ZAIN SONS, KARACHI VS DEPUTY COLLECTOR OF CUSTOMS, 2018 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 239 (2017)

Customs Act (IV of 1969)---

----Ss. 32, 79, 80, 157 & 168---Filing of goods declaration and determination of liability of payment of duties and taxes---Mis-declaration---Confiscation of imported goods---Importer filed goods declaration and determined his liability of payment of applicable duties and taxes and sought clearance under S.79(1) of the Customs Act, 1969 under self-assessment system---In order to check as to whether the importer had correctly paid the legitimate amount of duties and taxes, goods declaration was selected for scrutiny in terms of S.80 of the Customs Act, 1969 and was referred to examination for confirmation of description, quantity and other physical attribute of the goods---Scrutiny of the goods declaration, revealed that the importer had mis-declared the description, PCT and quantity of the goods---Show-cause notice was served upon the importer and case was adjudicated vide order-in-original---Validity---Impugned goods had been adjudged as a "job lot" on the basis of being in different sizes and having different dates of manufacturing---Such goods being not importable, were confiscated---Contention of the importer was that though the paper they had imported was assorted, but not of inferior quality and was not hit by the provisions of "job lot", as neither the goods were factory rejects nor damaged left-overs---Paper imported was found to be not in Prime Packing, and was not 'job lot'; as same was in rolls of different colours---Outright confiscation of the impugned goods was not found justifiable on any count---Appeal was allowed and the goods were allowed to be released upon payment of due duty and taxes on the fair customs value and without any penal action---Customs Authorities were also directed to issue delay/detention certificate for available waiver of port and shipping charges.

Nadeem Mirza for Appellant.

Zulfiqar, P.A. for the Respondents.

Date of hearing: 13th April, 2017.

JUDGMENT

ZULFIQAR A. KAZMI, MEMBER (TECHNICAL-I).---This judgment will dispose of Customs Appeal No. K-1979/2016 filed by the appellant against the Order-in-Original No. 579293/2016 dated 28.09.2016, passed by Additional Collector of Customs (Adjudication), Karachi.

2.Facts on record are that the appellant filed Goods Declaration No.KAPE-HC-25702-23-08-2016 and declared to contain PVC COATED ONE SIDE COLORED PAPER IN ROLLS (FOR BOOK BINDING) UNDER HS Code 4811.5990 @ invoice value 10837.3100 (USD). The importer determined his liability of payment of applicable duties and taxes and sought clearance under section 79(1) of the Customs Act, 1969 under self assessment system. 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 attribute of the goods. The Examination Report revealed as under:-

"ASSESSMENT ALERT NO COMMERCIAL INVOICE FOUND INSIDE THE CONTAINER DESCRIPTION BN WALL COVERING BRAND WALL PAPER IN ROLLS OF SUBSTANDARD PACKING DIFFERENT IN COLOUR SIZE SPECIFICATION MANUFACTURING DATE MATERIAL AND QUALITY WHICH INDICATES SUBSTANDARD JOB LOT QUALITY R/SAMPLE ARE BEING FORWARDED TO CUSTOM HOUSE GROUP AND LAB AS WELL CONFIRM MATERIAL AND DESCRIPTION NET WT 13970 KGS."

03.On appellant request re-examination was carried out which reveals as under:-

"Net wt approx 13100 kgs Brand and origin Not shown 100% wt re-checked vide PICT wt slip No.498291 dated 2-9-2016 and found 13950 kgs Wt slip scanned images attached. Scrutiny of the Goods Declaration in the light of examination report coupled with inspection of rep sealed samples forwarded by the Examination staff has revealed that the importer has mis-declared the description. PCT and quality of the goods. Importer's declaration is Book Binding Paper under HS Code 4811 5990 at unit value USD 0.83/kgs to avoid application of Valuation Ruling which is applicable on ascertain description and PCT i.e. WALL PAPER classifiable under PCT heading 4814 2000 assessable at unit value USD2.52/kg (vide Valuation Ruling No.680/2014 dated 26-8-2014) Total value has been worked out at USD 34.079/- Further more Examination staff has reported that goods are of job lot quality which is banned vide Sr No.7 of Appendix-A of IPO, 2016 amounting to Rs.3,601,100/- would have been cleared in violation of IPO 2016 5. The importers have therefore contravened the following Acts, ACT SECTIONS punishable Customs Act, 1969, sections 16, 32(1) 32(2) and 79(1) clauses 9, 14, 14A and 45 of section 156(1) Sales Tax Act, 1990 section 33 clause 11(c) of section 33, Income Tax Ordinance 2001, section 148."

