Misdeclaration

2024 PTD 1532 KARACHI-HIGH-COURT-SINDH Judicial Precedent

Ss. 32(1), 32(2), 32(3-A), 79, 80 & 156(1), (14)Sales Tax Act (VII of 1990), Ss. 3 & 6MisdeclarationDuties and taxes, evasion ofDepartment adjudging evaded duties and taxes on cleared consignmentsPast Departmental practice qua wrong benefit extended beyond the law/policyScope and effect

Importer / Company was alleged to have of imported and got cleared water based varnishes in the garb of acrylic polymer as items having different PCT Headings attracting different duty rate of 20% and 10% respectively

Importer was ordered to deposit the evaded duties and taxes vide Order-in-Original

Applicant (importer) filed Reference Application as Order-in-Original was maintained by the Appellate Tribunal Inland Revenue (' Tribunal')

Contention of the applicant was that previously it had been able to clear identical consignments while paying lower duties and taxes

Validity

Record revealed that the Show-Cause Notice was predicated on data coming into the knowledge of the Respondent / Department and not upon any ruling

It was also apparent from the reply filed by the applicant/importer, to the Notice, that no objection had been taken to the jurisdiction of the issuing authority or the applicability of the provisions of law under which the same was issued

No cavil had been articulated before the High Court to suggest any impropriety in the department adjudication

Therefore, the High Court reformulated the question to be answered, in terms of the verbiage, and the only question arising was "whether in the facts and circumstances of the case the department had due cause to adjudge evaded duties and taxes on cleared consignments of the applicant"

Regarding plea of the applicant with respect to past departmental practice, the Tribunal had specifically addressed that issue and observed that previous treatment of like consignments was "actually based on incorrect and incomplete data provided by the applicant"; the Tribunal further observed that the subsequent scrutiny resulted in identification of the actual composition of the imported item, hence, the determinant classification

No cavil had been articulated by the applicant / importer to the findings with regard to the composition of the imported item (and the sole objection was that the earlier classification ought to have been maintained merely as the same had been done in the past)

There was no unsubstantiated departure in the present case

A wrong benefit, extended beyond the law/policy, may not be perpetuated

Thus, the plea/contention of the applicant / importer was misconceived

Reference application, filed by the importer / company, was dismissed, in circumstances.

2023 PTD 725 KARACHI-HIGH-COURT-SINDH Judicial Precedent

Ss.25, 32 & 196ReferenceMisdeclarationCriminal proceedingsPre-condition

Appellant / importer was aggrieved of criminal proceedings initiated against him by authorities for misdeclaration of value of goods and duty paid thereon

Validity

Post General Agreement Tarrifs and Trade (GATT) era S.25 of Customs Act, 1969, not only eliminated concept of economic zones for comparison and fixation of values of imported goods for customs purposes but at the same time required such valuation to be based on actual value of imported merchandise on which duty was to be assessed and had barred valuation hinged to the value of merchandise of national, or any other country's origin, or on arbitrary or fictitious values

Offense under S.32 of Customs Act, 1969, could not be constituted in absence of mens rea on the part of an importer and could not be put in operation

Provision of S.32 of Customs Act, 1969could only be invoked on an importer upon availability of deliberate act or connivance, error, omission or misconstruction

Element of mens rea was missing and no deliberate misdeclaration was apparent from the record

Authorities did not adduce any evidence to substantiate that it was a willful fault and deliberate mis-declaration

Authorities' desire to levy fine in absence of incriminating evidence could not be entertained

Merely hypothecation would not ipso facto mean that element of mens rea was present making importer liable for imposition of penalty

High Court set aside allegation of mis-declaration and imposition of fine and penalty as the same could not be sustained

Appeal was allowed, in circumstances.

2020 PTD 1214 CUSTOMS-APPELLATE-TRIBUNAL-LAHORE Judicial Precedent

S.180MisdeclarationShow-cause noticeObject and scopeCustoms Clearing Agent and importer were imposed penalty for mis-declarationValidityNo allegation had been levelled against the Clearing Agent in the show-cause noticeDepartment could not go beyond the show-cause notice

Object of show-cause notice under S.180 of Customs Act, 1969 was to inform the concerned party indicating the nature of contravention and allegation against him and the proposed action to be taken.

2019 PTD 1129 CUSTOMS-APPELLATE-TRIBUNAL-LAHORE Judicial Precedent

Ss. 186, 83 & 2(s)MisdeclarationSmugglingScopeDetention of goods pending payment of fine and penaltyClearance of goods for home consumption

Directorate General of Intelligence and Investigation detained the goods of appellant at the exit gate after their release by Clearance Collectorate and charged the importer for mis-declaration

Validity

Section 186 of Customs Act, 1969 came into play if any case had been adjudicated by competent authority against importer through which it had been held that the charges were established as levelled in the show-cause notice and fine and penalty was imposed and the importer had not paid the some or any inquiry or that investigation in respect of any goods was underway and imposition of penalty was under consideration

Appropriate officer was empowered to detain the forthcoming goods of the same importer till the time fine and penalty was not paid

Lawfully cleared goods could not be detained under any pretext by any officer of customs, as regard to the officials of Directorate General of Intelligence and Investigation, they could detain the goods which were either "smuggled" or detained goods of the person involved in smuggling but not imported goods

Power to detain imported goods under the provision of S.186, Customs Act, 1969 was only available to the officials of Clearance Collectorate upon availability of either of two conditions available in subsection (1) of S. 186, Customs Act, 1969

Detention of goods of importer was not permitted even by the officials of Clearance Collectorate in the absence of availability of any of the said two conditions

Detention of goods by Directorate General of Intelligence and Investigation was held to be without lawful authority and jurisdiction

Appeal was allowed.

