Mis-declaration

After examination of the said goods it was observed that they were not to be meant to work and operate with the renewable energy sources like Solar Energy or Wind Energy, and they were to be operated on alternate current rather than direct current, and as a consequence the concession was not available

Department filed Reference as Customs Appellate Tribunal (Tribunal) set-aside Order-in-Original having been passed against the respondents/importers

Validity

Perusal of the finding of the Tribunal reflected that earlier the respective Collectorates had cleared the subject goods by extending the benefit of the exemption and after releasing of the same it was alleged that the said exemption was not available

It appeared that such proceedings were initiated pursuant to some letter of FBR dated 12.02.2016, wherein, it was clarified that the exemption would only be available where the voltage of LED lights did not exceed 60 Watts

Tribunal had rightly observed that such clarification or finding of FBR in respect of an exemption available under the Customs Act, 1969, came from nowhere, as FBR had no role to play in such matter; and that FBR had no authority either to enhance or restrict an exemption; and that in any case said letter of FBR could not be applied retrospectively on the respondents' goods which were already cleared after accepting the claim of exemption

Pertinently, said adversarial clarification/letter was later on withdrawn on 28.11.2017

Regarding the exemption in question, there was no such restriction as to the limit of watts or voltage of the LED lights in question, whereas, the related department ie. National Energy Conservation Centre and Ministry of Water and Power had also supported the case of the respondents

Even otherwise, the relevant entry in the 5th Schedule provides "following items for promotion of renewable energy technologies for conservation of energy", whereas the applicant /department was of the view that the lights in question were never meant for promotion of renewable energy; however, it had lost sight of the fact that after this the word "OR" had been used which here in the given facts and circumstances was to be read as "and"; hence, applied to all items for promotion of conservation of energy, which made it irrelevant as to whether what was the capacity in watts or voltage; or for that matter whether it was to be used in solar or wind energy, or in AC current or DC current

Thus, the Tribunal had rightly come to the conclusion that the applicant/department had no case to rely upon an interpretation given by FBR inasmuch as the same was against the very statute and could not be accepted and therefore the entire case as set-up by the applicant / department including allegations of mis-declaration within the contemplation of S. 32 of the Customs Act, 1969, had no basis

No justifiable cause with the applicant / department to challenge such finding of the Tribunal was made out

Special Customs Reference, filed by the Department dismissed in limine, in circumstances.

Allegation against the importer / Company was that the items disclosed in the Goods Declaration (GD) were materially different from the goods imported by it

Department filed Reference as the Customs Appellate Tribunal concurred with Collector (Appeals) that the H.S. Code and the rate of duty and taxes were the same, hence, since no loss to the exchequer had been caused, therefore, the imposition of redemption fine/duty were waived

Validity

Neither the Collector (Appeals) nor the Tribunal had said a single word about the fact that the goods declared found out by the Department were materially different from the ones disclosed and declared in the GD electronically filed by the importer / Respondent and the goods detected upon their physical examination

H.S Code of the goods the rate of duty/taxes of the declared goods and the examined goods were the same but the prime question with regard to the incorrect declaration of the goods electronically filed by the Respondent had remained unanswered and uncontroverted

Record revealed that no correspondence was made by the Respondent with the Customs Department or from any argument advanced by them before the fora below that there was no difference in the declaration of goods by the Respondent and the goods as found out by the Department but the main and the prime emphasis of the Respondent had remained that the H.S Code and the duty/taxes had since remained the same, therefore, no adverse inference could be drawn against them

Since, on physical examination, the goods were found to be different from the one declared by the Respondent, therefore, in such circumstances the department was fully justified in drawing adverse inference against the Respondent notwithstanding the fact that H.S Code and the taxes/duties had remained the same

Respondent could not be absolved from the responsibility of making a true declaration of their goods, as provided under S. 79 of the Act, 1969 and from the fact that the goods as declared in the GD electronically filed by them were materially different from the goods found on physical examination in which provisions of S. 32 of the Act, 1969 were fully attracted

A person is guilty of making untrue declaration of its goods, as specifically provided under S. 79 of the Act, 1969, notwithstanding/irrespective of the fact that after final determination H.S Code and the rate of duty/taxes had remained the same and penal action in such circumstances is warranted for untrue declaration coupled with giving incorrect particular of such goods in the description of the goods

Thus, the proposed relevant questions was answered in affirmative i.e. in favour of the Department and against the Respondent/ importer

Special Customs Reference, filed by department, was allowed.

While the goods were confiscated, an option was given to the importer to redeem the confiscated goods after paying 35% redemption fine as envisaged under SRO. 499(I)/2009 dated 13-06-2009, in addition to the payment of duty and taxes chargeable thereupon

Reference was filed by the Customs Department against the order in favour of the importer passed by the Customs Appellate Tribunal ('Tribunal') observing that while there was no guilty intention on the part of the respondent / importer, the difference in the sizes of the bicycles was due to the style of measurement of the consignment

Validity

Record revealed that the goods were examined more than once and the contravention made out against the respondent / importer by the Customs Authorities was due to their (Authorities') own style of measurement

But on seeing the measurement style of the respondent and as disclosed by the consigner, there was no difference in the sizes

Since the difference in sizes was between the Authorities and importer, therefore, the Tribunal had categorically observed that the same could not be made the basis of contravention or mis-declaration

Respondent / importer also offered the Customs Authorities to explain the method of measurement but no heed was paid by them in said regard

Record showed that the bicycles were imported in kilograms and not on the basis of measurement, whereas the difference in size was due to measurement of the frames of the bicycles, which was not the correct method of measurement

Had the bicycles been imported on sizes basis then it could have been said that the contention of the applicant / Department might be correct but , in the present case, the frames of bicycles were imported in kilograms and not by virtue of sizes

Customs Authorities, on asking by the Tribunal, also failed to produce any basis (law, notification, SRO et.) for their method of measurement

Since onus in such regard was not discharged, therefore, case of mis-declaration was not proved against the respondent / importer

No interference was made out in findings of the Customs Appellant Tribunal that no discrepancy was found in the description of the goods

Customs reference filed by the Customs Authorities was dismissed, in circumstances.

