SHAHEEN AERO TRADERS AVIONIC ENGINEERING, RAWALPINDI VS DEPUTY COLLECTOR OF CUSTOMS, GROUP-III, MCC OF APPRAISEMENT WEST, KARACHI, 2018 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 1685 (2017)

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

----Ss. 25, 25-A, 32 & 79---SRO No.499(I)/2009, dated 13-6-2009---Mis-declaration---Importer, submitted goods declaration---Said declaration was confirmed in all aspects---Assessing Officer passed the assessment order on declared value against quantity of each item---Principal Appraiser framed contravention report in respect of one of the imported items, with the allegation that the importer in connivance with the other importer had committed an act of mis-declaration of weight which was found excess and tried to evade the duty and contravene the provisions of Ss.32 & 79 of the Customs Act, 1969, S.33 of the Sales Tax Act, 1990 and S.148 of Income Tax Ordinance, 2001, punishable under S.156(1)(14) of the Customs Act, 1969---Collector of Customs, ordered confiscation of goods, subject to redemption of 20% fine by invoking S.33 of the Sales Tax Act, 1990 and S.148 of the Income Tax Ordinance, 2001---Section 33 of the Sales Tax Act, 1990 was a penal section and contained penal clauses, which were to be invoked on the contravention of charging/respective sections of the Sales Tax Act, 1990---Said section was synonymous with S.156(1) of the Customs Act, 1969---Section 33 of the Sales Tax Act, 1990 could not be invoked unless charging/relevant sections were invoked by the authority empowered under the respective provisions of Sales Tax Act, 1990---Section 148 of the Income Tax Ordinance, 2001, contained procedure for collection of income tax at import stage by the authorities referred therein---Said sections were independent under which no charge could be invoked---No show-cause notice could be issued under said sections---Issuance of show-cause notice on the basis of irrelevant sections, rendered show-cause notice and order-in-original void ab initio and of no legal effect---Collectorate of Customs was not empowered to lay hands on the matter falling within ambit of S.11 of the Sales Tax Act, 1990 and S.162 of Income Tax Ordinance, 2001---Said sections empowered the Officers of Inland Revenue/Commissioner of Income Tax to initiate adjudication/recovery proceedings for the short collected/paid sales tax and income tax---Clearance Collectorates, did have the authority to collect sales tax and income tax at import stage in the capacity of collecting agent and could recover escaped/short payment paid customs duty and regulatory duty levied on imported goods, after process of law, but had no powers to adjudicate the cases of short recovery/evaded amount of sales tax and income tax---Exercise of jurisdiction on that point by Collector of Customs Adjudication, was without lawful authority---Issuance of show-cause notice and passing of order-in-original were held to be ab initio void, coram non judice on that point.

[Case-law referred]

(b) Words and phrases---

----Declaration---Meanings.

[Case-law referred]

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

----S. 32---False statement or misdeclaration---Declaration of importer, could only be termed as 'misdeclared', if during the course of examination, his given description, quality, quantity or weight was found contrary or any document delivered to Customs Officer was found to be false, forged or tampered; or a statement given in answer to any question put to him, was found to be false---Prior to leveling allegation under S.32 of the Customs Act, 1969, Authority had to determine that whether the importer had given declaration or submitted document/statement knowingly or having reason to believe that such documents and statement was false in material particular---Importers had been dragged needlessly, in the litigation in the absence of any wrong-doing or misdeclaration within the meanings of S.32 of the Customs Act, 1969---Show-cause notice was vacated and impugned order-in-original, was set aside, in circumstances.

[Case-law referred]

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

----Ss. 25, 25-A, 32 & 156---Charging of duty and taxes on the imported goods---Duty and taxes, to be charged on goods, actually imported for use/consumption of the general public---No provision of Customs Act, 1969 had empowered the officer of Customs to add the weight of essential/non-essential packing---Vital element was its cost not weight and that was validated from the provisions of S.25 of the Customs Act, 1969 which provided about "goods" and "class of goods".

[Case-law referred]

Nadeem Ahmed Mirza (Consultant) present for Appellant.

Adnan Rafiq, Deputy Collector and Asad Masood Principal Appraiser present for Respondents.

Date of hearing: 6th July, 2017.

JUDGMENT

TAHIR ZIA, MEMBER (JUDICIAL-II).---Through this common order, we intend to dispose off two (2) Appeals bearing Nos. K-2204/2016 and K-2217/2016 directed against Order-in-Original No. 603236 dated 25.11.2016, passed by Collector of Customs, Adjudication-I, Customs House, Karachi.

