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and Messrs World Trade Corporation v. Central Board of Revenue 1989 MLD 4310
rel.
(g) Customs Act (IV of 1969)---
----Ss. 193 & 195---Appeal to Collector of Customs (Appeals)---Powers of Federal
Board of Revenue or Collector of Customs to pass certain orders---Scope---When
the right of appeal has been provided by legislature in the provision of S. 193 of
Customs Act, 1969, S. 195 becomes un-operational and cannot be exercised even
by the authority defined therein.
Nadeem Ahmed Mirza, Consultant for Appellant.
Asif Maqbool, Assistant Director and Umair Jehangir, A.O. for Respondents.
Date of hearing: 23rd October, 2018.
ORDER
JEHANZAIB WAHLAH (MEMBER JUDICIAL-III).---Through this order, I
intend to dispose off Appeal No. K-1269/2017 directed against the Order-in-
Original No. 234/2017-18 dated 02.10.2017 passed by Additional Collector of
Customs, Adjudication-I, Karachi (Respondent No.3).
2. Briefly facts of the case are that the appellant imported 03 consignments of
textile fabric and viscose dyed fabric of PCT heading 5407.4200, 5516.1200 and
6301.4000 from China, upon receipt of shipping documents, appellant transmitted
Goods Declaration (GD) defined in Section 2(la) under the provision of Section
79(1) of the Customs Act, 1969 (Act) and Rule 433 of Sub-Chapter III of Chapter
XXI of Customs Rules, 2001 (Rules), with the MCC of PMBQ, upfront duty and
taxes against those on the strength of declarations were deposited in NBP,
consequent to which GDs was numbered as KPPI-HC-41740-29122016, KPPI-HC-
49996-30012017 and KPPI-HC-5186-04022017. Upon appearance of these on the
work station of the nominating assessing officer, instead of passing assessment
orders out-rightly on the strength of the declaration, opted to get the consignments
examined by the appropriate authority defined in Section 2(b) under the provision
of Section 198 and Rule 435 of the Act/Rules. The assessing officer after adducing
his opinion/apprehension referred the GD to the Deputy Collector of Customs,
Group-IV (respondent No. 2), who assented that and routed the GDs to the Deputy
Collector of Customs, Examination, QICT who marked those to the examiner of his
choice on the selection basis. The consignment upon examination were found to be
in accordance with the declaration in all aspects and report so prepared by him after
approval of the Deputy Collector, QICT were uploaded in the reservoir of the GDs,
thereafter the nominating Assessing Officer in the capacity of authority defined in
Section 2(a) passed assessment orders in each GDs under the provision of Section
80 and Rule 438 of the Act for levy of duty and taxes while adducing remarks in
the assessment note reading as "ER/VR" and "assessed as per ER/VR 784/2015" on
02.01.2017, 01.02.2017 and 06.02.2017 and transmitted view messages for
payment of additional amount of duty and taxes, which were paid by the appellant
on the same dates, consequent to which the inbuilt authority of Customs
Computerized System (CCS) passed clearance order as per the contemplation of
Section 83 and Rule 442 of the Act/Rules and appellant's represented obtained the
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delivery from the terminal. After lapse of about four months from the date of
clearance of the first consignment, the Deputy Director, Directorate General of
PCA, (respondent No. 1) issued order audit observation on the basis of formed
opinion that the consignment imported by the appellant's were infact of polyester
falling under the PCT 5407.5200 as against declared 5407.4200, upon which
benefit under Serial No. 2186 of the Free Trade Agreement (FTA) of SRO
659(I)/2007 dated 23.06.2017 is not admissible, this act of appellant resulted in
short payment/evasion of Rs. 1,590,701.00. This audit observation was not served
on the appellant as per the contemplation of Section 215 of the Act, resultant, no
reply whatsoever was submitted by the appellant's. The respondent No. 1
subsequently framed contravention report with the allegation that the appellant mis-
declared the description and PCT heading of the goods, which is tantamount to
contravention of the provision of Section 32(1), (2) and 3(A) of the Act, Sections 3,
6,7,7A and 34 of the Sales Tax Act, 1990 (S.T.A.), Chapter X of the Sales Tax
Special Procedure Rules, 2007 (STSPR, 2007) and Section 148 of the Income Tax
Ordinance, 2001 (ITO), punishable under clause 14 of Section 156(1) of the Act
and Section 33(5) of the S.T.A. and Sections 148 and 182 of the I.T.O. and
submitted the same with the Director, PCA, who forwarded that to the respondent
No. 3, who issued show-cause notice dated 24.05.2015 containing the same facts and
contravening provision of the Act, S.T.A. and I.T.O. as were narrated in the
contravention report by the respondent No. 1. Ironically the said show-cause notice
was also not served on the appellant's despite mandated under the provision of
Section 215 of the Act. The respondent No. 3 subsequently passed an ex-parte order
