2002 PTD 3053

Appeal No. K-1899 of 2001, decided on 24th January, 2002. Versus Appeal No. K-1899 of 2001, decided on 24th January, 2002.

Citation2002 PTD 3053

CourtCustoms, Excise and Sales Tax Appellate Tribunal

ORDER

The present appeal has been brought against the order, dated 20‑11‑2001, passed by the Deputy Collector of Customs, Adjudication, Karachi‑1, whereby the appellant has been held guilty of making an untrue statement in terms of section 32 of, the Customs Act, 1969 (hereinafter referred to as the 'Act) and penalty amounting to Rupees ten thousand has been imposed by the Adjudicating Officer, his order in this regard reads as follows:‑‑‑

" ....I am not left with a doubt that importers have deliberately tried to evade the legitimate amount of Revenue by availing illegal benefit of concessionary S.R.O. Charges levelled in the show‑cause notice are established, I, therefore, enforce the demand raised therein amounting to Rs.2,31,273 under sub section (2) of section 32 of the Customs Act, 1969. Appraisement Collectorate may also fix responsibility and take appropriate action against the staff members who initially allowed the release of subject goods at concessionary rate as also envisaged and desired by Central Board of Revenue. Importer should pay the demand amount Within 30 days failing which, department would hold the' right to initiate recovery action as envisaged in the Customs Act, 1969. A personal penalty of Rs.10,000 (Rupees ten thousand only) each is also imposed on the importer Messrs Dawlance (Pvt.) Ltd., and clearing agent Messrs. Omalsons under clause (9) of section 156(1) d the Customs Act, 1969..." ,

2. Brief necessary facts of the case for the disposal of this appeal are that Messrs. Dawlance (Pvt.) Ltd.; Karachi, did import a consignment of compressors and filed a bill of entry on 5‑1‑1998 for the release of said goods. These goods were meant for domestic manufacturing of refrigerators and deepfreezers. At the assessment stage the importer requested the Assessing Officer to allow release of goods on concessionary rate of duty in terms of S.R.O. 504(1)/94, dated 9‑6‑1994, as the said consignment did qualify for the concessionary rate of duty. The Assessing Officer after due consideration allowed appellant's request and released the goods on concessionary rate of customs duty by extending the benefit under S.R.O. 504(1)/94.

3. At a post clearance scrutiny, a Customs Officer observed that release of the said consignment on concessionary rate of duty was not in order as the said action was not inconformity with the Board's instructions contained in its letter, dated 7‑6‑1995. The said instrument directed that where imported goods of like kind and quality were being manufactured by domestic manufacturers, the benefit of concessionary, rate of duty will not be available to the imported goods. The customs thus prima facie, believed that the goods were fraudulently cleared by the importers with the active connivance of their authorized clearing agent, Messrs. Omalsons Corporation, and in collusion with the customs staff in order to defraud the Government.

4. The customs acting under the said belief, charged the importers for violation of the provisions of subsections (1) and (2) of section 32 of the Act, and issued a show‑cause notice, whereby both the principal and agent were called upon a show‑cause as to why the short levied amount be not recovered from them and as to why penal action under clauses (10A), (14) and (86) of section 156(1) of the Act, be not taken against them.

5. During the adjudication proceedings, the appellant denied the said charges as being baseless and pleaded for the vacation of the show cause notice. However, the Adjudicating Officer did not agree with his point of view and he imposed a penalty amounting to Rs.10,000 for the violation of section 32 read with clauses (10A), (14) and (86) of the subsection (1) of section 156 of the Act. Being aggrieved, this appeal has been filed to challenge the vires of the said order.

6. Mr. Sardar M. Younus, the learned counsel for the appellant has attacked the impugned order by arguing that no specific act of omission or of commission to bring the conduct of the appellant within the fold of alleged offences has been specified; a study of para. three of the show cause notice would reveal that his client was held guilty and a judgment was passed without providing him any opportunity 'to defend the allegations, or to know the evidence or the basis for arriving at the said conclusion; in view of section 209 of the Act, an agent represents the principal and all his acts including making of statement, submission of documents and the emerging consequences are the responsibility, of the principal and not of the agent, therefore, his client cannot be punished for making a representation only; that even the main issue of release of goods on concessionary import duty, has been decided by the Lahore High Court, whereby the action of the customs to deny the benefit of S.R.O. 504(1)/94 has been held illegal ab initio, hence the customs action against the appellant is illegal; that their lordships of the Lahore High Court in the case of Maple Leaf Cement Factory 'Limited (2002 YLR 1989), have held: "the rights which vested in the importer who entered into a firm contract with foreign supplier could not be taken away by issuing a Notification or Customs General Order." Having said all that, the learned counsel pleaded for the quashment of impugned order.