2.Since, these 02 appeals are based on similar facts and questions of law, therefore, it is needless to reproduce facts of each case separately. Hence, being heard and dealt with and disposed off simultaneously though this common order for reference, facts of Appeal No. K-2204/2016, which are M/s. Shaheen Aerotraders Avionic Engineering, Rawalpindi (here-in-after to be referred as appellant No. 1) are taken and which are that M/s. Shaheen Aerotraders Avionic Engineering, Rawalpindi is a Welfare Trust of Shaheen Foundation owned by Pakistan Air Force, appellant participated in a tender floated by Government of Pakistan General Headquarter (Logistics Staff Branch), Directorate General of Procurement (Army) for supply of Latex Surgical Powder Gloves for use in Combined Military Hospitals (CMH), upon bidding succeeded in award of the contract for supply of 2,700,000 pieces of PV -05345 Gloves Operation Sterilized Rough Size 7 and 4,743,333 pieces of PV -05346 Gloves operation Sterilized Rough Size 8 vide No. 28-1827 dated 06.11.2015 i.e. 50% by 01.12.2016 and 50% on or before 01.12.2017.1n pursuance of the contract contacted M/s. TG. Medical SDN -BHD Malaysia with the specification of the gloves and after approving the samples, forwarded by them, by the Directorate General of Procurement (Army), entered into an agreement for procurement and were asked to forward proforma invoice for establishing letter of credit. M/s. TG. Medical SDN -BHD Malaysia forwarded proforma invoice No. 2000029721 dated 28.06.2016. The Appellant No. 1 against the said proforma invoice established irrevocable letter of credit vide No. ILC27300612916 dated 12.07.2016 favouring M/s. TG. Medical SDN --BHD Malaysia. Which after producing of the goods and shipped a partial shipment, prior to under scrutiny consignments, against which GD was transmitted by the clearing agent namely M/s. Arshad Suleh Corporation, Karachi (here-in-after to be referred as appellant No. 2), which was allowed clearance by the respondent department with the acceptance of declaration in totality, which include the declared quantity of the goods (Latex Surgical Powdered Gloves). Subsequently, the shipper consigned the balance quantity vide Invoice No.90072827 dated 13.10.2016 for 5414400 pieces weighing to 49825.48 kgs, gloves, each piece of which was packed in airtight medicated container and one dozen in a box akin to tissue and those boxes were packed in 6768 cartons weighing to 30564.52 kgs, containing specification Latex Surgical Powdered Gloves (280mm) Palm Texture Embosed Outside Natural, no flavor sterilized, (FG), Gnrl Formation Brand TG Medical @ USS. 0.162/pair C&F of each size i.e. US$ 438,566.40. shipped and B/L No. MYPKG0000011677 dated 14.10.2016, the Appellant No. 1 after retiring the documents from the bank, delivered those to appellant No. 2 for transmitting Goods Declaration (here-in-after to be referred as GD) with the MCC of Appraisement-West under the provision 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 the Customs Rules, 2001 (here-in-after to be referred as Rules). Who accordingly transmitted the GD on the basis of the documents i.e. for 5414400 pieces gloves weighing to 49825.40 kgs being the imported goods, no declaration whatsoever was transmitted for 30564.52 kgs i.e. weight of material used for essential/non essential packing. He as per pre-requisite for availing the regime of WeBOC deposited upfront duty and taxes of Rs. 24,865,143.00 vide cash No. C-KAPW-18949-31.10.2016 after obtaining pay orders from the Appellant No. 1, consequent to which GD was allotted No.KAPW-HC-83903-31.10.2016. Upon appearance of the GD on the desktop the Appraiser concerned opted to get the goods examined first under the provision of Section 198 and Rule 433 of the Act/Rules and to proceed with after adducing his opinion for conduction of examination transmitted the GD to Deputy Collector of Customs, Group-III, MCC of Appraisement-West, (here-in-after to be referred as respondent No.1), who gave his assent and routed the GD to the Deputy Collector KICT, who onward marked it to the examiner for conduction of physical examination of the goods. Who accordingly complied to the order and confirmed the declaration in all aspects (no observation in regards to excess weight was adduced with the exception that the weight of goods given in report of each container is inclusive of the weight of retail packing). The reports of 06 containers were thereafter posted by him in the reservoir of the GD. Upon receipt of which on his desktop, the assessing officer passed the assessment orders on declared value against quantity of each item i.e. Gloves of different sizes. Ironically as against imported 04 items, he created fifth item on the strength of weight of essential/non essential packing i.e. 23,120 kgs, in the absence of availability of gloves and assessed those at the value declared by the Appellant No. 1 on which duty and taxes were calculated to the extent of Rs.11,537,868.00 and transmitted the GD to Principal Appraiser, who on the strength of assessment order/note for the fifth created item framed contravention report with the allegation that the appellant No. 1 in connivance with the appellant No. 2 committed an act of misdeclaration of weight, which is found excess by 46.39%, on which the duty and taxes of Rs. 11,537,868.00 are payable by the appellant No.1, which they tried to evade and as such contravened the provisions of sections 79(1), 32(1), 32(2) of the Act, Section 33 of the Sales Tax Act, 1990 and Section 148 of the Income Tax Ordinance, 2001, punishable under clauses (1) & (14) of section 156 of the Customs Act, 1969 read with SRO 499(I)/2009 dated 13.06.2016 and transmitted the GD to Additional Collector, Law, who approved that and routed the GD to Respondent No.2, who transmitted show-cause notice dated 10.11.2016 containing the reported fact and invoked provision of the Acts/Ordinance by the Respondent No. 1 with the direction to the Appellants to reply to the allegation levelled therein. The Appellant No. 1 pasted the reply dated 14.09.2016 online, whereas appellant No. 2 submitted written reply as no space is available in the WeBOC module for him to paste that. Through the replies appellants challenged the jurisdiction of Respondent No.2 under the provision of Section 11 of the Sales Tax Act, 1990 and section 162(1) of the Income Tax Ordinance, 2001 and so the veracity of the found excess weight and charges of misdeclaration. The Respondent No.2 without dilating upon the advanced arguments passed order dated 25.11.2016 holding that the charges levelled in the show-cause notice stand established against the appellant and ordered confiscation of the goods of the appellant No. 1 subject to redemption of those upon payment of 20% fine of Rs.4,338,687.00, penalty of Rs. 300,000,00 in addition to duty and taxes leviable on the weight of essential non essential packing of the Gloves amounting to Rs.11,537,868.00, a penalty of Rs. 100,000.00 was also imposed on the appellant No. 2, verbatim of the relevant portion of the order is reproduced here-in-below:

