2010 PLP (Trib (PTD)

MUHAMMAD ARIF MOTON (MEMBER JUDICIAL).

This order will dispose off Customs Appeals No.K-192 of 2006 filed by the appellant against Order-in-Appeal Nos. 128 to 130 of 2006, dated 24-4-2006 passed by the Collector of Customs, Sales Tax and Federal Excise (Appeals-I), Karachi.

2. Brief facts of the case as reported by the Appraisement Collectorate, vide their Contravention report NOSI/MISC/97/2005-IV are that appellant imported a consignment consisting of "Unworked Glass Beads" and filed Goods Declaration vide IGM No. 820 of 2005 dated 29-4-2005 and Index No. 93 and bearing Machine No. HC-150031 dated 30-4-2005 through clearing agent Messrs A.H. Enterprises (CHAL No.1029), Karachi. The Goods Declafation was referred for First Examination. As per physical verification the description of the good was found as per declaration, however, representative sample was sent to Customs House Lab for test, wherein it was reported that the goods are worked glass beads vide test Report No. 42 of 2005 dated 7-5-2005. Had this misdeclaration of the description gone undetected the Government would have been deprived of its legitimate revenue. Thus by mis declaring description of the consignment in material particulars, the importers have committed an offence under section 32(1) of the Customs Act, 1969, punishable under Clause (14) of section 156(I) of the Customs Act, 1969. Hence, show-cause notice was issued to the appellant by the Deputy Collector (Adjudication-I) vide No.SI/MISC/96/ 2005-IV/418/Adj-1/2005 dated 16-5-2005. Consequent to which the appellant submitted an application for early adjudication, subsequently, after providing opportunity of hearing, the adjudicating authority passed order-in-original dated 18-5-2005 holding that the appellant misdeclared the description and value. Hence, guilty of. offence under section 32 of the Customs Act, 1969, while observing in para. 5 that: "I have gone through the case record considered submission of the respondents. The offence of misdeclaration under section 32(I) of the Customs Act, 1969 under clause (14) of section 156(I) is established and admitted as well. The offending goods i.e. Worked Glass Beads are confiscated under clause 14 of the Customs Act, 1969 however the importers are allowed to get redeemed the same on payment of in equal to 30% (thirty per cent) of the value of the offending goods in terms of section 181 of the Customs Act, 1969 read with S.R.O, 374(I)/2002 dated 15-6-2002 besides the payment of duty and taxes leviable thereon. A penalty of Rs. 15,000 (Fifteen Thousand only) is also imposed on the importer for violation of law."

3. The order was challenged before Collector (Appeals) who also vide his order dated 24-4-2006 rejected the appeal by observing that:-- "I have examined the case record and given the consideration to the arguments made before me. I find that the appeal is time-barred by 264 days, the impugned order was passed on 18-5-2005 and the appeal was due by 17-6-2005 while the same has been filed on 9-3-2006. The appellant consultant contended that the appeal was not filed on time because the appellants were busy contesting the case before the Hon'ble FTO. They have not come up with any other justification for late filing, of the appeal. The aforesaid plea is not tenable for the reason that the remedy available under the FTO law is of administrative nature and matter relating to quasi judicial forums cannot be contested before the Hon'ble FTO. Therefore, the time spent on pursuing the matter with an irrelevant forum cannot be deducted for the purpose of computation of time limit. From the record it is established that the appellants had preferred to avail an administrative remedy and intentionally ignored the time limit of 30 days prescribed under section 193(i) of the Customs Act, 1969 for filing of appeal against the impugned order. Under the circumstances, I hold that the justification for condonasion of time bar presented by the appellants' consultant is not admissible under the law and, therefore, I reject the appeal as time-barred.