7. Mr. Farhan, the learned departmental representative has supported the impugned order by arguing that the relationship between the importer and the agent having genesis in section 209 of the Act, which essentially is nature of an agreement between principal and agent and as the appellant was expressly authorized by the owner, his acts are cognizable in terms of section 32 of the Act.

8. Coming back to the merits of the case, I have heard the learned counsel for the parties. According to the case mainly set‑up by the respondent in the show‑cause notice, dated 4‑3‑1999 and during the course of arguing this appeal and the reason which basically prevailed with the learned Adjudicating Officer is, that there exists a relationship of agent and principal between the agent arid importer which has created a liability on the part of the agent within the mischief of section 32 of the Act.

9. In order to ascertain the above fact, it is expedient to analyze the show‑cause notice and the admitted nature of dealings between the customs, the importer and the agent. Under the show‑cause notice as explained by Mr. Sardar M. Younus, the respondent has failed to specify the nature of act and its character in order to implicate the appellant and to bring his conduct within the fold of section 32 of the Act. Thus it is necessary to find out‑‑‑

(a) the true purport and amplification of section 32 of the Act;

(b) the role of the agent in terms of section 209 of .the Act, and ensuing liabilities of the parties;

10. First of all I shall take the primary plea of the respondent's side qua the untrue statement of the appellant. Section 32 of the Act, defines an offence under the Act in the following terms:

"...32 (Untrue) statement error, etc.‑‑‑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 req0ired by or under this Act to answer‑

[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 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 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.

(3A) Notwithstanding anything contained in subsection (3), where any duty 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 three years of the relevant date requiring him to show‑cause why he should not pay the amount specified in the notice].

(4) The appropriate officer, after considering the representation, if any, of such persons as is referred to in subsection (2), or subsection (3) shall determine the amount of duty payable by him 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;'

11. From the above, it is clear that in order to attract these provisions and to bring an act within the fold of clause (14) of section 156(1) of the Act, the presence of following factors is necessary:

(a) to make any declaration, notice, certificate or other document;

(b) to sign any declaration, etc;

(d) to deliver or cause to be delivered any declaration, etc., to an officer of Customs;

(e) to make 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.

12. After setting the above criteria, it should now be judged, whether on the basis of submission of documents or in the light of admitted facts relating to customs transactions conducted by the appellant, was there an act which can be termed as an untrue statement in material particulars?

13. As per the show‑cause notice and as verbally explained by learned counsel for the parties, the appellant was held guilty for an offence attracting the provisions of sections 32 and 192 of the Act. The charge framed in the said notice relates to a claim made by the importer through the agent, that goods in question be assessed to concessionary rate of duty as the consignment do qualify and meets the conditions laid down in S.R.O. 504(1)/94. The customs, however, claimed that in terms of Central Board of Revenue's instructions, dated 7‑6‑1995, the concessionary rate of duty was not applicable as the goods were being manufactured domestically and marketed accordingly. As per the show‑cause notice, since Public Notice No.21/95(A) had'6een issued on 26‑4‑1995, therefore, the agent should not have made a claim, and since hg made one, the act attract the provisions of section 32 of the Act.

14. According to the show‑cause notice itself and construing it in the light of the Act, the customs should have made distinction between a "declaration" or "a statement in answer to any question put" and a "claim". As regards declaration it means a communication by a person in relation to a business being conducted: The word "declaration" came to judicial scrutiny in the case of Vithoba Syamna v. Union of India reported as AIR 1957 Bom. 321. It was held in that case that the word "declaration" refers to the nature, description and value of goods so that Assessing Officer can apply appropriate tariff rates for assessment and charging. On the other hand the word "claim" means a demand for something supposed due to, or demanded as a right.

