2004 PLP (Trib (PTD)

S.M. KAZIMI, MEMBER (TECHNICAL).

This judgment disposes of the appeal filed by Messrs M.B. Dyes & Silk Industries (Pvt.) Ltd. against the Customs Order-in-Appeal No.242 of 2000, dated nil passed by and dispatched under the Collector, Customs, Central Excise and Sales Tax (Appeals), Northern Zone, Rawalpindi C. No. IV(15)P/2004/99/785, dated 21-6-2000.

2. Briefly, the facts of the case are that Messrs M.B. Dyes and Silk Industries (Pvt.) Ltd., hereinafter called the appellant, imported a consignment of 40,000 Kgs of Chinese origin TITATNIUM DIOXIDE (PGM-100) valued at Rs.1,399,840 from UAE, per S.S. Dammam Bay, IGM No. 418/97, dated 20-3-1997, Index No.307 Bill of Lading No. 2744, dated 14-3-1997 against Letter of Credit No. 96/303/PGTR/307 dated 12-9-1996, and filed into-bond Bill of Entry No. 6/97, dated 3-4-1997 through Kings International Forwarding Agency (C.H.A.L. No.2/91 of Peshawar) and declared it to be assessable under P.C.T. Heading 3206.1100 liable to customs duty at 45% ad valoram and sales tax at 12.5%. The said into-bond bill of entry also declared that the goods shall be warehoused in PWL-6/9L of Messrs M.B. Dyes. The pre- bonding Customs examination report, dated, 3-4-1997, on the reverse of the said into-bond bill of entry confirmed landing of 1585 bags (out of the 1600 Kgs) of the goods (Titanium Dioxide) as per the bill of entry and invoice. The goods were warehoused accordingly. Later, the appellant (through Messrs Paracha Enterprises C.H.A.L. No.22 of 1993) filed ex-bond Bill of Entry No. 2016/217/MBD/97, dated 21-6-1997 for clearance of the 39,625 Kgs (1585 bags) of the said Titanium Dioxide (PGM-100), as .was earlier warehoused under into-bond Bill of Entry No.6 of 1997 dated 3-4-1997, but declared it (the ex-bond bill of entry, dated 21-6-1997) to be classifiable under P.C.T. Heading 2823.0000 liable to, customs duty at 10% and sales tax 12.5. It is pertinent to mention here that vide Notification No. S.R.O. 274(I)/97, dated 11-4-1997, the Federal Government exempted customs duty on Titanium Oxides of PCT Heading 2823.0000 in excess of the rate of 10%. In other words, the effective rate of duty on Titanium Oxides of PCT Heading 2823.0000 became 10% from 11-4-1997 as against the statutory rate of 45 %. Again under the Finance Bill, 1997, read with the Schedule thereof as introduced in the National Assembly of Pakistan on 13-6-1997 duly appended with a Declaration under section 3 of the Provisional Collection of Taxes Act, 1931, giving immediate effect (i.e. with effect from 13-6-1997) to the provisions of said clause 4 of the Finance Bill, 1997, the statutory rate of customs duty on "Titanium Oxides" of PCT Heading 2823.0000 were reduced from 45% to 10% while the rate of customs duty on "Pigments and preparation, based on titanium dioxide, containing more than 80% or more by weight of titanium dioxide calculated on the dry weight of PCT Heading 3206.1000 was reduced from 45% to 25%. These tariff rate changes were also confirmed vide section 4.111 of the Finance Act, 1997, read with the Schedule thereof. In view of the above situation, the Inspector and the Deputy Superintendent of Customs highlighted this aspect in their examination report, dated 24-6-1997 on the reverse of the said ex-bond bill of entry and added that" It is submitted that the, party had previously imported/cleared Titanium Dioxide under PCT Heading 3206.1100 instead of 2823.0000. The tariff of PCT Heading 3206.1100 is 25% while of PCT 2823.000 is 10%. The party is evading duty taxes by misdeclaration of classification of goods." On this report, it was ordered that samples be drawn and sent to the laboratory for analysis. Samples were drawn on 26-6-1997 and sent to the Customs Laboratory, Lahore, under the Superintendent of Customs, Gadoon Amazai's letter, C. No. Misc; (GE)1/97/1268, dated 28-6-1997. In the meantime on 30-6-1997, the importer, vide noting on the reverse of the said ex-bond bill of entry requested the customs to release 50% of the consignment as per the bill of entry. The Deputy. Collector of Customs, vide his order, dated 30-6-1997 on the reverse of the said ex-bond bill of entry, approved his subordinates recommendation that 50% of the consignment may be released against undertaking, dated 30-6-1997, and the goods were signed "out of charge" accordingly on 30-6-1997. Later, vide Report No. 1DP/AB/1875/97/298-A, dated 7-7-1997, the Customs Laboratory, Mughulpura, Lahore reported about the sample of Titanium Dioxide that: "Sample on chemical examination is found to consist of surface treated Titanium Dioxide. It is in the form of white powder." Since Titanium Dioxide (PGM-100) is classifiable under PCT Heading 3206.1100 (Customs duty 45% before 13-6-1997 and 25% from 13-6-1997) and bad always been so-assessed previously, the attempt to hoodwink the Customs by seeking clearance under PCT 2823.0000 (Customs duty at 45% before 13-6-1997 and at 10% from 13-6-1997) in disregard of the declaration on the into bond of Bill of Entry 6 of 1997, dated 3-4-1997 and after getting the H.S. Code amended from 32.06 to 28.23 from the Bank on import documents like invoice, letter of credit, bill of lading, etc., was considered by the Customs as a deliberate attempt at mis-declaration (for evading Rs.176,689) by the importer in the light of the laboratory analysis report which confirms that its being liable to classification under PCT Heading 3206.1100 at 25% C.D + 12.5% S.T. instead of the declared classification of PCT 2823.0000 at 10% C.D. + 12.5% S.T. The Additional Collector of Customs accordingly issued a notice, C. No. IV-CE(A)(8) Add: Coll-II/37/98/0000, dated 27-1-1998, requiring Messrs M.B. Dyes Chemical and Silk Industries (Pvt.) Ltd., to show cause why penal action under clause (14) of section 156(1) of the Customs Act, 1969, should not be taken against them and also why the short-paid amount of Rs.176,689 should not be recovered from them. During the course of hearing before the Additional Collector, it transpired that 50% of the detained consignment (i.e. the detained consignment) of ex-bond Bill of Entry No. 2016/217/MBD/97, dated 21-6-1997 had clandestinely been removed from the warehouse. The Assistant Collector of Customs informed the Adjudicating Officer that on 30-7-1997 that the Party had requested for the release of the remaining 50% consignment (i.e. 795 bags) but this request was not allowed. The party reapplied on 2-8-1998 for release of the remaining 50% consignment but his request was regretted once again. The party approached the Deputy Collector again on 10-3-1998 with similar request and the Superintendent of Customs replied it on 17-3-1998 advising that they should approach the Adjudicating Officer in this regard. The Assistant Collector further informed the Adjudicating Officer, that during the course of handing overtaking/over charge by the Customs Officer Incharge of this warehouse on 27-6-1998, as specifically mentioned in Note No. 1 of the charge report, it transpired that the party had already removed the detained 50% (795 bags) of the consignment of Titanium Dioxide relatable to this case somewhere in May, 1998, without any legal authority and that the "Bond Register still show a balance of 795 bags". The Adjudicating Additional Collector heard Dr. Maqbool Islam on behalf of Messrs M. B. Dyes Chemical and Silk Industry (Pvt.) Ltd. and also heard Mir Salam and Mr. Karamatullah, inspectors from the Department and decided the case vide his Order-in -Original No.8 of 1999, dated 23-1-1999 holding that the allegation of misdeclaration was established against the party and, therefore, he directed that the amount of Rs.176,689, short-paid by them, should be recovered from them. He also imposed penalty equal to the value of the goods mis-declared under clause 14 of section 156(1) of the Customs Act, 1969, upon Messrs M.B. Dyes Chemical and Silk Industry (Pvt.) Ltd. Party's appeal against the said order-in-original has also been rejected by the Collector of Customs, Central Excise and Sales Tax (Appeals), Northern Zone, Rawalpindi, vide his Customs Order-in- Appeal No.242 of 2000 issued under his C. No. IV(15) P/2004/99/785, dated 21-6-2000. Hence this second appeal.