Record of the case has been examined and written as well as verbal arguments/ contention of all the sides been considered carefully. Perusal of the show-cause notice shows that the basic allegation against the importer is misdeclaration of weight by way of deliberately concealing that weight of the imported goods in order to get the same assessed on suppressed value and payment of less duty /taxes top the tune of Rs. 11537868/-. The act of the importer attracts the provision of sections 32(1), (2), 79(1) of the Customs Act, 1969 and Section 33 of the Sales Tax Act, 1990 and Section 148 of the Income Tax Ordinance, 2001, punishable under clauses (1) (14) of section 156(l) of the Customs Act, 1969 read with SRO 499(I)/2009 dated 13.06.2009 as amended from time to time. Contention behalf of the importer challenging jurisdiction and power of adjudicating authority to issue show-cause notice under provision of Sales Tax Act, 1990 and Income Tax Ordinance, 2001 has not legal force. The relevant law doses not provide any such restriction or bar on the adjudicating authority. The matter has further been clarified by Federal Board of Revenue vide letter No. 3(32) TAR-1/90 dated 06.08.2012 after obtaining a legal opinion from the Ministry of Law and Justice. According to the said clarification, the relevant officers of Customs may, therefore continue the adjudication proceedings already initiated and take cognizance of all cases of FED, Sales Tax and withholding Tax pertaining to import stage in future as well. Therefore, the contention of importer consultant is nothing but to divert the attention from the actual issue. The importer has failed to give any solid explanation to justify misdeclaration of weight in the imported goods as a result of the examination. The case making agency on the other end has been successful in proving its case in view of the arguments forwarded by them as explained above 3. In view of above stated, the charge of misdeclaration of weight against the importer is established the consignment/ impugned goods are, therefore confiscated for violation of the provision of the relevant law as mentioned in the show-cause cotice. However, an auction under Section 181 of the Customs Act, 1969 is given to the importer to redeem the same on payment of 20% redemption Fine of Rs. 4338687/- (Rupees four million three hundred thirty eight thousand six hundred and eighty seven only). Equivalent to the value of offending goods and mentioned by the department (i.e. 20% of Rs. 21693430/-) in terms of SRO 499(I)/2009 dated 13.06.2009 in addition to payment of leviable duty and taxes chargeable thereon. Penalty of Rs.300,000/- (Rupees three lacs only) is also imposed on the importer and Rs.100,000/- (Rupees one hundred thousand) on clearing agent for violation above mentioned provision of law.

3.Being aggrieved and dissatisfied with the Order-in-Original, the appellant filed the appeals before this Tribunal on the grounds incorporated in the memo. of appeal. The appellant's counsel argued strictly in consonance with those and prayed for acceptance of appeal and the Order passed by the adjudicating authority may kindly be set aside in the interest of justice.

4.No cross objection under subsection (3) of section 194A of the Act have been submitted by either of the respondent within the stipulated period prescribed therein. However, on the date of hearing the representative of the respondent forcefully defended the order passed by respondent No. 2 being correct in facts and law. Therefore, need not to be disturbed and be maintained while dismissing the appeals.

