2014 PLP 1723 (PTD)

12. The Importer visited Karachi on 11 February, 2013 and met the dealing Customs Appraiser (Mr. Anwar Khan) along with Mr. Yousaf, a representative of the Clearing Agent. The Customs Appraiser admittedly told them that the 'Tank Truck' was different from 'Sprinkle Truck'. So, the condition of Import Policy Order was not met as Sprinkle Truck was importable in used condition whereas Tank Truck was not. After explaining the difference in the import status of the vehicles, he admittedly advised them either to get the description rectified or apply for conversion of Pre-Shipment Inspection condition in the Import Policy Order to Post-Shipment Inspection from the Ministry of Commerce. In his reply to a written query by the FTO Secretariat, the aforesaid Customs Appraiser admitted having given the above mentioned advice but averred that 'the above opinion was given in good faith to the best of my professional ability'. 'As this opinion was not binding on the Importer or his Clearing Agent, they could approach higher officers for resolution of the dispute' the Customs Appraiser contended in his written reply.

13. This is a strange position taken by the Customs Appraiser who is the departmental expert in these matters. His professional advice is normally taken for granted by the Clearing Agents and the Importers unless they have anything else in their knowledge out of their own experience of dealing with Customs matters. As the Importer and the representative of the Clearing Agent, did not doubt his expert advice, they embarked upon the course advised by the dealing Appraiser. The Importer contacted his supplier in Japan for change of description. As the vehicle had already left Japan and arrived in Pakistan, it was obviously impossible for Messrs Bureau Veritas at Osaka, Japan to change the description of the vehicle without inspecting it again. The Deputy Collector of Customs while replying to the FTO Secretariat's written query No.(xi), also confirmed the impossibility of the proposition of rectification of description in the PSI Certificate as follows:-- "procuring of a Pre-Shipment Inspection Certificate in the situation may have been a near impossible proposition."

14. In such view of the facts, the Customs Appraiser's advice to get the PSI certificate rectified from Messrs Bureau Veritas, Japan obviously suffered from rationality deficit. An appropriate course for the Customs staff would have been to examine the vehicle, as initially requested by the Clearing Agent, to determine the essential character of the impugned vehicle. If it was confirmed through examination that the vehicle was an ordinary truck and not a sprinkle truck, then the suggestion given by the Appraiser for obtaining the MOC's NOC to obtain Post-Importation Inspection Certificate from any PSI company listed in Appendix-H of the relevant IPO, would have been obviously irrelevant. Therefore, the professional advice given by the dealing Appraiser statedly 'in good faith' was obviously inappropriate and wrong.

15. Similarly, the MSA's alleged refusal in September, 2012 to conduct the examination and oral advice to the Clearing Agent either to produce catalogue of that old and used vehicle of 1998 model, or confirmation by a technical engineer of the spraying function of the vehicle, and subsequently conducting the examination after about a delay of five months without availability of either of the required catalogue and confirmation by the Technical Engineer, makes both the requirements questionable. If the examination was so much contingent upon availability of the catalogue or confirmation by a technical engineer, why did the MSA subsequently conduct the examination without availability of either of these, after a lapse of about five months from 26 September, 2012 to 21 February, 2013? It is interesting to note that when, finally the MSA, conducted the examination on 21 February, 2013, he confirmed the vehicle to be 'old and used adapted sprinkling water lorry fitted with pump, nozzle and unit'. This clearly proved that the MSA had the capacity and expertise to examine the old vehicle under reference without the help of the catalogue, which was not available, and a Technical Engineer to confirm the spraying function. It also lends a lot of credence to a written submission by the complainant vide his letter dated 15 January, 2013 addressed to the FTO Secretariat explaining the reason of injustice done to him by the Customs staff in this case. Concluding his submissions by the following phrase, speaks volumes about the reason behind the unreasonable acts of omission and commission by the Customs Appraisement and Examination staff in this case:-- "This all has been done to me", the complainant said, in his aforesaid letter, "so that I would submit to the illegal dictates of the officials of the Customs."

