2010 PTD 1315

ORDER

MUHAMMAD ARIF MOTON, MEMBER (JUDICIAL-II).-- This order will dispose of Customs Appeal No.405/2009 filed by appellant against Order-in-Appeal No.1792/2009 dated 1-6-2009, passed by learned Collector of Customs, Sales Tax and Federal Central Excise (Appeal), Karachi.

2. Brief facts of the case are that the appellants imported a consignment of "Sequin Sitara Sheets" (means sitara sheets in circular spangles for attachment to clothing as on ornament) from China at the unit rate US $ 0.6122/Kg and filed the Goods Declaration vide CRN: I.HC. 878991 dated 15-1-2009 under section 79 (I) of the Customs Act, 1969. That the appellants paid the custom duty and taxes amounting to Rs.238,932 @ 25% on the declared value vide PCT Heading 5204-2090. A show-cause notice containing charges of misdeclaration of description of goods, value and incorrect citation of PCT Heading under sections 79(1), 32(1) 32(2) and 32(A) of the Customs Act, and section 33 of the Sales Tax Act and section 148 of the Income Tax Ordinance, 2001 was issued to the appellant.

3. Adjudication proceedings were initiated and the learned Additional Collector passed the Order-in-Original No.4050 of 2009 holding that the appellant had misdeclared the description and classification in order to evade due amount of customs duty and taxes wilfully and with mala fide intention. He also imposed 50% fine amounting to Rs. 1,468,428/30 in terms of S.R.O. 487(I)/2007 dated 9-6-2007 alongwith leviable duties and taxes on the 'enhanced value of US$ 1.9/kg. A penalty of Rs.150,000 had also been imposed. The appellant preferred an appeal against the said order-in-original who also upheld the order and passed the order-in-appeal which is impugned before this forum.

4. Heard Ch. Muhammad Rafiq Consultant for the appellant and Mr. Ghulam Yasin Appraising Officer (A.0) for the appellant. The learned Consultant for the appellant emphasized on the following grounds.

(i) That they have not indulged into an act of misdeclaration as alleged by the Customs Authorities. The goods are generally known in the international and domestic market by its trade description which consist of three essential ingredients. (1) Description goods (2) primary functions and (3) usage/utility. In common parlance the trade name of the subject goods is Sitara Sequin Sheet. Thus it is commercial identity in the international and domestic market and goods are bought and sold accordingly. Its primary function utility/usage is of a decoration article sewed and attached by machine on different ladies' garments.

(ii) That it is a past practice to classify these goods under the ascertained PST Heading i.e. 3921.9090 at the rate of 20% customs duty at favourably comparable values. Since the rate of duty declared in the appellants case is 25% there is no room for any apprehension that the appellant wanted to evade legitimate customs revenue as they had classified the goods under a PCT Heading which carries a higher slab of duty.

(iii) That according to umpteen number of judgments the wrong declaration under the PCT Heading does not constitute an act of misdeclaration where rate of duty is the same. In this case the rate of duty is higher. There is an amendment in the Finance Act, 2009-2010 whereby misquoting the PCT Heading has been made the ingredient of misdeclaration. However the subject the consignment belongs to January, 2009 and it is, therefore, not affected by this amendment in the Customs Act, 1969.

(iv) That umpteen number of consignments prior and subsequent to the subject consignment have been cleared by the Custom House against favourably comparable prices under Heading 3921-9090 with same description. The appellants have been meted out a different treatment regarding the clearance of this consignment. It is a blatant violation of the provisions enshrined in Article 25 of the Islamic Republic of Pakistan. The PCT heading relied upon by the customs authorities in the show-cause notice is attracting customs duty @ 25% and the value determined being 3.5/kg. The case has been adjudicated by the officer of original jurisdiction under PCT Heading 3921-9090 attracting customs duty @ 20% and the value assessed accordingly @ US$ 1.9/kg. Thus the adjudicating officer has travelled beyond the Charter of show cause notice which is not permissible in terms of hallmark judgment delivered by honourable Supreme Court in the case of Rahim Din v. Collector of Customs reported as 1987 SCMR 1840. He also stressed that the act of customs authorities is against the principles of natural justice, equity and fairplay.