4.Accordingly a show-cause notice was served upon the appellant under relevant provisions of law. The case was adjudicated vide the impugned Order-in-Original No. 579293 dated 28.09.2016 and the following was ordered

"I have perused the available record and examined the submissions made by respondents as well as the department. The respondents reiterated their stance regarding importability of the said goods which was vehemently rebutted by the department. I have come to the conclusion that the goods are not wall paper but one sided PVC coated paper as indicated in the second examination report substantiated by the Lab Report. As far as allegation regarding job lot is concerned the respondents failed to shed the proof in its favour the physical condition of the goods as shown in the images attached during examination, the different dates of manufacturing different sizes of rolls of paper and assortment of misc. goods clearly make it as job lot. Therefore the charges leveled in the show-cause notice to the extent of job lot are established and the impugned goods are ordered to be confiscated outrightly under section 156(9) of the Customs Act, 1969 without extending any option for redemption of said goods."

5.Being aggrieved with this order the appellant filed this appeal on 13.10.2016, inter-alia, on the following grounds;

i.The Government of Pakistan has withdrawn the powers vested to Custom Officers of Executive Collectorate under section 179 of the Custom Act, 1969 through Notification S.R.O No. 886(I)/2012 dated 18.07.2012, in the cases where charge of mis-declaration under the provision of Section 32 of the Customs Act, 1969 in addition with the respective provisions of Sales Tax and Income Tax. Resultantly, the appropriate authority for the purpose of adjudication is Collectorate of Customs Adjudication, not respondent No. 2.

ii.That the respondent No. 2 in the show cause notice has made reference to Clause (c) of section 33 of the Sales Tax Act, 1990 and section 148 of Income Tax Ordinance, 2001 for penalizing, without going though those as section 33 of the Sales Tax Act, 1990 is a penal section synonymous to section 156(1) of the Customs Act, 1969, under which penalty is imposed upon contravention of charging section of Section 32 of the Customs Act, 1969, unless charging section is not invoked, no penalty can be imposed under the said section, which is infact a machinery section. Similarly, Section 148 of the Income Tax Ordinance, contain procedure for collection of Income Tax at import stage by the authorities defined therein. Meaning thereby that it is also a machinery section under both these sections not charge can be leveled. Invoking of not relevant sections, rendering the show cause notice void and ab-initio as held by the Superior Judicial Fora in reported judgments.

iii.That even otherwise respondent no. 2 is not appointed as Officer of Inland Revenue under Section 30 of the Sales Tax Act, 1990 and section 207 of the Income Tax Ordinance, 2001 and as such is not empowered to issue show cause notice and pass order-in-original for the contravention of section 11 of the Sales Tax Act, 1990 and section 162(1) of the Income Tax Ordinance, 2001. Hence, by issuing show cause notice with the inclusion of amount of Sales Tax and Income Tax, respondent No. 2 usurped the power of Officer of Inland Revenue to which he is not vested, Rendering the show cause notice as well as order-in-original being in flagrant violation of law and as such coram non-judice.

iv.That irrespective of the above illegality, it is imperative for the appellant to state further that the respondent No. 2 has even no power under section 179 of the Customs Act, 1969 by virtue of no involvement of duty and taxes, which is a fact and the case in question fall within the ambit of section 80 and the competent officer under the said section is Principal Appraiser stood validated from notification SRO No.371(I)/2002 dated 15.06.2002, to be read with section 2(a) ibid. Meaning thereby that he is empowered to proceed in the matter instead of respondent because it is settled elementary principle of law that action of executive functionaries are to be restricted to specific sphere permitted by the statute.

v.That it is erroneous on the part of respondent No. 2 to termed the goods of the appellant as of job-lot quality without going into the definition of that, which is given in para 1 of CGO 1 of CGO 12/2002 dated 15.06.2002 is reproduced:

"Job Lot :- Job lot is a collection of odds and ends for sale as one lot. Normally these are goods of inferior quality. To cater to the needs of different customers a supplier varies specifications, colour schemes etc. It is a normal practice to produce slightly more than the order placed so that after rejection, damage etc, there is still enough quantity left to meet the demand of the customer. After selling the goods to a few buyers, the supplier has an assortment of goods with slight modification or differences. These when put into a lot are called "job-lot" and are generally sold at low prices."

