JAMIL BROTHERS VS The COLLECTOR OF CUSTOMS, 2018 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 2282 (2017)

Customs Act (IV of 1969)---

----Ss. 80, 83, 179, 193 & 195---SRO No.565(I)/2006, dated 5-6-2006---Assessment of duty---Re-opening of past and closed assessments---Goods in question were assessed under mandate of S.80 of the Customs Act, 1969 and were cleared under S.83 of the Act and different orders were passed at the relevant time---All said assessment orders attained finality; which were neither re-opened by the Collectorate of Customs, nor were challenged by the authorities before the appropriate forum of law---Collectorate of customs, had attempted re-opening of said past and closed assessment orders with mala fides and misusing the jurisdiction under S.179 of the Customs Act, 1969---Assessment orders passed by Collectorate at the relevant period of clearance had attained finality, and imported goods had been consumed by the importer in manufacturing process---Importer contended that proceedings initiated through issuance of show-cause notice and impugned order-in-original, amounted 'double jeopardy' and attracted the principle of res judicata---Impugned order-in-original being not sustainable under the law, was set aside and case was remanded to the authorities along with the directions to re-adjudicate the matter on account of paid amount of customs duty through extra paid bill.

Muhammad Adeel Awan for Appellant.

Arif Maqbool, Senior Auditor for Respondents.

Date of hearing: 28th February, 2017.

JUDGMENT

MUHAMMAD NADEEM QURESHI, MEMBER JUDICIAL-I.---By this judgement we intend to dispose of the instant appeal filed by the appellant under Section 194-A of the Customs Act, 1969, against Order-in-Original No.56 of 2014-2015 dated 18-08-2014, passed by the Collector of Customs (Adjudication-II), Karachi.

2.Brief facts of the case are that the appellant importer in an industrial concern and indulged into manufacturing of "Composite Roll-Formed Doors and Windows". The appellant imported its raw material "Electrolytic Galvanized Steel Coils" as authorized under Item 27 of SRO. 565(I)/2006 dated 05.06.2006. The appellant imported Forty-Sex (46) consignments during the period of September 2009 to December-2010, the appellant imported. The goods were assessed under the mandate of Section 80 of the Customs Act, 1969 and customs cleared under Section 83 ibid under Forty-Six different assessment orders passed at the crucial time. All those assessment orders under Section 80 ibid attained finality which were neither re-opened by the respondent Collectorate under section 195 ibid nor challenged by the respondent under the mandate of section 193 ibid before the appropriate forum of law. The collectorate has attempted re-opening of the said past and closed assessment orders under apparent non-bona fides under misuse of jurisdiction of section 179 ibid. Which has been attempted in absence of false statement, false declaration or false document for double punishment as the same has been adjudged under Order-in-Original 27/2012 by the Model Customs Collectorate Multan. The respondent is an officer appointed under Section 3 of the Customs Act, 1969 and limited to work under the mandate of Section 4 ibid. But he acted arbitrarily for recovery of Sales Tax under Section 11 or 36 of the Sales Tax Act, 1990 and Section 162 of the Income Tax Ordinance, 2001. He took the law into his hands and passed the impugned order with reference to recovery of Sales Tax and Income Tax. As such the respondent mis-used the jurisdiction, rather arbitrarily assumed the jurisdiction of the concerned Commissioner Inland Revenue with relation to the Income Tax and Sales Tax, collected or collectible at the time of import in advance on behalf of another government department and tended to encroach the same for undue recovery measures. Whereas, the appellant has discharged his liability under Income Tax Ordinance, 2001 and Sales Tax Act, 1990, during the crucial periods. The impugned Order-in-Original is an attempt to double jeopardy against the appellant as the cognizance against the same issue has already been taken by the Collectorate of Customs, Multan vide Order-in-Original. The assessment orders, passed by the respondent collectorate at the relevant period of clearances have attained finality, and the same goods had been consumed by the appellant in manufacturing process accordingly at the crucial cost of the said imports of raw material. The attempt to recover the amount of duty and taxes and other penalties at this belated stage is unwarranted by the facts and laws of the case. The operative part of the impugned Order-in-Original No.56 of 2014-2015 dated 18-08-2014 passed by adjudicating officer is as follows:--

