2010 PLP (Trib (PTD)

MUHAMMAD ARIF MOTON, MEMBER (JUDICIAL-II).

This order will dispose of Customs Appeal No.K-348/2009 filed by the appellant against Order-in-Appeal No.1650 of 2009, dated 17-3-2009 passed by the Collector of Customs, Sales Tax & Federal Excise (Appeals), Karachi.

2. Brief facts of the case are that the appellant electronically filed Goods Declaration vide CRN 640393 declared to contain 100% Nylon Fabric and Liner fabric for a total invoice value of US$ 36641.8592. The appellant determined their tax liability on their own and secured clearance thereof under section 79(1) of the Customs Act, 1969. However, on information the staff of Directorate of Intelligence and Investigation (FBR), Karachi intercepted the container and re-examined the goods in the presence of the appellants' representative. The samples of the consignments were drawn and sent to Custom House Laboratory. The laboratory vide Test Report No.CE/R/89 dated 4-6-2008 reported that the goods were Camouflage Fabric (58 to 60) 22680 Meters (324 Rolls) and Liner Fabric for Camouflage Fabric (12000 meters, 59 Rolls, classifiable under HS Code 5903.9000 chargeable to customs duty @25% and I. Tax @ 1% whereas the appellant had cleared the goods as 100% Nylon Fabric (22690 Meters 324 Rolls) and Liner Fabric (12000 Meters, 59 Rolls) under PCT 5407.4200 @ 15% and I. Tax @ 1% assessed @ US$ 4.080/kg and US$ 5.6028/kg respectively. In the light of re-examination report and Test Report of Customs laboratory, Camouflage Fabric (58 to 60) 22680 Meters (324 Rolls) and Liner Fabric for Camouflage (12000 meters, 59 Rolls) were reassessed @ US$ 7.7/meter US$ 1.9650/meter respectively under HS Code 5903.9000. Thus, the appellant had deliberately misdeclared physical description, value and classification of the goods in order to defraud the Government from its legitimate revenue amounting to Rs.3,470,515.

3. Adjudicating proceedings were initiated and the learned Additional Collector passed the Order-in-Original No.3209 of 2008. Aggrieved with the above order-in-original the appellant preferred an appeal before learned Collector Appeal who also upheld the order-in- original vide Order-in-Appeal No.1650/2009 dated 17-3-2009, hence this appeal.

4. The learned counsel for the appellant also requested that written submission filed by him on behalf of the appellant may be incorporated in the judgment of the Tribunal since these submissions minutely discussed and illustrated all questions of fact and all questions of law with the help of documentary evidence and citations from judgments of the honourable apex Court and other High Courts of Pakistan. These submissions are reproduced as under: (i) That the impugned Order passed by the respondent has arbitrarily upheld the finding by the Additional Collector in Original No.3209 of misdeclaration under section 32 of the Customs Act, 1969, without considering the following:-- "Upon alleged examination of goods after re-assessment and clearance, the said officials did not discharge the onus of establishing the alleged misdeclaration of the appellant by not obtaining the price of the goods in the country of origin, i.e. Taiwan, at the time of the import of the goods which is a necessary criterion for the determination of the value of the goods and relied upon the judgment reported as 2004 PTD (Trib.) 2898 Messrs Aftab Ahmad v. The Collector, 1992 SCMR 1083 Messrs Latif Brothers v. Deputy Collector, Customs, Lahore and others, PLD 1959 SC (Pak) 364 Messrs Eastern Rice Syndicate v. Central Board of Revenue and others." (ii) As per section 32(1) of the Customs Act, 1969, knowledge of any alleged false statements on the part of the appellant is a necessary requirement to be found guilty of misdeclaration. For the reasons submitted in Paras. 3 and 4 supra, the relevant Customs Officials did not have the complete and necessary information to establish that the appellant intentionally under-valued the goods sought to be imported. (iii) In the facts and circumstances of the titled case, the goods of the appellant were assessed, re-assessed and subsequently cleared on 17-5-2008. It has been held that once a consignment is out of charge after due consideration of relevant facts it becomes a past and closed transaction to the extent of its value. The Officers of Directorate of Intelligence and Investigation have the authority to inspect such cleared goods within the limits of the Customs Area, but can only do so if they have a "reason to believe" as opposed to a "reason to suspect" that an importer is fraudulently trying to evade the payment of government duties. DIT could only call for the documents as envisaged under section 83 of the Customs Act, 1969, only to the extent to confirming the non-payment or short payment of duty. He relied upon the judgment reported as 2005 PTD (Trio.) 135 Messrs Muhammad Ateeq Paracha and others v. The State 2009 PTD 467 (Lahore)-Messrs S.T. Enterprises v. Federation of Pakistan and others and 2009 PTD 281 (Lahore) Messrs Sunny Traders v. Federation of Pakistan and others