(v) That as regards the valuation aspect the learned consultant pointed out that the value mentioned in the show-cause notice was 3.5/kg. The goods were adjudicated at 1.9/kg and no evidence of actual physical import in terms of section 25(1) subsection (5) for identical/similar goods read with Rule 107(b) of Customs Rules was provided or brought on record by the adjudicating officer. In this contest, he referred to the judgment delivered by honourable apex Court and different High Courts of country.

That the learned counsel for the appellant relied upon the judgment reported as PTCL 1992 CL 32, PLD 1959 S.C. 364, PLD 1969 SC 708, PLD 1967 SC I, 1998 PCr.LJ 891 Messrs Abdul Aleem v. The State, PLD 1976 Karachi 1154, Messrs Hindustan Electro Graphites Ltd v. Union of India (1990 (50) E.L.T. 259), 2003 PTD 552, 2007 PTD 2623, 2006 PTD 909, 2004 PTD 2592.

5. The Appraising Officer representing the Department issued as under: --

That the goods declaration in this case was filed on 15-1-2009. The examination was conducted on 18-1-2009, show-cause notice was issued on 26-1-2009 and goods were sent for Laboratory Test on 18-1-2009 and Laboratory test report was received on 13-2-2009. The goods were declared as Garments accessories i.e., Sequin Sitara Sheet under PCT Heading 5204-2090, the value being declared as 0.6122/Kg. On physical examination of the goods misdeclaration of description of the subject goods was established only through physical/visual examination. On physical examination the goods were found to be of EE Holographic Glittering sheets classifiable under PCT Heading 3921-9090, the value of the similar/identical goods being US$ 3.2/kg. However goods on being tested by the laboratory were found to be PVC Plastic strip having metallized coating which is further coated with Holographic pattern. He stressed that this is a clear-cut case of mis-declaration since goods are not sewing thread but PVC plastic sheets. Whether goods are polyethylene or PVC is immaterial since it belongs to same genus and the change in classification does not extinguish the charge of mis-declaration. The appellant had classified his goods under PCT Heading 5204-2090 with a higher rate of duty to hoodwink the customs authorities in terms of the description of the goods which has significant impact of its value.

(ii) That declared value is US$ 0.61/kg and is far less than the assessed value of US$ 1.90/kg and which resulted in cumulative loss of Government Revenue to the tune of Rs.1200,000 Aprox.

(iii) The A.O referred to a GD Cr.No.861252 dated 16-12-2008 of the appellant himself in which the appellant has claimed the subject items under PCT Heading 3926.9099. He stressed that though the goods are not metallized coated but it amply demonstrates that being of plastic the appellant has classified his goods under the proper PCT and Chapter 39. The appellant has accordingly indulged into an act of mis-declaration with reference to description of the subject goods.

(iv) The contention of the appellant that show cause is beyond jurisdiction is based on misconception as the same was issued under the provisions of misdeclaration of description and classification hence the contention of appellant is quite incorrect and based on ignorance. The evidence provided are not relevant as goods are not holographic coated/zed coated. The AO submitted a judgment of Tribunal bearing Appeals Nos.659/2007 and 146/2008 and also submitted the application of section 79 before and after institution of PACCs.

6. Rival parties have been heard and case record and evidences produced by both sides examined. The following issues are framed for consideration of this Tribunal.

(i) Whether in the facts and circumstances of the case the provisions of section 79(1) of the Customs Act, 1969 in respect of filing of Goods Declaration by the Appellants thereby requesting for first appraisement attracts mischief of mis-declaration in terms of provision of section 32 of the Customs Act, 1969?