3. During the course of hearing before us, the learned counsel for the appellant argued that this is basically a case of classification dispute. He invited attention to the printed Literature (Technical Data) of "CRISTAL Chloride Process TITANIUM DIOXIDE PGM-100" printed by Messrs Cristal. The National Titanium dioxide Co. Ltd. P.O. Box 13586, Jeddah 21414, Saudi Arabia, placed at page 34 of the written appeal, dated 17-7-2000 and emphasized that, as per this literature, the Titanium. Dioxide contents is 95% (minimum), and, therefore, the goods should be classified under PCT Heading 2823.0000 as Titanium Oxides. He also invited attention to the following laboratory test reports:-- (i) LAB No. OS: 9336/97, DATED 28-5-1997 (UNDER FORENSIC SCIENCE LABORATORY, PESHAWAR'S ENDT. NO. 6391/FSI, DATED 14-7-1997 IN RESPONSE TO THE DEPUTY COLLECTOR OF CUSTOMS DRYPORT, PESHAWAR'S C. NO.1025. DATED 24-5-1997:- Opinion: Chemical and Instrument analysis of the Sample in question revealed that it was TITANIUM DIOXIDE. (ii) PCSIR, PESHAWAR'S REPORT No. 406/105/97/ILS DATED 27-9-1997 IN RESPONSE TO THE SUPERIN TENDENT GADOON'S REFERENCE NO. MISC. TR/GE/971682, DATED 22-8-1997:

It gives detailed analysis report that contents are 95.49% Titanium Dioxide, 2.21% of Aluminium Oxide, 0.12% of Calcium, 0.10 of Magnesium, 0.20% of Sulphate and traces of Iron Oxide, Sodium and Potassium with no Lead or Barium. (iii) CUSTOMS LABOARTORY MUGHULPURA DRYPORT, LAHORE'S REPORT/LDP/LAB/1875/298-A DATED 7-7-1997 IN REPONSE TO THE SUPERINTENDENT OF CUSTOMS & EXCISE, GADOON'S REFERENCE C. No. MISC (GE) 1/97/1268, DATED 28-6-1997. Opinion: Sample on~ chemical examination is found to consist of surface treated Titanium Dioxide. It is in the form of white powder.

4. The learned counsel also produced photocopies of 2 ex-bond Bills of Entry machine-numbered 106.13, dated 23-10-1998 for TITANIUM OXIDE A-Z imported from Belgium per IGM No.1401 of 1998; dated 28-9-1998, Index No.24 and cleared at Karachi under PCT Heading 2823.0000 and Bill of Entry No. C-4 097, dated 19-1-1999 for TITANIUM DIOXIDE (RF-I) imported from Dubai and cleared at Karachi under PCT Heading 2823.0000. He claimed that his consignment of Titanium Dioxide should also be classified under PCT 2823.0000 accordingly. As regards correction about H.S. Code (from 3:06 to 28.23) made on the invoices, bill of lading, letter of credit, etc., he argued that these corrections were made by the Bank issuing the letter of credit at the instance of exporters and therefore, they (importer/warehouse/appellant) are not responsible. He argued that they made a true' and correct declaration in the bill of entry and are, therefore, not liable to any penalty under clause 14 of section 156(1) of the Customs Act, 1969. As regards the- demand of Rs.176,698, he stated that the goods were provisionally assessed under section 81(1) of the .Customs Act, 1969, on 30-6-1997 and, therefore, the demand is time-barred under section 81(2) of the Act and demand is not lawful in terms of 81(4) of the Act. He prayed that the impugned order may be set aside both on issue of PCT classification and on the issue of time limitation under section 81 of the Act. At the end, he posed a question that if his TITANIUM DIOXIDE does not fall under PCT Heading 2823.0000, what specific goods shall be classified under that PCT Heading 2823.0000.

