STATE CORPORATION CUSTOMS CLEARING AGENTS, LAHORE VS SUPERINTENDENT OF CUSTOMS DFGS, LAHORE, 2018 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 982 (2015)

Customs Act (IV of 1969)---

----Ss. 18, 25, 32(1)(2) & 156(1)(14)(77)---S.R.O. No. 499(I)/2009, dated 13-6-2009---Misdeclaration---Imposition of penalty on clearing agent---Clearing Agent and the importer were alleged in the show-cause notice that they had knowingly and deliberately contravened the provisions of Ss.18 & 32(1)(2) of the Customs Act, 1969 punishable under cls.14 & 77 of S.156(1) of the Act---Adjudicating Officer ordered for recovery of alleged amount of duties and taxes from the importer and imposed penalty on importer and Clearing Agent---Validity---In order to bring actions against Clearing Agent within folds of penalty consequences, presence of requirement of S.32 of the Customs Act, 1969, had to be considered before proceeding any further---When the legislature had introduced the knowledge or intention actuating the commission of the offence as essential element, it was imperative that before the penal consequence of criminal provisions could be set into motion it was to be confronted, if the act in question (actus reus) was laced with presence of criminal intent (mens rea)---Penal consequences under S.32 of the Customs Act, 1969, could not be set into motion against the Clearing Agent in presence of clear findings of Collector (Appeals), wherein he had exonerated the Clearing Agent of committing any actus reus culminating in mens rea---Penalty imposed on the Clearing Agent, stood remitted.

PLD 1967 SC 1 ref.

M. Akram Nizami for Appellants.

Jamshed Hussain, Inspector for Respondents.

JUDGMENT

OMAR ARSHAD HAKEEM, MEMBER (JUDICIAL).--(1) This judgment shall dispose of the above mentioned two appeals filed against a composite Order in Appeals Nos. 167-168/2014 passed by the learned Collector of Customs (Appeals), Lahore as common questions of law and facts arise in these cases.

2.A perusal of record shows that the subject appeals were the jurisdiction of Single Bench therefore the same were referred to the Hon'ble Chairman for assignment to any Member of this Bench. These appeals were entrusted to the undersigned for disposal. Arguments were heard and the case was reserved for orders.

3.The crux of the facts, culminating in the commencement, relevant for the purpose of deciding the core controversy, involved in these appeals and emanating from the record, are that the staff of Post Clearance Audit while conducting audit observed that Messrs Jan Enterprises, Lahore imported a consignment of "Air Refreshner" from China and got clearance thereof through Messrs State Corporation, Customs Clearing Agents, Lahore (the present appellant). The scrutiny of the import documents revealed that the Importer filed T.P. No. KPQI-TP-11151 dated 19.04.2012 at Karachi Customs House declaring the description of the goods as "842 Cartons of Air Refreshner". On arrival of the goods at CFS, NLC Dryport, Lahore, the importer through his authorized Customs Clearing Agents filed GD by mis-declaring the description of goods as 542 Cartons (3468.80 Kgs) of Air Refreshner under H.S. Code 3307.4900 attracting customs duty @ 35% (5% under the benefit of FTA notified vide SRO 659(I)/2007 dated 30.06.2007), ST @ 16%, WHT @ 5%, CED @ 10% of RP and additional ST. @ 3%. In view of the above the Importer and the Customs Clearing Agents knowingly and deliberately mis-declared the quantum of imported goods and evaded duties and taxes.

4.Subsequent to completion of the formalities and in pursuance of the legal and factual inquiry, a show cause notice was issued, which inter alia, it was charged that the Importer and the Customs Clearing Agents had knowingly and deliberately contravened the provisions of sections 18, 32(1) and (2) of the Customs Act, 1969 punishable under clauses 14 and 77 of section 156(1) of the Act ibid read with S.R.O. 499(I)/2009 dated 13.06.2009.

5.In sequel to impugned show cause notice adjudication proceedings were conducted which concluded into an adjudicatory order and the adjudicating office precisely ordered for recovery of the alleged amount of duties and taxes from the Importer and also imposed penalty of Rs. 1,00,000/-. A penalty of Rs. 50,000/- in each case was also imposed upon the Customs Clearing Agents.

