2024 PLP (Trib (PTD)

SHAKIL AHMED ABBASI, MEMBER JUDICIAL-III.

By this judgment, I intend to dispose of the instant appeal filed by Appellant against Order-in-Appeal No. 870/2017 dated 29.12.2017 passed by Collector of customs (Appeals) Karachi.

2. Brief facts of the case was reported by the Directorate of Post Clearance Audit, Karachi, that during the scrutiny of data of importer, it was found that M/s ESSEF Traders, Karachi, NTN # 3798625-2, has importer 01 consignment of Aerosol Spray Paints under PCT Heading 3208.9090 and cleared the same from MCC Appraisement (East), Custom House, Karachi vide GD No. KAPW-HC-167273 dated 16.06.2014 through their clearing agent M/s Zed Bee Enterprises, CHAL No. 1977, 26, 3rd Floor, Main Chamber, Shahrah-e-Liaquat, Karachi, Paying Custom Duty @ 12.5% after claiming benefit of SRO 659(I)/2007 dated 03.06.2067. However, the subject goods are correctly classifiable under PCT 3208.2090 attracting Customs Duty @ 20% Sales Tax @ 17% Additional Sales Tax @ 3% and Income Tax @ 6%. By the way of mis-declaration of classification, M/s ESSEFF Traders, Karachi has evaded / short paid Customs Duty Rs. 134,830/- Sales Tax Rs.22,921/- Additional sales tax Rs. 4045/- and income tax Rs.21,843/- totaling Rs. 183,639/- Therefore the importer has violated the provisions of section 32(1) (2) and (3A) of the Customs Act, 1969, sections 3, 6 and 7 read with section 34 of the Sales Tax Act, 1990 and section 148 of Income Tax Ordinance, 2001 and section 7A of the Sales Tax Act, 1990 read with Chapter X of the Sales Tax Special Procedure Rules, 2007 (special producer for payment of sales tax by the importers) and under relevant provision of Income Tax Ordinance, 2001.

3. Accordingly a show-cause notice was served upon the respondent and after due process and affording opportunities of defense the impugned Order-In-Original 642/2016-2017 dated 05.05.2017 which was challenged before Collector of Customs appeals, vide appeal No. 870/2017 dated 29.12.2017 which was disposed off Operative part of this Order-in- Appeal is reproduced as under- ""I have examined the records of the case and the arguments placed before me form the applicants/ and the respondents side. The matter involved is a controversy of classification of imported goods "Aerosol Spray Paints". The goods were cleared under heading 3208.9090 by collectorate of Customs, Appraisement-West, Karachi. The Directorate of Post Clearance Audit has on audit of the importer, considered the classification of the goods under heading 3208.2090. Under the latter heading, as per the audit, the importer is disentitled for exemption in SRO 659(I)/2007 dated 03.06.2007. PCT heading 3802.2090 is meant for Paints based on which audit has concluded that the spray paint of the importer is based on acrylic or vinyl polymers. The appellant on the other state that their paints are based on polyamides which are to be classified under heading 3208.9090 the appellant has produced order-in-original Appeal bearing No.319/2017 dated 03.07.2017, 425/2017 dated 15.08.2017 and 457/2017 dated 15.08.2017 wherein the collector (Appeals) had already decided the identical cases as without any evidence to the contrary, it can be safely presumed that the paints are polyanside based as contended by the appellant. Thus the impugned goods do not fall under heading 3208.2090. The contention of audit is therefore found to be incorrect. The order-in-original is thus set aside and the appeal is allowed."

4. Being aggrieved with this Order-in-Appeal, the appellant filed this appeal on the following grounds:- A. That the impugned Order-in-Appeal is ab-initio illegal, unjust and without application of judicial mind and provision of the Act. The Order-in-Appeal has been passed without considering the view point and supporting evidence of the department hence the same becomes ex-parte in nature. The Order-in-Appeal does not mention even a single word from the arguments put forth by the Departmental Representative while the DR had argued extensively during the hearings and had also furnished evidence / supporting documents for placement on record. B. That the learned Collector (Appeal) completely ignored the submissions of the Departmental Representative regarding the fact that the identical goods vide GDs Nos. KPPI-HC-55799 dated 11.06.2014, KPPI-HC-4005 dated 19.07.2014, KAPW-HC-26770 dated 15.08.2015, KPPI-HC-21897 dated 14.10.2014, KPPI-HC-50612 dated 14.05.2014 were cleared under correct and appropriate PCT Heading 3208.2090 attracting Custom Duty @ 20%. C. That the Collector Appeal has erred in law by not considering the submission of DR that similarly identical goods imported by other traders vide GD Nos. KPPI-HC-36409 dated 14.02.2015 and KAPW-HC-53709 dated 14.10.2014, upon test were found to be acrylic based and consequently the concession under SRO 659(I)/2007 was disallowed and the goods were assessed under appropriate PCT heading 3208.2090.

