KARACHI: A two-member bench of The Sindh High Court (SHC) has dismissed a reference application filed by The Collector of Customs through Ms. Masooda Siraj, Advocate against M/s. Habib Sugar Mills Limited challenging impugned Order dated 17.11.2016 passed by the Customs Appellate Tribunal at Karachi in Customs Appeal No. K-1402/2015, a detailed judgment was released dated 27 Feb, 2021.
On March 1, 2021, the Court observes in its order that “learned Counsel for the Applicant submits that it is a case of mis-declaration of HS Code; hence the Tribunal was not justified in allowing the Appeal to the extent of imposition of fine and penalty. According to her, the respondent had mis-declared the HS Code so as to get benefit of a lesser rate of duty; hence the questions be answered in favour of the Applicant.
We have heard the learned Counsel for the Applicant and perused the record. It reflects that appellant imported “1 Unit of 32 M3 — 2MPA LCO2 Cryogenic Vacuum Perlite Insulated Semi-Trailer” and claimed assessment of the goods under HS Code No. 7311.0030, which was disputed by the applicant, as according to them the goods were correctly classifiable under HS Code 8716.3190, attracting customs duty at the rate of 15%. Show Cause Notice was issued and matter was adjudicated, whereby, fine and penalty was imposed, which in appeal has been set-aside to the extent of such fine and penalty.
Perusal of the above finding reflects that the learned Tribunal has been pleased to hold that since all imported related documents including the Free Trade Agreement (FTA) Certificate were showing HS Code 7311.0030, whereas, the description of the goods was correctly mentioned by the respondents, therefore, this was not a case of any intentional mis-declaration and element of mens rea was missing.
The learned Tribunal has also accepted the plea of the SCRA No.98 of 2017 Page 4 of 5 respondents that, if any mis-declaration could have been made it was the description, which could have been changed; however, admittedly the correct description of goods was declared on the Goods Declaration. The respondent had declared the HS Code on the basis of the documents including the FTA Certificate.
We are of the view that the Tribunal’s finding is correct in law and it is not that in each and every case wherein upon scrutiny of the Goods Declaration if HS Code is changed attracting a higher rate of customs duty, that fine and penalty has to be imposed mandatorily, as it is always dependent upon facts and circumstances of the case as well. One has to see the intention in doing so as well as the presence of elements of mens-rea.
Here, in this case when the description of goods was correct, then such a harsh action against an Industrial Importer could have been avoided. It is also a settled proposition of law that classification of goods is a question based on legal and factual determination and so also of interpretation of the HS Code and the Customs tariff; hence, there could always be difference of opinion for interpreting the same.
It is not that it always be a case of mens rea and imposition of fine and penalty if the claimed HS Code is not accepted by the Department and therefore, in our opinion to the extent of imposition of fine and penalty the order of the adjudicating authority has been rightly modified by the Tribunal.
In support reliance may be placed on the cases reported as Collector of Customs vs. Shaikh Shakeel Ahmed reported as 2011 PTD 495 and Collector of Customs Karachi vs. Power Electronic Pakistan (Pvt.) Limited Lahore reported as 2011 PTD 2837.
Accordingly, in our view the present facts do not warrant any interference by this Court as apparently the questions of law, as proposed, do not arise out of the Order of the Tribunal; hence we are not inclined to answer these questions. The Reference Application, being misconceived is hereby dismissed. Let a copy of this order be sent to Appellate Tribunal Customs in terms of sub-section (5) of Section 196 of Customs Act, 1969”.