Writ Petition. (iv) It is submitted that the appellant had the goods cleared after assessment and re-assessment by the Customs Appraisal authorities at Karachi, which is evident by the Goods Declaration dated 15-5-2008 and the Release Order No.673/2008 passed by the Principal Appraiser at Tort Qasim. (v) It has been held if any mischief has been done in incorrectly assessing goods by Customs officials, the Assessing Officer is guilty of making such wrong assessment and the importer could not be held responsible for the same. He relied upon the judgment reporter as 2005 PTD (Trib.) 196 (Karachi). (vi) The notice dated 14-6-2008 issued under section 26 of the Customs Act, 1969 did not provide the appellant with the relevant information pertaining to either the Laboratory Report dated 4-6-2008 or the Pro forma Invoice dated 20-8-2007 of Messrs Samad Rubber Works (Pvt.), and this relevant fact has escaped the notice of the respondent whilst passing the impugned Order. (vii) The same is not in accordance with law as it has been held that a Notice issued under section 26 has to communicate the necessary details to a party to enable him to produce all relevant documents and information in that regard. An authority cannot employ the provisions of section 26 to make an indiscriminate roving and fishing inquiry without possessing any definite and proper information, in the hope of unraveling some concealment and illegality on the part of a citizen. He relied upon the judgment reported as 2005 PTD (Trib.) 135 (Karachi), PLD 1992 SC 485 (Supreme Court of Pakistan)-Assistant Director, Intelligence and Investigation, Karachi v. M/s B.R. Herman and others. (viii) That the goods were seized under section 168(1) and according to section 168(2), a show-cause notice had to be issued within 2 months of the seizure under section 180, otherwise the goods shall be returned to the owner. The show-cause notice as issued on 4-8-2008 which was 79 days after the said seizure. It is settled law that where after expiry of 2 months from the date of seizure and no show cause notice issued, and neither time extended for a further month, goods are liable to be returned to the importer and that he could not be divested of such right after expiry of this period. Reliance is placed in 2007 PTD 167, 2004 PTD 369, 2003 PTD 2821, PTCL 1983 (CL) 184. (ix) According to the Seizure Report dated 12-7-2008 prepared by DIT, seizure of the appellants' took place on 6-6-2008. However, the goods of the appellant were physically taken into custody by the DIT officials on 17-5-2008, as is evident from para 19.2 of the said Report where it has been stated that "the mushirnama/inventory was prepared at the spot in presence of two independent mushirs." It has been held that seizure takes place only when the authority competent to seize movable property had not only intention to seize it, not only where circumstances justifying seizure has come to his notice but when he overtly seizes the movable property by divesting the possessor thereof with its possession and investing the possession in himself or through himself in some other persons. He relied upon the judgment reported as PTCL 1983 (CL) 184. (x) According to the opening line of para 19.2 of the Seizure Report, it has been stated that "the container was detained and re-examined". In this regard it is submitted that the word "detain' has been defined under section 2(kk) and the same entails to prohibit the use or disposal of the goods, pending finalization of any proceedings under the act and section 186 specifically deals with detention, which clearly states that where any fine or penalty is imposed, the goods shall not be removed until proceedings have been finalized. In the instant case, no such fine or penalty had been imposed as on 17-5-2008, hence, no question of detention involved in the titled case; only seizure. It has been held that the word "detention' is alien to section 168(2) of the Customs Act, under which admittedly the Respondent authorities had proceeded against the Appellant and has relied upon the judgment reported as 1998 MLD 650. (xi) That the concept of "notional seizure' has recently been discussed in 2003 PTD 2821. (xii) That According to section 171 of the Customs Act, 1969, the grounds for the seizure i.e. the reasons and facts leading up to the seizure are to be given in writing, as soon as may be, to the person from whose possession the goods are seized. And this exercise must precede the seizure under section 168. (xiii) In the titled case, the DIT officials were acting on the basis of "credible" information i.e. Pro forma Invoice dated 20-8-2007 of Messrs Samad Rubber Works, and according to section 1992 of the Customs Act, 1969, the said information had to be given in writing. No such grounds or reasons for seizure contemplated under section 71 were provided to the appellant at the time or any time soon after 17-5-2008. In fact, the seizure report dated 12-7-2008, does not even disclose the full information and grounds for the seizure of the Appellant's goods on 17-5-2008. He relied upon the judgment reported as PLD 1968 Karachi 599. (xiv) Furthermore, it