2018 PTD 2461 CUSTOMS-APPELLATE-TRIBUNAL-LAHORE Judicial Precedent

Ss.32, 79, 156(1)(14) & 181SRO No.499(I)/2009, dated 13-6-2009MisdeclarationConfiscation of goodsOption to importer to redeem the confiscated goods on payment of redemption fine

Importer had filed goods declaration, declaring the goods as "submersible pumps" under P.C.T. Heading 8413.7010, chargeable to customs duty at 5% and sought clearance under S.79(1) of the Customs Act, 1969

Goods declaration was selected for examination to confirm the declaration made by the importer

Examination report revealed that the goods were found to be "light vertical multistage centrifugal pump with motor", classifiable under PCT Heading 8413.7090, chargeable to customs duty at 20%

Importer, in view of said report, was found to have wilfully and deliberately misdeclared the description and PCT Heading of the goods to avail undue benefit of duty and taxes

Adjudicating Authority, ordered confiscation of the goods with option under S.181 of the Customs Act, 1969 to redeem the confiscated goods on payment of 35% redemption fine

Penalty of Rs.25,000 was also imposed on the importer

Validity

Question for determination, in the present case, was as to whether the imported goods fell under the category of "Submersible Pumps PCT Heading 8413.7010" or under "Centrifugal Pumps PCT Heading 8413.7090"

First examination report showed that the subject goods were found under the description of 'submersible pumps with motor'; another report extended the different description of consignment as "light vertical multistage centrifugal pump with motor"

Importer claimed the PCT Heading 8413.7010, but on the contrary, PCT Heading 8413.7090 was insisted by the department, without support of any evidence

Element of mens rea, had not been proved against the importer

Charge of misdeclaration under S.32 of the Customs Act, 1969, was unwarranted and penalty imposed on importer under cl.(14) of S.156(1) of Customs Act, 1969, was patently unlawful

Option provided in S.181 of the Customs Act, 1969, did not specify amount or value on the basis of which the owner of the goods could opt to pay in lieu of the confiscation of the goods

Adjudicating Officer passed impugned order with least application of judicious mind; pitch of fine and penalty, did not correspond with the gravity of offence

Fine and penalty imposed on the importer, were ordered to remitted by the Tribunal

Impugned order-in-original was modified accordingly

Department was also directed to issue delay detention certification in accordance with law.

2018 PTD 2335 CUSTOMS-APPELLATE-TRIBUNAL-LAHORE Judicial Precedent

S. 32(2)(3)SRO No.886(I)/2012, dated 18-7-2012SRO No.371(I)/2002, dated 15-6-2002Misdeclaration

Powers and functions relating to cases under S.32(3), Customs Act, 1969 had been conferred on Superintendent Customs or Principal Appraiser vide SRO No.371(I)/2002, dated 15-6-2002 and not to the Collector Adjudication

Act of issuance of show-cause notice by the Collector Adjudication was ab intio wrong.

2018 PTD 2335 CUSTOMS-APPELLATE-TRIBUNAL-LAHORE Judicial Precedent

Ss. 32 & 195MisdeclarationRevisional power of Federal Board of Revenue or Collector

Order or decision passed or taken by the subordinate officer, could only be corrected in revisional power and not under S.32 of the Customs Act, 1969

Collector or Federal Board of Revenue, would exercise their revisional powers or correctional jurisdiction in terms of S.195 of the Customs Act, 1969

For adjudication of a case through issuance of show-cause notice, the proof of mis-declaration had to be prima facie present at the first instance; if allegation of mis-declaration was to be believed against taxpayer in terms of S.32 of Customs Act, 1969 through issuance of show-cause notice by the officer of original jurisdiction

Where the consignments were released on the basis of commercial documents and physical examination by the Examining and Assessing Officer and the charges subsequently leveled under S.32(3) of the Customs Act, 1969 were unsubstantiated, whole proceedings, were infested with inherent legal infirmities and substantive illegalities tantamounting to patent violation of mandatory statutory provisions and in utter disregard of the provisions of Act

If the law had prescribed method for doing of a thing in a particular manner, such provision of law was to be followed in letter and spirit and achieving or attaining the objective of performing or doing of a thing in a manner other than provided by law, would not be permitted.