16. It is also interesting to note that the DR presented copies of a number of PSI Certificates issued by Messrs Bureau Veritas at UAE where vehicles were released by the same Customs authorities showing the following descriptions:-- (a) Mazda truck (b) Hino truck

17. It is a question why did the addition of the word 'Tank' with the impugned 'Truck' became a problem when the MSA finally found it to be a 'sprinkling water lorry fitted with pump, nozzle and tank'. It is thus, obvious that the Customs treatment of this case was neither straightforward nor reasonable nor justified. Issue No.II

18. As the Importer had provided a Pre-Shipment Inspection Certificate issued by Messrs Bureau Veritas, Osaka, Japan, and its short comings had been made up by a Post-Shipment Inspection Certificate by Messrs Bureau Veritas at Karachi, there was no need for an NOC by Ministry of Commerce. That is why, the Deputy Collector of Customs finally decided to allow release of the vehicle as the letter and spirit of Import Policy had been fulfilled in terms of the Pre and Post-Shipment Inspection Certificates issued by a listed company in Appendix-H of the IPO. Issue No.III

19. Although clearance of the vehicle was blocked by the Customs staff in February, 2013, the Assistant Collector of Customs (Auction) issued an auction notice Lot No.CF-02/Oct-12 dated 14 March, 2013 alleging the Importer's failure to clear the vehicle within one month's time after unloading it from the ship. It was threatened that the vehicle would be auctioned without further notice, if not cleared within seven days unless stay order was issued by a competent authority.

20. It is obvious that such a notice was not justified in this case at a time when clearance of the vehicle had been excessively delayed by the Department itself for almost six months on one pretext or the other and when the GD had been blocked by the Principal Appraiser himself. It clearly showed that, the failure to clear the vehicle at that point in time was not on the part of the Importer. So, the auction notice was not justified at all. Its issuance appeared to be for lack of coordination between the Customs Auction staff and the Appraisement staff. The DR plainly admitted lack of coordination between the Customs Auction staff and the Appraisement staff as the main reason for such a belated issuance of auction notice. However, the victim of such lack of coordination in the Customs Deptt was again the hapless Importer whose misery cannot be imagined when, after much ado during a hectic period of about six months after import, he had crossed the stages of examination and assessment. Shocked by such a treatment of his case by the Customs staff, the health of the Importer broke down critically. He had to be hospitalized. Issue No.IV

21. It is evident from the facts explained above that the Customs Appraisement and Examination staff did not handle this case fairly, justly and competently. They did not tender proper advice to the Importer and they raised objections which were subsequently eschewed without assigning any reasons. They subjected the Importer to extreme pressure by issuing an unjustified auction notice; they blocked the GD for payment of duty and taxes only a day after its clearance after about six months of its import. These acts of omission and commission speak volumes about the inefficiency, ineptitude, injustice and high handedness of the Customs staff at all stages of handling this case.

22. The most critical issue at the outset was that the Pre-Shipment Inspection Certificate issued in Japan described it as 'Tank Truck', whereas the Importer/Clearing Agent had declared it to be a 'Sprinkle Truck' in the GD. Whereas old and used sprinkle trucks were being imported and released by the Customs in terms of sub-para (5) of Para 9(ii) of the IPO-2009, the vehicle under reference should have been examined first to determine its essential character. Had the examination been conducted, it would have been found to qualify being a sprinkle lorry fitted with necessary gadgets. Thus, the issue of ban would have been out of the Customs way. As the Pre-Shipment Inspection Certificate was deficient in confirmation of EURO-II compliance and five years residual working life of the vehicle, the Importer/Clearing Agent should have been advised to obtain a confirmation of the requisite aspects from any of the Pre-Shipment Inspection Companies listed in Appendix-H and operating in Pakistan as per the plain reading of sub-para (5) of Para-9(ii) which did not require Prior Inspection Certificate as is specifically required under all other sub-paras under Para-9(ii) and Para-9(iii) of the IPO-2009.

23. The Importer/Clearing Agent would have obtained the requisite certificate, as they actually did in this case on 01 March, 2013 when they were advised to do by the Appraiser in February 2013 and thus, the 'Sprinkler Truck' could have been released expeditiously to save the hapless Importer from unnecessary hold up of the vehicle at the Container Terminal, accumulation of storage charges/demurrage/rent etc (amounting to Rs.1,404,301 as worked out by the Terminal Operator in October, 2013). It would have also forestalled the need for hiring, at exorbitant cost of a replacement 'Sprinkler' to fulfill the Importer's contractual obligations with the Provincial Government of KPK.

