AAMIR SUHAIL, MESSRS IDEAL BUSINESS PRODUCT, UNIVERSITY ROAD, PESHAWAR Versus The COLLECTOR OF CUSTOMS, M.C.C., PESHAWAR
1. SYED SARDAR HUSSAIN SHAH, CHAIRMAN/MEMBER JUDICIAL. ---This appeal is filed by Aamir Suhail, Messrs Ideal Business Product, Peshawar (hereinafter called appellant) against the Order-in-Original No.488566 of 2016, dated 01.03.2016 passed by the Additional Collector of Customs (Adjudication), Custom House, Jamrud Road, Peshawar, whereby he released the goods against payment of redemption fine equal to 35% of the customs value and personal penalty was also imposed on the appellant.
2. Brief facts of the case are that, the goods declaration was electronically filed from the User Id of the Director General Health, Khyber Pakhtunkhwa, Peshawar for clearance of medical equipments/dental units as per detail given below, under claim of exemption from payment of duty/taxes in terms of PCT heading 9913:-
2. 1.
3. Sterilizer
4. 02 Pcs
5. 2.
6. Infant Incubator
7. 02 Pcs
8. 3.
9. Oxygen Concentrator
10. 01 Pcs
11. 4.
12. Suction Machine
13. 02 Pcs
14. 5.
15. Hematology Analyzer
16. 01 Pcs
17. 6.
18. Electrical Surgical Units
19. 03 Pcs
20. 7.
21. X-Ray Film Processor
22. 02 Pcs
23. 8.
24. Dental Unit
25. 03 Pcs
26. 9.
27. Ultrasound Scanner
28. 01 Pcs
2. Initially the GD was examined and assessed on the basis of the undertaking submitted by the importer in accordance with the prescribed procedure implying that the goods were intended for DHQ Nowshera. Meanwhile, information was received to the DC Appraisement that the importer had misrepresented the facts in order to claim exemptions that were not otherwise admissible. The goods were accordingly detained before they were allowed gate out. With a view to ascertain as to whether the exemption claimed on the imported items is admissible or otherwise, the matter was probed into which revealed that:- i. In terms of Para 3(4) of the Import Policy Order, 2015, the Public Sector (Hospitals) can import only against letter of credit to be opened with a schedule bank of Pakistan duly authorized by the State Bank of Pakistan for the purpose. In the instant case, the goods were being imported without a letter of credit. Furthermore it was observed that the imported items have been declared under PCT heading 9913, which extends exemption from payment of duty/taxes only to the charitable/non-profit making institutes on donations received from abroad, whereas the hospitals run by the Provisional Government neither come within the said ambit nor the instant import is donation, therefore, exemption under the said PCT heading is not admissible. ii. It was further observed that the GD had been filed through the User ID of Director General Health Services, KPK, whereas the import documents including the B/L and the commercial invoice were in the name of Dr. Tahir, Project Director, Nowshera Medical College and DHQ Teaching Hospital, who had also submitted the undertaking. When confronted vide this office letter No.2991, dated 08.09.2015, he owned in writing that only three items (7 pieces) out of 09 then items (17) pieces and expressed unawareness about ownership of the remaining items, meaning thereby the undertaking is on one had from an irrelevant person, while on the other hand it does not cover all the items included in the consignment. iii. The matter was further probed into and it was found out that various hospitals had given orders for supply of different medical equipments/dental units to a local supplier namely M/s. Ideal Business Product, 40 Hurmaz Plaza, University Road, Peshawar and the said firm had to supply the requisite items on the prices mutually agreed upon in the supply orders (copies enclosed). The said importer has attempted to bring in all the goods against a single B/L and invoice and filed GD in the name of the DG Health, KPK. The DG Health has also disowned the said import and has further intimated that an enquiry is being conducted into how DG Health's. We BOC ID was misused for filling of the instant GD. iv. During investigation, the importer submitted another copy of the invoice bearing No. PI 150707, dated 7th July, 2015 for a value of US$ 10,150/-. This value is different from the commercial invoice uploaded in the system bearing the same number but showing a value of US$ 4640/- = (Pak Rs.492,260). This proves that the value of the consignment has been drastically suppressed by the importer by forging the earlier invoice. On the other hand, value of the items calculated on the work back method from the prices mentioned in the quotations/supply orders approved by various hospitals to Messrs Ideal Business Product comes to Rs.3,184,303/-. The difference of 85% proves indulgence of the importer/supplier in under invoicing before the Customs and over-invoicing to the public sector. The drastic difference in both the said values clearly depicts, that even in case of admissibility of the exemption, the benefits thereof are not passed on to the buyers (Government Hospitals) rather the same are being illicitly availed by the importer/supplier.