15. Here the only charge against the appellant is that he claimed benefit of a notification and wrongly got assessed the goods on concessionary, rate of duty, there is no charge that his declaration in respect of nature, description and value of goods was found to be wrong. In the case of Eastern Rice Syndicate v. Collector of Customs (PLD 1959 SC 364), the Supreme Court had held that in order to attract the penal provisions of section 39 (now section 32), it must be established that the person who alleged to have made any statement in a document, submitted to the Customs Authorities must be false to his knowledge, and it would depend upon the facts and circumstances of each case. It is not disputed here that the statement made in the customs documents regarding the nature and value of the goods imported were in any way wrong; rather that information was found correct and true.

16. The assumption of the customs that violation of the said section I did take place appears to be wrong. In fact, the charge against the agent was wholly misconceived, as his actions do not fall within the operative mechanism of section 32 of the Act. A study of sections 79 and 80 of the Act, reveals that the importer or his agent has to file a bill of entry for release of goods on which the Assessing Officer has to make an assessment. Any claim made by an importer subject to scrutiny by the Assessing Officer who has been vested with unfettered powers to complete an assessment. A claim is a request subject to approval by a competent officer, and where a competent Authority grants or rejects the claim, no charge of fraud or otherwise can be linked to the agent or to his principal, whose duty is to submit relevant documents for processing of release application. It appears that the officer who issued the show cause notice grossly misunderstood the scheme, meaning and operative mechanism of the assessment provisions of the Act.

17. It would be appropriate to analyze the scheme and mechanism of the assessment as provided in the Act, therefore, for ease of reference the provisions of said sections are eproduced below:

" ....79. Entry for home‑consumption or warehousing. ‑‑‑ (1) The owner of any imported goods shall make entry of such goods for home‑consumption or warehousing or for any other approved purpose by delivering to the appropriate officer a bill of entry thereof in such form and manner and containing such particulars as the Board may direct:

Provided that, if the owner makes and subscribes a declaration before the appropriate officer to the effect that he is unable, for want of full information, to make a complete entry of any goods, then the said officer shall permit him, previous to the entry thereof, to examine the goods in the presence of an officer of customs or to deposit such goods in a public warehouse appointed under section 12 without warehousing the same, pending the production of such information.

[(2) A bill of entry under subsection (1) may be presented at any time before or after the delivery of the manifest].

(3) If [an officer not below the rank of [Additional Collector] of Customs] is satisfied that the rate of customs‑duty is not adversely affected and that there was no intention to defraud, he may in exceptional circumstances and for reasons to be recorded in writing permit substitution of a bill of entry for home consumption for a bill of entry for warehousing or vice versa.

(4) [An officer of Customs not below the rank of [Assistant Collector or Deputy Colector] of Customs may in case of goods requiring immediate release allow release thereof prior to presentation of a bill of entry {****} and subject to such conditions and restrictions as may be prescribed by the Board].

80. Assessment of duty .‑‑‑(1) On the delivery of such bill, the goods or such part thereof as may be necessary may, without undue delay, be examined or tested, and thereafter the goods shall be assessed to duty, if any, and the owner of such goods may then proceed to clear the same for home‑consumption or warehouse them, subject to the provisions hereinafter contained.

(2) Notwithstanding anything contained in subsection (1), imported goods prior to examination or testing thereof may be permitted by the appropriate officer to be assessed to duty on the basis of the statements made in the bill relating thereto and the information furnished under the rules and she documents produced under section 26; but if it is found subsequently on examination or testing of the goods or otherwise that any statement in such bill of 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 re‑assessed to duty... "

18. In terms of section 79 of the Act, the Central Board of Revenue vide its Customs General Order No.3 of 1996, dated 6-3‑1996 did prescribe form, manner and particulars of a bill of entry to be filed by an intending importer. The format of bill of entry so prescribed requires submissions and reporting of detailed informations including description of goods, its weight and value. After processing the said information, the Assessing Officer has to get the goods examined or tested (as the case may be) for determining, nature, quantity and description of goods to assess the amount of duty and taxes leviable thereon.