24. There was also no justification for requiring the MOC's NOC after clearance of the GD for payment of duty and taxes as the critical omissions in the Pre-Shipment Inspection Certificates had been fulfilled by the Importer by obtaining a Post-Shipment Inspection Certificate on the advice of the Appraisement staff. Besides, neither sub-para (5) of Para 9(ii) of the IPO-2009 required a Prior Shipment Inspection Certificate, nor was it necessary as the deficiencies in the Pre-Shipment Certificate were basically due to lack of the Importers knowledge of the aforesaid sub-para (5), which he got made up under advice of the Customs Appraiser, through a Post-Shipment Certificate. It is noteworthy that requiring unnecessary NOC's of the MOC adds exorbitantly to the cost and hassle of import. So, the Customs authorities should have avoided blind following of any perceptions about these legal provisions as they are the professionals who are daily dealing with this law. They should ensure acting in accordance with law and procedure, in the interest of fairness and justice. So, the benefit of omission of the requirement of 'Pre-Shipment or Prior-Shipment Inspection Certificate' in sub-para (5) of Para-9(ii) in contradistinction to specific stipulation of this requirement in other sub-paras under Para 9(ii) and Para-9(iii) of the IPO-2009, in all fairness, should have gone in favour of the Importer in this case. Issue No.V

25. The Clearing Agent also does not appear to have rendered service to the taxpayer efficiently and effectively. He wasted a lot of time in unnecessarily requiring rectification of the Pre-Shipment Inspection Certificate from Japan. He should have known that since the vehicle had arrived in Pakistan, Messrs Bureau Veritas at Osaka, Japan would not be in a position to change any entries in the Pre-Shipment Certificate already issued by them. Besides, he should have immediately checked up with the Importer at Islamabad whether he possessed the catalogue of the vehicle and intimated its non-availability to the MSA as the vehicle was already under demurrage. He should have explained the difficulty of arranging the travel of a Technical Engineer from Islamabad to Karachi and suggested an alternate at Karachi. Messrs Bureau Veritas at Karachi could provide a solution. As the Customs staff did not offer necessary help, he should have immediately brought the problem to the notice of supervisory management i.e. AC, DC, Addl. Collector or the Collector, all of whom are readily accessible for resolving such issues. The Clearing Agent should have the capacity to comprehend the provisions of IPO to ensure justice and fairness with his clients. Instead of doing so, he just conveyed the verbal requirements of the MSA to the Importer in Islamabad without providing the requisite solutions himself.

26. Experience has shown that a serious systemic issue obtaining in the Customs administration is that some of the Clearing Agents collude with the corruption-prone Customs Appraisers and Examiners to entangle the importers and exporters belonging to far off cities in the quagmire of technicalities. Those importers/exporters who reside in or operate their. business at places away from the port/dry port cities, face more difficult entanglements, as the one involved in the present complaint. As the importers/exporters of far off places cannot easily access the supervisory management personally, they succumb to the technical bluffs of the Customs staff relayed to them by the permissive among the Clearing Agents who find safety and benefit in acquiescence rather than resistance. Being licensees of the Customs, even the well-meaning among the Clearing Agents, some times fall a victim to the machinations of the corruption-prone among the Customs staff. So, the Customs supervisory managements need to be extremely watchful of this phenomenon. Findings:

27. The acts of omission and commission of the Customs Appraiser, the MSA and the Principal Appraiser constitute a very serious maladministration in terms of section 2(3) of the FTO Ordinance, 2000. The issuing of auction notice without confirming the facts also shows inefficiency and ineptitude on the part of the Assistant Collector of Customs incharge of auction. Recommendations:

28. The FBR to direct the Collector of Customs, MCC Appraisement, Karachi, to:-- (i) get this matter investigated to determine the extent of maladministration by each of three Customs officials involved in this case; and proceed against those found responsible for these irregularities; (ii) compensate the complainant's loss to be determined by the Collector; (iii) get the demurrage and storage charges remitted by the Container Terminal Operator; and (iv) report compliance within sixty days. MH/53/FTO Order accordingly.