(ii) Whether in the facts and circumstances of the case the value of the subject goods determined by the Respondent No.1 @ US$ 1.90 per kg represents the admissible assessable value for the subject goods in view of evidential data of lower values of prior and subsequent contemporaneous imports produced by the appellants?

(iii) Whether in facts and circumstances of the case the appellant has indulged into an act of misdeclaration within the ambit of mischief of section 32 of the Customs Act, 1969 through incorrect declaration of P.C.T. Heading?

(iv) Whether in the facts and circumstances of the case the appellant has indulged into an act of fiscal fraud within the ambit of mischief of section 32-A of the Customs Act, 1969?

(v) Whether in the facts and circumstances of the case the imposition of penalty by the respondents is justified in terms of clauses 14 and 14A of section 156(1) of the Customs Act, 1969?

(vi) Whether in the facts and circumstances of the case the ratio decidendi of the hallmark Judgment of the apex Court reported as 1987 SCMR 1840 in the case of the Collector Central Excise and Land Customs v. Rahim Din is applicable?

7. As regards issue No.(i) a perusal of the record indicates that the appellants imported a consignment of Sequin Sitara Sheets from China at the unit value of US$ 0.6122 per kg and filed the Goods Declaration vide CRN-87899 dated 15-1-2009 under section 79(1) of the Customs Act, 1969. The appellants paid the leviable amount of Customs Duty and Taxes to the tune of Rs.238932 at the rate of 25% ad valorem on the declared value under P.C.T. Heading 5204.2090 in terms of clause (b) of subsection 41) of section 79 of the Customs Act, 1969. Thus, all the requirements envisaged under the aforesaid statute were duly fulfilled in all aspects. In this case the appellant has not been allowed the benefit of the provisions of these rules and laws and allegation of mis-declaration has been levelled against him. In the first place the appellant has made a qualified declaration in terms of section 79(1) of the Customs Act, 1969. As such charge of mis-declaration cannot be alleged when the assessment of the goods was made 'under the First Appraisement System as held by the honourable High Court of Sindh at Karachi in the case of Messrs Akhtar Hussain v. Collector (Appeals) Karachi reported in 2003 PTD 2090. It was held that:--

"In the case of option given for first appraisement for the determination of correct description of P.C.T. heading, quantity of goods, no misdeclaration shall be charged for mis-declaration under section 32 of the Customs Act, 1969".

That similar position of law has been referred in case reported as Messrs Shaheen Enterprises v. Additional Collector 2005 PTD (Trib.) 1321 and 2005 PTD (Trib.) 1826.

8. In this respect after a bare perusal of enabling sections of the Act, and PACCS Rules, it emerges that declaration of an importer, before the Customs, for clearance of his goods begins with the submissions of Goods Declaration in terms of Rule 433 of PACCS Rules read with section 79 of the Act, which stipulates that G.D. shall be deemed to have been submitted to Customs only when duty and taxes leviable thereon, if any, have been paid in terms of clause (b) of subsection (1) of section 79 of the Act. Similarly, when Rules 434, 435, 437, 438 and 492 of PACCS Rules are examined combinedly in conjunction with sections 80, 81 and 83 of the Act, it follows that evasion of taxes by making mis-declaration of particulars is only possible through submission of incorrect GD as the examination, the assessment, checking of G.D. and release of goods by the Customs Officer is only possible when a G.D. under section 79 of the Act read with Rule 433 of PACCS Rules is submitted by the importer, otherwise, neither declaration of the importer can be checked or viewed nor goods can be assessed, examined and released by the Customs after satisfying themselves about the declarations and payment of leviable taxes. From a plain reading of the relevant provisions of customs law it transpires that before adjudging the bona fide or mala fide intentions of an importer, mechanism devised in the aforesaid sections of Law and Rules is to be kept in mind as a whole. Before, invoking provisions of section 32 of the Act, as the case may be, the adjudicating officer must satisfy himself that the case squarely falls within the ambit of section 32 of the Act. As such the appellant has not indulged into the alleged act of misdeclaration within the ambit of mischief of section 32 of the Customs Act, 1969 and the issue No. (i) is answered in negative.