5. The learned representatives from the Collectorate pointed out that prior to May, 1997, TITANIUM DIOXIDE (PGM-100) imported by the appellant had always been classified under PCT Heading 32.06.1100 whether under the respective bills of entry or under the respective CRF (Clean Report of Findings issued by Inspection Companies), letters of credit by the Bank, Invoices issued by the exporters, etc., etc. They cited and produced copies of the appellants Bills of Entry ex-bond No.1244/206/MBD/97, dated 18-2-1997 for 800 bags imported from Chemical Star Trading Estt. Dubai per SS NOVA ADNIA IGM No. 1754 of 1996, dated 2-12-1996 Index No.92, into-bond machine numbered 03122, dated 24-12-1997 for 20,000 Kgs and ex-bond Bill of Entry No. 1128/MBD/97, dated 26-1-1997 imported from Germany under into-Bond-Bill of Entry No. ST-02907/6/52/96, dated 18-12-1996 per CMBT CONCORD's IGM No. 1837 of 1996, dated 17-12-1996, Index No.457. The Department Representatives argued that when the rate of customs duty on Titanium Dioxide of PCT Heading 2823.0000 was reduced from 45% to 10% the appellant got the documents (namely invoice, bill of lading, letter of credit, etc.) amended for substituting HS Code 3206.1000 by HS Code 2823.0000 for evading the duty and taxes to that extent. They argued that it is a case of misdeclaration by the appellant which was detected as such (i.e. a case of misdeclaration) vide the Customs examination report, dated 24-6-1997 of the reverse of .the ex-bond Bill of Entry No.2016/217/MBD/97, dated 21-6-1997. They argued that cases of misdeclaration for the purposes of evading duties and taxes is governed by section 32(1) and 32(2) of the Customs Act, 1969, where the limitation period is 3 years. They also invited attention to the fact that the appellant went to the extent of unauthorizedly and unlawfully removing the detained portion (50%) of the, consignment from the warehouse which was detected on the eve of customs handing and taking over of charge by the customs officers, as the warehouse register showed the 795 bags (detained consignment) as un-cleared and still in stocks while the said goods had already been unlawfully and unauthorizedly removed by the appellant. They denied the appellant's contention that any Customs Officer allowed them to do so because, had it been so, there would have been entry in this regard at least in the warehouse register and on the reverse of the ex-bond bill of entry. On the contrary, they pointed out, the warehouse register shows it still in balance in stocks and the Department had replied to the appellant in writing to seek such permission (to, remove the detained portion of the consignment) from the Adjudicating Additional Collector, which the appellant did not do. As regards classification, they argued that the Titanium Dioxide, in this case, is surface-treated and classified under PCT Heading 3206-1100 and was declared as such in the into-bend bill of entry. It is the appellant who manoeuvred change of classification on the import documents (like invoice, bill of lading, letter of credit, etc.) in connivance with the exporter and the bank and attempted to evade duty and taxes. They pleaded that the appeal may be rejected as without merit.

9. Having heard the parties and on perusal of record of the case, we find that first of all this case involves classification of the Chinese origin product TITANIUM DIOXIDE (PGM-100), as imported into Pakistan by the appellant under S.S. Dammam Bay IGM No. 418/97, dated 20-3-1997, Index No.307. it is pertinent to note that the ABL's Letter of Credit No.96/303/PGTR/307, dated 12-9-1996. Shipping Line's B.I. No.27442538, dated 14-3-1997, Rainbow General Trading Co. Ltd., Ajman, UAE's Invoice No. RE-923, dated 16-3-1997, pro forma Invoice No. G-22A/09/96, dated 29-8-1996 and into-Bond Bill of Entry No.6 of 1997 dated 3-4-1997 had all declared the PCT Heading of the, said goods as 32-6,1000. However, ABL, GT Road. Branch, Peshawar, vide its amendment, dated 12-3-1997, amended the Letter of Credit No. 96/303/PGTR/307, dated 12-9-1996 to the extent, that "HS CODE NUMBER MAY BE READ AS 2823/307 INSTEAD OF EXISTING." The ABL, Peshawar, on the advice and acceptance of the exportex and importer also made the amendment of PCT Heading from 3206,1000 to 2823.0000 on all, import documents e.g. commercial invoice, bill of lading etc. ABL. GT Road, Peshawar or the appellant have not given reasons or produced documents which necessitated the said change of PCT heading. Before we look into the intent and purposes of the said change in PCT. heading, we look into the classification of the Chinese origin product TITANIUM DIOXIDE (PGM 100) imported in this case. Pakistan Customs Tariff is based on the Harmonized Commodity Description and Coding System (popularly known as the HS (de) evolved and adopted by the World Customs Organization 9WCO), Brussels, of which Pakistan is also one of its members. The General Rules for the interpretation: of the Harmonized System is adopted as the First, Schedule, to the Customs Act, 1969. All commodities, imported, exported and traded all over the world (in the countries adopting the said HS Code) are described and classified in the said HS Coding System. "Titanium Dioxide" can generally be classified under one of the following HS Codes (PCT Headings):-- H.S. Code P.C.T. Heading Conditions for classification 26.14 2614.0000 Titanium Dioxides as principal Titanium Ores and concentrates. This specifically excludes finely ground titanium ores for use as pigments. 28.23 2823.0000 Titanium Dioxides chiefly used as a pigment and is classified here when unmixed and not surface treated. It has the highest covering power of all white pigments and resists the action of light. This specially, excludes, Natural Titanium Dioxide (rutile anatase and brookite) of Heading 26.14 and also excludes Titanium Oxides mixed with barium or calcium sulphates or other substances or surface treated of Heading 32.06. 32.06 32.1000 or3206.1100 Titanium Dioxides as pigments and preparations based on Titanium Dioxides (containing 80% or more by weight. This colouring matter or pigment consists of surface treated titanium Dioxides or of mixture of Titanium Dioxides were barium sulphates, or other materials or of mixtures of these products in aqueous slurvey. The Titanium Dioxides of this heading specifically exclude not surface-treated or unmixed Titanium Oxides of heading 28.23.

10. Now, we shall refer to rules 3 and 4 of the General Rules for the Interpretation of Harmonized System, as forming a part of the First Schedule to the Customs Act, 1969, which reads as here under;-- "When by application of rule 2(b) or for any other reason, goods, are, prima facie, classifiable under two or more headings, classification-shall be effected as follows: (a) The heading, which provides the most specific description, shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to, those goods, even if one of them gives more complete or precise description of the goods. (b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3(a), shall he classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable. (c) When goods cannot be classified by reference to 3(a) or (b), they shall be classified under the heading, which occurs last in numerical order among those, which equally merit consideration. Goods which cannot be classified in accordance with the above Rules shall be classified under the heading appropriate to the goods to which they are most akin."

