2024 P T D (Trib.) 133
[Customs Appellate Tribunal (Karachi Bench-I)]
Before Mazhar Ali Ghallu, Member Judicial-II and Abdul Basit Chaudhry, Member Technical-I
Messrs ESSA STEEL and another
Versus
The COLLECTOR OF CUSTOMS (ADJUDICATION-II), CUSTOM HOUSE, KARACHI and another
Customs Appeal No.K-96 of 2022, decided on 25th May, 2023.
(a) Customs Act (IV of 1969)---
----Ss. 79, 80, 19, 32(1), 32(2), 32-A, 104 & 156(1), clauses (10-A), (14) & (14-A)---SRO 655(I)/2006 dated 05-06-2006---Mis-declaration---In-Bond Goods, description of---Fiscal fraud---Inadmissible exemption---Scope---Iron and Steel Sheets of assorted sizes were imported as an input raw material for manufacturing of "silencers" for motorcycles---Importer assailed order-in-original passed by Collector of Customs (Adjudication) following actions taken by Directorate General of Intelligence and Investigation-Customs ('Directorate')---Allegation against the appellant/importer was that sizes of the imported steel sheets coils mentioned in its Goods Declaration ('GD') did not match with the sizes allowed by the Engineering Development Board (' EDB ')to the importer as an input material---Submission of the reporting Directorate was that the importer had declared the raw material consumption of 7.99 kgs per unit whereas prevalent per unit consumption was 4.01 kgs---Validity---In the case of In-Bond GD, the goods are warehoused after checking and the goods are cleared after payment of duty / taxes, if any, through Ex-Bond GD being filed under section 104 of the Customs Act, 1969 ('the Act, 1969')---Particulars of an invoice, packing list, Bill of lading ('B/L') etc., are merged into GD and to check the "declaration" of an importer, the GD' s particulars are to be considered for the purpose of charging a person for mis-declaration within the meaning of S. 32 of the Act, 1969---Further, for charging a person for the violation of S.32-A of the Act, 1969, the Department has to prove the submission of some fake or manipulated or fabricated documents by the declared importer , which is missing in the present case, thus it is neither a case of " mis-declaration" nor a case of " fiscal fraud" within the meaning of Ss. 32 & 32-A of the Act, 1969 , rather, prima facie, it is just a case of S. 19 of the Act, 1969 which needs to be examined as per conditions of the SRO 655(I)/2006 dated 05-06-2006---Submission of the respondents impliedly confirms that, instead of sizes, the weight-wise consumption of the imported material / steel-sheets matters for determination of the lawful consumption for exemption ; thus, in case of any variation in sizes, the appellant / importer could not be charged for evasion of duties / taxes in availing inadmissible exemption---EDB had also pointed out the consumption of excessive material, not the sizes, and had asked the Department for recovery of duties / taxes, if any, on misuse of quota after chain audit---Respondent / Department had failed to establish its case and legality of its actions were without jurisdiction---Tribunal set aside the impugned order-in-original passed by the Collector of Customs (Adjudication)---Appeal filed by the taxpayer was allowed, in circumstances.
(b) Customs Act (IV of 1969)---
----Ss. 79, 80, 19, 32(1), 32(2), 32-A, 104 & 156(1), Cls (10-A), (14) & (14-A)---SRO 655(I)/2006 dated 05-06-2006---Mis-declaration---In-Bond Goods, description of---Fiscal fraud---In-admissible exemption---Scope---Importer-cum-manufacturer getting goods manufactured through another sub-manufacturer---Scope---Iron and Steel Sheets of assorted sizes were imported as an input raw material for manufacturing of "silencers" for motorcycles---Directorate, through contravention report, alleged that importer had shown some other unit as theirs because on their (Directorate) team's visit it was found that importer's unit did not exist, rather there was a small industrial unit (with a name other than name of unit given by the importer) employing 810 workers---Validity---Though there was discrepancy of the changed name, but no denial to the fact that the manufacturing facilities of the output goods were available, operational with 810 employees, on the given address of the unit---SRO 655(I)/2006 dated 05-06-2006 ('SRO 655(I)/2006') had allowed an importer-cum-manufacturer, like appellant, to get the goods manufactured through another manufacturer (sub-vendor)---Considering the spirit of availing exemption under the SRO 655(I), allegation against the appellant was immaterial, particularly against the imported raw material which had been consumed in manufacturing---Respondent / Department had failed to establish its case and legality of its actions were without jurisdiction---Tribunal set aside the impugned order-in-original passed by the Collector of Customs (Adjudication)---Appeal filed by the taxpayer was allowed, in circumstances.
(c) Customs Act (IV of 1969)---
----Ss. 79, 80, 19, 32(1), 32(2), 32-A, 104 & 156(1), Cls. (10-A), (14) & (14-A)---SRO 655(I)/2006 dated 05-06-2006---SRO 486(I)/2007 dated 09-06-2007---Mis-declaration---In-Bond Goods, description of---Fiscal fraud---In-admissible exemption---Scope---Issuance of "Flying Invoices" for sale of output goods, allegation of---Jurisdiction---Scope---Iron and Steel Sheets of assorted sizes were imported as an input raw material for manufacturing of "silencers" for motorcycles---Importer assailed order-in-original passed by Collector of Customs (Adjudication) following actions taken by Directorate General of Intelligence & Investigation-Customs ('Directorate')---Validity---Matter of issuance of "Flying Invoices" related to "supply" and for that I.R.S authorities had exclusive jurisdiction---Even otherwise, as per the conditions of the SRO 655(I)/2006 the complete round for availing exemption completes on communication to the concerned Collectorate of Customs (Imports), in writing , about the consumption of the input raw material in manufacturing of the specified output article, in term of condition (ix) of the SRO 655 (I)/2006 , which had been complied with by the appellant / tax-payer---According to the condition (x) of the SRO 655 (I)/2006, even if there was an information about evasion of duty / taxes through an in-admissible exemption in that case too , the matter was ought to be communicated to the Collector of Customs, having jurisdiction, who allowed input raw materials' release---Collector of Customs was to initiate proceedings for the recovery of duty / taxes, if any, due to non-consumption or mis-appropriation of the imported input goods by an importer---Even an "audit" or "investigation" could only be undertaken by the specific person or agency duly designated by the EDB and FBR---Respondents Directorate had failed to produce any " authorization" in terms of condition (x) of the SRO 655 (I)/2006, thus the actions of the respondents / Directorate were without jurisdiction---Considering Notification SRO 486(I)/2007 dated 09-06-2007 issued under S.3E of the Customs Act, 1969, the officers of Directorate General of Intelligence and Investigation-Customs had no jurisdiction to investigate the matters relating to S.19 of the Customs Act, 1969---Respondent / Department had failed to establish its case and legality of its actions were without jurisdiction---Tribunal set aside the impugned order-in-original passed by the Collector of Customs (Adjudication)---Appeal filed by the taxpayer was allowed, in circumstances.
Saeed Shahzad for Appellants.
Saddurddin, Assistant Manager, present for Engineering Development Board (EDB) and Umair Mustafa, A.O. for Respondent.
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