COLLECTOR OF CUSTOMS, KARACHI VS SHUJABAD AGRO INDUSTRIES (PVT.) LIMITED, KARACHI, 2018 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 882 (2017)

Customs Act (IV of 1969)---

----Ss. 29, 80, 81, 88(5), 193 & 195---Re-assessment of goods---No provisional assessment or final assessment was made in terms of S.81 of the Customs Act, 1969---Goods against all declarations, were assessed to duty and taxes under S.80 of the Customs Act, 1969; once the goods were assessed under the said provision of law same could not be re-assessed---Remedy available was that of appeal under S.193 of the Act against the assessment order or invocation of provision of S.195 of the Act---Department had failed to legally prove its case---Order-in-appeal being lawful order appeal of department was dismissed being without merit.

Sajjad Rizvi, A.C. for Appellant Department.

M.H. Awan for Respondents.

Date of hearing: 2nd March, 2017.

JUDGMENT

MUHAMMAD NAZIM SALEEM, MEMBER TECHNICAL-II.--This order disposes of Customs Appeal No.K-21/206 filed by the Appellant Department against Order-in-Appeal No.1064/2016 dated 1.10.2016 passed by the Collector of Customs (Appeals), Karachi.

2.Brief facts of the case as stated in the impugned Order-in-Appeal are that the Respondent No.1 imported a consignment of "Crude degummed Soyabean Oil" in bulk against IGM No. 0114 dated Index Nos. 1 to 17 vide LC No. 0047LCS150002 dated 27.01.2015, 2015 invoice Nos. (i) 011/2015-O1A dated 27.02.2015, (ii) 011/2015-01B dated 27.02.2015, (iii) 011/2015-O1C dated 27.02.2015, (iv) 011/2015-OID (v) 011/2015-O1E dated 27.02.2015, (vi) 011/2015-01F dated 27.02.2015, (vii) 011/2015-OTG dated 27.02.2015, (viii) 011/2015-01H dated 27.02.2015, (ix ) 011/2015-011 dated 27.02.2015, (x) 011/2015-01J dated 27.02.2015, (xi) 011/2015-01K dated 27.02.2015, (xii) 011/2015-OiL dated 27.02.2015, (xiii) 011/2015-01M dated 27.02.2015, (xiv) 011/2015-OIN dated 27.02.2015, (xv) 011/2015-010 dated 27.02.2015, (xvi) 011/2015-01P dated and (xvii) 011/2015-01Q dated 27.02.2015 which were allowed in-bonding after deciding the import value. However, 17 ex-bond GD Nos.(I) KPQI-EB1223 dated (2) KPQI-EB-1225 dated 07.04.2015, (3) KPQIEB-1224 dated 07-04.2015, (4) KPQI-EB-1274 dated 23.04.2015 (5) KPQI-EB-1275 dated 23.4.2015 (6) KPQI-EB 1404 dated 23.05.2015 (7) KPQI-EB-1445 dated 30.05.2015, (8) KPQI-EB-1505 dated (9) KPQI-EB-1506 dated 05.06.2015, (10) KPQI-EB-1538 dated 15.06.2015, (11) KPQI-EB-1559 dated 24.09.2015, (12) KPQIEB-11 dated 06.07.2015, (13 ) KPQI-EB-12 dated 06.07.2015, (14) KPQI-EB-13 dated 06.07.2015, (15) KPQI-EB-104 dated (16) KPQI-EB-105 dated 12.08.2015 and (17) KPQl-EB-154 dated 03.09.2015 were filed for the clearance of the consignment. The declared value of the consignment was @ US$ 715/MT which was not accepted by the Customs and the goods were released provisionally under section 81 of the Customs Act, 1969, securing differential amount of duty and taxes in shape of 17 Pay Orders submitted by the appellant during the period 07.04.2015 to 03.09.2015 respectively. That the impugned letter/ order dated 23.06.2016 issued by the Assistant Collector, Collectorate of Customs Port Muhammad Bin Qasim, Karachi is without considering the requirements of section 81 of the Customs Act, 1969.

3.The case was adjudicated by the learned Assistant Collector of Customs, MCC, Port Muhammad Bin Qasim, Karachi vide Order-in-Original No.SI/Misc/EB/UT/231/2015(PQ) bulk dated 29.06.2016 against the Respondent party.

