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Petitioner: MUHAMMAD JAWED and 3 others VS Respondent: The DIRECTOR, DIRECTORATE GENERAL OF INTELLIGENCE AND INVESTIGATION, FBR, KARACHI and another
Court Name: Customs Appellate Tribunal Judge(s): Adnan Ahmed Title:MUHAMMAD JAWED and 3 others vs The DIRECTOR, DIRECTORATE GENERAL
OF INTELLIGENCE AND INVESTIGATION, FBR, KARACHI and another Case No.: Customs Appeals Nos. K-1639 to K-1642 of 2014 Date of Judgment:2015-01-20 Reported As: 2016 PTD (Trib.) 2190 Result: Appeal allowed Judgment ORDER ' ADNAN AHMED, (MEMBER (JUDICIAL-II)).---Through this common order, I intend to dispose off these 04 appeals directed against Orders-in-Original No, 128/2014-2015, dated 11.09.2014 passed by the Collector of Customs (Adjudication-I) (here-in-after, referred as respondent No, 2). 2. Since, these appeals are based on similar facts and questions of law, therefore it is needless to reproduce facts of each case separately, hence for reference the facts of Appeal No, K-1639/2014 are taken into consideration for decisions and brief facts of the case are that the .Appellant is a Broker/Commission Agent and he sells the goods imported by different companies of Pakistan and charge commission of I% on the selling of the goods. He received goods i.e, 270 drums of R.P. Oil from Messrs New White Chemical House through Sitara Sher Hassan Goods Transport Company, Bilty No, 0499 dated 16.02.2014, which he had stored in Tayyaba Open Warehouse before entering into sale agreement with prospective buyers. The Officials of Directorate General of Intelligence and Investigations FBR (here-in-after to be referred as respondent No, 1) conducted a search of the aforementioned warehouse and demanded the appellant to substantiate ownership of the stored goods, which were submitted along with other respective documents pertaining to the import of the said goods, to the Official of Respondent No,1 who despite finding no fault in the documents discarded those as not relevant and seized the goods vide seizure notice dated ---03-2014 and thereafter prepared contravention report and forwarded it to Respondent No,2, who issued Show Cause Notice dated 27.03.2014. The appellant submitted reply dated 09.04.2014 in which he again submitted the respective documents that substantiated his ownership of the goods and controverted the unfounded accusation leveled against him. The Respondent No,2 however
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disregarded the arguments and documents and passed Order-in-Original dated 11.09.2014, paras 21 and 22 are relevant, which are reproduced here-in-below for ease of reference:- "21- I have gone through the case and consider the written replies of the respondents, I have also carefully perused the comments of the Directorate of Intelligence and Investigation, have considered arguments made during hearing of the case. The crux of the issue is whether the goods seized by staff of Directorate General of Intelligence and Investigation on 7th March, 2014 at .Messrs Tayya ba Open Place Warehouse are smuggled as defined in Section 2(s) of the Customs Act, 1969 or not. The department pleads that the goods, which were deposited in the warehouse by four different persons, are smuggled Petroleum Product (R.P. Oil, Slack Wax, Foots Oil). All respondents were advised to prove legal import and possession in terms of Section 156(2) of the Customs Act, 1969. Two of the four respondents, namely Shoaib Bhai and Malik Shabbir who attended the hearing claimed to be agents of the importer but were unable to substantiate this claim by any agreement with record of financial transaction establishing their commissions, etc. The documents they submitted too were sketchy as the triplicate copies did not bear the cross border endorsement nor were they able to justify the delay in shipment or weight differences. Messrs Taqdeerwala was represented by an Advocate who also claim to represent the importer Messrs Snow white Chemical House, Quetta. The Advocate could not satisfactorily respond to the objection of the department regarding delay in shipment and weight difference. Messrs Rehan Enterprises claimed he too was an agent of the importer's but in his.Case; the goods seized were of two different importers Messrs Javed Enterprises and Messrs Frontier Enterprises: It was claimed that the slack wax was imported by Messrs Javed Enterprises, while foots oil was imported by Frontier Enterprises. No one appeared to claim the goods on behalf of Messrs Frontier Enterprises, who it was claimed were represented by Mr. Shahzad Ahmed. Mr. Shahzed Ahmed produced copies of triplicate GD's with cross border endorsement, and he also claimed that all his