Collector, Model Customs Collectorate, Custom House, Gawadar at Gaddani V. Messrs Byco Petroleum Pakistan Limited and another,

2025 P T D 112 [Balochistan High Court] Before Muhammad Kamran Khan Mulakhail and Shaukat Ali Rakhshani, JJ COLLECTOR, MODEL CUSTOMS COLLECTORATE, CUSTOM HOUSE, GAWADAR AT GADDANI Versus Messrs BYCO PETROLEUM PAKISTAN LIMITED and another Special Customs Reference Application No.02 of 2020, decided on 30th August, 2024. (a) Customs Act (IV of 1969)--- ----Ss. 18, 25, 32(1), 32(3A) & 195---Assessment conducted by Authority--- Re-opening--- Scope ---Petroleum Company imported furnace oil in an oil tanker which was partially empty and, considering "dead freight" for the empty space, paid the charges whereof Goods Declaration (GD) was made as per the assessment made by the Appropriate Officer of Customs, however, during audit, an Audit Officer, Director General Audit Customs and Petroleum, raised objection, on his own, on the value determined by the Appropriate Officer on the ground that the GD failed to represent the correct amount of freight ---Stance of the importer (Petroleum Company) was that show -cause notice issued by an officer not competent to adjudicate the matter cannot reopen the order of assessment under S. 195 of the Customs Act, 1969, and that only the Collector Customs is the competent officer to exercise such powers ---Department/Collectorate filed Reference against judgment passed by Customs Appellate Tribunal whereby the Order -in-Original (to pay duty and taxes amounting to Rs. 2,481,696 in terms of Ss. 32(1) & 32(3A) of the Customs Act, 1969) rendered by Additional Collector of Customs (Adjudication) was set -aside while accepting the appeal of (Importer /Petroleum Company) ---Validity ---Record revealed that respondent being an importer, undeniably, chartered a vessel "Shalimar" whereof he signed an agreement to import crude oil from UAE , which was destined to CRL, offshore Petroleum Jetty, Pakistan- QGDN--- Freight charge per metric ranged from US$ 14.M tons (with average of US$ 9.M ton), which consignment was formally imported and cleared vide relevant GD ---Audit Officer, Director General Audit Customs and Petroleum Lahore, during audit, found a discrepancy in the GD that the freight included in the consignment was about US$ 3 per metric tons which was low and was not in accordance with the general marker practice, thus, resulted in short -realization of revenue, amounting to Rs 2,481,696---Additional Collector (Adjudication), Quetta, while holding the show -cause Notice to be in accordance with law / record, directed respondent (importer) to pay such arrears in terms of Ss. 32(1) & 32 (3A) of the Customs Act, 1969---Tanker wherein petroleum product was loaded was partially empty, whereof dead freight was, undeniably, paid--- Admittedly, respondent (importer) had paid duty on the furnace oil which was imported and declaration was made thereof and charges of dead freight were paid, thus, neither the case of respondent /importer squared within the purview of S. 18 nor under S. 25 of the Customs Act, 1969, as such Show -Cause Notice issued by the concerned Additional Collector Customs without any legal justification ---Reference was answered in negative i.e. against the Applicant / Collectorate. (b) Customs Act (IV of 1969)--- ----S. 195--- Customs authorities ---Powers ---Factual controversy--- Any error in the assessment, which is disputed by the adversarial parties, obviously requires a thorough probe and inquiry which exercise cannot be the done by the High Court while adjudicating a Reference because it exclusively falls either in the domain of Additional Collector, Customs, during adjudication or by the Appellate Tribunal, which is the final and ultimate authority to determine error in assessment of duty or any disparity in the rate of freight or any other factual controversy. (c) Customs Act (IV of 1969)--- ----Ss. 79, 80 & 195--- Assessment conducted by competent authority, re -opening of ---Scope - --Since the competent authority had assessed the duty and charges as contemplated under Ss. 79 & 80 of Customs Act, 1969, which order was not assailed in appeal under S. 193 of the Customs Act, 1969, thus, Audit Officer was not competent to reopen the case on his own, except by a Collector Customs under S. 195 of the Customs Act, 1969 and that too within a period of two years only, thus, the Customs Authority had become functus officio to reopen the case--- Reference was answered in negative. Collector of Customs, Model Customs Collectorate, Quetta v Messrs Al -Habib Enterprises and Engineering 2019 PTD 1712 ref. Raja Jawad Mehmood for Applicant. Dr. Pervaiz and Tahir Kaleem for Respondents. Date of hearing: 19th August, 2024. JUDGMENT SHAUKAT ALI RAKHSHANI, J. ----The Petitioner through the captioned reference filed under section 196 of the Customs Act, 1969 ("Act of 1969"), seeks annulment of the judgment dated 13.11.2019 ("impugned judgment") handed down by Member (Judicial -II), Customs Appellate Tribunal, Bench- II Karachi ("Appellate Tribunal"), whereby the Order - in-Original dated 11.05.2017 rendered by Additional Collector of Customs (Adjudication), Quetta was set at naught, while accepting the customs appeal.