6.Aggrieved from the order passed by the learned Deputy Collector (Adjudication) the Customs Clearing Agent filed an appeal before the learned Collector of Customs (Appeals), Lahore for remission of penalty. Subsequent to proceedings the learned Collector ruled as follows:--

"I have examined the case record, considered the grounds of appeal and verbal arguments advanced by the learned counsel for the appellant and the departmental representative during hearing and have found that the appellant of the case is only a Custom Clearing Agents and has not made any mis-declaration before the Appropriate Officer of the Customs at the time of filing and presenting the goods for examination. As such, there is nothing on record which could suggest and prove that the appellant made statement and presented any documents before the Appropriate Officer of Customs at his own which could be termed as false and forged. No connection has been established of the appellant with respect to the impugned goods.

In view of the above, a lenient view should have been taken against the appellant, wherein the imposition of Rs. 50,000/- personal penalty seems too harsh and legally incorrect on a poor innocent like the appellant who has no nexus with the impugned goods. Therefore, I hereby order to reduce the imposed personal penalty to Rs. 10,000/- (Rupees ten thousand only). The order in original Nos. 111-112/2014 dated 23.03.2014 appealed against is accordingly modified to this extent only."

7.Being further dis-satisfied from the order passed by the learned Collector of Custom (Appeals), the appellant has filed the present appeal before the Tribunal.

8.The learned counsel for the appellant mainly contended that the appellant submitted the same documents which were provided by the Importer. No alteration or amendment has been made therein which can be termed as false and frivolous, therefore, the appellant cannot be held responsible for the offence of misdeclaration. He further contended that it was the duty of the Customs Staff to correctly examine the goods and assess the value as per provisions of section 25 of the Customs Act, 1969 and there is no material available on record which could suggest that the appellant managed examination and assessment of the impugned goods. Moving further learned counsel for appellant referred to para. 8 of impugned order in appeal and contended that in presence of the Collectors' own findings to the effect that the appellant had neither committed the offense of mis-declaration nor was involved in any forgery nor any nexus of the appellant's clearing agent with respect to mis-declaration stood established consequently, the learned Collector Appeals should have remitted the penalty instead of reducing it to Rs. 10000/-.

9.Leveling a variety of allegations and narrating the sequence of events, in all learned Deputy Collector of Customs CFS (NLC), Lahore deposited parawise comments through Jamshed Hussain inter alia contending that order in original was issued after show cause notice and a penalty was imposed on the Customs Clearing Agents due to mis-declaration and as per provisions of the Customs Act the Clearing Agent has to file GD in support original documents and equally responsible for any mis-declaration of description and quantity.

10.The arguments of the parties heard, provisions of relevant law discerned and the available record of the case thoroughly considered.

11.The question to be addressed in the instant case is whether penalty can be imposed on clearing agent in strict and absolute terms as a necessary consequence of mis-declaration in absence of any proof of his assistance in aiding or abetting commission of offence under section 32 of the Customs Act, 1969?

12.For a better appreciation of the issue framed, it is necessary to refer to section 32 and subsections (1) and (2), thereof which read as under:--

"32. False statement, error, etc.-(I) If any 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 by or under this Act to answer, or

(c)submits any false statement or document electronically through automated clearance system regarding any matter of Customs.

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.

(2) Where, by reason of any such document or statement as aforesaid or by reason of some collusion, any duty, taxes or charge has not been levied or has been shot-levied or has been erroneously refunded, the person liable to pay any amount on that account shall be served with a notice within five years of the relevant date, requiring him to show cause why he should not pay the amount specified in the notice.

13.The afore reproduced statutory provision makes it quite clear that in order to bring actions of appellant within folds of penal consequences the presence of requirements of section 32 of the Act have to be considered before proceeding any further. There is little doubt that the words "untrue" and "knowledge" and having "reasons to believe" appearing in section 32 clearly point out that the same does not create a strict liability offense (PLD 1967 SC 1). Thus, wherever, legislature introduces the knowledge or intention actuating the commission of the offence as an assential element, it is imperative that before the penal consequence of criminal provisions could be set into motion, it has to be confirmed if the act in question (actus reus) was laced with presence of criminal intent (mens rea).

14.I am of the considered opinion that the penal consequences under section 32 of the Customs Act, 1969 cannot be set into motion against the appellant in presence of clear findings of Collector Appeals in para 8 of his order wherein he has exonerated the appellant of committing any actus reus culminating in mens rea.

15.In wake of above discussion, these two appeals are accepted and consequently the penalty imposed on the appellant clearing agent stands remitted.

16.Parties be informed through registered post A.D. or by UMS.

17.File be consigned to record after completion.

HBT/134/Tax(Trib.) Appeal accepted.