2010 PLP (Trib (PTD)

MUHAMMAD ARIF MOTON, MEMBER (JUDICIAL).

This order will dispose of Customs Appeal No. K-237 of 2008, filed by the Appellant against Order-in-Appeal No.948/2008 dated 27-3-2008, passed by the Collector of Customs, Sales Tax and Federal Excise (Appeals), Karachi.

2. Brief facts of the case are that the Appellant in November, 2007 imported a consignment comprising of "Stainless Steel Round Bars AISI 400" of different dia. and length from Japan, weighing 19825 kgs. classifiable under H.S. Code 7222.1100, against a letter of credit opened with Habib Metropolitan Bank Ltd., Main Branch, Sialkot @ US$850/MT. On arrival of the consignment, the Appellant filed G.D. electronically after making payment of leviable taxes amounting to Rs.3,12,606 vide Cash No.B1-11-24-442 dated 24-11-2007 in terms of clause (b) of subsection (1) of section 79 of the Customs Act, 1969. Therefore, Customs Reference Number I-HC-464356-241107 was allotted to the G.D. by the respondent Collectorate. However, the consignment was not released and it was subjected to examination without association or intimation to the Appellant as a result of which a show cause notice was served upon the Appellant alleging that:-- "Scrutiny of the Goods Declaration revealed that the importer has mis-declared the description and quality of the goods i.e. the goods declared as stainless steel round bars of prime quality standard AISI 400, whereas on physical examination the goods have been found to be as stainless steel round bars magnetic type of secondary quality, without showing any standard, dia. 4mm to 18mm length 900 to 3010mm etc., which stands banned and not importable vide serial No.10 of Appendix-A of Import Policy Order 2007-08."

3. The Appellant was charged to have contravened the provisions of sections 16, 79(1), 32(1), 32(2) and 32(A) of the Customs Act, 1969, section 33 of Sales Tax Act, 1990, section 148 of Income Tax Ordinance, 2001 and section 3(1) of the Imports and Exports (Control) Act, 1950, punishable under 9, 14, 14(A) and 45 of section 156(1) of Customs Act, 1969, 11(c) of section 33 of Sales Tax Act, 1990, 148 of Income Tax Ordinance, 2001 and 3(3) of Imports and Exports (Control) Act, 1950.

4. The charges levelled in the show cause were denied and contested by the Appellant but could not convince the respondent Deputy Collector, who passed order-in-original against the Appellant in the following terms:-- "I have examined the records of the case and heard the Respondent. The case involved the determination of the question whether the goods were of prime quality for secondary quality. The examination report stated; "Documents found while opening the container for examination. Examined the goods with GD retrieved form the system. Desp: Stainless steel round bars magnetic type, Dia. 4.0mm x 900/ 3010 nun length, Dia 5.0 mm/18.0 mm x 900/3010 mm length and etc. I/O Japan, Packed in 12 bundles un-even packing, assorted sizes packed in each bundles, some are rusted. AISI No. not mentioned on goods. In my opinion the goods are of secondary quality, 100% wt. checked vide KICT wt slip No.76942 dated: 27-11-2007 and found 19670 kgs. Gross. Maximum images are attached." The following observations are made:-- (1) The documents found from the container i.e. invoice is different from the invoice produced by the importer. (2) The goods are in un-even sizes without AISI number. (3) No production date is mentioned on the goods or any of the documents as per the provisions of the public notice No.1/2002 (Appraisement). In the light of above observations, the goods do not seem to be prime quality. Thus, contravention of law is established. I hereby order confiscation of the offending goods sunder section 156 of the Customs Act, 1969. As the goods are banned under Appendix-A of the Import Policy Order, 2007-08, the option for redemption of goods against payment of fine cannot be allowed under the provisions of section 181 of the Customs Act, 1969 read with S.R.O. 487(I)/2007 dated 9-6-2007."

5. The Order-in-Original was challenged before the Respondent No.2 in terms of section 193 of the Customs Act, 1969 and the learned Collector (Appeals) maintained the order of the adjudicating officer and rejected the appeal with the following observation:

"I have considered written as well as oral submissions of both the sides. There is dispute of description and quality besides import status of the impugned items. The minute examination of the subject Appendix "A" of the IPO would show that the Stainless Steel Sheets are excluded from the exception vide sub para.2(1) of Sr. No.10 of the Appendix "A" of the IPO 2007-08. The impugned Order-in-Original is accordingly correct in law and facts bf the case. Appeal is rejected." Hence the present appeal has been filed by the appellant.

6. Rana Zahid Hussain Khan, Advocate of Messrs G.A. Jahangir and Associates, Karachi, and Mr. Ghulam Yasin, Appraising Officer, represented the appellant and department respectively. Exhaustive hearings were conducted and rival parties were given maximum time to put forth their points of view and evidences, if any, in support of their contentions.