Penalty cannot be imposed without establishing an act of the importer which knowingly violates the law and indulges in mens rea.

Importer was accused of intentionally concealing the true price of a vehicle and re-exporting it with the intention of re-importing it at a lower declared value, thereby depriving the government of its legitimate revenue

Validity of these allegations was called into question based on the relevant date defined in subsection (5) of S. 32, which specified a five-year time limit from the date of goods clearance

In the particular case, the manual goods declaration was filed in 2013, while the show-cause notice was issued in 2020, more than seven years after the goods declaration was filed

As a result, the show cause notice lacked legal merit and was issued beyond the stipulated time period mentioned in Ss.32(1) & 32(2) of the Customs Act, 1969

Furthermore, S. 32-A(2) clearly states that a show-cause notice must be issued within 180 days of detection

However, in this case, the show-cause notice was issued after one year and seven months, making it time-barred

Department had not provided any explanation for this significant delay

Appeal filed by the importer was allowed, and the department's appeal was dismissed, in circumstances.

Both the consignments, in the present case, were physically examined and the Examination Report confirmed the product to be Thermoplastic Rubber (TPR) in granule form (Styrene Butadiene Styrene) of Sofpen Brand imported from Italy

In both the consignments, the description was accepted as Synthetic Rubber classified under PCT heading 4002.9900 and the Respondent /Collectorate granted benefit of zero rating of sales tax under Notification SRO 1125(I)/2011 dated 31.12.2011 ('the SRO')

After release of the goods in the years 2016 and 2017, the Show-Cause Notice was issued in the year 2018 for recovery of sales tax and income tax

Both the Clearance Officer and the Adjudicating Officer had no jurisdiction to recover the amount of sales tax and income tax when the goods declaration were assessed under S.80 of the Customs Act, 1969 and gated out under the provisions of S.83 of the Customs Act, 1969

Respondent /Collectorate was applying the provision of Public Notice No.03/2014(A) dated 25-06-2014 ('the Public Notice ')on presumption basis that the goods-in-question (in both the Goods Declarations) were never tested in Customs House Laboratory or in other Laboratory while the goods covered in the Public Notice was tested in the PCSIR Laboratory and found to be Compounded Rubber

Thus, provision of the Public Notice could not be applied on presumption basis that the Appellant/Importer had imported Compounded Rubber of PCT heading 4005.1090 instead of his declarations

Clearance Collectorate as well as Adjudication Collectorate had no jurisdiction to adjudicate / recover sales tax at post release stage

Sales tax was not recoverable from the appellant / importer as no mis-declaration was made out

Customs Appellate Tribunal set aside Show-Cause Notice and the impugned Order-in-Original passed by the Collector of Customs (Adjudication ) and remitted the penalty having been imposed upon the Appellant /Importer

Appeal filed by the Importer was allowed, in circumstances.

While proceedings (including Customs Laboratory Test report) relating to examination/seizing of imported goods were going on, the data of the same importer was scrutinized online through WeBEOC which revealed that the same importer during the last nine months adopted same modus operandi to get cleared five (05) consignments of the same type evading duty / taxes and a certain amount was recoverable from the same importer

Total amount (inclusive of those goods after seizing of which online scrutiny was conducted) vis-à-vis seized and contravening goods was worked out to the tune of Rs.7,458,826

Adjudicating proceedings culminated into Order-in-Original which was assailed before the Customs Appellate Tribunal ('the Tribunal')

Appellant/importer contested the jurisdiction of the case contenting that the Directorate was granted seizing powers under the Notification No.486910/2007 dated 09-06-2007, but was not granted powers under S.32 of the Customs Act, 1969

Held, that the actions taken by the respondent / Directorate in the present case were beyond jurisdiction

No laboratory test for the previous five (05) consignments, which were imported during the last nine months, was conducted

Hence, the contravention had been made against said five (05) consignments without any evidence and on mere presumptions

Law did not acknowledge any presumption

Regarding the Goods Declaration, for which Lab Test was conducted, it would have been appropriate to forward its information to the respective Collectorate having jurisdiction to take necessary actions as per law

Tribunal set-aside impugned findings / observations regarding previous consignments relating to last nine months passed in Order-in-Original, being void ab initio

Appeal filed by the importer was allowed accordingly.

