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Petitioner: Judicial-II Haji SAEED AHMED and another VS Respondent: ANTI-SMUGGLING ORGANIZATION and another
Court Name: Customs Appellate Tribunal Judge(s): Adnan Ahmed Title:Judicial-II Haji SAEED AHMED and another vs ANTI-SMUGGLING
ORGANIZATION and another Case No.: Customs Appeals Nos.K-123 and K-122 of 2014 Date of Judgment:2014-07-21 Reported As: 2016 PTD (Trib.) 659 Result: Order accordingly Judgment CORRIGENDUM ADNAN AHMED, MEMBER (JUDICIAL-II).---Due to typographical mistake the word "194-B(2)" has been typed instead of "194-A (1)" in the order dated 03-07-2014. Therefore in partial modification in aforesaid order the word "194-B(2)" shall be substituted by word "194-A(1)" after the word "under section" appearing at line No.3 of para 1 of the aforesaid order. 2. Brief, facts of the case as stated in the impugned order are that a credible information was received on 04.09.2013 that smuggled/non duty paid LED/LCD TV are brought at inter City Bus Terminal, Yousuf Goth, Karachi from Quetta for onward supply to the other cities of Sindh using a modus oprendi that the smuggled/non duty paid LED/LCD TV's are firstly taken to Saddar Market and then refrigerators are loaded in the back of the vehicle to cover the LED/LCD TV's and also a receipt of a wholesale shop is made and kept in the vehicle to show lawful possession. It was further informed that LED/LCD TV's were being loaded on a Mazda Vehicle bearing registration No. JY-0080. Pursuant to the said information ASO Team posted at Mobile Squad Check Post super Highway near Tool Plaza was alerted to foil the attempt. Reportedly the said loaded vehicle was taken from Yousuf Goth to Hashoo Centre, Sadder, Karachi from where 3 refrigerators were loaded on the vehicle to disguise the law Enforcement Agencies. At about 2:00 pm the said vehicle was squaded near Toll Plaza heading towards Hyderabad. Accordingly, the said vehicle Mazda bearing Regn No.JY-0080 loaded with cartons of foreign origin/assorted LCD/LED TV's and refrigerators duly covered with "Tarpal" was intercepted. The occupant/driver/owner of the vehicle identified as Noor Muhammad S/o Muhammad Bux was asked about the goods loaded on the vehicle to which he replied that refrigerators were loaded on the vehicle being dissatisfied with his statement and
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having specific information a search was made in the presence of Mushirs namely Farhan Khan and Muhammad Danish which revealed that the foreign origin assorted LED/LCD TV's and refrigerators were loaded/kept on the vehicle. The 03 refrigerators were kept in the back of the vehicle to cover LED/LCD TV's so as to camouflage the Law Enforcement Agencies, therefore the driver/owner of the vehicle was asked about the legal import documents or any other documents to substantiate lawful possession/purchase/ importation of the said goods to which he produced one receipt of M/s. Whole Sale Point A/5, Hashoo. Centre, A.Haroon Road, Saddar, Karachi in the name of SS. Hyderabad dated 04.09.2013 and told that one Haji Saeed was the owner of the goods and he has loaded the goods on his vehicle against hire. However, as there existed specific information and being dis-satisfied with the receipt produced the goods so recovered were taken into possession to ship the same ASO, HQ NMB- wharf Karachi along with the said occupant/driver/owner of the vehicle to complete further legal formalities. The seizing officer examined the LED/LCD TV's and refrigerators off loaded from Mazda bearing Registration No. JY- 0080 which resulted in recovery of 107 numbers of foreign Origin LED/LCD TV's and 03 Refrigerators . The occupant/driver/owner of the vehicle was asked to call the owner of the goods but no body came forward to claim the goods. As there existed and specified information that the goods were loaded from intercity bus terminal Yousuf Goth RCD, Highway, Karachi and the fact that non duty paid goods were brought into country through unauthorized routes other then the routes as declared under Sections 9 and 10 of the Customs Act, 1969, therefore aforesaid goods valuing to Rs. 2,967,069.00 involving duty and taxes CD Rs. 42,998.00 Sales Tax 31675.00 AST - 6540.00 and Income Tax 11227.00 totaling Rs. 1,913, 645.00 were seized along with conveyance/vehicle under section 168 of the Customs Act, 1969 for violation of Sections 2(s) 16 and 156 (2) and 157(2) of the Customs Act, 1969 punishable under clauses (8) (89) and (90) of Section 156(1) ibid read with Section 3(1) of Imports and Exports Control Act, 1950. Notice under Section 177 of the Customs Act, 1969 was served upon the owner of the goods care of occupant driver/owner of the vehicle and the occupant driver/owner of the vehicle accordingly. 