4. The appellant has now challenged the above orders by way of this appeal. The consultant Nadeem Ahmed Mirza appeared on behalf of the appellant who reiterated the arguments incorporated in the memo of the appeal. And emphasized that: (a) That it is erroneous on the part of respondents to consider the office of Hon'ble Federal Tax Ombudsman as an Administrative forum and himself as Judicial. (b) That the Hon'ble Federal Tax Ombudsman enjoys the power of the Court and each complaint lodged, is against the Revenue Division, to which the respondents are employed and perform their duty in accordance with the framed rules and report their performance to it. The respondent working is therefore of an Administrative nature and not a Judicial nature. Their acts and commissions fall within the preview of Ordinance No. XXXV of 2000. (c) That since the appeal before respondent No.1 was filed as per recommendations of the Hon'ble Federal Tax Ombudsman. Resultant it was mandated upon him to condone the delay in submission of the appeal and decide the case after considering the facts and relied upon authorities as the order of the Hon'ble Federal Tax ombudsman is binding upon him being a field formation of the Revenue Division. (d) The appellant goods were found as per declaration by the examining official after conduction of examination that is "Glass beads" as is evident from the endorsed examination report which clearly depicts that the glass beads are in assorted colours and sizes. Nevertheless, the sample was forward to the group as per examination order for verification of the other aspect namely H.S. Code and Valuation. (e) That it was mandated upon the group officials only to determine the aspect of the H.S. Code and Valuation as per manifest duty instead of re-verification of the description which already stood verified. The aspect of verification of description through laboratory is contrary to the rules and regulations and speaks about mala fide intentions. The said fact derives strength from the endorsement on the reverse of GD of the examination officials, which states "R/s in its original form is forwarded to group" meaning "unworked glass beads" confirmation of which was already given in the examination report. Meaning, the examining officials were well aware of the fact that the group officials invariably substitute the sample for blackmailing or penalizing the importers in case of not acceding to their nefarious designs and the said facts stand further endorsed from the remarks on the reverse side of the test memo issued by the laboratory stating that "the report pertains only 'to the samples forwarded tested in the laboratory". Meaning, they were also of the view that the sample tested by them was of the consignment in question or otherwise (substituted). (f) That the order of the competent authorities i.e. shed staff comprising of Examiner/Appraiser and Principal Appraiser regarding confirmation of the description of imported goods of our client stand final, unless those were not reopened by the Collector of Customs under subsection (1) of section 195 of the Customs Act, 1969 if the order so passed at any later stage was found to be suffering from legal infirmity. (g) That neither the Board nor the Collector reopened the said order to date in exercise of the power conferred under section 195 of the Act and the group officials in violation of the provision of the Customs Act, 1969 reopened the order of the shed themselves and proceeded to dispute the description, which was not available as those were "glass beads" and getting it verified according to their whims and wishes on the basis of sample arranged by them. The said fact was completely overlooked by Deputy Collector (Adjudication) prior to the issuance of show-cause notices and simultaneous order-in-originals. Instead of acting as a judicious authority she mechanically acted as a sub-ordinate, and signed the draft show-cause notice and the order-in -original on the strength of those vague contravention reports/ notices prepared by respondent No. 2. (h) That since the examining officials verified the description, quantity and quality in examination report dated 4-5-2005 as per examination order dated 30-4-2005 given by the group officials, reading as: please inspect the lot and examine 10%. Verify description, quantity, weight, brand size and I/O as per BIE and invoice confirms T.D and S.T. Please also send sample to group confirm worked or unworked". The examining officials accordingly verified that "quantity description, quantity, weight brand size and I/O as per. B/E and invoice confirmed T.D. and S.T. Please also' send sample to group confirms worked or un worked". The examining officials accordingly verified that "quantity, description, PCT Heading and I/O as per declaration and for verification of the rest of the aspect, the representative sample was forwarded to group officials only." The said examination report was signed by Examiner, Appraiser and Principal Appraiser. Resultant, there were no need for further verification of the description by the group as the issue in regards to description, quality stands decided and as such past and closed issue. In case the group officials were of the opinion contrary to the examination report (order) signed by the officer of the customs. It has to be reopened by the competent authority under section 195 of the Customs Act, 1969 as held by Hon'ble Federal Tax Ombudsman, in its findings/decision bearing No.804-K/2004 in the case of Messrs Saleem Enterprises v. Revenue Division and Appellate Tribunal in Customs Appeal No. K-156/2004 dated 15-7-2004, Sales Tax Appeal No.K-2352/99 dated 18-10-2001 and Sales Tax Appeal No. K-106 of 2003 dated 20-8-2003 in the cases of Messrs New Mashallah Old Electric Works, Faisalabad, Unitex Towels Factory, Karachi and Messrs Silver Corporation, Karachi v. The Collector of Customs, Sales Tax and Central Excise (Adjudication), Karachi-I, Collector of Customs (Appeals) and The Additional Collector of Customs, Sales Tax and Central Excise (Adjudication), Karachi-III. Since no order was obtained and the settled issue was reopened by the officer of same grade i.e. Principal Appraiser on his own. Hence the said act was done contrary to the Law, Rules and Regulations and appellant was charged for misdeclaration in the absence of any order of the competent authority. The said act and commission of the 'respondent was transgressing the provision of section 195 of the Customs Act, 1969, despite no powers and jurisdiction (copies of judgments are already with the group official). (i) That since the H.S. Code for unworked or worked glass beads were one and the same i.e. 7018.1000 and applicable to same rates of duties and taxes. No charge of misdeclaration under section 32 could had been levelled against the appellant by virtue of no revenue loss due to the said fact. Contrary, the respondent No.2 constituted a case of misdeclaration against the appellant and he proceeded with the fictitious adjudication proceeding completely in negation of the vividly cleared provision of section 32 of the Customs Act, 1969 and direction issued by the Board in clause (ii) and (iii) of sub-para. (b) of Serial No. 101 of the Customs General Order No. 12 of 2002 dated 15-6-2002. For the sake of convenience the said 2 clauses are reproduced here-in-under: (i) When a consignment is found to contain goods or description other than the one declared falling under separate PCT Heading but chargeable to same rate of duty. (iii) Where the description of the goods is as per declaration but incorrect PCT Heading has been mentioned in the bill of entry no misdeclaration case under section 32 of the Customs Act, 1969 be made out provided there is no change in the rate of custom duty as a result of PCT Heading. (j) That the second charge in the show-cause notices is of the mis declaration of value as evident from the shown loss of revenue. The figure shown in contravention reports/show-cause notices cannot be considered as valid in the eyes of law, unless, it is not proved by respondent No. 2 and Deputy Collector (Adjudication) that the appellant has not paid the value of the goods as specified in rule 113 of Sub-Chapter III of Sub-Chapter I of Chapter IX of Customs Rules, 2001 and the whole transaction is dubious and manipulated. (k) That when no charge with unrefutable evidence, has been levelled in the show-cause notice. It is mandated upon the filed formation and the respondents to accept the declared value of the appellant as fair within the meaning of transaction value in terms of section 25(1) of the Customs Act, 1969. (l) That if the respondent ignored the provision of law and doubted the correctness of declared value, then the value has to be ascertained with the application of different subsections of section 25 of the Customs Act, 1969 in sequential manner while complying the provisions of Customs Rules, 107 and 122 of Sub-Chapter 1 of Chapter IX of Customs Rules, 2001. Contrary, the value determined at the time of clearance and even through the impugned order-in-original is unilateral and arbitrary, without proving that the declared value of the appellant was false as held by the Customs, Excise and Sales Tax Appellate Tribunal, Lahore in its reported judgment 2005 PTD (Trib) 617 corresponding to Appeals No. 1668/LB and 1669/LB of 2002 filed by the Collector of Customs, Lahore and as per rule of interpretation of statute. (Copies of judgments are already with the group official). (m) That since the value enhanced in the appellant case was without any basis and reason, despite incumbent upon the respondent No.2 to make a contravention report and forward the case to the respective adjudication for decision along with evidential invoice of the same period and country of import as defined in sub rule(a) of rule 107 of Customs Rules, 2001 read with clause (i) of Serial No. 78 of Chapter XIV of C.G.O. 12/2002 dated 15-6-2002, reading as: "In case involving misdeclaration of value the precise basis on which the declared value are held to be misdeclared should be clearly spelt and copy of the evidence on the basis of which it is so held should also be supplied to the party after omitting the names of the local importers of identical goods which are not required to be divulged to them." (n) The stance of appellant hold strength from the hosts of judgments of Supreme Court and High Courts of Pakistan and even by the Federal Tax Ombudsman in its findings in Complaint No. C-401-K of 2003 reported vide (2004 PTD 100) and in Review Application No. 68 of 2004 further endorsed by the Customs, Excise and Sales Tax Appellate Tribunal in its Order No. K-222/2004 dated 1-12-2005. Wherein, their lordship and the Hon'ble Ombudsman held that the valuation of the imported goods has to be done strictly in terms of the provisions of section 25 of the Customs Act, 1969 and Chapter IX Customs Rules, 2001. The ascertainment of value under any other method is erroneous and devoid from legal infirmity and charging a person for misdeclaration of value in the, absence of any valid documentary evidence as per mandated requirement of law is void, ab initio and of no legal effect and so the issued show-cause notice as held previously by the Bench of High Court of Sindh in its reported judgment (1986 MLD 790) Messrs Mughal Tobacco Company Ltd., v. Collector of Customs, held that "the impugned order dated 31-12-1981. In our view, suffer from an error which is apparent on the face of the order and that is that it does not disclose the material on the basis of which valuation was fixed for Rs. 1,000,000.00. The figure of Rs. 1,000,000.00 was apparently fixed arbitrarily by the customs authorities. The order dated 31-12-1981 in the circumstances, cannot be sustained." The ascertainment of appellant imported goods on speculation basis abundantly suffer from legal infirmity. (copies of judgments are already with the group official). (o) The value of imported goods is to be termed true transaction value under section 25(1) of the Customs Act, 1969. Nevertheless, the same has been disputed by the customs without any rhyme and reason and above all abundantly in negation of the provision of section 25 of the Customs Act, 1969, read with Chapter IX of Customs Rules 2001 and Serial Nos. 78 and 101 of Chapter XIV and XV of CGO 12/2002 dated 15-6-2002. Resultant, to bring home allegation of mis-declaration of value rest on the part of customs under Article 117 of Qanun-e-Shahadat as held by High Court of Sindh in its reported judgment (PLD 1996 Karachi 68) in the case of Kamran Industries v. The Collector of Customs, Exports; (1992 SCMR 1083) Latif Brothers v. Deputy Collector of Customs, Lahore; PLD 1959 SC (Pak.) 364 Eastern Rice Syndicate v. C.B.R.; and (1969 SCMR 708) The Collector, Central Excise and Land Customs, Chittagong v. Imdad Ali and (2004 PTD 2592) Karachi Bulk Storage and Terminal (Pvt.) Ltd., v. Controller of Customs (Valuation) Karachi and others. Their Lordships of High Court of Sindh in this latest judgment held that: "Enhancement of value of goods by the Customs Department on the ground that the declared value was not the true price