Iron and Steel Sheets of assorted sizes were imported as an input raw material for manufacturing of "silencers" for motorcycles

Importer assailed order-in-original passed by Collector of Customs (Adjudication) following actions taken by Directorate General of Intelligence & Investigation-Customs ('Directorate')

Validity

Matter of issuance of "Flying Invoices" related to "supply" and for that I.R.S authorities had exclusive jurisdiction

Even otherwise, as per the conditions of the SRO 655(I)/2006 the complete round for availing exemption completes on communication to the concerned Collectorate of Customs (Imports), in writing , about the consumption of the input raw material in manufacturing of the specified output article, in term of condition (ix) of the SRO 655 (I)/2006 , which had been complied with by the appellant / tax-payer

According to the condition (x) of the SRO 655 (I)/2006, even if there was an information about evasion of duty / taxes through an in-admissible exemption in that case too , the matter was ought to be communicated to the Collector of Customs, having jurisdiction, who allowed input raw materials' release

Collector of Customs was to initiate proceedings for the recovery of duty / taxes, if any, due to non-consumption or mis-appropriation of the imported input goods by an importer

Even an "audit" or "investigation" could only be undertaken by the specific person or agency duly designated by the EDB and FBR

Respondents Directorate had failed to produce any " authorization" in terms of condition (x) of the SRO 655 (I)/2006, thus the actions of the respondents / Directorate were without jurisdiction

Considering Notification SRO 486(I)/2007 dated 09-06-2007 issued under S.3E of the Customs Act, 1969, the officers of Directorate General of Intelligence and Investigation-Customs had no jurisdiction to investigate the matters relating to S.19 of the Customs Act, 1969

Respondent / Department had failed to establish its case and legality of its actions were without jurisdiction

Tribunal set aside the impugned order-in-original passed by the Collector of Customs (Adjudication)

Appeal filed by the taxpayer was allowed, in circumstances.

Iron and Steel Sheets of assorted sizes were imported as an input raw material for manufacturing of "silencers" for motorcycles

Directorate, through contravention report, alleged that importer had shown some other unit as theirs because on their (Directorate) team's visit it was found that importer's unit did not exist, rather there was a small industrial unit (with a name other than name of unit given by the importer) employing 810 workers

Validity

Though there was discrepancy of the changed name, but no denial to the fact that the manufacturing facilities of the output goods were available, operational with 810 employees, on the given address of the unit

SRO 655(I)/2006 dated 05-06-2006 ('SRO 655(I)/2006') had allowed an importer-cum-manufacturer, like appellant, to get the goods manufactured through another manufacturer (sub-vendor)

Considering the spirit of availing exemption under the SRO 655(I), allegation against the appellant was immaterial, particularly against the imported raw material which had been consumed in manufacturing

Respondent / Department had failed to establish its case and legality of its actions were without jurisdiction

Tribunal set aside the impugned order-in-original passed by the Collector of Customs (Adjudication)

Appeal filed by the taxpayer was allowed, in circumstances.

Iron and Steel Sheets of assorted sizes were imported as an input raw material for manufacturing of "silencers" for motorcycles

Importer assailed order-in-original passed by Collector of Customs (Adjudication) following actions taken by Directorate General of Intelligence and Investigation-Customs ('Directorate')

Allegation against the appellant/importer was that sizes of the imported steel sheets coils mentioned in its Goods Declaration ('GD') did not match with the sizes allowed by the Engineering Development Board (' EDB ')to the importer as an input material

Submission of the reporting Directorate was that the importer had declared the raw material consumption of 7.99 kgs per unit whereas prevalent per unit consumption was 4.01 kgs

Validity

In the case of In-Bond GD, the goods are warehoused after checking and the goods are cleared after payment of duty / taxes, if any, through Ex-Bond GD being filed under section 104 of the Customs Act, 1969 ('the Act, 1969')

Particulars of an invoice, packing list, Bill of lading ('B/L') etc., are merged into GD and to check the "declaration" of an importer, the GD' s particulars are to be considered for the purpose of charging a person for mis-declaration within the meaning of S. 32 of the Act, 1969

Further, for charging a person for the violation of S.32-A of the Act, 1969, the Department has to prove the submission of some fake or manipulated or fabricated documents by the declared importer , which is missing in the present case, thus it is neither a case of " mis-declaration" nor a case of " fiscal fraud" within the meaning of Ss. 32 & 32-A of the Act, 1969 , rather, prima facie, it is just a case of S. 19 of the Act, 1969 which needs to be examined as per conditions of the SRO 655(I)/2006 dated 05-06-2006

Submission of the respondents impliedly confirms that, instead of sizes, the weight-wise consumption of the imported material / steel-sheets matters for determination of the lawful consumption for exemption ; thus, in case of any variation in sizes, the appellant / importer could not be charged for evasion of duties / taxes in availing inadmissible exemption

EDB had also pointed out the consumption of excessive material, not the sizes, and had asked the Department for recovery of duties / taxes, if any, on misuse of quota after chain audit

Respondent / Department had failed to establish its case and legality of its actions were without jurisdiction

Tribunal set aside the impugned order-in-original passed by the Collector of Customs (Adjudication)

Appeal filed by the taxpayer was allowed, in circumstances.

Respondent imported mobile phones and paid duty at the rate of Rs. 250/- per piece whereas the Sales Tax Department was of the view that the mobile phones attracted higher duty

Department issued a show cause notice on the issue of misdeclaration

Validity

Purported allegation of misdeclaration was in fact within the domain and jurisdiction of Collectorate of Customs, which, in case of any controversy, could have retained the consignment/goods for further inquiry or chemical test and determine the duty provisionally till disposal of the inquiry or re-assessment

Dispute of classification was never raised at customs level

Exercise undertaken by the department was a futile attempt in absence of any concrete resolution of misdeclaration

Reference application was dismissed.

