Dealing Officer: …Mr. Muhammad Akbar, Advisor
Present: Mr. Ehsan Ullah Shamim, Advocate for the complainant.
Mr. M. Saqif Saeed, Deputy Director (Intelligence) for the respondents.
The staff of Customs Intelligence and Investigation, Gujranwala intercepted/seized water pumps belonging to the complainant on the ground that those were non-duty paid goods of foreign origin. The Deputy Collector (Adjudication), Gujranwala issued the complainant a show cause notice dated 05.09.02, framing charges against the complainant for violation of the provisions of clauses 89 & 90 of section 156(1) of the Customs Act, 1969. The complainant contended that the pumps were locally manufactured and hence did not attract the provisions of section 2(s) of the Customs Act, 1969, read with SRO.491(I)/85 and he had not violated the provisions of section 156(1)(89) of the Act. Ignoring complainant’s pleas, the D.C ordered outright confiscation of the pumps in question vide Order-In-Original No.203/02 dated 31.12.02. The complainant filed appeal against the aforesaid O-I-O before Collector (Appeals). The Collector decided the appeal vide his Order-In-Appeal No.467/03 dated 11.03.03. Holding that the subject goods did not fall within the ambit of sections 2(s) and 156(1)(89) of the Act, he allowed release of goods on payment of duty and taxes plus 50% redemption fine. The complainant filed an application dated 22.03.03 with the Customs authority to estimate the value of goods in accordance with Collector (Appeals)’ direction to enable him to deposit the dues but the complainant learned that the respondents had sold/auctioned the goods in question at a low price ranging from Rs.200 to Rs.300 per piece. The complainant was neither informed about the auction nor was he served with a notice that was required to be given under the law. Although the complainant was prepared to pay duty and taxes, the respondents auctioned the goods causing injustice and financial loss to him. Had the DC (Adjudication) decided the case lawfully and had he allowed release of goods on payment of duty and taxes against fine, the complainant would have paid duty and taxes as per the market survey. The FTO may take notice of the arbitrary fixation of price of goods at the time of auction and of D.C’s unlawful order because of which the complainant had to suffer a financial loss. The respondents may be directed to pay compensation for the loss sustained by the complainant to enable him to resume work in his closed unit.
2. In reply, the Directorate of Intelligence and Investigation (Customs and Federal Excise), Gujranwala has submitted that complainant’s contention that the goods were locally manufactured and were not of foreign origin was incorrect. The complainant did not provide any sales tax registration showing himself to be a local suppler/importer of seized goods. Since the case involved determination of value, it fell out of FTO’s jurisdiction in terms of section 9(2)(b) of the FTO Ordinance, 2000. The complaint was dated 11.07.03, it was received in the FTO Office on 08.08.06 and it was, therefore, not entertainable in terms of section 10(3) of the FTO Ordinance, 2000. Pumps of Chinese Origin were recovered from the complainant. He could not produce any evidence of their lawful import/ possession. The O-I-O was passed after issuance of proper show cause notice. In appeal, the goods were allowed release on payment of duty and taxes plus redemption fine. The appellate authority also warned the complainant to be careful. The confiscated property rested in the government in terms of section 182 of the Customs Act, 1969. The same was disposed of in terms of the provisions of section 169 of the Act on a value appraised by the appraising unit after due notice dated 11.01.03, issued to the complainant. He did not respond to the notice nor did he intimate the respondents about filing appeal against the O-I-O nor, for that matter, did he produce any stay order restraining the auction. The complaint may be dismissed.
3. Three hearings were notified. None appeared at the first two hearings, neither the complainant or his AR nor the respondents. At the last hearing the DR was asked as to why the first two hearings were not attended by departmental representative, he stated that he was representing the Directorate of Customs Intelligence and Investigation and explained that the call notices for 20.09.06 and 05.10.06 were perhaps sent by the Revenue Division to the Collectorate of Excise & Sales Tax, Gujranwala because the Directorate of Intelligence did not receive any of the aforesaid two call notices. The Revenue Division was asked vide letters dated 20.09.06 and 06.10.06 to intimate this office why the hearings remained unattended to which no reply has so far been received. The Revenue Division should have endorsed the hearing notices to the concerned respondents. There is need for better communication between the Revenue Division and the relevant field formations so that government’s cases do not go unrepresented. Likewise, no one attended the first two hearings on behalf of the complainant despite issuance of call notices. The AR was asked as to why the first two hearings were not attended, he replied that call notices were not received by the complainant. The explanation is not convincing because the record shows that the call notices were issued to the complainant at the given address. It is also observed that none of the two call notices were received back un-delivered, which means that those were served.