Basic requirement for refusing to accept the declared price in view of section 25, Customs Act, 1969 was that the department was in possession of sufficient material on the basis of which it could be said that department has rightly come to the conclusion that the declared price/value of the goods by way of concealment or undervaluation or was not the true price

Onus was on the Customs Authorities to prove that the declared price was untrue before the same could be rejected warranting the enhancement or determination of the value/price

Customs Department, in the present case, failed to produce any withdrawal or evidence in support of their contention that they had relied on the very important material in concluding that the declared price was not the true price, was by way of concealment or was undervalued and further that at the relevant time the price of the goods in question was more than the declared price

In view of lack of material, the action for rejection of the declared values/prices and for determining/ascertaining of the value or price of goods, would appear to be arbitrary, whimsical, capricious and in complete disregard of the provisions of section 25, Customs Act, 1969 which required the Customs Authorities to disclose evidence or material for rejecting the declared value/price and enhancing/determining the same

(copies of judgments are already with the group official). (p) The Deputy Collector (Adjudication) upon receipt of contravention report has to apply his mind independently without any bias regarding the charges and applicability of the respective sections prior to issuance of the show-cause notice as mandated by the Board vide its letter No. Dy-730-M (L)/2002 dated 15-6-2002 with the caption "Principal and Functions of Adjudication and guidelines for Adjudication Officers". In the case of appellant, the adjudicating authority least acted as mandated upon him by the board and simply signed and dispatched the draft show-cause notice forwarded to him by the Collectorate of Appraisement, Karachi. The said act is never being appreciated by the August Courts of Pakistan. Reliance is placed on the reported judgments of High Court of Sindh (2004 PTD 369) in the case of Messrs Zeb Traders v. Federation of Pakistan and others, wherein their lordships held that "The proceedings before the Adjudication Officer under the Customs Act, 1969 are in the nature of quasi-judicial proceeding and issuance of notice under section 180 of the Customs Act, 1969 is very important documents. The decision to issue show-cause notice is to be taken by the Collector Adjudication by application of independent mind and not merely signing the draft show-cause notice submitted by the investigating agency. By virtue of signing a show-cause notice prepared by the agency, the adjudicating authority in fact acted as subordinate to the agency, hence lost his creditability and so the truthfulness and legality of the order-in-original issued by him. (Copies of judgments are already with the group official). (q) Intention of statute: The first principle in interpretation of. statute is that the intention of the legislature is to be ascertained by reference to the words used and the grammatical and ordinary sense of the words is to be adhered to, unless that would lead to some absurdity or some repugnancy or inconsistency with the rest of the statute. Where the language of a statute is clear and unambiguous, it must be interpreted in its ordinary sense. A reasonable interpretation is to be preferred to one that least unreasonable result. The state of the law at the time a statute was passed is a matter material to be considered to arrive at the intention of the legislature [AIR 1936 Pat 282 = 162 and Cas 550 (DB)]. (r) That no authority i.e. Revenue Division, Appellate Tribunal, High Court or Hon'ble Federal Tax Ombudsman can interpret a provision of any Act or Notification manoeuvering, stretching or interpreting in a manner to empower any authority or to protect any illegal act, damaging vested right of a citizen in a way to by pass such course and to destroy the whole fiber and scheme of statute as held by High Court of Punjab, Multan Bench in its reported judgments 2002 MLD 296 corresponding to the case of Collector of Customs, Multan v. Muhammad Tasleem Lodhran bearing Customs Appeal No. 4 of 1998 "that, an order issued by the C.B.R. is binding upon the appropriate officer. The Tribunal could not directly or in directly allow a relief. The provisions of sections of Customs Act, 1969 allow discretion to the executive limp of State in order to regulate the system in the prospective of financial or social requirement of the 'people of the country. The order so made betray the policy of the State and therefore neither the departmental officer nor the Tribunal could deviate from it. Being a creature of statute, it cannot go beyond the statute to declare, directly or indirectly, any of the provision to be illegal or inapplicable, where these are clearly attracted." (Copies of judgments are already with the group official). (s) That it is also not out of place to place reliance on the judgment of High Court (2004 PTD 90) Messrs Hashwani Hotels Ltd., v. Federation of Pakistan held that "in a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be employed. One can only look fairly at the language used and the Supreme Court of Pakistan held in its reported judgment (1993 SCMR 274) of Messrs Mehran Associates Limited v. The Commissioner of Income Tax Karachi that "the cardinal principle of interpretation of the fiscal statute seems to be that all charges upon the subject are to be imposed by clear and un ambiguous words. There is no room for any intendment nor there is any equity or presumption as to a tax. A fiscal provision of statute is to be construed in favour of the tax payer and in case of any substantial doubt the same should be resolved in favour of the citizen. (Copies of judgments are already with the group official).