vi.The criteria laid down in the said definition for determination of any product as "job-lot" is based on two attributes i.e. (i) the goods should be collection of "odds" and "ends" and put for sales as one lot and (ii) those goods should be of inferior quality. Since, neither section 2 of Customs Act, 1969 nor Chapter-I of Customs Rules, 2001 or para 1 of CGO 12/2002 defines the words , "odds and ends", the definition given in Dictionary has to be taken into consideration, the 20th Century Dictionary was consulted, which defines the words "odds" as "a material unpaired or not matching" and "ends" as "last point or portion of any good" . Meaning thereby the collection of "odds" means that none of the goods should be in pair or matched with to/with each other. Whereas the word "ends" means last point of portion of any product e.g. meter of the product. Any product falling under the said definition answer to the 1st condition of the definition of word "Job-lot" . For considering the goods as job-lot it should be also of inferior quality as per condition No. 2.

vii.That if the examination report is considered, the Examiner has no where confirmed that the goods are collection of odds and ends, nor are of inferior quality, instead laid stressed on sub-standard packing and on the fact that no manufacturing date is mentioned on the goods, while inscribing the said opinion, he lost sight of the fact that mentioning of manufacturing date is mandatory in edible product for confirmation of 50% shelf life. Mentioning of manufacturing date in any other product is not required nor mandatory. Additionally, he has not termed our goods of inferior quality and this stood validated form the images. Terming of the goods as job-lot on the basis of packing in old or non seaworthy packing is absurd as those least alter the quality of the goods by virtue of the fact that now a days goods are invariably stuffed in container, and there exist no chance of damaging/destruction of the goods in spite being packed in old and used cartons or non seaworthy. The examiner and respondent No. 2 terms standard goods of our client's as of job-lot without any cause or reason and rationale and this stood validated from the opinion of respondent No. 2, which is completely silent in regards to arguments of the appellant in this context. Rendering, the opinion and the order as of no legal effect and nullity to the definition of job-lot.

viii.That the respondents inspite of identical/similar goods as of appellant in the past and even todate are allowing regularly without terming those as job-lot/stock-lot or sub-standard quality and for validation of the fact GD Nos. KAPE-HC-10439-02082013, KAPE-HC-18374-20082013, KAPE-HC-62957-11112015, KAPW-HC-51090-16092016, KAPW-HC-68482-03122013, KAPE-HC-51179-13122013, KAPE-HC-18375-20082014, KAPE-HC-122263-06042015, KAPE-HC-108473-09022016 and KAPW-HC-9463-18072016. Therefore, as per principle of natural justice his consignment should have been allowed clearance as per existing practice in vogue as the precedent has to be adhered. That by issuance of show-cause notice by the Assistant Collector and passing of order-in-original by respondent No. 1 has treated the appellant differentially, which is prohibited under Articles 4 and 25 of the Constitution of Islamic Republic of Pakistan.

ix.The order passed by the respondent No. 2 shows that it has not been passed with the application of mind and provision of the Act. Instead is a non speaking order and did not conforms to the mandated requirement of S.24-A of the General Clauses Act, 1897 and this stood validated from the fact that no rebuttal on the arguments advanced in the reply to the show-cause notice and addendum have been made in the order nor any reasoning/rationale have been adduced for ignoring those and the annexed evidences of the identical/similar imports. He infact passed the impugned order on personal absurd opinion contrary to law and that too also is not containing substantial reasons and does not shows that it was passed on objective consideration stood validated from it contents. Such type of orders are deems to be always treated as illegal, void arbitrary and a result of misuse of authority vested in public functionary. No room was available for such illegal, void and arbitrarily orders in any system of law. If any authority Court or Tribunal gave a finding of fact which was not based on material available on record was illegal arbitrarily without discussing and considering the material available on record it became perverse and a perverse finding of fact which is violative of the established principle of appreciation of evidence on record was not sustainable in law. The principle that every judicial or quasi-judicial finding should be based on reasons containing the justification for the finding in the order itself is an established principle of dispensation of justice. The Adjudication/Appellate orders are being violation of basic principle of the goods governance and mandatory requirement of Section 24A of the General Clauses Act, is not only illegal and void but also not sustainable under law.