11. The aforesaid commodity classification and rules for interpretation for purposes of classification shows that the Titanium Oxides (i) while in the primary form of ores and concentrates are classified under H.S. Code 26.14; and (ii) while still unmixed with other substances or while still not surface-treated will be classifiable under H.S. Code 28.23 and (iii) while surface-treated and mixed with other substances (in small quantities to the extent that Titanium Dioxide still constitutes more than 80% by weight of this substance) shall be classified under H.S. Code 3206 or H.S. Code 3206.10/3206.11. The Titanium Dioxide (PGM 100) imported in this very case was got tested and the test reports opinions, as listed in the foregoing paragraph 3 of this order, show that FSL. Peshawar's only indicates, that it was Titanium Oxide and does not state whether it was in primary form (as ore concentrate) and whether mixed with other chemical or not and also whether surface- treated or not. The second report from PCSIR, Peshawar, shows that the sample is routile pigment, contained 95.4% (i.e. more than 80%) of Titanium Dioxide, was a mixture with 2.21% of Aluminium Oxide, 0.12% Calcium, 0.1% Magnesium. 0.2% sulphate with traces of iron Oxide, Sodium and Potassium. These 3 test reports, taken together, confirm that the samples were from goods described as Titanium Dioxide which is in the form of pigment powder, has more than 80% of Titanium Dioxide, is in admixture with calcium, magnesium, sodium, potassium, sulphates besides other materials (e.g. Oxides of iron and Oxides of aluminium) and is also surface treated. Being trot in primary form of (or ore and concentrates) and being a pigment in admixture with other materials and substances and being surface treated, the product of Titanium Dioxide (PGM 100) imported in this case is excluded from the purview of H.S Code 26.14 and H.S. Code 28.23, both. Heading 3206.1000 provides the most specific description to this product containing more than 80% of Titanium Dioxide, which is a pigment, manufactured in admixture with other substances and is surface-treated. We shall not go to the test reports, produced before us during the course of hearing, whether by the appellant or by the respondent, on the ground that in the .presence of test reports relatable to specifically this very consignment of Chinese origin imported from UAE, there is no justification to look into report relating to other TITANIUM DIOXIDES of other origin or of the others shippers. As regards the trade literature of "CRISTAL CHLORIDE PROCESS TITANIUM DIOXIDE PGM -100" (submitted at page 43 of the appeal book), that too relates to the product manufactured by CRISTAL, the National Titanium Dioxide Co. Ltd. P.O. Box No. 13586, Jeddah 21414, Saudi Arabia, and has no Co- relation with the Chinese origin Titanium Dioxide imported from UAE in this case. That trade literature mentions minimum of 95% of Titanium Dioxide as its contents but does not specify the name of other material/substances used as upto 5% the remaining in the product. However, that literature cannot be relied upon in this case as it is neither of Chinese origin TITANIUM DIOXIDE (PGM-100) nor issued by its manufacturer or its exporter/distributor. For the reasons mentioned in this paragraph, we confirm the impugned order to the extent that the Chinese origin TITANIUM DIOXIDE (PGM-100) imported by the appellant from Ajman, UAE per S.S. DAMMAM Bay, IGM No.418 of 1997, dated 20-3-1997, Index No. 307 is classifiable under PCT Heading 3206.1100 and was liable to customs duty at 45% later reduced to 25% w.e.f. 13-6-1997) and the goods should be assessed accordingly in terms of section 30(b) and section 31-A of the Customs Act, 1969. The amendments made and attested, in respect of PCT Heading, whether at the behest of the exporter or that of the Importer, by the ABL. GT Road. Peshawar, in the letter of credit, invoice or bill of lading or any other document, are of no consequence because assessment to customs duty (obviously involving PCT classification of the goods warehoused) is a function of the Customs Officers under section 80 of the Customs Act, 1969, read with section 104 thereof.

12. As regards the question of time-bar under section 81 of the Customs Act, 1969, the question involved is whether the said section 81 covers this case. The into-bond Bill of Entry No.16\97 dated 3-4-1997 filed by the appellant declared the goods to be classifiable under PCT 3206.1000 at 45% ad valorem. The notings, dated 3-4-1997, as on reverse of the said into-bond bill of entry, shows that the consignment was found to be 1585 bags as against 1600 bags consigned and the bond (involving duty at 45% and sales tax at 12.5% was accepted after examining the goods and also after examining invoice, letter of credit, bill of lading and bond paper and after drawing samples for laboratory test. The said customs examination report, dated 3-4-1997 or the party's declaration about PCT Heading 3206.1000 shows that the bill of lading, invoice and letter of credit were not yet corrected in respect of PCT Heading from 3206.1000 to 2823.0000. However, when the goods were sought to be ex-bonded vide, appellant ex-bond Bill of Entry No.2016/217/MBD/97, dated 21-6-1997, the appellant changed the PCT Heading to 2823.0000 at 10% customs duty and 12.5% sales tax. The customs examination report, dated 24-6-1997 on the said ex-bond bill of entry stated "it is submitted that the party had previously imported/cleared Titanium Dioxide under PCT Heading 3206.1100 instead of 2823.0000. The tariff of PCT Heading is 25% while of PCT 2823.0000 is 1.0% at present. The party is evading duty/taxes by misdeclaration of classification of goods. Sd/-Inspector and Deputy Superintendent, dated 24-6-1997." The Superintendent of customs, in his note-dated 26-6-1997, added that "please draw the sample and send it to laboratory for analytical test. The party had cleared this item against PCT No.3206.1000 instead of PCT No.2823.0000. The rate of Customs duty on these headings are different. It is, therefore, necessary to first investigate the case and put up to me for onward submission for taking appropriation action." The Customs Officer drew sample on 26-6-1997 and also asked the importer on 26-6-1997 to supply original bill of lading, original invoice and chemical literature. On 30-6-1997, the importers/appellants requested Customs to release 50% of the consignment as per his request on the bill of entry, which was allowed by the Assistant Collector on furnishing an undertaking, dated 30-6-1997. Thus 50% of the consignment was provisionally allowed clearance against this undertaking pending laboratory is report. Later, the test reports, dated 7-7-1997 from the Customs Laboratory, Dry Port Moghulpura and PCSIR, Peshawar Laboratories test report, dated 27-9-1997 confirmed that these samples, as drawn from the appellant's consignment under discussion, were found to be containing more than 80% of Titanium Dioxide, were white pigment made in admixture with other materials/substances and were surface-treated. There remained no doubt that the goods were classifiable under PCT Heading 3206.1000, Even otherwise, when the into-bond bill of entry had declared the consignment to be classifiable under PCT Heading 3204.1000, when the goods had been warehoused by the appellant as liable to duty at 45% under PCT Heading 3206.1000 and when the appellant had previously into-bonded and ex-bonded all the previously imported consignments of Titanium Dioxide under PCT Heading 3206.1000, the attempt to ex-bond this very consignment under PCT Heading 2823.0000 at 10% customs duty was clearly an attempt to defraud the Government of its legitimate revenues. The appellant made all preparations to commit this misdeclacation by getting the PCT heading amended from 3206.1000 to 2823.0000 on the letter of credit, invoice and bill of lading under attestation by ABL., Peshawar, where the letter of credit was opened. There is no letter from Chinese manufacturer for change of composition or HS Code of the Chinese origin product and there is no document to justify why this change was made or necessitated except for the Government of Pakistan obvious act of drastic reduction of duty on Titanium Dioxides of PCT Heading 2823.0000 from 45% to 10% while reducing the duty on Titanium Dioxide of PCT Heading 3206.1000/3206.1100 to 25% only w.e.f. 13-6-1997. With a view to remove the evidence in the Warehouse, the appellants went even to the extent of removing the balance 50% of the consignment from the Warehouse without its proper "out of charge" by Customs. In its very first examination report, dated 24-6-1997 on the reverse of-the ex-bond bill of entry, the Customs have alleged that this is a case of misdeclaration. Even in show-cause notice, dated 27-1-1998, besides other allegations also proposed action, alleges breach of section 32 and proposes penal action under clause 14 of section 156(1) of the Customs Act, 1969, for the appellant's act of misdeclaration aimed at evasion of Government revenue. Section 81 of the Customs Act, 1969 applies to the innocent case of determination of assessment and does not conceal or shield acts of misdeclaration. Section 80(2) of the Customs Act, 1969, more appropriately covers such cases where assessments are made on the basis of statement made (by importer) in the bill of entry but where on subsequent examination or testing of the goods or otherwise, it is found that the statement in the bill of entry was not correct in any matter relating to assessment, goods are to be re-assessed to duty appropriately (without any limitation) without prejudice to any other action which may be taken under the Act. Obviously, this any other action includes action under clause 14 of section 156(1) of the Act for the offence of misdeclaration by the importer. Since this was an alleged case of misdeclaration with ulterior motives to evade duty, the provisions of section 81 are not involved here. The act of misdeclraation of PCT heading, as detected by the Customs in the examination report, dated 24-6-1997 and as alleged in the show-cause notice, dated 27-1-1998, compounded by the appellants unauthorized act of removal of 50% of the detained consignment from the Warehouse, is established by the test reports received from PCSIR Laboratory of Peshawar and the Customs Dry Port Laboratory of Moghulpura. We have no doubt in our mind that the consignment of Chinese origin Titanium Dioxide (PGM-100) imported by the appellant from UAE under S.S. Dammam Bay I.G.M. No.418 of 1997, dated 20-3-1997, Index No.307, was classifiable under PCT Heading 3206.1000 (or Heading 3206.1100, to be more specific) and should be assessed to customs duty and allied taxes accordingly. The act of misdeclaration of PCT Heading on the ex-bond bill of entry was with ulterior motives to evade duty and this constitutes an offence under section 32(1) of the Customs Act, 1969, which cannot be condoned. We therefore, also confirm the impugned Order-in-Appeal No.242 of 2000 dated 21-6-2000 for recovery of dues not paid/short-paid by the appellant on this import and for imposition (upon the appellant) of penalty equivalent to the amount of value of the imported goods in terms of clause 14 of the section 156(1) of the Customs Act, 1969. The appeal has no merit and is disposed of as dismissed accordingly.