4.On appeal filed by the Respondent party against the above Order-in-Original, the Collector of Customs (Appeals), Karachi vide Order-IN-Appeal No.1064/2016 dated 05.10.2016, passed the following order:--

"1 have examined the case record. The Act of the matter is that the goods were assessed under section 80 of the Customs Act, 1969, the declared transaction value was accepted and the goods were allowed in bonding against various CD's during March 2015. There was no dispute regarding the customs value at the time of in-bonding, therefore assessment stood completed and goods were removed from customs area. When the appellant filed ex-bond goods declaration, the respondents un-authorisedly reopened past and closed transaction and challenged the customs value and processed the goods declaration at a higher value, and upon resistance of the appellant, invoked section 81 of the Customs Act, 1969 and secured pay orders for the additional amount. This action was taken in cases of 17 ex-bond CD's dated April to September, 2015. The respondents made further mockery of law by encashing all the pay orders without issuing any order under section 81(5) of the Customs Act, 1969, within the stipulated period. In essence, the appellants have resorted to amendment of goods declaration, whereas they were specifically debarred to do so. The provisions regarding amendment of GD are examined here under:--

29. Restriction on amendment of [goods declaration].---Except as provided in section 88, no amendment of [goods declaration] relating to goods assessed for duty on the declared value, quantity or description thereof shall be allowed after such goods have been removed from the customs-area [or assigned a Customs Reference Number electronically, as the case may be].

Amendment under this section is not admissible as the goods were assessed on the declared description and value and that the goods have already been removed from custom area. The custom area as defined under section 2(i) of the Act does not include a warehouse licensed under section 12 ibid.

88. Receipt of goods at warehouse.---(1) On receipt of the goods, the pass shall be examined by the warehouse-keeper, and shall be returned to the appropriate officer.

(2) No package, butt, cask or other container shall be admitted into any warehouse unless it bears the marks and numbers specified in, and otherwise corresponds with, the pass for its admission.

(3) If the goods be found to correspond with the pass, the warehouse-keeper shall certify to that effect on the pass, and the warehousing of such goods shall be deemed to have been completed.

(4) If the goods do not so correspond, the fact shall be reported by the warehouse-keeper for the orders of the appropriate officer, and the goods shall either be returned to the custom-house in charge of an officer of customs or kept in deposit pending such orders as the warehouse-keeper deems most convenient.

(5) If the quantity or value of any goods has been incorrectly stated in the [goods declaration], due to inadvertence or bona fide error, the error may be rectified at any time before the warehousing of the goods is completed, and not subsequently.

There was no discrepancy found or reported at the time of in-bonding. This provision allows rectification of bona fide error or inadvertent mistake before warehousing of the goods is completed and not subsequently. Therefore amendment under this section is also not possible.

205. Amendment of documents.- Except in the case provided for by sections 29, 45, 53 and 88, an officer of customs not below the rank of an [Assistant Collector] of Customs may, in his discretion, upon payment of a fee of [one hundred] rupees, authorise any document, after it has been presented at the custom-house to be amended.

This provision deals with cases which are not covered under sections 29 and 88. In view of the express bar under the previous sections, amendment of GD under this section is not permissible.

In view of the above discussion it is evident that the responding Collectorate committed patent illegalities in processing such cases, in their zeal to extort revenue, the assessing staff have dealt the case with high handedness. The assessment of value stood past and closed transaction at the time of inbonding of goods. In terms of section 30 no change except rate of duty (if applicable) could be made at the time of exbonding. The respondents re-opened the assessment without involving section 195 of the Act, changed the same to provisional assessment under section 81 ibid. The respondents in derogation of provisions of section 81 took an adverse action. The proceedings being void ab initio are set aside. The appeal is successful. The supervisory officers are advised to take appropriate action against delinquents for jeopardizing probable revenue and causing harassment to tax payers."

5.Being aggrieved and dissatisfied with the Order-in-Appeal, the Appellant Department filed the instant appeal before this Tribunal on the grounds, which are reproduced as under:-

A.That the impugned order is bad in law, wrong on facts, unjust, inequitable, erroneous, harsh and lacks judicial application of mind.

B.Regarding Para (B) it is respectfully submitted that at the time of arrival of bulk cargo vessel imported bulk oil is immediately discharged from vessel which is directly pumped from the vessel through pipe lines to off dock oil tanks of bonded ware houses for direct in-bonding without any assessment as vital information such as test report confirming the exact composition, whether fit for human consumption, value and PSQCA conformity certificate are not available at the time of arrival of the vessel. As such no assessment is made at the time of arrival/ In-bonding of bulk oil cargo and Goods Declaration is endorsed to the effect that all aspects shall be checked at the time of ex-bonding of the goods.

