2010 PTD 460
ORDER
SHAUKAT ALI, MEMBER.--- This appeal has been filed by Messrs Karsons Enterprises, (hereinafter the appellants) against Order -in-Original No.4761 of 2009 dated 2-9-2009, passed by Mr. Afzal Ahmed Wattoo, Assistant Collector, Model Customs Collectorate, PaCCS, Customs House, Karachi.
2. Briefly, facts of the case as reported are that the appellants electronically filed Goods Declaration bearing No. 1104224, dated 11-8-2009 declared to contain RBD Coconut Oil, at total invoice value of US$ 15912. They determined their tax liability on their own and sought clearance thereof under section 79(1) of the Customs Act, 1969. However, in order to check as to whether they had paid the correct amount of duties/taxes the afore-said GD was selected for scrutiny in terms of section 80 of Customs Act, 1969. Scrutiny of the Goods Declaration in the light of examination report revealed that the appellants had misdeclared the actual value of the goods. During the course of physical examination, the examination staff had found original invoice bearing No.175976 dated 17-7-2009 from the container which indicated the total value of the goods as US$ 21222.63 whereas the invoice electronically filed indicated the total declared value as US$ 15912. The declared value was alleged to be as low as 33.37% of the actual value. The appellants were alleged to have committed an offence by filing fake and forged documents/particulars of the case besides making an attempt to clear imported goods at highly under invoiced value besides filing forged information to the electronic system of PaCCS and attempted to defraud the Government from its legitimate revenue amounting to Rs.101,356. The appellants were accordingly charged under the relevant provisions of law and the adjudicating officer held that the charges against the appellants had been proved. The operative part of the impugned order reads as under:--
"I have gone through the case and have read the, facts and statements made by importer/representative of the importer and perused the examination report as well. It is the legal responsibility of the importer under section 79(1) (a) and (b) to file a true declaration of goods, giving therein complete and correct particulars of such goods so that the due liability of duty, taxes and other charges is assessed and paid. During the course of physical examination, the examination staff has found original invoice bearing No.175976 dated 17-7-2009 from the container which indicates the total value of the goods as US$ 21222.63. Whereas the invoice electronically filed indicates the total declared value as US$ 15912. The declared value is as low as 33.37% of the actual value as evident from the original import documents discovered from the container. The charges levelled in the show-cause notice stand established. I hereby order that contravened items are confiscated under sections 181 and 156 of the Customs Act, 1969, read with S.R.O.499(I)/2009. However, the importer has the right to get his goods released/redeemed on payment of redemption fine, amounting to Rs.640228 and Penalty of Rs.25,000 shall also be paid.
3. The case was fixed for hearing on 30-9-2009 when Malik Mohabbat Hussain Awan, consultant, appeared on behalf of .the appellants while Mr. Abdul Hameed, appraising officer, appeared for Model Customs Collectorate, PaCCS, Karachi. The learned counsel reiterated the arguments given in the memo of appeal dated 14-9-2009; which are reproduced as under:--
(i) that the impugned order of the respondent is against the facts, ab initio illegal, void, mala fide inasmuch as the same is influenced by circumstances not permitted by law;
(ii) that the impugned orders of the respondent is against the prevailing departmental practice and thus the same is discriminatory, and in violation of para. 74. of GGO 12 of 2002 and Article 25 of the Constitution of Islamic Republic of Pakistan, 1973;
(iii) that the impugned order is based on whimsical grounds/mis interpretation, without following the spirit of mandatory provision of law/established departmental practice/procedure and due to the said reason/basis same is discriminatory and without jurisdiction, hence, liable to be set aside. As per section 179 of the Customs Act, 1969, an Assistant Collector can only adjudicate a case involving duties and taxes upto Rs.3,00,000 (Three Lac) whereas in the instant case, not only the involved duty/taxes are more than Rs.3,00,000 (Three Lac) but also the value and the fine/penalty are more than Rs.3,00,000, hence, the impugned order is without jurisdiction;
(iv) that in admitted position that there was no direct evidence with the department, thus, in term of Sr.No.1(d) of Table to S.R.O.499(I)/2009 dated 13-6-2009 the appellant cannot be charged for mis-declaration of value and instead declared transaction value is to be accepted for assessment purposes in term of section 25(1) of the Customs Act, 1969;
(v) that the respondent's whole case revolves around one point that an invoice of higher value has been found during examination. Admittedly neither the examination was conducted in presence of the appellants nor any notice under section 171 of the Customs Act, 1969, was issued or even no "Seizure of Documents" report is provided' till to date. In the absence of all afore-said ingredients the so-called invoice which is perhaps placed by the respondent's staff with the connivance of our rivals, cannot be accepted as a valid peace of evidence;
(vi) that it is also an admitted fact that the declared description, quality and all other particulars of the goods are found as per GD, therefore, there is no question of any mis-declaration on part of .the appellants. The goods have been imported against a firm contract of L/C and the respondent has failed to provide any piece of paper to prove that the L/C is fake or its particulars are false;.