13. Inform all concerned accordingly.

14. Announced (Sd.) S.M. Kazimi, Member (Technical).

15. With great respect for my learned brother Member (Technical) I do not find my self in agreement with him on his findings about alleged misdeclaration of PCT. Heading on ex-bond bill of entry by the appellants and confirmation of the verdict of Adjudicating Officer, as per impugned order.

16. The core issue involved in this appeal is whether the Appellant's imported chemical namely Titanium Dioxide (MG-100) vide IGM No.418 of 1998, dated-20-3-1997, Index No.307 was classifiable under P.C.T. Heading 3206.1100 or P.C.T. 2823.0000. At the time of filing into-bond Bill of Entry No.6 of 1997, dated 3-4-1997 for warehousing, the appellant declared the said consignment under P.C.T. Heading 3206.1100 which was then subject to 45% customs duty. Subsequently, for clearance of the said goods from warehouse, the appellant filed eh bond Bill of Entry No.2016/217/MBD/97 dated 21-6-1997. However, the appellant sought assessment of the said consignment under changed P. C. T. Heading 2823.0000 which at the time was subject to 10 customs duty. It appears that appellant was prompted for changing the P.C.T. Heading 3206.1100 due to change in the duty structure at the time filing ex-bond B/E as vide S.R.O. 274(I)/97, dated 11-4-1997, the Federal Government had exempted customs duty on Titanium Dioxide of P.C.T. Heading 2823.0000 in excess of 10% of the statutory rate of duty which was 45% with effect from 11-4-1997. Subsequently, by Finance Bill, 1997 introduced in the National Assembly with declaration under the Provisional Collection of Taxes Act, 1931, the statutory rate of duty on Titanium Dioxide of P.C.T. Heading 2823.0000 was also reduced from 45% to 10% while the customs duty "on pigments and preparation base of Titanium Dioxide" (P.C.T. Heading 3206.1100) was also reduced from 45% to 25%.

17. The Customs had taken a very serious note of that change of P.C.T. heading, while examining the goods at the time of processing of ex-bond B/E, as evident from the note of the Deputy Superintendent on the back of bill of entry which is reproduced as under:-- "It is submitted that the party had previously imported/cleared Titanium Dioxide under PCT Heading 3206.1100 instead of 2823.0000. The tariff of PCT Heading 3206.1100 is 25% while of PCT 2823.0000 is 10%. The party is evading duty taxes by misdeclaration of classification of goods".

18. This tussle between the parties led-to a classification dispute emerged between them. To determine whether the consignment was "Titanium Dioxide (PCT 2823.0000" or "pigments and preparation based on Titanium Dioxide, containing more by weight of Titanium Dioxide" "PCT 3206.1100), a sample was drawn on 26-6-1997 and sent to Customs Laboratory Mughalpura Customs Dryport Lahore simultaneously, the ex-bond bill of entry was provisionally assessed under section 81 of the Customs Act, 1969, the B/E was formally out of charged on 30-6-1997 by a Superintendent. However, the concerned Deputy Collector Customs restricted the release to 50% of the consignment. Meanwhile the Customs Laboratory, Lahore reported the sample as "sample on chemical examination is found to consist of surface treated Titanium Dioxide. It is in the form of white powder." The appellant in support of their declaration of the PCT Heading on the ex- bond B/E, also had got amended from the Bank all the requisite import documents like invoice, letter of credit, bill of lading and PCT etc. However, in spite of the Bank verification, the Customs had taken it as deliberate attempt for misdeclaration for avoiding revenue of Rs.176,689 and so on 27-1-1998, the Additional Collector Customs served a show-cause notice upon the appellant for recovery of all aforesaid short paid amount and for penal action under clause 14 of the section 156(1) of the Customs Act 199 for violation of section 32 ibid.