It is further respectfully submitted that assessment of imported Bulk Oil is made in terms of the Board's letter Board's letter No. 1(2)S/Va1/2000 dated 12.11.2003 as per Reuter Price confirmed by Pakistan Vanaspati Manufacturer's Association as on the relevant Contract date. Since at the time of arrival/ in-bonding of cargo on 31.03.2015 such irdormation/(Reutter Price duly endorsed by the, PVMA) was not available, which was subsequently provided on 29.04.2015 as such no assessment could be made at the time of in-bonding of the goods.

It is further respectfully submitted that the Respondent importer himself requested vide letter dated 27.04.2015 for provisional assessment as per contract date January 26, 2015 meaning thereby that they were well aware of the established practice of assessment as per Reuter Price on the date of contract.

C.That the learned Collector of Customs Appeal has erred in fact and law to not appreciate that no assessment is made at the time of arrival of goods and "assessment" of such class of goods is made upon receipt of the Reuter Price confirmed by Pakistan Vanaspati Manufacturer's Association as on the relevant Contract date which was provided on 29.04.2015. Therefore, the assessment was finalized as per as per Reuter Price confirmed by Pakistan Vanaspati Manufacturer's Association as on the relevant Contract in terms of the Board's letter No. 1 (2)5/Va1/2000 dated 12.11.2003.

D.That the learned Collector of Customs Appeal erred in facts to not appreciate that the Pakistan Vanaspati Manufacturer's Association vide letter No. PVMA/1007/Value/2015 dated has confirmed that the Reuter Price of subject goods @ US$ 782/- as on the relevant contract date as confirmed by the PVMA.

E.That without prejudice to above and even otherwise, the learned Collector wrongly presumed that the matter was past and closed transaction and cannot be re-opened by the appellant. It is respectfully submitted that under Section 80(3) of the Customs Act, 1969 the department is empowered to reassess the goods at any stage. The goods can be re-assessed even after they have been removed from the customs station. The order passed by the learned Collector amounts to put restriction on the power of the appellant which was not done by the legislature. The provision of law is reproduced hereunder for ready reference:

"If during the checking of goods declaration, it is found that any statement in such declaration or document or any information so furnished is not correct in respect of any matter relating to the assessment, the goods shall, without prejudice to any other action which may be taken under this Act, be reassessed to duty, taxes and other charges levied thereon."

Hence the action taken by the department was correct and in accordance with law.

F.That the learned Collector (Appeals) failed to appreciate that the provision of law reproduced herein above is absolute and not conditional. The powers exercised by the respondent under the provision of law reproduced ibid are therefore rightly exercised and no illegality was committed in any manner.

G.That the learned Collector failed to appreciate that the encashment of pay orders was done only after the provisional assessment had becohie final and not earlier.

H.That the learned Collector failed to appreciate that the concerned officers have performed their duty honestly and diligently and no harassment had been caused to the tax payers.

I.That the impugned order cannot be sustained under the law and is illegal.

It is therefore prayed that the Honorable Appellate Tribunal be graciously pleased upheld as under:--

a. to set aside the impugned order of Collector of Customs (Appeals), Karachi dated 05.10.2016 and;

b. upheld that the provisional assessment was rightly finalized under section 81(2) of the Customs Act, 1969 and;

c. Securities submitted by the respondent importer were rightly encashed in favour of government exchequer;

6.The Respondent party has submitted counter-objections/para-wise comments on the Memo of Appeal filed by the Appellant Department, which are reproduced as under:-

A.Denied, impugned Order-in-Appeal is speaking order just, equitable and within the ambit of law hence, appeal is liable to be set aside.

BDenied. There is no provisions in the Customs Act, 1969 that any imported consignment can be allowed in-bonding without assessment. Further Board's letter has no force of law as the same is not protected under the Customs Act, 1969. Every Customs officers is under obligation to process any importable and exportable consignment in the light of provisions of the Customs Act, 1969. Moreover no in-bonded consignment can be assessed provisional under section 81 of the Customs Act, 1969 either on the request of importer or on the directives of any Customs Officer.

C.Denied. The learned Collector of Customs (Appeals) has rightly observed in impugned Order-in-Appeal No. 1064 / 2016 dated 05.10.2016. That no assessment is made after in-bonding of any imported consignment under section 29 of the Customs Act, 1969.

D.Denied. The reference of Pakistan Vanaspati Manufacturer Association's letter No. PVMA/ 1007/ Value/2015 dated 29.04.2015 is not relevant because the said letter was issued on 29.04.2015 whereas, consignment was in-bonded on 07.04.2015 and first Ex-Bonded Good Declaration was completed on 08.04.2015. The question is as to how Ex-bond GD was re-assessed at US$ 782 per metric ton on 08.04.2015 on the basis of Pakistan Vanaspati Manufacturer Association's letter No. PVMA/ 1007/ Value/ 2015 dated 29.04.2015; the statement made in appeal is incorrect.