5. The departmental representatives Mr. Wahid Buksh, Assistant Collector Group-III and Rana Insaram Rabbani appeared on behalf of the respondent and furnished their comments on above cited grounds of appeal inter alia as under: (a) The appeals under section 193 of the Customs Act, 1969 were badly time-barred. Hence, the learned Collector (Appeals) order is very much correct and within four corners of law. (b) That the contents of grounds (a) are incorrect, hence, denied. (c) That the contents of grounds (b) are incorrect, hence, denied. (d) That the contents of grounds (c) are incorrect, hence, denied. (e) That the contents of ground (d) are incorrect, hence denied and it is reiterated that as per B/L and examination report the goods were found as "Glass Beads in Assorted Colours" whereas importer's declaration was for "Un-worked Glass Beads". (f) That in the light of submission made above the contents of grounds (e) are incorrect, hence, denied. (g) That in the light of submission made above the contents of ground (g) are incorrect, hence denied. It however, respectfully submitted that the procedural acts of examination and assessment can not be termed as an order passed by the judicious authority, thus it can not be termed as a case where re-opening under section 195 of the Customs Act, 1969, is mandatory. Further as stated above the description of goods was not found as declared by the appellants. (h) That it is clear case of misdeclaration of physical description/ specification, submission of documents which are false in material particulars and even not matching with the contents of B/L and suppression of value with an intention to deprive the government from its legitimate revenue, hence the provisions of Serial No. 101 of CGO 12/2002 cannot be used as defense/ refuge. Further without prejudice to above the provisions of CGO 12/2002 are not providing a license to an importer to mis declared the goods on the plea that the PCT Heading is same. It is also pertinent to mention here that all TV's are classify under one PCT Heading thus an import by declaring 12 inches TV cannot import 60 inch TV. (i) That in the light of submission made above the contents of ground (i) are incorrect, hence, denied, it is however, respectfully submitted that nowhere in Section 25 of the Customs Act, 1969, it has been stated that every declared value is to be accepted for assessment purposes and rather the provision of subsection (1) of section 25 of the Customs Act, 1969, asking for the acceptance of a payable transaction value (which is not in this case) as customs value on the following conditions: (i) subject to subsequent subsections of section 25 and rules (i.e. Chapter-IX of the Customs Rules, 2001). (ii) That the value paid by an importer must be in agreement with the payable: value in the market of similar kind of goods. That first of all it is proved from the record of the case that no information or corroborative documents were provided and the petitioner has failed to provide any corroborative documents i.e. L/C etc. to prove the transaction of even suppressed declared value, thus, the appellant was even failed to substantiate his "paid" value. Secondly, the Appropriate Officer, by virtue of powers conferred under subsection (ii) of section 25 of the Customs Act, 1969, shall have a right to satisfy himself whether the "paid" value is true "payable" transaction value to be considered as customs value for assessment purposes. For this purpose apart from other information/documents, as required for assessment by the customs, the importer is duly bound to provide the information about the price adjustments, along with corroborative documents, as envisaged in subsection (2) of section 25 of the Customs Act, 1969. Admittedly in the instant case the appellant has failed to provide the said information/ documents, thus in terms of clause (f) of section 25(2) of the Customs Act, 1969, there was/is no question to accept the declared value as customs value in terms of section 25(1) of the Customs Act, 1969. The record and circumstances of the case proving that the customs value of the Appellant's consignment can not be determined on the basis of appellant's declared value. Thirdly, the words subject to the provisions of this section and rules", appeared in section 25(I) of the Customs Act, 1969, have a great importance while accepting any transaction value as customs value. These words clearly confirms that even if an importer proves his declared value as paid transaction value in that case too the acceptance of the said value as customs value is subject to comparison with the 90 days' data of the customs values in terms of Rule 107 of the Customs Rules, 2001, if the said declared value is not in agreement with Rule 107's data then the same can be accepted as payable transaction customs value. Fourthly it is respectfully submitted that in the appellant's consignment the declared value was for Un-worked Glass Beads" whereas on examination the Glass Beads were not found "Unworked" and in fact on test the goods were found as "Worked/processed Glass Beads", thus, the misdeclaration of physical description/specification also suggest that the declared value is not even commensurate with the found description. (j) That considering the quality/specification of Glass Beads found after test there is no question to accept the declared value for assessment purposes. (k) That the goods were found different and superior in quality, hence the appropriate officer has every right to enhance the value according to the quality and better specification. (l) That in the light of submissions made above and considering the very fact that is a case of deliberate misdeclaration of physical description/specification and submissions of documents/ declaration which are false in material particulars, thus the citations referred in grounds (n) are not relevant or applicable on the appellant's case.