Department alleged subject goods were for light truck whereas importers/appellants claimed the tires were useable in construction, mining or industrial handling vehicles or machinery

Held, that no mens rea was found , in the present case, on the part of the appellants

Impugned orders passed by Adjudicating Authority and Collector (Appeals), having been infested with legal infirmities, were set-aside

Clearance Collectorate was directed to finalize the assessment in light of Manufacturers' Catalogues as well as in accordance with Import Policy Order

Appeals were accepted.

Classification of goods is a mixed question of law and facts and so also of interpretation of statutory provision i.e. tariff heading which is part of First Schedule to the Customs Act, 1969; hence, there could always be a difference of opinion in interpreting the same administratively and judicially

It is not that it always will be a case of mens rea and imposition of penalty if interpretation of tariff heading for classification of goods is not accepted by the department.

Where the department had not placed on record any adverse material or evidence against the Customs Clearing Agents which could establish without any reasonable doubt that they were directly or indirectly the beneficiaries of alleged misdeclaration of HS Code and allegedly evaded duty/taxes thereon, which was the basic requirement of issuance of show cause notice and imposition of penalties; Appellate Tribunal observed that the Agents neither fell within the ambit Ss. 32 & 32-A nor imposition of penalties was sustainable against them under the law.

Appellants imported consignments of "Coated Writing Paper in Sheets (gloss) (Nevia brand)" from China through their authorized Clearing Agents vide Goods Declarations

Goods were cleared under S. 83 of the Customs Act, 1969; subsequently, the post import clearance data revealed that goods were assessed and released under tariff heading 4810.1910 (attracting 20% customs duty reduced to 16% on presentation of certificates of origin issued under China-Pakistan Free Trade Agreement) which were actually classifiable under tariff heading 4810.1910 being not specifically meant for "writing" and chargeable to 20% customs duty having no tariff concession

Show cause notices were issued to the importers and their clearing agents for recovery of evaded amount of duty/taxes and penal action

Charges levelled in the show-cause notices were upheld and the appeals were also dismissed

Validity

Department had exercised its supervisory power of checking the Goods Declarations and had passed the final assessment orders in respect of more than 250 consignments of identical goods

Such assessments were neither assailed by the department under S. 193 nor re-opened under S. 195 of the Customs Act, 1969

Department had released the consignments with the admission that "the classification declared on the scanned documents is in conformity with the classification determined by the Assessing Group"

Similar controversy relating to tariff headings 4810.1910 and 4810.1990 had already been adjudicated by the Appellate Tribunal in favour of the importers

Appellate Tribunal was the final fact finding body and its findings were conclusive

Appeals were allowed and the impugned orders were set aside.

Importer/respondent availed the exemption on payment on sales tax on import of Styrene Butadiene Rubber (SBR) Grade 1502 under SRO 1125(I)/2011 dated 31-12-2011

Appellant/Department assailed order-in-original passed in favour of importer/respondent contending that the said exemption was available on SBR in latex form only whereas normally the same (SBR) was being imported in form of lumps/solid blocks etc. having no usage in export-oriented sector

Held, that SBR in latex form was not classifiable under PCT 4002.1900, instead the same was specifically classified under PCT 4002.1100

SRO 1125(I)/2011 dated 31-12-2011 specifically granted exemption from payment of sales tax under PCT 4002.1900

Exemption enjoyed by the importer/respondent on import of SBR Grade 1502 was rightly claimed and extended by the Clearance Collectorate

Record also revealed that several consignments of many other importers had already been released extending the benefit of exemption from payment of sales tax under SRO 1125(I)/2011 dated 31-12-2011, thus rule of consistency was to be applied in the present case also

Order-in-original passed by the Adjudicating Authority in favor importer/respondent was upheld

Appeal was dismissed, in circumstances.

Held, that the appellant/importer had discharged his onus with regard to the declared transactional value of imported goods by providing a valid invoice and other allied documents and it was the duty of the respondent/Department to disprove the same with cogent reasons

Respondent/Department had failed to bring on record any evidence for rejecting and refusing the declared value of the impugned goods; and instead, had only relied upon import data of identical goods imported by other importers in the past

In order to negate the declared value of the consignment, the Department was under obligation to procure evidence to discard the value declared by the appellant

Appellant could not be held guilty and transactional value of the impugned consignment declared by the appellant was valid, which shall be accepted in accordance with the provisions under S.25(1) of the Customs Act, 1969, for the subsequent assessment of the consignment accordingly

Impugned assessment order and Order-in-Appeal were set aside

Appeal was allowed, under circumstances.

Since the fuel oils were importable only by approved oil marketing companies according to Serial No. 02, Part II of Appendix B to Import Policy Order, 2020, therefore, the goods were confiscated

Validity

No proper test was ever conducted to ascertain the exact nature of the impugned goods

Laboratory report was not sought to ascertain the description or nature of the impugned sample rather a reference was sent to the laboratory to ascertain whether the sample was petrol, diesel or fuel oil

Irresponsible handling of the matter resulted into a very unspecific report which neither pointed out the percentage of Aliphatic or Aromatic Hydrocarbons in the sample nor the specific grade/number of fuel

Order-in-original was passed without ascertaining the facts thoroughly, as such, the same was set aside

Appeal was disposed of accordingly.