19. The assessment procedure as provided in section 80 of the Act, is quite exhaustive and detailed. The Assessing Officer can call for all the relevant documents and any other information which he deems necessary, and still the Assessing Officer can put questions. or require submission of additional information for the purpose of completing the assessment. A perusal of section 32 of the Act reveals that in addition to declaration any communication or answers to question put by customs and found wrong in material terms do qualify to constitute an offence within the framework of said section. So, in order to bring an act on action within the framework of word `false' as used in section 32 of the Act, the act should either be a conscious wrong or culpable negligence and should signify knowingly or negligently untrue. This issue came up for decision before the Karachi High Court in the case of Muhammaa Imtiaz Ahmed Sheikh v. Principal and Chairman, Academic Council etc. reported as PLD 1976 Kar. 1154. Therein, their lordships observed:

"...In law, the word `false' usually implies either conscious wrong or culpable negligence and signifies knowingly or negligently untrue. See United States v. Ninety‑nine Diamonds (1). According to Metropolitan Life Insurance Co. v. Adams (2) the word `false' has two distinct and well‑recognized meanings(1) intentionally or knowingly or negligently untrue; (2) untrue by mistake or accident, or honestly after the exercise of reasonable care ...."

20. `The customs have failed to bring out on record any material as an outcome of their inquiry by which it can be assumed that agent was in any way linked with a plan to defraud the Government. It is surprising I that in the instant case no specific charge has been levelled against the agent in the show‑cause notice. An examination of para. 3 of the show cause notice reveals that rather than accusing the agent for a specific act and providing the basis and evidence, the authority who did issue the notice held him guilty of the offence falling under section 32 read with clauses (14) and (86) of section 156(1) of the Act, without any basis. This act in itself violated the principles of natural. justice. In these circumstances applicability of section 32 was ab initio wrong and the act of customs to malign the agent unnecessarily and to issue him a show cause notice was an act of abuse of power.

21. Attention in this regard is also invited to the provisions of section 180 of the Act, which lays down a mandatory duty on the part of Adjudicating Officer to issue a show‑cause notice before imposition of penalty. For ease of reference, the said provisions are reproduced below:

"...180 Issue of show‑cause notice before confiscation of goods or imposition of penalty.‑‑‑ No order under this Act shall be passed for the confiscation of any goods or for imposition of any penalty on any person, unless the owner of the goods, if any or such person‑‑‑

(a) is informed in writing (or if the person concerned consents in writing, orally) of the grounds on which it is proposed to confiscate the goods or to impose the penalty;

(b) is given an opportunity of making a representation in writing (or if the person concerned indicates in writing his preference for it orally), within such reasonable time as the appropriate officer may specify, against the proposed action; and

22. Amongst other things the said provisions provide that an affected person is to be informed in writing of the grounds on which it proposes to impose penalty. In the instant case the show‑cause notice does not reveal grounds or a cause against the agent. In fact, the show‑cause notice only addresses grievance of the customs and that too against the importer. The grounds on which customs proposed to take action against the agent were never revealed. The initiation of action against the agent was thus in violation of the provisions of section 180 of the Act.

23. The effect of said provisions was interpreted in the case of Ali Haider v. Ijaz Hussain Malik etc. reported as 1968 PCr.LJ 127. While addressing the object of issuance of a show‑cause notice, their lordships observed:

"..When a show‑cause notice is given, the object is that the person on whom it is served gets an opportunity to explain the allegations against him for which action is proposed to be taken. If the show‑cause notice is not to be reduced to a mere formality, the contents of the reply in response to the show cause notice must receive due consideration. The grounds mentioned in the show‑cause notice cannot become reasons for the action that may be taken unless the grounds are tested in the light of the explanation tendered and stand the scrutiny of the authority who has to take action on an objective assessment of the material supplied in proof of the allegations contained in the show‑cause notice. When the statute enjoins that the reasons must be recorded in writing, the plain meaning is that the reasons must be manifested in the order itself to be self explanatory for the purpose of showing that the order has a foundation in reason and is not capricious or arbitrary ....