3. The above acts of manipulation and maneuvering on the part of the importer is an offence within the meaning of Sections 19, 32(2) and 79 of the Customs Act, 1969 read with Section 3(1) of the Imports and Exports (Control) Act, 1950 which are punishable under Section 156(1)(10), (10A), (14) and (45) ibid read with S.Nos. 1(d) and (f) of the table appended in SRO. 499(I)/2009, dated 13.06.2009 and Section 3(3) of the Imports and Exports (Control) Act, 1950. Furthermore the unauthorized use of the DG Health's unique User ID attracts penal action as prescribed under Section 155 K read with section 156 (1)(103) of the Customs Act, 1969.
4. Value of the offending goods has been estimated to be Rs.3,184,303/- involving duty/taxes amounting to Rs.1,191,310/-, breakup of which is as under:-
29. 1.
30. CD =
31. Rs.160,966/-
32. 2.
33. ST =
34. Rs.568,696/-
35. 3.
36. AST =
37. Rs.100,359/-
38. 4.
39. AIT =
40. Rs.361,289/-
41. Total:-
42. Rs.1,191,310/-
5. Investigation is in progress to determine the criminal liability of the persons involved however contravention case under the relevant provisions of the Customs Act, 1969 was forwarded for adjudication.
6. Accordingly, after adjudication of the matter, the learned Additional Collector of Customs (Adjudication), Custom House, Peshawar, who vide his Order-in-Original No.488566 of 2016, dated 01.03.2016, released the seized goods against redemption fine equal to 35% with personal penalty of Rs.9552909/- (03 times the value of the goods) under Clause (14), Rs.5956550/- (05 times the amount of duty and taxes), under Clause (45), Rs.50000/- under Clause (103), Rs.20000/- under Clause (10), Rs.31843030/- under Clause (10A) of Section 156 (1) of the Customs Act, 1969 imposed on the appellant. Hence the appeal to this Tribunal.
43. 7 We heard Mr. Irshad Ahmed Durrani, learned Advocate for the appellant as well as Mr. Alhaj Gul, Superintendent/D.R for the respondents and perused the record of the case with their-able assistance.
8. In this case, appellant (M/s Ideal Business Product, Peshawar) imported medical equipments to Government hospitals. The Government of Khyber Pakhtunkhwa (KP) on 26.02.2015, approved the quotations/rates for the purchase of different articles/equipments for Nowshera Medical College and DHQ Teaching Hospital, Nowshera as well on 26.02.2015 quotations/rates were approved by the Purchase Committee for the purchase of equipments for Nowshera. Similarly, Government of KP, Children and Maternity Hospital, Charsadda issued a supply order for the procurement of Machinery and Equipments and Furniture to the successful bidder, Messrs Ideal Business Products, Peshawar. Similarly, on 22.05.2015, the Purchase Committee approved the quotation rate for supply/purchase of instruments/equipments. Similarly, the Department of Anesthesiology requested the appellant to donate an Ultrasound Machine with linear probe for regional Anesthesia techniques on donation basis. The required of equipment/articles were imported via Qatar Airbase to Peshawar Airport vide Airway bill dated 28.08.2015. On receipt of the consignment the appellant apply for clearance to the Customs authorities, who objected that the License has not been properly opened for the transaction. Secondly, the user ID of the Health Department has been misused. Thirdly, PCT Code has wrongly been mentioned in 9913 instead of 9914. According to the Chapter (XIII) of the FE Manual of 2002, Para-6 described the Modes of payments for imports, which says that the "Payment for imports may be made either through letters of credit, without letters of credit against documents received for collection on the basis of registration of contracts, or as clean remittance without opening of letter of credit and without registration of contract, as described in detail in the subsequent paragraphs." As the equipments/articles were required imported for Government Hospitals, thus the importer used the user ID 9051401 of the Directorate of Health Services. The PCT Code head 9913 is inadvertently written and the correct PCT Code is 9912, which has been corrected by the Customs authority in the GD.
9. The Perlong Medical Equipment (Hong Kong) Limited wrote a letter to the Collector of Customs, Peshawar, wherein stated that due to mistake of our forwarder the goods were wrongly dispatched to Peshawar Airport and requested to return us frustrated Cargo, so it will be dispatched again properly to above each institutions or if possible deliver the Medical Equipment to the above institutions. If not possible then return we will bear all freight expenses.
10. The learned Additional Collector of Customs (Adjudication) allowed the importer to redeem the goods on payment of redemption fine equal to 35% with personal penalty of Rs.9552909/- (03 times the value of the goods) under Clause (14), Rs.5956550/- (05 times the amount of duty and taxes), under Clause (45), Rs.50000/- under Clause (103), Rs.20000/- under Clause (10), Rs.31843030/- under Clause (10A) of Section 156 (1) of the Customs Act, 1969 imposed on the importer. The penalty in the Clause (14) of Section 156 of the Customs Act, 1969, as per this Clause "If any person commits an offence under section 32 of Act," and according to Section 32 of the Customs Act, 1969 is for non declaration and false statement. Section 32 of the Customs Act, 1969 is reproduced as under:-
44. Section 32. False statement, error, etc.- (1) 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.
45. [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 short-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.