E.Denied. The statement is not only incorrect but also against the provisions of law. The Interpretation of section 80(3) of the Customs Act, 1969 is incorrect As a matter of fact and law, the assessment orders passed under section 80 of the Customs Act, 1969 are Quasi Judicial Order which can only be re-opened by the concerned Collector or Board under section 195 of Customs Act, 1969 or aggrieved party can file an appeal before Collector of Customs (Appeals) under section 193-A of the Customs Act, 1969.

F.Accepted. The contention of appellant that the powers exercised by the respondent under the provisions of law are therefore, rightly exercise and no illegality was committed in any manner. If so then why the appellant has filed this appeal which is required to be dismissed only on this ground.

G.Denied. The observations of The learned Collector of Customs (Appeals) are correct and lawful. It is pointed out that the guarantees were in-cashed without fulfilling the requirements of law and information of the importers/ Respondent No. 1. The real fact is that guarantees were in-cashed illegally in the month of June to show higher recovery of Collectorate of Customs Port Muhammad Bin Qasim MCC (PQ) Karachi,

H.Denied. The Collector of Customs (Appeals) has rightly observed in the impugned Order-in-Appeal No. 1064/2016 dated 05.10.2016 that the concerned officers of the Collectorate of Customs (PQ) Karachi have not performed their duty honestly diligently and also harassment has been caused to the Tax payers. The observations of the learned Collector of Customs (Appeals) are highly appreciable in the eyes of law.

I.Denied. The impugned Order-In-Appeal is a speaking order sustainable under the four corners of law which deserves to be upheld.

In view of above submissions it is most humbly requested that the Customs Appellate Tribunal may be pleased to kindly uphold the impugned Order-in-Appeal No. 1064/2016 dated 05.10.2016 and dismiss the said appeal with cost in the interest of justice.

7.We have heard both the contesting parties at some length and also examined the relevant record. The controversy in this case involves both points of fact and law. The core issue is that the Respondent party declared value of imported goods as US$ 715/M.T whereas the Appellant Department assessed the same on value US$ 782/M.T in the light of Soyabean Oil prices as per Reuter as on 26.01.2015. In total, nine (9) Into-Bond Goods Declarations were filed by the Respondent party in April, 2015 in order to get their imported consignments of "Crude Degummed Soyabean Oil" cleared for in-bonding. The contention of the Appellant Department is that since the "imported bulk oil is immediately discharged from vessel which is directly pumped from the vessel through pipelines to offdock oil tanks of bonded warehouses for direct in-bonding without any assessment as vital information such as test report confirming the exact composition whether fit for human consumption, value and Pakistan Standard Quality Control Authority (PSQCA)'s conformity certificate are not available at the time of arrival of the vessel. As such no assessment is made at the time of arrival/in-bonding of bulk oil cargo and the Goods Declaration is endorsed to the effect that all aspects shall be checked at the time of ex-bonding of the goods". Therefore, in the view of the Appellant Department all Into-Bond Goods Declarations were not assessed to duty and taxes. The Appellant Department relies on F.B.R's letter No.1(2)S(Valutaion/2000 dated 12.11.2003 for assessment purpose which requires to assess the imported edible oil as per Reuter Price confirmed by Pakistan Vanaspati Manufacturer's Association (PVMA) as on the relevant contract date. The Memo. of Appeal adds that "since at the time of arrival/ in-bonding of cargo on 31.03.2015 such information (Reuter price duly endorsed by the PVMA) was not available which was subsequently provided on 29.04.2015, as such, no assessment could be made at the time of in-bonding of the goods.

8.On the other hand, the stance taken by the Respondent party is altogether different. They state that the position taken by the Appellant Department amounts to Mis-statement. During hearing, the learned Counsel stated that the Department had finalized assessment at the time of in-bonding of the imported consignment, as required under the law. He added that in terms of section 29 of the Customs Act, 1969, no amendment of Goods Declaration can be done after the goods have been removed from the Customs area. He also relied on section 88 (5) of the said Act which requires that the bona fide error in a Goods Declaration can be rectified only before warehousing of the goods. On a query that as to why they made written request to the Department dated 27.04.2015 for provisional assessment of the goods in terms of section 81 of the Customs Act, 1969, the learned Counsel responded that the officers of the Appellant Department forced them to do so otherwise they would not process their Ex-Bond Goods Declarations. The Counsel also argued that section 81 of the Customs Act, 1969 does not require an application from the importer. During the course of hearing, the learned Departmental Representative of the Appellant stated that goods were provisionally assessed to duty and taxes on 27.04.2015 while the said assessment was finalized on 29.04.2015. The learned D.R, however, could not present evidence of Provisional Assessment or Final Assessment except a letter of the Respondent party dated 27.04.2015 containing request for provisional assessment. The letter of PVMA dated 29.04.2015 highlights average value US$ 782.90/ M.T prevailing on 26.01.2015.

