2001 PLP 661 (PTD)

DESCRIPTIONS IMPORT VALUE E7 22/13 LIVE END, 7326.90000 509952 6509954 E4 12/13 DEAD END, COUPLERS, GROUT CAPS BEARING PLATES, 7 S 185 COMPRESSION GRIPS E2 RETAINERS PLATES, WEDIE, SCREWED RODE AND NUT TOTAL 6509954 (iii) Bill of Entry No: IGM‑1296/94 Dated 11‑7‑1994 DESCRIPTIONS IMPORT VALUE E7 22/13 LIVE END DEAD END 7326.3000 CASES 5390063.00 COUPLERS, E412/13 LIVE END 2963 NOS: DEAD END COUPLERS E2 7/13 LIVE END, END, CONSISTS OF CASTING, BEARINMG PLATE, GRIPS RETAINING PLATE. ETC. TOTAL 5390063.00 On arrival of the aforesaid Bridge equipments/machineries into Pakistan, Customs Authorities took several months for processing, inspection and determination of the nature of the Bridge equipments/machineries for levying Customs duty and sales tax. Thereafter, the aforesaid Bills of Entries were endorsed to the Customs Shed Staff for verification and confirmation, which was duly recorded by the Appraisement Section of respondent No. 1 after physical verification, perusal of the catalogue and literature of the Bridge equipments/machineries, whereupon the description of the Bridge equipments/machineries was accepted and confirmed and the declarations made in the Bills of Entries after due inspection of Bridge equipments/machineries were verified and accepted. The entire above procedure was completed in September, 1994. However, in June, 1995 the petitioner received a show‑cause notice, dated 10‑6‑1995 stating therein that the goods imported by the petitioner were classified under PCT Sub‑heading No.7321.90000 and further stating that the same were not covered by S.R.O. 858/(1)/92, dated 9‑9‑1992 on the ground that the goods did not constitute the Bridge equipments/machineries. The respondents alleged that the petitioner had made a mis-declaration regarding the description of goods, as a result of which Bridge equipments/machineries were charged at a very low rates of Customs duty and sales tax and paid a sum of Rs.44,84,022 as against an amount of Rs.1,50,39,378 which was actually chargeable by way of Customs duty and sales tax. The respondents in their aforesaid notice stated that they intended to invoke the provisions of section 32 of the Customs Act. The petitioners replied the said show‑cause notice but the same was not considered to be satisfactory and respondent No.1 by his order, dated 11‑4‑1997, directed the petitioner to pay Customs duty and Sales tax amounting to Rs.1,50,37,379 under section 32(2) of the Customs Act and penalty of Rs.50,00,000 under clauses 10(a) and 14 of section 136(1) of the Customs Act. The said order was challenged by the petitioner before the Customs, Excise and Sales Tax Appellate Tribunal, who by its order, dated 14‑7‑1998, modified the order of respondent No.1 to the extent that penalty of Rs.50,00,000 imposed under clauses 10(1) and 14 of section 136(1) of the Customs Act was set aside but maintained the imposition of Customs duty and Sales tax to the tune of Rs.1,50,37,

379. Feeling aggrieved and dissatisfied with the aforesaid order, the petitioner has filed this Constitutional petition. We have heard the arguments of M/s. Jawaid Siddiqui and Syed Tariq Ali, the learned counsel 'for the parties and have also perused the material on record. The first point which we would like to take, up for consideration is a relative to the issuance of notice under section 2 of the Customs Act. section 32 of the Customs Act empowers the appropriate officer of the Customs Department to issue a show‑cause notice to the concerned person/ importer if any person in connection with any matter of Customs 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 documents whatsoever, or makes any statement in answer to any question put to him by an officer of Customs which he is required by or under this Act to answer 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. Different period for issuance of show‑cause notice are mentioned in subsections (2) and (3) of section 32 of the Customs Act. Subsection (2) deals with the cases where duty or charge has not been levied or has been short‑levied or has been erroneously refunded, by reason of any such document or statement or by reason of some collusion with the officer of the Customs. In such a situation, the duty can be demanded after due notice within three years of the relevant date which expression has been defined in subsection (5) of section 32 of the Customs Act. Subsection (3) of section 32 of the Customs Act deals with the cases whereby 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 six months of the relevant date requiring him to show cause why he should not pay the amount specified in the notice. On minute examination of provisions of subsections (2) and of section 32 of the Customs Act, it is to be observed that the present case in our view would be covered by subsection (3) and not by subsection (2) of section 32 of the Customs Act as was done by respondent No. 1 while issuing a notice under section 32(2) of the Customs Act. Our above view is based on consideration and examination of the facts of the case, according to which the petitioner had submitted the Bills of Entries under which the entire Bridge equipments/machineries were imported by it into Pakistan. It had also produced Bridge equipments/machineries for physical inspection for the purpose of verification that the nature/description of the Bridge equipments/machineries was the same as given on the Bills of Entries. The petitioner had also produced the necessary catalogue relating to the Bridge equipments/machineries and from the aforesaid facts, it was established that the Bridge equipments/machineries imported by the petitioner into Pakistan were entitled to be charged at concessional rate of Customs duty and sales tax in accordance with Notification No.S.R.O. 858(i)/92. In the circumstances, it cannot be said that the petitioner was guilty of acts of commission or omission as provided in clauses (a) and (b) of subsection (1) of section 32 