2010 PTD 2204
ORDER
DR. ZAFAR AHMED KHAN SHERWANI (MEMBER (JUDICIAL-I)).--- This appeal under section 194-A Of the Customs Act, 1969, (The Act) is directed against an Order-in-Appeal No.467 of 2006 passed by Collector of Customs (Appeals), Karachi whereby the Order -in-Original No.66 of 2006; dated 25-8-2006 passed against the respondent was set aside.
2. Earlier this Tribunal had dismissed the appeal vide order, dated 9-10-2007 passed by Member (Technical) against which a Special Custom Reference Appeal No.66 of 2008 was filed by the appellant before the Honourable High Court of Sindh, Karachi which was allowed vide their, dated 17-4-2009 remanding the appeal to this Tribunal de novo consideration by the Member (judicial).
3. Brief facts leading to this appeal are that the respondent imported consignment of Air Conditioners Condensers and Evaporators from Malaysia vide JGM No.642/04, dated 27-9-2004, Index No.139 for total consideration of US$ 21080 and filed such G.D. KPQ HC-8069, dated 28-9-2004. The officials of the appellant were not satisfied with the valuation of the consignment, therefore, provisional assessment under section 81 of the Act was made as under:--
Model No.
Declared United Value by the importer US$ per Unit
Assessed Unit Value by the Collection (US$ Per Unit)
AWM25FR-AFB
77.00
80.85
ALC-25BRAFEC
93.00
97.65
4. However, final determination in respect of the above was made by the Director of Valuation vide its valuation ruling No.460 of 2005, dated 15-12-2005 to the following effect:--
S.No.
Model
Declared Unit by the importer
Provisionally Assessed Unit Value by the Collectorate
Actual transactional value as ascertained by Directorate of Valuation and PCA
1-
AWM25FR-AFAB
77.00
80.85
240.00
2-
ALC-25BRAFEC
93.00
97.65
117
5. On the basis of this valuation ruling the respondents were served with the show-cause notice under section 32(1) and (2) read with sections 32-A and 32(5) of the Act directing them to pay a total sum of Rs.7,01.263 in terms of duties and other leviable taxes and proposed different penalties. After adjusting proceeding the Adjudication Officer passed the order-in-original, concluding para. thereof is reproduced as under:--
"The importers are therefore directed to pay the short levied amount of duty and taxes amounting to Rs.334,732 on account of customs duty, Rs. 251,049 on account of sales tax and Rs.115,482 on account of income tax (Total Rs.701,263). Besides the personal penalty of Rs.1,00,000 is also imposed on the importers Messrs Mia Corporation (Pvt.) Limited No. 384, Street No. 16, Industrial Area 1-9, Islamabad under the aforesaid provision of law."
6. In Appeal the Collector of Customs (Appeals) set aside the order holding that "since the Collectorate failed to meet its obligation under section 81(3) ibid its right to issue show-cause notice under section 32(5) ceased to exist, therefore, the show-cause notice dated3-4-2006 is of no legal effect" and the order was, therefore, set aside. Hence this appeal.
7. I have heard the departmental representative for the appellant and the learned counsel for the respondent.
8. It was contended by the departmental representative that the learned Collector of Customs (Appeals) has erred in holding that the show-cause notice was barred by time in term of section 32(5) because the said show-cause notice was not issued on account of the fact that valuation ruling under section 81(2) was time barred and the provisional value of the consignment had become final in term of section 81(4) ibid, however, the right of the appellant with reference to taking action under section 32(1) of the Act for the mis-declaration by the respondent could not be taken away as the offence of mis-declaration had been proved beyond reasonable doubt. He contended that the order passed in original was correct and in accordance with law Which could not be interfered by the Collector of Customs (Appeals) which is liable to be set-aside and the appeal is fit to be allowed. Whereas the learned counsel for the respondent contended that since valuation ruling issued by the Directorate General Valuation was not in accordance with the provision of section 25 of the Act and settled principles as laid down by the superior Courts, therefore, no action could be taken in term of, section 32(1) and (2) of the Act and, therefore, the order passed by the Collector of Customs (Appeals) is in consonance with these principles which can not be interfered by this Tribunal, and, therefore, the appeal is liable to be dismissed. He relied upon the cases reported in:--
(i) Rehan Umer v. Collector of Customs, Karachi and 2 others 2006 PTD 909.
(ii) Messrs CIBA GEIGY (Pakistan) Limited v. Deputy Controller Customs Valuation, Karachi and 2 others 2005 PTD 1131.
(iii) Messrs Hassan Trading Company v. Central Board of Revenue, Islamabad and 2 others 2004 PTD 1979.
