nor applicable and therefore, not established.

h)Notwithstanding to the above fact the appellant is unable to digest the rationale adopted by the respondent of preparing contravention report on the basis of presumption assumption and conjectures /in the absence of valid evidence and issuance of show-cause notice/passing of order-in-original while ignoring the fact that the proper examination was carried out and assessment orders were passed by the subordinate of respondent No. 2 under the provision of sections 80 and 83 and Rules 438 and 442 of the Act/Rules after finding the declaration of the appellant as correct in all aspect. Despite appellant standing on the same pedestal as of Custom Official i.e. subordinate of respondent No. 2 they are let off scot free. The treatment given to the appellant by Respondents is nothing more than a partial and differential treatment as it would constitute a negation of Articles 4 and 25 of Constitution of Islamic Republic of Pakistan.

i)The penalty on appellants Nos. 2 and 3 have been imposed by the respondent No. 1 in the absence of availability of any cause or reason and commission of contravention of the invoked provision in the show-cause notice, which cannot be summarily invoked, implicating a clearing agent a clear finding in regards to collusion/connivance or submission of forged documents or proof of obstructing the Custom Official in performing there specified duties is warranted. In the absence of that no charge of misdeclaration can be levelled, the respondent No. 1 lost sight of the said fact and slapped penalty of Rs. 100,000.00 on the agent merely on the basis of the fact they filed GDs, which they have to file in terms of the Licensing Rules on the basis of documents supplied to them by the importer.

5.No cross objection under Subsection (4) of Section 194A of the Act have been submitted by either of the respondent within the stipulated period prescribed therein. Instead the respondent No. 2 through his subordinate submitted comments on memo. of appeal, which are placed on record and the representative of the respondent No. 2 argued on the strength of those and stated that the order passed by the authority below is correct in facts and law. Therefore, need not to be disturbed and be maintained while dismissing the appeal.

6.Heard and perused the record prior to dilating upon the root cause of the case, it is germane to decide the vital question of jurisdiction/power of respondents in regards to conduction of audit, matter of sales tax and income tax and other legal lacunas pointed out by the Advocate of the appellant's. The legislature has inserted Section 3DD in the Customs Act, 1969 through which Directorate of Post Clearance Audit has been created and its officials had been delegated powers through Notification No. 500(I)/2009 dated 13.06.2009 for conducting audit of the importer under Section 26A of the Act, which includes every aspects of the declaration made by the importer and assessment order passed by the competent authority of the Clearance Collectorate under Section 80 and Rule 438 Act/ Rules and upon finding discrepancy or any ambiguity in the declaration or the contravention of the law, audit observation is prepared and forwarded to the importer for clarification and if the reply fails to settle the issue, prepare report and forward the same to the Collector of the Clearance Collectorate through Director of PCA. Who upon receipt of that refer that to the legal department, who examine that and if found to be based on strong footing, submit their report to Collector , who orders preparation of contravention report , which he subsequently forward through covering letter to the respective Collectorate of Customs, Adjudication for issuance of show-cause notice under section 180 of the Act and passing of order-in-original as per the expression of Section 179 ibid. The respondent No. 2 and his subordinates assumed the powers of officials of Directorate General of Post Clearance Audit and scrutinized the GDs of the appellant, the said act is tantamount to conduction of Audit Post Clearance under section 26A in the absence of availability of powers. Neither respondent No. 2 or his subordinates are empowered to transgress the sovereign jurisdiction of Director General of Post Clearance Audit (here-in-after to be referred as DG- PCA) under any circumstances as this will render the formation of DG- PCA by the legislature under Section 3DD of the Customs Act, 1969 and the powers delegated under Notification No. 500(I)/2009 dated 13.06.2009 as redundant. The Tribunal has observed with great concern that the respondent No. 2 are running parallel departments to the DG, PCA in derogation of Section 3DD ibid, this is not permitted under law as the said act shall be instrumental in creating a situation of anarchy within the different organs of FBR, who will left no stone unturned for exceeding their jurisdiction while encroaching the powers/jurisdiction of the other sovereign organ of the FBR. These type of act cannot be allowed to be perpetuated under any circumstances instead have to thwart from the very beginning for sustaining the integrity and independence of the different sovereign organs of FBR. Therefore, the scrutiny made by the officials of respondent No. 2 of the Goods Declaration of the appellant after clearance and preparation of contravention report dated 06.07.2015 by the officials of respondent No. 1 without any lawful authority and as such without any power/ jurisdiction, hence, void and ab-initio and coram non judice as held in countless reported judgments of the Superior Judicial fora holding field firmly.