has been held that non-compliance of the provisions of section 171 is not curable, being an illegality, and all subsequent proceedings thereof would be rendered void. He relied upon the judgment reported as 2004 PCr.LJ 1958. (xv) The Laboratory Report dated 4-6-2008 and subsequent Lab Confirmation are totally invalid for the following reasons; (a) The Laboratory Report should have been based upon scientific tests relating to textile fabrics as shown by the lab tests prescribed by the Army and PSCIR. This is totally missing and in fact, the test report and subsequent confirmation both prove that there were no laboratory tests and instead, they were acting as customs advisors to DIT and obliging them; (b) The statement by the author of the Lab Report that she applied some acid to one side of the sample, is irrelevant, vague and useless and only confirms that there were no laboratory tests as prescribed. It only proves collusion between the Laboratory and the DIT. And proves a pre-determined intention of DIT to unlawfully penalize the appellant in every possible way, with a design to destroy his business. (c) The prescribed World Harmonized Commodity Code standard atmospheric conditions for laboratory tests on textiles were also wilfully and totally ignored by the Laboratory. (d) "Micro particles" by definition cannot be visible by the naked eye and can only be seen through magnification under a Microscope. And the term "Camouflage" is not any laboratory test term or nomenclature. "Camouflage" only refers to the colour design which is only meant to confuse the vision_ of a distant viewer. (xvi) It is submitted that the said reports are not in accordance with law as no indication has been made as to what particular chemical tests were conducted by the Examiner of the Customs Laboratory. It is settled law that where there is an allegation of mis-declaration and where constituents/components and the chemical qualities of the substance tested have not been indicated in a laboratory report, the same cannot be considered to be a valid examination report. He relied upon cases reported as 2008 PTD 649 (Federal Tax Ombudsman). (xvii) That as per lab report dated 4-6-2008 and subsequent confirmation report dated 30-8-2008, it has been alleged that `It has plastic coating on back side, which can be seen with naked eye/visible change in colour". This is the basis upon which the goods of the applicant/appellant have been assessed under Chapter 59, more specifically under PCT Heading No.5903.9000. (xviii) Note 2 to Chapter 59 of the PCT states that 59.03 applies to those textile fabrics, impregnated, coated, covered or laminated with plastics, other than; "(4) Fabrics partially coated or partially covered with plastics and bearing designs resulting from these treatments (usually Chapters 50 to 55, 58 or 60". (xix) The aforesaid "partial coating" exceptions fortified upon looking at the PCT table of Chapter 59, the PCT Code 59.03 is described as Textile fabrics impregnated, coated, covered or laminated with plastics other than those of hearing 59.02, in which the uniform customs duty applicable is 25%. The term used "coated" as opposed to "partially coated". (xx) That as admitted by the respondents, the goods of the appellant were coated on only one side which would mean that they were "partially coated" as opposed to being "coated". (xxi) That the phrase `coating" is mutually exclusive from "partial coating" and the former cannot include the latter, for the very reason that a distinction has categorically been made in Note 2 of Chapter 59 of the PCT and the same is supported by the fact that in the aforesaid table in Chapter 59, under the heading of 59.03, the word "coated" has been used, and the phrase "partially coated" has been expressly excluded. Even the Notes to Chapter 59 of the World Harmonized Commodity Description and Coding System provide for the same exception of partial coating. (xxii) The Notes to Chapter 59.03 of the World Harmonized Code, also state that "textile fabrics partially coated or partially covered with plastics and bearing designs resulting from these treatments are also classified in Chapters 50 to 55, 58 or 60. (xxiii) That through Commercial Invoice dated 3-1-2008, appellant imported the following goods; (i) 22,680 meters of 100% Nylon Fabric (ii) 12,000 meters of Liner Fabric (xxiv) That the appellant filed Goods Declaration CRN 640393 dated 15-5-2008, wherein the aforesaid Goods were declared to be assessed- under PCT Heading 5407.4200, under the applicable customs duty of 15%, assessed under Kilogram (KG) unit of measurement. The said goods were assessed, re-assessed and subsequently cleared on 17-5-2008. (xxv) That once the goods had been cleared, the same were seized by the DIT officials on the basis of some information received that the appellant were attempting to misdeclare the value of the goods imported. (xxvi) That the basis of the alleged misdeclaration was a pro forma Invoice dated 20-8-2007 of Messrs Samad Rubber Works, which showed that similar goods were imported previously, upon which a higher price per unit had been coated, which is "Fabric Main Camouflage

