SHAHBAZ ENTERPRISES VS ADDITIONAL COLLECTOR OF CUSTOMS, COLLECTORATE, 2018 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 2220 (2017)

Customs Act (IV of 1969)---

----Ss. 16, 79 & 80---SRO No.499(I)/2009, dated 13-6-2009---Public Notice No.08/2017, dated 12-3-2017---Letter No.SI/Misc/260/2015 dated 12-9-2015---Prohibition of import of fabric falling in the negative list for import from India---Declaration in respect of consignment shipped from Hong Kong, declaring to contain Polyester grey fabric of Chinese origin---Importer determined liability of payment of applicable duties and taxes---In terms of Public Notice No.08/2017, dated 12-3-2017, import of fabric falling in the negative list for import from India as per prevailing Policy Order would be viewed to be banned, if imported from any free port---Contention of the department was that the consignment of un-finished fabric was imported from China, but the importer had not produced manufacturer's certificate rather submitted wrong certificate---Certificate of origin was, however verified from the official internet website of China---Main contention of the department was that since certificate of origin had shown the name of the importer separately, hence the consignment was of Indian origin---Consignments imported from Dubai, were normally suspected and commercially viable to bring Indian origin goods from Dubai, but it seemed odd and illogical that consignment was taken from India to Hong Kong then shipped to Pakistan from Hong Kong---Freight element would make such consignment invioable and much expensive---Had the importer intended to bring Indian origin consignment, he would have done it through Dubai or Colombo etc., i.e. some nearby port---Department had made out case on frivolous grounds---Imported fabric was normal fabric from China and manufactured in China and it was freely imported item---Department was not justified to conclude that fabric in question was Indian origin---Additional Collector of Customs (Adjudication), ordered for outright confiscation of the consignment in terms of Ss.16 & 79(1) of the Customs Act, 1969 holding that the imported goods had been brought in violation of Import Policy and Public Notice No.08/ 2007, dated 12-3-2007---Said order, was set aside, in circumstances.

Muhabbat Hussain Awan for Appellant.

None for Respondents.

Date of hearing: 7th August, 2017.

ORDER

SYED TANVIR AHMAD, MEMBER (TECHNICAL-III).---This appeal has been preferred against Order-in-Original No.701613-16062017/2017 dated 01.06.2017 passed by the Additional Collector of Customs (Adjudication), Karachi.

2.Brief facts of the case are that Messrs Shahbaz Enterprises electronically filed Goods Declaration No. KAPW-HC-2222178-16.05.2017 declared to contain polyester grey fabric (qty 227 cartons), weight 14500 kgs of Chinese origin under PCT headings 5407.5100 at a total declared value of US$ 15449.75. The consignment is shipped from Hong Kong. The importer determined his liability of payment of applicable duties and taxes in terms of section 79(1) of the Customs Act, 1969. In order to check as to whether the importer has correctly paid the legitimate amount of duties and taxes, the under reference GD was selected for scrutiny in terms of section 80 of the Customs Act, 1969 and was referred to Examination for confirmation of description, quantity and other physical attributes of the goods. For ease of reference examination reports of two (02) containers out of 11 containers are re-produced as under:-

"Container No. TCNU8247266 KAPW-HC-222178-16-05-2017 no documents found in the container, goods examined and found description (1) polyester un finished fabric in roll" origin, not shown, approx net wt 13750 kgs. Rep sample is being forwarded to customs house lab for test for the confirmation of actual description, constituent material, complete composition, HS code specification and all other aspect as well as forwarded to custom house group-IV to check all aspect. Total cargo gross weight 14460 kgs vide KICT weightment certificate No. 970269 dated 18.05.2017. Images are attached, receipt No. 070672. The sample as received is in the form of off-white thin fabric. On test is found to be woven textile fabric made of multifilamental textured yarn composed of polyester-un dyed / unfinished fabric".