Importer declared goods as Miscellaneous electronics items including LED lights/ fittings and fixture, bulbs and parts thereof, chandeliers, galvanized iron and steel screws, CTCP printing plates

Respondent/ importer contended that even one of the items i.e. CTCP Printing Plates was liable to be assessed in square meter but the Department had assessed the same in Kg. (Kilogram)

Held, that the entire exercise of re-examination and assessment conducted by the Reporting agency was not only illegal and without jurisdiction but it was faulty also

In relevant PCT heading the HS Code No. 3701.3020 of the CTCP printing plates was Square meter , thus the claim of the Appellant/Department was baseless that the same was liable to be assessed in Kilograms

Under SRO 486(I)/2007 read with letter dated 11-12-2018, Seizing Agency could only re-examine the consignment with prior approval of the Chief Collector of the Customs

No glaring discrepancy in description of imported items was found, thus no Mens Rea on the part of the respondent/importer could be established

Record revealed that the respondent/importer had already paid the fine and penalty as adjudged vide impugned Order-in-Original passed by the Adjudicating Authority, thus the matter could not be dragged further

No interference in impugned order passed by the Adjudicating Authority was made out

Appeal was dismissed, in circumstances.

Contention of the appellant/importer was that the redemption fine and penalty had been imposed only on the apprehension that the importer had deliberately committed mis-declaration of contents of the consignments in order to avoid payment of due amount of leviable duty and taxes

Held, that that there was absolutely no likelihood of escape of leviable duty and taxes on imported consignments of used computers as the same were invariably marked for 100 percent examination

Examination report of such consignments reflected the composition of imported goods accurately, thus making it almost impossible to evade leviable duties and taxes on such imports unless there was some oversight by the Examination Staff of the Collectorate

Such consignments , however, consisted of mixed lot purchased from abroad and it was not possible for the importers to make correct declaration of all the contents of such consignments at the time of declaration before the Department

Any mistake in the declaration was, therefore, not intentional on the part of importers of such goods by any means

Record revealed that previously the Department had released identical goods of other importers, thus discriminatory treatment with the appellant / importer was unfair

Imposition of fine and penalty, in the present case, was too harsh and thus was not applicable as no element of Mens Rea was established against the appellant/importer

Fine and penalty imposed was cancelled/waived

Order-in-Original and Order-in Appeal were set aside

Appeal was allowed, under circumstances.

Two questions are required to be addressed before invoking S. 32 of the Customs Act, 1969, for mis-declaration (i) whether mens rea which is essential element for the purpose of subsection (i) of S.32 has been proved and (ii) whether a demand for short recovery can be made under the provisions of subsection (2) of S.32

If element of mens rea is not visible and guilty intention is not proved then provisions of S.32 cannot be invoked.

Element of mens area is to be seen when a criminal liability is required to be established against a person and not in the cases of assessment whether even duty/taxes has been detected.

Appellant declared the disputed goods to be Glass Parts for Chandelier but on physical examination the same were found in complete sets, hence, there was a difference in chargeable duty and taxes which resulted in an order for confiscation of goods

Validity

No element of mens rea and collusion was brought on surface nor mentioned in the show-cause notice

Adjudicating officer had passed the impugned order with least application of judicious mind as the pitch of fine and penalty imposed did not correspond with the gravity of the offence

Impugned order was modified to the extent that the appellant was only liable to pay all adjudged amount of additional duty and taxes

Impugned order was modified accordingly.

Department, on physical examination of the goods, found the goods to be in excess of the declared amount and an invoice of higher value was also found

Department confiscated the goods, gave an option to the importer to pay redemption fine and imposed penalty

Contention of importer was that the invoice did not relate to its consignment and the shipper had sent the invoice by mistake

Validity

Department had not tried to verify the documents though the importer had stated that the invoice was issued by mistake

Proper investigation/inquiry under S.166, Customs Act, 1969, should have been conducted

Importer had not made transaction with the manufacturer, therefore, any document generated by the manufacturer could not represent as evidence of transaction value

Importer could not be charged for submitting incorrect statement in terms of S.32(1) of the Customs Act, 1969

Adjudicating authority had not passed the order according to the facts of the case

Confiscation of goods and consequent option to redeem the goods upon payment of fine was excessive and unwarranted, hence, the same was set aside

Department was declared to be at liberty to determine the customs value of goods in accordance with methods provided under S.25 of the Customs Act, 1969

Appeal was disposed of accordingly.

Allegation against accused was that he imported 28 Old and Used Concrete Transit Mixture Trucks under false and bogus PSI (Pre-Shipment Inspection) Certificates

Entire case of the prosecution depended upon the verification of PSI Certificate issued by the Pre-Shipment Inspection Company

Prosecution witnesses had not sought any verification of the letter

Person who had issued the letter on behalf of the Pre-Shipment Inspection Company was never produced before the trial court to support his letter and to disclose about his source of information regarding fake certificates

Prosecution itself had axed the roots of their case; hence the trial court had rightly acquitted the accused

Appeal was dismissed.

Paragraph 101 of Customs General Order, 2002, applied in cases where an importer claimed assessment under certain HS Code which was not accepted and the assessment was made in some other HS Code by the department and if as a result thereof, there was no change in the rate of duty, then benefit of the referred paragraph could be claimed by the importer

In the present case, the facts were entirely different as an attempt had been made to declare goods as used as against new and as a consequence thereof, notwithstanding that the rate of duty remained same, an attempt had been made to pay duty and taxes on lower/reduced value of used goods as against the value of new goods

If such would have gone undetected, naturally lesser taxes and duties would have been paid on the value of used road roller as against the value of a new road roller

Such apparently was a case of mis-declaration of actual description of goods warranting initiation of proceedings in terms of S.32 of the Customs Act, 1969

Order passed by Appellate Tribunal was set aside.