7. The learned advocate for the appellant contended that the impugned consignment is of prime quality which has been imported against an irrevocable letter of credit against a normal and fair import value prevailing for Stainless Steel Round Bars AISI 400 of prime quality at the relevant point of time. The .consignment was examined without intimation and association of the appellant by the Examining Officer of Customs who has given a vague, incomplete and very doubtful examination report stating that in my opinion the goods are of secondary quality" which shows that he was not sure whether the goods are secondary or prime quality and in this situation rendering of a second opinion of a senior officer of Customs was mandatory, however, this was totally ignored and the show cause notice was issued on the basis of disputed examination report. The learned Deputy Collector during the course of hearing had taken opinion of the, departmental representative Mr. Eijaz Ashrafi, Principal Appraiser on the basis of letter of credit, invoice and mill test report produced by the appellant before him, and in turn the said Principal Appraiser had reported that the letter of credit and the mill test certificate show that the goods are of prime quality. However, the learned Deputy Collector totally ignored the commercial documents and opinion of the departmental representative and passed- an illegal order without applying a judicious mind by confiscating the consignment. The learned counsel further pleaded that even the adjudicating officer did not pass a valid and firm order who in his concluding para has observed that "in the light of above observations the goods do not seem to be prime quality," which again demonstrates that the adjudicating officer was also not sure about the quality of the imported goods. This situation had vehemently suggested either re-examination of the consignment through a Committee or some Steel experts or the goods would have been released giving the benefit of doubt to the appellant. However, on the contrary the respondent adjudicating officer outrightly confiscated the consignment despite the fact that the appellant had paid duty and taxes also in terms of clause (b) of subsection (1) of section 79 of the Customs Act, 1969, prior to filing of the Good Declaration. The learned counsel went on arguing that the Examining Officer and the adjudicating officer have acted mala fidely and maliciously for the reasons that the then entailing situation had necessitated re-examination of the disputed goods to arrive at fair conclusion. The learned counsel during the course of hearing challenged that the Stainless Steel Round Bars are being imported for the last several decades by various importers from Japan, China, India and other sources and never ever any consignment was treated as of secondary quality. The learned counsel further urged that the department has taken a different version in this case as on one hand the goods have been treated as of secondary quality and on the other hand the consignment has been assessed at a very exorbitant value even higher than the goods imported by other importers which were treated as being of prime quality. At the end the learned counsel submitted that an irrelevant Public Notice (No. 01/2002 Appraisement) has also been applied maliciously by the respondent Deputy Collector to create reasons for outright confiscation of appellant's consignment which pertains to examination/assessment of mixed iron and steel sheets, whereas the appellant has imported Stainless Steel Round Bars. Even para 03 of the impugned Public Notice prescribes that if a dispute arises between Customs and the importers regarding description of goods, the matter will then be referred to Steel Committee constituted under Public Notices No. 3/1999 dated 7-8-1999. Since the appellant had disagreed with the disputed examination report given single-handedly by an Examination Officer, the respondent Deputy Collector was under moral and legal obligation to get the consignment re-examined by some experts to arrive at fair conclusion. However, this had not been done deliberately. The learned counsel vehemently prayed to release the consignment on payment of normal duty and taxes and requested for quashment of the impugned orders passed by the forums below.

8. On the other hand, Mr. Ghulam Yasin, Appraising Officer, representing the department, stood firmly behind the order-in-original and order-in-appeal and submitted that the report of the Examining Officer was submitted online to Deputy Collector Shed who after approval had forwarded the same to Appraisement Group for further initiation of penal action which means that the report of the Examining Officer was endorsed by the Deputy Collector. He further contended that the consignment comprising of assorted sizes in each bundle and specifications are not mentioned on the goods. In rebuttal to learned counsel's arguments that the consignment is of prime quality and is containing comparable value of prime consignment the DR submitted scanned images of the consignment and a statement showing values of prime quality Stainless Steel Round Bars declared by various importers, a copy of which was handed over to the appellant's counsel also. The departmental representative further argued that this is the first consignment during the last several years which has been treated as of secondary quality by the department on merits. The departmental representative vehemently prayed to dismiss the appeal and to uphold the impugned orders.

9. In reply to the departmental representative's arguments the learned counsel on the last date of hearing filed seven evidences of Stainless Steel Round Bars AISI 400 and 410, five of which were imported from Japan and two from India, which have been placed on record. The learned counsel also stipulated copies of few G.Ds to prove that examination reports are always given by confirming the description and quality and not in the manner as has been given in appellant's case on the basis of mere opinion. These G.Ds are also available on record.

