____________________________________________________________________
Order with signature of Judges
Present
Mr. Justice Sajjad Ali Shah
Mr. Justice Aqeel Ahmed Abbasi
For Katcha Peshi
Date of hearing: 01.03.2012
Date of order: 02.04.2012
Mr. Parvez Iqbal Kasi, advocate for the applicants.
Mr. S. Mohsin Imam, advocate for the respondents.
-----------------------
Aqeel Ahmed Abbasi, J: Through this common order, we intend to dispose off the above reference applications arising out of the common order dated 30.09.2011, involving similar controversy, passed by the Customs Appellate Tribunal, Bench-III, Karachi in Customs Appeal Nos.K-1067/11/1203, K-1065/11/1201 and K-1066/11/1202 filed by the applicants, which was rejected. The applicants have preferred the instant reference applications for opinion of this Court.
2. Following questions of law are said to have arisen from the impugned order.
I. Whether the Honourable Tribunal erred by not offering any comments/observations on the scope of Permission for Re-Export, granted by the Ministry of commerce, Government of Pakistan to applicants consignment?
II. Whether the Re-Export permission issued under the express provisions of the Export Policy Order, by the Ministry of Commerce was binding on the concerned customs authorities?
III. Whether non-compliance of Ministry of Commerce’s permission order for re-export by the Customs Department is ultra vires?
IV. Whether the Honourable Tribunal has erred by treating applicants import as a case of ‘Frustrated Cargo’?
V. Whether the Honourable tribunal has properly interpreted and applied the provisions of section 138 of the Customs Act, 1969?
VI. Whether the charge of violation of section 16 of the Customs Act, 1969 still holds good, once the competent authority that is the Ministry of Commerce allows Rs-Export Permission in terms of the powers vested in it under the Export Policy Order?
VII. Whether any mensrea can be attributed to the applicants who had clearly mentioned the origin of the goods as UAE in their Letter of Credit?
VIII. Whether the Ministry of Commerce’s permission orders, lawfully issued under para 8(i) the Export Police Order 2009, in any way amounts to interference in the adjudicating authority’s quasi-judicial functions?
IX. Whether the Honorable Tribunal has upheld the Order-in-Original and Order-in-Appeal in a mechanical manner without proper application of mind and has materially misread and/or failed to properly read and appreciate the record of the case?
3. Brief facts as recorded by the learned Tribunal in its impugned order are that the Director General of Intelligence & Investigation-FBR, Regional Office, Karachi, has reported vide its seizure Report C.No.PaCCS-346/DCI/Seiz/2011 March, 2011, that M/s Saima Packaging (Pvt) Ltd. (NTN No.0711951), situated at Plot No.60-A/30-A, Sector No.15, Korangi Industrial Area, Karachi, survey based industry, are involved in the import of Polyester Transparent Film of Indian origin, which is not permissible for import from India and that item is being cleared on concessionary rate of duty against Survey Certificate. It was also disclosed by the source that a consignment of 2x20’ containers being Nos.MSKU-7773137 and PONU-0115561 imported from UAE is being cleared from the Collectorate. In pursuance of above information, vigilance was mounted and the afore-said containers released/cleared vide Goods Declaration (GD) bearing CRN No.1-FS-173211-250211, from PICT through this Collectorate loaded on Trailer Nos.JT-0309 and TKF-690. The Directorate of Intelligence and Investigation-FBR, Regional Office, 81-C, Block-6, P.E.C.H.C, Karachi on 03.03.2011 staff were intercepted near Korangi Industrial Area by the Deputed Staff of the Anti Smuggling Organization Branch of the said Directorate. Since it was not possible to examine the goods on the spot, the same were escorted to Directorate of Intelligence and Investigation-FBR, Regional Office, Karachi on 03.03.2011. Subsequently, on 04.03.2011 containers were removed/escorted to Customs CPF Bonded Warehouse, Rasheedabad, Karachi under proper Musheernama for detailed examination. The containers were also weighed at Babar Computerized Weighbridge, S.I.T.E., Karachi vide Weightment Slip Nos. 018648 and 018649 dated 04.03.2011. Initial scrutiny of Goods Declaration (GD) bearing CRN No.1.FS-1732111-250211, produced by the clearing agent M/s Qasim International (CHAL No.620) revealed that goods 24,627.80 kgs net of Polyester Film of 12 micron NOVAK brand of UAE origin were declared and cleared on concessionary rate of 5% customs duty plus usual taxes against Survey Certificate No.01-ISR-SPPL/61/FE/LTU/07/1621104 in terms of SRO 565(I)/2006 dated 05.06.2006. The goods were imported from/supplied by M/s Novak General Trading, Dera Dubai, UAF. The consignment was cleared from this Collectorate without examination on payment of declared taxes amounting to Rs.2,281,675.95/-. In order to confirm the veracity of the information, the goods were examined by the staff of the Directorate General in presence of importer’s representative, Suresh Kumar, Clearing Agent, Noor Muhammad and musheers on 04.03.2011 at CPF Bonded Warehouse, Rasheedabad. The examination resulted into recovery of 18 rolls in each container (total 36 rolls) Sarafil transparent Polyester Film, one side corona type 12 TFC, 12 micron of Indian origin. The net weight of the goods was found as per declaration inventory of the goods was made on the spot under proper musheernama duly signed by the imporder’s representative and all present. After examination, the goods were re-stuffed in the containers and locked with pad locks taped, sealed and signed. The goods valuing Rs.69,26,133/- having been imported in violation of provisions of the Import Policy Order, 2009-10 are liable for out right confiscation, in terms of SRO 499(I)/2009-10, and as such do not qualify for concessionary regime under SRO 565(I)/2006. The short levied amount of taxes has been worked out to Rs.1,508,304/- (Customs duty Rs.10,38,920/- + Sales Tax Rs.2,28,562/- + Income Tax Rs.2,40,822/-.)
4. The Additional Collector of Customs, Karachi did not agree with the reply of show cause notice and passed an order-in-original No.39 of 2011 dated 31.05.2011.
5. The applicants aggrieved from the order-in-original filed appeals before the Collector of Customs (Appeals), Karachi. The Collector of Customs (Appeals), Karachi rejected the appeals of applicants.
6. The applicants still feeling dissatisfied with the order of Collector of Customs (Appeals), Karachi, filed appeals before the Tribunal against Order-in-appeal, which were also dismissed by the learned Tribunal vide impugned order which has been assailed by the applicants through instant reference application, wherein it has been prayed that questions as proposed hereinabove do arise from the impugned order and the same may be answered in favour of the applicants.
7. It is contended by the learned counsel for the applicants that the orders passed by the custom authorities as well as the impugned order of the learned Tribunal is erroneous in law and facts. Per learned counsel, mistakenly Indian origin goods have been shipped to the applicants instead of UAE origin goods, whereas the applicants have no intention to violate the provision of Import Policy Order 2009-2010. It is further contended by the learned counsel that having realized this mistake a representation was made to the Federal Government, Ministry of Commerce, seeking permission for re-export of the consignment which according to learned counsel was allowed by the Ministry vide their letter dated 18th April 2011 and the consignment was allowed to be re-exported in terms of para 8(i) of the Export Policy 2009, however, per learned counsel, such permission by the Ministry of Commerce has not been taken into consideration by the custom authorities without realizing that Ministry of Commerce has the authority in matters of International Trade in terms of the provisions of Import Policy Order read with provisions of Imports and Export Control Act, 1950. The learned counsel submits that the custom authorities are bound by the Import Policy Order and also to follow instructions and directions issued by the concerned Ministry in this regard and cannot render such instructions and directions redundant in the garb of quasi judicial proceedings taken against the applicants. In support of his contention, learned counsel readout para 8(i) of the Export Policy 2009 as well as the contents of letter dated 18th April 2011, issued by the Ministry of Commerce in this regard and submitted that in view of hereinabove legal and factual position the custom authorities were bound to allow re-export of the consignment, which was inadvertently shipped by the consigner in the name of applicants.