(iv) Messrs Abdul Aziz Ayoob v. Assistant Collector of Customs and 2 others PLD 1990 Karachi 377.
(v) Messrs Dawlance (Pvt.) Limited v. Collector of Customs Adjudication, Karachi-I 2002 PTD (Trib.) 3077.
(vi) Messrs Sohrab Global Marketing v. Deputy Collector of Customs, Lahore and 4 others 2005 PTD 67.
(vii) Messrs Habib-ur-Rehman and Company v. Collector of Customs (Appraisement) Karachi and 4 others 2005 PTD 69.
(viii) Messrs Karachi Bulk Storage and Terminal (Pvt.) Limited v. Controller of Customs (Valuation), Karachi and another 2004 PTD 2592.
(ix) Messrs Haji Sultan Muhammad v. Government of Pakistan and another 2004 PTD 2599.
(x) Messrs Punjab Beverage (Pvt.) Limited v. Appellate Tribunal (Customs, Excise and Sales Tax) and 2 others 2002 PTD 2957.
(xi) Messrs Collector of Customs (Valuation) and another v. Karachi Bulk Storage and Terminal Limited 2007 SCMR 1357.
9. I have carefully considered the arguments in the light of the record. .
10. It is undisputed that the offending goods were initially released to the respondent under section 81(2) of the Act and the matter was referred to the Directorate General Valuation for final determination of their actual value. It is also admitted that this valuation ruling was not issued within the period of limitation as provided under section 81(2) ibid, therefore, the provisional assessment become final as provided under section 81(4) ibid, however, the action initiated by the appellant against the respondents in term of section 32(1) was on the basis of evidence during the process of valuation ruling by way of report of Messrs SGS which conducted inquiry to determine the genuineness of the import document i.e. invoice. Now the question is whether the respondent could be charged and punished for the mis-declaration in respect of customs value of the consignment in the GD. In this regard the show cause was issued by the appellant with the specific allegation that the valuation of the offending goods declared therein were grossly under invoiced with mala fide intention to evade colossal amount of Government revenue. Admittedly the show-cause notice was issued to the Respondents after expiry of limitation period as provided under section 81 of the Act. It has been held in Hassan Trading Co. supra as under:--
The main issue to be considered in this case is as to why the Customs Department did not finalize the provisional assessment within a period of 180 days or the extended period 270 days as provided by section 81 of the Customs Act. Had it come to the knowledge of the Customs Department that the petitioners had imported the goods other than goods which were mentioned in the Letter of Credit, IGM and the Bill of Entry then a notice ought to have been issued to the petitioner to explain the discrepancy and if it was found that the imported goods did not conform to the description .of the goods mentioned in the aforesaid documents then the Customs department could have proceeded accordingly. However, from the material on record it stands confirmed that no such action was taken by the Customs Department, within the period provided to them by section 81 of the Customs Act, 1969. The provisional order was made on 9-10-1991 which was required to be finalized on or before 8-4-1992. This period of 180 days could have extended by further 90 days that still 7-7-1992 but the customs department did not comply with the requirements of section 81 of the Customs Act and issued a notice on 17,11,1992. Mr. Junaid Ghaffar, submitted that once a provisional assessment was made under section 81 of the Customs Act then under section 32 of the Customs Act could not be issued and it was incumbent upon the Customs Authorities to finalise the assessment as per requirement of section 81 of the Customs Act. In support of his above contention he placed reliance on the case of Messrs Aziz Ayoob v. Assistant Collector of Customs and 3 others reported in PLD 1990 Karachi 378. From a bare perusal of the judgment referred to above it is crystal clear that the Customs' Authorities did not have the jurisdiction to issue a notice under section 32 of the Customs Act in a matter where provisional assessment was made and the only course available to the Customs Department was to finalise the assessment under section 81 of the Customs Act during the course of which the question of mis-declaration could have been raised and considered. It was further observed that the provisions of subsections (2) and (3) of section 32 of the Customs Act would be attracted only when a final assessment either wrongfully or erroneously had been made. This Court further went on to pronounce that where the goods were provisionally released under section 81 of the Customs Act, the Customs Department could have issued a notice under section 81 for any discrepancy which was found in the case subject to the period of limitation prescribed by section 81 of the Customs Act."
Applying the above rule in this case the show-cause notice was barred by time as provided under section 32(5) of the Act. It is suffice to observe neither any such allegation was made in the show-cause notice not copy of the SGS report was supplied to the Respondents therefore, no action could be taken under section 32(1) of the Act and no such penalty on such charge could be imposed. In view of the above discussion it is held that the impugned order is unexceptionable and the appeal is, therefore, dismissed.
H.B.T./136/Tax(Trib.) Appeal dismisse