9. As regards issue No. (ii) a perusal of the different invoices prior and subsequent to the date of subject importation produced by the appellant indicated that Customs Authorities have been accepting different values for Sequin Sitara Sheets from China origin imported under the description of Garment Accessories, PVC Plastic Strip Sheets with Holographic Pattern etc. in the range of US$ 0.65 per KG to U$ 17 per KG. The date of the subject importation vide CRN-878891 is 15-1-2009. The other CRNs (i) 895404 dated 31-1-2009, (ii) 851252 dated 16-12-2008, (iii) 861252 dated 16-12-2008, (iv) 862261 dated 29-12-2008, (v) 881117 dated 17-1-2009, (vi) 849948 dated 15-12-2008 pertain to the months of January, March, April 2009 and qualify for reliance in terms of 90 days valuation data under section 25 of the Customs Act, 1669 read with Rule 107 (a) of the Customs Rules 2001. It is immaterial as to whether other consignments with same description of "Sequin Sitara Sheets" were got tested from the Customs Laboratory before their release since Customs authorities are not allowed to follow a policy of convenience thereby meeting out discrimination to other importers. In this respect the Customs Authorities looking after the affairs of the Model Customs Collectorate PACCS Custom House, Karachi are advised to adopt a uniform price pattern for "PVC Sequin Sitara Sheets" which according to the representatives of both sides are different names for the same genus of goods. Even if the laboratory report describes the goods as PVC Plastic Strip having metallized coating which is further coated with Holographic pattern the appellants would not be at disadvantage since the respondent could not explain the non-testing of contemporaneous imports with same description through chemical laboratory on one hand and on the other hand could not bring on record any evidential invoice of contemporaneous physical imports for the same type of goods having a transaction value of US$ 1.90 per Kg during the same period. The highest value at which similar goods have been cleared by the Customs Authorities is US$ 1.17 per Kg. For sake of observance of uniformity in assessment of contemporaneous imports, value needs to be applied in the appellants case as well. As regards the valuation aspect of the case it is evident from the plain reading of section 25 of the Customs Act, 1969, that the transactional value of the goods can only be ascertained by the Customs Authorities by following the procedure prescribed under the said section 25. For bringing home their allegations, the Customs Administration in the first instance disprove the stance of the appellant and disprove and negate the documentary evidence produced with valid and cogent reasoning. On the contrary no evidential invoices have been produced, no higher unit values determined have been indicated in the show-cause notice. Only cumulative alleged short recovery amount has been mentioned. As such the show-cause notice and the order-in-original is deficient in the material ingredients, defective, void and ab initio. The Supreme Court of Pakistan in an identical case of Collector of Customs Port Muhammad Bin Qasim v. Messrs Zymotic Diagnostic International, Faisalabad reported as 2007 PLD 2623 where in the valuation was fixed without following, a proper procedure and same was held as unlawful on the following grounds, operative part of the same is reproduced as under:

"Section 25 of the Customs Act authorizes an officer of the Customs Department to reject the declared value of a consignment imported in Pakistan and to assess the same. Section 25 lays down various modes in which the officials of the Customs Department are required to proceed in determining or assessing the value of the consignment after rejecting the declared value. However, for rejecting or refusing to accept the value declared by a consignee in respect of imported goods the concerned officer is required to given cogent plausible and satisfactory reasons for non-acceptance of the declared value and rejecting thereof which can be proceeded on the whims or desire of the officer of the customs."