3.That in terms of Public Notice No. 08/2017 (A) dated 12.03.2017 read with letter No. Sl/Misc/260/2015 dated 12.09.2015 all import of fabric falling in the negative list for import from India as per the prevailing Import Policy Order (IPO) shall be viewed to be banned, if imported from any free port if not accompanied with the following documents:--

i).Certificate of the Manufacturer issued in favour of the shipper based in the free port, confirming the goods and quantity supplied.

ii).Certificate of origin (duly issued on the prescribed format i.e. blue sheet) shall be provided by the manufacturer authenticating the origin of the goods supplied.

iii).The certificate of origin must be stamped and endorsed by the export council / chamber of the originating country.

iv).Besides, the veracity of the certificate of origin shall be checked on line at the time of assessment.

4.The importer was asked to provide the foresaid documents through online message followed by reminder but the importer failed to provide the mandatory documents as prescribed vide the public notice referred to above which implies that goods have not been imported from China nor are of Chinese origin as claimed by the importer. The burden of proof, therefore, lies on importer in terms of section 187 of the Customs Act, 1969 to prove that the goods have been imported from China and are of Chinese origin. However, no corroborated proof has been put forth by the importers despite lapse of considerable period that the goods were imported from China and were 'made in China'.

5.This proves that the importer has deliberately and willfully imported the subject consignment in violation of section 16 of the Customs Act, 1969 read with Sr. No. 363 of Appendix "G" to the Import Policy Order, 2016 and Public Notice No. 08/2007 (A) dated 12.03.2017/ letter No. SI/Misc/260/2015 dated 12.09.2015. The value of offending goods is ascertained as Rs. 6,052,030/-involving duty and taxes to the tune of Rs. 3,339,752/-. The importers have, therefore, been found guilty of an offence of the provisions of sections 16 and 79(1) clauses 9 and 45 of section 156(1) after Customs Act, 1969 and section 33 clause 11(c) of section 33 of Sales Tax Act, 1990 and section 148 of the Income Tax Ordinance, 2001 read with S.R.O. 499(I)/2009 dated 13.06.2009.

6.The case was forwarded for initiation of adjudication proceeding under the aforesaid provisions of law read with S.R.O. 499(I)/2009 dated 13.06.2009 of the said consignment. The consignment was shipped from Hong Kong. The importer determined his liability of payment of applicable duties and taxes in terms of section 79(1) of the Customs Act, 1969.

7. Hearing in the case was held in the presence of importer, clearing agent, the Group DC and the Group A.O. Detailed deliberations were held by both sides. The relevant Group has submitted the following comments:

(a)It is intimated that in terms of Public Notice No. 08/2017 (A) dated 12.03.2017 read with this Collectorate's letter No. SI/Misc/260/2015 dated 12.09.2015 all consignments shipped from any free port shall be accompanied, inter alia, with the following documents:-

(i)Certificate of the Manufacturer issued in favour of the shipper based in the free port, confirming the goods and quantity supplied.

(ii).Certificate of origin (duly issued on the prescribed format i.e. blue sheet) shall be provided by the manufacturer authenticating the origin of the goods supplied.

(b)Certificate of origin provided by the importer / clearing agent during the course of hearing is not in accordance with the aforesaid Public Notice / letter dated 12.09.2015 due to the following observation:-

i).Certificate furnished shows shipper / exporter as M/s. Yiwu Xianglong Import and Export Co. Ltd. Yiwu, China whereas the import documents provided with Goods Declaration (GD) are silent about this shipper / export.

ii).Actual shipper based in Hong Kong i.e. Messrs Atari HK Ltd., is mentioned in the certificate as 'on behalf (OB)' while on line verification provided does not mention the name of Messrs Atari HK Ltd. Besides over writing.

iii).No Corroborated evidence provided that Messrs Yiwu Xianglong Import and Export Co. Ltd. Yiwu, China is involved in manufacturer of textile fabric and they are the actual manufacturer of the impugned fabric and after manufacturer the same were exported to a Hong Kong based supplier.

