Law: Customs Act, 1969

Section: 26A,32,32(2),80,83,156(1)(14),180,193,19 5,202

Law: Income Tax Ordinance, 2001

Section: 148,162,162(2),177,228

Law: Customs Rules, 2001

Section: R.432,442

Law: Sales Tax Act, 1990

Section: 2(16),3,3(2)(b),3(6),4(c),6,7,11(4),25,3 3(5),34,71

(a) Customs Act (IV of 1969)- -Ss. 32, 180 & 156(1)(14)-Sales Tax Act (VII of 1990), Ss. 2(16), 4(c), 3(2)(b), 3(6) & 71-SRO No. 1125(I)/2011 dated 31.12.2011- Show-cause notice-Short levied sales tax-Mis-declaration-Zero rating-Special procedure for payment of sales tax-Manufactured- Produced, semi-finished product-Scope-Appellant imported "Belt strips/Composition Leather" and claimed benefit under SRO No. 1125(I)/2011 dated 31.12.2011-Goods, upon examination, were found as declared, consequent to which assessment order was passed while allowing benefit under the aforesaid SRO-Inbuilt authority of Customs Computerized System passed clearance orders, subsequent to which consignments were delivered to the appellant, importer- Director, Directorate of Post Clearance Audit conducted audit of the goods declarations and observed that the appellant had illegally availed the benefit of SRO No. 1125(I)/2011 dated 31.12.2011 as the goods imported by him were in finished form and no further work was desired to be done-Contravention report was framed and appellant was served with show-cause notice-Appellant was ordered to pay amount of evaded duty/taxes in addition to penalty-Validity-Examination report nowhere confirmed that goods imported by appellant were in finished state and ready to wear, instead goods were in semi-finished shape and had to undergo the process of further finishing that is punching of holes, affixing of buckles, preparing of loops and cropping/stitching, etc-Allegation of customs authorities stood negated from the definition given in S.2(16), Sales Tax Act, 1990, which stated that "if any article imported in same condition was either converted into another distinct article or product or was so changed, transformed or reshaped and it became incapable of being put to use differently or distinctly or included any process incidental or ancillary to the completion of manufactured product, it fell within the definition of manufacture or produce"-Not material, whether appellant imported same state goods or raw material as he had to sell that after value addition and transforming same into a distinct item and had to pay further tax on his sale as enunciated…

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