06.On appellant request this Tribunal vide its order dated 24.10.2016 has allowed to shift the goods to CPF/Public Warehouse in the following words;

"Considering all the circumstances and arguments extended by both the parties, it has been noticed and observed that the subject appeal against the said impugned order is pending before for its decision and observations and finding given in the impugned order-in-original are not yet be finalized, matter requires legal deliberation on the point that whether subject consignment falls under category of joblot or otherwise, appellants have prima facie case and balance of convenience also lies in their favour and to avoid and save the appellants from further losses, being custodian of law we hereby allow the subject application and direct the respondent Collectorate to shift the subject consignment from the port area to CPF/Public Bonded Warehouse on account of appellant and not to take any coercive action against the appellant till the next date of hearing. The subject application is accordingly disposed off with no order as to cost."

07.Hearings were fixed for 27.10.2016 and 01.11.2016 when Mr. Nadeem Mirza, Consultant appeared but nobody come to represent the respondents. On 21.11.2016 Mr. Abid Shah, A.O, appeared and requested for adjournment to prepare their defence. The request was allowed and case was fixed for 09.12.2016 when the appellants representative appeared but nobody come for the respondent. Next date was fixed for 09.01.2017 when Mr. Nadeem Mirza, Consultant and Mr. Noor Akhtar Mehar, A.O, appeared. The respondent sought time for filing their comments on the appeal. This was allowed and hearing was re-fixed for 07.02.2017 but the case could not be heard, hence next date for 23.03.2017 was given when Mr. Nadeem Mirza of the appellant appeared. He argued in detail in the light of the grounds of appeal - as reproduced hereinabove - and cited various judgments in support thereof. Once again nobody came to represent the respondent. Final hearing was hence fixed for 13.04.2017 when the said Consultant and Mr. Zulfiqar, P.A of the respondent were present. The given comments in defence of the appeal were reiterated which are reproduced as under:--

i.That in the light of made submissions above, contents of the Para (i) of the appeal are vehemently denied, hence, no violation of any spirit of law in impugned orders passed by the adjudicating authority. The judgments cited by the appellant are not relevant in the instant case.

ii.That in the light of made submissions above, contents of the Para (ii) of the appeal are vehemently denied. It is respectfully submitted that on the basis of above the importer was charged for violation of the provisions of sections 16, 32(1), 32(2), 32A, 79(1) of the Customs Act, 1969 read with Serial No. 51 and Serial No. 52 of Part-I of Appendix-B of the Import Policy Order, 2013 reads with paragraph 5(B)(i) of the IPO section 33 of the Sales Tax Act, 1990 and section 148 of the Income Tax Ordinance, 2001 punishable under clauses 9, 14, 14(A) and 45 of section 156(1) of the Customs Act, 1969 clause 11(c) of the section 33 of the Sales Tax Act, 1990 and section 148 of the Income Tax Ordinance, 2001 and accordingly a show-cause notice was issued.

iii.That in the light of made submissions above, contents of the Para (iii) of the appeal are vehemently denied. It is respectfully submitted that the case was adjudicated by the adjudicating authority, therefore, no violation of any spirit of law in impugned orders passed by the adjudicating authority.

iv.That in the light of made submissions above, contents of the Para (iv) of the ground of the appeal are vehemently denied. It is respectfully submitted that the Importer Declarations Book Binding Paper under HS Code 4811.5990 at unit value US$ 0.83/kgs to avoid applicable of Valuation Ruling which is applicable on ascertained description and PCT i.e. Wall Paper classifiable under PCT heading 4814.2000 assessable at unit value US$ 2.52/kg vide Valuation Ruling No. 680/2014 dated 26.08.2014 total value worked out at US$ 34,079/-. Furthermore, examination staff has reported that goods are of "Job Lot Quality's which is banned vide Serial No. 7 of Appendix-A of the IPO, 2016. This act of the importer constitutes an offence under sections 16, 32(1), (2) of the Customs, Act, 1969. It is thus, evaded that importer has tried to clear banned I substandard goods in the garb of standard quality with mala fide intention. If the goods were cleared directly through the system the banned items amounting to Rs. 3,601,100/- would have been cleared in violation of IPO, 2016.

v.That in the light of made submissions above, contents of the Para (v) of the ground appeal are vehemently denied.

vi.That in the light of made submissions above, contents of the Para (v) of the ground appeal are vehemently denied.