iv)The consignment has been imported /shipper from Hong Kong. No shipping documents with regards to transportation of same from China to Hong Kong have been provided.

c).Certificate of the Manufacturer in favour of the shipper based in the Hong Kong have not been provided as required under the Public Notice.

d).I have heard the contention of the importer / clearing agent and D.R. and have come to the conclusion that the imported goods have been brought in violation of sections 16 and 79(1) of the Customs Act, 1969, read with Sr. No. 363 of Appendix 'G' to the Import Policy Order, 2016 and Public Notice No. 08/2007 (A) dated 12.03.2007 read with letter No. SI/Misc/260/2015. The importer has also failed to produce certificate of manufacturer issued in the favour of the shipper based in the free port, confirming the goods and quantity supplied, and a certificate of the manufacturer in favour of the export clarifying the chain of supply of goods. Moreover, the certificate of origin furnished by the importer suffers from infirmities as detailed in the departmental reply. I, therefore, order for outright confiscation of the consignment in terms of sections 16 and 79(1) of the Customs Act, 1969 read with section 33 clause 11(c) of the Sales Tax Act, 1990 and section 148 of the Income Tax Ordinance, 2001 read with Sr. No. 363 of Appendix 'G' to the Import Policy Order, 2016 and Public Notice No. 08/2007(A) dated 12.03.2007 read with letter No. SI/Misc/260/2015 dated 12.09.2015 and S.R.O. 499(I) of 2009. A penalty of Rs.100,000/- and Rs. 25,000/- is imposed on the importer and the clearing agent respectively in terms Clauses 9 and 45 of section 156(1) of Customs Act, 1969.

8.An appeal was filed against the order-in-original. The appellant importer filed appeal on following grounds:--

a).The impugned order of the Respondent No.1 is against the facts, ab initio illegal, void, mala fide in as much as the same is influenced by circumstances not permitted by law.

b).That the impugned order of the Respondent is against the prevailing department practice and thus the same is discriminatory and in violation of Customs Act, 1969 and Article 25 of the Constitution of Islamic Republic of Pakistan, 1973.

c).That the goods have been imported from Hong Kong which is the integral part of China and the Certificate of Origin No. 17C3307YO745/00031 dated 22.04.2017 issued by the China Council for the Promotion of International Trade government of China was submitted to Customs Authorities for consideration but they did not accept the certificate.

d).That the imported goods Polyester Grey Fabric, assessable under HS Code 55151200 is freely importable except from Israil or India. The Bill of Lading No. A147407500 dated 26.04.2017 is a valid documentary evidence to the effect that the goods were legally imported from Hong Kong by SS Inter Asia therefore, there is no question of misdeclaration of Country of Origin.

e).That the confiscation of goods which are freely importable is against the provision of Customs Act, 1969 hence, the impugned Order-in-Original No. 701613 dated 16.06.2017 is liable to be set aside.

f).That the adjudicating authority has become the party of the case and decided the matter against the appellant / importer on the basis of presumption and assumption that the goods were imported from India. The Impugned Order-in-Original No. 701613 dated 16.06.2017 is therefore, defective order not covered under the four corners of the law, hence required to be set aside.

g).That the appellant/importer has already paid duty and taxes of imported consignment but in the impugned Order-in-Original No. 701613 dated 16.06.2017 nothing is mentioned about the refund of duty and taxes, therefore the impugned Order-in-Original No.70163 dated 16.06.2017 is defective order being not speaking order.

h).That goods cannot be confiscated unless it is proved that they have been illegally imported in contravention of any restriction or prohibition provided imported goods are not mentioned in sub-clause (a) of clause (s) of section 2 of the Customs Act, 1969.

i).That nothing is mentioned / marked or printed on the imported goods / fabric or on packing cartons boxes as "Made in India" therefore, merely on the basis of presumption or assumption imported goods cannot be treated as Indian origin goods, therefore, confiscation of goods is illegal and impugned Order-in-Original is liable to be set aside.