5.Heard and perused the record and the relied upon documents/judgments by the appellant's. Prior to dilating upon other factual and legal aspect of the case, it is of vital importance for us to dilate upon the invoking of Section 33 of the Sales Tax and Section 148 of the Income Tax Ordinance, 2001 and jurisdiction of Collectorate of Customs Adjudication and power of respondent No.2 in the matter pertaining to Sales Tax and Income Tax, falling under the ambit of the provision of section 11 and section 162 of the Sales Tax Act, 1990 and Income Tax Ordinance, 2001, which respondent No. 2 assumed on the strength of letter of clarification issued by the Federal Board of Revenue vide letter No. 3(32) TAR-1/90 dated 06.08.2012 after obtaining a legal opinion from the Ministry of Law and Justice, legality of Which has been challenged by the consultants with the submission that neither Board nor Ministry of Law have any mandate to interpret the provision of statute passed by the legislature for obtaining the desired results of their choice as the job of interpretation of statute rest with the High/Supreme Courts of Pakistan and in support of their stance relied upon reported judgments 1996 SCMR 1232 Central Insurance Company v. CBR and 2005 PTD 2462 M/s. Lever Brothers Pakistan Ltd. v. Customs Sales Tax and Central Excise Appellate Tribunal and in regards to the jurisdiction and powers of the Officer of Clearance Collectorate and Adjudication relied upon several reported judgments of this Tribunal and High Courts.

6.upon perusal of the show-cause notice, we have noticed with great concern that the respondent No.2 has invoked section 33 of the Sales Tax Act, 1990 and section 148 Income Tax Ordinance, 2001 without going through section 33 of the Sales Tax Act, 1990 despite being mandatory upon him as it is settled proposition of law that a judge should wear all the laws of the land under his sleeves, section 33 of the Sales Tax Act, 1990 is a penal section and contains penal clauses, which are to be invoked on the contravention of charging/respective Sections of the Sales Tax Act, 1990, this Section is synonymous to section 156(1) of the Customs Act, 1969. Meaning thereby, that the clauses of section 33 cannot be invoked unless charging /relevant sections are invoked by the authority empowered under the respective provision of Sales Tax, 1990. Similarly, section 148 of the Income Tax Ordinance, 2001 contains procedure for collection of Income Tax at import stage by the authorities referred therein. Meaning thereby that the said sections are independent under which no charge can be invoked. No show-cause notice can be issued under these sections. Issuance of show-cause notice on the basis of irrelevant sections renders it and the order-in-original is 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) 88 Taxation 128 (Lah), 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.

7.For further crystallizing, the issue relating to recovery of short paid sales tax and income tax. We are indebted to peruse section 30 of Sales Tax Act, 1990 and section 228 of the Income Tax Ordinance, 2001 and have observed that the legislature appoints under the said Sections different organs of the FBR as Officer of Inland Revenue for exercising powers under the respective Sections of the Act/Ordinance, delegated through statutory notifications or under Section 207 of the Income Tax Ordinance, 2001. In these Sections neither Officers of Clearance Collectorate nor respondent No. 2 figures anywhere nor in charging section 11 of the Sales Tax Act, 1990 or section 162(1) of the Income Tax Ordinance, 2001. Therefore, the respondents Collectorate under no circumstances assume jurisdiction in the matter of Sales Tax/Income Tax. Therefore, neither respondent collectorate nor respondent No. 2 are empowered to lay hands on the matter falling within the ambit of section 11 of the Sales Tax Act, 1990 and section 162(1) of the Income Tax Ordinance, 2001. These sections empowers the Officers of Inland Revenue/ Commissioner of Income Tax 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 recovery proceeding have to be carried out under the aforesaid provision of the Sales Tax Act, 1990 and Income Tax Ordinance, 2001.

The assumption of jurisdiction and powers on the strength of Boards letter C.No. 3(32) TAR-I/90 dated 06.08.2012 by respondent No. 2 is patently based on misconception and lend no help to him as Board have no mandate to interpret the provision of the Act or amend the provision. It can only give opinion it is for the judicial fora to interpret the provision of statute and our opinion stood validated from the reported judgment 1993 SCMR 1232 in the case of Central Insurance Co. v. Central Board of Revenue the Hon'ble Supreme Court of Pakistan held that "Board's view as to the interpretation of law do not have the force of law and the exception would be, where a fiscal statute is involved, that should be implemented with strict impartiality" and 2005 PTD 2462 M/s. Lever Brother Pakistan Ltd. v. Customs Sales Tax and Central Excise Appellate Tribunal, Karachi that "CBR has no place to in the Scheme of Law, conferred with the jurisdiction to interpret any law, statutory or in exercise of any deliberate authority i.e. subordinate legislation" whereas, in 2016 PTD (Trib.) 107 Qazi CNG Station, Gujrat and another v. Directorate General of Intelligence and Investigation-FBR, Karachi and 02 others, this Tribunal held that "statute can be amended by the Parliament and a notification through a notification not through any communication. In the absence of amendment of notification, clarification issued by the department could only be termed as opinion and it would not at all amend the notification". Therefore, assuming powers on the strength of letter of the Board is palpably illegal beside fatal for the health of the case. Even otherwise, the letter's speaks about collection of Federal Excise Duty at import stage in the same manner and at the same time, as if it is a duty of customs payable under the Customs Act, 1969 (IV of 1969) and for collection of the same the provision of section 31A also apply. Reference of section 7 of the Federal Excise Act, 2005 has also been given simply for clarification that for collection of import duty provision of Sales Tax 1990 is applicable.