Colour Effection Cordura

two tones US$ 7.700 per meter". On the basis of the said invoice, the Lab Report dated 4-6-2008 also confirmed that the fabric imported by the appellant was camouflage fabric, and suggested HS Code of 5903.9000.That additionally, in the Order-in-Original No.3209 of 2008 and in the Comments of DIT to the appeal dated 24-2-2009 another brand new description is being given to the goods allegedly imported by the Appellant, which is "Fabric Main Camouflage colour Cordura of color Cordura of PCT Heading 5903.9000" (xxvii) That it is submitted that neither the terms "Camouflage" nor "cordura" for that matter appear in Chapter 59 of the PCT. "Cordura" is in fact a brand of fabric, which is different than what the appellant imported. (xxviii) That as per sample approved by Inspectorate of Army Store and Clothing (IAS&C), (attached with Contract), the description of the cloth required to make the goods for the Army was "Cloth Nylon Cordura Type" as opposed to "Cordura" (xxix) That any Camouflage material cannot fall under Chapter 59 of the PCT. If it is camouflage material then it cannot fall under Chapter 59; As the word camouflage means to conceal, its use is limited to concealment and cannot be included within the term "industrial use" as provided for in Chapter

59. Camouflage material relates to the end use of the material. When any fabric is printed in brown, green and in an irregular pattern, then it is called camouflage printing and is used for camouflage. (xxx) That the Deputy Chemical Examiner, in his confirmation of Lab Report dated 30-8-2008 and subsequently relied upon by the Collector (Appeals), has stated that HS Explanatory Notes of 5407 exclude fabrics of technical use and fabrics of special/ technical use fall under Chapter 59. (xxxi) That it is submitted that the same incorrect as the Notes to Chapter 5407 of the World Harmonized Commodities Code clearly states that woven fabrics for technical uses of particularly Heading 59.11 are excluded, and not the whole of Chapter 59, as stated aforesaid. (xxxii) That the Customs Officials have invented a "novel" method to classify the goods of the appellant under PCT Heading 5903.9000, which is evidenced by the following. (i) According to the Scheme of the Pakistan Customs Tariff, the column titled `Unit' in the PCT Table indicates the unit of measurement. The standard unit of measurement is for PCT Headings 5407.4200 and 5903.9000 are KG. (ii) The goods imported by appellant were assessed, re-assessed and cleared according to the rates per KG, as per Goods Declaration dated 15-5-2008. (iii) The invoices of Messrs Samad Rubber Works relied upon by the Customs officials for assessing the goods of the appellant under Chapter 59 states the prices per meter of the goods. (vi) Subsequently, according to show-cause notice dated 4-8-2008 (at page 37), it has been stated as under: "On the basis of re-examination report and Test Report of Customs Laboratory, goods are reassessed as under. Camouflage fabric 22680 meters (324 rolls), 5903.9000, USD 7.7. /meter Liner Fabric for Camouflage fabric 12000 meters (59 rolls), 5903.9000, USD 1.9650/meter. (v) That from the above report it is evident that the importer has mis-declared the description and classification of the goods to deprive the exchequer from its legitimate revenue. The total amount of revenue involved has been determined as Rs.3470515 and the determined value of the offending goods comes to Rs.13221007." (vi) This so-called `re-assessment" has been upheld in both the Order-in-Original dated 3-9-2008 (at page 62) and in the Order in Appeal dated 17-3-2009 (at page 98). (xxxiv) That it is submitted that nowhere in the revised "re-assessment" conducted by the Customs officials, have the rates allegedly applicable on the appellants been given under the standard unit of measurement i.e. KG and the new rates are on the basis of values per meter. Both Chapters, 54 and 59 mention KG as the Unit of Measurement, hence there can be no basis for applying PCT Heading 5903.9000 on the appellants. (xxxv) That in fact, the goods imported by Messrs Samad Rubber Works, which are mentioned in their Commercial Invoice dated 27-9-2007, have been imported and cleared vide Goods Declaration dated 30-10-2007, after converting the same into KG, the relevant HS Codes applied Camouflage fabric and Liner fabric are 5407.5200 and 5902.1000, chargeable to 15% and 5% Customs duty respectively. (xxxvi) That as per Goods Declaration dated 11-3-2009 for the goods imported by M/s Usman Corporation, Lahore, which were Nylon Fabric, the relevant HS Codes applied were 5407.44000, after conversion into KG, chargeable to 15% customs duty. (xxxvii) That it is settled law under section 25 of the Customs Act, 1969 that when comparing imports of similar or identical goods, such an exercise cannot be done without the examination of each consignment, declaration of goods, examination of assessment given by the previous importers and of all the relevant documents in that regard. At no stage of either the investigation carried out or the adjudication proceedings before the Additional Collector, Customs, Karachi and before the respondent, were any other relevant import documents of Messrs Samad Rubber Works (Pvt.) Ltd. relied upon by the concerned Customs officers. He relied upon the case-law reported as 2006 PTD 909, 2003 PTD (Trib) 2233. (xxxviii) That the relevant Customs Officials are guilty of discrimination under Article 25 of the Constitution of Pakistan, 1973, in classifying the goods of the appellant under Chapter 59 as opposed to Chapter 54, as can be seen from the comparison of the Goods Declaration filed with the titled appeal, of M/s Samad Rubber Works and Messrs Usman Corporation. (xxxix) That the goods of the appellant were assessed, re-assessed and subsequently cleared by the Principal Appraiser under HS Code 5407.42000. It is submitted that the appellant was to be treated alike as the importers mentioned above and in fact, the liner fabric imported by Messrs Samad Rubber Works (Pvt.) Ltd. has been classified under HS Code J902.1000 chargeable to 5% Customs duty. He relied upon the judgment reported as PLD 2001 (sic) and 2008 PTD 1475.