24. In the case of Haji Abdul Razzaq v. Pakistan (PLD 1974 SC 5), their lordships observed:

"...If the words `liable to confiscation' in section 168, Sea Customs Act, 1878, give a discretion to the Confiscating Authority to deprive a person of his property, then it follows that this discretion must be exercised upon the principles of natural justice; that is to say, the persons sought to be deprived of the property must be given notice to show‑cause, they must be furnished with adequate opportunity of putting forward their point of view and the same must receive due consideration. Furthermore, according to one of the principles now well‑accepted, no person should be deprived of his property by way of penalty unless it is clear that he is in some measure responsible for assisting or furthering the commission of the offence committed, No innocent person should be unjustly punished or deprived of his property..."

25. By applying the objective tests which their lordships have laid down in Ali Haider's case (supra) the resultant position is that the said conditions were never met in this case and the action against the appellant was taken in flagrant violation of law. The evidence against the appellant was never disclosed, and even the ‑basis whereby, the customs came to the conclusion that agent is guilty of a customs offence were also not disclosed to him. From this perspective exercise of discretion by the customs infringed the principles of natural justice.

26. Coming back for the elucidation, as to what is the true relationship, inter se the parties, particularly in the light of the submission, made by the learned counsel for the respondent, that section 209 of the Act, places a responsibility on the part of agent, it would be appropriate to review the provisions of the Act, the relevant provisions are accordingly reproduced below:

" ....209. Liability of principal and‑agent. ‑(1) Subject to the provisions of sections 207 and 208, anything which the owner of any goods is required or empowered to do under this Act may be done by any person expressly or impliedly authorized by the owner for the purpose.

(2) Where this Act requires anything to be done by the 'owner, importer or exporter of any goods, any such thing done by an agent, clerk or servant of the owner, importer or exporter of any goods shall; unless the contrary is proved, be deemed to have been done with the knowledge and consent of such owner, importer or exporter so that in any proceedings under this Act the owner, importer or exporter of the goods shall also be liable as if the thing had been done by himself.

(3) When any person is expressly or impliedly authorized by the owner importer or exporter of any goods to be his agent in respect of such goods for all or any of the purposes of this Act, such person shall, without prejudice to the liability of the owner, importer or exporter, be deemed to be the owner, importer or exporter of such goods for such purposes:

Provided that where any duty is not levied or is short‑levied or erroneously refunded on account of any reason other than wilful act, negligence or default of the agent, such duty shall not be recovered from the agent..."

27. In view of said provisions of law, an agent represents the principal or the importer or the exporter, and accordingly for all his acts including making of statement, submission of documents and for other doings the principal is responsible. For example an agent can be held liable for a criminal act, or for a misconduct, an action can be taken against him under the governing rules relating to agents, but with regard to anything relating to customs duty, he cannot be charged. The issue came up before Judicial scrutiny in the case of Abdul Ghani v. Government of Pakistan (1984 PCr.LJ 540), wherein their lordships observed:

"After considering the provisions of section 209 we are of the view that the act done by the Tendal Hussain who was admittedly the employee of the petitioner equally bound the petitioner in view of the provisions of subsection (2) of section 209 of the Customs Act unless the contrary was proved. Therefore, the burden of proving to the contrary was entirely on the petitioner. The Deputy Collector of Customs Collector of Customs and Board of Revenue after considering the circumstances of the 'case reached the conclusion that the petitioner was liable for the act of the Tendal Hussain who was his employee and was incharge of the launch at the relevant time. The fact that the launch was found involved in the act of smuggling is not disputed by the petitioner. There is nothing on record before us to show that Tendal Hussain acted against any express instructions of the petitioner. In these circumstances the order passed by the authorities for confiscation of the launch was, in accordance with the provisions of the law and no exception could be taken to it..."

28. Their lordships have held that effect of subsection (2) of section 209 is that where the principal knew about the happening of criminal activity (smuggling) he was responsible for the acts of his agent.

Whereas in this case the circumstances are altogether different. The importer who had a right within the framework of permission given by the C.B.R. in terms of survey report was entitled to bring compressors on concessionary rate of duty. The permission so granted by the C.B.R. was never withdrawn. By issuing a general order or a public notice a right given by a specific permission could not be withdrawn. This issue came up for scrutiny before their lordships of Lahore High Court in the case of Messrs United Refrigeration Industries (Pvt.) Ltd. v. Federation of Pakistan (2000 CLC 1660).