3. The respondents Nos. 2 and 3 submitted the reply to the show cause notice issued by respondent No. 3 substantiated with purchase receipt and verified by the seller upon receipt of notice under section 26 of the Customs Act, 1969 from the subordinate of appellant. The respondent No. 3 after conducting multiple hearing passed order-in-original dated 26.12.2013. Para 12 of the order is relevant, same is reproduced here-in-under:--- "I have gone through the case record and heard the arguments of both sides in detail. The emerging facts of the case are that the department have seized LED/LCD/Plasma TV's 107 Nos. And Refrigerators 03 Nos. Along with conveyance/vehicle. It has been mainly contended on behalf of the respondent/owner of the goods that all these goods were purchased from local market in Karachi City for his sale point/retail shop which he owns in the name of S.S. Electronics, Hyderabad. He also produced various cash memos in this behalf. It has been further stated that these cash memos were produced also before the Seizing Agency on which they carried out verification as well. However, the department did not own such verification during adjudication proceeding, therefore the department was asked to verify the memos. The department issued notices under Section 26 to the shop keepers in reply the shop keepers acknowledged that all these goods were sold by them. The department as such does not deny that the goods were bought from the local market. However, stand of the department is this that these are foreign origin imported goods and are to be dealt under section 156(2) of the Act. According to which the onus of discharging the burden of proof rest on the respondent. It is important to observe that these goods have not been seized on the border. The department has reported the seizure at Toll Plaza, and has stated that the goods were en-route to Hyderabad having been loaded from Karachi. It is therefore clear that these were being transported from Karachi city. Keeping the seized TV's and the fridges in view it is
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also clear that in order these should be taken to be smuggled, prima fade these should be of foreign origin. In this context the seize goods appears to be in 02 categories. Part of the goods shows the foreign origin as Thailand, Malaysia etc. Whereas, the remaining parts only shows the name of the company as "Samsung" without any indication of foreign country where it WAN made. It is well known that many locally made goods bearing name of foreign brands/logos are found selling openly in the market without indicating the origin. The people buy these for these brands on much cheaper price although it is also known that such goods are manufactured locally. In this case the department has initiated contravention/seizure proceeding on the charges of 2(s) i.e. Of smuggling, whereas the impugned/seized goods i.e. LED/LCD TV's etc partly show only the name of the company and do not show the manufacturing origin as such. It is also the fact that the Samsung LED/LCD TV's are being manufactured in Pakistan by M/s. Orient, Lahore. Beside this LG and Haier range of product including air conditioners and refrigerators are being also manufactured in Pakistan. Where only the name of the companies are indicated without showing manufacturing origin. The impugned TV's LED/LCD are the same as the Make and Models. Being manufactured by M/s. Orient, Lahore in the name of Samsung Co. In Pakistan. Given this position I cannot agree with the smuggling charges with respect to the items which are being made by the local manufacturer in the name of Samsung and Haier bearing the same appearance With regards to Design, Model and Logo etc. How can the section 156(2) ibid be invoked for the goods which are being manufactured locally? How would any buyer know that these can be smuggled when the manufacturing of these goods and the market sale is well established? In the specific circumstances/fact of this case in order to invoke Section 156(2) ibid there must be some prima facie foreign origin indication with respect to foreign manufacturing country on the goods only then the goods can be differentiated from the those locally made. I therefore hold that the seized goods i.e. TV's and Fridges which do not show foreign manufacturing origins and the likes of which are already been manufactured in Pakistan, can not be brought in the fold of Section 156(2), All such tv's, fridges were therefore identified immediately and relief. However, the other parts of the seized goods where foreign origin is indicated on the goods such as "Made in Thailand, Malaysia etc." the burden of proof lies on the respondent to bring forth the evidence that these were duty paid and brought legally in Pakistan. The respondent hold the cash memo which were verified by the department from which it can be gathered that the respondent has bought these from the market in good faith, however, these goods clearly bear the foreign manufacturing origin. Therefore, the evidence for legal imports of these goods is required which he has not able to do so. Therefore, the charges raised in the Show Cause notice in respect of these goods stand established. These goods are accordingly confiscated along-with conveyance Mazda Truck Reg. No: JY-0080's since TV's are notified items under Section 2(s) therefore these cannot be redeem on fine in terms of S.R.O. 499(1)/2009 dated 13.06.2009. The confiscation is therefore outright. A penalty of Rs.25000.00 (twenty five thousand) is also imposed on the respondent. As for the seized conveyance it is allowed to be redeemed on payment of fine equal to 20% of its assessed value in terms of S.R.O. 466(1)/2009. Dated 13.06.2009 a penalty of Rs.10,000.00 (Ten thousand) is also imposed on the owner/claimant of the vehicle. 