7.I have also noticed with great concern that Respondent No. 1 in the show-cause notice has invoked Section 6 of Sales Tax Act, 1990 and Section 148(1) of the Income Tax Ordinance, 2001 and that also intentionally while ignoring the fact that these sections are not charging sections rather machinery , containing procedure for collection of Sales/Income Tax levied on the imported goods at import stage by the authorities defined therein. These sections are specifically inserted in the Act/Ordinance for giving legality to the collection of these taxes on goods at import stage because Sales Tax is invariably levied on the sale of goods and it's a sort of VAT. Whereas, levy of Income Tax is on the annual income of an individual or company after expiry of a financial year. Even otherwise, charges in regards to the matter of Sales/Income Tax have to be invoked under Section 11 of the Sales Tax Act, 1990 and 162(1) of the Income Tax Ordinance, 2001, by the authorities defined therein i.e. the Officers of Inland Revenue/Commissioner of Income Tax, Invoking of these sections despite irrelevant by the respondent No. 1 are palpably illegal as it is now well settled law that invoking of erroneous/irrelevant Sections in the show-cause notice and by the authorities not competent to do so renders it void and ab-initio and of no legal effect as held in reported judgment judgments 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.

8.Upon passing of assessment order under Section 80 and Rule 438 of the Act/Rules by the authorities defined in section 2(a) of the Act and Notification No. 371(I)/2001 dated 15.06.2001, it cannot be disturbed by any authority for preparing contravention report overlapping 1st assessment orders, for initiation of adjudication proceeding, on the basis of which Respondent No. 1 issued show-cause notice and passed order-in-original. The only course available under law for Respondent No. 2 was to challenge the assessment orders before the Collector of Customs (Appeals) under section 193 of the Act in exercise of the powers delegated upon him . In the filed appeal, Respondent No. 2 is empowered to incorporate all the apprehension, misreading of the facts and contravention of the provision of the Act/Rules. The Collector of Customs, upon receipt of the appeal and going through the facts and grounds if thinks fit that the contention of the Respondent No. 1 seems to be correct and the duty and taxes has not been either not levied or short paid or evaded on the basis of the goods found subsequent to clearance, is empowered to issue show-cause notice to the importer (appellant) as expressed in 3rd proviso to the subsection (3) of section 193A of the Act. Instead of the adhering the prescribed method available in the Act the Respondents reopened the assessment/clearance order under Section 195 of the Act under which no powers are vested either of the Respondents. When the right of appeal has been accorded by the legislature in the provision of Section 193 of the Act, the provision of Section 195 is un-operational and cannot be exercised even by the authority defined therein and this has been validated by the Hon'ble High Court of Sindh in reported judgment 2014 PTD 1256 Messrs Paramount International (Pvt.) Ltd., Karachi v. Secretary Revenue Division that "department or an Officer of Customs, if aggrieved, by any decision or order passed by an officer of customs below the rank of additional collector could prefer an appeal before the Collector (Appeal) --- 1st order in original passed in the subject matter was an appealable order for both the parties, therefore option to reopen and order pass under the adjudication hierarchy was not available to the Collector. Even the Collector of Customs Adjudication could not oversee or exercise any right of re-opening of any order which has been passed by an officer lower in rank but acting as an adjudicating authority. Impugned order was set-aside and Constitution Petition was allowed." The CPLA No.105-K of 2014 filed by Collector of Customs and others against the order of the High Court has been dismissed by the Hon'ble Supreme Court of Pakistan while refusing leave to appeal. It is also settled proposition of law that in the presence of an appealable order, fresh order cannot be passed even in the shape of reassessment order or through issuance of show-cause notice under section 180, while exercising powers under the provision of Section 179 ibid. These acts are piling upon multiple orders on the existing appealable order not permitted under law as held by Hon'ble High Court of Sindh in reported judgment 2004 PTD 3020 Messrs Smith Kline French v. Pakistan that "once an order is passed, which attain finality the same cannot be subject to a show-cause notice again, considering that no appeal or revision is filed against the first order". By virtue of non filing of appeal against the assessment order as elaborated above by Respondent No. 2 or his subordinates within 30 days. With the lapse of stipulated periods of 30 days without any action by either respondent No. 2 or his subordinates, the transaction stood passed and closed and attain finality and cannot be disturbed. For reaching at the decision I have gained strength from the reported judgment 1989 MLD 4310 Messrs World Trade Corporation v. Central Board of Revenue, wherein their lordship of High Court held that "if the order has attained finality through limitation. A fortiori; the Central Board of Revenue could not open up an order that has attained finality, under the Sea Customs Act, 1878 and against which sou motu revision. Notwithstanding, the act of issuance of show-cause notice and passing of order-in-original by Respondent No. 1 also falls under the ambit of "double jeopardy" not permitted under Article 13 of the Constitution of Islamic Republic of Pakistan. Rendering the order passed by Respondent No. 1 for piling upon an existing appealable order is without lawful authority and jurisdiction and as such void and ab-initio and of no legal effect.