5. The respondent filed counter-submissions in reply to appeal dated 16-7-2007 which read as under: (i) That admittedly the fabric imported in this case is "coated" and of technical nature, thus the same are correctly classifiable under Chapter 59 of the Customs Tariff and not under Chapter 54 as claimed by the importers and made self-assessment under said Chapter (PCT Heading 5407.4200) with clear intention to get the consignment cleared at very nominal price and less payment of revenue. (ii) That the consignment of the appellant was tested twice and on both occasion the laboratory has confirmed that the fabric imported by the appellant is correctly classifiable under PCT Heading 5903.9000 @ 25% customs duty instead of 5407.4200 @ 15% customs duty as assessed by the import. In order to ascertain classification of subject consignment, the representative sample of the consignments was drawn in presence of clearing agent and were forwarded to the Custom House Laboratory for confirmation of the actual description of the goods as well as the classification. The Customs House Laboratory vide Report No.CE/R/89 dated 4-6-2008 has confirmed the description as "Camouflage Fabric" having plastic coating on back side which can be seen with naked eye/visible charge in color and suggested HS Code as 5903.9000. The report is re-produced as under. "Two samples A & N received Report is as under. (S) The sample is in the form of Khaki Base/Maroon and green colour camouflage fabric width= 156 cm. On test it is found be woven textile fabric composed of Nylon. It has plastic coating on back side, which can be seen with naked eye/visible change in the colour. Weight per square meter = 350 gm at RTH. Suggested H.S. Code 5903.9000 (B) The sample is in the form of Khaki colour dyed fabric width=160 cm. On test it is found to be woven textile fabric, composed of Nylon. It has plastic coating on backside, which can be seen with naked eye/visible change in colour. Weight per square meter =115 gm at RTU. Suggested H.S. Code 5903.9000 Additionally, the Custom House Laboratory vide letter C.No.CE/R/MCC/2008 dated 30-8-2008 elaborated previous findings of test report and stated that the subject goods are classifiable under PCT Heading 5903.9000 on the following grounds; (i) In the fabric, the plastic coating can be seen with naked eye. The plastic coating of tiny shiny micro parcels released at the back side of the fabric are visible and can be seen with naked eye which confirms that this fabric is classifiable in Chapter 59. (ii) That the HS Explanatory notes of 5407 exclude the fabric of technical use which are not for the daily/normal use. Whereas, the subject fabric is woven fabric for special/technical use which is classifiable in Chapter 59 (Chapter Notes 5407 at Page XI-5407-2). (iii) The World Harmonized Commodity Description and Coding System also explain in section XI at page XI/3 E that special kind of fabric of PVC coating are classifiable in HS Code 5903. This example is also in support of the subject fabric that is accurately classifiable in Chapter 59 rather than in Chapter 54. (sic) That as evident from the supplier's submission before SGS the ordered description was "woven main fabric 100% Nylon Camouflage CCD Design 1.000D Cordura No. TCF-I-A in Khaki/green/brown" as against the declared description of 100% Nylon "Fabric and Liner Fabric" (iv) That an information was available with the Directorate General of Intelligence and Investigation F.B.R., Karachi about deliberate mis-declaration and attempt of evasion, that being so, the appellant has not filed his GD for about three months. The PACCS is based on automated clearance system; hence, the goods were assessed as per importer's declared description. (v) That the declaration of the supplier before SGS and the contents confirmed by the laboratory the imported special fabric is correctly classifiable under sub-heading 5903 which is also confirmed by the learned Collector (Appeals) in para 7 (i) of the Order-in-Appeal No.1650/2009 dated 17-3-2009. (vi) That there was no need to check any other report where samples were not drawn from the same container in the presence of customs officials, however, even the SGS report is not confirming the description stated by the appellant.