2018 PTD 1587 CUSTOMS-APPELLATE-TRIBUNAL-LAHORE Judicial Precedent

Ss. 25, 25-A, 32, 79 & 80Misdeclaration

Appellant/importer, was alleged to be involved in import and clearance of consignment of imported goods on under-assessed value in violation of relevant Valuation Ruling

Appellant was also alleged, to have resorted to file into-bond Goods Declaration for warehousing of commodity avoiding application of relevant Valuation Ruling and managed to get the goods subsequently ex-bonded on the same lower values causing a colossal loss to Public Exchequer

Previously another Valuation Ruling was issued by the Valuation Directorate, wherein value of the commodity was determined at US dollar 1.44/Kg, which subsequently was set aside and fresh revised Valuation Ruling was issued wherein customs value of commodity was determined at US Doller 2.60/Kg

Collector of Customs (Adjudication) vide order-in-original found appellant guilty of mis-declaration including non-application of relevant valuation ruling

Validity

Appellant's subject consignment was accordingly processed under the prescribed Rules and statutory obligations after complying the previous Valuation Ruling and the consignment was allowed into-bond

Later on, the subject goods were ex-bonded in accordance with proper procedure of law and clearance made by the clearance Collectorate

Show-cause notice was issued against the appellant; after the lapse of near about 6 months, wherein the allegations were attributed against the appellant that he, with the active connivance and collusion with the Clearing Agent and Assessing Staff, by clearing consignment at under-assessed value through non-applicable Valuation Ruling avoided thereby the Government legitimate revenue

When the allegation of mis-declaration had been attributed against the appellant/ importer, responsibility of the department was to comply with the proper provisions of law and invoke the same with its true letter and spirit

Before invoking the provisions of S.32 of the Customs Act, 1969, prima facie, element of mens rea did not exist

Re-assessment under S.80(3) of the Customs Act, 1969 after release of the goods was permitted only after calling for the documents as expressed in subsection (2) of S.80 of the Customs Act, 1969

Upon receipt of documents or the information so transmitted/submitted, or the statement given by the importer to the Customs authority, if were found to be incorrect in respect of earlier assessment, the re-assessment could be made

In the present case, no such notice under S.26 of the Customs Act, 1969 had been issued to the appellant/importer

In principle, if it was considered for the sake of arguments that the Customs Authority was empowered to re-assess a Goods Declaration after clearance of the goods under S.80(3) of the Customs Act, 1969 without adhering the procedure laid down in S.80(2), there was no need for the legislature to frame subsection (2) of S.80 of the Customs Act, 1969

No re-assessment was permitted under S.80(3) of the Customs Act, 1969 once the goods were cleared

Re-assessment was permitted prior to passing of order of clearance under S.83 of Customs Act, 1969

Valuation Ruling though was applicable under S.25-A(2) of the Customs Act, 1969 in the present case, but the department failed to apply subject Valuation Ruling in the Customs Clearance system

Said defect, could not be cured at the stage of the case when the goods, which were cleared after due process of law were disposed of in the market by the importer

Proceedings initiated by the department, were in "unlawful manner" in negation of Art.4 of the Constitution and the judicial principles

Proceedings, actions and orders passed by the hierarchy of the Customs, suffered from grave legal infirmities which were declared to be illegal, ab initio and of no legal effect

Appeal was accordingly allowed, in circumstances.

2018 PTD 1260 CUSTOMS-APPELLATE-TRIBUNAL-LAHORE Judicial Precedent

Ss. 2(b), (KK), (O), 3, 17, 32, 80, 83, 156(1)(14)(90), 157, 180, 181, 194-A & 195S.R.O. No.499(I)/2009, dated 19-6-2009S.R.O. No.581(I)/2013, dated 18-6-2013Import of goodsAssessment of duty payableMisdeclarationSeizure and confiscation of imported goodsRedemption of goods on payment of redemption fee

Staff of Collectorate of Customs physically examined the imported goods, checked the declaration and assessed the duty payable in respect of said goods

Assessment of duty was countersigned by the Principal Appraiser of Customs, Dry Port at "P" and entire customs duty was deposited by the importer with the State Exchequer

Importer, thereafter booked the said goods by road to another city "L" and container stuffed with said imported goods was detained by the department of Intelligence and Investigation, under Ss.2(KK) & 17 of Customs Act, 1969

Importer was refused delivery of goods even after production of requisite Goods Declaration and goods were seized on the premise that said goods had been under assessed by the appropriate Officers of Collectorate of Customs of Dry Port at "P"

Additional Collector of Customs (Adjudication), at "L" issued show-cause notice under S.180 of the Customs Act, 1969, charging that the reassessment of impugned goods by the Staff of Collectorate of Customs, at "L", had revealed that the importer had committed an offence of mis-declaration and that goods were liable to confiscation under S.156(1)(14)(90) of the Customs Act, 1969

Said Adjudicating Authority, ordered seizure of the goods

Option under S.181 of the Customs Act, 1969, read with S.R.O. No.499(I)/2009, dated 19-6-2009 was allowed and confiscated goods were redeemed to the importer on payment of redemption fine, in addition to payment of duty/taxes leviable thereon

Truck/Trailer was also confiscated

Validity

Provisions of Ss.2(b)(i) & 3 of the Customs Act, 1969, had revealed that only such officers were assigned explicit functions with relation to an area in terms of S.3 of the Customs Act, 1969 would be “appropriate officer” or “officers of customs” for that area under the operative and functional sections of the Customs Act, 1969

Specific entrustment of jurisdiction by the Federal Board of Revenue, was the governing test to determine; whether an “officer of customs” or the “appropriate officer” had been authorized to exercise powers within a certain area

Under S.R.O. No. 581(I)/2013, dated 18-6-2013 the jurisdiction of officers of Collectorate of Customs, at "P" was well defined and distinct from that of Officers of Model Collectorate Customs (Appraisement), at "L"