In order to lend clarity expression of Section 11 of the Sales Tax Act, 1990 and Section 162(1) of the Income Tax Ordinance, 2001 are referred, which empowered the Officer of Inland Revenue and Commission of Income Tax and none else, which includes also respondent No. 2 . He assumed the power not vested with him under the provision of sections 11 and 162(1) of the Sales Tax Act, 1990 and Income Tax Ordinance, 2001. Therefore, we hold without any reservation that the Customs Collectorates does have powers to collect and enforce payment of Sales Tax and Income Tax at the time of clearance. The plea that the Customs is empowered to recover the short paid amount of sales tax and income tax at the import stage under section 202 of the Customs Act, 1969 is also based on mistaken belief. The fact of matter is Customs Collectorate could recover the amount of Sales Tax and Income Tax only upon receipt of notice from the Officer of Inland Revenue and Commissioner of Income Tax in terms Section 48 of The Sales Tax Act, 1990 and section 140 of the Income Tax Ordinance for recovery of the adjudged amount of Sales Tax and Income Tax after due process of law. Therefore, it is our considered opinion that the Clearance Collectorates does have the authority to collect Sales Tax and Income Tax at import stage in the capacity of collecting agent and can recover escaped/short payment paid Custom Duty and Regulatory Duty levied on the imported goods under Sections 18, 18A and 18C of the Act under section 202 ibid., after due process of law, but have no powers to adjudicate the cases of short recovery/evaded amount of Sales Tax and Income Tax falling within the ambit of Section 11 of the Sales Tax Act, 1990 and Section 162(1) of the Income Tax Ordinance, 2001, our opinion stands fortified from the reported/unreported judgment of the superior Judicial Fora namely 2011 PTD (Trib.) 110, 2010 PTD (Trib) 2086, SCRA No. 01/2010, 2004 PTD 801 , C.P. No. D 216/2013, 2015 PTD 702, 2016 PTD (Trib.) 969, 2016 PTD (Trib.) 1008, 2016 PTD (Trib.) 2125 , Appeal No. K-1635/2014 , Appeal No. K-1029/2016 Appeal No. K-1030/2016, Appeal No. K-1343/2015, 2016 PTD (Trib.) 2463, 2017 PTD (Trib.) 481.

The opinion formed by us is well assisted by the judgment reported at 1994 CLC 1612, 1990 PTD 29, 2005 PTD 23 and -- in 2007 PTD 250 titled as Collector of Sales Tax and Federal Excise v. Mst. Qasim International Container Terminal Pakistan Ltd., wherein it has been held that "There is a clear distinction between the charging provision of Statute and the machinery part thereof. It is axiomatic that mode of manner of recovery does not alter, the nature of tax nor a tax can be introduced or import by implication." In 2008 PTD 1973 Xen Shahpur Division v. Collector of Sales Tax (Appeal), Collectorate of Customs, Federal Excise and Sales Tax, Faisalabad, for clarity of the Rule of Interpretation of Statute, golden principle was outlined in so many words reading as "That fiscal law is to be applied with full authority and its natural meaning-one has to look merely at what is clearly said and there is no room for any intendment-neither there is equity about a tax nor presumptions as to tax - nothing is to be read in, nothing is to be implied -- one can only look fairly at the language used" The Hon'ble Supreme Court of Pakistan in reported judgment 2006 SCMR 12, titled as DGI&I and others v. Al-Faiz Industries (Pvt.) Ltd. and others held that:

"If the law have prescribed method for doing a thing in a particular manner such provision of law is to be followed in letter and spirit and achieving or retaining the objective of performing or doing of a thing in a manner other than provided by law would not be permitted--- each and every words appearing in a Section is to be given effect and no other word is to be rendered as redundant or surplus - when the legislature required the doing of a thing in a particular manner then it is to be done in that manner and all other manner or modes of doing or performing that things are barred -- if the doing of a thing is made lawful in a particular manner the doing of that thing in conflict with the manner prescribed will be unlawful as per maxim "Expression facit cessare taciturn

It is therefore held in the light of the expression of statute and law laid down in the referred in above deliberation and cases reported at, that the exercise of jurisdiction on this point by Respondent No. 2 is without lawful authority and jurisdiction/powers. Hence, issuance of show-cause notice and passing of Order-in-Original are held to be ab-initio void and as such coram non judice on this point also.