19. During the course of hearing, it was also alleged by the respondents that the remaining 50% consignment (795 bags) which were detained by the Deputy Collector, were also removed by the appellant. The appellant had denied the allegation during the hearing with Adjudication Officer and stated that the Deputy Collector subsequently, allowed the clearance as they had paid the due duty and taxes as required by section 104 of the Customs Act, 1969 and the removal was done in the presence of the Incharge of the Bonded Warehouse who was incidentally being Incharge of the Private Bonded Warehouse and was also supervising officer of the Appellant Excise record including RG-1 and R-2 who on one hand certified the entry of those goods in the Excise Record RG-2 (Godown of raw material), but on the other hand shown ignorance of the removal of the detained goods. The issue remained unresolved because the removal of the goods was not entered in the Bond registered maintained by Incharge Bonded Warehouse. The Customs could not explain their position as to how the goods were removed without supply of their own second key.

20. It has been contended by the appellant that even the first and last Lab. reports which, are to be followed, have found the correct classification of the subject consignment as 2833.0000, the second report of the Customs Laboratory being arbitrary and non-elaborative. On the first occasion, the consignment was got tested from the Forensic Science Laboratory, Peshawar by the Deputy Collector, Customs Dry Port Peshawar, vide his Letter No. 1025, dated 24-5-1997. The FSL Laboratory Report No.6391/FSL, dated 14-7-1997 opined as under:

"Opinion! Chemical and Instrument analysis of the sample in question revealed that it was Titanium Dioxide" Thereafter, another sample was drawn on 26-6-1997 (when the appellant filed ex-bond with change PCT Heading 2823.0000) and was sent, to Chemical Examiner. Incharge Customs Laboratory, Customs Dry Port Lahore by the Superintendent Customs Gadoon vide his letter No. Misc: (CE)/197/1268, dated 28-6-1997. The Customs Laboratory vide its report LDP/LAB/1875/97/298-A, dated 7-7-1997 reported as under: "Titanium Dioxides: Sample on chemical examination is found to consist of surface treated Titanium Dioxide. It is in the form of white powder".

21. As the report of the Customs Laboratory, Lahore was not elaborative as it did not disclose the basis of opinion declaring the sample to be surface treated Titanium, Dioxide, creating confusion in resolving a complex problem of classification, the sample was finally sent to the PCSIR by the Superintendent, vide his letter No. Misc/TR/CE/97/1682, dated 22-8-1997. The contents of the letter, inter alia, contained the following:-- "An economic package was announced during March, 1997 reducing thereby rate of customs duty on raw materials. Now the party has requested that the said item i.e. Titanium Dioxide may be cleared against PCT No.2823.0000 which attracts lower rate of customs duty i.e. 15% whereas PCT Heading No. 3206.1100 attracts higher rate of customs duty i.e. 25% custom duty. For ease of reference, photocopies of explanatory notes on both the classifications i.e. 2823.0000 and 3206.1100 are sent herewith for determining/analyzing the exact classification/raw materials so that the Government exchequer is not jeopardised .the raw materials maybe cleared according to correct classification under proper PCT Heading i.e., 2823.0000 or 3206.1100."

22. The PCSIR after testing, reported vide their No.406/105/97/ILS/1997, dated 27-9-1997 the test result as under:-- RESULTS ANALYSIS REPORT

1. Bulk density 0.87 g/ml

2. Specific gravity 4.2

3. Moisture 1.00%

4. Loss on ignition (LOI) 1.03%

5. Titanium as TiO2 95.49%

6. Aluminium as Al2O3 2.21%

7. Iron as Fe2O3 traces

8. Lead as Pb Nil

9. Calcium as CA 0.12%

10. Magnesium as Mg 0.10%

11. Barium as Ba Nil

12. Sulphate as SO4 0.20%

13. Sodium as Na traces

14. Potassium as K traces Total 100.15 The sample analyzed is rutile pigment containing 95.49% Titanium Dioxide."

23. Before analyzing the reports and intent of the appellant for changing the PCT heading, it is wroth to mention that Titanium Dioxide is in its various form is classifiable under three PCT heading as tabulated in para. 9 of the judgment of my learned brother Member (Technical).

24. For the sake of clarity and understanding of the nature of the product and its contents, it is proper to reproduce from exporters literature which are available at page 34 of the appeal file. TiO2 content; minimum 95% Specific gravity 4.1 Density 4.1 Kg/Lt Bulk Volume (solid) 0.24Lt/kg Bulk density 0.64-0.88 Kg/Lt Scattering coefficient per 1Kg TiO2 In enamels1 9.5 In flat latex2 6.2 Oil absorption 16.5g oil100 g pigment Water demand 18.Og water/100g pigment pH 7.3 Specific resistance 12,000 ohms Average particle diameter 0.23 um Chalk resistance medium Specification ASTM D 476-84 Type II, III PACKAGING 25kg a Itiwal paper bags, palletized and shrink wrapped, 1000 kg per pallet":

25. Now if we look into the chemical examination reports; it appears that these' are least supportive of the prosecution version. Taking the first examination report, of FSL, Peshawar which just simply declared the sample as "it was Titanium Dioxide," the product can best be placed in PCT Heading 2823.0000. So far the report of the Customs Laboratory, Mughalpura Lahore, is concerned opining the sample consisting surface treated Titanium Dioxide which is in the form of white Powder, though by virtue of element of surface treatment excludes the subject consignment from the PCT Heading 2823.0000, but the test report per se does not conform to judicial test as it does not contain the factors on the basis of which the aforesaid opinion has been formed. Therefore, the report is not worth-consideration to be taken sufficient in proving the allegation against the appellant beyond any reasonable doubt and for subjecting him to any penalty.