dated 02.10.2017 through which he held the charges as levelled in the show-cause
notice established and ordered payment of short paid amount of Rs. 1,590,701.00 in
addition to imposed penalty of Rs. 150,000.00. Operative part of the order is
reproduced here-in-under:-
"I have gone through the case record and considered the arguments of the
representative of the department. The department's case is that the
respondents imported 03 consignments of Polyester Dyed Ladies Suiting
Shirting Fabric /Polyester Dyed Fabric by misdeclaring PCT heading as
5407.4200 and cleared the same on payment of Custom Duty @ 12% by
availing inadmissible benefit of reduced rates of Custom Duty under SRO
659(I)/2007 dated 30.06.2007. The imported goods are correctly classifiable
under PCT 5407.5200 chargeable to Custom Duty @ 15% , where the
benefit of FTA is not admissible. The identical/same imports have been
declared and assessed by the importers and the Collectorates under PCT
5407.5200. Therefore, the respondents were charged for the violation of
Section 32(1) , (2) and (3A) of the Customs Act, 1969, Sections 3, 6 and 7
read with Section 34 of the Sales Tax Act, 1990 and Section 148 of the
Income Tax Ordinance, 2001. During the hearing, the departmental
representative (DR) defended the stance of the detective agency and stated
that the respondents wrongly avail the benefit of FTA and evaded ligtimate
amount of duty and taxes to the tune of Rs. 1590,701/- despite hearing
notices neither any body appeared for hearing on behalf of the respondent
nor any written reply of the Show-Cause Notice was received in this office.
It is evident that the respondent have nothing to say in their defense with
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surcharge fines and penalties, or for ensuring compliance with all other laws
administered by the Customs, an appropriate officer of Customs may;-
(a) Examine, or cause to be examined upon reasonable notice, any record or any
statement or declaration or document described in the notice with reasonable
specificity, which may be relevant to such audit, inquiry or investigation:
(b) Summon, by giving a notice and reasonable time,-
The person who imported, or exported or transported or stored or held under
customs bond, or filed a goods declaration, drawback or refund claim,
Any officer, employee or agent of any person described in clause (a); and
Any person having possession custody or care of records and documents
required to be kept under the Act and any other person, as deemed proper, to
appear before him at a reasonable time and to produce such records and
documents as specified in.
6. From bare reading of the provision of Section 26A of the Act, it is abundantly
clear that the appropriate designated Officer of Customs empowered by the Board
for conducting audit of the record of the importer under Section 26(2) is in the
manner prescribed by the Board in Rules. To this date no Rules are framed/issued
by the Board despite insertion of Section 26A in the Act through Finance Act, 2006,
resultant, the audit of an importer accounts/record maintained by him under the
provision of Section 211 and Chapter XI of Act/Rules, has to be conducted by the
Officials of Directorate of Post Clearance Audit or respondent No. 1 as per the
mechanism provided in the Section itself, wherein appropriate officer of Customs is
empowered to conduct audit or inquiry or investigation of an importer for the
purpose of ascertaining the correctness of any declaration or documents or
statement, for determining the liability of any declaration or document or statement,
for determining the liability of any person for duty, taxes, fees, surcharge, fines and
penalties, or for ensuring compliance with all other laws. However, prior to
proceeding with the said exercise, the appropriate officer appointed under Section
3DD of the Act for the said purpose and empowered through SRO 500(I)/2009
dated 13.06.2009, which respondent No. 1 have to either summon or give a notice
and reasonable time to an importer for the conduction of audit and for the said
purpose production of accounts and record as per the expression of clause (b) of
Subsection (2). The first ground of the appellant in memo of appeal is that the
respondent No. 1 has not either issued to him any notice or served a summon for
the purported exercise of audit despite mandated under law and this lapse renders
the audit so conducted which is the root cause of the impugned show-cause notice
as of no legal effect. Since, no notice is annexed with the memo. of appeal, the
representative of respondent No. 1 was asked to place the copy of the
notice/summon forwarded/served to the appellant, as the copy of the same would
had been available with him in the case file. The query was replied in negative,
which flabbergasted me and another query was put to him that how the audit was
conducted, without asking for the accounts and record of the import, the answer
was on the basis of GD's available in the data reservoir maintained by PRAL under
