2008 PLP (Trib (PTD)

DR. RIAZ MEHMOOD, MEMBER (JUDICIAL).

The appellants have assailed, in this appeal, the Order-in-Appeal No.148 of 2007, dated 1-11-2007, passed by the learned Collector (Appeals,) respondent No.3, whereby he had upheld the order passed by the learned adjudicating officer, respondent No.2, vide which. the latter had confiscated the consignment of Paper Board imported by the appellant No.1 and had allowed redemption thereof on payment of fine equal to 50% of the assessment value of the goods in terms of section 181 of the, Customs Act, 1969 read with S.R.O. 487(I)/2007, dated 9-6-2007 and had also imposed a penalty of Rs.50,000 on each of the appellants. The appellants have pleaded in the memo. of appeal that the appellant No.1 had entered into a sale agreement with Messrs Paper Base Converting SDN BHD Selangor Dar-ul-Bhsan, Malysia, whereby the appellant No.1 was to import a consignment of Paper Board falling under PCT Heading 4808.1000 at the unit value of USD 380/MT; the total import value being USD 11780. In pursuance of said agreement the requisite consignment was dispatched by the supplier vide Commercial Invoice and Packing List both, dated 25-4-2007. Shipment was made for Dryport Lahore via Karachi vide Bill of Lading, dated 2-5-2007. On arrival of consignment at Dryport, Lahore the appellant No.1 filed GD No.17541, dated 22-5-2007 through Clearing Agent, the appellant No.2, declaring the description of the goods as Paper Board classifiable under PCT Heading 4802.1000, the total import value being USD 11780. The goods were examined and the samples were drawn. According to the lab report, dated 25-5-2007, the goods were reported to be Metal (Aluminum) Foil Backed Paper appropriately classifiable under PCT Heading 7607.2000 and on the basis thereof the consignment was classifiable as such and accordingly value was also enhanced to USD 57350 and show-cause notice, dated 7-6-2007 was issued on the charges of misdeclaration of description of the goods. The appellant No.1 submitted the reply, dated 31-7-2007, that it was not believable that the exporter had shipped a consignment of goods which was very costly item. He further submitted that he had submitted GD on the basis of literature supplied to him by the exporter. He further submitted that if there was error in respect of the classification of the goods, the same appellants corrected presented to the goods be released accordingly. The department copies of about 2 dozens of GDs in which the department had on their own corrected the classification and charged the taxes and duties accordingly without imposition of any fine and penalty. The respondent No.2 adjudicated the matter and confiscated the consignment under section 156(1)(14) of the Customs Act, 1969 with option to redeem the same on payment of redemption of fine equal to 50% of the assessed value of the goods and also imposed a penalty of Rs.50,000 on each of the appellants. The appellants filed an appeal before the learned Collector (Appeals), respondent No.3, who dismissed the same. Hence, this appeal.

2. The arguments were heard. The learned counsel argued that it was the exporter who had in fact caused the breach of the agreement. The appellant No.1 had written a letter to the exporter that by shipping a different type of goods, he (the exporter) had landed him into difficulty and the exporter had replied that Metal Foil Backed Paper had erroneously been shipped and may be sent back. The learned counsel further submitted that the appellant No.1 had requested the adjudicating authority that he may grant the permission to re-export the goods, but the permission was unnecessarily refused. He further submitted that the appellant No.1 applied the Ministry of Commerce, Government of Pakistan, Islamabad for granting permission for re-export and the said permission was granted in terms of para. 10(h) of the Export Policy Order vide Order No.8(5)/06-Exp-II, dated 28-9-2007. The Adjudicating Authority contacted the Ministry of Commerce for verification of the permission and the Ministry of Commerce withdrew its permission. The learned counsel further submitted that the appellant No.3 dismissed the appeal simply because the Ministry of Commerce had withdrawn the permission to re-export the goods and did not apply mind any further. He further contended that the appellant No.2 was not at all at fault inas much contended that the much as there was no collusion between the appellants Nos. 1 and

2. The appellant No.2, as per information afforded to him, had made the declaration and no penalty could be imposed upon the appellant No.2 The learned counsel cited "Port Way Customs House Agent v. Collector of Customs (2002 YLR 2651)" in this respect. The learned counsel 'submitted that either the goods should be released on payment of customs duty and sales tax as per rectified classification or the appellant No.1 be allowed to re-export the goods after reasonable value addition as also agreed by the exporter abroad.