26. The report of the PCSIR, which is latter in order and exhaustive too, declares "the sample rutile pigment containing 95.49% Titanium Dioxide". The report is more conforming to the literature of Saudi Supplier of Chinese origin Titanium Dioxide. Besides, it is admitted that chemicals are in powder form whereas in PCT Heading 3206.1100 only those mixture of Titanium Dioxide can be classified which are in aqueous slurry form. This factor also excludes the consignment from classifying in PCT Heading 3206.1100. Though there are certain other elements also like Calcium, Barium detected, but however, these are in the form of impurities not intentionally mixed to make it the mixture as preparation of Titanium Dioxide as firstly, it is in rutile (in ore form) form as supported both by the laboratory report and supplier literature and secondly, the manufacturer/supplier has claimed the purity minimum upto 95 % the rest being impurities allowed under. Notes to Chapter 28 of the Harmonised Customs Tariff, the relevant part of the which reads as under:-- "

1. Except where the context otherwise requires, the Heading of this Chapter apply only to:-- (a) Separate chemical elements and separate chemically defined compounds whether or not containing impurities."

27. It is an established fact that Chemicals of Industrial grade cannot be 100% pure, as it must contain some impurities even up to 10%. Hence on the basis of impurities existing naturally with compound, no adverse inference can be drawn. Therefore, I cannot agree with the proposition that since the Lab, has detected 95.49% Titanium Dioxide, it is more than 80% preparation of Titanium Dioxide because Titanium Dioxide being a compound within itself, it has to have more than 80% Titanium Dioxide. Resultaully, the allegation of misdeclaration against the appellant cannot be established beyond doubt.

28. Now coming to the question whether the appellant was under the law could change PCT Heading at the stage of ex-bond and that he has acted mala fide, it is to be noted that at the time of filing into bond bill of entry, the statutory rate of duty, for both PCT Heading i.e. 2823.0000 and 3206.1100 was 45%. However, at the time of filing Ex-bond B/E, the statutory rate of duty for PCT Heading 2823.0000 was reduced to 10% while for PCT Heading 3206.1100 it was reduced to 25%. Hence, at the time of filing into bond B/E because of the same rate of duty on both contesting PCT headings, the appellant or other importers of Titanium Dioxide, may not have been as attentive to the prefect classification as they ought to be after introduction oaf differential slab of duty structure reducing the duty on Titanium Dioxide. In my view, if the consignment falls within the PCT, Heading 2823.0000 and the importer having had the advantage of low rate of duty, could avail the advantage as of right. The respondent role could be appreciated to the extent that they had noticed and investigated the matter, but the provisions of law, Tariff and Lab. Reports have unnecessarily been stretched for the purpose of taking cognizance.

29. Coming to the saga of detention of 50% of the consignment on 30-6-1997 by the Deputy Collector even after provisional assessment under section 81 and after paying all the duty and taxes under section 104 of the Customs Act 1969, by the appellant, it is evident that the appellant had fulfilled his obligations. All samples were drawn and were sent to the laboratories. The remaining 50% consignment was unprecedently detained for considerable period against the letter and spirit of section 81 ibid. Though during the hearing before the Adjudication Officer, the appellant maintained the position" that it was done in the knowledge and presence of the I/C warehouse as it was impossible otherwise because the warehouse is always under dual lock and key of licensee and Customs On the other hand the same officer I/C warehouse, was also supervising officer of Central Excise and he had verified entry of the same allegedly removed goods in RG-2 (Godown register, where raw materials are stored). Moreover, there is no police report etc. against, the appellant about any dishonest removal of the, balance goods. Hence, the Customs staff posted at the appellant unit were breathing hot and cold in the same breath. In my view the Adjudication Officer rightly excluded this episode of illegal removal from the evidence as otherwise it would put the prosecution in further disadvantageous position. Besides, the allegation per se: constitutes a separate cause of action for which there is nothing on record that any proceedings have been initiated against the appellant on this score. These allegations also do not find place in the show-cause notice issued to the appellant and so cannot be taken any notice of at the appellate stage.

30. Initially, the respondent had processed the ex-bond B/E under section 81 ibid but subsequently, show-cause notice was issued under section 32 of the Act. There is nothing on record that the respondents have finalized the classification dispute within the prescribed time of 180 days or extended period of further 90 days. However, the respondents have taken resort to section 32 ibid under which they had to prove untrue declaration by the appellant. In my view, the respondents have failed to discharge their onus since the two independent Lab. Reports i.e., PCSIR and FSL have not supported their version whereas the Customs laboratory report could not be relied upon for its arbitrariness. Hence, under the circumstances, the imposition 'of penalty under clause (14) of section 156(I) of the Customs Act, 1969, on the appellants is unwarranted.

31. In view of what has been stated above, the appeal is allowed and the impugned orders of both the Adjudication Additional Collector vide Order-in-Original No.8/99, dated 2'3-1-1999 and of the Collector of Customs, Central Excise and Sales Tax (Appeals), Northern Zone Rawalpindi, vide Order-in-Appeal No.242/2000, stand set aside. (Sd.) Raj Muhammad Khan, Member (Judicial). Government of Pakistan Customs, Excise and Sales Tax Appellate Tribunal Peshawar Bench 4-10-2002 Appeal No.7(3125)CU/IB/2001(PB)

1. The dissenting note of the Member (Judicial) is appended to the draft judgment written by Member (Technical) of Peshawar Bench. We the Members of the Bench, therefore, formulate the, points of difference as under for determinations/resolution by Referee Member:-- (1) Whether in view of all the three Laboratory reports, the appellant imported Titanium Dioxide (vide IGM No.418/97, dated 20-3-1997 Index No.307 was classifiable under PCT Heading 3206.1100 or PCT 2823.0000? (2) Whether under the circumstances, the appellant acted legitimately or mala fide while changing the PCT Heading at the time of ex-bond B/E? (3) Whether section 81 of the Customs Act, 1969 is attracted to the case of the appellant or issuance of show-cause notice section 32 of the Customs Act, 1969 was justified?

2. The case is submitted to the worthy chairman for further action under section 194-C(5) of the Customs Act, 1969, please. (Sd.) (Sd.) S.M. Kazimi, Raj Muhammad Khan, Member (Technical) Member (Judicial),

32. Per Mr. Mohammad Sulaiman, Member (Technical): I have heard the appellants and respondents in detail and also carefully examined the assertions made by the learned Member (Technical) and Member (Judicial) of Peshawar Bench.

