Customs Appellate Tribunal

Tribunal strikes down fine, penalty imposed by Customs for being malafide in nature

KARACHI: The Customs Appellate Tribunal has struck down the fine and penalties imposed by Customs Adjudication on a mineral oil importer for being malafide on the part of Customs Appraisement, immediate release of the seized consignment was also ordered. According to the details of the case, M/s Servo Motor Oil Pvt. Ltd electronically filed Goods Declaration for the imported consignment declared to contain Mineral Oil under PCT heading 2710.1991 at invoice value of $57106 and determined his tax liability for payment of duty & taxes for clearance of consignment. The under reference GD was selected for scrutiny and referred to examination for confirmation of description, quantity and other physical attributes to Customs House Laboratory for report, the Customs Laboratory reported that the nature of goods is mineral oil more than 70% essentially of aliphatic hydrocarbon. The department re-tested the goods from HEJ Laboratory on the ground that the Customs House Laboratory Report was inconclusive. The HEJ Laboratory remarked that in the light of tests carried out, the given sample results comparable with Pakistan mineral base oil grade 150 NHVI. Moreover the same can be used in the manufacturing of engine lubricating oil hydraulic oil, textile machinery, processing oil and also in general lubrication. On the basis of second report, the PCT heading of impugned goods was changed from 2710.1991 to 2710.1993 and rate of duty was accordingly changed from 5% to 10%. The importer is alleged to deliberately conceal the actual description and mis-declared the classification in order to get the goods released on the lower rate of customs duty and deprive the government from its legitimate revenue of Rs.1.70 million. The Customs Adjudication ordered confiscation of the goods and imposed redemption fine of Rs3.676 million along with a penalty of Rs300,000. Dissatisfied with the Adjudication, the importer Appellate Tribunal. The Tribunal after considering the arguments of both parties and perusal of the case observed that the importer filed GD along with all relevant import documents with laboratory report of SGS, OGC Laboratory Dubai, UAE before shipment of consignment and paid the duty and taxes as applicable on mineral oil. The record reveals that samples were drawn and sent to Customs House Laboratory. The Customs Laboratory reported the nature of goods is Mineral oils more than 70% essentially of aliphatic hydrocarbon. From this report, it appears that the consignment is consists on mineral oil. It is not understandable, on first instance, the department chosen to confirm the description of goods from the above said laboratory then by saying that the laboratory report is inconclusive, it means that they are denying the reliability of their own laboratory. Even then an additional demand of duty and taxes were raised and the said amount was paid by the importer, thereafter samples were re-drawn and sent to HEJ Laboratory for second opinion in absence of importer as alleged. On receipt of HEJ laboratory report a demand of differential amount of duty and taxes were raised by treating the consignment as mineral base oil. The differential amount was also paid but the consignment was not released because in the meanwhile, the impugned order-in-original was passed and goods were confiscated by imposing the charge of mis-declaration which is not warranted as the importer has complied with all demands of duty and taxes. The Tribunal observed that the imposition of redemption fine for release of goods and penalty on importer is illegal because there is no revenue loss is remains. The two laboratory reports SGC, OGC Laboratory, Dubai and Customs House Laboratory confirms the consignment as a mineral oil and only the HEJ Laboratory reported that the given sample results comparable with Pakistan mineral base oil which is creating doubts in mind on the reliability of report. Tribunal set aside impugned adjudication and directed to release the consignment forthwith along with issuance of a delay and detention certificate as to save the importer from further financial loss because the delay occurred due to unnecessary detention of consignment by the department.    
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