6. The consultant of the appellant exercising his right of rebuttal, submitted rejoinder comments on the counter submission/ comments of respondent No. 2, with the reiteration of the followings:-- (a) That the objection, that the appeals filed by the appellant with the Collector of Customs, Appeals under the provision of section 193 of the Customs Act, 1969 were barred by time is not relevant at this stage as the subject issue stood diluted, when the appellant appeals before the Appellate Tribunal are within time. Nevertheless, for the sake of regularization the appellant submits that since he was pursuing his case before the legal authority namely Federal Tax Ombudsman and time consumed during the said proceeding cannot be counted under law, for calculation of limitation and as such his appeal has to be considered within time by the Appellate Authority. Contrary, the respondent No. 1 despite being a field formation termed himself a legal forum despite not and rejected the appeal summarily as time barred, instead of condoning the delay if any for the sake of regularization, justice and fair play, for which application was submitted by the appellant along with affidavit. (b) That the respondent No. 1 should have decided the appeals after consideration of facts and grounds as his appeal was not barred by time as held by the Appellate ' Tribunal in Customs Appeals No.K-112/2006 (K.K. Enterprises v. The Collector of Sales Tax and Federal Excise (Appeals), wherein it was observed while rejecting the plea of the department that the appeal is time barred that "as regards the first issue it is evident from the record that the appellant has been pursuing a legal remedy against the order in original. Hence, his appeal cannot be treated as time-barred." (c) That the respondent No. 2 accepted the said order of the Appellate Tribunal and had not filed a reference with the High Court of Sindh under section 196 of the Customs Act, 1969. Resultant, the said order attained finality and no second opinion can be formed in this context. Even otherwise, the order of the Tribunal is binding on the Bench of Appellate Tribunal, unless it is set at naught by the decision of the full Bench of the Tribunal. Reliance is placed on the reported judgment of Tribunal 2003 PTD (Trib.)

220. Messrs 3N Traders v Collector (Appeals) Central Zone, Lahore. (d) The appeals filed before the respondent No. 1 were not hit by limitation, by virtue of the fact that firstly the appeals were in continuation with the proceedings as narrated in facts 15 to 17 of memo of appeals and secondly the orders passed by the Deputy Collector of Customs (Adjudication-1), were nullity in law. Hence, void ab initio. Bar of limitation does not operates in such cases as evident from the dictum laid down by the Supreme Court of Pakistan in its reported judgment PLD 2001 Supreme Court 514 (Land Acquisition Collector, Nowshera and Others v. Sarfaraz Khan and others), their lordships of the Supreme Court held that: "It is settled law that the bar of limitation would not operate in respect of void ab initio orders. The question of limitation may not therefore, arise in, respect of the judgment which is in nullity of law void ab inito and ultra vires the statute or the Constitution if an order is void it needs not even be set aside as has been held in the cases of Ali Muhammad v. Hussain Baksh PLD 1976 SC 37 and Ch. Altaf Hussain and others v. the Chief Settlement Commissioner PLD 1965 SC 68." (e) That the respondent No.2 and Deputy Collector (Adjudication-1) were not empowered to touch the settled issue of "quantity, description, HS Code and I/O", unless the goods found contrary to the declaration upon re-examination. Contrary, irrespective of the fact that the group was empowered to complete assessment for levy of duty and taxes after examination of the received samples, ventured in reopening the examination order having no defect. The order of the examination can be reopened by the Collector of Customs under the provision of section 195 of the Customs Act, 1969, if the said order contains some illegality or impropriety, which was not available in the said case. Hence, reopening of the examination order, which attains finality by the group and respondent in the absence of power is nullity and tantamount to transgression of the vested powers. Beside ultra vires to the statute and Constitution of Islamic Republic of Pakistan. Reference is placed to the finding/decision bearing No. Review Application No. 68/04-Complaint No.268-K/2004 Messrs New Masaallah Old Electric Works, Faisalabad v. Secretary Revenue Division, Islamabad, 804/K12004 Messrs Saleem Enterprises v. Revenue Division and Appellate Tribunal in Customs Appeal No. K-156/04 dated 15-7-2004, Sales Tax Appeal No. K-2352/99 dated 18-10-2001 Messrs Unitex Towel Factory, Karachi v. The Collector of Customs (Appeals), Karachi and the Sales Tax Appeal No. K-106/3 dated 20-8-2003 Messrs Silver Corporation, Karachi v. The Additional Collector of Customs, Sales Tax and Central Excise (Adjudication-III), Karachi. (f) That beside, neither respondent No. 2 nor Deputy Collector of Customs (Adjudication-I) - were empowered to charge the appellant for misdeclaration under section 32 of the Customs Act, 1969 on the basis of formed opinion that the goods were contrary to the declaration in specification (despite verified as glass beads in assorted colours) and glass beads of all types falls under HS Code 7018.1000 and applicable to the same rate of duty and taxes. When any goods found to be attracting the same rates of duty and taxes, section 32 of the Customs Act, 1969 cannot be invoked as per direction of the board given in clauses (ii) and (iii) of sub-para (b) of Serial No. 101 of the Customs General Order No. 12 of 2002 dated 15-6-2002. The act contrary to the direction, render the order from suffering of lack of power, as nullity in law, besides ultra vires to the statute and Constitution of Islamic Republic of Pakistan. (g) The appellant is tempted to rely on the judgments issued by the Appellate Tribunal in Customs Appeal No. K-151/2006 (Assistant Collector of Customs, MCC, Karachi v. Mr. Muhammad Saleem Balagam, Karachi and the Collector of Customs (Appeals-I), Karachi on the identical issue, held that when rate of duty and taxes on declared and found description and one and the same, importer cannot be charged and penalized for mis-declaration under section 32 of the Act, while observing that: "For invoking provisions of misdeclaration under section 32 of the Customs Act, 1969 prima facie, an element of `mens rea' should be present i.e. there should be an attempt of wilful and deliberate false declaration. The importers may not be charged for misdeclaration under section 32 of the Customs Act, 1969, in the following situations: (ii) When a consignment is found to contain goods of description other than the one declared falling under separate PCT Heading but chargeable to same rate of duty. Therefore, I hold that no penal action is warranted against the appellant under the circumstances. (h) The respondent No.2 and his subordinates were only empowered to assess the value with the application of different subsections of section 25 of the Customs Act, 1969 in sequential manner as expressed in section 25(10) of the Act, in case the declared value was not acceptable being transaction value within the meaning of section 25(1) ibid. Nevertheless, in case of alleging the value as misdeclared, it is mandated upon them to supply to the appellant the relied upon evidential invoice of the same period and country of the product in question (see explanation of sub-rule (a) of rule 107 of the Customs Rule 2001) under law, beside para 78 of CGO 12 of 2002 dated 15-6-2002 without adopting the course of misdeclaration/issuance of show-cause notice. Reliance is placed on the judgments of Appellate Tribunal, High Court and Supreme Court of Pakistan i.e. Customs Appeal No. K-249/2000/13372 Messrs National Radio Products, Karachi v. The. Collector, Customs, Sales Tax and Central Excise, Karachi, Customs Appeal No. K-35/2002 Messrs Iqbal Brothers, Lahore, Karachi v. The Additional Collector, Customs (Adjudication-1), Karachi, Customs Appeal No. K-1670/2001, Messrs Tauheed Glass House, Lahore v. The Collector of Customs, (Appraisement), Karachi, 2005 PTD (Trib.) 617 issued in Customs Appeal Nos. 1668/LB and 1669/LB of 2002, Customs Appeal No. K-1281/2005 Messrs Muhammad Farooq and Sons v. The Collector of Customs, Sales Tax and Central Excise (Appeals), Karachi, 1986 MLD 790 Karachi Messrs Moghal Tobacco Company Ltd., v. Collector of Customs, PLD 1996 Karachi 68 Messrs Kamran Industries v. The Collector of Customs (Exports), Karachi, 2006 PTD 909 Karachi Rehan Umar v. Collector of Customs, Karachi 2002 PTD 2957 Messrs Punjab Baverages (Pvt.) Ltd., v. Appellate Tribunal (Customs Excise and Sales Tax) and 2 others, 2007 SCMR 1357 = 2007 PTD 1858 Collector of Customs, (Valuation) another v. Karachi Bulk Storage and Terminal Ltd., and 2008 SCMR 438 Collector of Customs, Port Muhammad Bin Qasim v Messrs Zymotic Diagnostics International, Faisalabd, 1992 SCMR 1083 Messrs Latif Brothers v. Deputy Collector, Customs, Lahore". (i) Contrary to the provision of section 25 of the Act and rules, the respondent No.2 and his subordinates assessed the appellant goods unilaterally/arbitrarily, not permitted either in the Act, beside prohibited under Rule 110 of the Customs Rule 2001. The said fact stood verified from the language of show-cause notice and order-in-original, which indicates the amount said to be calculated for revenue loss, without any mention of that how the said revenue loss was calculated and, what was the base of that? That either the value was determined under section 25 of the Act or on the basis of evidence. Nothing is available on the record in this regard. The said' exercise is nullity in law, void and ultra vires, rendering the order illegal, void ab inito. (j) That the respondent No. 1 on one hand considered the appeal of appellant time barred, despite not. Whereas, on the other hand considered an appeal within time, despite of the fact that it was filed on 30-5-2007 i.e. after 341 days of the stipulated period expressed in section 193 of the Customs Act, 1969, without raising an eyebrow/objection as evident from Order-in-Appeal No. 560/2007 dated 6-8-2007 issued against Order-in-Original No. 173/2006 dated 24-5-2006. The said attitude confirms abuse of discretionary powers arbitrarily/unilaterally, beside discrimination as against Article 25 of the Constitution of Islamic Republic of Pakistan.