33. My findings on the points of difference are as under:-- S. No. Question Findings

1. Whether in view of all the three Laboratory reports, the appellant imported Titanium dioxide (vide IGM No.418 of 1997, dated 20-3-1997 index No.307 was classifiable under PCT heading 3206.100 or PCT 2823.0000? In this case 3 laboratory reports are available on record and all 3 have been reproduced in the orders of the Collector of Customs of Customs, Central Excise and Sales Tax (Appeals) Northern Zone, Rawalpindi and worthy Members (Technical) and (Judicial), Peshawar Bench. A simple reading of the 3 reports shows that the Forensic Science Laboratory, Peshawar vide No. OS: 9336/97, Peshawar vide No.OS: 9336/97, dated 28-5-1997 opined as under:-- "Chemical and instrument analysis of the sample in question revealed that it was Titanium Dioxide." The second report was written vide No.LDP/LAB/1875/97/298-A, dated 7-7-1997 by the Customs Laboratory, Mughalpura, Dryport Lahore where the opinion recorded was as under: "Sample on chemical exami nation is found to consist of surface treated Titanium Dioxide. It is in the form of white powder." The third and last opinion was given by PCSIR, Peshawar vide Report No. 406/105/97/ILS, dated 27-9-1997 in response to the Superintendent Gadoon's Reference No. Misc. TR/GE/97/1982, dated 22-8-1997 as under: "It gives detailed analysis report that contents are 95.49% Titanium Dioxide, 2.21% of Aluminium Oxide, 0.12% of Calcium, 0.10% of Mangesium, 0.20% of Sulphate and traces of Iron Oxide, Sodium and Potassium with no Lead or Barium". It concluded by saying that "The sample analysed is rutile pigment containing 95.49 Titanium Dioxide". A simple reading of these 3 reports shows that at least 2 reports i.e. the report of Customs Laboratory, Mughalpura, Lahore and that of PCSIR Laboratory, Peshawar concluded after testing that the sample sent to them consisted of Titanium Dioxide Pigment. Pigments obviously are classifiable under Chapter 32 of the Pakistan Customs Tariff and the specific heading of the PCT is 32.06 which is as under: "32.06 - OTHER COLOURING MATTER; PREPARA TIONS AS SPECIFIED IN NOTE 3 TO THIS CHAPTER; OTHER THAN THOSE OF HEADING No.32.03, 32.04 OR 32.05; INORGANIC PRODUC TS OF A KIND USED AS LUMINOPHORES, WHETHER OR NOT CHEMICALLY DEFINED (+). Pigments and prepara tions based on titanium Dioxide: 3206.11 -- Containing 80% or more by weight of Titanium Dioxide calculated on the dry weight. 3206.19

other The colouring matter 'of this heading includes: (1) Pigments based on Titanium Dioxide con sisting of surface-treated Titanium Dioxide or of mixtures of Titanium Dioxide with calcium or barium sulphate or other materials or of mixtures of these products in an aqueous slurry. Titanium Dioxide, which is neither surface treated nor mixed is sometimes referred to as Titanium white; this product is classified in Heading 28.23". It will be observed that the opinions given by the laboratories are supported by the Explanatory Notes to the Item 32.06, which is re produced as under:-- The colouring matter of this heading includes: "Pigments based on Titanium Dioxide consisting of surface -treated Titanium Dioxide or of mixtures of titanium dioxide with calcium or barium sulphate or other materials..." In detailed analysis given by the PCSIR it is observed that calcium and sulphate are present which by itself shows that as per the criteria of PCT the product squarely falls under Heading 3206.1100 as it contains Calcium & Sulphate etc. the arguments given by the Honourable Member (Judicial) that the PCSIR called it Rutile Pigment and therefore, it is in ore form and that this is supported by the literature supplied by the Saudi supplier is based on information provided by the appellants and shows an obvious lack of knowledge of the Chemistry of Titanium Dioxide Pigments. Titanium Dioxide Pigments are of 2 types based on the source of raw material. The 2 sources of raw material are Ilmenite and Rutile. Titanium Dioxide ores fall under Chapter 26 of the PCT Heading 2614.0000. The description of Titanium Dioxide ores and con centrates in the Explanatory Notes to the Harmonized Commodity Description and coding System is as under:-- "26.14-TITANIUM ORES AND CONCENTRATES. The principal ores generally classified in this heading are: (a) Ilmenite (or titaniferous iron ore), iron titanate. (b) Rutile, anatase and brookite, Titanium Oxides. The heading excludes finely ground titanium ores for use as pigments (Chapter 32)" As is quite obvious rutile is one of the ores on which rutile pigments are based and the reference to Rutile Pigment in the report of PCSIR simply refers to the source of the raw material and method of production of Titanium Dioxide Pigments. This is supported by the following extract from the Condensed Chemical Dictionary published by Van Nostrand Rein hold Company, Inc. "....Deriva tion: From Ilmenite or rutile. (a) Ilmentie is treated with sulfuric acid and the Titanium sulfate further processed. The product is primarily, the anatase form (b) Rutile is chlorinate and the Titanium tetrachloride converted to the rutile form by vaporphase oxidation". It is further observed that even Titanium Dioxide ore when finely ground is classifiable as a pigment under Chapter 32 irrespective of the impurities and source or type of ore. Therefore by this exclusion given under PCT Heading 26.14 also the Titanium Dioxide imported in this case, which is in powder form, is clearly classifiable under PCT Heading 3206.1100.

2. Whether under the circumstances, the appellant acted legitimately or mala fide while changing the PCT Heading at the time of ex-bond B/E? Under the circumstances of the case the mala fide of the importer are obvious. His actions as reported by the Adjudicating Officer and Honourable Members of the Tribunal clearly support this contention; These are: (i) Changing of the PCT Heading in the Letter of Credit. (ii) Making amendments in the invoice and the Bill of Lading, changing the PCT heading and then putting the stamp on that particular spot to create confusion and mislead the Customs Authorities. (iii) Removing the 50% detained remaining part of the consignment unauthorizedly, which was detained by Customs etc. etc.

3. Whether section 81 of the Customs Act 1969 is attracted to he case of the appellant or issuance of show cause under section 32 of the Customs Act 1969 was justified? Section 32 is clearly attracted in the case in view of what has been stated above. In fact the original assessment under section 81 of the Customs Act, 1969 was ill conceived and should not have been done to start with. It was for this reason that this case has lingered on for such a long time.

34. In view of what has been stated above am in full agreement with the decision of Member (Technical), Peshawar Bench in this case and uphold the Order-in-Appeal No. 242 of 2000, dated 21-6-2000 passed by the Collector of Customs, Central Excise and Sales Tax (Appeals) Northern Zone, Rawalpindi and the Order-in-Original No. 8 of 1999, dated 23-1-1999 passed by the Additional Collector of Customs. Peshawar.

35. Ordered accordingly. C.M.A./1062/Tax (Trib.) Order accordingly.