6. Heard Mr. Raza Kazim and Mr. Usman Raza Jamil Advocates appeared on behalf of the appellants who reiterated the arguments incorporated in the memo of the appeal as well as written submission submitted by them and which are placed on record. They mainly emphasized on the following points: (i) That the shows cause notice was issued after a period of (79) days from the date of seizure. The seizure was effected on 28-5-2008 and the show-cause notice was issued on 4-2-2008. No extension of time was procured and the seizure was ab intio void and the appellants were entitled to return/restoration of their goods in terms of judgments of superior judicial fora reported as 2007 PTD 167, 2004 PTD 369, 2003 PTD 2821 and PTCL 1983 CL 184. (ii) That the words camouflage refers to a colour design meant to confuse the vision of distant viewer and has no place in the chemical dictionary or in the Customs Tariff or nomenclature. (iii) That Chemical Examiner is playing the part of an adviser to the prosecution to further their mala fide intentions and ulterior motives. In as much as the chemical examination through transgression of the authority vested in them suggested the P.C.T. Heading for classification of the subject goods. (iv) That the laboratory reports dated 4-6-2008 and 30-8-2008 indicate that the subject goods have plastic coating on the back sides and which can be seen with a naked eye/visible change in colour on the basis of which the appellant's goods have been classified under alleged P.C.T. Heading No.5903.9000. (v) That the above report in unequivocal terms states that only back side of the goods or in other words one side of the goods is coated with plastic or in other words the goods are not fully coated but only partially being coated on one side only. Notice 2 to Chapter 59 of Harmonized System section 11 impregnated coated covered or laminated with plastics other than Fabrics partially coated or partially covered with plastics and bearing designs resulting from these treatments "usually Chapters 50 to 55, 58 or 60." (vi) That the phrase "coating" is mutually exclusive from "partial coating" and the former cannot include the latter, for the very reason that a distinction has categorically been made in Note 2 of Chapter 59 of the PCT and is further supported by the fact that in the aforesaid table in Chapter 59, under the sub-heading 59.03, the word "coated" has been used and the phrase "partially coated" has been expressly excluded. (vii) That the subject goods through Goods Declaration CRN Nn.6403936 dated 15-5-2008 were declared as 100% nylon fabric and liner fabric under P.C.T. Heading 5407.4200 at respective declared unit value of US$ 1.150 per Meter F.O.B. and US$ 0.880 per meter of F.O.B. the rate of Customs Duty being 15% ad valorem. These declared values were enhanced by .PACCS Customs House, Karachi at the rate of US$4.0804 per Kg and US$ 5.6028 per Kg respectively. (viii) That initially the goods imported by the appellant were assessed, reassessed and cleared by the Customs House taking the unit of measurement in kilogram as per scheme of Pakistan Customs Tariff relating to PCT Heading 5407.4200 and 5903.9000. However, the evidential invoice of another competitor Messrs Samad Rubber Works relied upon by the respondent-Collectorate for assessing goods of the appellant under Chapter 59 stated the price similar goods in meters. The camouflage Fabric was reassessed on US$ 7.7. per meters whereas Liner Fabric for camouflage Farbic was reassessed at US$ 1.9650 per meter. The weight of Cordura Fabric imported by Messrs Samad Rubber Works Pvt. Ltd was approximately double that of the appellant. It is two meter per kilogram as against 4 meters per kilogram in the case of the appellant. This irrelevant and inadmissible reassessment on the basis of entirely different goods was upheld by the officer of original jurisdiction as well as by Collector (Appeals). Even the evidential invoice for similar goods imported by Messrs Usman Corporation for identical Nylon Fabric classifiable under PCT Heading 5407.4400 was not taken into consideration for the purposes of either valuation or PCT by the respondent-Collectorate as well as by the officer of the Directorate General of Customs Intelligence who seized the goods after being out of charge by the Port Qasim Authorities. That in doing so the respondents have discriminated the appellant through classification of their goods under Chapter 59 instead of Chapter 54 when compared with the G.Ds. filed by Messrs. Samad Rubber Works and Messrs. Usman Corporation. This also constitute a departure from existing practice in terms of Customs Rules 2001.

7. The learned Deputy Collector assisted by Mr. Ghulam Yasin A.O and Rana Gulzar from Directorate General Intelligence supported the impugned orders. They reiterated facts of the case and placed great emphasis on the issue of misdeclaration, aspect of PCT, test report result so on and so forth. They were however not clear on the point of discrimination in appraisement of different value in the case of imports by Messrs Usman Corporation Ferozepur Road Lahore reportedly trade rival of the appellants.