(vii) that without prejudice to our claim that our declared transaction values is correct, it is also an admitted position that there is no evidence of previous imports or in the date of PaCCS which can prove that the prevailing international price of the RBD Coconut Oil was @ US$ 1067/PMT. In import of their enhanced value the respondents have failed to provide data of imports showing transaction value of US$1067/PMT;
(viii) that it is a clear case of victimization and discrimination on part of the respondent who made out this case for nothing but to ruin and destroy the appellant's businesses and for such an illegal order our consignment has been detained for almost three months which resulted into further burden of about Rs.6,00,000 on account of demurrage and detention charges;
(ix) that the value has been enhanced arbitrarily illegally without following the procedure of determination of value in sequential manner in terms of section 25 of the Customs Act, 1969 read with Chapter IX of the Customs Rules, 2001. The appellant's declared transaction value has been rejected without providing any direct evidence to prove that our transaction is not fair. No evidence of value in terms of section 25(5) or 25(6) of the Customs Act, 1969 read with Rules 117 and 118 of the Customs Rules, 2001 have been provided;
(x) that in view of the above submissions it is clear that neither there is any mis-declaration of value nor of quantity or description and infact the GD. was filed as per established departmental practice. It is, therefore, clear that the respondents have made out the case without application of mind and did not allow release of our consignment as per established departmental practice. The respondent's action is clearly in violation of para. 74 of GGO 12 of 2002; and
(xi) that it was also .brought into notice of the respondent that the goods were under heavy demurrage, container and port charges, but despite that they have failed to decide the case expeditiously and burdened the appellants for further charges.
4. During hearing the proceedings, the learned consultant contended that the impugned order, having been passed without jurisdiction by the adjudicating officer, was a nullity in the eyes of law and was liable to be set aside on this ground alone. He further contended that even if it is admitted that the customs value mentioned on the invoice allegedly recovered from the container relates to the goods imported in this case, no redemption fine can be imposed on the goods for the simple reason that the extent of difference between the declared and the ascertained value works out to 25% which is less than the threshold of 30% prescribed under Notification S.R.O.487(I)/2007 dated 9-6-2007 for imposing redemption fine in lieu of confiscation. He emphatically contended that it had been wrongly stated in the impugned order that the difference between the declared and the ascertained value was 33.37% for the simple reason that for the purpose of determining the extent of under invoicing the actual transaction value had to be taken as the base figure and not the declared value and if in this case the actual value of US$ 21222.63/MT is taken as the base figure and quantum of under invoicing is worked back (i.e. "Formula: AV-DV =X/AVx 100), the same worked out to 25% instead of 33.37% as worked out by the department by taking the declared value as base figure. He, therefore, pleaded that the penal action taken against the appellants should be waived. The departmental representative contended that the percentage of under invoicing had to be worked up from taking the declared value as base figure and loading the concealed portion thereon. He accordingly pleaded that the impugned order may be maintained.
5. I have examined the entire case record and given due consideration to the arguments made before me. On the point of determination of quantum of under-invoicing. I find a lot of weight in the learned consultant's plea that the quantum of under invoicing needs to be worked downward from the ascertained value: in fact, the only logical way to determine the extent of under invoicing is to work out the differential by deducting the declared value from the ascertained value in the first place and then determine the percentage thereof. By application of the afore-said method, the extent of under invoicing works out to 25.02 in this case. What the departmental representative has pleaded is the method of working out the quantum of loading which is not relevant for the purposes of this case because it is not the quantum of loading but the quantum of under invoicing that is required to be determined. Since the threshold for taking penal action in cases of under invoicing is 30% and the extent of under invoicing in this case is 25.02% I hold that the case falls outside the preview of Notification S.R.O. 487(I)/2007. It is also apparent from the case record that the adjudicating officer (an Assistant Collector) was not authorized to adjudicate upon this matter: under subsection (1) of section 179 of the Customs Act, 1969 an Assistant Collector is not authorized to adjudicate cases where the amount, of duty/taxes involved is more than Rs.300,000 whereas the amount of duty taxes involved is admittedly, Rs.535,345. Clearly, the adjudicating officer has passed the impugned order with least application of mind. For the above reasons, I remit the redemption fine and the penalty imposed on the goods and the appellants respectively. The impugned order is modified to the afore-said extent only and the appeal is disposed of accordingly.
H.B.T./13/Tax(Trib.) Order accordingly.