9.That the respondent No. 2 implicated and the respondent No. 1 charged the appellants, for mis-declaration under the provision of Section 32 of the Customs Act, 1969 merely on the basis of assumption/ presumption that the appellants transmitted GDs on the basis of erroneous description and PCT, in order to hoodwink the Customs and to evade the amount of duty and taxes. I am unable to buy the said arguments as in conduction of examination appellants have no part to play instead had to be carried out by the subordinate of respondent No. 2 with the assistance of Officials of Terminal Operator, independently and without any influence as per the expression of Section 198 and Rule 435 and the passing of assessment/clearance order under sections 80 and 83 and Rules 438 and 442 of the Act/Rules falls with the sole and exclusive domain of the Customs Officer listed at Serial Nos. 30 and 33 of the S.R.O. 371(I)/2002 dated 15.06.2002. The Officials conducting the examination who confirmed the declarations and who passed assessment/ clearance orders while accepting the declaration as true and correct. If it is presumed as stated in the show-cause notice that the alleged clearance of the goods imported by appellant No. 1 were on the basis of erroneous description and PCT, that could had not been possible unless these officials were having hands in gloves with the appellants. Meaning thereby that they are standing on the same pedestal. Ironically, no charges have been levelled under Section 32(2) against those Officials, as of appellant. This act of the respondents proves that the appellants have been met out with partial treatment, which is not permitted under Article 25 of the Constitution of Islamic Republic of Pakistan and the law laid down by the Superior Judicial Fora in reported judgment 2002 SCMR 312 and PTCL 2010 CL 671 the Hon'ble Superior Courts have observed that "there exists 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 placed 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."

10.Notwithstanding, for resolving the issue in hand, I have scrupulously gone through the contents of show-cause notice and the grounds taken by the appellant No. 1 and has observed that the allegations levelled by the respondent No. 1 in the show-cause notice are of general nature and for that reason in support of those no intangible incriminating evidence such as posted examination reports, copy of expert opinion, which was vital in such type of case were annexed with the show-cause notice or even placed on the record of the Tribunal on the date of hearing. After filing of GDs, the correct determination of description, classification, value and PCT Heading are sole responsibility of Customs Department to scrutinize the same, under which the goods are declared under section 80(1) of the Customs Act, 1969, read-with Rule 438 of Sub-Chapter-III of Chapter 21 of Customs Rules, 2001. After clearance of goods the subsequent charged of mis-declaration of value under section 32(1)&(2) of the Customs Act, 1969 is illegal, nor applicable and therefore, not established, and the imposition of fine or penalty is illegal as per Para 2 and 101 of CGO 12/2002. The appellant was not charged under subsection (3) or (3A) of section 32 of the Customs Act, 1969. Nevertheless for further confirmation of the charges, the representative of the respondent was asked that what is the basis for forming the said opinion, the reply was that since the appellant is also importing Loncin Brand Generators and Water Pumps, there exist every likelyhood that the appellant infact imported Internal Combustion Petrol Engines as against declared Marine Engine. Upon this the representative was asked to place on record any provision of the Act or notification, wherein an importer of any specific item is barred from importing item other than dealt/importing by him previously. The reply was in negative, he was further confronted that whether it was not vital for the respondent No. 2 and his subordinate to visit appellant business premises for verification of availability of Internal Combustion Petrol Engine, which the appellant imported in the garb of Marine Engine, in reply it was stated that it was not felt appropriate or just as the detail available at the website of the manufacturer was quite enough for forming the opinion, this amazed me, however, he was confronted that whether it was not felt apt to mail the manufacturer for inquiring that as to whether shipment against the invoices/B/L's presented by the appellant for clearance correspond to 'Marine Engine" or Internal Combustion Petrol Engine or dispatch the copies of invoices/B/L's to the Consulate General of Pakistan in China for obtaining verification from the manufacturer/shipper and Chinese Customs in regards to actual description of the shipped goods. This spell- bounded him. The Tribunal then asked him that as to whether he has to say something in regards to the submission made by the appellant No. 1 in his ground containing deliberation in regards to the description of goods and about the veracity of Annexure D to L15 of Memo. of Appeal. He stated that the comments submitted are sufficient and contains objection on those, when his attention was invited to the facts that the comments are silent in this regard, he said then he will state in categorical terms that those are irrelevant. The line of argument flabbergasted me and I was left with no other option to hold without any hesitation that the respondents miserably failed to prove the allegation as enunciated in Articles 117 and 121 of Qanun-e-Shahadat (10 of 1984) and the law laid down by the Superior Judicial Fora that the person levelling the allegation have to prove those without any exception and hold that the entire case is based on no evidence as held in reported judgment 1991 PTD 551 that "Any action which is based upon no evidence is not permitted by law " and in PTCL 2007 CL 71 that " a mere assertion of the prosecution is no evidence" and the whole case is being made out on the basis of conjectures and fishing inquiries which is not permitted under law as per law laid down by the Hon'ble Supreme Court of Pakistan in reported judgment PLD 1992 Supreme Court 485. The Assistant Director Intelligence and Investigation v. B.R Herman Mohattas (Pvt) Ltd., Karachi that "it cannot make a rowing or fishing inquiry or issue a notice by merely shooting in the dark in the hope that it will be able to find out some material out of those documents and then charge the party of irregularity or illegality". The said principle was subsequently held by the Superior Judicial For a in reported judgment (1957) 32 ITR 89, (1967) 64 ITR 516, I.TAs. 2400/2401/KB/91-92, 1995 PTD (Trib.) 580, 1995 PTD (Trib.) 1152, (1982) 1381 ITR 742, 1993 PTD 206,1997 PTD (Trib.) 2209 and 2013 PTD (Trib.) 353. I, therefore hold that the case against the appellant is based on presumptions, assumptions , conjectures and rowing and fishing inquiry and fails the test of judicial scrutiny.