8. The following issues are framed for consideration of this forum- (i) Whether subject goods are coated fabrics correctly classifiable under PCT Heading 5902.1000 as determined by respondent? (ii) Whether the respondents have enhanced the declared value of the subject goods on the basis of admissible evidence in terms of section 25 of the Customs Act read with Rule 107 (a) of Customs, Rules 2001 further read with judgments of higher judicial fora? (iii) Whether an element of discrimination is apparent through application of different PCT in respect of the subject goods imported by the appellant when compared to similar goods imported by other importers?

9. The heading at Chapter 59 of Harmonized Commodity Description and Coding System of Brussels Nomenclature includes impregnated, coated, covered or laminated textile fabrics; textile article of a kind suitable for industrial use. To be more elaborate the Heading No.5903 applies to the textile fabrics, impregnated, coated, covered or laminated with plastics, whatever the weight per square meter and whatever the nature of the plastic material (compact or a cellular) other than: fabrics partially coated and partially covered with plastic and which usually pertain to Chapter 50,55,58 or

60. The sub-heading of Harmonized Commodity Description and Coding System of explanatory notes 5903 includes textile fabrics impregnated, coated, covered or laminated with plastics other than those of heading 5902. This heading covers textile fabrics which are impregnated, coated, covered or laminated with plastics e.g. Poly Vinyl Chloride. Such products are classified here irrespective weight per square meter and whatever the nature of plastic component (compact or cellular), provided that textile fabric is not completely embedded in, or coated or covered on both sides with plastics. As per laboratory report dated 4-6-2008 and subsequent confirmation report dated 30-8-2008 which have been vehemently contested by the appellant, it has been stated therein that the sample of the fabrics has plastic coating only on backside which can be seen with naked eye/visible change in colour. This is the criterion/yardstick which has been made the focal point and the very foundation for assessing the subject goods of the appellant under PCT Heading No.5903.9000. However, in doing so the respondent Collectorate has ignored Chapter Note 2 to Chapter 59 of the PCT which in unequivocal and unambiguous terms at exclusion 4 states as under:- "(4) Fabrics partially coated or partially covered with plastic and bearing designs resulting from these treatment (usually Chapter 50 to Chapter 55, 58 or 60)"

10. Since the goods of the appellant as per laboratory report and as per physical visual examination by the naked eye show that they are coated only on one side is tantamount to a clear and admitted conclusion that the goods are partially coated as opposed to being coated. As per rules of exclusion partially coating and coating are mutually exclusive of each other. The aforesaid specific exclusion of the partially coated fabrics from Chapter 59 and more specifically heading 5903.9000 bracket these partially coated fabrics with fabrics of Chapters 52,55,58 and

60. The above exclusion of partially coated textile fabrics which are impregnated, coated, covered or laminated with plastics is fortified and strengthened in view of the following proviso to sub-heading 5903 of Harmonized Commodity Description and Coding System. " .Textile fabric partially coated and partially covered with plastic and bearing designs resulting from these treatment (usually classified under Chapter 50,55,58 or 60)"

11. That the textile fabric is not completely embedded in, non coated or covered on both sides with plastic. This proviso No.3 leaves no room whatsoever for inclusion of subject fabrics under heading 5903 because they are not completely embedded in, nor coated or covered on both sides with plastic. The subject fabrics are for manufacture of rucksacks as per contract of the appellant and army and cannot be put to any technical use, which would classify these fabrics under Chapter

59. As such the classification done by the respondent Collectorate and Directorate of Intelligence is based on complete misconception of the relevant provisions of Harmonized Commodity Description and Coding System read with relevant provisions of Pakistan Customs Tariff. The goods are, therefore, correctly classifiable under PCT heading 5407.4200 of Pakistan Customs Tariff which covers woven fabrics of synthetic filament, yarn. As such issue No. (1) is answered in negative. The correct PCT shall accordingly be 5407.4200. 11-A. As regards issue No.(ii) regarding enhancement of the declared value of the subject goods by the respondent Collectorate in consultation with Directorate General of Customs Intelligence (DII) it is pointed out that the appellant through their goods declaration declared unit values of the subject 100% Nylon Fabric and liner fabric @ US$ 1.150 per meter FOB and US$ 0.880 per meter FOB respectively. However, these declared values were enhanced by the PACCS Customs House, Karachi @ 4.0804 per kg and US$ 5.6028 per kg respectively. Though G.D was completed by the Customs Authorities at Port Qasim the same was intercepted by officers of 'Directorate of Intelligence and Investigation and after issuance of the show-cause notice the already enhanced values were further enhanced on the basis of evidential import of trade rival Messrs Samad Rubber works under which similar goods Color affection Cordura-two tones were imported @ US$ 7.70 per meter. Even the declared PCT Heading 5407.4200 attracting customs duty @ 15% adval. was changed to heading 5903.9000 attracting customs duty @ 24% adval.