8.Reverting back to the issue in hand, one has to examine the word "declaration" and how it is made and on the basis of which documents while transmitting GD under the provision of section 79(1) and Rule 433 of the Act/Rule. Since, no definition of the said word is given in Section 2 of the Act, literal dictionary meaning has to be adopted, which is as per Marriam Webster Dictionary is " the act of making as official statement about something, or the act of declaring something or something i.e. stated or made known in an official or public way or a document that contain an official statement, or documents that make a declaration, in short the act of declaring" whereas 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. The declaration made under Section 79(1) and Rule 433 of the Act/Rules should be based on which documents, those are prescribed in Section 2(KKa) which read as "documents means a goods declaration, application for claim of refund, duty drawback or repayment of duty , import or export general manifest passenger manifest, bill of lading, airway bill, commercial invoice and packing list or similar other forms or documents used for customs clearance or making a declaration to customs, whether or not signed or initiated or otherwise authenticated". Since meaning of declaration is traced and definition of the documents on the basis of which declaration, the question to be answered is that how a declaration of an importer can be termed as misdeclaration as per the expression of Section 32 of the Act, for which reproduction of same is vital, which is as under:

Section 32 False statement, error, etc. ------ If ant person, in connection with any matter of customs, ----

(a) makes or signs or causes to be made or signed, or delivers or causes to be delivered to an officer of customs any declaration, notice, certificate or other document whatsoever, or

(b) makes any statement in answer to any question put to him by an officer of customs which he is required hr or under this Act to answer,

Knowing or having reason to believe that such document or statement is false in any material particular, he shall be guilty of an offence under this section. (Emphasis Supplied)

A declaration of an importer could only be termed misdeclared, if during the course of examination his given description, quality, quantity or weight is found contrary or any document delivered to a custom officer is found to be false, forged or tampered or a statement given in answer to any question put to him is found to be false. Prior to levelling allegation under the said section one has to determine that whether the importer has given that declaration or submitted documents/statement knowingly or having reason to believe that such documents or statement is false in material particular. Meaning thereby that it contemplate, the existence of a personal "knowledge". Believe being a conviction of the mind arising not from actual perception or knowledge but by way of inference of evidence received or information derived from others. If it falls short of any absolute certainty because the accused in accounting for his possession, may be able to show that the ground upon which is based are unsubstantial. Fazal Kader Chowdri v. Crown PLD 1952 FC 19. Whereas, the term "reason to believe", has to classified at a "higher pedestal, then mere suspicion and allegation, but not equivalent to prove evidence. Even the strongest suspicion cannot transform in "reason to believe". The criteria laid down (to differentiate between mere suspicion and reason to believe) has to be, that some tangible evidence is available against the accused, which if left un-rebutted, may leave to the inference of guilt" and 2011 PTD (Trib.) 2220.

9.Now we determine that as to whether any misdeciaration has been made by the appellants at the time of transmitting GD with the Customs for obtaining clearance of his consignment, for that relevant documents are scrupulously examined and observed that the appellant imported 5414400 pieces of Latex Surgical Gloves weighing to 49825.40 kgs, each glove was packed in a airtight medicated paper container, subsequently packed in a box akin to tissue and those boxes as per arrangement between the importer/ shipper were packed in cartons and thereafter in master carton, weight of those were 31364.32 kgs, in addition to that the gross weight was 80390 kgs. The documents at no where transpires that the appellant No.1 imported 05 items namely Latex Surgical Gloves and air tight medicated paper container, boxes, cartons and master carton. Resultant, appellant transmitted single declaration instead of 05 separate items, those were subjected to examination, which confirmed the declaration in all aspects. Amazingly, the examiner concerned despite not warranted under law reported the weight of the gloves with the addition of air tight medicated paper container and boxes, which was 23120 kgs and as such increase the weight of the goods to the extent of aforesaid kgs, without reporting any excess quantity either in pieces or weight. With this it is establish that no misdeclaration either in quantity or weight was made by the appellant . At this juncture , it is pertinent to adduce that Latex, Vinyl and Nitril examination and surgical gloves are to be assessed on the basis of Valuation Ruling 960/2016 dated 06.10.2016 issued by Director, Directorate General of Valuation under the provision of Section 25A @ US $ 3.95/kg C&F, on which the duty and taxes on the appellant imported quantity comes to Rs. 11,103,671.00. The bona fide of the appellant, who is a Trust of Shaheen Foundation owned by Pakistan Air Force can be gauged from the fact that their declared value per unit was US $. 8.802/kg and they deposited upfront duty and taxes of Rs. 248,65143.00 i.e. in excess by Rs. 13761526/-, which an ordinary industrial/commercial importer would had not deposited/paid and opted for obtaining clearance on the basis of value determined through Valuation Ruling No. 960/2016 dated 06.10.2016.