11.The appellants Nos. 2 and 3 as observed from show-cause notice and Order-in-Original and as verbally explained by the learned Counsel, were held guilty of an offence under Section 32(1) and (2) of the Act. The charge framed in the notices relates to a claims made by the importer through him, As per show-cause notice the only charge against appellants Nos. 2 and 3 are that they filed GD's for the clearance of the goods of appellant No. 1 and for the said act, for which they are accorded License by the Licensing Authority assertion is that they should not have made the declaration in the GD's and since they made, the said act of their attracted the provision of Section 32 of the Act. According to the show-cause notice itself and construing it in the light of the Act, the Customs should have made distinction between a declaration or "a statement in answer to any question put" and a "claim". As regards declaration it means a communication by a person in relation to a business being conducted. The word "declaration" came to judicial scrutiny in the case of Vithoba Syamna v. Union of India reported as AIR 1957 Bom. 321. It was held in that case that the word "declaration" refers to the nature, description and value of goods so that assessing officer can apply appropriate Tariff rate for assessment and charging. On the other hand the word "claim" means a demand for something suppose due to or demanded as a right. Here the only charge against the appellants Nos. 2 and 3 are that they filed GD's on the basis of the documents supplied by the appellant No. 1. There is no charge that his declaration in respect of nature, description and value of the goods were found to be wrong. In the case of Eastern Rice Syndicate v. Collector of Customs (PLD 1959 SC 364), the Supreme Court had held that in order to attract a penal provision of Section 39 now Section 32) it must be established that the person who alleged to have made any statement in a documents submitted to the Customs authorities must be falls to his knowledge and it would depend upon the facts and circumstances of each case. It is not disputed here that the statement made in the Customs documents regarding the nature and value of the goods were in any ways wrong; rather that information was found correct and true. The assumption of the Customs that violation of the said section did take place appears to be wrong. Infact, the charges against the appellants Nos. 2 and 3 were wholly misconceived, as their action does not falls within the operative mechanism of Section 32 of the Act. A study of Sections 79 and 80 of the Act reveals that importer or his agent has to file GD for release of the goods on which assessing officer has to made an assessment any claim made by an importer is subject to scrutiny by the assessing officer who has been vested with unfettered powers to complete an assessment. A claim is a request subject to approval by a competent officer, and where a competent authority grants or reject the claim, no charge of fraud or otherwise can be linked to the agent or to his principal, whose duty is to submit relevant document for processing for release of consignment or application. It appears that the respondent No. 2 who issued the show-cause notice grossly mi-understood the scheme meaning an operative mechanism of the Sections 32 and 80 of the Act. The liability of a clearing agent during the course of clearance of the consignment has to be evaluated under the provision of sections 207, 208 and 209 of the Customs Act, 1969, which indicate that an agent represent his principal and until and unless any direct evidence is attributed against him or when department is not able to prove any criminal intent on his part, he cannot be penalized under the General provision of the Customs Act, unless he violates the governing condition of his License.

12.For the foregoing deliberation/observation and in the light of prescribed law laid down by the Superior Judicial Fora and in adherence of the ratio decidendi, the instant appeal is allowed and the Show-Cause Notice is vacated and impugned Order-in-Original No.301/2015-16 dated 10.12.2015 passed by Respondent No.1 is hereby set-aside with no order as to costs.

13.Order passed and announced accordingly.

HBT/76/Tax(Trib.) Appeal allowed.