Only such Customs Officers, who under S.3 of the Customs Act, 1969 had been assigned through notification by the FBR specific functions of assessment of duty in the jurisdictional area, where the import concerned had been effective, were the officers who were competent to assess the same

Officers of Model Collectorate of Customs, at "P", who wield the powers of assessment in the present case, which included re-assessment under S.80 of the Customs Act, 1969 or review under S.195 of the Customs Act, 1969

Officers working under the Model Customs Collectorate, at "P", within whose jurisdiction, the Goods Declaration had been filed and the consignment had been cleared for home consumption under S.83 of the Customs Act, 1969, would have the jurisdiction to re-assess the goods

Resultant adjudication proceedings were to be initiated by the relevant Collectorate of Customs Adjudication at Federal Capital area

Re-assessment of impugned goods by the Officers of Collectorate of Customs, at "L", was without jurisdiction and ultra vires to the powers conferred upon them under the Customs Act, 1969

Impugned show-cause notice as well as the impugned order-in-original, stood annulled, in circumstances.

2018 PTD 982 CUSTOMS-APPELLATE-TRIBUNAL-LAHORE Judicial Precedent

Ss. 18, 25, 32(1)(2) & 156(1)(14)(77)S.R.O. No. 499(I)/2009, dated 13-6-2009MisdeclarationImposition of penalty on clearing agent

Clearing Agent and the importer were alleged in the show-cause notice that they had knowingly and deliberately contravened the provisions of Ss.18 & 32(1)(2) of the Customs Act, 1969 punishable under cls.14 & 77 of S.156(1) of the Act

Adjudicating Officer ordered for recovery of alleged amount of duties and taxes from the importer and imposed penalty on importer and Clearing Agent

Validity

In order to bring actions against Clearing Agent within folds of penalty consequences, presence of requirement of S.32 of the Customs Act, 1969, had to be considered before proceeding any further

When the legislature had introduced the knowledge or intention actuating the commission of the offence as essential element, it was imperative that before the penal consequence of criminal provisions could be set into motion it was to be confronted, if the act in question (actus reus) was laced with presence of criminal intent (mens rea)

Penal consequences under S.32 of the Customs Act, 1969, could not be set into motion against the Clearing Agent in presence of clear findings of Collector (Appeals), wherein he had exonerated the Clearing Agent of committing any actus reus culminating in mens rea

Penalty imposed on the Clearing Agent, stood remitted.

2018 PTD 924 CUSTOMS-APPELLATE-TRIBUNAL-LAHORE Judicial Precedent

Ss. 25, 32, 79, 80 & 194-AImport of 'Calcium Premium Batteries'MisdeclarationDetermination of customs valueAppellants/importers, had imported goods by declaring item 'Calcium Premium Batteries'

Scrutiny of Goods Declaration, had revealed that importer had mis-declared the PCT heading '8507.2090', C.D. 20%, whereas the examination staff, had confirmed that subject goods were 'automotive batteries', which were correctly classifiable under PCT heading 8507.1020 (C.D. 35% add C.D. 15%)

Importer was alleged to have mis-declared the PCT heading of goods to avoid correct levy of customs duty, additional customs duty and taxes

Goods, were examined twice by the customs examination staff; in both the examination reports, customs staff had confirmed the declared description as "Calcium Premium Batteries"

Customs Authorities, had not given any basis to ignore the description declared by the importers and twice confirmed by the customs examination staff

Customs Authorities had not given the basis/document that the impugned batteries contained lead, calcium electrodes, which fell under Sub-heading 8507.1020

Order-in-original did not show that the batteries were meant for vehicles, mentioned against Sub-heading 8507.1020, and not meant for the vehicles mentioned against Sub-heading 8507.1010

Held, that goods in question were classifiable under heading 8507.8000 at 10% duty

Appeal was allowed and the order-in-original was set aside, in circumstances.

2017 PTD 2250 CUSTOMS-APPELLATE-TRIBUNAL-LAHORE Judicial Precedent

Ss. 25, 32, 79 & 80MisdeclarationDeclaration was filed at total invoice value of US $ 6250Importer sought clearance of the same by determining the liability of taxes on his ownGoods declaration was selected for scrutiny

Images attached and scrutiny of the examination report, had revealed that value given was Indian rupees 2,504,200 which came to US $ 37,629 and final value came to US $ 38000; which clearly manifested under invoicing to the extent of 508 %

Said facts had shown that the importer had deliberately concealed the actual contents of the goods by mis-declaring the value of the goods in order to suppress duty/taxes and with mala fide intention and had attempted to evade the legitimate revenue amounting to Rs.654512

Adjudicating authority, found that charges against the importer stood established and in exercise of powers under Ss.32(1)(2) & 79(1) of Customs Act, 1969, importer was given an option to redeem the same on payment of leviable duty/taxes and redemption fine, with penalty of Rs.50,000

Validity

Adjudicating authority, had adjudged duty/taxes on the 'ICEGATE' invoice by stating in the impugned order that the importer had admitted the charges of under-invoicing and showed willingness to pay the differential duty/taxes

Said conclusion was found to be factually incorrect as record, did not reveal any such act or statement by the importer; rather he had contested the charges and depended his declaration and documents furnished with the goods declaration at all stages of adjudication and appeal

Evidence of actual payment also supported the declaration of the importer

Supplier had also confirmed the transaction value for the impugned goods at US $ 6,250, whatever information was given at the Indian Web-site, could not over-rule or set aside the transaction value, unless the department evidently would prove that such a consideration had been exchanged for which the provisions of S.25 of the Customs Act, 1969, were required to be followed

Impugned order had no legal premise to stand

Appeal having merit, was allowed.

