Appellate Tribunal declares customs recovery notices after three years illegal

KARACHI: The Appellate Tribunal has ruled that customs officers can not issue notice for recovery after three years of assessment and importers have advantage of 10 percent differential in both up and down sides for assessment of valuation.
The Customs Appellate Tribunal gave these observations verdict in favor of appellants due to its correct rationales against the fraud for paying less tax/duty at the time of clearance of imported consignment by the appellant. Hence, the notices issued by customs were declared illegal.
In the case of M/s Nasiruddin Lalani, According to the order in original, “the importer consignments of GP Steel Sheets of Secondary quality classifiable under HS Code 7210 and cleared the same from Model Customs Collectorate (MCC) of Pakistan Automation Customs Clearance Audit System (PACCS) on a lower value without application Valuation Ruling No.Misc/32/2007-IV-A dated December 18, 2007.”
The competent authority said that due to non-applicability of the valuation ruling, duty and taxes were short levied by the appellant. In this regard, show cause notices for recovery of amount under the relevant provisions of law in which timeframe had been given for making short levied payments within 10 days.
The appellant said that the imported GP Sheets on November 8, 2008 and declared the price 436 EURO per M/Tons but it was finally assessed at 536 EURO per M/Tons. As per authorities, “After lapse of three years stated that goods ahs to be assessed at 540 EURO per M/Tons without any basis, it is only a difference of four EURO which is negligible.”
As per Customs Laws, the difference of 10 percent above or below in price between declared or assessed value is ignorable as per boards order and any demand after three years cannot be entertain-able.
The Deputy Collector of Customs PACCS (Group III) filed counter submission which includes, “In terms of Section 195B of the Customs Act, 1969, the subject appeal is not maintainable until or unless the appellant deposits the demanded amount along with surcharge in terms of section 83(2) of the Customs Act, 1969.” Therefore, it said that Hon’ble Tribunal that before proceeding in the matter the appellant may be directed to first pay the demanded amount of Rs 1.38 million.
According to authorities that the demand/show cause notice was not issued after three years. Whereas, the in-bond GD was filed on November 8, 2008, the show cause notice was issued on March 3, 2009 and the order in original was issued on January 12, 2010. It is not understandable that how the appellant are stating that the notices were issued on after three years.”
Case 2 of M/s S.H Corporation, according to ONO, the appellant imported consignments GP Steel Sheets of Secondary Quality (7210) and filed against five goods declarations vide No. EB.0007308, EB.7308, EB.0007337, EB.0007349 and EB.0007349 on August 20, 2010 for clearance of same. It said, “During the post clearance audit it has been noticed that the correct rate of income tax has not been applied which resulted in short realization of government revenue of Rs 230773/-.”
The appellant have gone through similar procedures of show cause notices and then replied, “Paid all duty and taxes prevailing at the time of release, the rate of duty and taxes were already feed on computer of customs, at that time customs did not create any problem and demanded any extra amount at the time of clearance of goods as there was no short payment because it was finally assessed.”
After lapse of two years a show cause notice bearing No.PCA/439/09 audit dated July 3, 2009 was issued which was not received in the office of appellant, however, he managed a copy of the show cause notice when he received order in general.
The appellant’s consignment imported into bond on June 26, 2008 and released from bond on July 10, 2008 after payment of duty and taxes as worked out by Customs at applicable rates of duty and taxes.
After lapse of 1 ½ year show cause notice was issued on December 12, 2009 which is time barred under customs act as the show cause notice is required to be issued within two months.
It is stated in the show cause you have made short payment of income tax whereas the imported paid income tax as per two percent notification on July 11, 2008.
The amount of income tax paid was Rs 37, 269/- and other taxes at 20 percent customs duty, 17 percent sales tax and two percent additional tax. It is mentioned that there is no short payment asking after the lapse of three years.
Case 3 of M/s Saleem agencies, according to ONO, “The appellant imported consignments of CRC Steel Sheets of Secondary Quality weighing 82613 kgs were cleared on lower value without application of valuation ruling No.Misc/32/2007-IV-A on December 18, 2007, issued in terms of Section 25-A of the Customs Act, 1969.”
“Due to non-applicability of the above mentioned valuation rulings, the duty and taxes were short levied. The appellate was issued a show case notice for recovery of short levied amount of Rs 169076/- ,” ONO said.
The goods imported finally assessed on January 4, 2008 at US $372 per M/Ton and sales tax/income tax were paid at the time notified rates, it is not justified after the lapsed of more than three years customs asking taxes on differential amount on a revised value, a value which was only proposed /suggested value not finalized, it said.
The proposal said that the enhancing value remain unsettled and fate for approval moving here and there on January 30, 2008, April 24, 2008 and August 18, 2008, no value was finalized how customs claims to ask additional sales tax and income tax on differential amount.
The ONO said that the departmental representatives focused the arguments appellant around the issues raised in show cause notice as well as in order in original that he impugned goods were cleared on lower value without application of valuation ruling No.Misc/32/2007-IV-A on December 18, 2007 and valuation ruling No. 25-A-71 on January 30, 2008 and further reviewed vide ruling No. 25 (A) D-126 on August 18, 2008 by the Directorate General of Customs Valuation.
The competent authorities said, “As per calculations in light of above rulings there short levied duty and taxes amounting to Rs 1.69 million, thus, appellant was charged accordingly.”

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