10. Rival parties have been heard and case record and evidence produced by both sides examined. After a careful perusal of the show cause notice and order-in-original it transpires that the department has deviated from its long-standing practice and examination manual. The Examining Officer had not given a conclusive and fair examination report which has been normally given after examination of such consignments. The examination report is defective in as much as it does not confirm that the goods are of secondary quality or of prime quality but the said Customs Examining Officer has just jotted down his personal opinion without mentioning any parameters or criteria or yardstick to substantiate the same by saying that "in my opinion the goods are of secondary quality". This amply demonstrates and connotes that he is not sure about the quality of goods suggesting that his report shall be seconded by some higher officer to confirm his opinion and this procedure is adopted invariably in all cases where quality dispute arises. However, in violation of procedure and practice straightaway a show cause notice had been served upon the appellant. Similarly, the adjudicating officer also acted in violation of principles of natural justice and departmental practice as he not only ignored that the examination report is deficient, sketchy, vague, unspecific and incomplete but he overlooked comments of the departmental representative Mr. Aijaz Ashrafi, Principal Appraiser, who had endorsed that the commercial documents do suggest that the goods are of prime quality. In this situation the adjudicating officer had two options (i) either he should have released the consignment on payment of taxes following comments of Principal Appraiser, or (ii) he should have referred the matter back to Deputy Collector Shed for re-examination in association with Steel experts, however, he did not do so and in haste outrightly confiscated the consignment which has definitely deprived the appellant of his vested right to clear his goods if the second report had come in his favour, on payment of leviable taxes after assessing the value in terms of section 25(1) of the Customs Act, 1969. I cannot ignore the fact that though the Public Notice No.01/2002 relied upon by the Adjudicating Officer is irrelevant in this case being pertaining to mixed Iron and Steel Sheets, however, its para. 3 contains clear cut guidance that in disputed cases where the importer disagrees with the examination report the matter must be referred to Steel Committee for re-examination to have fair idea about the physical quality of the consignment. This shows that the respondent mala fidely ignored the provisions of said Public Notice which he had used for confiscation of the consignment resultantly this behavior has directly stricken upon the basic rights of the Appellant importer. It is observed that this attitude is not appreciable and has been invariably deprecated by higher judicial fora since it causes unwarranted monetary and intrinsic loss to an innocent and law abiding taxpayer.

11. On the issue of value of identical goods the departmental representative tried his best to convince this forum by submitting irrelevant evidences of value of Stainless Steel Round Bars of different specifications falling under H.S. Code 7222.3000 imported by various industries from India and other sources, whereas the Stainless Steel Round Bars imported by the appellant are classifiable under HS Code 7222.1100. Therefore, the price statement submitted by the departmental representative is of no help to him which is totally irrelevant. The evidential G.Ds produced by the appellant show that the respondent has enhanced the value of the consignment upto a very higher level even beyond the normal value of other prime consignments cleared by various importers which goes against the respondent for simple reason that if the goods are of secondary quality the value of prime quality goods cannot be applied. This defect in the impugned order goes to the roots of this case that when the goods have been assessed at the level of other consignments which have been released without any objection why the appellant has been discriminated. A facility allowed to one and denied to other is discrimination. Every citizen is equal in the eyes of law and any deviation from this rule brings in provisions of Article 25(1) of the Constitution of Pakistan to rescue such citizen. The Honourable Supreme Court of Pakistan in a large number of similar cases has taken very serious view of the matter by providing relief to petitioners.

12. In other words an element of inter discrimination has crept up into the body fabric of the impugned order-in-original in addition to other legal infirmities and discrepancies patently floating on its surface. Reference is made to the hallmark judgment of the Honourable Supreme Court of Pakistan reported as 2005 SCMR 492, wherein the apex Court has laid down golden principle that "facility allowed to some one and denied to one is the discrimination." Regarding the merits of the subject case the facility of release of identical consignments of Stainless Steel Round Bars imported by other importers has been extended without adjudication proceedings despite the fact that their import values were almost at the same level as of the Appellant. While judging in the perspective of the apex Court's judgment the action on he part of the adjudicating officer constitutes an act of blatant discrimination. It also flouts the basic principle of consistency in respect of which the Superior Judicial Fora has time and again through a series of judgments deprecated such undesirable actions involving adjudicating proceedings.

13. In view of above narration, it is my considered opinion that the impugned orders are not maintainable since they suffer from patent legal infirmities, therefore, the same are set aside and the appeal is allowed. The respondent Collectorate is directed to release the goods after realizing levilable taxes against transaction value to be determined in terms of subsection (5) of section 25 of the Customs Act, 1969. Since the consignment is under heavy port demurrage and container detention charges since November, 2007 due to improper, discriminatory and confiscatory adjudication proceedings and illegal confiscation of goods it is also hereby Ordered to issue delay detention certificate to the appellant. The appeal is disposed of in the above terms. C. M. A./22/Tax(Trib.) Appeal allowed.