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Revenue Division

Islamabad …Respondent

Dealing Officer: …Mr. M Mubeen Ahsan, Advisor


Mr. Ghulam Ahmad Khan, Advocate

Ms Misbah Khatana, Deputy Collector of Customs (Appraisement)

The complaint has been filed against the Customs Department claiming damages for the loss of 960 cartons of Condensed Milk allegedly caused by illegal confiscation alongwith the expenses incurred on the import of the goods. The Complainants have stated that they imported the consignment of Condensed Milk which was classified by the customs officials under HS 1901.9090 on 25-06-2003 under section 80 of the Customs Act and was warehoused under bond on 07-07-2003. An ex-bond bill of entry was filed on 06-10-2003 for clearance of the warehoused goods.

2. It was stated that under para 6(14) of the Import Policy Order, issued under SRO 489(I)/2000, it was a predominant condition that edible products should be valid for human consumption for a period of at least six months or should have 50% of shelf life. When the ex-bond bill of entry was filed on 06-10-2003, about three months were available for consumption and, in terms of the manifest date, about six months were available for consumption.

3. It was stated that a show cause notice dated 30-04-2004 for violation of sections 16 and 32 of the Customs Act was received after five months and 24 days of filing of ex-bond bill of entry alleging that “……………that the goods have already been expired six months before date of expiry 15-04-2004 (i.e. 15-10-2003). SCN did not disclose how could (the fitness for consumption of) the goods expire before the expiry date and the goods were confiscated.

4. The Complainants filed an appeal before the Appellate Tribunal which in its order dated 04-02-2006 held that the goods assessed under section 80 of the Act were not subject to review. It was stated in the Tribunal’s order that “an objection was raised by an officer who was not competent to re-open an assessment already made, the action of Respondent was therefore not warranted by law. In these circumstances, refusal to release the goods on ex-bond bill of entry was illegal”. Complainants filed a claim for damages on 21-04-2006 before the Collector of Customs for payment of the loss of cartons of Condensed Milk on account of illegal confiscation alongwith the expenses incurred on the import of goods. However, they did not receive any response to this claim and no reply has been communicated to them.

5. It was stated that the illegal confiscation of the goods placed heavy financial burden of preliminary expenses, margin of profit and mark-up etc for a total sum of Rs.15,43,047.06 on account of maladministration “caused by perverse, neglect, inattention, deliberate delays and above all ineptitute of the Tax Officials in handling the present case” within the meaning of sub-section 3(i) (b), (ii) of section 2 of the Federal Tax Ombudsman Ordinance.

6. The Respondent replied to the complaint that it was clearly mentioned in the in-bond bill of entry that it was subject to “check all aspects”. The importer/clearing agent did not bother to complete the formalities such as laboratory test three months after in-bonding of goods and they filed ex-bond bill of entry for clearance of 160 cartons out of 960 cartons in the bond, which was held up in the Group for a long period. The Appraising Officer on 10-10-2003 required the importer to provide literature and test report. Clearing Agent requested on 27-10-2003 for permission to clear partial consignment of 160 cartons and send sample to customs laboratory for test. The bill of entry was returned to arrange for test report which he failed to do and resubmitted the bill of entry on 20-02-2004 without test report. Since the Proprietor had gone to Hajj he resubmitted the document on return and requested for condonation of delay and allow ex-bonding and payment of duty and taxes. The delay was entirely on the part of the importer and not of the Department. Since only a few days were left they did not pay the surcharge under section 98 of the Customs Act of the extended period for permission of its extension. There is no provision in the Customs Act to condone the delay.

7. It was further stated that appeal filed by the Complainants was decided by the Appellate Tribunal on 25-01-2006 that the assessment had been completed under section 80 of the Customs Act and clearance was refused on flimsy grounds and the “refusal to release the goods on ex-bond bill of entry was illegal”. The Complainants have filed claim for the entire consignment whereas document of ex-bonding was filed only for 160 cartons. The validity of the entire consignment had expired and it could not be released being unfit for human consumption. It was clear that the claim of the importer was not logical and maintainable under law.

8. It was stated that with regard to the alleged heavy financial burden, the Respondent could not offer any comments because it was the responsibility of the importer to observe the time factor in its own interest. The customs cannot release goods which have become unfit for human consumption. The delay occurred on account of the importer who had gone to perform Hajj and he could have deputed his employees/authorized staff to clear the goods instead of claiming damages on the basis of an allegation which was not correct.

9. The Counsel for the Complainants submitted rejoinder on the parawise comments from the Collector of Customs. It was stated that the facts of the case and the law points have already been taken into the consideration by the Appellae Tribunal who have passed a judgment and there was no need to reiterate the issues. The learned Counsel has stated that the bill of entry containing objection by the Appraising Officer was never delivered to the Complainants, it was still held by the Respondent whereas for any reply or clarification it should have been returned to the importer/clearing agent. He further stated that the illegal action of the Respondent on the first bill of entry prevented the Complainants for filing the second bill of entry for the remaining goods which had also crossed the expiry date and there was no occasion to seek clearance of expired goods and offer the same for sale.

10. During the hearing of the complaint, the learned Counsel for the Complainants stated that the complaint has been made against the Customs Department for illegally refusing release of goods and ordering confiscation without any justification. It was stated that the complaint was directed against the customs authorities for passing an illegal order causing huge financial losses; the action of the Department be declared as maladministration and it should be directed to pay compensation to the Complainants.

11. Deputy Collector of Customs replied that the ex-bond bill of entry was filed on 06-10-2003. The clearing agent was required to submit the test report which was not done. It was not clear from the bill of entry whether it was returned to the agent or not and it was possible that bill of entry remained with the Group. The test report was not submitted and when ex-bond was eventually sought in February 2004 the period of utilizing the goods had already expired and adjudication proceedings were initiated. (Learned Counsel stated that ex-bond bill of entry was never returned to the agent and the demand for test report was not legally required because ingredients were printed on the container).

12. Deputy Collector further stated that the Tribunal’s order did not contain any remarks about the adjudication order and as far as this order was concerned the adjudication order was still in the field. On inquiry she stated that the application of the Complainants for compensation was received in April 2006 but no action has been taken.

13. The contents of the complaint, comments of the Respondent and the arguments put forward by both the sides have been examined. The Appellate Tribunal has decided that once the assessment under section 80 of the Customs Act was completed the delay in releasing the consignment was not warranted by law. Thus it is established that there was no justification to raise any objection on the ex-bond bill of entry and refuse to deliver it to the importer/clearing agent for ex-bonding goods on payment of duty and taxes. It has also been established that the bill of entry remained with the Appraising Officer of the concerned Group, it was not returned to the clearing agent and no action was taken deliberately for malafide reasons. The Complainants have suffered loss on account of inaction, delay, incompetence, inefficiency in discharge of duties and responsibilities by the customs officials by withholding the ex-bond bill of entry without any lawful reason with malafide intention. It has been proved that the loss was occasioned by gross negligence on the part of the Respondent. It is, therefore, recommended that CBR direct the Collector of Customs to

  1. pay full compensation for the loss of goods to the Complainants, in accordance with the provisions of section 216 of the Customs Act, as claimed in the application dated 21-04-2006.

  2. Above recommendation be implemented within thirty days; and

  3. compliance be reported to this office within forty five days.

(Justice (R) Munir A. Sheikh)

Federal Tax Ombudsman

Dated: 2006





Mr. Muhammad Shakeel

S/o Muhammad Akram

R/o Kamkot, P.O. Lithrar,

Tehsil Kotli Sittian,

District Rawalpindi. …Complainant

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