2017 PTD 2069 CUSTOMS-APPELLATE-TRIBUNAL-LAHORE Judicial Precedent

Ss. 32, 79, 80, 83, 156(1), Cls. (14)(14A), & 186S.R.O. No. 371(I)/2002, dated 15-6-2002MisdeclarationUpfront duty and taxes were deposited to which goods declaration was numberedNominated Appraiser opted to get the goods examinedOfficials posted at terminal after physical verification of the goods confirmed the declaration

Appraiser passed assessment order on the basis of declaration, examination report, images and infield valuation ruling and transmitted the view message for payment of additional amount of duty and taxes, which were paid and Authority passed the clearance order

Officials of terminal operator informed the importer that hold had been placed on the goods declaration by the Deputy Collector and delivery could not be effected

Deputy Collector of Customs(MCC), informed the Clearing Agent that it was their apprehension that duty and taxes had not been levied correctly

Importer, upon apprehending the mala fide on the part of Deputy Collector Customs (MMC) filed constitutional petition before High Court on which order was passed that goods be allowed to be released after submitting of pay order of specified amount with the Nazir of the High Court and thereafter importer to present certificate and Nazir of the Court issued certificate

Department, thereafter, framed contravention report and show-cause notice was issued to the importer, with the allegation that the importer was involved in mis-declaration of description, brand, quality, classification, value and non-application of valuation ruling, resulting in loss of Revenue and that importer had violated the provisions of S.32 of the Customs Act, 1969

Validity

Consignment of importer could be detained under S.186 of the Customs Act, 1969 after payment of leviable duty and taxes and order of clearance by the authority defined in the SRO No.371(I)/2002, dated 15-6-2002, if any adjudication order against the said importer was in field and wherein fine/penalty had been imposed upon him and which he had not paid; or in a case wherein contravention report had been framed in an under clearance consignment for adjudication by the competent authority for imposition of fine or penalty

In the absence of availability of said conditions, consignment could not be detained under S.186 of the Customs Act, 1969

In the present case, no such order was available, wherein adjudicating Authority had imposed any fine or penalty on the importer nor any contravention report was prepared for the purpose of adjudication prior to passing of assessment/clearance under the respective provisions of Act/Rules

Department was only authorized to take action for issuance of detention notice, once the amount alleged to have been evaded had been finally adjudicated and decided against the person

Show-cause notice which was barred by time by 128 days was without power, jurisdiction and lawful authority hence, void ab initio and not enforceable under the law

Deputy Collector of Customs (Adjudication) issued show-cause notice and passed order in original by usurping the powers of Additional Collector, which was not permitted under the law

Exercise of jurisdiction by Deputy Collector of Customs (Adjudication) was without lawful authority and jurisdiction

Issuance of show-cause notice and passing of order-in-original, were void ab initio, in addition to the order passed by Collector of Customs (Appeals)

After passing of clearance order by the competent Authority, same could not be disturbed by any Authority, for preparing contravention report for adjudication proceedings

No misdeclaration of quantity, quality, weight for alleged PCT or value, were visible, as the weight in both the examination reports, assessment order and show-cause notice were one and the same; difference was shown only in description

Preparation of contravention report by Deputy Collector of Customs (MMC) and issuing/passing of show-cause notice/order-in-original by the Deputy Collector of Customs (Adjudication) and order-in-appeal by Collector of Customs (Appeals) were ab initio illegal and void, and of no legal effect which were annulled and set aside by the Tribunal.

2017 PTD 2022 CUSTOMS-APPELLATE-TRIBUNAL-LAHORE Judicial Precedent

Ss. 32, 168, 171 & 194-AMisdeclarationSeizure of imported goodsFive trucks stuffed with foreign origin TV Remotes etc., were interceptedDrivers of the trucks produced bilities, issued by Goods Forwarding Agency

Produced goods declaration and examination reports were examined and compared with the recovered foreign origin goods and it was proved that misdeclaration was made in terms of quantity and same were also assessed on lower side

Recovered goods along with five trucks were seized under S.168 of the Customs Act, 1969

Counsel who appeared on behalf of the Seizing Agency, contended that the department had no objection, if the seized goods were released on payment of duty and taxes

Adjudicating Officer, passed order

Collector of Adjudication, had also made remarks against the concerned staff, as they caused huge loss to the national exchequer of its legitimate revenue in active connivance with the importer and clearing agency, and directed to hold departmental inquiry

Validity

Impugned order, had not stated any reason for the conclusion

Judgment in question did not speak a word about the alleged connivance between the concerned customs staff and importer/clearing agent

Conclusion drawn by the Adjudicating authority being without evidence on record, amounted to "non-speaking" order which was expunged, in circumstances.