7. At the time of hearing the learned consultant for the appellant reiterated the arguments incorporated in the memo of appeal and rejoinder comments and mainly emphasized on the following points. (i) That the Collector (Appeals) did not consider the directions of the Hon'ble Federal Tax Ombudsman regarding condonation of delay and decision on merit. Rather the Collector (Appeals) has indulged into an act of discrimination to the detriment of the appellant since another Appeal No. 560/2007 decided on 6-8-2007 was time barred by 341 days was impliedly condoned by the Collector (Appeal) without deciding the question of pre-admission on limitation and which is beyond the jurisdiction of Collector (Appeal). (ii) That no charge under section 32(1) or (2) and (3) of the Customs Act, 1969 can be invoked on the appellant (despite invoking in the show-cause notice and held correct in order-in- original/appeal section 32(1) confirming the misdeclaration without any revenue loss). Specifications do not alter the description of the goods. Despite difference of opinion it remains the same. It is for this reason that specification was not made an issue anywhere either in the Customs Act, Customs Rules, 2001 and Customs General Orders. Resultant, notification issued for imposition of redemption fine vide notification No.374(1)/2002 dated 15-6-2002 for misdeclaration speaks about description, weight, excess quantity and value. This in no way suggests the imposition of redemption fine for difference in specifications. In consonance of the Act/Rules, sub-para. B(ii) of Para 101 of CGO 12 of 2002 dated 15-6-2002 is relevant. (iii) That it makes no difference that whether the goods in question are "Unworked" or "Worked" because both types of goods fall under HS Code 7018.1000 attracting a levy of Custom Duty @ 20% Sales Tax 015% and Income Tax 06%. Hence, no mis declaration in material particular to the extent of description for which redemption fine has been notified by the Board. (iv) That no charge for value of misdeclaration in the given circumstances can also be levelled on the appellant, because he discharged the burden of proof with regard to the value laid upon him under Rule 109 of the Custom Rule, 2001. His value has to be treated as transaction value within the confines of section 25(1) of the Customs Act, 1969. In case of dispute of value the onus of proof stands shifted to the department and it takes upon itself the responsibility to produce material to substantiate that the value of the goods has been mis declared as directed in Para 78 of CGO 12 of 2002 dated 15-6-2002. The relied upon unit value of US$. 1.10/kg is nullity as it is not based on evidential invoice or data of import as expressed in Rule 110 in respect of the country of origin and period mentioned in rule 107(a) ibid. Rather it is based on arbitrary/unilateral assessment. The data of assessment if any available with the customs cannot be applied as it has been abolished by the Federal Board of Revenue vide letter C.No.1(25)S/Val/98 dated 22-7-2000. No evidence as per mandated requirement of law was provided by the Customs. Reliance was placed by the consultant on plethora of judgments of the Superior Courts mentioned at sub para. (h) of para.6 above.