"I have gone through the record of the case, perused the written reply of the importer and considered the replies of the Model Customs Collectorate and the Directorate General of Intelligence and Investigation. It has been alleged by the detecting agency that the importer imported the above mentioned consignment without payment of concessionary Customs Duty @ 10% charge-able against S. No. 27 of SRO 565(I)/2006 dated 05-06-2006, resulting in non-payment of customs duty and short payment of Sales Tax and Income Tax totalling of Rs. 56,917,434/ -. The importer has not disputed these facts and in fact as per Collector's, Model Customs Collectorate (Multan), letter dated 13-06-2014, the respondent was earlier depositing the non paid/ short paid amount as a consequence of recovery action of Model Customs Collectorate of (Multan). The importer's contention that the matter has already been adjudicated upon and that the undersigned cannot adjudicate the matter is not totally correct. While it is true that as per the contention of Model Customs Collectorate (Multan) and Directorate of Intelligence and Investigation (FBR) Regional Office, Lahore/ Multan, the consignment adjudicated by Collector, Model Customs Collectorate (Multan) were the same as those stated in subject show cause notice, but the honourable Appellate Tribunal, Lahore had set aside the order of the Collector of Customs, Adjudication on the grounds that he did not have jurisdiction in the matter and the correct / lawful jurisdiction in the case would be the station (Collectorate) from where the goods were cleared. Since the goods were cleared from Model Customs Collectorate of (PaCCS), Karachi, the Directorate of Post Clearance Audit (Customs), Karachi has jurisdiction and the case is to be lawfully adjudicated by the undersigned.

In view of the above facts and the facts that the importer has not otherwise denied legitimacy of the non-payment/ short payment of duties and taxes totalling of Rs. 56,917,434/-. I hold that the charges levelled in the show-cause notice stand established and that the undersigned is competent to adjudicate the case. Accordingly, the respondents are directed to pay Rs.56,917,434/- into the government treasury along with additional duties and default surcharges immediately. A penalty of Rs. 5,000,000/- in terms of clause 14 of Subsection (1) of Section 156 of the Customs Act, 1969, is imposed on the respondent."

3.Hence the appellant filed the instant appeal on the grounds mentioned in the memo of appeal and further contended that the impugned Order-in-Original is an attempt to double jeopardy against the appellant as the cognizance against the same issue has already been taken by the Collectorate of Customs, Multan vide Show-Cause Notice C.No.171/2012/Adj/Cus/Co11/4920 dated 10-09-2012 and Order-in-Original No.27/2012. Hence, the impugned Order-in-Original in the instant appeal needs to be turned down. The assessment orders, passed by the respondent collectorate at the relevant period of clearances have attained finality, and the same goods had been consumed by the appellant in manufacturing process accordingly at the crucial cost of the said imports of raw material. The attempt to recover the amount of duty and taxes and other penalties at this belated stage is unwarranted by the facts and laws of the case and prayed to annul the impugned Order-in-Original, passed by the respondent in defiance to the dictates of law and facts, without application of judicial mind on the crucial facts of the case and declare that the Order-in-Original, passed by the respondent No. 2 Collectorate was an act of non-jurisdiction, arbitrarily and in defiance and natural norms of fair and transparent trial.

4.No Cross objections under subsection (4) of Section 194-A of the Customs Act, 1969 were filed by the department/respondents. However, D/R contended that, the order passed by the respondent is legal lawful having statutory force. He prayed for dismissal of appeal in the interest of justice.

5.Arguments heard and concluded. Record of the case perused.