Rule 110 of Rules, upon this the representative of respondent No. 1 was asked to
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read out the passage available in Section 26A, wherein audit of any importer is
permitted on the basis of the record available in the CCS Module, to this the answer
was given in negative, confirming that audit of the importer accounts/book could
only be conducted upon presentation of those after receiving notice/summon to do
so. In the absence of that conduction of audit on the basis of the record available on
the CCS Reservoir is not permitted as it is settled proposition of law that a thing
has to be done as it has been prescribed to be done, in case of doing the same in any
other manner render it illegal and as such void and ab-initio and this have been held
in countless reported judgments, reference is 2002 PTD 2457 that "the thing should
be done as they are required to be done, or not at all". The Apex Court held in
judgment PLD 1971 Supreme Court 61 "neglect of plane requirement of an
absolute statutory enactment prescribing how something is to be done, would
invalidate thing being done in some other manner" and in PLD 1973 Supreme
Court 236 "it is now well established that where an inferior Tribunal or Court has
acted wholly without jurisdiction or taken any action "beyond the sphere allotted to
the Tribunal by law and therefore outside the area within which to law recognizes a
privilege to err" then such action amounts to a "usurpation of power warranted by
law" and as such an act is a nullity that is to say the result of a purported exercise
of authority which has no legal effect whatsoever" in such a case, it is well
established that a Superior Court is not bound to give effect to it." The said ratio
was maintained, in the case of E.A Avans reported as PLD 1964 SC 536 "where it
has been unambiguously and categorically held that if the doing of a thing is made
lawful in a manner than doing of that thing in conflict with the manner prescribed
will be unlawful." The Hon'ble Apex Court in 2001 SCMR 838 and 2003 SCMR
1505 held that "while considering the impact of violation or non-observance of the
method prescribed by law for doing an act in a particular manner or mode, such
provision of law is 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. The same observation has been made by the Hon'ble
Supreme Court of Pakistan in the Civil Petition filed by Director General of
Intelligence and Investigation and others v. M/s. Al-Faiz Industries (Pvt.) Ltd. and
others reported as 2006 SCMR 129 "if the law had prescribed method for doing of a
thing in a particular manner, such provision of law is 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.". The super structure
built on such foundation namely audit observation, show-cause notice and order-in-
original no matter how strong those may be have to fall, reference is made to PLD
1996 Karachi 68 which laid down that " where the initial order or notice was void
all subsequent preceding, orders or super structure built on it were also void. In
reported judgment 2006 PTD 978 it is held that "the entire proceeding initiated by
the Adjudicating authority and further super structure thereon including the order
passed by the learned Tribunal are without jurisdiction void and in-operative." The
Apex Court in PLD 1971 Supreme Court 184 held that "order of a Tribunal found
to be without jurisdiction ---all successive orders based upon it illegal and liable to
be quashed".
7. That in regards to the second part of my observation available in para 5 supra,
I have perused Section 228 of the I.T.O. and found that the respondent No. 1 has
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of duty and taxes involved are Rs. 8,141,152.00 (paid upfront duty and taxes of Rs.
2,800,930.00 + paid additional amount of duty and taxes upon passing of
assessment order under Section 80 and Rule 438 Rs.3,749,521.00 + evaded/short
paid amount of duty and taxes shown in show-cause notice Rs. 1590701.00. Case of
such amount falls within the powers of Collector of Customs in terms of clause (i)
of Subsection (1) of Section 179 of the Act . To the contrary, the respondent No. 3
issued show-cause notice and passed order in original by usurping the powers of
Collector, which is not permitted under law. Nobody is allowed to usurp the powers
of the defined Adjudicating Authority. Rendering the act of issuance of show-cause
notice and passing of order-in-original in the instant case without
power/jurisdiction, hence ab-initio, null and void and coram non judice. It is also
settled principle that the exercise of jurisdiction by an authority is mandatory
requirement and its non fulfillment would entail the entire proceeding to be coram
non judice. Ref: PLD 1963 SC 663, PLD 1971 SC 184, PLD 1976 Supreme Court
514, 1983 SCMR 1232, 1984 CLC 1517, PLD 1995 Kar. 587, PLD 1992 SC 486,
2001 SCMR 103, PLJ 2003 (sic) 1660, PLD 2004 Supreme Court 600, PLD 2005
Supreme Court 842, 2009 PTD (Trib.) 1996, 2009 PTD 1112, 2010 PTD (Trib.)