8. On the contrary the Assistant Collector and AO representing the respondent No. 2 supported the impugned order. The main points advanced by them are as follows:-- (a) That it is a clear-cut case of time bar and the appeal was filed with Collector (Appeal) barred by 264 days. (b) That as per documents submitted by the appellant to the customs authority i.e. declaration in GD, B/L and Commercial invoices varies. The B/L and Commercial Invoices showed the beads to be only Glass Beads, it does not specify these as worked or unworked. The declaration on the GD is unworked glass beads. However, on referral to group and further referral to chemical lab, the beads were found to be worked glass beads. (c) Though HS Code remains the same for both type of glass beads, the import value as well as domestic price differs. In support of their contention they submitted computer sheet depicting data wise assessment value showing that in some cases the declared values are more than the assessed values as compared to the appellant goods.

9. Rival parties heard and case records perused. As regards issue of time bar the appellant was pursuing a remedy before the Hon'ble Federal Tax Ombudsman for redressal of his grievance due to maladministration indulged into by the respondent. The Federal Tax Ombudsman in his findings dated 18-2-2006 in Review Application No.76 of 2005 in Complaint No.812-K/2005 made a clear observation that since the complainant has been pursuing in a good faith the complaint and review application before this forum, therefore, an appeal if filed with application for condonation of delay may be considered by the Appellate Authority and be decided on merits in accordance with law. The appellant's advocate has also referred to an Order-in-Appeal No. 51 of 2007 dated 6-8-2007 passed by the same Collector (Appeals) wherein-under similar circumstances a time bar of (341) days was condoned by him. However despite the above position the appeal before Collector (Appeals) was rejected by him as time barred. The Collector (Appeals) did not take into consideration the judgment of the Customs Appellate Tribunal in Customs Appeal No.K-112/2006 Messrs K.K. Enterprises v. Collector of Customs, Sales Tax and Federal Excise (Appeals) wherein the Hon'ble Member rejected the plea of the department that the appeal was time barred since the appellant was pursuing the remedy before Hon'ble Federal Tax Ombudsman. The relevant extract from the order of the Appellate Tribunal is as under:-- "As regards the first issue it is evident from the record that the appellant has been pursuing legal remedy against the order-in- original hence his part cannot be treated as time bar."

10. The grounds taken by the appellant in respect of time bar that the case/complaint was subjudice with the Hon'ble Federal Tax Ombudsman and that the appellant was not sleeping over his right is a sufficient ground for forum below to condone the delay in the submission of appeal before Collector (Appeals). Secondly the belated filing of the appeal before Collector (Appeals) is also not contumacious. There was no latent or patent benefit accruing to the appellant through late filing of the appeal. As such the Collector (Appeals) should not have treated the appeal as time barred in view of the explanation tendered by the appellant. Contrary to that the respondent No. 1 indulged into an act of discrimination to the detriment of the appellant, when in another appeal bearing 560/2007 dated 6-8-2007 issued against Order-in-Original No.173-/2006 barred by time by 341 days was impliedly condoned by him without deciding the question of pre-admission on limitation. The differential treatment given to the appellant is in violation of Article 25 of the Constitution as well as Ruling of the Superior Courts delivered in umpteen numbers of judgments reported as SCMR 2002 P. 312, PLD 1995 SC 396, 1990 SCMR P. 1072, 1990 SCMR P. 1059, 1975 SCMR 352, 2002 PTD 976, 1998 SCMR P. 1404, PLD 1997 SC 582, PLD 1997 SC 334, 1997 SCMR P. 1874, 2005 SCMR 492.

11. As regards the value of the subject goods the respondent has produced (90) days PARAL data within the meaning of section 25(1) of the Customs Act, 1969 read with Customs Rules, 2002 to justify and substantiate the enhancement ordered by the adjudicating authority. It has been observed by this forum that the enhanced price of US$ 1.10/kg of the identical or similar goods is not based on physical contemporaneous imports. However as per the PARAL data declared transaction values of similar imported goods are in the range of US$ 0.70/ kg to US$ 1.00/kg which had been enhanced to US$ 1.10/kg to US$ 1.20/kg without producing evidence of physical imports of the (90) days valuation data. Since there can be more than one transaction value for identical/similar goods it is not necessary to enhance the declared transaction value to the level of the highest of such value of identical/similar goods on record in terms of clause (d) of subsection 5 of section 25 of the Customs Act, 1969 which is also applicable mutatis mutandis to subsection 6 of the section 25 ibid. The relevant extract is as under: (d) If, in applying the provisions of this subsection, there are two or more transaction values of identical goods that meet all the requirements of this subsection and clauses (b), (d), (e) and (f) of subsection (13), the customs value of the imported goods shall be the lowest such transaction value, adjusted as necessary in accordance with clauses (b) and (c).] Moreover the respondent has not been able to bring on record any cogent evidence or documents which can prove the declared transaction value of the subject goods tainted or colourable. The lower transaction value for the subject goods in absence of such evidence does not necessitate the enhancement of the value to the level of the highest of transaction value for similar/identical goods on record.