drums were new and had the manufacturer's name printed on them. He further produced weighment slips for his consignment for weigh bridges in Quetta and Karachi which appeared to confirm his stance that the imported goods were same as ones seized by the staff of D.G. I & I. Two bills of ladings where the goods were transported to Taftaan on 31.12.2013 and 01.01.2014 each carrying 114 and 120 tons were also presented. A release order from Quetta dated 06th January with cross border endorsement on 9th January and date of storage of 9th January all appeared to confirm that the goods were same as those legally imported. The response of the department though is interesting. While they were asked to confirm or deny a simple matter, whether the drums claimed to have been imported by Messrs Javed Enterprises have the manufacturers name printed on them or not, which was confirmed by the DR. However, he continued to tried to established that the goods were smuggled by stating that the bill of lading was only for 114 drums while CMR was for 120 drums. The fact is that both of the documents quoted are in file and are Irani bill of ladings for two truck which transported goods to the Taftaan Borders. Adding these two drums comes to 234 drums for which GD was filed on 6th January. The GD clearly states two truck Nos. JT-9129 and JT5397 and so taking only into account the goods of one truck and not the other is mis- leading the fact that no drums imported in container by land from Iran have any marks and Number on them is a known fact but atleast the marking on the drums confirmed the manufacturers as given in the bill of ladings, which does verify to some extent the claim of the importer. Further the weighment slip produced of Karachi and Quetta also confirm the weight of the goods, which has not been commented upon by the DR in his reply. 22- In view of the above facts I hold that other than the 216 drums of slack wax imported by Messrs Javed Enterprises, Quetta and stored in the name of Messrs Rehan Enterprises, no one else, including the foots oil consignment stored in the name of Messrs Rehan Enterprises have
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been able to satisfactorily establish that the goods seized were genuine and legitimate imports and that they were no smuggled goods as defined in section 2(s) of the Customs Act, 1969. I accordingly order confiscation of 560 drums of R.P. Oil and foots oil seized from Tayyaba Open Place Warehouse situated at Plot No, D-241 S.I.T.E. Area Karachi under clause 89 of section 156(I) of the Customs Act, 1969. As regards the 216 drums of slack wax hearing inscription "Slack wax made in Iran Esphan Oil Co. I hold that sufficient evidence has been produced to established bona fide import of the same and they are accordingly released to the lawful importer and his agent" 3. The appellant being aggrieved by the order of respondent No, 2 filed Appeal No,K-385/2014 before this Tribunal on the strength of the ground and which read as follows:-- a. That prior to commenting upon the legal aspects of the case it is advantageous to state that indeed the respondent No, 1 are appointed and designated as "Officer of Customs" under Section 3A of the Customs Act, 1969 and they derived power for functioning from notification No, S.R.O. 486(1)/2007 dated 09.06.2007 said to be within the territory of Pakistan for thwarting the act of smuggling but this doesn't means that they have unfettered powers to approach any warehouse situated in Karachi for inspection of the warehoused goods within city. Their jurisdiction in principal is restricted to the territory not falling within the ambit of Sections 9 and 10 of the Customs Act, 1969 and beyond 5 kilometer of the border of India and Iran in terms of Section 177 of the Customs Act, 1969 to be read with .Notification S.R.O. No, 188(1)/83 dated 12.12.1983. The goods in question does not at all falls with in the ambit of Section 2(s) and section 177 of the Customs Act, 1969, instead are lawfully imported and cleared after completion of all the codal formalities. b. The official of respondent No, 1 are even not empowered to ask from either the warehouse owner or from the appellant about the legality of the warehoused goods unless there exist any provision in the Act or notified through an SRO that the person who warehouse in Karachi the goods imported and clear from any defined port/dry port of Pakistan. In the absence of availability of any section in the Act and the notification, demanding Good Declaration/receipt is nullity to law and hold no ground and the stance of the appellant stood validated form the reported/unreported judgments K-719/02, H- 720/02, H-686/03, Q-776/04,2005 PTD (Trib.) 135 and PLD 1991 Supreme Court 630. ' That the official of respondent No, 1 were not empowered to search the premises of the warehouse in exercise of the power vested with under the provision of Section 163 of the Customs Act, 1969. It is a trite law, that if the search is not carried out in accordance with law and the dictum laid down by the Honorable Supreme Court in a number of judgments, then the whole foundation of the case falls on the ground, and, here in the instant case no search was ever carried out on the premises of M/s. Tayyaba Open Warehouse, S.I.T.E, Karachi, who warehoused the goods in accordance with the rule of business. d. That the case has been made on the basis of an alleged search under Section 163 of the Customs Act, 1969 on the warehouse Messrs Tayyaba Open Warehouse, S.I.T.E, Karachi without recourse to mandated requirement of section 162 ibid. The search could only be carried out by the Deputy Collector if he believes that there is a danger that before a search could be carried out in terms of section 162 after obtaining a search warrant from the Magistrate, the documents or things or goods liable for confiscation would be removed from the said place, he after preparing a statement in writing of the grounds of his belief and of the goods, documents or things for which search is to be made, search or cause search to be made for such goods, documents or things in that place. However no such details of search were provided to the appellants nor any due process of law was ever disclosed to the appellants and hence the search on the basis of which the whole case has been made out was illegal and all subsequent acts of the respondent including the show cause notice and the impugned order are liable to be set aside on this ground alone. It is now a well settled proposition of law that the search carried out in terms of section 163 of the Customs Act, 1969 without recourse to the mandatory provisions of section 162 of the Act ibid, the same is
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illegal and any case made out on the basis of documents seized on the basis of such search cannot be used against the person from whose premises the same have been obtained. The following case law is reproduced in support of the above contention and therefore the whole case made out against the appellant is illegal, mala fide, tainted with colorful exercise of use of unfair discretion and hence liable to be set aside. ' 2003 PTD 2037 Messrs Ihsan Yousaf Textile Mills v. Federation of Pakistan (Lahore High Court), 2004 PTD 2952 N.P. Water Proof Textile Mills (Pvt.) Limited v. Federation of Pakistan, 2005 PTD 1933 Collector of Sales Tax and Central v. Messrs Mega Tecch (Pvt.) Ltd. (Supreme Court of Pakistan), 2003 PTD 1034 Federation of Pakistan v. Messrs Master Enterprises (Pvt.) Ltd. (Supreme Court of Pakistan), .PLD 1993 SC 630 Collector of Customs (Pvt.) v. Muhammad Mahfooz (Supreme Court of Pakistan) and 2009 PTD 1083 A.M.Z. Spinning and Weaving Mills (Pvt.) Ltd. v. Federation of Pakistan (Karachi High Court). ' 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 (ii) 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 ex-pressed 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. ' That the goods warehoused by the appellant were legally imported by his supplier from the MCC of Quetta after fulfillment of all the codal formalities meaning thereby those were neither brought by his supplier or by the appellant into Pakistan in breech of any prohibition or restriction for the time being inforce under the Import Policy Order, 2009 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 lawfully transported from Quetta by the appellant's supplier and warehoused by him in Karachi through proper bilty and after payment of warehouse charges, those cannot be considered as smuggled by any stretch of imagination. Hence searching of warehouse, 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 search interruption till issuance of show cause notice and subsequently passing drder-in-original on that as ab inito, null and void. (0 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(1)/83 confirms that the