832, 2010 PTD 465, 2010 PTD (Trib.) 1636, 2011 PTD (Trib.) 2114, 2011 PTD
(Trib.) 2557 and 2014 Supreme Court 514. (Emphasis supplied)
9. I have also noticed with great concern that the respondent No. 3 in the show-
cause notice have 3, 6, 7, 33 and 34 of the S.T.A. and Section 148 of the I.T.O.
without realizing that Section 3 while indeed being a charging section cannot be
invoked by anyone other than an Officer of Inland Revenue whereas Section 6 is a
machinery section that lays down the procedure relating to collection of Sales Tax
at the import stage by the customs authorities hence cannot be used to charge
anyone including the appellant for an offence under the said section with the
exception of official of Clearance Collectorate, upon whom charge under the said
section can be invoked. Section 7 speaks about the determination of tax liability at
the time of filing of sales tax return cum payment challan under Section 26 of
S.T.A., this is also a machinery section. Section 33 contains penal clauses
synonymous to Section 156(1) of the Act and Section 34 speaks about imposition of
default surcharge, to be paid by the tax payer upon confirmation of the charges
levelled in the show-cause notice issued by the officer of the Inland Revenue under
the respective Section of the S.T.A., again this is not a charging section; aforesaid
sections are independent and cannot be used to invoke a charge. Since, these
sections are irrelevant in the matter of customs and no show-cause notice can be
issued by a custom officer under these section, render the issued show-cause notice
and passed order-in-original palpably illegal and as such void and ab-initio as held
in the following reported judgments: Asst. Collector v. Khyber Elec. Lamps 2003
PTD 1275, D.G. Khan Cement v. Collector of Customs 2005 PTD 480, Caltex v.
Collector 2003 PTD 1593, Union Playing Card Company v. Collector of Customs
2002 MLD 130, Atlas Tyres v. Addl. Collector 2002 MLD 180, State Cement v.
Collector PTCL 2001 CL 558, Kashmir Sugar v. Collector 1992 SCMR 1898, Rose
Color v. Chairman, CBR and 2013 PTD 813 Sarwar International v. Addl. Collector
of Customs.
10. In order to further crystallize, the issue relating to recovery of short paid
sales tax and income tax, I was indebted to peruse Section 30 of S.T.A. and Section
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228 of the I.T.O. and have observed that the legislature appoints under the said
Sections different organs of the FBR as Officer of Inland Revenue for exercising
powers under the respective Sections of the Act/Ordinance, delegated through
statutory notifications or under Section 207 of the I.T.O. In these Sections neither
respondent No. 1 nor respondent No. 3 figures anywhere nor in charging section 11
of the S.T.A. or Section 162(1) of the I.T.O. Therefore, the respondent No. 3 under
no circumstances was empowered to lay hands on the matter falling within the
ambit of Sections 3, 6, 7A and 11 of the S.T.A. and Section 162 (1) of the I.T.O.
These sections least empowers the Officers of Customs including the respondent
No. 3 to initiate adjudication/ recovery proceeding for the short collected/paid Sales
Tax and Income Tax either due to collusion or connivance or inadvertent, error or
misconstruction. For proceeding for these type of recovery a show-cause notice has
to be issued under the Provision of Section 11 of the S.T.A. and Section 162(1) of
the I.T.O., the authority to issue show-cause notice under these Sections are Officer
of Inland Revenue and the Commissioner of Income Tax, in these sections
respondent No. 3 least figures anywhere.