12. That when description of the goods remains the same and difference of opinion arises regarding the specification/quality of the goods, charge of misdeclaration under section 32(I) cannot be invoked by virtue of the fact that no false declaration was submitted. Secondly both specifications/qualities i.e. "Unworked or Worked" fall under the same H.S. Code attracting the notified duties and taxes under the said head. The only aspect left for determination is that whether section 32(1) can be invoked or not. The difference in specification/quality of the goods does not alter its composition except in the appearance, fineness and viability. The description of the contentious goods remain the same. The para B (ii) of para 101 of CGO 12/2002 dated 15-6-2002 is relevant, containing directions for the customs authorities that an importer may not be charged for misdeclaration under section 32 of the Customs Act, 1969, in the following situation: (i) When a consignment is found to contain goods or description other than the one declared failing under separate PCT Heading but chargeable to same rate of duty. (ii) Where the description of the goods is as per declaration but incorrect PCT Heading has been mentioned in the bill of entry no mis-declaration case under section 32 of the Customs Act, 1969 be made out provided there is no change in the rate of customs duty as a result of PCT Heading.

13. The learned Respondent had failed to consider that the determination of P.C.T Heading is the sole function of the Customs Officers. The importer only assists the customs by citing the P.C.T Heading of the goods. At best citation of P.C.T Heading may be called a claim for assessment of taxes, which means a request, may be accepted or rejected by the competent authority but is not a punishable offence under any of the provisions of the Customs Act or Notification issued thereunder. The citation of a particular P.C.T Heading. in the Bill of Entry does not amount to misdeclaration within the meaning of section 32 of the Customs Act, 1969 is a well settled principle of law in Customs Jurisprudence/through a series of Judgments of Superior Judicial Fora of Indian and Pakistani Jurisdictions starting with the case of Monnoo Industries Ltd., v. Govt. of Pakistan reported as Pet.D-199/ 1984 to State Cement Corporation v. Govt. of Pakistan reported as C.A. No.43 of 1999. Reference is made to the reported Judgment 2003 PTD (Trib) 293 of the Customs, Excise and Sales Tax Appellate Tribunal Karachi Bench Karachi in similar nature of case. "We believe that clearing agent while filing a bill of entry is required to fill the PCT Column for the easement and assistance of the Assessing Officer. The perusal of section 80 of the Customs Act, 1969 indicates that during the process of assessment it is the duty of the Assessing Officer not only to examine the goods but also to tally the description, its weight and value of the goods thereof, and to consider any extra information available on the bill of entry in order to arrive at a correct assessment of duty and taxes. Simply, assuming that a wrong PCT Heading amounts to misdeclaration would not be a correct approach to interpret section 32, where emphasis is on the word "material particulars" which means something going to the root cause of the basic declaration. To our mind, a misdeclaration in material terms has not been made by the Appellant." That the allegation under section 32(1) or 32(2) of the Customs Act, 1969 are unwarranted under the circumstances of the case. A correct Goods Declaration was filed by the Appellant with correct description of goods which is undisputed. There was no false statement or any collusion with the officer of the Customs.

14. That this is a case of classification of goods and no case can be made out under the provisions of section 32 of the Customs Act, 1969 this was held by the honourable Customs, Excise and Sales Tax Appellate Tribunal Karachi in the Judgment Messrs Falcon Enterprises v. Collector of Customs Vide Appeal No. K-723 of 2007:-- "alleging a charge of misdeclaration on the basis of a wrong classification heading does not constitute an offence within the framework if section 32 of the Customs Act, 1969 as there is no material falsity in the statement made by the Appellant." That the similar issue of classification was also decided vide Customs Appeal Nos.K-432 and others which went up to the apex Court and the orders of the Tribunal passed were maintained in which it was held: "The difference of opinion with respect to classification does not fall within the mischief of section 32 of the Customs Act, 1969. The confiscation and imposition of penalty in this count, therefore is ab initio void and illegal."

15. That incorrect quoting of P.C.T is not tantamount to misdeclaration within the ambit of mischief of sections 32(1), 32(2) and 32(A) of the Customs Act, 1969 since a positive assertion of facts is a pre-requisite for bringing charges of misdeclaration against the tax payer. If the wisdom of the Customs Authorities for invoking section 32 in cases of incorrect citing of P.C.T Heading is acceded to no responsibility obviously devolve upon the hierarchy of the Customs Officials to levy and assess the duty according to law. The provisions of section 79 and section 80 of the Customs, Act, 1969 in such a state of mind would become redundant and the observation of the honourable Late Justice Sabihudduin Ahmed in the case of State Cement v. Government of Pakistan reported as C.A. No. 43 of 1999 would once again ridicule the irrational approach of the Customs Authorities. The observation verbatim states "We are rather amazed at the line of reasoning put forward to the effect that while an assessee is required to interpret the law and relevant notification correctly and could be held guilty of a penal offence for not doing so in terms of section 32(1) of the Customs Act, no responsibility of any kind would devolve on the customs officials. Thus, it appeared to be a case of no loss of Government Revenue on this account. It is also a well-settled law that section 32 of the Customs Act, 1969 would attract only when misdeclaration was made to cause the Government Exchequer by evasion of Customs Duty. Thus in the absence of any revenue loss the charge of misdeclaration under section 32 of the Act ibid was not attracted. The honourable Supreme Court of Pakistan in the case of Al-Hamd Edible Oil (Pvt.) Ltd and others v. Collector of Customs reported as 2003 PTD 552 while discussing the aforesaid aspect of the case held as under:

"A bare reading of this section clearly indicates that it relates to a situation where a person makes any statement or files any documents which is false in any material particular by reason of which any duty or charge is not levied or is short levied or is refunded. In such event, the Customs Authority is empowered to issue to the person concerned a notice to show-cause why he should not pay the loss of revenue suffered by the department and after giving him a hearing, beside any other action under law, order payment of the same, if the case is made out. The entire provision revolves around the central point of loss of revenue suffered by the Customs Department on account of the conduct of any person. Mr. Iqbal has not argued that the department has suffered any loss on account of the conduct of the appellants. The question of applicability of section 32 in the present circumstances apparently does not arise." The same principle has been laid down by the honourable High Court of Sindh at Karachi in the case of Kamran Industries v. Collector of Customs Export reported as PLD 1996 Karachi 68.

16. In view of the relevant provisions of the Customs Act, 1969 supported by various judgments of the superior judicial fora, the allegations of misdeclaration of value and description of the subject goods are misconceived. As such the impugned orders are set aside and the subject appeal is allowed in the above terms. C.M.A./104/Tax(Trib.) Appeal accepted.