10.We are at loss to digest the rationale adopted by the respondent No. 1 and his subordinates of ignoring the profile of the importer and excess payment made by him on its consignment in comparison to the other importer and creation of a separate item for the weight of airtight medicated paper containers, boxes and cartons and assessing those as Latex Surgical Gloves in the absence of availability of 2512396 pieces of gloves and assessing those @ US$ 8.802/kg, and creation of additional amount of duty and taxes of Rs. 11537868.00. The duty and taxes on the air tight mediated paper container and boxes and cartons, if the declaration in regards to import of these items had been made by the appellant separately under the respective PCT headings and on the value if determined by the Director, Directorate General of Valuation under the provision of Section 25A or with the application of identical /similar goods value available in the data reservoir maintained by PRAL under Rule 110 of Chapter IX of the Rules. When no separate declaration for these items have been made by the appellant, no duty and taxes are either to be deposited or can be charged. The respondent No. 1 and his subordinate added the weight of container, boxes and carton in the weight of gloves in derogation of the unit of measurement given in First Schedule to the Act, which speaks with clarity about the goods imported, which in the case of appellant are gloves without any exception. The agony of the appellant does not ends here as evident from the fact that the subordinate of the respondent No. 1 framed contravention report and forwarded to respondent No. 2 with the allegation that the declared weight of the gloves is found to be excess by 23120 kgs which is equivalent to 46.39% despite not. The respondent No. 2 without going through the documents forming the basis of declaration and examination report transmitted show-cause notice in mechanical manner, when the appellant consultant, controverted the allegation, successfully, he ignored those in addition with the question of powers/jurisdiction and passed the slip shot and bald order, through which he held the charges as levelled in the show-cause notice established. We are flabbergasted to note that he does not took pain to confront the respondent No.1 and his subordinate that under what provision of law weight of essential/non essential packing have been added in the weight of the goods and to the fact that whether it is just and proper and legal to charge duty and taxes in the absence of availability of the goods, apparently which are non existent. In the absence of answer to the said query the impugned order would not had been passed by him, which he did and caused hardship and financial losses beside multiplication of the agony of the appellant.

