2021 PLP (Trib (PTD)

SYED SARDAR HUSSAIN SHAH, CHAIRMAN/MEMBER JUDICIAL.

This Judgement disposes of Customs Appeal No.K-1497 / 2016 filed by the Appellant against the Order-in-Original No.179 of 2015-2016 dated 26.05.2016 passed by the Collector, Collectorate of Customs (Adjudication-II), Custom House, Karachi.

2. Brief facts of the case are that the Model Customs Collectorate of Appraisement (East), Customs House, Karachi received a credible information to the effect that Messrs Pure Enterprises, (NTN-1199090), Room#201, 2nd Floor, Sami Chamber, Arambagh Road, Karachi was regularly importing pharmaceutical raw material with the vague description of SDO and preservation from china at the lowest declared value US$ 0.30/Kg while according to the informer, the impugned pharmaceutical raw material was in-fact "Paracetamol" which being costly item, the declared / assessed value should not have been less 'than US$ 5/Kg and US$ 6/Kg respectively. Further, the import of these goods is restricted to be importable by pharmaceutical industries holding valid pharmaceutical manufacturing license in accordance with the provisions of Drugs (Import and Export), Rules, 1976 in terms of serial Number 7 of the Appendix-B (Part-II) of Import Policy Order, 2013-14. The modus operandi adopted by the importer Messrs Pure Enterprises, (NTN-1199090), Room#201, 2nd Floor, Sami Chamber, Arambagh Road, Karachi was to get impugned goods cleared on vague ambiguous declaration supported by vague test reports issued by Custom House Laboratory. In order to check the veracity of Information, the relevant data of the import was retrieved whereby it has been observed that the said importer has imported 02 consignment of the said material, details thereof is summarized hereunder: SR No. GD No. and Date Description Supplier Name a. KAPE-HC-60030 dated 27.01.2014 SDO-777 SDO-999 Sunny Pharmchem Co. Ltd. b. KAPE-HC-84308 dated 22.03.2014 SDO-999 Sunny Pharmchem Co. Ltd. In view of the credible information a strict vigil was kept by the Model Customs Collectorate of Appraisement (East), Karachi, on the manifested cargo and finally two consignments covered by two bills of lading bearing No. KMTCXGG702115 and No KMTCXGG702356 respectively were spotted. In order to ensure that the goods were not removed through illegal means, the said containers were blocked In the system and Deputy Collector (PICT) was requested to withhold the auction proceedings, Since nobody filed the GD to claim release of the goods, therefore, the Deputy Collector (PICT) referred the goods for chemical analysis from Customs House Lab. The said laboratory vide letters No. CE/R/MCC/57115 dated 12.01.2015 issued container wise test report as under: "SRO 444, Container No. SEGU1877457: The samples were analyzed with instrument (First Defender RM) which was operated after receiving of batteries / accessories on 22.12.2014 on test in found to be nitrogen and phenol function organic compound Acetaminophen (Paracetamol). It is in the form of white Powder." It was also alleged by the department that goods in the case of consignments mentioned above were also mis-declared as the same were imported from the same supplier, namely Messrs Sunny Pharmachem Co. Ltd, China with identical description, which amply proved that the importer M/s. Pure Enterprises, (NTN-1199090), Room#201, 2nd Floor Sami Chamber, Arambagh Road, Karachi in connivance with the lab staff managed to manipulate test report in the previously released cases as well, thereby escaped the restriction stipulated by the Import Policy and evaded payment of legitimate taxes to the tune of Rupees 17,407,129/-. Later on Customs Agent Messrs Suhail Enterprises (CHAL-1015.), 903, Uni Plaza, 9th Floot, II Chundrigarh Road, Karachi claimed BL No.KMTCXGG702115 on-line with an application under Section 79 of the Customs Act, 1969 on 12.11.2014 showing the importer as Messrs Poulvet Pharmaceuticals (NTN-3973548), 195/B. D-I, Nespak Housing Society, Lahore (as per shipping information fed by Shipping Line into the WeBOC system, the said IGM belongs to Messrs Pure Enterprises). The owner of Messrs Suhail Enterprises namely Sheikh Muhammad Suhail was questioned with regard to claiming of IGM on behalf of Messrs Poulvet Pharmaceuticals, particularly in the backdrop goods were manifested in the name of M/s. Pure Enterprises (a commercial, non-pharma manufaturer entity). He informed that the said request was moved on the directive of Muhammad Ali Chandna, the owner of Messrs Pure Enterprises. In this way, the Appellant Muhammad Ali Chandna attempted to get the name of consignee changed from "M/s. Pure Enterprises" to "M/s. Poulvet Pharmaceuticals" with an intention to circumvent the restrictions of Import Policy and to get refuge from the vigilance and blocking of Customs. Accordingly, the contra-banned goods were seized under Section 168 of the Customs Act, 1969 under proper musheernama prepared on the Spot in the presence of witnesses.