8. Conversely, the learned counsel for the respondents has vehemently opposed the arguments advanced by the learned counsel for the applicants. It is contended by the learned counsel that instant reference application is misconceived and not maintainable as the decision of the learned Tribunal is based upon finding of facts, whereas no question of law arise from the impugned order.
9. Without prejudice to hereinabove objection as to maintainability of the instant reference application, learned counsel has also opposed the contention of the applicants on merits and submitted that this is a clear case of mis-declaration and violation of Import Policy Order 2009-2010 whereby the applicants with an intention to defraud the revenue has imported the Indian origin goods to evade duty and taxes and other charges. It is further contended by the learned counsel that once the goods were confiscated and the adjudication proceedings commenced against the applicants, the applicants approached the Ministry of Commerce without disclosing the complete facts and particulars of the fraudulent import and obtained permission for re-export of the consignment, which has no bearing in the instant case, as the matter had already been adjudicated upon in accordance with law under quasi judicial proceedings. It is further contended that even so-called permission was conditional and could be applied if the case of the applicants would have been “otherwise in order”. Learned counsel further submitted that the applicants did not even approach the concerned custom officer at relevant time with an application to allow export of such goods in order to avail the facility provided under Section 138 of the Customs Act, 1969 and instead approached the Ministry of Commerce directly when a case of mis-declaration was made out against the applicants. Per learned counsel, since the import was in clear violation of Section 16 of the Customs Act, 1969 and the Import Policy Order 2009-2010, therefore, no exception can be taken to the order passed by the custom authorities as well as the learned Custom Appellate Tribunal, hence instant reference application is liable to be dismissed with cost.
10. We have heard both the learned counsel and perused the record with their assistance. The main controversy in the instant reference application appears to revolve around determination of a question as to:
“Whether under the facts and circumstances of this case when the consignment of the applicants, on checking under Section 80 of the Customs Act, 1969, was confiscated on account of having been imported in violation of Section 16 of the Customs Act as well as the Import Policy Order 2009-2010, the permission of re-export granted to the applicants by the Ministry of Commerce has any bearing on the proceedings initiated by the custom authorities in the instant case and the order passed by the quasi judicial forum including Tribunal?”
There seems no dispute with regard to the fact that the consignment i.e. polyester film of Indian origin was imported in violation of Import Policy Order 2009-2010 as the goods imported from UAE are admittedly of Indian origin, which are not included in Appendix-G of the Import Policy Order 2009-2010. It is also pertinent to note that the consignment was cleared from the Collectorate without examination on the basis of self-assessment on payment of declared taxes, however, in order to confirm the varsity the goods the said consignment was examined, whereafter it was found that the goods imported were of Indian origin and not entitled to concessionary regime under SRO 565(I)/2006. The goods were seized and the show cause notice dated 05.02.3011 was issued to the applicants, which was responded, however, Adjudicating Officer was not satisfied with the explanation given by the applicants and passed the order-in-original No.39/2011 dated 31.05.2011.
11. It will be advantageous to re-produce hereunder the provision of para 8(i) of the Export Policy Order 2009 as well as the letter of Ministry of Commerce dated 18th April 2011 granting permission to the applicants for re-export.
“8(1) Imported items may be exported for purposes of repairs, replacement, or refilling of cylinders and ISO tanks subject to submission indemnity bond to customs authorities undertaking that goods being, exported shall be re-imported after repairs, replacement, or refilling:
Provided that in cases where defective goods have to be exported for which replacement has already been received, the condition of indemnity bond shall not apply provided there is no revenue implication.”
“No.2(10)/2011-Imp-II
GOVERNMENT OF PAKISTAN
MINISTRY OF COMMERCE
********
Islamabad, the 18th April, 2011
The Collector,
Collectorate of Customs,
M.C.C. Customs House,
Karachi.