No demand notice requiring payment of any alleged short levy can be issued without show-cause notice.

Subsection (3) cannot be read in isolation to subsection (1) as it refers to a goods declaration filed under S. 79 of Customs Act, 1969, which requires the importer to file a true declaration, assess and pay his liability of duty, taxes and other charges thereon

Self-assessment of the goods declaration can be re-assessed in terms of subsection (3)

This power would not continue to be available at all times

It stops once the goods declaration has been assessed to duty/taxes and consignment has been released

Thereafter, no re-assessment can be made under S. 80(3)

The only way out is either through a proper show cause notice issued under S. 32 or by way of an appeal in terms of S. 193 and lastly in exceptional circumstances by way of re-opening of the assessment order in terms of S.195 of the Customs Act, 1969.

Classification of goods is a question based on legal and factual determination and so also of interpretation of the HS Code and the Customs Tariff; hence, there can always be difference of opinion for interpreting the same

Such will not always be a case of mens rea and imposition of penalty if the claimed HS Code is not accepted by the department.

Where department had accepted the classification claimed by importer instead of objecting and refusing the assessment or issuing any show cause notice at the time of clearance of goods, High Court observed that merely for the fact that some other HS Code was mentioned would not ipso facto mean that the element of mens rea was present making the importer liable for imposition of penalty.

Applicant imported Bakery Counter Refrigerator through different shipments; claimed assessment under HS Code 8418.9000; paid duty at the rate of 5% and such assessment as claimed under SRO No.575(I)/2006, dated: 05-06-2006 was accepted

After clearance of goods show-cause notice was issued to the applicant on the ground that the goods were correctly classifiable under HS Code 8418.5000 chargeable to duty at the rate of 35% and in addition the exemption was also not applicable

Order-in-original was accordingly passed and the appeals against order-in-original were dismissed

Validity

Classification of the Refrigerators imported by the applicant was under HS Code 8418.5000 wherein it was specifically covered as "Other refrigerating or freezing chests, cabinets, display counters, show cases and similar refrigerating or freezing furniture"

Imported goods could not be classified under HS Code 8418.9000 which specified "furniture designed to receive refrigerating or freezing equipment" was not understandable

Exemption claimed by applicant under SRO No.575(I)/2006, dated: 05-06-2006 was not available to the goods imported by applicant

Reference applications were partly dismissed to the extent of claimed assessment and exemption and partly allowed to the extent of penalty which was remitted.

Case of department was that the respondent imported used vehicles and declared value, which was less than the value determined pursuant to a valuation ruling and therefore, it was a case of mis-declaration

Order-in-original was passed, vehicle was confiscated and redemption fine as well as penalty were imposed

Respondent assailed the order before Appellate Tribunal

Appellate Tribunal set aside the order-in-original to the extent of redemption fine in lieu of confiscation along with penalty and vehicles were ordered to be released upon payment of duty and taxes assessed by the department

Validity

Assessment was being made on the basis of valuation ruling, no case for any mis-declaration to the extent of value, so declared by an importer, could be made out in terms of S. 32 of Customs Act, 1969

Redemption fine in terms of S. 181 of Customs Act, 1969, read with SRO No.499(I)/2009, dated: 13-06-2009, reflected that fine could be imposed when the declared value was less than 30% from the value ascertained/determined on the basis of a direct evidence

Department's case was not that there was any direct evidence of the identical or similar goods

Reference applications were dismissed.

Respondents were called upon to show cause as to why the evaded amount of duty and taxes might not be recovered from them and penal action, as warranted under the law, might not be taken against them

Firstly, the allegation per se was unwarranted inasmuch as admittedly it was not a case of making any recovery of the alleged evaded amount of duty and taxes, as at the time of issuance of show-cause notice, it was already paid and recovered

No question for calling upon the respondents to make payment of any duty and taxes

Secondly, even if there was a case of imposition of any penalty, then an appropriate action ought to have been initiated against the shipping agent, who had allegedly filed a wrong estimated time of arrival of the vessel

Such again was notwithstanding that even otherwise, how could a person be issued show-cause notice merely for filing a wrong date of an estimated arrival

Estimate by itself was not a final conclusion; hence, on that account also show cause notice could not be sustained

As to implication of two other respondents (Importer and Clearing Agent) in the same show-cause notice, it was only a bald allegation of connivance without any substantial material on record

No case was made out by the department

Reference applications were dismissed.

SRO No.1125(I)/2011, dated 31-12-2011 gave concession to manufacturer, importer, exporter and wholesale dealers of textile, carpets, leather, sports and surgical goods

Department's case was that in view of the facts of the case Appellate Tribunal had erred in law by misreading the effect that the importer was a textile manufacturer within the meaning of SRO No.1125(I)/2011, dated 31-12-2011

Validity

Taxpayer Registration Certificate filed by the department itself disclosed that the principal activity of the importer was manufacturing of plastic products and other activities were import, export or manufacture of other textile NEC

SRO No.1125(I)/2011, dated 31-12-2011 in column (2) provided zero rating for textile and articles thereof excluding some articles

Importer's case did not fall within the excluding components

Registration Certificate was a comprehensive evidence

Since the conditions as required under SRO No.1125(I)/2011, dated 31-12-2011 was fulfilled, no other view could be taken than the one taken by the Appellate Tribunal

Customs Reference Application was dismissed.