3. The department filed parawise comments. They submitted that a wilful mis-declaration had been made. The Ministry of Commerce had withdrawn the permission, stating therein that the appellant No.1 had concealed the facts and had not disclosed in his application that any declaration had been filed and found incorrect. They further submitted that any correspondence between the appellant No.1 and the exporter, was after the issuance of show-cause notice, and hence an afterthought. They further submitted that the customs authorities normally corrected the classification and charged the taxes and duties due if the importer readily admitted the misdeclaration, but in the present case he had contested the description.

4. The representative of the department defended the impugned orders and reiterated the stand of the department taken in the show-cause notice as also in the comments filed in the appeal.

5. I have carefully gone through the record. The appellant No.1 had made an application to the Government of Pakistan, Ministry of Commerce, who vide their letter No.8(5)/06-Exp-II, dated 28-9-2007, had granted the permission to re-export in the following words:- "I am directed to refer to your letter No.RE/IMP/0l/MOC/07, dated 19th September, 2007 on the above subject and to inform that Ministry hereby allows the re-export of wrongly imported goods back to Malaysia, in terms of para. 10(h) of EPO, 2006, subject to fulfilling of requisite customs formalities and the condition that Company will not claim refund of duties and taxes."

6. The lab report, dated 24-5-2007 may be reproduced as below:-- "Sample put for test is not a product of Chapter-48 as claimed by the party. On chemical examination sample is actually found a metal foil backed with paper, in the form of a 49x80 c.m. rectangular sheet having its gram mage 245 Gm/Sq. meter. It consist of metallic foil (Aluminum foil of thickness less than 0.02 mm), which is coated on the surface side with golden yellow colour lacquer and it is backed with paper of bleached chemical wood pulp. By virtue of above quoted references, such metal (Aluminum) foil baked with papers stand excluded from the ambit of Chapter-48 and appropriately falls under Heading 7606-2000 of PCT."

7. At one point of time when the exporter was contacted by the appellants, he furnished an explanation as below:-- "We are exporting our goods in many countries of the world and declare our goods as per the technicalities of the material. Your low cost paper board is chemically quoted and bonded aluminum with top lacquer finish material meeting the minimum requirements of head dispersion which is 15 to 20 per cent extra expensive than plain bonded paper material in our state of the art aluminum spray technology (pneumatic) just after the paper bleaching. This gives us an extra edge over our competitors. Conclusively, it is not aluminum foil pasted material you can say it Aluminum bonded paper material with top with lacquer finish."

8. At log last when importer insisted that he had been charged with misdeclaration, the exporter wrote to him as below:-- "As per our mutual agreement the Paper Base Converting was bound to send you a Paper Board (Printed with aluminum sprayed lacquer technology. Your consignment of two containers under B/L II NYKS490394818 was sent to you in the extreme manufacturing load and company did not have enough time to manufacture your required material so we sent you a resembled material to fulfil your requirement but if our effort has provided you loss and the matter does not fulfil your requirement we are ready to accept our material back so it is, therefore, requested to kindly please re-export the material as soon as possible."

9. All this shows that there was no serious contravention. It was hardly a case of wilful misdescription. The Ministry of Commerce, after applying its mind, had granted permission and had hastily withdrawn the same. The appellant No.1 has placed on record copies of number of GDs wherein the customs authorities had charged the taxes and duties upon rectified classification. The approach of the Government functionaries should also be beneficent to its citizens and not harsh and oppressive. The customs authorities should not always insist on getting a pound of flesh. The appellant No.2 was absolutely not at all at fault and the respective case-law cited by the appellant is fully applicable. As such the appeal is accepted and the impugned orders are set aside the appellants are allowed, to re-export the goods in terms of the above referred letter of the Ministry of Commerce, Government of Pakistan. C.M.A./44/Tax (Trib.) Appeal accepted.