2017 PTD 1993 CUSTOMS-APPELLATE-TRIBUNAL-LAHORE Judicial Precedent

Ss. 25, 32, 80 & 156(1)(4)Determination of customs value of goods and assessment of dutyMisdeclaration

Audit team duly constituted for post clearance audit, pointed out that "Lead acid batteries" imported by the importer vide different Goods Declarations, were misclassified under PCT Heading 8506.8000 attracting customs duty at 10%, instead of correct classification under PCT Heading 8507.2000 attracting Goods Declaration at 20%

Collector of Customs (Adjudication)/Adjudicating Authority vide its consolidated order-in-original ordered the importer to deposit the short amount of duty/taxes paid into Government Treasury

Adjudicating Authority also imposed a personal penalty upon the importer in terms of cl.(14) of S.156(1) of the Customs Act, 1969, which had been challenged by the importer before the Appellate Tribunal

No chemical examination of any laboratory was produced to establish that Batteries in question were "Lead acid Batteries" falling under PCT heading i.e. 8507.2000, attracting Goods Declaration at 20%

Department was not in possession of any sample so that, it could have been referred to a laboratory for chemical analysis and its composition

No extra weightage, in circumstances, could be given to picture of the battery alone, when its chemical composition could not be substantiated from an independent laboratory report

Conclusion of short realization of duty/taxes, was mainly drawn by the department on the basis of image available in "WeBOC data"

Such an image, could not be made "material in particular" to substantiate that the importer had paid short amount of duty/taxes

When a system was laid for the purposes of determination of correctness of declaration, it had to be adhered to and appreciation of any evidence in that respect; had to be in conformity with what was prescribed; because otherwise depending on something outside the laid methodology, would amount to an aberration and upon hearsay; which could damage the requirement given by the law

Examination report tendered by the Customs Authorities, constituted in itself an independent piece of evidence, which itself negated the departmental stance and on the contrary fortified view point of the importer

All the important documents stood verified by the customs at the time of examination/assessment and the Adjudicating Officer could not substantiate its observation or view point with any documentary evidence, which could rebut or nullify the documentary evidence of import, purchases and examination report of the examiner

Customs authorities, though had disputed the description of the subject goods on the basis of said "image", but the Adjudicating Officer did not analyze the authenticity and legal sanctity of the "image"

'Image' could not be taken as conclusive evidence

Importer had submitted the entire requisite commercial documents viz., commercial invoice, packing list, certificate of origin of bill of lading before the customs authorities

Said documents sufficed the legal requirements of submission of prescribed documents to be submitted by the importer to the customs at the time of importation

Examination report, had revealed that no misdeclaration was found during the physical examination

Impugned order-in-original, passed by Adjudicating Authority did not stand the thrust of actual and prime course of justice

Order-in-Original was set aside to the extent of the importer

Order of Adjudicating Authority would mutatis mutandis stand applicable to the appeals being identical in nature, having similar question of law and fact.

2017 PTD 1792 CUSTOMS-APPELLATE-TRIBUNAL-LAHORE Judicial Precedent

Ss. 32, 25, 26 & 156(1)(10-A)(14)Valuation Ruling No.203, dated 30-12-2009MisdeclarationEvasion of tax and duty

Importer was alleged to have knowingly and wilfully managed to obtain clearance of imported goods through misdeclaration of rate in violation of Valuation Ruling No.203, dated 30-12-2009 and evaded duty and taxes to the tune of Rs.14,96,302 by contravening the provisions of Ss.26, 32(2)(3), punishable under S.156(1)(10-A)(14) of Customs Act, 1969

Additional Collector (Adjudication) vide impugned order-in-original, directed that amount of duties and taxes, as pointed out by audit, should immediately be paid by the importer

Penalty of Rs.50,000 was also imposed on the importer

Department had failed to produce any direct evidence against the taxpayer as provided under Art.117 of the Qanun-e-Shahadat, 1984

Departmental representative, conceded that grounds on which customs department had proposed to take action against the importer, were never revealed in the show-cause notice

Initiation of action against the importer, in circumstances, was in violation of the provisions of S.180 of the Customs Act, 1969, as the very essence of any notice was to enable any person affected thereby be known the particulars of the charges mentioned in the notice

Basis of allegations, was not known to the importer

No chemical examination of any laboratory, had been produced by the department to substantiate that lead acid batteries (imported goods) fell under P.C.T. Heading 8507.2090

Show-cause notice issued to the importer was time barred having been issued beyond the time limitation of 5 years

Paramount duty of the Customs department was that before embarking upon any allegation, the functionary must already possess some definite material so as to establish any illegal action having been taken by the importer

Impugned order-in-original, in circumstances, would not stand the thrust of actual and prime course of justice

Same was set aside to the extent of importer.