Accused persons were alleged to have evaded huge amount of duty and taxes through submission of fabricated invoices, however, they were enlarged on bail by the Trial Court

Remote possibilities, as contended by the prosecution, came under deeper appreciation of evidence as such the same could not be considered either at the time of granting bail or otherwise

Exoneration after adjudication in respect of alleged tax evasion had created a doubt regarding the prosecution case and the benefit of doubt went in favour of the accused even at the bail stage

Case against accused persons was based on documentary evidence and/or the deposition of official witnesses, there-fore, there was no chance of tampering with the prosecution evidence

Applications for cancellation of bail were dismissed, in circumstances.

Allegation against accused was that he imported 28 Old and Used Concrete Transit Mixture Trucks under false and bogus PSI (Pre-Shipment Inspection) Certificates

Entire case of the prosecution depended upon the verification of PSI Certificate issued by the Pre-Shipment Inspection Company

Prosecution witnesses had not sought any verification of the letter

Person who had issued the letter on behalf of the Pre-Shipment Inspection Company was never produced before the Trial Court to support his letter and to disclose about his source of information regarding fake certificates

Prosecution itself had axed the roots of their case; hence the Trial Court had rightly acquitted the accused

Appeal was dismissed.

Directorate of Post Clearance Audit found that the buyer and seller were related parties, as such, transaction value could not be accepted; that identical/similar goods method was not applicable as the respondent was sole importer of vehicle and that the respondent had caused a huge loss to the exchequer

Collector of Customs (Adjudication) vacated the show-cause notice on the ground that method of determination of value of vehicles was incorrect

Validity

Supplier of the respondent had purchased CBU (Completely Built Up) vehicles from the OEM (Original Equipment Manufacturer) and had sold the same to the respondent at much lower values, which could not be considered as bona fide transaction value

Correct value of the vehicle appearing at the official website of the manufacturer was much higher, which established that the supplier had engaged in an undervalued transaction

Verification by Chinese Customs, China Council for Promotion of International Commerce did not have any legal cover under the Customs Act, 1969

The only authentic document was by the manufacturer which was hopelessly missing in the case

Respondent had initially imported three vehicles from the OEM, which were assessed at a higher value but when the bulk quantity of 2080 units were imported through the supplier, the price came down

Charges levelled in the show cause notice stood established

Order-in-original was set aside and the appeal was allowed.

Department found the goods to be flame cut rectangular/ square Billets (4.8 to 5 feet length) and flame cut iron and steel rods (5 feet length)

Case of department was that the importer had mis-declared the description of goods, as such, the goods were confiscated

Contention of appellant, inter alia, was that imported goods were admittedly re-rolling scrap falling under PCT heading 7204 which covered waste and scrap of iron and steel; that such waste and scrap of iron and steel was of miscellaneous nature and generally took the form of waste and scrap from the manufacturer of mechanical working of iron and steel; that Explanatory notes to HS (Harmonized System) categorically reflected that article of iron and steel definitely not useable as such because of cutting fell in the category of waste and scrap

Validity

Appellant had not committed any offence, which could warrant confiscation of goods

Charge of mis-declaration as alleged by the department was based on assumptions and presumptions

Department had failed to prove its case

Impugned order-in-original was set aside and the department was directed to release the goods imported by appellant

Appeal was allowed.

Reading of S.32 clearly indicates that it is related to a situation where a person makes any statement or files any document which is false in any material particular by reason of which any duty or charge is not levied or 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 a case is made out

Entire provision revolves around the central point of loss of revenue suffered by the Customs Department on account of conduct of any person.

Customs authorities on spy information detained three containers containing banned goods destined for Export Processing Zone

In order to fulfill the requirement of issuance of NOC (No Objection Certificate) from the Export Processing Zone Authority (EPZA), online application through Unique User ID was filed by the appellant company

After detention of containers, a letter was received from the appellant, whereby it had informed that their ID had been misused for NOC from EPZA and they had no concern with the goods

Customs authorities seized the containers and imposed penalty on the appellant company

Validity

Section 32 of Customs Act, 1969, was only attracted when alleged mis-declaration or mis-statement was made for obtaining illegal gain by evasion of payment of customs duty and other taxes or for causing loss of revenue

Similar was the case of applicability of S. 32-A because there was no question of levy of duty and taxes on goods destined for Export Processing Zones

Goods meant for Export Processing Zones were exempt from all duty and taxes

When all goods destined for Export Processing Zones were exempt from customs duty and taxes there arose no question of invoking Ss. 32(1), 32(2) & 32-A of Customs Act, 1969

Goods declaration (Bill of Entry) was required to be under R. 3(2) of the Customs Export Processing Zones Rules, 1981 and goods found at the time of examination did not fall in prohibited category as detailed in R.3(7) of Customs Export Processing Zones Rules, 1981

Appellate Tribunal held that the user ID of the appellant had been misused

Imposition of penalty on the appellant was not only unjustified but also against all canons of law, hence, the same was ordered to be remitted

Appeal was allowed.