5. The Respondent/ Importer filed parawise comments in reply to memo. of appeal as under:- A. That appeal is three days time barred whereas law is very clear about time barred there is no relief for indolence. The appellant/ department is not mentioned any sufficient cause for delay filing appeal, therefore it is requested on behalf of respondent/trader that honorable court may kindly be dismissed the appeal on this ground. The appellant/Department filed this appeal on the bases assumptions and similar grounds without direct evidence in their hand only for harass importer and misleading this honorable appellate tribunal and thus come up with unclean hands is not eligible to get any equitable relief. The Respondent/ importer is duly registered persons with the Customs Department Sales Tax Department and Income Tax Department (Inland Revenue) of the Federal Board of Revenue and regularly filing monthly Sales Tax and Income Tax returns within due date and time. Moreover the trader is a bona fide tax payer and have a good record of tax compliance and since the date of registration no audit objection or any other irregularity has been communicated by the department up till now. B. That the respondent/importer is law abiding citizen and responsible professional businessman and engaged in his business in a lawful / legal manner accordingly, in the normal course of business the trader imported the various consignments from various countries the goods are consumed distribution and sale the same in open market to the various registered persons and un-registered persons for past many years and maintain all prescribed records of the Customs Sales Tax and Income Tax properly and pay all duty and taxes, honestly diligently and regularly, for the last many years and having commanding a good reputation in the business sector accordingly and always did her job honestly with dedication sincerity and trustworthily for the entire satisfaction of the business clients keeping in mind the prime interest of national exchequer i.e. local and abroad. C. That the respondent/ Importer is engaged in lawful purchased / imported the consignments in the normal course of business and distribution / sale of imported the consignments for past many years and filed the Goods Declarations with the Customs Authorities for clearance of imported goods, declared the true complete and correct particulars of such goods, description quantity classification of the imported goods and value of the imported goods and particulars of the goods, without concealing actual goods on the GDs as per under Section 79(1)(a) of the Customs Act, 1969 read with Customs Rules duly supported by the Commercial Invoice Packing List and Bill of Lading or any other documents required for clearance of such goods which is clearly indicate the imported goods i.e. Description and Classification of goods quantity quality weight and value amount or any other documents required for clearance of such goods, after proper scrutiny of documents and physical examination of goods, the GDs was cleared as per declared not only this the leviable amount of duty and other taxes were also paid in the National Bank of Pakistan in terms of clause (b) of subsection (1) of Section 79 of the Customs Act, 1969 and the imported goods are already out of charge / cleared by the Customs Authority the Customs never could find any error / mis-declaration, nor is any demand raised at the time of clearance which indicate / transpires that the Appellant is fair and honest importer. The procedure for filing Goods Declarations for home consumption under Section 79(1) of the Customs Act, 1969 and Rule 433 of Sub-Chapter III of Chapter XXI of the Customs Rules, 2001 and no charge can be levelled under the said Section by virtue of the fact that it is a machinery Section. The declaration filed by Respondent is in conformity with the import documents no procedural contravention has been made in filing the Goods Declarations rendering the invoking of Section 79(1) without lawful authority and jurisdiction. It would be appropriate to analyze the scheme and mechanism of the assessment as provided in the Act, therefore, for case of reference the provisions of said sections 79 and 80 of the Customs Act, 1969, The imported goods declaration under Section 79(1)(a) if the Customs Act, 1969 i.e. true and correct description of goods complete and correct particulars of such goods quantity import value of the goods and classifiable under HS Code 38089090. The appellant verified its authenticity from there-own sources independently. That the only charge against the respondent is that wrongly claimed and wrongly got assessed the goods on concessionary rate of duty / losses the revenue there is no charge that declaration in respect of nature description quantity origin and value of imported goods was found to be wrong neither declared by the respondent. In the case of Eastern Rice Syndicate v. Collector of Customs (PLD 1959 SC 364), the Supreme Court has held that in order to attract the penal provisions of Section 39 (now Section 32) it must be established that the person who alleged to have made any statement in a document submitted to the Customs Authorities must be false to his knowledge, and it would depend upon the facts and circumstances of each case. It is not disputed here that the statement made in the Customs documents regarding the nature weight, HS code and value of the imported goods were in anyway wrong rather that information was found correct and true. That the similar controversy is all ready solved by this Honorable Customs Appellate Tribunal in Appeal No.K-24/2017 and the Honorable High Court of Sindh vide 1991 PTD 551 held that " any action which is based is based on no evidence is not permitted by law "the trader filed goods declaration as per correct HS Code which was properly examined and after fully satisfaction, collectorate released goods and out of customs charge therefore allegation against the trader not sustainable in the eyes of law and without showing direct evidence in their hands.

6. Hearing in the matter was fixed. The learned counsel did not press for Appeal's 3 days' time barred issue and opted for arguing / responding on merit. I have examined the records of the case and the arguments advanced by the counsel of the Appellant and the respondent No.1. The matter involved a controversy of classification of imported goods "Aerosol Spray Paints". The goods were cleared under heading 3208.9090 by Collectorate of Customs, Appraisement-West, Karachi. The Directorate of Post Clearance Audit had conducted audit of the importer, considered the classification of the goods under heading 3208.2090 and found that the importer is disentitled for exemption in SRO 659(I)/2007 dated 03.06.2007 as PCT heading 3802.2090 is meant for Paints. On this basis audit had concluded that the spray paint of the importer is based on acrylic or vinyl polymers, therefore, it is not "paint" to qualify for exemption. The Respondent No.1 on the other hand stated that their paints are based on polyamides which are to be classified under heading 3208.9090. The Respondent has relied upon Customs Appeal No. K-24/2017 on identical issue which has already been decided by this Tribunal. The counsel for Respondent further relied upon Supreme Court judgment cited as PLD 1959 SC 364, 1991 PTD

551. These rulings support his contention that once goods are cleared and out of custom charge, thereafter, no allegation against the imported goods is sustainable in the eye of law.

7. I have given anxious thought to the facts, law and applicable case laws on the point. Appellant department has failed to produce single evidence on bases of which audit document was created, therefore, it can safely be presumed that the impugned paints are polyamide based as contended by the counsel for the Respondent No.1. Thus, the contention of audit is found to be incorrect. Instant appeal being devoid of merit and without any substance is hereby dismissed. Order passed by Collector of Customs (Appeals) is upheld, being well reasoned and unexceptionable.

8. The Appeal stands disposed of in above terms. MQ/42/Tax (Trib) Appeal dismissed.