6.After perusal of the record as well as arguments extended by both the parties it has been observed that during hierarchy of the customs before the adjudication authority as well as before this court appellant strongly contended on the point that instant proceedings initiated against the appellant through issuance of show-cause notice and impugned Order-in-Original amounts to maxims of double jeopardy and attracted under the principles of res judicata. It is also evident from the impugned Order-in-Original bearing No.56 of 2014-2015 dated 18-08-2014 which is impugned in this present appeal was passed by the respondents/ Collector of Customs (Adjudication-II) Karachi, while passing the impugned Order-in-Original learned Collector also referred the proceedings which are been conducted and finalized after adjudication by the Model Customs Collectorate, Multan and passed the impugned Order-in-Original No.27 of 2012 dated 16-11-2012. It is clearly evident from the record and contents of the impugned Order-in-Original No.56 of 2014 that the Collector of Customs Adjudication-II Karachi, who passed the subject impugned order was well aware about the previous adjudication proceedings held, conducted and finalized by the Collector of Customs Adjudication, Model Customs Collectorate, Multan, through Order-in-Original No.27 of 2012 dated 16-11-2012. Although the issue of jurisdiction has been challenged by the appellant, under the legal frame and obligations but on the contrary the Collector of Customs Adjudication-II Karachi, held himself competent to adjudicate the present matter on the ground, which has already been decided by the Model Customs Collectorate Multan through Order-in-Original No.27 of 2012 dated 16-11-2012. By doing so, in this regard the Collector of Customs Adjudication-II/respondent had taken the refute that the Honourable Appellate Tribunal Lahore Bench had set aside the impugned Order-in-Original No.27 of 2012, on the grounds that he did not have the jurisdiction in the matter. He accordingly observed that, the correct/ lawful jurisdiction in the case would be the station (Collectorate) from where the goods were cleared. Since the goods were cleared from the Model Customs Collectorate (PaCCS), Karachi, the Directorate of Post Clearance of Audit (Customs) Karachi has the jurisdiction and the case is to be lawfully adjudicated by him. Now it is the duty of the court to make the observations on subject issue. It is also noticeable from the impugned Order-in-Original No.56 of 2014 wherein it is admitted fact that, as per para 16 of this order the contention of Model Customs Collectorate Multan and Directorate of Intelligence and Investigation, Regional Office Lahore/Multan proved that, the consignment adjudicated by the Collector Model Customs Collectorate Multan were the same as those stated in the present subject show-cause notice. Under such circumstances the proceedings initiate and conducted through the impugned show-cause notice dated 19-02-2014 issued against the contravention report referred by the Directorate General of Post Clearance Audit (PCA and reporting agency) dated 13-08-2012 falls under the serious doubts by noting the fact elaborated in para-4 of the impugned Order-in-Original No.56 of 2014 wherein it has been categorically mentioned that Director General of Post Clearance Audit, Custom House, Karachi issued an audit observation to the importer vide their Directorate's letter of even number dated 22-03-2012, asked them to make payment of short levied amount or justify their claim. Before the said audit observations issued by the Director General of Post Clearance Audit (PCA) Karachi the appellant in compliance of the impugned Order-in-Original No.27 of 2012 dated 16-11-2012 deposited the amount of Rs.15,100,000/- under protest. The said amount was also later on verified by the concerned authorities (Multan Collectorate) through letter dated 28-05-2016.

7.Apart from the above observations it is also verified from the record that against the said impugned Order-in-Original No.27 of 2012 dated 16-11-2012 the Customs Appellate Tribunal Bench-I Lahore, through Customs Appeal No.253/2012 passed the judgement and set aside the said impugned Order-in-Original against which the department/ respondent filed the reference before the Honourable Lahore High Court under Reference No.101/2013. The said reference was decided by the Lahore High Court on 26-09-2016 after giving interpretation of Section 194-C(3) of the Customs Act, 1969, as a result impugned judgment of the Tribunal was set aside and appeal was remanded back to the Tribunal for its decision which clearly reflected the fact that, the subject matter initiated by the Multan Collectorate through show-cause notice dated 10-09-2012 is still pending before the Tribunal at Lahore, and not been finalized. Under aforesaid circumstances, appellants are again held responsible to pay the relevant taxes which have already been adjudged and accordingly paid thereon (under protest) as such the present proceedings would tantamount the double jeopardy which is not admissible under the law. The appellant has discharged its total liability of sales tax and income tax at the time of filing requisite reports with the Inland Revenue Department. Any further imposition and recovery would tantamount the double taxation which is also not permissible under the law.

8.Keeping in view the above/foregoing observations, this court is of considered view that the impugned Order-in-Original No. 56 of 2014-2015, fails its merits, not sustainable under the law, we therefore, set aside the impugned Order-in-Original and remand back the instant matter to the respondent with the observations given in above paras along with the directions to re-adjudicate the matter on account of paid amount of customs duty through extra paid bill. Copy of this order is also forwarded to the concerned quarters to take necessary action under Section 36 of the Sales Tax Act, 1990 and Section 148 of the Income Tax Ordinance, 2001 and ensure that the appellants have discharged the tax liability on filing of the tax returns of relevant years (period) or further relevant tax orders. Appeal is disposed off in above terms accordingly with no order as to cost.

9.Judgement passed and announced accordingly.

HBT/75/Tax(Trib.) Case remanded.