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warehousing of goods within the territorial limit of Pakistan do not constitute an offence, meaning thereby that these 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 search upon warehousing 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 search the warehouse on sham pleas of smuggling. Reference is placed on the order of the Tribunal in Customs Appeals Nos. K-719/02, H-720/02, H-686/03, Q-776/04, 2005 PTD (Trib.) 135 and PLD 1991 Supreme Court 630. (g) That the respondents have also lost sight of the legal fiction that if the goods found during the search are freely available in the local market without any curb or restriction such goods least falls within the degree of smuggled as defined in Section 2(s) of the Customs Act, 1969 and are presumed to have been 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 Siddiqui 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. ' That upon submission of respective import documents and bilty of transportation from Quetta to Karachi, the appellant discharged the initial burden laid upon him and the onus of burden to prove the allegation stood shifted on the shoulders of the respondent No, 1 under Articles 117 and 121 of Qanun-eShandat (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 All 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. Imdad All 1969 SCMR 708 and Messrs Latif Brothers v. Deputy Collector of Customs, Lahore 1992 SCMR 1083. (i) 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: "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
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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 statues 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 also of the view that a construction is to be placed upon statutes which would minimize the discretion vested upon the executive authorities. As absolute power corrupts an interpretation fettering the discretion of the executive authority would be more in line with the principles of equity and justice. The issue regarding the applicability of section 187 is to be looked from another angle i.e, in case we were to hold that due to Section 187 the entire burden to dispute the entire case rest upon the accused alone. The executive authorities would be let loose and given a wide, naked and arbitrary discretion to operate without any guidelines which would then section 187 susceptible to a Constitutional challenge upon its vires on this score alone. By the interpretation as proposed above any redundancy or illegality would also be avoided. ' That the official of respondent No, 1 despite searching the warehouse and subsequently detaining the goods of the appellant prepared seizure report without fulfilling the mandated requirement of law i.e, serving the seizure notice in terms of section 168(1) of the Customs Act, 1969 along with notice under section 171 of the Customs Act, 1969 on the owner of the warehouse due to the reason that in that case show cause notice has to be issued to the warehouse owner and in case of adjudication, the case would had been thrown out by the adjudicating authority on the face of the said officials. ' That despite narrating the events and name of the appellant in the seizure report the official of the respondent No, 1 also failed to serve seizure notice and notice under section 177 on the appellant. Non serving the notice render the whole proceeding infested from legal infirmity and as such of no legal effect as held by Superior Judicial Fora in umpteenth reported judgment e.g. PTCL 1994 CL 22 (sic), 1983 PCr.LJ 620, 1983 PCr.LJ 623, 1983 CLC 786, PTCL 1983 CL 47(sic), 1987 PCr.LJ 1413, 1987 PCr.LJ 1091 and 2004 PCr.LJ 1958. (i) 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 copy pasted the facts and allegation of the contravention report in the issued show cause notice 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. " (m) The section 179 of the Customs Act, 1969 expressed that the power of adjudication has to be determined by the authority on the basis of "amount of duty and taxes involved excluding the conveyance. In the case of the appellant as per the calculation of respondent No, 1 the amount of duty and taxes is 1,694,562.00 and the appropriate authority to adjudicate the cases of said amount rest with the Additional Collector instead the respondent No,2. Issued a collective show cause notice to the four different parties and for deriving powers of adjudication, he took the entire amount of worked out duty and taxes of Rs,4,864,021.00. This is not permitted, every party has to be
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issued a separate show cause notice by the empowered authority. The respondent No,2 interpreted the provision of Section 179 of the Customs Act, 1969 as per his whims and wishes for usurping the power of his subordinate. Nobody is allowed to usurp the powers of his subordinates as held by the Hon'ble Supreme Court of Pakistan in reported judgment PLD 1973 Supreme Court 49 The State v. Zia-ur-Rehman and others and 2009 PTD 1083 that "Superior authority cannot exercise the power of his subordinates 'for adjudication purpose .....Powers of…
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