4. The appellant Messrs Haji Saeed Ahmed has challenged the order of the respondent No. 2 by way of Appeal No. K-123/2014. Mr. Obayd Mirza/Nadeem Ahmed Mirza (Advocates/Consultants) on behalf of the appellant and reiterated the arguments incorporated in the memo. Of the appeal and emphasized that:-- (i) The respondent No. 2 in order dated 26.12.2013 failed to distinguish or discuss the law, instead made academic discussion of personal nature in regards to fiscal statute, which is not sustainable in comparison to the Law and the judgment of Hon'ble Superior Courts of Pakistan. Hence erred in
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passing the order and the same is not sustainable in law as the same is clearly contrary to the Law/Rules, being erroneous and not in consonance of law, equity and natural justice. (ii) That upon receipt of the contravention report, it was mandated upon the respondent No. 2 to look into the actual facts of the case and the applicable provision of the Act, Rules and Regulation independently and fairly. Instead he completely relied upon the version of the officials of respondent No. 1 and mechanically signed the show cause notice on the basis of the contravention report forwarded to him by the official of the respondent No. 1, rendering it nullity to the law laid down by the Superior Courts of Pakistan. Reliance is placed on the reported judgment 2004 PTD 369 Messrs Zeb Traders, v. Federation of Pakistan. Wherein their lordship of the High Court held in unambiguous terms that: "The proceeding before Adjudicating Officer, under the Customs Act, 1969 are in the nature of quasi judicial proceedings and issuance of notice under section 180 of the Customs Act, is very important documents. The decision to issue show cause notice is to be taken by the Collector, Adjudication, by application of independent mind and not merely signing the draft show cause notice submitted by the investigation agency separate from the Adjudication Department and each category of officers are required to perform their respective functions/duties under the law. The practice to submit draft show cause notice by the Director General of Intelligence and Investigation to the Collector Adjudication is depreciated." (iii) That the respondent No. 2 instead of determination of the fact that as to whether the goads were lawfully purchased or smuggled by the appellant ventured into determination of the origin of the goods, which was not warranted in the given circumstances of the case. Therefore, while doing so the case in question stood ousted from his power/jurisdiction as in terms of Notification S.R.0 No. 886(1)/2012 dated 18.07.2012, in the cases involving technical violation of import export restrictions without any involvement of any evasion of duty and taxes as evident from Sub-Para (d) of Para 3 of the Notification. In the instant case there deems to be no revenue loss as evident from the charter of Order-in-Original, wherein respondent deliberated on the origin of the goods as against the charge of smuggling, which was not the subject matter of show cause notice. While laying hand on the instant case the respondent has transgressed the authority vested with the Officer of the Executive Collectorate. Beside ventured outside the scope of show cause notice, rendering the issuance of show cause notice and Order-in-Original being in-flagrant violation of law and as such coram non judice, hence void and ab-initio as held in reported judgments 2002 PTD 2457, PLD 1971 Supreme Court 61, PLD 1973 Supreme Court 236, PLD 1964 SC 536, 2001 SCMR 838 and 2003 SCMR 1505, In PLD 1996 Karachi 68, 2006 PTD 978 and PLD 1971 Supreme Court 184, 1987 SCMR 1840 and 2004 PTD 1449. (iv) That it is pre-requisite to serve notice prior to seizure of the goods under Section 171 of the Customs Act, 1969. No notice under section 171 of Customs Act, 1969 has been served either on the appellant or the Truck driver. This is in complete derogation of Article 4 of the Constitution of Islamic Republic of Pakistan and the expression of section 171 ibid rendering the seizure and subsequent Proceeding illegal as held in reported judgment 1983 PCr.LJ 19; 1983 CLC 786; 1985 PCr.LJ 286, 2004 PCr.LJ 1958, 1983 PCr.LJ 620 and 1983 PCr.LJ 623. (v) That intercepting goods transported with in the territory of Pakistan, by the respondent No. 1 is tantamount to abuse of power as no interception can be made unless a provision exist in the Act or any notification is in field directing the appellant to provide documents of import or purchase prior to booking of the goods meant for transportation within the territory of Pakistan and the driver of the carrier should contains those documents during the journey. No such section is available in the Act and nor any notification is in field. Resultant interception of the transported goods at Truck Stand near Custom House by the officer of respondent No. 1 is patently illegal rather confirms without any ambiguity abuse of power and high handedness.
