2021 PLP (Trib (PTD)

SYED SARDAR HUSSAIN SHAH, CHAIRMAN/MEMBER JUDICIAL.

These appeal have been directed against Order-in-Original Nos.583 and 584 of 2018 dated 7-2-2018, passed by the Collector of Customs (Adjudication-I), Karachi.

2. Brief facts of the case as per prosecution story are that Messrs Muhammad Tahir Construction Company electronically filed Goods Declaration No.KAPW-HC-258II dated 09.08.2016 and declared to contain Ten (10) units of Old and Used Hino Diesel Transit Mixer Trucks in CBU Condition having Chassis No. (i) JHDFMZPK67ISI3099, (ii) JHDFMZPKUXXXIIS66, (iii) JHDFMZPKUXXX11586, (iv) JHDFMZPKUXXX11582, (v) JHDFMZPKUXXX11591 (vi) JHDFMZPKUXXX1161, (vii) JHDFMZPKUXXXIIMI, (viii) JHDFMZPKUXXX11741, (ix) JHDFMZPKUXXX10810 and (x) JHDFMZPKUXXX11743 under PCT heading 8705.4000 at declared invoice value of 134900 (US$). The importer determined his liability of payment of applicable duties and taxes in terms of Section 79(1) of the Customs Act, 1969. In order to check as to whether the importer has correctly paid the legitimate amount of duties and taxes, the under reference GD was selected for scrutiny in terms of Section 80 of the Customs Act, 1969 and was referred to Examination for continuation of description, quantity and other physical attribute of the goods. For ease of reference examination report is re-produced as under:

1. DESCRIPTION 10 UNITS OLD AND USED HINO DIESEL TRANSIT MIXER TRUCKS IN CBU CONDITION

2. CHASSIS No. (i) JHDFM2PK671S13099 ii) JHDFMZPKUXXXI 15-66 (iii) JHDFM2PKUXXX1 1586 iv) JHDFMZPKUXXXI 1582 (v) JHDFMZPKUXXXI 1591 vi) JHDFMZPKUMI 161 (vii) JHDFMZPKUXXYI 1141 viii) JHDFMZPKUXXXI 1741 (ix) JHDFMZPKUm10810 x) JHDFMZPKUm11743

3. ENGINE No. 1) P11CU320854 ii) P11C-UBI4020, iii) P11C-UBI4056 iv) P11C-UBI4051, (v) P11CUBI4067 vi) P11C-BI4116, vii) P11C-UBI3178 viii) P11C-UBI4532, ix) PIIIC-UBIZ436 x) P11 C-UB1455

74. DEMONSTRUCTION Clearing Agent and Importer made demonstration before the examination staff on 13.08.2016 and found that the Transit Mixer are in working condition, concrete transit drum is properly working and is being operated from driver's cabin.

5. DOCUMENTS PROVIDED Invoice, B/L and pre-shipment inspection certificate from BUREAU VERITAS issued from Shanghai China (I/O China). Importers were asked to provide road worthy registration of original exporting country (China) but they could not provide the same

6. REMARKS OF EXAMINATION STAFF examined the goods in the light of data retrieved from the system. Description: Physical examination of the goods has been carried out examination staff After due deliberations the opinion that the imported goods are old, used adapted left hand drive transit mixers in working condition whereby chassis/base of the concrete transit drum has been fitted on the chassis of the truck with welding, U bolts and screw bolts. Mechanism to operate the transit drum is available inside the truck/driver's cabin. A shaft from the truck cabin was found attached to the concrete mixer drum in all of the ten transit mixers making it operateable from the truck cabin/driving seat. Furthermore, all Hino Transit Mixer Models are 2011 (on chassis plate). Keeping in view the physical condition appearance and observation during the demonstration of the operation of the mixers regarding rotation of the drum on both side i.e. clock/anti clock wise, the examination staff is of the firm opinion that aforementioned left hand drive concrete transit mixers remained is use as concrete mixers in exporting country before export to Pakistan and qualifies for classification under PCT Heading 8705. In view of the above Assessment Group may process the case further for assessment subject to check all relevant aspects including classification, valuation and importability in terms of Para 9(11)(5) of Import Policy Order, 2016. During clearance of such types of vehicles, a credible information was received that some unscrupulous elements are involved in clearance of such vehicles older than five years which are otherwise not importable. Therefore, such type of fifteen (15) vehicles of M/s. Tahir Construction lying at the port was put under hold and verification of particulars of those vehicles were made from M/s. Hino Pak Motors, Karachi. The information materialized and it was proved that those vehicles were older than five years and not importable as per Para-9(ii)(5) of IPO, 2016. Therefore, case was made and matter was referred to adjudication. The adjudicating authority outright confiscated the vehicles vide Order-in-Original No.658278 dated 21.03.2017, besides imposing a penalty of Rs.400,000/- on the importer and Rs.100,000/on clearing agent.