3. The willful mis-declaration of description by Messrs Pure Enterprises, (NTN-1199090), Room#201, 2nd Floor, Sami Chamber, Arambagh Road, Karachi was aimed at to avoid the restriction of import on pharmaceutical raw materials by the commercial importers and while declaring its lower value was to deprive the government of its legitimate revenue to the tune of Rs.16,583,382/- in both the consignments under detention. Thus the Importer Messrs Pure Enterprises, (NTN-1 199090), Room#201, 2nd Floor Sami Chamber, Arambagh Road, Karachi and then clearing agents Messrs Rajah Ali and Sons (CHAL # 50), A/618. 6th Floor, Saima Trade Tower, I.I. Chundrigar Road, Karachi and M/s. Suhail Enterprises (CHAL # 1015), 903, Uni Plaza, 9th Floor, I.I Chundrigar Road, Karachi allegedly committed offence under Section 16, 32, 32A and 192 of the Customs Act, 1969, Section 33 of Sales Tax Act, 1990 and Section 148 of Income Tax Ordinance, 2001, punishable under Clauses 9, 14, 14A, 86 and 90 of Section 156(1) of the Customs Act, 1969, clause 11(c) of Section 33 of Sales Tax Act, 1990 and Section 148 of Income Tax Ordinance, 2001, subsection (1) of Section 3 of Import and Export (Control) Act, 1950 read with S. No.7, Part II, of Appendix-B to the Import Policy Order-2013-2014.

4. Accordingly, the Importer Messrs Pure Enterprises, (NTN-1199090), Room#201, 2nd Floor, Sami Chamber, Arambagh Road, Karachi and their clearing agents M/s. Rajab Ali and Sons (CHAL#50), A/618, 6th Floor, Saima Trade Tower, I.I. Chundrigar Road, Karachi and M/s. Suhail Enterprises (CHAL # 1015). 903, Uni Plaza, 9th Floor, I.I. Chundrigar Road, Karachi were called upon to show-cause under provisions of Section 32A of the Customs Act, 1969 read with sections 16, 32 and 192 thereof, section 33 of Sales, Tax Act, 1990 and Section 148 of Income Tax Ordinance, 2001, as to why the evaded amount of duty and taxes to the tune of Rs.33,990,511/- (Customs Duty amounting to Rs.13,922,0671-, Sales Tax amounting to Rs.14,930,555 and Income Tax amounting to Rs.5,137,8891-) be not recovered from them and penal action be not taken against them under clauses 9, 14, 14A, 86 and 90 of Section 156(1) of the Customs Act, 1969, clause 11(c) of Section 33 of Sales Tax Act, 1990 and Section 148 of Income Tax Ordinance, 2001, subsection (1) of Section 3 of Import and Export (Control) Act, 1950 read with S.No.7, Part-II of Appendix-B to the Import Policy Order, 2013-2014.