Subject: PERMISSION FOR RE-EXPORT OF TWO CONTAINERS OF POLYSTER FILM.
M/s Saima Packaging (Pvt) Ltd. has approached this Ministry with the request to allow re-export of two containers (MSKU7773137 and PONU0115561) of Polyester film of Indian origin (valuing US$ 80,040.36) imported from Dubai vide B/L No.861566429 dated 16.02.2011, CRN No.I-FS-1732111-250211.
2. The request has been examined in this Ministry and it has been decided to allow re-export of the said consignment in terms of para 8(1) of the Export Policy Order 2009 if otherwise in order.
Sd/-
(Muhammad Arifullah)
Section Officer.”
12. From perusal of para 8(i) of the Export Policy Order 2009, it emerges that the imported items can be allowed to be exported for the purposes of repairs, replacement, or refilling of cylinders and ISO tanks subject to condition that goods being exported shall be re-imported after repairs, replacement, or refilling. The applicants is further required to submit indemnity bond to the customs authorities to ensure the compliance of above condition. It has been further provided that such arrangement will have no revenue implications. Similarly, from perusal of letter dated 18th April 2011, issued by the Ministry of Commerce, it is noted that the permission for re-export of two containers of polyester film is conditional and the re-export of the said consignments has been allowed in terms of para 8(i) of the Export Policy Order 2009, if it is found to be “otherwise in order”. In the instant case it has come on record that the consignment was not imported in accordance with law, whereas the applicants have attempted to clear the banned goods by seeking the benefit of SRO 565(I)/2006, which was not attracted in the facts and circumstances of this case or duty and taxes were evaded by the applicants and lesser amount of duty and taxes were paid, which resulted in loss of revenue to the exchequer. We have further noted that permission as visualized in terms of para 8(i) of the Export Policy Order 2009, is also restrictive only for the purposes of repairs, replacement or refilling of cylinders and ISO tanks, further subject to submission of indemnity bond to customs authorities undertaking that the goods being exported shall be re-imported after repairs, replacement or refilling. In the instant case it appears that neither such request was made in terms of para 8(i) of the Export Policy Order 2009 nor under the facts and circumstances of this case the goods of the applicants are covered under such provision. Learned counsel for the applicants was asked to refer to any provision of law or to produce any case law to support his contention that even after seizure of goods and initiation of adjudication proceedings against an importer the permission of re-export of goods can be awarded, but the learned counsel could not refer to any such provision of law nor could place any case law in this regard. However, he has submitted that the customs authorities are bound to follow the provisions of Import and Export Policy as well as the notification and instructions issued in this regard. We have noted that no relaxation has been issued by the Ministry of Commerce in terms of the Import Policy Order 2009-2010 nor any instructions have been issued whereby the confiscated goods which have been imported in violation of Import Policy Order are permitted to be re-exported once the adjudication proceedings have been initiated.
13. Keeping in view of hereinabove facts, we are of the view that the order passed by the learned Tribunal as well as the orders passed by the Adjudicating Officer and Collector (Appeals) do not suffer from any factual or legal error, hence do not require any interference by this Court in its reference jurisdiction. Mover, the impugned order is based on concurrent finding on facts which cannot be disturbed unless proved to be perverse. Reference in this regard can be made to the judgments of the Hon’ble Supreme Court in the case of Lungla (Sythet) Tea Co. v. CIT (1975) 31 Tax 64 SC, S.M. Ilyas & Sons v. CIT PLD 1982 SC 259, Japan Storage v. CIT 2003 PTD 2849 and CIT v. NIT 2003 PTD 589. The only question, which was argued by the learned counsel for the applicants regarding the effect of permission granted by the Ministry of Commerce is answered in negative against the applicants. Consequently, after having responded to above question the other questions formulated by the applicants have though become infructuous, however, the same are answered in negative against the applicants.
J U D G E
J U D G E