4. The AR reiterated the arguments advanced in the written complaint. He submitted that after Collector (Appeals) had set aside the order of outright confiscation and allowed release of goods on payment of duty and taxes plus fine, the complainant submitted an application dated 22.03.03 to the respondents for release of goods but they did not respond. The DR emphatically rebutted that no such request was ever received from the complainant. The AR was asked to produce evidence to establish that he had really sent the aforesaid request to the respondents but he could not produce any evidence to establish that the aforesaid application had indeed been submitted. Asked as to how it was that the complaint was dated 11.07.03 whereas the same was received in the FTO Secretariat on 08.08.06, the AR submitted that the complainant had filed the complaint in the FTO Secretariat in the year 2003. The FTO Secretariat had asked him vide letter dated 15.07.03 to file the complaint on FTO Form-“A” and to furnish the affidavit on prescribed form and submit the same together with power of attorney. These documents, he stated, were subsequently supplied. The FTO Secretariat vide letter dated 31.07.03 asked the complainant to furnish the prescribed affidavit on stamp paper, which too was subsequently submitted. Asked as to when were the short documents actually submitted to the FTO’s office, the AR submitted that he did not know the exact dates of despatch. He, however, reiterated that the respondents should have entertained complainant’s application dated 22.03.03. They should not have auctioned the goods pending appeal. The retail price per piece shown in the seizing agency’s report was Rs.1800/- per pump while the FOB value was shown as Rs.1200 per pump. The respondents should pay the value of 54 pumps, which worked out to Rs.64800/- (CIF) and Rs.97200/- (retail price).
5. The DR submitted that as per the provisions of section 169 of the Customs Act, 1969, and in the absence of stay from a court of competent jurisdiction, the respondents could auction the goods. The goods were auctioned on 31.01.03 for Rs.12049/-. The goods were auctioned at a time when these stood confiscated and the department was not required to issue notice of auction to the complainant under section 201 of the Customs Act, 1969. Despite that, he added, a notice under the aforesaid section was given/sent to the complainant under registered post but the complainant did not react. The AR, however, denied receipt of the notice. The DR was asked to produce the despatch register as well as the postal receipt to determine whether or not the notice for auction was despatched to the complainant. He appeared the next day and placed on record an extract of despatch register, which, according to him, showed despatch of notice to the complainant on 11.01.03. The goods were auctioned. The complainant could have claimed the balance of auction receipts, after deduction of duty, taxes and other charges within six months as per the provisions of section 201 of the Customs Act, 1969 but he did not file any such claim. The DR intimated that at the time of auction the goods were assessed at Rs.8100/- as per the existing rules on which customs duty and sales tax worked out to Rs.2025/- and Rs.1519/- respectively. Further, he added, a fine of Rs.4050/- was imposed on the complainant. Since auction and other miscellaneous charges were also payable there was hardly any balance left for payment to the complainant.