Notwithstanding to above, as regards to the line of arguments adopted by the representative of the respondents for justifying the proceedings that the weight of essential/non essential packing is deemed to be part and parcel of the weight of the goods so imported and to be construed as UOM /quantity (contents) as mentioned against each PCT heading of First Schedule to the Act. It is based on misconception and inapt interpretation of the UOM and in derogation to the First Schedule to the act which speaks about the contents of the imported goods/items sans weight of essential/non essential packing, which is disposed off, after unwrapping/using the contents of actual goods, as trash. Only the weight of imported goods matters and that is to be construed as goods, the weight of essential/non essential packing, cannot be considered through any figment of imagination as an integral part of the goods so imported. The duty and taxes has to be chareed/collected on the goods actually imported for use/consumption of the general public. No provision of the Act, empowers the Officer of Customs to add the weight of essential/non essential packing , the vital element is its cost not weight and this is validated from the provision of section 25 which speaks about determination of value of the "goods" and "category of the goods" and Section 25A speaks about "goods" and "class of goods" which means the goods so imported and its quantity excluding the weight of essential/non essential packing, which is not for use instead "trash" which cannot be used as goods so imported through any stretch of imagination or definition available in reputed dictionaries of English language. Weight of essential/non essential packing is immaterial. Whereas, in the case of appellant goods not even the essential/non essential packing is disposed off as trash, even the gloves itself after using as examination/surgical gloves are not ought to be used twice. Nevertheless, addition of cost of essential/non essential packing material in the value of the imported goods had to be made as defined in Serial No. (iii) of clause (b) of subsection (2) of section 25 of the Act. while determining the value of imported goods under the concept of "Transaction Value" within the meaning of section 25(1) of the Act, only then when it is confirmed that the importer has incurred that but has not included those in the price actually paid or payable of the imported goods. This means that the onus to prove that the cost of packing whether for labour or essential/non essential packing material is not included by the exporter, rests on the shoulder of the Officer of Customs in terms of Articles 117 and 121 of Qanun-e-Shahadat (10 of 1984), unless it is not proved through tangible incriminating evidence, the cost whether for labour or essential/non essential packing material is not permitted to be added under law. The representative of the respondents also laid emphasis on Serial No. (ii) of Clause (b) of subsection (2) of section 25 of the Act, which read as "the cost of container which are treated as being one for customs purpose with the goods in question". This is in consonance with the illustration made in Rule 5(a) of General Rules of Interpretation, i.e. for the purpose of classification and valuation items listed therein or akin to those are to be treated as integral part of the goods so imported e.g. "Camera Cases Musical Instrument Cases, Gun Cases, Drawing Instrument Cases Necklace Cases and similar containers specifically shaped or fitted to contain specific article or set of article, suitable for long term used as presented with the article for which they are intended, shall be classified with such articles when of a kind normally sold therein. This Rule does not, however apply to the container which give the whole its essential Character." In contrast the goods imported by the appellant are not in any manner akin to those, resultant, stand excluded from Serial No. (ii) of Clause (b) of subsection (2) of section 25 ibid. Notwithstanding, when against any imported item a ruling is in field issued by Director, Directorate General of Valuation under Section 25A of the Act, for levy of custom duty, he determine those to the extent of unit as given in the respective applicable PCT of First Schedule on C&F basis, meaning thereby in the said custom value every single element/ expense is taken into consideration by him i.e. "cost" not "weight" which is immaterial due to the fact that the container or akin receptacle, in which goods or item products are packed or filled are to be thrown after use of the contents in the garbage bin as trash. In the instant case the item so imported namely Latex Surgical Gloves are subject to assessment for levy of duty and taxes with the application of valuation ruling No. 950/2016 dated 06.10.2016 and on the net contents of the goods as weight of essential/non essential packing cannot be made part of assessable weight, if i.e. allowed to be added, being in derogation of the norms of business, WTO Agreement on Valuation and provision of section 25 of the Act, above all "extortion". No commodity is sold without its essential packing and while a seller offering the goods for sale includes the incidental charges in its final cost. In juxtaposition an importer/buyer will also not lift the imported goods without its essential packing. The value of essential/non essential packing is in fact inbuilt in the custom value determined under section 25A of the Act, after following the method laid down in section 25 ibid. Therefore. valuation determined under section 25A could not be further saddled in the name of weight of essential packing. It is apparent from the Valuation Ruling that it is on C&F value of the net contents of the goods so imported, in which addition of weight of essential/non essential packing is not supported by warrant of law. If it allowed as opined by the respondents for generating revenue for the exchequer on that weight containing no goods. In terms of the respective PCT Heading of the First Schedule, duty and taxes can only be recovered on the net contents of the imported goods. Essential/non essential packing cannot be construed as goods by any mean and as defined in section 25 and First Schedule to the Act, without supplying the goods declared in Goods Declaration transmitted under the Provision of Section 79(1) and Rule 433 of the Act/Rules . In the instant case, the respondents desires to collect duty and taxes of Rs.11537868/- on 23120 kgs valuing to US $ 203502.24 on the weight of essential/non-essential packing in the absence of availability of 2512396 pieces of Latex Surgical Gloves in addition to duty and taxes of Rs. 224865143.00 on imported net contents of goods of 49825.68 Kgs comprising of 541400 pieces. This type of generation of revenue is in derogation of the provision of section 25 of the Act, and Article 13 of Constitution of Islamic Republic of Pakistan and tantamount to "high minded thing" "shabby thing" and "dirty tricks" precisely "extortion" and deemed to be double taxation not permitted under the Act/ Constitution of Pakistan and even of the world and the law laid down in reported judgment 1992 PTD 593, 2003 PTD (Trib.) 928, 2010 PTD 1515 and 2009 PTD (Trib) 2025. (Emphasis Supplied)

12.The appellant No. 2 as observed from show-cause notice and Order-in Original and as verbally explained by the learned Counsel, has been held guilty of an offence under sections 32(1) and (2) of the Act. The charge framed in the notice relates to a claims made by the importer through him. As per show-cause notice the only charge against appellant No. 2 is that he filed GD's for the clearance of the goods of appellant No. 1 and for the said act, for which he is accorded License by the Licensing Authority, assertion is that he should not had made the declaration in the GD and since he made, the said act of his 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 respondents 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 as deliberated by us in para 15 supra. Here the only charge against the appellant No. 2 is that he filed GD on the basis of the documents supplied by the appellant No. 1. There is no charge that his declaration in respect of description, quantity, weight 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 false 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 respondents that violation of the said section did take place appears to be wrong. In fact, the charges against the appellant No. 2 are wholly misconceived, as his 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 as contemplated in section 80 and Rule 438 of the Act/Rules 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 mis-understood the scheme, meaning and 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 Act, 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 Act, unless he violates the governing condition of his License.

13.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, we hold that the appellants have been dragged needlessly in the litigation in the absence of any wrong doing or misdeclaration within the meaning of Section 32 of the Act. We, therefore, allow this appeal, vacate the Show-Cause Notice and set-aside the impugned Order-in-Original No.603236-25112016. The appellant may apply to the relevant authority for a delay and detention certificate which application shall be considered and disposed of by the said authority strictly in accordance with law and in the light of section 14-A(2) of Customs Act, 1969.

14.Order passed and announced accordingly.

HBT/100/Tax(Trib.) Appeal allowed.