9.It is observed that there is some contradiction in the stance taken by the Appellant Department in their Memo. of Appeal and the case presented by the learned Counsel for the Respondent party. As per Memo. of Appeal, the Appellant as highlighted at para 7 above, has unambiguously stated that at the time of in-bonding, the goods were not assessed to duty and taxes for want of information like exact composition of the goods, whether fit for human consumption or not, value and PSQCA's conformity certificate. The minute scrutiny of all the Into-Bond Goods Declarations reveal that the Appellant Department assessed each Goods Declaration to duty and taxes in terms of section 80 of the Customs Act, 1969 and accepted the total declared value of the Respondent party in Pak Rupee terms as Rs.36,727,116/- (US$ 715 per M.T) for 500 M.T of Soyabean Oil (column 56 of each G.D) which leads us to conclude conveniently that the position taken by the Appellant Department is not only contradictory, unsubstantiated but also incorrect insofar as the facts of the case are concerned.

10. Now, we would like to examine the legal issues involved in the controversy. Section 88 (5) of the Customs Act, 1969 stipulates that "if the quantity or value of any goods has been incorrectly stated in the Goods Declaration due to inadvertence or bona fide error, the error may be rectified at any time before the warehousing of the goods is completed, and not subsequently". As mentioned above, the Appellant Department had assessed the imported consignments to duty and taxes in terms of section 80 of the Customs Act, 1969. We would like to mention here that some Goods Declarations show a stamp placed thereon by the Appellant Department which highlights that "Ex-Bonding subject to check all aspect, Test Report, Valuation etc". Here our observation/ comments are that the said stamping/endorsement does not and cannot over-ride the statutory provisions. Section 84 of the Customs Act, 1969 speaks of warehousing of dutiable goods where the goods have been assessed under section 80 or 81 ibid. As mentioned earlier, there is no trace of any Provisional Assessment nor Final Assessment in terms of section 81 of the Customs Act, 1969, therefore, it is obvious that the goods against all Goods Declaration were assessed to duty and taxes under section 80 of the Customs Act, 1969. Once goods assessed under the said provision of law, cannot be re-assessed. The remedy is available only to file appeal under section 193 of the said Act against the Assessment Order or invoke provisions of section 195. Here we would endorse plea taken by the learned Counsel of the Respondent party that under section 29 of the Customs Act, 1969, no amendment of Goods Declaration, except as provided in section 88 shall be allowed after such goods have been removed from the Customs area. Regarding F.B.R's letter dated 12.11.2013 whereby the Appellant Department assessed the imported consignment, the same does not carry any legal sanctity. The letter infact contains minutes of meeting held between F.B.R and the representatives of P.V.M.A. The legal position with regard to determining value of imported consignment is that section 25 of the Customs Act, 1969 prescribes methods for the purpose. The Appellant Department has not followed any of such methods instead they have relied on F.B.R's letter under reference which, as earlier stated, does not carry any legal value. At this juncture, we would endorse observation of the learned Collector, Customs (Appeals), Karachi that "There was no dispute regarding the customs value at the time of in-bonding, therefore, assessment stood completed and goods were removed from the Customs area." We further endorse his observations that "When the appellant filed cx-bond goods declaration, the respondent unauthorizedly opened past and closed transaction and challenged the customs value and processed the goods declaration at a higher value, and upon resistance of the appellant, invoked section 81 of the Customs Act, 1969 and secured pay orders for the additional amount. The action was taken in case of 17 ex-bond dated April to September, 2015 the respondents made further mockery of law by encashing all the pay orders without issuing any order under section 81(5) of the Customs Act, 1969, within the stipulated period." We cannot restrain ourselves for endorsing another pertinent observation of the learned Collector that "The supervisory officers are advised to take appropriate action against the delinquents for jeopardizing probable revenue and causing harassment to the tax payers."

11.In view of above, we are led to conclude that the Appellant Department has miserably failed to legally prove their case. We uphold the impugned Order-in Appeal being a lawful Order. The appeal of the Appellant Department is dismissed as the same is without merit.

12.Announced.

HBT/51/Tax(Trib.) Appeal dismissed.