11. In order to lend clarity expression of Section 11 of the S.T.A. and Section
162 (1) of the I.T.O. are referred, which empowered the Officer of Inland Revenue
and Commission of Income Tax to initiate adjudication / recovery proceeding for
the short collected/paid, Sales Tax and Income Tax either due to collusion or
connivance or inadvertent, error or misconstruction. Respondent No. 3 figures no
where in these sections. He assumed the power not vested with him under the
provision of Sections 11 and 162(1) of the S.T.A. and I.T.O. Therefore, I hold
without any reservation that the Customs Collectorates does have powers to collect
and enforce payment of Sales Tax and Income Tax at the time of clearance. The
plea that the Customs is empowered to recover the short paid amount of sales tax
and income tax at the import stage under Section 202 of the Act is also based on
mistaken belief. The fact of matter is Customs Collectorate could recover the
amount of Sales Tax and Income Tax only upon receipt of notice from the Officer
of Inland Revenue and Commissioner of Income Tax in terms Section 48 of the
S.T.A. and Section 140 of the I.T.O. for recovery of the adjudged amount of Sales
Tax and Income Tax after due process of law. Therefore, it is my considered
opinion that the Clearance Collectorates does have the authority to collect Sales
Tax and Income Tax at import stage in the capacity of collecting agent and can
recover escaped/short payment paid Custom Duty and Regulatory Duty levied on
the imported goods under Sections 18, 18A and 18C of the Act under Section 202
ibid, after due process of law, but have no powers to adjudicate the cases of short
recovery of Sales Tax and Income Tax falling within the ambit of Section 11 of the
S.T.A. and Section 162(1) of the I.T.O., my opinion stands fortified from the
reported/unreported judgment of the superior Judicial Fora namely 2011 PTD
(Trib.) 110, 2010 PTD (Trib.) 2086, SCRA No. 01/2010, 2004 PTD 801, C.P. No.
D-216/2013, 2015 PTD 702, 2016 PTD (Trib.) 969, 2016 PTD (Trib.) 1008, 2016
PTD (Trib.) 2125, Appeal No. K-1635/2014, Appeal No. K-1029/2016 Appeal
No.K-1030/2016, Appeal No. K-1343/2015, 2016 PTD (Trib.) 2463 and 2017 PTD
(Trib.) 481.
12. I, therefore hold in the light of the law laid down in the referred in above
deliberation and cases reported at, that the exercise of jurisdiction on this point by
Respondent No. 3 is without lawful authority and jurisdiction. Hence, issuance of
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show-cause notice and passing of order-in-original are held to be ab-initio void and
as such coram non judice on this point also.
13. Upon passing of assessment order under Section 80 and Rule 438 of the
Act/Rules and thereafter passing of clearance order under section 83 and Rule 442
ibid by the authority defined in section 2(a) of the Act and SRO 371(I)/2001 dated
15.06.2001, it cannot be disturbed by any authority for the purpose of preparing
contravention report and adjudication proceeding. The only course left for the
respondent No. 1 was to challenge the said order before the Collector of Customs
(Appeals) under Section 193 of the Act in exercise of the powers delegated upon
him through SRO 500(I)/2009 dated 13.06.2009. In the filed appeal the respondent
No. 1 is empowered to incorporate all the apprehension, misreading of the facts and
contravention of the provision of the Act/Rules. The Collector of Customs, upon
receipt of the appeal and going through the facts and grounds if thinks fit that the
contention of the respondent No. 1 seems to be correct and the duty and taxes has
not been either not levied or short paid on the basis of the goods found subsequent
to clearance, is empowered to issue show-cause notice to the importer (appellant)
as expressed in 3rd proviso to subsection (3) of Section 193A of the Act. Instead of
the adhering the prescribed method available in the Act the respondent No. 1
reopened the assessment/ clearance order under section 195 of the Act under which
no powers are vested with any Officers of the respondent No. 1. When the right of
appeal has been accorded by the legislature in the provision of Section 193 of the
Act, the provision of Section 195 is un-operational and cannot be exercised even by
the authority defined therein and this has been validated by the Hon'ble High Court
of Sindh in reported judgment 2014 PTD 1256 Messrs Paramount International
(Pvt.) Ltd., Karachi v. Secretary Revenue Division that "department or an Officer of
Customs, if aggrieved, by any decision or order passed by an officer of customs
below the rank of additional collector could prefer an appeal before the Collector
(Appeal)---1st order in original passed in the subject matter was an appealable
order for both the parties, therefore option to reopen and order pass under the
adjudication hierarchy was not available to the Collector. Even the Collector of
Customs Adjudication could not oversee or exercise any right of re-opening of any
order which has been passed by an officer lower in rank but acting as an
adjudicating authority. Impugned order was set-aside and Constitution Petition was
allowed." It is also settled proposition of law that in the presence of an appealable
order, fresh order cannot be passed even through issuance of show-cause notice
under section 180, while exercising powers under the provision of Section 179 ibid.