5. The adjudicating officer vide Customs Order-in-Original No.34 of 2013-2014 dated 17.04.02014, held that the charges levelled against the Appellants were established. Operative part of the impugned order reads as under:- "Therefore, in the light what has been discussed above this case is disposed of with the observation that if in response to the letters written by Model Customs Collectorate of Appraisement (East), Karachi to the concerned authorities it is established that no shipper in the name of M/s. Sunny Pharmchem Co. Ltd., China is existent or registered with the Chinese Authorities or the consignments vide Bill of lading No.KMTCXGG702115 and KMTCXGG702356 were rightly shipped to the respondent No.(i) Messrs Pure Enterprises Karachi then the charges leveled in the show-cause notice will be established and M/s. Pure Enterprises, (NTN-1199090), Room#201, 2nd Floor, Sami Chamber, Arambagh Road, Karachi will be liable to pay Rs.33,990,511/- Customs Duty amounting to Rs.13,922,067/-, Sales Tax amounting to Rs.14,930,555/- and Income Tax amounting to Rs.5,137,889/-). A penalty of Rs.5,000,000/ (Rupee Five Million Only) will also be recoverable from M/s. pure Enterprises, Karachi in terms of Clauses 14, 14A, 86, and 90 of Section 156(1) of the Customs Act, 1969. Similarly, both the respondents namely M/s. Rajab Ali and Sons (CHAL#50), A/618, 6th Floor, Saimi Trade Tower, I.I Chundligar Road, Karachi and Messrs Suhail Enterprises (CHAL # 1015), 903, Uni Plaza, 9th Floor, I.I. Chundrigar Road, Karachi with also be liable to pay a penalty of Rs.500,000/- (Rupee Five Hundred Thousands Only) each under Clauses 14, 14A, 86 and 90 of Section 156 (1) of the Customs Act, 1969 for conniving with the Importer to clear the restricted pharmaceuticals raw materials for violating of Sections 16, 32, 32A and 192 of the Customs Act, 1969. However, if it is confirmed through the verification report that the detained containers were mistakenly sent to respondent No. 1 and he was not the owner on these goods, then obviously he can not be penalize for the goods not belonging to him and his past clearance can not be related to the detained goods not owned by him and in such charges in the show-cause notice will not be established. The two consignments covered by Bill of lading numbers. KMTCXGG702115 and KMTCXGG702356 stuffed in container No. SEGU1329094, (ii) SEGU1877457, (iii) TEMU2467216 and (iv) TGHU3128184) are hereby confiscated in term of clauses 9, 14, 14A, 86 and 90 of Section 156(1) of the Customs Act, 1969 for Violation of Sections 16, 32, 32A and 192 of the Customs Act, 1969 and subsection (1) of Section 3 of the Import and Export (Control) Act, 1950 read with S. No. 7 Part-II of Appendix-B to the import order 2013-2014 because these contain pharmaceutical raw material "Paracetamol" which is only importable by pharmaceutical industries having valid Pharmaceutical manufacturing license and both the respondent No.(1) and (ii) art not qualified to import the same."

6. Aggrieved by the Order-in-Original No.179 of 2015-2016 dated 26.05.2016 the appellant filed appeal before this Tribunal, mainly on two-fold ground that (a) the goods lawfully released under GD Nos.KAPE-HC-66030 dated 27-01-2014 and No.KAPE-HC-84308 dated 22-03-2014. Through due process in terms of sections 80 and 83 of the Act, on payment of duties and taxes could not be questioned by the Respondents regarding their attributes; and (b) the Appellant had no concern with the subsequently detained consignments of paracetamol.

7. Arguments heard and case file perused. The appellant imported consignments under GD Nos. KAPE-HC-66030 dated 27- 01-2014 and No.KAPE-HC-84308 dated 22-03-2014. After examination the customs authorities sent samples of the same goods to the Customs Laboratory for analysis. The laboratory report is as under:- "The sample on test is found to consist of mixture of aromatic alkul esters, hydroxul amino and carboxylic acid function compound etc. It is in the form of white powder."

8. Thereafter the goods were physically examined by the Appraiser and after assessment they were released and gate pasted, making the transactions "past and closed transactions". Allegedly similar types of consignment reached the port and the customs authorities found that the same consisted of "Paracetamol". The customs authorizes presumed that the consignments which had already been released vide GD Nos. KAPE-HC-66030-27-01-2014 and No.KAPE-HC-84308-22-03-2014 were similar goods (paracetamol). It is very much surprising that, when the consignments/goods were nor physically present before the customs authorities how they could, after one year, presume that the said consignments/good released earlier were "Paracetamol" powder. Besides this, customs authorities did not record material evidence to prove that the consignments which were so released/gate passed had been mis-declared. One should not be penalized only on presumptions and assumptions without any material evidence available on record. The action of the customs authorities seems to be unlawful exercise.

9. Secondly regarding the ownership of the later consignments brought under two bills of lading bearing No. KMTCXGG702115 and No. KMTCXGG702356, the appellant disowned the same; hence liability of penalty etc. cannot be imposed on the appellant, in absence of first. proving that he had imported the said goods and that too when clearance was attempted through mis-declaration. The said consignments were confiscated by the learned adjudication officer, for which the appellant has expressed no grievance. Hence the appellant cannot be saddled with charge of mis-declaration on that count regarding the said unclaimed consignments.

10. In view of the above, we allow this appeal and modify the impugned Order (No.179 of 2015-2016 dated 26.05.2016) passed by the Collector of Customs Adjudication-II Karachi by setting aside the enforcement of demand of duties and taxes with respect to GD Nos. KAPE-HC-66030 dated 27-01-2014 and No.KAPE-HC-84308 dated 22-03-2014 and imposition of penalty under the said order.

11. Judgement passed and announced accordingly. SA/115/Tax (Trib.) Appeal allowed.