(3) Where, by reason of any inadvertence, error or misconstruction, any duty [taxes] or charge has not been levied or has been short-levied or has been erroneously refunded, the person liable to pay any amount on that account shall be served with a notice within [three years] of the relevant date requiring him to show-cause why he should not pay the amount specified in the notice.
46. [Provided that if the recoverable amount in a case is less than [twenty thousand] rupees, the Customs authorities shall not initiate the aforesaid action.]
47. [(3A) Notwithstanding anything contained in subsection (3), where any duty [taxes] or charge has not been levied or has been short-levied or has been erroneously refunded and this is discovered as a result of an audit or examination of an importer's accounts or by any means other than an examination of the documents provided by the importer at the time the goods were imported, 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.
48. [Provided that if the recoverable amount in a case is less than one hundred rupees, the Customs authorities shall not initiate the aforesaid action.]
(4) The appropriate officer, after considering the representation, if any, of such person as is referred to in subsection (2) or subsection (3) for subsection (3A)] shall determine [any amount payable by him under this Act,] which shall in no case exceed the amount specified in the notice, and such person shall pay the amount so determined.
(5) For the purposes of this section, the expression "relevant date means:-
(a) in any case where duty is not levied, the date on which an order for the clearance of goods is made;
(b) in a case where duty is provisionally assessed under section 81, the date of adjustment of duty after its final assessment;
(c) in a case where duty has been erroneously refunded, the date of its refund;
(d) in any other case, the date of payment of duty or charge in case of clearance of goods through the Customs Computerized System, on self assessment or electronic assessment, the date of detection.]
11. The contents of this Section has not attracted to the case of the appellant. And the Second penalty under Clause (45) of Section 156 the language of this Clause is that "If any goods have been declared on, a goods declaration, as the case may be, and it is found that goods not so declared have been concealed in, or mixed with the goods so declared". In the appellant case the appellant properly declared the goods and nothing has been concealed or mixed with the goods, so declared, so this Section of law is also not attracted to the case of appellant. The third penalty is for under Clause (10A) of Section 156 is for the breach of "any condition, limitation or restriction imposed by Federal Government or by the Board for grant of partial or total exemption from customs duties is violated in respect of the goods on which exemption has been granted". The appellant was properly exempted and there was no bar on the importation of such goods by the Federal Government, thus this penalty under this Clause is also not in accordance with law. The penalty under Clause (103) of Section 156 is for "Unauthorized use of or attempt to make unauthorized use of unique user identifier by any person". As the KP Government directed the importer to import such equipments for their hospital and user ID has already been share by the Government on NET for the use of importation of hospitals equipments.
11. In parawise comments, the respondents admitted that the Importer in the instant import filed the GD through the user ID of Director General, Health Services, KP, whereas the import documents i.e. Bill of Landing and commercial Invoice were in the name of Dr. Tahir, Project Director, Nowshera Medical College and DHQ Teaching Hospital, Nowshera. It means that the consignment was for the hospitals. Further in their comments they stated that the Dr. Tahir, Project Director, Nowshera admitted that some of the equipments are for Nowshera Medical College DHQ Teaching Hospital, Peshawar KP, but the others are not related to them. The letter of District Health Officer (DHO), Dir Lower at Timergara, addressed to Messrs Ideal Business Products, Peshawar on 22.05.2015 and other letter of Professor Dr. Gohar Rehman, Project Director, Children and Maternity Hospital, Charsadda addressed to M/s Ideal Business Products, Peshawar on 12.06.2015, available on record stated that they are needs of these equipments, which are mentioned in their supply order. The undertaking dated 15.09.2015 is available on record, wherein DHO, Dir Lower at Timergara also undertakes that the equipments are required to them for hospital, and they are exempted from all type of Government taxes. Similarly, the undertaking of DMS (Store), Hayatabad Medical Complex, Peshawar, dated 31.08.2015, available on record also admitted that the equipments mentioned therein are required to them for the Hospital use and they will not soled, utilized or disposed off otherwise than for the purpose for which the same have been imported, the evidence which is available on the record has not been considered by the Adjudication Officer, while deciding the case and wrongly been imposed redemption fine as well as penalty on the appellant.
12. In view of the above discussions, we allow this appeal partially and the impugned order dated 01.03.2016 of the Additional Collector of Customs (Adjudication), Peshawar is set aside to the extent of redemption fine and penalties. The respondents are directed to release the goods to the appellant on payment of leviable duties and taxes. The appeal is disposed off accordingly.
49. SA/51/Tax (Trib.) Appeal allowed.