29. In the said case, the issue involved was the same as in the present case, that is, the effect of S.R.O. 504(1)/94 and Public Notice No.21/95 (A), whereby the importers were being denied concessional rate of duty in respect of import of compressors on the plea that the same are being locally manufactured. His lordship of the Lahore High Court while examining this issue in detail summed up his findings in the following terms:

" ....Without ensuring availability of compressors being manufactured by PEL in the market and its capacity of commercial production, the withdrawal of exemption of S.R.O. 504(1)/90 on the presumption of locally made compressors were available in the market was not justified. ‑‑‑With a view to provide a better living to a common person, it was essential to reduce the price of the item of general use and, therefore, a special concession in customs duty was made available to the manufacturers of refrigerators under S.R.O. No.504(I)/94, dated 9‑6‑1994 issued under section 19 of the Customs Act, 1969 with the result that the refrigerators would be available in the market within the reach of purchasing power of a common person. The components of a few items of the general use were not being produced and manufactured in the country and were being imported for the manufacturing of items such as specified in Table‑1 to the S.R.O. No.504(I)/94, dated 9‑6‑1994, therefore, the same were exempted from the customs duty chargeable under First Schedule to the Customs Act, 1969. This is admitted that the compressors being manufactured in the country were not available in the market and that the permission was given for the import of compressors under the above said S.R.O. on a concessionary rate of customs duty and the petitioner had been availing the benefit of S.R.O. in question on the import of compressors before 24th March, 1998 and again was made available to him after 30th March, 1999 and this special concession was only withheld during the period from 24th of March, 1998 to 30th of March, 1999. Thus, the pivotal question of determination would be, whether the manufacturing of compressors by PEL an industrial unit in the country without commercial production would take away the statutory concession on customs duty available to all the manufacturers of refrigerators and whether for the said reason such concession could be withdrawn through a Customs General Order for the benefit of an individual Unit. It is understandable that the concession on the import of compressors was given for the reason that the same were not being manufactured in the country were not‑ available in the market, therefore, without ensuring availability of compressors being manufactured by PEL in the market and its capacity of commercial production, the withdrawal of concession on the presumption of locally made compressors were available in the market was not justified.

It is held that the petitioner being entitled to the concession of customs duty under S.R.O. No.504(1)/94, dated 7‑6‑1990 was illegally refused on the basis of Customs General Order No.7, dated 24‑3‑1998 and it is declared that the benefit of the said S.R.O. shall be available to the petitioner and notwithstanding the Customs General Order No.7, dated 24‑3‑1998, it would be deemed to have always been available to him. The Customs General Order should have no effect on the right of the petitioner relating to the claim of exemption on customs duty S.R.O. No. 504(1)/94, dated 9‑6‑1994, the refusal of the same by the respondent would, therefore, be without lawful authority.

The object of S.R.O. 504(1)/94, dated 9‑6‑1994 issued under section 19 of the Customs Act, 1969 was that the refrigerators would be available in the market within the reach of purchasing power of a common person.

In absence of any evidence of the sale of compressors by PEL in the market, the mere establishment of a Plant of compressors by the PEL for the use of the same in the refrigerators being manufactured in its industrial unit would not permit the respondents to take away the concession of customs duty on the import of compressors under the S.R.O. No.504(I)/90 it question, which would amount to restrict the market to the refrigerators being manufactured by the PEL and allow the said Unit to create monopoly in the business at the cost of healthy and free competition in violation of Constitution for providing fair opportunity of lawful business under Article 18 of the Constitution of Islamic Republic of Pakistan, 1973.

The Customs General Order is issued for guidance of field staff to achieve the purpose of the statute where such departmental instructions are in conflict with the statutory law or tends to undo any such law, then the same has no legal effect.‑‑‑the refusal of the legitimate statutory concession made available by the Government through the departmental instructions in the form of Customs General Order would amount to undo the effect of notification issued under section 19 of the Customs Act, 1969. The departmental instructions such as Customs General Order is issued for guidance of the field staff to achieve the purpose of the Statute, and if such departmental instructions are issued in conflict to statutory law or to undo any such law, the same would not have any legal effect.."