12. In the first place the first enhancement of the appellant's declared unit value of US$ 1.150 per meter FOB and US$ 0.880 per meter FOB to US$ 5.6628 respectively was done on the basis of evidence which has neither been disclosed either in the show-cause notice nor in the order-in-original. The goods were cleared by the appellants at the enhanced price to avoid demurrage charges as well as to honour contractual obligations with the army. However second enhancement after detention of the goods by DII and subsequent adjudication proceedings by the Additional Collector was done on the basis of evidential import of Messrs Samad Rubber Works Pvt. Ltd. who had imported a totally different main camouflage fabrics cordura in the year 2007. There are only two invoices of two trade competitors namely Messrs Usman Corporation Ferozepur Road Lahore and Samad Rubber Works Pvt. Ltd. Lahore available on record. The date of import of the subject consignment is 12-5-2008. The evidential import pertaining to Messrs Usman Corporation Lahore pertains to 11-1-2009 which has been imported 8 months subsequent to the importation of the appellant and is not applicable in terms 90 days valuation data in terms of section 25 of the Customs Act, 1969 read with Rule 107(a) of Customs Rules 2001. Similarly the date of import of other evidential import of Messrs Samad Rubber Works Pvt. Ltd. is 30-10-2007 and has been imported approximately 15 months prior to the subject import which is dated 12-5-2008. As stated earlier both the invoices relied upon by the customs authorities and DII for first and second enhancement of the declared invoice price of the appellant are not relevant and admissible in terms of relevant provisions of section 25 of the Customs Act, 1969 read with Rule 107(a) of Customs Rules, 2001 and as such enchantment of value done by the respondent is unlawful, illegal and without any legal basis. The same view has been expressed by the superior Courts of the country including Honourable apex Court in a number of judgments reported as under: - (i) 2002 PTD 2957; (ii) 2005 PTD 21, (iii) 2004 PTD 2993, (iv) 2006 PTD 1876, (v) 2006 PTD 232, (vi) 2007 SCMR 1357 = 2007 PTD 1858, (vii) 2008 PTD1250 and (viii) 2009 SCMR 438 In addition to the above legal position regarding valuation aspect the respondents were shown a copy of the contract concluded by the appellants with the army for supply of rucksacks etc. to be manufactured out of these subject fabrics. The total number of finished goods together with the prices/rates concluded with the army was seen by the respondent's representatives and nothing objectionable was deposed by them either verbally or in writing. As such issue No.(ii) is answered in negative.

13. As regards issue No.(iii) a perusal of both the invoices of similar imports of two competitors of the appellant relied upon by the respondents demonstrate and support the plea of discrimination advanced by the appellant beyond any shadow of doubt. In both the invoices relied upon by the respondents, one pertaining to Messrs Samad Rubber Works Pvt. Ltd. vide IGM Dated 30-10-2009 and the other pertaining to Messrs Usman Corporation Ferozpur Road, Lahore in GD vide IGM dated 11-1-2009 indicate that these fabrics have been classified under PCT Heading 5407.5200 and 5407.4400 attracting customs duty @ 5% ad valorem as 100% Nylon fabrics respectively as against the classification of similar fabrics of the appellant's under PCT Heading 5903.9000 attracting customs duty @ 25% ad valorem as textile fabrics coated with plastics. The detailed discussion under issue No.(i) supra also in unambiguous terms classifies the subject imported fabrics under PCT Heading 5407.4220 attracting customs duty @ 15% ad valorem. Hence a different treatment has been meted out to the appellant by the respondents which militates against the principles enshrined in Article 25 of the Constitution. A facility allowed to some one and denied to other is the case of discrimination. This view has been held by the honourable apex Court in judgment reported as 2005 SCMR

492. Wherein the apex Court has laid down the golden principle that "facility allowed to some one and denied to one is the discrimination." As such issue No.(iii) is answered in affirmative.

14. In view of' the various legal infirmities and violations of mandatory provisions of relevant provisions of Customs Act coupled with determination of incorrect classification of the subject goods under PCT heading 5902.1000 as against the appropriate PCT Heading 5407.4200 and enhancement of their declared transaction value on the basis of irrelevant evidential imports, the appellants have suffered multiple serious consequences due to non-fulfilment of their contractual obligations with the army, blockage of their funds and accrual of demurrage. The impugned orders are, therefore, set aside and the appeal is allowed accordingly. The appellants are entitled to issuance of delay and detention certificate if so required. C .M. A. /27/Tax(Trib.) Appeal allowed.