Collector of Customs Valuation v. Karachi Bulk Storage and Terminal Ltd. reported as 2004 PTD 2592 where it was held that:--

"Enhancement of value of goods by the Customs Department on the ground that the declared value was not the true price. Basic requirement for refusing to accept the declared price in view of section 25, Customs Act, 1969 was in possession of sufficient material on the basis of which it could be said that the - department has rightly come to the conclusion that the declared price/value of the goods by way of concealment or under valuation was not the true price. Onus was on the Customs Authorities to prove that the declared price was untrue before the same could be rejected warranting the enhancement or determination of value/price. Customs Department in the present case, failed to produce any withdrawal or evidence in support of their contention that they had relied on the very important material in concluding that the declared price was not the true price, was by way of concealment or was under-valued and further that at the relevant time the price of goods in question was more than the declared price. In view of lack of material, the action for rejection of the declared value/prices of goods would appear to be arbitrary, whimsical, capricious, and in complete disregard of the provisions of section 25, Customs Act, 1969 which required the Customs Authorities to disclose evidence or material for rejecting the declared value/price and enhancing/determining the same."

10. This judgment of the honourable High Court has also been upheld by the honourable Supreme Court of Pakistan in C.P.L.A. No.676-K of 2004 dated 17-10-2006 reported as 2007 PTD 1858 in the case of Collector of Customs Valuation and others v. Karachi Bulk Storage and Terminal Ltd. where leave to Appeal was refused and the C.P.L.A. was dismissed. The operative part of the Judgment is reproduced below for the case of reference:--

"In the case in hand, Division Bench of the High Court, after examining the contents of the parties and the material placed on record has come to a definite finding that there was no material on record as to what were the grounds or reasons which prompted the Customs Authorities not to accept the declared value of the molasses and for determining the same of US$ 54 per metric ton as against the declared value. High Court found that in view of lack of material, action of rejection of the declared value and fixing enhanced value of molasses would appear to be arbitrary, whimsical, capricious and in complete disregard of the provisions of section 25 of the Customs Act, which requires the relevant authority to disclose evidence and adequate material for rejecting the declared value and enhancing the same. Confronted with this situation, learned Advocate on record has not been able to persuade us that the view taken by High Court suffers from factual or legal infirmity, except reiterating that the respondent did not wait for the ultimate decision of notice and challenged the Show-Cause Notice. As observed hereinabove, in view of the inherent defect and lacuna in the act of the petitioners, respondent would not be legally obliged to avail of the remedies under the Customs Act as it would have been sheer wastage of time and energy and an excise in futility. For the aforesaid facts, circumstances and reasons, we find no merit in this petition and dismiss the same as no ground for leave is made out."

11. That the value enhanced in the Appellant case was without any basis and reasons despite incumbent upon the respective officials to make a contravention report and forward the case to the respective adjudication authority for decision along with evidential invoice of the same period and the country of import as defined in sub-rule (a) of rule 107 of the Customs Rules, 2001 read with clause (i) of serial No.78 of Chapter XIV of CGO 12 of 2002 dated 15-6-2002 which read as under:--

"In case involving misdeclaration of value the precise basis on which the declared value are held to be misdeclared should be clearly spelt and copy of the evidence on the basis of which it is so held should also be supplied to the party after omitting the names of local importers of identical goods which are not required to be divulged to them."

As such the issue No.(ii) is answered in the negative.

12. As regards issue No.(iii) the learned Respondent Nos.1 and 3 had failed to consider that the determination of P.C.T. Heading is the sole function of the Customs Officers. The importer only assists the customs by citing the P.C.T. Heading of the goods. At best citation of P.C.T Heading may be called a claim for assessment of taxes, which means a request, may be accepted or rejected by the competent authority but is not a punishable offence under any of the provisions of the Customs Act or Notification issued thereunder. The citation of a particular P.C.T. Heading in the Bill of Entry does not amount to misdeclaration within the meaning of section 32 of the Customs Act, 1969 is a well-settled principle of law in Customs Jurisprudence through a series of Judgments of Superior Judicial Fora of Indian and Pakistani Jurisdictions starting with the case of Monnoo Industries Ltd. v. Government of Pakistan reported as Pet.D-199/1984 to State Cement Corporation v. Government of Pakistan reported as C.A. No.43 of 1999. Reference is made to the reported Judgment 2003 PTD (Trib.) 293 of the Customs, Excise and Sales Tax Appellate Tribunal Karachi Bench-Karachi in similar nature of case:--