2017 PTD 744 CUSTOMS-APPELLATE-TRIBUNAL-LAHORE Judicial Precedent

S. 32Customs Rules, 2001, R.352(3)Import of goodsMisdeclarationImporter, imported 26 consignments of raw material to manufacture finished goods for exportAssistant Collector of Customs issued letters to the importer to provide evidence of export under manufacturing bond

Importer having failed to provide required information; it was concluded by the department that importer had not exported the goods and importer was liable to pay leviable duty and taxes thereon

Out of 26 imported consignments used in the manufacture of goods meant for export, importer had satisfied Customs authorities about export of finished goods manufactured out of 20 consignments while whereas in the case of remaining consignments, importer had not been able to produce relevant record for reconciliation; to establish that the finished goods had been exported

Stance of the importer was that he had submitted Goods Declaration wise complete record regarding all the 26 consignments to the department

Neither the department nor Adjudicating Authority had been able to specifically identify, as to which documents were not produced by the importer

Department confirmed that 20 Goods Declarations had been reconciled through on-line system; and that 6 Goods Declarations, could not be reconciled being not legible

Department, had been changing its stance regarding submission of record by the importer

Importer submitted copy of letter, along with a statement showing consumption of raw material, and export of finished goods imported under manufacturing bonded werehouses

Importer had also handed over copy of statement and 26 files to the department

On the insistence of the importer that complete record had already been provided, it was stated on part of the department that record pertaining to remaining 6 Goods Declarations, was not legible, as such reconciliation could not be done which had confirmed that the department had been changing its position regarding provisions of complete record of all 26 Goods Declaration

Impugned order-in-original, was set aside to the extent of 6 Goods Declarations

Department, was directed to undertake on-line verification/reconciliation exercise afresh pertaining to 6 Goods Declaration on the basis of documents, already provided by the importer

Importer was also directed to extend full co-operation to the department, in case it required any information/document.

2017 PTD 244 CUSTOMS-APPELLATE-TRIBUNAL-LAHORE Judicial Precedent

Ss.32, 79, 80, 83, 158, 171, 179, 180, 186, 194-A & 156(1)(4)(45)Customs Rules, 2001, Rr.433, 435, 438 & 442S.R.O. No.486(I)/ 2007, dated 9-6-2007S.R.O. No.371(I)/2002, dated 15-6-2002MisdeclarationConfiscation of imported goods

Consignment was imported and shipping documents were delivered to clearing agent for transmitting Goods Declaration; as per pre-requisite upfront duty and taxes were deposited, consequent to which Goods Declaration was numbered

Nominated Appraiser got the imported goods examined prior to passing assessment order

Officials posted at terminal, after physical verification of the goods confirmed the declaration and Competent Authority passed assessment order on the basis of examination report; additional amount of duty and taxes leviable thereon, were also paid; consequent to which inbuilt authority passed clearance order

Clearing agent of the importer, thereafter obtained the delivery

Directorte General of Intelligence and Investigation stopped the container on the pretext that the duty and taxes had been paid short as against actuate and put on hold on Goods Declaration and goods were detained for conducting of re-examination

Officials of Director General of intelligence and investigation seized the consignment in terms of provisions of S.168(1) of the Customs Act, 1969 after serving notice under S.171 of the Customs Act, 1969, and subsequently prepared contravention report stating that importer, had tried to obtain clearance of the goods under HS Code 7315.1190 as against the actual one

Said fact had been accepted by the importer, and he agreed to pay the differential amount of duty and taxes

Such inadvertent error on the part of the employees of the clearing agent was termed as an act of misdeclaration by the importer

Deputy Collector of Customs issued a show-cause notice to the importer and Deputy Collector, being dissatisfied with reply of the importer passed impugned order whereby imported goods were held liable to confiscation; giving option to the importer to get the goods redeem on payment of 20% redemption fine

Appeal filed by the importer against the order was rejected by Collector of Customs (Appeal)

Validity

Officials of Directorate General of Intelligence and Investigation, were not empowered to detain the consignment of the importer; as the Directorate derived powers for functioning within the territory of Pakistan under S.R.O. No.486(I)/2007, dated 9-6-2007 for thwarting the act of smuggling; which would not mean that it had unfettered powers to intercept and detain the goods cleared by the Officials of Clearance Collectorate; after completion of codal formalities and realization of the leviable duty and taxes, for delivery to the importer through his clearing agent/representative, either in the terminal or their office

Officials of Directorate could not assume powers of seizing the goods under the provisions of S.168(1) of the Customs Act, 1969, as no allegation of smuggling, had been levelled

Directorate stretched its powers beyond the allotted sphere, same were not permitted, unless enabling provisions to the said effect was available in the Customs Act, 1969 or the notification

Said unlawful act of the officials of Directorate, was an act of high handedness abuse of powers being in violation of the provisions of law, hence void ab initio and as such coram non judice

Federal Board of Revenue had not delegated powers to the Directorate under provisions of Ss.32 & 79 of the Customs Act, 1990

Exercise of jurisdiction by the Deputy Collector of Customs being without lawful authority and jurisdiction, issuance of show-cause notice and passing of order-in-original, were void ab initio and of no legal effect upon passing of assessment order under S.80 of the Customs Act, 1969 and R.438 of Customs Rules, 2001 and thereafter passing of clearance order by Competent Authority, could not be disturbed by any authority for the purpose of preparing contravention report and adjudication proceedings

Issuance of show-cause notice and passing order-in-original in the case by Deputy Collector of Customs also fell under the ambit of "double jeopardy" not permitted under Art.13 of the Constitution

Preparation of contravention report by Director General of Intelligence and Investigation and issuing of show-cause notice, order-in-original by Deputy Collector of Customs and order-in-appeal passed by Collector of Customs (Appeals) were ab initio, illegal and void and of no legal effect

Same were set aside by Appellate Tribunal, appeal was allowed with directions to Directorate General of Intelligence and Investigation to release the pay orders/post dated cheque deposited by the importer as security for obtaining delivery of the goods in compliance of the order of the Tribunal.