vii.That in the light of made submissions above, contents of the Para (vii) of the ground appeal are vehemently denied. On the other hand PVC in crushed form is initial stage which is acquired from the collection of waste/ scrap of different type of PVC articles from different sources e.g. PVC waste pipe PVC soles and other PVC waste materials etc which neither invoice the process of washing I clearing with the exception of cutting into small pieces crushing in the crusher machine etc.

viii.That in the light of made submissions above, contents of the Para (viii) of the ground appeal are vehemently denied.

ix.That in the light of made submissions above, contents of the Para (ix) of the ground appeal are vehemently denied. The judgments cited by the appellant are not relevant in the instant case.

x.That in the light of made submissions above, contents of the Para (x) of the ground appeal are vehemently denied. The judgments cited by the appellant are not relevant in the instant case.

xi.That in the light of made submissions above, contents of the Para (xi) of the ground of appeal are vehemently denied. The judgments cited by the appellant are not relevant in the instant case.

xii.That in the light of made submissions above, contents of Para (xi) of the grounds appeal are vehemently denied. The judgment cited by the appellant are not relevant in the instant case.

08.The Consultant furnished Additional arguments in rebuttal of the given comments which read as under;

i.The appropriate authority to adjudicate the case of the appellant rests with the Collectorate of Customs Adjudication in terms of SRO 886(1)/2012 dated 18.07.2012. On the case of the appellant the respondent No. 2 usurp the powers of Collectorate of Adjudication. Rendering the show cause notice and subsequent order ab-initio void and as such coram non judice.

ii.Invoking of sections 33 and 34 are out of context and render the show cause notice palpably illegal and as such of no legal authority inclusive of subsequent orders.

iii.Respondent No. 2 is not empowered to invoke the provision of Sales Tax Act, 1990 and Income Tax Ordinance, 2001 in the show cause notice in the capacity of "Officer of Customs" as this is tantamount to transgression of powers "Officer of Inland Revenue", rendering the show cause notice and subsequent order ab initio void.

iv.It is also admitted that the power to adjudicate the cases of importability, rests with the Principal Appraiser in terms of SRO 371(I)/2002 dated 15.06.2002, rendering the show-cause notice and subsequent order ab intio void and without lawful authority/jurisdiction as held in reported judgments referred in the grounds of appeal, copies of few of those are placed on record.

v.The submission made in ground No. (vi) is admitted in totality, whereas comments on ground No. (vii) are worth considering as those has no nexus with the case of the appellant and speaks volume about the working of the respondents and their subordinates as they invariably submit stereotypical comments without going through the memo. of the appeal. This aspect alone is sufficient for allow of appeal and setting aside of the order passed by the forum below.

vi.The grounds Nos. (viii) & (xi) are admitted in totality, the ground Nos. (xiv) to (xviii) are admitted in totality as nothing has been placed on record of the Tribunal for negating the same despite being mandatory. The cases are to be decided on the basis of evidences and the law laid down by the Superior Judicial Fora not on the basis of hearsay or on the basis of ones opinion as per norms of justice and fairplay and the judgment of the Superior Judicial Fora holding field firmly.

09.Record is perused. Arguments given by both the sides have been duly considered. It is observed that the impugned goods have been adjudged as 'job lot' on the basis of being i) in different sizes and ii) having different dates of manufacturing. Therefore, the same not being importable have been confiscated outrightly. The appellant's contention is that although the paper they had imported is assorted but not of inferior quality as it is not hit by the provisions of JOB LOT given in CGO 12/2002 as neither the goods are factory rejects nor damaged left-overs. He relied upon the dictionary meaning as well i.e. for any goods to be termed as JOB LOT, the same should be a collection of 'odds and ends'. The paper in this case is found to be not in PRIME PACKING but the consignment is also not a JOBLOT in the defined sense of the word, as the same are in rolls of different colours. Keeping in view all the facts and grounds taken by the appellant, outright confiscation of the impugned goods is not found justifiable on any count. The appeal is, therefore, allowed and the goods are hereby allowed to be released upon payment of due duty and taxes on the fair customs value and without any penal action.

10. Customs Authorities are also directed to issue delay/detention certificate for availing waiver of Port and Shipping Charges.

11.Judgment passed and announced accordingly.

HBT/62/Tax(Trib.) Appeal allowed.