30. Thus, the Court while interpreting the object and purpose of S. R. O. 504(1)/94, dated 9‑6‑1994 observed that the intend of said regulation was to make the refrigerators available in the market on competitive price and since the goods namely, compressors being domestically manufactured were not available openly, therefore, the object of public policy was being defeated. The Court accordingly held that any refusal to available statutory concession by Customs General Order or through a Public Notice was illegal. The action of the department in the light of said verdict of the Honourable High Court was thus ab initio wrong.

31. As regards the issue raised by the counsel of the appellant that whether not the act of the clearing agent falls within the ambit of clauses (l0A), (14) and (86) of subsection (1) of section 156 of the Act, suffice it to say that the said provisions of law are not applicable in the present case. It would be relevant here to reproduce the said provisions. The same read as follows:‑‑‑

Offences

Penalties

Section of the Act to which offence has reference 19 and 20

(10A) If any condition, limitation or restriction imposed by, the

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.

Such goods shall be liable to confiscation; and

Federal the person to whom the exemption was granted shall be liable to a penalty not exceeding ten times the value of goods ;and upon conviction by a Special

Judge he shall further be liable to imprisonment for a term not exceeding two years.

14. If any person commits an offence under section 32,

Such person shall be liable to a penalty not exceeding

(twenty five thousand rupees) or three times the value of the goods in respect of which such offence is committed, ' whichever be greater; and such goods shall also be liable to confiscation [and upon conviction by a

(Special Judge) he shall further be liable to imprisonment for a term not exceeding three years, or to fine, or to both].

Such person shall, on conviction (before a Special

Judge), be liable to imprisonment for a term . which may extend to one year, or to a fine not give exceeding [(twenty five in writing to thousand rupees], or to both,

86. If any person, having knowledge of the commission of any offence under this Act or of an attempt or likely attempt to commit any such offence, fails to information the officer‑in‑charge of the nearest custom house or customs station, or if there be no custom house or customs station at a reasonable convenient distance to the officer‑in charge of the nearest police‑station,

192

32. As regards clause (IOA), the same is not applicable in this case as neither any violation of the terms and conditions of the relevant Notification was ever made by the appellant, nor it has been alleged in the show‑cause notice. Therefore, the said provision has no relevance to the merits of the case. Clause (14) provides imposition of penalty where an offence under section 32 did take place. As is evident do not find presence of. any fact or circumstances where by any stretch of imagination it can be assumed that an offence under section 32 did take place and that too on the part of agent. Therefore, any action under the said clause would have no relevance to the facts of Ibis case. As regard, clause (86) it refers to reporting of a customs office to the Customs' Authority. These provisions are only applicable in Cases of smuggling, that is, where the goods are brought through unauthorized routes. In the before, provisions of present case no such circumstances did exist, the section 192 were not attracted. In fact, there was no offence which the agent was under an obligation to report. Accordingly, it is evident that the said provisions of law are not attracted in this, case.

33. Now attending to the submission of the learned departmental representative, that impugned order was legally correct, .it is observed that he has not been able to bring on record any evidence whereby it can be assumed that the agent did violate any provision of law; When confronted with aforementioned legal position emanating from the case, he conceded that the departmental action was wrong and that too without

34. In the light of what has been stated above, I do not find that the respondent has been able to make out a prima facie case to punish the agent. Be that as it may, it is observed that:

(a) the show‑cause notice was defective and illegal ‑inasmuch as that it held the appellant guilty without providing him an opportunity of hearing and without delivering him the evidence for the cause‑shown in the notice, thereby violating the mandatory provisions of section 180 of the Act.

(b) In view of section 209 of the Act, and in the circumstances of this particular case no liability did exist against the agent.

(c) The matter having been decided by the Lahore High Court in favour of the importer, any presumption of guilt against the agent was wrong.

(d) No offence under clauses (l0A), (14) or (86) of section 156(1) of the Act, whatsoever took place.

(e) The Department has conceded that then action was wrong.

35. Having said that, this appeal is allowed, the penalty imposed Limited, accordingly the impugned order stands modified to this extent.

Q.M.H./40/Tax(Trib.) Appeal allowed.