Mis-declaration detected on import of Malaria diagnostic kit; case proven to be null and void

KARACHI: Pakistan Customs has detected the tax/duty evasion on import of Malaria Diagnostic Kit by an importer over filing incorrect and false good declaration through computerized clearance system.
It is detected that Master Enterprises has deliberately declared wrong country of origin as of China in order to mislead customs besides importing goods at highly under invoiced value however; it’s been found that its actual origin was United States. It is worth mentioning that the wrong declaration is due to avoid higher customs values of US origin whereas China origin goods valuation is on lower side.
“The assessable customs values of origin US is at higher side i.e $ 3.0/ cassettes considering the fright element as well as their high physical attributes instead of declared C&F value of China origin $0.05/ cassettes. The offending value of mis declared/incorrect country of origin in Rs 16357304,” said an Order-in-Original issued to the importer.
However, it declared the goods contain diagnostic malaria PF/PV AB Cassettes test kits. 50000 cassettes diagnostic reagent malaria ICT immunochromato graphic test, at total invoice value of $2500.
In this scenario, the importer attempted to defraud the government from its legitimate revenue to Rs 4336049/-. In this regard a show cause notice had been sent to the importer to appear in the hearing to defend the charges leveled against him.
The ONO was issued by Collector adjudication Muhammad Asif Marghoob Siddiqui. The importer has sent the accredited representative of Master Enterprises Muhammad Rafique S/o Khushi Muhammad in the case hearing.
The offender responded, “We have made mis-declaration of origin and instead of China it has been alleged that the imported goods i.e Nova test malaria diagnostic kit, are of US origin.”
The offender has submitted certificate of origin issued by the concerned government authority of China (copy enclosed), the subject show cause notice is liable to be vacated. [the_ad id=”31605″] In his defense the offender said, “The word reagent made in USA is printed on the sashay of the imported kit, are written. It is to inform that the reagents are one of the component/raw materials used in the manufacturing of the diagnostic kit and the whole kit is manufactured in China, which has also been confirmed by the manufacturers in their certificate dated 22-11-2013 (copy enclosed).”
It is revealed when goods declaration examined and goods description is “Medical diagnostics+Nova test one step diagnostic rapid test/malaria PF/PV Antibody test cassettes +ASSAY buffer (diluents) kit (for in vitro diagnostic use only) EXP: DT: 09/2015, I/O: USA (printed on packaging/CTN), however, importer/trader has declared origin: China in GD, QTY: 31CTNS STC: 50,000 cassettes with printed packaging’s. Checked WT: 100 percent & found gross WT: 487 kgs, vide NLCCT W/Slip NO. 2013110911 dated: 09-11-2013 images attached.
The importer informed that there are number of evidences i.e. GD No. (i) KAPR-HC-27379-31-08-2012, (ii) KAPR-HC-8606-19-06-2012, (iii) KAPR-HC-111870-14-04-2012, (iv) KAPR-HC-27379-31-08-2012, (v) KAPR-HC-62453-21-11-2012, (v) KAPRHC-62453-21-11-2012, (vi) KAPI-HC-12493-30-05-2013 & (vii) LTNB-HC-10783-31-05-2012, which confirms that the identical diagnostics kits have been allowed released as of China origin despite the presence of the words reagent made in USA on the kits.
It further added by the importer, “As per WHO’s conditions the manufacturers in China and other countries are bound to use the USA made reagent while manufacturing the diagnostic kits for malaria.”
The representative further said that the goods are customs duty & sales tax free and the average assessed value of the imported diagnostic kits is at $0.05 to $0.07/kit, whereas the group has assessed the goods at $3.00/kit, which is out of imagination and there is no such prices in the world for the diagnostic kits for malaria.
The collectorate further informed, the fact that there is no evidence of such high price that is why; there is no mentioning of any evidential data/GD in the show cause notice. Therefore, the charges of mis-declaration is of value is totally incorrect and un-substantiated.
The offender said that imported diagnostic kits are free of customs duty/sales taxes, in terms of SRO 567(I)/2006 dated 05-06-2006 & SRO 880(I)/2008 dated 01-09-2008, therefore, the law settled by the honorable High Court of Sindh in number of judgments even otherwise if there is no involvement of customs duty then there is no question to charge an importer for mis-declaration in terms of Section 32 of the Customs Act, 1969.
The request made by the importer that the goods which are lying at the port for a considerable period and the kits are perishable nature and due to weather and sunlight conditions the quality of the goods may be deteriorated, therefore, it is requested to kindly vacate the notice and direct the assessing authorities to release the goods because of the fact that neither there is mensrea of mis-declaration of origin nor mensrea of evasion of revenue.
Again the show cause notice sent to him but the similar reply had been received. Model Customs Collectorate of PaCCs, Mahtab, Principal Appraiser was asked to further look after the case. So, he commented, “The importer contended that goods and the test of malaria is of Chinese origin wherein reagent are of USA origin, on the other hand show cause notice is based on a point that goods are USA origin. Secondly, importer has disputed valuation of the subject goods. The rebuttal have minutely been examined and images also been seen.”
Mehtab said that the importer contention is correct as certificate of origin have also been provided. It may be pertinent to mention that there is exemption of customs duty and sales tax vide above mentioned SRO 567(1)/2008 and SRO 880(i)/2008. It added that there is no mensrea and declared value may be accepted as fair as ascertained value was taken of value air freight that not of sea.
The ONO said that after gone through the records the written reply of the importer on the representative of the reporting collectorate and have also heard verbal submission of both sides the Adjudication Collectorate added, “I am inclined to hold that the department’s allegation stated against the trader vide the instant show cause notice have been found without any justification and reason.”
It is accordingly held that show cause notice against the importer stands vacated and goods are allowed to be released, according to ONO.