The said act is piling upon yet another order on the existing appealable order not
permitted under law as held by Hon'ble High Court of Sindh in reported judgment
2004 PTD 3020 Messrs Smith Kline French v. Pakistan that "once an order is
passed, which attain finality the same cannot be subject to a show-cause notice
again, considering that no appeal or revision is filed against the first order". By
virtue of non filing of appeal as elaborated above. The transaction stood passed and
closed and attain finality and cannot be disturbed. For reaching at the decision I
have gained strength from the reported judgment 1989 MLD 4310 Messrs World
Trade Corporation v. Central Board of Revenue, wherein their lordship of High
Court held that "if the order has attained finality through limitation. A fortiori; the
Central Board of Revenue could not open up an order that has attained finality,
under the Sea Customs Act, 1878 and against which sou motu revision.
Notwithstanding, the act of issuance of show-cause notice and passing of order-in-
original in the instant case by the respondent No. 3 also falls under the ambit of
"double jeopardy" not permitted under Article 13 of the Constitution of Islamic
Republic of Pakistan. Rendering the order passed by respondents Nos. 3 and 4 for
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piling upon an existing appealable order are without lawful authority and
jurisdiction and as such void and ab-initio and of no legal effect.
14. I have noted with concern that the respondent No. 1 implicated and the
respondent No. 3 charged the appellants, for mis-declaration under the provision of
Section 32 of the Act merely on the basis of assumption/presumption that the
appellants transmitted GDs on the basis of erroneous PCT, in order to hoodwink the
Customs and to evade the amount of duty and taxes. I am unable to comprehend
with the line of arguments as in conduction of examination appellants have no part
to play instead had to be carried out by the subordinate of respondent No. 2 with
the assistance of Officials of Terminal Operator, independently and without any
influence as per the expression of Section 198 and Rule 435 and the passing of
assessment/clearance order under sections 80 and 83 and Rules 438 and 442 of the
Act/Rules rest with the sole and exclusive domain of the Customs Officer listed at
Serial Nos. 30 and 33 of the SRO 371(I)/2002 dated 15.06.2002. The Officials
conducting the examination who confirmed the declarations and who passed
assessment/ clearance orders while accepting the declaration as true and correct. If
it is presumed as stated in the show-cause notice that the alleged clearance of the
goods imported by appellant were on the basis of erroneous PCT, that could had not
been possible unless these officials were having hands in gloves with the
appellants. Meaning thereby that they are standing on the same pedestal. Ironically,
no charges have been levelled under Section 32(2) against those Officials, as of
appellant. This act of the respondents proves that the appellant had been met out
with partial treatment, which is not permitted under Article 25 of the Constitution
of Islamic Republic of Pakistan and the law laid down by the Superior Judicial Fora
in reported judgment 2002 SCMR 312 and 2009 PTD 1507 the Hon'ble Superior
Courts have observed that "there exists no power to target incidence of tax in such a
way that similarly placed person be dealt not only this similarly, but
discriminatingly". Whereas, in reported judgment 2005 SCMR 492 the Hon'ble
Supreme Court held that "A facility allowed to some one and denied to other is
discrimination". The Apex Court further held in reported judgment 2010 SCMR
431 that:
"Doctrine of equality, as contained in Art. 25 of the Constitution, enshrine
golden rules of Islam and states that every citizen, no matter how high so
ever, must be accorded equal treatment with similarly situated persons---
State may classify persons and objects for the purpose of legislation and
make laws applicable only to persons or objects within a class--- In fact all
legislations involve some kind of classification whereby some people
acquire rights or suffer disabilities whereas others do not--- What however,
is prohibited under principle of reasonable classification, is legislation
favouring some within a class and unduly burdening others--- Basic rule for
exercise of such discretion and reasonable classification is that all persons
placed in similar circumstances must be treated alike and reasonable
classification must be based on reasonable grounds in given set of
circumstances but the same in any case must not offend spirit of Art. 25 of
the Constitution."