"We believe that clearing agent while filing a bill of entry is required to fill the PCT Column for the easement and assistance of the Assessing Officer. The perusal of section 80 of the Customs Act, 1969 indicates that during the process of assessment it is the duty of the Assessing Officer not only to examine the goods but also to tally the description, its weight and value of the goods thereof, and to consider any extra information available on the bill of entry in order to arrive at a correct assessment of duty and taxes. Simply, assuming that a wrong PCT Heading amounts mis-declaration would not be a correct approach to interpret section 32 where emphasis is on the word "material particulars" which means something going to the root cause of the basic declaration. To our mind, a mis declaration in material terms has not been made by the Appellant."

That the allegation under section 32(1) or 32 (2) of the Customs Act, 1969 are unwarranted under the circumstances of the case. A correct goods Declaration was filed by the appellant with correct description of goods which is undisputed. There was no false statement or any collusion with the officer of the customs.

13. That this is a case of classification of goods and no case can be made out under the provisions of section 32 of the Customs Act, 1969 this was held by the honourable Customs, Excise and Sales Tax Appellate Tribunal Karachi in the Judgment of Messrs Falcon Enterprises v. Collector of Customs vide Appeal No.K-723/2007:

"Alleging a charge of misdeclaration on the basis of a wrong classification heading does not constitute an offence within the framework if section 32 of the Customs Act, 1969 as there is no material falsity in the statement made by the Appellant."

That the similar issue of classification was also decided vide Customs Appeal Nos.K-432 and others which went up to the apex Court and the orders of the Tribunal passed were maintained in which it was held:

"The difference of opinion with respect to classification does not fall within the mischief of section 32 of the Customs Act, 1969. The confiscation and imposition of penalty in this count, therefore is ab initio void and illegal."

14. That incorrect quoting of P.C.T. is not tantamount to mis declaration within the ambit of mischief of sections 32 (1), 32(2) and 32(A) of the Customs Act, 1969 since a positive assertion of facts is a pre-requisite for bringing charges of misdeclaration against the tax payer. If the wisdom of the Customs Authorities for invoking section 32 in cases of incorrect citing of P.C.T. Heading is acceded to no responsibility obviously devolve upon the hierarchy of the Customs Officials to levy and assess the duty according to law. The provisions of section 79 and section 80 of the Customs Act, 1969 in such a state of mind would become redundant and the observation of the honourable late Justice Sabihuddudin Ahmed in the case of State Cement v. Government of Pakistan reported as C.A. No.43 of 1999 would once again ridicule the irrational approach of the Customs Authorities. The observation verbatim states "We are rather amazed at the line of reasoning put forward to the effect that while an assessee is required to interpret the law and relevant notification correctly and could be held guilty of a penal offence for not doing so in terms of section 32(1) of the Customs Act, no responsibility of any kind would devolve on the customs officials". In the subject case the citing of incorrect P.C.T. Heading which attracts Customs Duty of 25% as against the determined Customs Duty of 20% under the relevant P.C.T Heading, there is no apprehension of loss of revenue on this account. Only a "presumption" is lurking in the minds of the Assessing Officer that higher rate of duty has been made to hoodwink the Customs Authorities to get the goods released at lower declared values. While alleging so against the appellant the respondent has forgotten that a number of consignments prior and subsequent to the subject importation with the same description have been released by the same Customs Authorities at a fairly low prices in some cases compatible with the declared prices of the appellant but never against the assessable value of US$ 1.90 per Kg determined by the respondent in the case of the appellant. The respondent No.1 while adjudicating the subject case also forgot that section 80 of the Customs Act, 1969 lays certain duties upon the Customs Officers once the Goods Declaration is presented to them by the importer. In this case the responsibility of the Customs Assessing Officer was all the more enhanced since the Goods Declaration was presented under the First Appraisement System under section 79(1) of the Customs Act, 1969 meaning thereby the importer had made a qualified declaration subject to full scrutiny and examination of all aspects by the customs staff. It is very strange that a charge of misdeclaration under section 32 of the Customs Act, 1969 has been invoked against an innocent importer. That the respondents failed to consider that the appellant's declared rate of customs duty was at higher side i.e. 25% as against the ascertained P.C.T. Heading attracting rate of Customs Duty at lower side i.e. 20%. Thus, it appeared to be a case of no loss of Government Revenue on this account. It is also a well-settled law that section 32 of the Customs Act, 1969 would attract only when mis-declaration was made to cause the Government Exchequer by evasion of Customs Duty. Thus in the absence of any revenue loss the charge of mis-declaration under section 32 of the Act ibid was not attracted. The honourable Supreme Court of Pakistan in the case of Al-Hamd Edible Oil (Pvt.) Ltd. and others v. Collector of Customs reported as 2003 PTD 552 while discussing the aforesaid aspect of the case held as under:

"A bare reading of this section clearly indicates that it relates to a situation where a person makes any statement or files any documents which is false in any material particular by reason of which any duty or charge is not levied or is short levied or is refunded. In such event, the Customs Authority is empowered to issue to the person concerned a notice issue to the person concerned a notice to show-cause notice why he should not pay the loss of revenue suffered by the department and after giving him a hearing, beside any other action under law, order payment of the same, if the case is made out. The entire provisions revolve around the central point of loss of revenue suffered by the Customs Department on account of the conduct of any person. Mr. Iqbal has not argued that the department has suffered any loss on account of the conduct of the appellants. The question of applicability of section 32 in the present circumstances apparently does not arise."

The same principle has been laid down by the honourable High Court of Sindh at Karachi in the case of Kamran Industries v. Collector of Customs Export reported as PLD 1996 Karachi 68. In view of the above discussion, issue No.(iii) is answered in the negative.

15. As regards issue No.(iv) the appellant never filed or submitted concocted, altered, mutilated, false, forged, tampered or counterfeit document to a functionary of Customs, so the case of appellant does not fall within the purview of section 32 A of the Customs Act, 1969. As such the Issue No.(iv) is answered in negative.

16. As regards issue No. (v), it is observed that the Goods Declaration in the subject case being filed under section 79 (1) of the Customs Act, 1969 and the charging of misdeclaration of value and P.C.T. have been answered in negative, there does not seem any justification for imposition of penalty under clauses 14 and 14-A of section 156(1) of the Customs Act, 1969 on the importer. That it is now a well-settled principle of law that where a charge of misdeclaration is to be alleged, importers declarations, documentary evidences produced, previous knowledge, intent to defraud and misstatement in material terms are to be proved by the contesting department after a thorough scrutiny and investigation. The learned departmental representative was confronted to show the presence of above stated elements on the basis of which a charge of misdeclaration could be construed. No satisfactory explanation was offered thereto. In addition to the above established legal position for proving misdeclaration it may be pointed out that various violations of the mandatory provisions of the Customs Act, 1969 very elaborately pointed out by the counsel of the appellant duly substantiate their point of view regarding inherent deficiencies in the show-cause notice and non-requisitioning of documents from the appellant either under section 80(2) and of the Customs Act, 1969 during or after examination and reassessing the goods under PACCS Rules 437 and 438 of 2007 issued vide S.R.O. 704(I)/2007 dated 14-7-2007. The learned Departmental representative when confronted with the situation couldn't rebut the appellant's stance regarding the commission of the aforesaid violations of the mandatory provisions of the Customs Act, 1969. The Superior Courts have repeatedly held that the violations of the mandatory provisions of law are in fact substantive illegalities and not procedural irregularities or technicalities and violations of the same will hit the cases fatally. In the circumstances of the case it would meet the ends of justice if the penal action taken by the Adjudicating Officer and upheld by the Collector Appeals is set aside. It is also evident from the record that the goods were examined under first examination. This position has been admitted by the respondent in their show-cause notice. Having said that I am of the view that where there was no declaration per se made by the importer in respect of imported goods and the fate of description, quality and quantity depended on the first examination, the levy of charge misdeclaration was neither justified nor was in accordance with law. In cases of assessment under the First Appraisement System the allegation of misdeclaration withers away, the penalty imposed under clause 14 of section 156(1) also stands remitted. Since the allegation in terms of section 32A stands scrapped, penalty under section 14A of section 156(1) also abates. As such issue No.(v) is answered in the negative. In fact there was no application of mind in the least to the facts by the officer of original jurisdiction, as such no penalty can be imposed in such a case on this count as well as has been observed by honourable High Court of Sindh at Karachi in the case reported as 1985 CLC 2796.