2014 PTD 1615 KARACHI-HIGH-COURT-SINDH Judicial Precedent

Ss. 17, 25, 168 & 171Notification S.R.O. 486(I)/2007, dated 9-6-2007Constitution of Pakistan, Art.199Constitutional petitionMisdeclarationSeizure of goodsAdditional demand of duty and taxesProcedureAuthorities did not accept goods declaration submitted by importer and demanded additional duty and taxes

Plea raised by importer was that under Notification S.R.O. 486(I)/2007, dated 9-6-2007, goods could only be detained under S. 17 of Customs Act, 1969

Validity

Interpretation of notification as well as classification of goods did not fall within definition of "mis-declaration"

When goods were intercepted and seized, officials had credible information and prima facie evidence to the effect that there was some mis-declaration involved in description and or of quantity of goods, hence goods became liable for confiscation and powers under S.168 of Customs Act, 1969, could be lawfully exercised by authorities

After detention and seizure of goods a show-cause notice under S.171 of Customs Act, 1969, was issued to importer and matter was pending before competent authority, before whom importer had not chosen to proceed with

Officials did not act without jurisdiction and detention/ seizure of goods was with lawful authority and subsequent to such detention/seizure proper show-cause notice was issued to importer

Petition was dismissed in circumstances.

2014 PTD 52 CUSTOMS-APPELLATE-TRIBUNAL-KARACHI Judicial Precedent

Ss. 32 (1), (2), (3) & 194-AAppeal before Appellate TribunalMisdeclarationShort assessed duty, recovery ofShow-cause noticePrerequisitesAppellant/importer was served with a show-cause notice by the customs authorities

Allegation against the appellant was that he imported ester of Acrylic Acid attracting customs duty, sales tax but with a view to availing inadmissible benefits of zero percent/exemption from customs duty he misdeclared the imported items as Methyl Acrylate

Customs authorities found the appellant guilty of deliberate mis-declaration and passed an order for recovery of exempted amount of customs duty, sales tax and income tax and Collector of Customs (Appeals) dismissed the appeal of the appellant

Appellant in filing goods declaration had not made any false statement regarding the description, quantity of the goods

Appellant was not charged with allegation of any collusion by the customs authorities, therefore show-cause notice under S. 32(2) of the Customs Act, 1969 could not be acted upon

Validity

Appellant transmitted goods declaration with the Model Customs Collectorate (MCC) of Pakistan Customs Computerized System (PACCS) containing description "Methyl Acryalate" on the basis of commodity name in letter of credit, invoice, B/L, certificate of origin and he incorporated the said information of the Goods Declaration (GD) under Pakistan Customs Tariff (PCT) heading with the exemption of customs duty, Sales tax on the basis of infield notifications and Income Tax against certificate issued by the Commissioner of Income Tax

Software of the Pakistan Customs Computerized System (PACCS) had been designed by the agility in such a manner that upon receipt of the goods declaration the system co-relates each declaration with the corresponding Pakistan Customs Tariff (PCT) heading, the claimed notifications and the exemption certificate, which were fed therein either by the FBR/Project Director or Commissioner of Income Tax at their own and after finding those in accordance with the declaration the system pass assessment/clearance order in exercise of its inbuilt vested authority, such fact stood validated from examination of the import documents and goods declaration

Appellant had made no misdeclaration in material and invoking the provisions of S. 32 by customs authorities was erroneous in circumstances

Show-cause notice issued to appellant did not remotely hint the submission of any false documents or statement while transmitting goods declaration with the Model Customs Collectorate (MCC) of Pakistan Customs Computerized System (PACCS) or about the collusion with the project official of Pakistan Customs Computerized System (PACCS) rendering the show-cause notice and the subsequent proceeding void ab initio

Order-in-original passed by customs authorities and order-in-appeal passed by the Collector of Customs (Appeals) was set aside

Appeal was allowed.

2013 PTD 2258 CUSTOMS-APPELLATE-TRIBUNAL-KARACHI Judicial Precedent

Ss.32(1), 2, 32-A, 207, 208, 209 & 194-AAppeal before Appellate TribunalMisdeclarationEvasion of tax and dutiesShow-cause noticePersonal penalty on Clearing Agent without invoking the penal provision in the show-cause noticeScope

Importer was served with a show-cause notice for evading minimum value addition tax by disposing of the impugned goods in the same state without putting them into further process of manufacturing

Customs official while passing order of recovery against importer also imposed personal penalty on Clearing Agent for not fulfilling its responsibilities under law

Contention of the appellant (Clearing Agent) was that in absence of any mala fide on the part of Clearing Agent the impugned penalty could not be imposed and opinion framed by the adjudicating officer was without any evidence

Validity

Clearing Agent had filed the goods declaration and discharged his responsibility correctly

Act of connivance as charged in the show-cause notice had not been specified

Neither specific charge of connivance as to the role of Clearing Agent had been mentioned nor the relevant provisions of Ss.207, 208 & 209 of the Customs Act, 1969 had been invoked

Invoking penal provisions of law without mentioning the same in show-cause notice was void

Appeal was allowed.