15. Notwithstanding, for resolving the issue in hand, I have scrupulously gone
through the contents of show-cause notice and the grounds taken by the appellant
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and has observed that the allegations levelled by the respondent No. 3 in the show-
cause notice are of general nature and for that reason in support of those no
intangible incriminating evidence such as the posted examination reports were
manipulated and so the assessment order or even the copies of images of the
imported goods, which are vital in such type of case were annexed with the show-
cause notice or even placed on the record of the Tribunal on the date of hearing.
Nevertheless for further confirmation of the charges, the representative of the
respondent No. 1 was asked that what is the basis for forming the said opinion, the
reply was PCT Heading available in the First Schedule to the Act, wherein,
polyester fabric falls under PCT heading 5407.5200 on which benefit of FTA in
terms of SRO 659(I)/2007 dated 30.06.2007 is not admissible as against declared
PCT heading 5407.4200, when confronted with the FTA certificates annexed as
exhibits C to C2 at pages 14 to 16 of the memo of appeal, issued by the People
Republic of China containing PCT heading 5407.4200 to the representative of the
respondent No. 1, his reply was astonishing that they have to nothing to do with
this, to allow/disallow the benefit of FTA rest with the Official of Clearance
Collectorate, the action whatsoever to be taken by him/PCA is on the basis of the
declaration sans examination report and assessment orders and opined further that
FTA certificate are erroneous/invalid and ought not have to be considered by the
official of Clearance Collectorate at the time of passing of assessment orders. The
representative was further confronted that is it not the fact that the benefit of FTA is
allowed after confirmation of the veracity of that, his reply was in affirmative. This
Tribunal then inquired that if his submission is taken as correct for the sake of
argument , that the FTA certificate were erroneous/invalid, whether any
confirmation to the said fact was sought prior to framing of contravention report as
ordered by the Ministry of Commerce in its Office Memorandum F.No. 1(1)/2014-
AP-I dated 17.07.2014 that "it is not for Pakistan Customs, or any other Govt.
Agency but Chinese certifying to assess the eligibility of a product for being
granted the certificate of origin. If the relevant Chinese Authority has issued a
certificate of origin to a product as per the agreed procedure, then that shipment is
to be cleared under FTA Tariff concession . However, Customs Authority apprehend
any fraudulent practices then the matter can be taken up with the Chinese authority
for clarification as provided in the Rules 21 and 22 of Attachment "A" of the Rules
of origin of Pak-China Free Trade Agreement." Whereas, as expressed in Rule 15
minor discrepancies have to be overruled as those does not invalidate the FTA
Certificate, verbatim of which read as "The discovery of minor discrepancies
between the statement made in the Certificate of Origin of those made in
documents submitted to the Customs Authorities of the importing party for the
purpose of carrying out the formalities for importing the product shall not Ipso-
Fecto in valid the Certificate of Origin, if it does infact correspond to the product
submitted," the reply was in negative. Resultant, FTA certificates dated 07.12.2016,
06.01.2017 and 16.01.2017 are deems to be valid documents, issued under Pakistan
China Free Trade Agreement notified vide SRO 1286(I)/2005 dated 24.12.2015 for
determination of the description and applicable PCT heading of the goods imported
by the appellant, column 12 of which states in categorical terms that "the
undersigned hereby declared that the above detail and statement are correct and
further confirmed that all the goods were produced in China and that they comply
with the origin requirement specified for these goods in the China Pakistan Free
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Trade Area Preferential Tariff for the goods exported to Pakistan." Hence, no
contrary inference could be drawn under law, unless proven otherwise. I therefore,
hold in unequivocal terms that the case in question is of no evidence instead based
on assertion, assumption, presumption and conjectures, reference is placed to the
judgments of Hon'ble High Court of Sindh reported at 1991 PTD 551 that "Any
action which is based upon no evidence is not permitted by law" and 2006 PCr.LJ
1427 = 2006 PTD 2190 that "mere assertion of the prosecution is no evidence".
16. For the foregoing deliberation/observation and in the light of prescribed law
laid down by the Superior Judicial Fora and in adherence of the ratio decidendi, the
instant appeal is allowed and the Show-Cause Notice providing the basis thereof for
impugned orders issued/passed by respondents Nos. 2 and 3 are hereby vacated/set-
aside with no order as to costs.
17. Order passed and announced accordingly.
SA/11/Tax(Trib.) Appeal allowed.
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