17. As regard issue No.(vi) Para 3 of the subject show-cause notice indicates that the subject goods which were on physical examination found to be "P. E. Holographic glittering sheets in rolls classifiable under H.S. Code 3921.9090 were assessable @ US$ 3.5/KG. However, the Order-in-Original No.4050 of 2009 dated 20-2-2009 issued by Respondent No.1 Additional Collector of Customs (PACCS), Model Customs Collectorate Customs House, Karachi reveals that goods after chemical laboratory test were found to be classifiable under H.S. Code 3921.9090 assessable @ US$ 1.9/Kg. The value incorporated in the show-cause notice was US$ 3.5/kg as against US$ 1.9/Kg determined after conducting of the Customs laboratory test, Custom House, Karachi in respect of the subject goods. Apparently there was no haste on the part A of the Customs Administration to issue the show-cause notice in such a hurry without waiting for the result of the chemical test. In such a case the results can be procured from the Customs Laboratory within a period of three to four days. The record produced by the appellant also shows that consignments imported prior and subsequent to the subject importation of Sitara Sequin Sheets were released without sending them to laboratory for chemical test. Such discriminatory attitude on behalf of the concerned group is found to be highly objectionable. The appellant have claimed benefit of the ratio decidendi of the Judgment in the Honourable Supreme Court of Pakistan in the case of the Collector Central Excise and Land Customs and others v. Rahim Din reported as 1987 SCMR 1840 and Judgment of the honourable High Court of Sindh at Karachi in the case of Messrs Exide Pakistan Limited Karachi v. Deputy Collector of Customs and others reported as 2004 PTD 1449 which in unequivocal terms deprecate the adjudication by the adjudication by the adjudication authority on the basis of grounds not mentioned in the show cause notice. However, Customs Authorities have not been able to bring on record any evidence in respect of the value of US$ 3.5/per Kg mentioned in the show cause notice or US$ 1.9/per kg upon which the subject case was adjudicated by the Adjudicating Authority. The peculiar circumstances confronting the subject matter attract the application of ratio decidendi settled by the honourable Supreme Court of Pakistan in the case of the Collector Central Excise and Land Customs and others v. Rahim Din reported as 1987 SCMR 1840. As such issue No.(vi) is answered in affirmative.

18. In view of the above discussion the fine and penalty imposed against the importer are set aside. The enhancement of the declared price by the Adjudicating Officer to US$ 1.90 per kg is uncalled for. The highest price as per price statement of 90 days valuation data in terms of section 25 of the Customs Act, 1969 read with Rule 107(a) of the Customs Rules, 2001, on record is US$ 1.17 per kg and which may be taken as yardstick/criterion for assessing the subject goods for imparting uniformity and meeting out similar treatment to all such like imports. The impugned orders are modified to this extent only and the appeal is disposed of in the above terms.

C.M.A./28/Tax(Trib.) Order accordingly.