3. Subsequently, the data of past clearance of such vehicles was retrieved from system and found that 25 such vehicles were previously cleared from this Collectorate. Accordingly, the particulars of those vehicles forwarded (including these 15) to Messrs Hino Pak, Karachi vide letter No.SI/Misc/52/2017-R&D(AW) dated 15.02.2017 to confirm the year of manufacturing. In response, the local agent of M/s. Hino Motors vide their letter dated 06.03.2017 continued that the year of manufacturing of these vehicles is from 2003 2007 i.e. older than five years and imported / cleared in violation of Para-9(ii)(5) of Import Policy Order. Further scrutiny of the documents also revealed that the importers have also failed to substantiate the "project requirement" as per Para-9(ii) of the IPO, 2016, hence this contravention of ten (10) following vehicles of GD No.KAPW-HC25811 dated 09.08.2016 pertaining to Messrs Muhammad Tahir Construction Company. The vehicles are liable to be confiscation out-rightly and the importers / customs agent are also liable for punishment through penalty, etc, for clandestine clearance of the banned vehicles. The facts prove that the importer M/s. Muhammad Tahir Construction Company in connivance with clearing agent Messrs Farhat Sons had fraudulently cleared the Banned goods by mis-declaring the particulars of goods. The ascertained value of the offending goods is worked out to be Rs.17,397,190/involving duty and taxes to the tune of Rs.11,687,236/- The act of the importer is in violation of the provisions of Sections 16, 32(1), 32-A and 79(1) of the Customs Act, 1969, read with Section 3(1) of Import and Export (Control) Act, 1950, Para-9(ii)(5) of Import Policy and punishable under clauses (9), (14-A) and (14) of Section 156(1) of the Customs Act, 1969, read with section 3(3) of Import and Export (Control) Act, 1950 and SRO 499/2009 dated 13-06-2009, Section 33 of the Sales Tax Act, 1990 and Section 148 of the Income Tax Ordinance, 2001 as amended from time to time. The case was heard by the learned Collector (Adjudication-I), Customs House, Karachi, who vacated the Show-Cause Notice dated 20.07.2017. 4 Aggrieved of the Order-in-Original Nos. 583 and 584/2018 dated 07.02.2018, passed by the Collector of Customs (Adjudication-I), Karachi, the Collector of Customs, MCC Appraisement (West), filed these appeals before this Tribunal.

5. Accordingly the matter was fixed for hearing on 23.04.2019. Mr. Asad, appeared for the importer and Mr. Faiz Ahmed Faiz, represented the appellant department. Mr. Asad, stated that the goods were imported in accordance with para 9(ii)5 of the Import Policy Order, 2016. The vehicles were duly accompanied by Pre-shipment Inspection Certificates issued by Messrs Bureau Veritas, China. He emphasized that the goods were imported in accordance with the conditions provided in the law and that they have not made any incorrect statements before Customs in terms of sections 32(1) and 32(2) of Customs Act, 1969. The importers further stated that all the observations of appellant Collectorate can be addressed in the light of judgements of Hon'ble Supreme Court of Pakistan in Civil Petition No. 657 of 2018, dated 26.04.2018, and judgement of this Tribunal in K-518/2017 dated 31.05.2017.

6. The impugned vehicles were imported in accordance with para 9(ii)5 of the Import Policy Order, 2016, which is reproduced here for the sake of clarity; "Construction companies, mining, oil, gas and petroleum sector companies are also allowed to import specialized vehicle mounted machinery and transport equipment such as mobile transit mixer, concrete pumps, crane lorries, concrete placing trucks, dumpers designed for off highway use, cement bulkers and prime movers '280' HP and above, etc including those specified in Appendix-I. Import of said specialized machinery or transport equipment as mentioned above shall however be subject to prior pre-shipment inspection in the exporting country from any of the internationally recognized reshipments inspection companies listed at Appendix-H to the effect that the said machinery or transport vehicles are (a Euro-II compliant (b) manufactured as such by Original Equipment Manufacturer (OEM); and (c) not older than five years;"

7. Accordingly, inspection companies which are authorized to conduct inspection and verify the condition of importability are listed in Appendix-H, which are; a. Messrs Lioyds of London; b. Messrs Quality Tech, LLC; c. Messrs ABS; d. Bureau Veritas; e. Messrs SGS; and f. Messrs IMTECH

8. The imported goods were inspected by Messrs Bureau veritias, listed at Serial (d) above. The said company in their inspection results have identified the vehicles as of Model Year, 2011.

9. The examination report of the impugned vehicles categorically identifies the age of the vehicles as the vehicles year of manufacture as 2011. The appellant sought information form Hino Pak Motors. Apparently the department was conducting a roving inquiry and as they did not rely on the certifications produced before them and referred the matter to Hino Pak Motors, who on behalf of their principal in Japan identified the vehicles of older models. The said information forms the basis of show-cause notice. The department has not produced correspondence exchanged between Hino Pak and Hino Japan which could show what information was sought from Japan and in what terms the principal replied. It is needless to mention here that Hino Pak may have vested interest in the matter as being a local agent they would not be able to earn commission in case of import by construction companies directly. The department did not procure this information from Hino Japan through official channels. As such reliance cannot be placed on the information provided by a local vendor.

10. In view of the above deliberations we are of the considered opinion that the importer has not committed an offence within the meaning of sections 32(1) and 32(2) of Customs Act, 1969. The goods were imported in accordance with the conditions of Import Policy Order in vogue. The department had failed to bring on record an authentic examination report which could identify year of manufacturer of vehicles. Similarly report from Hino Japan has not been placed before us, and reliance on letter of local vendor will be misplaced as discussed above. Accordingly, judgement passed by Collector of Customs (Adjudication-I) is hereby upheld. The appeals being without merit is dismissed. SA/111/Tax (Trib) Appeal dismissed.