Clearing agent had filed the declaration for transit to Afghanistan under S.129 of the Customs Act, 1969, purportedly on the instruction of the appellant

Appellant was imposed upon a penalty

Appeal filed before Collector (Appeals) was dismissed

Validity

Customs officials were not empowered to examine the goods for the reason that goods had arrived in transit to Afghanistan and were not meant for home consumption

Section 2(s) did not apply to the case as the goods were imported in transit to Afghanistan

Section 16 was a machinery section under which no charge could be framed

Appellant had not submitted goods declaration for home consumption but had sought clearance of goods for transit to Afghanistan, resultantly neither S. 32 nor S. 32-A was applicable

Invoking of S. 178 was out of place as the appellant was not found with the goods

Since there were no rules for Afghan Transit Trade when show-cause notice was issued, therefore, clause (64) of S. 156(1) contained no consequence in contravention of S. 129

Treatment meted out to the appellant was against the principles enshrined in Arts.4 & 25 of the Constitution as a person having similar role as that of appellant was not booked in the case

Appeal was allowed and the impugned orders were set aside.

Goods were released under PCT Heading 4810.1910 (writing paper) attracting 20% customs duty reduced to 16% on the strength of FTA (Free Trade Agreement) certificates

Department, after release of goods, issued a show-cause notice with the allegation that goods were actually classifiable under PCT Heading 4810.1990 (other) chargeable to 20% customs duty but without FTA concession

Appellant's stance was that PCT Heading 4810.1910 was created for such paper having one of its use as writing paper, on the other hand, the department's stance was that such paper was classifiable in the heading which had exclusive use of writing

Validity

Subject goods fell under PCT Heading 4810.1910 which provided most specific description i.e. writing paper

No justification was given by the department regarding deviation from previous practice of classification of similar goods

Impugned order interpreting the PCT Heading 4810.1910 lead to the redundancy to classifying the subject goods under PCT heading 4810.1990 which provided more general description

Where two reasonable interpretations were possible, but one lead to redundancy while the other avoided surplusage, it was the later interpretation that had to be preferred

Appeal was allowed.

Appellants were charged for alleged mis-declaration of description, concealment of actual value and evasion of the customs duties and taxes

Validity

Manufacturer's certificates and the Forensic Laboratory's report confirmed that the "Tri-basic Lead Sulphate" imported by the cable manufacturers and the "TS-T" (Lead Sulphate), imported by the appellants were two different trade commodities due to difference in quality, purity and subsequent usage

Price of the commodities could not be equated at par because the goods could not be termed as identical and/or similar within the meaning of subsections (5) & (6) of S. 25 of the Customs Act, 1969

Appellants were discriminated against by the department as the Clearance Collectorate had, at an earlier point in time, determined the values after considering the strength, percentage and usage of Lead (Pb)

No substance was found in the Contravention Reports

Appeals were allowed and the impugned orders were set aside.

State functionaries have no power and authority to conduct fishing and roving inquires without possessing any definite and proper information, just in hope to unveil some concealment and illegality on the part of the tax payer/citizen

Before embarking upon any inquiry against citizen, the state functionary must already possess some definite material so as to establish any illegal action having been taken by the citizen.

Citation of particular PCT (Pakistan Customs Tariff) heading in the goods declaration does not amount to mis-declaration within the meaning of S. 32 of Customs Act, 1969.

Incorrect PCT (Pakistan Customs Tariff) for the declared item, as against the customs determined PCT heading, is not tantamount to any mis-declaration.

No charge of mis-declaration can be invoked with regard to PCT (Pakistan Customs Tariff) heading as the importer only assists the department by citing PCT heading of the goods for assessment of taxes

Declared PCT may be accepted or rejected by the competent authority but it is not punishable offence under the provisions of the Customs Act, 1969.

Appellate, a clearing agent, was imposed upon a penalty on the allegation that he transmitted Goods Declaration, which he had filed on the strength of the documents supplied by the importer

Nothing contrary to the documents was transmitted

No fault or default was spelt out in the show cause notice

Imposition of penalty on the appellant was not sustainable

Appeal was allowed and the order to the extent of appellant was quashed.

Mention of word "tax" in S.32, Customs Act, 1969, does not empower Customs Authorities to assume powers under the provisions of Ss.11(2) & (3) of Sales Tax Act, 1990 and S.162(1) of Income Tax Ordinance, 2001, unless Legislature appoints them as "Officer of Inland Revenue/Commissioner of Income Tax", who have powers under the sections to take cognizance in the matter relating to Sales Tax and Income Tax

Word "tax" inserted in Ss. 179 & 32 of the Customs Act, 1969, is only for assuming of powers on the basis of involved duty and taxes by the appropriate adjudicating authority for empowering the Officer of Customs to charge the taxpayer under the said provisions on the basis of duty and taxes, punishable under the provision of S.156(1) of Customs Act, 1969.

Department issued show-cause notice for mis-declaration alleging that the appellant had obtained delivery of consignment without application of infield valuation ruling

Validity

Goods of the appellant were not auto cleared but were cleared after examination and passing of assessment/clearance order, therefore, his consignment could not be construed by any stretch of imagination as cleared on self-assessment basis

No charge of mis-declaration on the basis of valuation ruling could be levelled

Valuation ruling was only for the purpose of assessment and not for levelling charge of mis-declaration

Valuation ruling could not be applied subsequent to clearance of the goods for home consumption

Impugned orders were set aside and the appeal was allowed, in circumstances.