of the Customs Act as the petitioner had made categorical and unambiguous statement with regard to the nature of the Bridge equipments/machineries, had produced the same for physical verification alongwith the catalogue of the Bridge equipments/machineries, had produced Bills of Entry wherein the description of Bridge equipments/machineries was corresponded to the Bridge equipments/machineries produced for examination, for levy of Customs duty and sales tax. From the above facts it appeared to be a case of non‑levy or short levy and the same would be deemed to be on account of inadvertence or misconstruction on the part of the concerned Customs Officers. The concerned Customs Officers, who had examined the Bridge equipments/machineries either were not careful, vigilant or knowledgeable and accepted the Bridge equipments/machineries to be the one described by the petitioner and subjected the same to lower rates of Customs duty and sales tax in view of the concession provided by Notification No. SRO 858(i)/92 or that they had intentionally with a view to cause loss to the Government exchequer accepted the version of the petitioner with regard to the description of the Bridge equipments/machineries and subjected them to concessional rate of Customs duty and sales tax. In the circumstances, the case of the petitioner would be squarely covered by subsection (3) of section 32 of the Customs Act and would not in any manner fall within the scope of section 32(2) of the Customs Act. The show‑cause notice in view o: short levy or non‑levy of the Customs duty and sales tax due to inadvertence, error or misconstruction on the part of the Customs Officers could be issued within six months from the date of payment of duty/charge. The last payment of Customs duty and sales tax was made on 7‑9‑1994, therefore, the show cause notice could have been issued on or before 6th March, 1995 but it was issued on 10‑6‑1995 and was clearly issued beyond the period of six months as prescribed under section 32(3) of the Customs Act. Another ground which requires consideration is whether the issuance of show‑cause notice was on the basis of some change of opinion by the concerned officer or that he had received certain information that certain Bridge equipments/machineries were either not disclosed by the petitioner at the time when they had produced their imported Bridge equipments/ machineries for inspection by the Customs Authorities or that the Bridge equipments/machineries did not correspond or tally with the description given in the Bills of Entry under which they were imported or as given by the petitioner. In this connection, it is to be observed that the concerned Customs Officer had taken a long time in physically inspecting and verifying the Bridge equipments/machineries imported by the petitioner and had accepted the description of the Bridge equipments/machineries as given by the petitioner verbally, in the Bills of Entry and the catalogues. In the circumstances, issuance of show‑cause notice on the basis that the Bridge equipments/machineries imported by the petitioner did not coi1form to the description which was to be subjected to concessional rate of Customs duty and sales tax under Notification No.SRO 858(i)/92 was a change of opinion 6f the concerned officer. The provisions of section 32 of the Customs Act can be said to be similar and analogous to the provisions of section 65 of the Income Tax Ordinance, 1979 which empowers the Assessing Officer to reopen the assessment finalized earlier on receiving a "definite information" that the earlier assessment had resulted in escapement of income from assessment or assessment was made at too low rate or on account of concealment of income. It is the requirement of section 65 of the Income Tax Ordinance, 1979 that the Assessing Officer intending to reopen the assessment under section 65 of the Income Tax Ordinance, 1979 has to show the material on the basis of which anyone of the above three grounds could be substantiated in the absence whereof it would amount to a mere change of opinion. Under section 32 of the Customs Act, the Customs Officer had accepted the facts disclosed and the version given by the importer with regard to the imported goods and had subjected them to duty under a particular provision of law. The show‑cause notice could not be issued unless it was definitely established that the short levy was on account of any act or omission of the petitioner as contemplated in clauses (a) and (b) of section 32(1) of the Customs Act. A definite and positive statement was made by Jawaid Siddiqui that the petitioner had not made any wrong or false statement with regard to the import of the Bridge equipments/machineries and the aforesaid Bridge equipments/machineries which were charged to concessional rate of Customs duty and sales tax were not for permanent consumption ill the Bridge structure but were meant to be used for support and construction of the Bridge and have been removed after the completion of the project. He further submitted that the Bridge equipments/machineries imported by the petitioners under the above Bills of Entries were support or construction material and were not to be consumed as permanent fittings and/or fixtures of the Bridge. He further submitted that the question whether the said Bridge equipments/machineries have been installed or fixed permanently or were used in building/constructing the Bridges and were removed clam be verified from perusal of the Certificate issued by M/s Beg Associates, Chartered Civil Engineers and Chartered Structural Engineers. However, in view of our foregoing discussion we do not consider it necessary to dilate upon this aspect. On 15‑3‑2000, by a short order, we had allowed this Constitutional petition and had set aside the impugned order of Customs, Excise and Sales Tax Tribunal for reasons to be recorded later. These are the reasons for the aforesaid short order. Q.M.H./M.A.K./C‑15/K Petition allowed.