2. Condensed resume of facts for disposal of the instant reference are that M/s. Byco Petroleum Pakistan (Ltd.) (respondent No.1) imported furnace oil in an oil tanker of a Vessel "Shalimar" from Fujairah Port, United Arab Emirates ("UAE") to be disembarked at CRL/SPM Gaddani. The tanker was partially empty and as such the importer as "dead freight" for the empty space paid the charges, whereof declaration was made as per the assessment made by the Appropriate Officer of Customs on 18.05.2015 vide GD No. 112. However, during audit, an Audit Officer, Director General Audit Customs and Petroleum Lahore on 12.05.2016 raised objection on his own on the value determined by an Appropriate Officer on the ground that the GD failed to represent a correct amount of freight, thus, the Additional Collector, Customs Gaddani issued a show -cause notice dated 29.12.2016, which was responded by respondent No.1 by filing a reply, repudiating and contesting the assertion made in the show -cause notice on the ground that show -cause issued by an officer not competent to adjudicate the matter cannot reopen the order of assessment under section 195 of the Act of 1969 and that only the Collector Customs is the competent officer to exercise such powers subject to legal justifications.

3. After hearing the parties, the Additional Customs (Adjudication), Quetta by means of Order -in-Original dated 11.05.2017 directed respondent No.1 to pay duty and taxes amounting to Rs.2,481,696/ - in terms of section 32(1) read with 32(3A) of the Act of 1969. which order was assailed by respondent No.1 before Appellate Tribunal, whereafter hearing the parties, the appeal was allowed and impugned Order -in-Original was set aside for being misconceived and beyond the limit of law applied, hence this reference.

4. In response to the notice issued by this court, respondent No.1 entered appearance and contested the reference and reiterated the objection raised before the Appellate Tribunal referred herein above.

5. Heard. Record pondered upon with able assistance of adversarial parties. Undeniably, respondent No.1 being an importer chartered a vessel "Shalimar" whereof he signed an agreement to import crude oil from Fujairah, UAE, which was destined to CRL, offshore Petroleum Jetty, Pakistan -QGDN. The freight charge per metric ranged from US$ 14.M tons (with average of US$ 9.M ton) which consignment was imported vide IGM#24/2015 dated 29.04.2015 and got cleared vide GD # 92 dated 04.05.2015. The Audit Officer, Director General Audit Customs and Petroleum Lahore during audit, found a discrepancy in the GD that the freight included in the consignment was about US$ 3 per metric tons which is low and is not in accordance with the general market practice, thus, resulted in short -realization of revenue, amounting to Rs.2,481,696/ -. The Additional Collector (Adjudication), Quetta while holding the show -cause notice to be in accordance with law and record, directed respondent No.1 to pay such arrears in terms of section 32(1) read with 32 (3A) of the Customs Act, 1969. The Appellate Tribunal, while agreeing to the stance of the respondent held that the tanker wherein petroleum product was loaded was partially empty, whereof he paid dead freight for the whole tanker which fact is not denied by the other end. Admittedly, respondent No.1 had paid duty on the furnace oil which was imported and declaration was made thereof and charges of death freight were paid, thus, neither the case of respondent No.1 squares within the purview of section 18 nor under section 25 of the Act of 1969, as such show -cause notice issued by the Additional Collector Customs Gaddani is without any legal justification.

6. Moreover any error in the assessment, which is disputed by the adversarial parties, obviously require a thorough probe and inquiry, which exercise cannot be done by this Court while adjudicating a reference because it exclusively falls either in the domain of Additional Collector, Customs during adjudication or by the Appellate Tribunal, which is admittedly the final and ultimate authority to determine error in assessment of duty or any disparity in the rate of freight or any other factual controversy.

7. Above all, since the competent authority has assessed the duty and charges as contemplated under sections 79 and 80 of Act of 1969, which order was not assailed in appeal under section 193 of the Act of 1969, thus, Audit officer was not competent to reopen the case on his own, except by a Collector Customs under section 195 of the Act of 1969 and that too within a period of two years only, thus, the Customs Authority had become functus officio to reopen the case. Reference in this regard can be made to the case of "Collector of Customs, Model Customs Collectorate, Quetta v Messrs Al -Habib Enterprises and Engineering" (2019 PTD 1712).

8. We have critically examined the impugned judgment of the Appellate Tribunal, which has well attended all the factual and legal aspects of the controversy through a well -reasoned and speaking judgment, suffering from no error. Likewise, the petitioner has failed to make any point of law or referred to any jurisdictional or legal error in the impugned judgment of the Appellate Tribunal, persuading us to exercise jurisdiction vested under section 196 of the Act of 1969, therefore, we are reluctant to meddle with the impugned judgment rendered by the Appellate Tribunal.

9. For what has been discussed herein above, the reference at hand is answered in negative for being shorn of merits, therefore, it stands dismissed. MQ/75/Bal. Reference dismissed.