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(vi) That irrespective of the referred in above illegality it is appropriate for the appellant to state that it was mandated upon the respondent No. 1 to act within the frame work of the definition of the word "smuggle" given in subsection 2(s) of the Customs Act, 1969. For ease verbatim of the same is reproduced here-in-under: (a) "smuggle" means to bring into or take out of Pakistan in breech of any prohibition or restriction for the time being in force, or evading payment of customs duties or taxes leviable thereon, (i) Gold bullion, silver bullion, platinum, palladium, radium, precious stones, antiques, currency, narcotics and narcotic and pyschotropic substances; or (u) Manufactures of gold or silver or platinum or palladium or radium or precious stones, and any other goods notified by the Federal Government in the official Gazette, which, in each case, exceed [one hundred and] [fifty thousand rupees] in value or (iii) Any goods by any route other than a route declared under section 9 or 10 or from any place other than a customs station and includes an attempt, abetment or connivance of so bringing in or taking out of such goods; and all cognate words and expressions shall be construed accordingly. (b) That customs ports etc. As expressed in clause (iii) of Section 2(s) are notified through various notifications in terms of Section 9 of Customs Act, 1969. Whereas, the border area of Pakistan Territory, whereas restriction on the possession of goods in certain areas (borders) as expressed in Section 177 ibid is also notified vide Notification No. S.R.O. 118(1)/83 dated 12.02.1983, ear marking the area of 5 miles adjacent to the Frontier of Pakistan with India and Iran to be the area to which Section 177 of the Customs Act,, 1969 shall apply. (vii) That the goods purchased and transported by the appellant were. Within the territory of Pakistan and those were not brought into Pakistan in breach of any prohibition or restriction for the time being in force under the Import Policy Order, 2013 or while evading payment of customs duties leviable thereon as expressed in clause (a) of Section 2(s). Nor were brought into Pakistan by any other route then the routes expressed in section 9 or 10 of the Customs Act, 1969 or from any other place then a customs station as per clause (a)(iii) of Section 2(s) instead were transported from Karachi to Hyderabad and those cannot be considered as smuggled by any stretch of imagination. Hence interruption of carrier loaded with the goods, their detention and seizure subsequently for the purpose of adjudication is nullity to the definition of the word "Smuggle" rendering the entire act of the respondent No. 1 and the respondent No. 2 right from interruption till issuance of show cause notice and subsequently passing order-in-original as ab-inito, null and void. (viii) That it is also imperative for the appellant to add that in the light of expressed provision of Section 2(s) and Section 177 of the Customs Act, 1969 and S.R.O. 118(I)/83 (Exhibit "J") confirms that the transportation of goods within the territorial limit of Pakistan do not constitute an offence, meaning thereby that transportation of goods from Karachi to Hyderabad through Super High Way supported by valid bilties and interruption of those at Truck Stand near Custom House by the respondent No. 1 cannot be termed as smuggling. It would also not be out of place to state that after clearance of the goods from Customs, either from Area of Sea Port or Dry Port, they are out of the ambit of Customs Department including the respondent No. 1 and any subsequent checking during transportation of those goods within the territory of Pakistan is beyond their jurisdiction as none of the provision of the Customs Act, 1969 authorizes any designated official of Customs to interrupt the local transportation of goods on sham pleas of smuggling. Reference is placed on the order of the Tribunal in Customs Appeal No.K-719/02, H-720/02, H-686/03, Q-776/04, 2005 PTD (Trib.) 135 and PLD 1991 Supreme Court 630. (ix) That the respondents have also look into the 2nd aspect for confirmation of smuggling i.e. Whether the goods so transported are retrieved from the hidden/false cavities made for time being or artificially made as defined in clause (b) of Notification No. 499(1)/2009 dated 13.06.2009,