j).That imported goods does not fall in prohibited, restricted or banned items list under Appendix "A" or "B" of Import Policy Order, 2016, therefore, imported goods cannot be confiscated out rightly.

k).That it is an admitted position that there is no direct evidence with the department, even otherwise thus, in terms of Sr. No.1(b) of Table to S.R.O. 499(I)/2009 dated 13.06.2009 the imported goods are releasable against redemption fine @ 20%.

l).That an identical case of Grey Fabric imported by Messrs Nova Impex, Lahore was adjudicated by Collector of Customs, Appraisement, Dry Port Mughalpura, Lahore in favour of importers vide Order-in-Original No. 02/2017 the case of appellant deserves same treatment without discrimination.

m).That the Certificate of Origin No. 17C3307YO745/00031 dated 22.04.2017, has already been submitted to the Customs, therefore, there is no justification to treat the imported consignment as of Indian origin without any evidential proof.

9.I have gone through the case record as well verbal arguments of the appellants as well as respondent. The contention of the department is that the consignment of an-finished fabric was imported from China but the importer appellant has not produced manufacturer's certificate and that the appellants have submitted wrong certificate of origin. The wording 'on behalf of Messrs Atari HK Ltd." is not on original certificate. The certificate of origin was however verified from the official internet website of China. The certificate was confirmed except wording of "on behalf of Atari HK Ltd". This shows that certificate was issued for this consignment but sold to present importer whose name is mentioned on the certificate. Moreover, on a question the department stated that the consignment was sold in Hong Kong and supplied from there. The DR confirmed that documents, container number, voyage and particulars of shipment were verified. The consignment was shipped from Hong Kong.

10.The main contention of the department is that since certificate of origin shows name of appellants separately, hence the consignment is of Indian Origin. I fail to understand as to how department is alleging that the consignment is of Indian origin. It seems commercially not viable to take consignment from India to Hong Kong and then imported from Hong Kong to Pakistan.

The consignment being imported from Dubai are normally suspected and commercially viable to bring Indian origin goods from Dubai. But it seems odd and illogical that consignment is taken from India to Hong Kong then shipped to Pakistan from Hong Kong. The freight element will make such consignment unviable and much expensive. Had the importer intended to bring Indian origin consignment, he would have done it through Dubai or Colombo etc i.e. some nearby port. The department was asked what is description of fabric and are their some marks or printed words or anything on packing carton to prove that this is of India origin or is this specific type of cloth manufactured only in India?

The DR replied that as per laboratory report the cloth was found as "woven textile fabric made of multifilament textured yarn composed of polyester-undyed/unfinished fabric". This is unfinished white fabric. The DR confirmed that such fabric is made in China and in other countries. He further stated that this bears no marks or specification or any evidence which prove that it is of Indian origin.

11.The contention of the department is that since the importer did not submit manufacturer's certificate therefore, this may be treated as of Indian origin. It was asked whether there is any such condition in import policy. It was told that there is no such condition, however, the department has made this SOP. On a query the DR stated that all particulars of the consignment matches with the certificate of origin except the extra wording "on behalf of Messrs Atari HK Ltd".

12.In view of the above discussion it is concluded that the department has made out case on frivolous grounds. The consignment is shipped from Hong Kong and declared that of Chinese origin. Certificate of origin was confirmed from the official website and all particulars are confirmed and matched with the consignment's details. Shipment documents of container No. were verified by the department. This is normal fabric imported from China and manufactured in China. The importer did not claim any benefit of FTA. Moreover, it is freely imported item. It is not understood as to how the department concluded that this is of Indian origin. It is not possible neither commercially viable to send Indian goods from India to China and then from China to Pakistan. The case has been decided on whimsical grounds.

13.In view of above, the appeal of the appellant is accepted. The order-in-original is set aside. The appeal is disposed off accordingly.

HBT/82/Tax(Trib.) Appeal accepted.