6. The arguments of the two sides and records of the case have been considered and examined. In so far as respondents’ contention that the complaint was hit by time limitation as provided in section 10(3) of the FTO Ordinance, 2000 is concerned, this is to clarify that the complainant had filed the complaint in the FTO Secretariat in the year 2003. As a few documents that are required to be submitted with the complaint were found short, he was asked vide FTO’s letter dated 15.07.03 to submit the missing documents. While he submitted some of the documents listed in the aforesaid letter he submitted the requisite affidavit on stamp paper on 02.08.06. In view of the foregoing position, the complaint is not hit by time limitation as laid down in section 10(3) of the FTO Ordinance, 2000. Respondents’ contention that FTO’s jurisdiction was ousted in terms of section 9(2)(b) of the FTO Ordinance, 2000 because the case involved determination of value is misconceived. This forum is competent to investigate cases involving ‘maladministration’. However, the position in this case emerges as under:
The case record reveals that water pumps in question were seized by the Customs Department as being goods of foreign origin. The D.C (Adjudication), Gujranwala decided the contravention case vide O-I-O No.203/02 dated 31.12.02 and confiscated the goods because the complainant failed to produce any evidence showing lawful import/proof of payment of duty and taxes. The complainant filed appeal against the said O-I-O. During hearing before the appellate authority, the applicant/complainant showed willingness to pay duty and taxes leviable on the subject goods and pleaded for a lenient view. Accepting complainant’s plea, the appellate authority released the goods on payment of duty and taxes plus redemption fine equal to 50% of the ascertained value of the subject goods. The appellate authority also warned the complainant to be careful. The respondents contend that they auctioned the goods in terms of section 169 of the Customs Act, 1969 (i) on the basis of value appraised as per the existing rules by the appraising unit, Sambrial Port after giving due notice dated 11.01.03 to the complainant to which he failed to react or respond and (ii) because the complainant did not produce any stay order restraining auction of the subject goods from a court of competent jurisdiction. The complainant, on the other hand, contends that he did not receive the aforesaid auction notice. The respondents have placed on record an extract of despatch register showing despatch of auction notice on 11.01.03. A perusal of entry No.40A in the despatch register (extract on record) shows that the notice was despatched to one Abdul Shakoor S/o Muhammad Saddique whereas complainant’s name is Muhammad Shakoor S/o Muhammad Shafi. The entry does not disclose the full address at which the notice was despatched. This makes the so-called auction notice dubious. Likewise, complainant’s contention that he had submitted to the respondents an application dated 22.03.03 seeking permission to pay duty and taxes as ordered by the Collector (Appeals) is not convincing because he too has not been able to produce any evidence regarding submission of the aforesaid application to the respondents. Even otherwise, the application, which the complainant claims that he had submitted to the respondents, is dated 22.03.03 while the respondents had auctioned the subject goods on 31.01.03.
7. It is observed that at the time of auction (31.01.03) the goods stood confiscated as per findings in the O-I-O dated 31.12.02 and the Order-In-Appeal had not yet been passed as the same was passed on 11.03.03. The respondents could auction the confiscated goods in accordance with the provisions of sub-section (4) of section 169 of the Act, notwithstanding the fact that the adjudication of the case or appeal or proceeding in any court was pending. According to sub-section (1) of section 201 of the Act, a notice is required to be issued in respect of goods other than confiscated goods. However, sub-section (5) of section 169 of the Act reads as under: -
“If on such adjudication or, as the case may be, in such appeal or proceeding in Court, the thing so sold is found not to have been liable to such confiscation, the entire sale proceeds, after necessary deduction of duties, taxes or dues as provided in section 201, shall be handed over to the owner”.
8. The complainant could have applied for payment of the balance of sale proceeds after deduction of duty, taxes and other charges as indicated in sub-section (2) of section 201 of the Act. Sub-section (3) of the aforesaid section stipulates that the balance, if any, shall be paid to the owner of the goods provided he applies for it within six months of the sale of goods or shows sufficient cause for not doing so. The complainant, it appears, failed to apply for payment of balance sale proceeds within the stipulated period of six months. Since the goods have already been sold in auction for a certain price, which price, the respondents contend, was appraised at the time of auction in accordance with the relevant rules and procedure, the complainant may, if he is so interested, approach the Customs authority for payment of balance sale proceeds, if any, by showing sufficient cause for not filing the application for payment of sale proceeds within the stipulated period. It will be for the competent authority to consider the request and decide the matter on merits in accordance with the provisions of law. As it is, no ‘maladministration’ is observed.
9. The complaint is disposed of with observations made above.
(Justice (R) Munir A. Sheikh)
Federal Tax Ombudsman
BEFORE THE FEDERAL TAX OMBUDSMAN
M/s Fazal Cloth Mills Limited
Through Mr. Muhammad Afzal Awan, Advocate
1st Floor Burhani Terrace, Bohri Road
Opp: Custom House