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(Exhibit "K") meaning thereby the space behind a truck for loading goods would not fall within the definition of false cavity. Resultant, goods transported within the territory of Pakistan with the exclusion of area given in Notification No. 118(1)/83 dated 12.02.1983, cannot be presumed even through a figment of imagination as smuggled. The appellant purchased/transported the goods at the back of the carrier openly. Resultant, the goods loaded on the carrier cannot be intercepted, detained, seized as has been done by the respondent No. 1. The said act amounts to exercise of powers based on forced construction of law, rendering the same nullity to law. Reliance is placed on the order of Customs Appellate Tribunal in Customs Appeal H-185/2009 Noor Muhammad S/o Muhammad Gul, Imtiaz Ali S/O Pir Buksh v. Deputy Collector of Customs, (Adjudication) Hyderabad and Lahore High Court reported judgment 2010 PTD 2015 Collector of Customs v Rehmat Afridi. (x) That the 3rd aspect to be looked into, for determination of the goods purchased/transported by the appellant or any other person is that whether those are freely available in the local market without any curb or restriction, if available then such goods does not fall within the degree of smuggled as defined in Section 2(s) of the Customs Act, 1969 and are presumed to have been tax and duty paid. The said opinion stood validated from the reported judgment of Apex Court 1995 SCMR 387 Sikandar A. Karim v. The State. The Double Bench of the Hon'ble Supreme Court comprised of Justice Saeed-uz-Zaman Siddinui and Justice Mukhtiar Ahmed Junejo held in unambiguous term that "If the item alleged to be smuggled by the prosecution were freely available in the open market and the import of such goods were not banned in the country, presumption could arrive that the goods in question were lawfully brought in the country unless contrary was shown". As per dictum laid down by the Hon'ble Supreme Court the Appellate Tribunal in Customs Appeal No.339/2000 Mr. Muhammad Hanif v. The State and 301/2003 Nasser Ahmed v. Collector of Customs, Sales Tax and Excise, Quetta that held that "to produce legal import documents is nothing but to put undue pressure on the business community inspite of the fact that it has been observed number of time by the Supreme Court of Pakistan that the goods which are freely available in the market are presumed to be have been legally imported and duty paid. Even otherwise no reasonable ground has been given in the order-in-original that even for the sake of arguments, it is taken that the receipt produced by the appellant and issued by Saifullah Khan have no legal status then also it cannot be concluded that the said transaction was illegal, making way to call upon appellant to produce import documents. (xi) That irrespective of the referred in above proposition of law, if it is considered for a while that the stance taken by the respondents is correct, even then the onus to prove the allegation of smuggling rest on their shoulders under Articles 117 and 121 of Qanun-e-Shahadat (10 of 1984) as per laid down law by the Superior Courts of Pakistan namely S.M. Anwar Sethi v. South British Insurance Company Ltd. PLD 1975 Kar. 458; Barkat All v. The State PLD 1973 Kar. 659; Cross on evidence 1967, 3rd Edn., London Butterworth; A Practical Approach to Evidence by Peter Murphy 1988 3rd Edn. London, Black Stone Press Ltd; The Modern Law of evidence by Adrian Kean 1985, 1st Den. Oxford, Professional Books Ltd; Mst Safia Begum V. Mst. Malkani and another PLD 1965 Lah. 576; Akber Ali v. Ehsan Ellahi PLD 1980 Lah. 145; Government of Pakistan v. Moulvi Ahmed Saeed 1983 CLC 414; Muhammad Sarwar v.. Fazal Rehman 1982 CLC 1286 Sardar Ghulam Nabi Khan v. Azad Government of State of Jammu and Kashmir 1984 CLC 325; Eastern Rice Syndicates v. CBR PLD 1959 SC (Pak) 364; The Collector Central Excise and Land Customs v. Lmdad Ali 1969 SCMR 708 and Messrs Latif Brothers v. Deputy Collector of Customs, Lahore 1992 SCMR 1083. (xii) That the said proposition of law was explained with clarity by their Lordship of High Court of Sindh in reported judgment PLD 1996 Karachi 68 Kamran Industries v. Collector of Customs (Exports) and Order of the Custom Tribunal in Customs Appeal No. K-391/04 Mr. Muhammad Mir v Collector of Customs (Adjudication), Karachi. While holding that:
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"For every offence for which the accused is charged under the Customs Act he shall have to disprove the allegation of the Customs Authorities is entirely without any obligation upon the Customs Department to adduce evidence, it would amount to affording unfettered, naked and arbitrary discretion to the authorities who may at their sweet will make out false cases against importers without the need of proving the sanctity of their actions. Such cannot be the intention of Parliament while the Courts are under an obligation to place such construction on statutes which would be beneficial to the widest extent and which would make the legislation operate fairly, justly and equitably and not unreasonably (see Mst. Zainab v. Kamal Khan (PLD 1990 SC 1051). This Court is…
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