2003 PLP (Trib (PTD)

Date of hearing: 29th January, 2002: MIAN ABDUL QAYYUM, MEMBER (JUDICIAL).‑

This judgment shall dispose of appeal filed by Messrs N.F.U. Industries (Pvt.) Ltd., Raiwind Road, Lahore against Order‑in-Original No.Cus 82 of 2001, dated 31‑7‑2001 (despatched on 8‑8‑2001). By this order, the learned Adjudicating Officer has adjudged against the appellant a demand of duties and taxes amounting to Rs.23,11,962 alongwith additional tax and penalty of Rs.1,00,000 for violation of the provisions of. S.R.O. 722(I)/89, dated 7‑10‑1989.

2. The relevant facts giving rise to this appeal are that the appellant holding manufacturing bond Licence No.52/LHR/93 in terms of S.R.O. 722(I)/89, dated 7‑10‑1989 imported certain raw materials during the period 16‑6‑1993 to 22‑1‑1995 valuing Rs.40,17,106 but did not dispose of the same in accordance with terms and conditions of the aforesaid notification. On scrutiny of their record, the Department made out a contravention case against the appellant for depriving the Government of duties and taxes amounting to Rs.20,89,846 relating to the imported raw material not consumed according to the provisions of the aforesaid notification. The case was adjudicated by the Collector (Adjudicating), Lahore who after issuing show‑cause notice and giving due opportunity of hearing to the appellant, held them liable to pay aforesaid amount of duty and taxes alongwith penalty.

3. While assailing the impugned order, the appellants have admitted that they imported the raw material in terms of S.R.O. 722(I)/89, but could not continue their business of export because of slump in the export market and their failure to maintain the required export quality of their product. On 27‑9‑1995, they requested the Collector for cancellation of the licence and supply of details of outstanding amount of duty and taxes payable by them in this regard. The Department, however, instead of supplying them this information, made out a contravention case against them. It has further been argued that the outstanding amount of duty and taxes has been incorrectly worked out by the Department. According to the reconciliation statement prepared by the Department during the course of adjudication the appellant was required to pay an amount of Rs.939,818 only whereas the learned Adjudicating Officer enhanced this amount to Rs.23,11,962 without giving any basis, besides imposition of penalty. The learned counsel for the appellant has placed on record, a copy of the reconciliation statement to this effect signed by himself and Mr. Zafarullah Niazi, Inspector. The amount of Rs.939,818 too bras been deposited by the appellant on 18‑9‑2001 on the direction of this Tribunal.

4. The learned departmental representative while defending the impugned order has placed on record, a copy of another reconciliation statement, dated 8‑5‑2001 prepared by the same Inspector Mr. Zafarullah Niazi and Deputy Superintendent Tanveer‑ul‑Hassan Gillani, according to which the net recoverable amount from the appellants works out to Rs.24,61,887.

5. We have examined the case records and considered the submissions made by the appellant's counsel as well as the D.R. The factual position as it emerges is that the appellant had admittedly violated the provisions of S.R.O. 722(I)/89, dated 7‑10‑1989 by not dealing with the raw material imported by them in accordance with the conditions provided therein by either exporting the goods manufactured therefrom or clearing the same for home consumption after payment of duty and taxes. It is also admitted that they had applied for cancellation of their licence and that the question. required to be resolved is only the determination of duty and taxes payable by them on the balance quantity of raw material not consumed according to the provisions of the aforesaid S.R.O. Initially, while preparing the contravention report, the Department worked out the amount of duty and taxes payable by the appellants at Rs.20,89,846 on the basis of which a SCN was issued by the learned Adjudicating Officer. The amount was subsequently revised twice by the detecting agency during the course of adjudication; first to Rs.23,11,692 and then to Rs.24,61,887 vide reconciliation statement dated 8‑5‑2001. The learned Adjudicating Officer amended the SCN by issuing a corrigendum dated 7‑10‑2000 when the first revision was made by the detecting agency but refused to further amend the SCN on receipt of second revision from the Department and decided the case on the basis of the SCN as amended on 7‑10‑2001. The learned Adjudicating Officer did not consider the reconciliation statement, dated 8‑5‑2001 presented to him whereby recoverable amount was shown at Rs.24.61,

887. It has also been observed that the amounts claimed to have been paid by the appellants before or during the course of adjudication have also not been accounted for while determining their liability although the Department according to para. 14(iv) of; the impugned order verified deposits of Rs.5,00,401 made on 9‑4‑2001 through cheque No.519700 and Rs.1,55,000 vide Cash Receipt No.264, dated 16‑11‑1999. The HBL Gulberg Branch, Lahore verified the deposit of Rs.1,45,000 against Pay Order No. 03295354, dated 29‑12‑1994, which was not confirmed by the National Bank of Pakistan, Dry Port Branch, Lahore. No effort has been made by the Department to confirm this deposit. In short, the determination of correct amount of duty and taxes payable by the appellants would require detailed exercise including factual verifications of payments made by them/reconciliation of account of the appellant.

6. As the aforesaid exercise can be done more effectively and conveniently only at the original stage of adjudication, the impugned order is set aside and the case is remanded to the learned Adjudication Officer for fresh decision in accordance with law after hearing the parties and receiving the evidence which they may like to produce. C.M.A./729/Tax (Trib.) Case remanded.