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Petitioner: Raja MUHAMMAD ZARAT KHAN VS Respondent: THE STATE
Court Name: Sindh High Court Judge(s): Muhammad Mujeebullah Siddiqui Title: Raja MUHAMMAD ZARAT KHAN vs THE STATE Case No.: Special Criminal Bail Applications Nos.36, 37, 38 and 39 of 2006 Date of Judgment:2006-09-04 Reported As: PLD 2007 Karachi 27 Result: Bail petition dismissed
JUDGMENT
JUDGMENT ' MUHAMMAD MUJEEBULLAH SIDDIQUI, J.---The facts and circumstances leading to all the four bail application are almost common, with some variation in Special Criminal Bail Application No,39 of 2006, which shall be highlighted presently. All the four bail applications have been argued together by the learned Advocates for the parties and are disposed of by this common order. ' Succinctly stated the relevant facts in Special Criminal Bail Application No,36 of 2006 are that the Intelligence Officer, Directorate of Intelligence and Investigation (Customs and Excise) Karachi recorded an F.I.R. On 31-3-2006 bearing No,Appg-12/DCl/2006, against the applicant Raja Muhammad Zarat Khan, Partner/Proprietor/Director/ Associate of Messrs Business International, Messrs B.S. Enterprises and Messrs Early Morning Textile Mills, as well as against Messrs Moosa Abdullah, Clearing and Forwarding Agents, Khalid Pervaiz, Examining Officer, East Wharf, Zulfiqar Ali, Appraising Officer, East Wharf, Asad Alam, Principal Appraiser, East Wharf, Collectorate of Customs (Export) Karachi and others whose names were to be ascertained in the investigation. The relevant facts disclosed in this F.I.R. Were as under:- "A credible information was received by the Directorate General, Intelligence and Investigation (Customs and Excise), Karachi, that Raja Muhammad Zarat Khan son of Makhan Khan, Chairman Messrs Bawan Shah Group of Companies Karachi, along with his other associates in crime with the active connivance of concerned examination staff of Collectorate of Customs (Exports), East Wharf Karachi, is involved in claiming inadmissible customs Rebate and misuse of DTRE scheme by way of phony and fraudulent exports of leather jackets and 100% Polyester Printed Ladies Suits and is causing colossal loss to the State Exchequer.
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' In pursuance of aforesaid information, a team of officers of Directorate was deputed to monitor the export consignment of Messrs Bawan Shah Group of Companies Karachi. The constituted team on 29-3-2006, detained Container No, IRSU-427256-5 (1 x 40ft) at East Wharf Karachi for re- examination, whose Shipping Bills/GDs No,KEXP-106072, dated 27-3-2006, declaring Cow Analine Leather Jackets (67 Packages) weighing 3745 Kgs, valuing Rs, 20,799,533, KEXP-106070, dated 27-3- 2006, declaring Sheep Analiie Leather Jackets (83 Packages) weighing 4650 Kgs, valuing Rs,25,831,496, and KEXP-106071, dated 27-3-2006, declaring 100% Polyester Printed Ladies Suits (Fabric total MTR 118195) WT. 720-730 GMS per suits DTRE No,KSH-23-07-0010, dated 23-7-2005 (176 Packages)weighing 17140 Kgs., valuing Rs,8,812,830 were filed by Messrs Moosa Abdullah, (CHAL No,2060), Clearing and Forwarding Agent, Karachi. The said consignments were declared as stuffed in Container No, IRSU-427256-5, (1 x 40ft) having Seal No,007592. All the aforesaid three consignments were declared to be consigned to Messrs Ravian Tarabar International Transport Co. Bandar Abbas, Iran. The aforesaid consignments were duly examined and allowed loading by the concerned examination staff of Collectorate of Customs (Export), East Wharf, Karachi. ' Subsequent, to the detention of aforesaid container, the Collector of Customs Exports, Customs House, Karachi was requested vide this Directorate General' letter C. No, Appg-12/DCl/2006, dated 30-3-2006 to intimate the concerned Clearing Agent/Exporters and depute Export Collectorate Staff for joint examination of the detained container on 31-3-2006. However, on 31-3-2006, neither the Exporters nor the Clearing Agent joined the process of examination. The staff of Directorate and Collectorate of Customs (Export), East Wharf, Karachi, on 31-3-2006, at 1100 hours, at Irani Shipping Line Terminal, TR-14 (Over Flow), East Wharf, Karachi, in presence of two witnesses namely Syed Muhammad Akhtar, Supervisor Messrs Friends Corporation Stevedores (Pvt.) Ltd. East Wharf Karachi and Mr. Noor-ul-Amin, Operation Assistant of Messrs Ocean Express Agency Pvt. Ltd., Karachi, de-sealed the aforesaid container and jointly carried out detailed re-examination of the container. ' Upon joint re-examination, of the Container No,IRSU-27256-5 (1 x 40ft), blended/cotton fabrics/cloth, Pakistan origin of assorted types/colours/sizes measuring 129,900 meters was recovered instead of declared Leather Jackets and 100% Polyester Printed Ladies Suits. Detailed inventory of the goods recovered was prepared on the spot duly signed by the witnesses and concerned officers of Directorate and Collectorate of Customs (Export), East Wharf, Karachi. The representative samples i,e, one each than/roll were drawn for lab test and Court exhibits, from the said container which were also signed by the witnesses and concerned officers of Directorate and the Collector i,e, Upon Physical weighment of Container No,IRSU-427256-5(1 x 40ft), 23590 Kgs.Nets weight was found as against the declared Net weight of 25535 Kgs. ' It is worth-mentioning that neither any carton/bale nor a single piece of declared leather jacket and polyester printed ladies suits was found contained in the said container. Since the representative of Clearing Agent/Exporter deliberately avoided to join the re-examination, therefore, the recovered goods were seized under section 168 of the Customs Act, 1969, for violation of sections 16, 25, 19, 32(1)(2), 32A and 178 of the Customs Act, 1969, read with S.R.O. 450(1)/2001, dated 18-6-2001, S.R.O. 509(I)/97, dated 8-7-1997 and S.R.O. 698(I)/2002, dated 9-10-2002, punishable under sub-clauses (OA), (14), (14A), (77) and (82) of subsection (1) of section 156 ibid, against proper Mushirnama prepared on the spot duly signed by the independent Mushirs and staff of Directorate and Collectorate of Customs (Export), East Wharf, Karaehi. In the absence of Exporters and Clearing Agent, Notice under section 171 of he Customs Act, 1969 was served upon Messrs Friends Corporation Stevedores (Pvt.) Ltd. East Wharf, Karachi. As the shifting of the seized container to the Intelligence State Warehouse was not practicable, therefore, the same after resealing with Seal No,007539 was given under the superdari of Messrs Friends Corporation Stevedores (Pvt.) Ltd., East Wharf, Karachi, in terms of section 168 of the Customs Act, 1969.
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' During preliminary investigation conducted on the spot, it was revealed that the Customs Examining staff after detention of the container by the Directorate tampered the examination report adding therein "but this consignment is short shipped, embossing full short shipment seal on Custom copies of the GDs bearing No,KEXP-106072 and KEXP-106070, dated 27-3-2006 whereas Shipping Agent's copies of the same GDs do not mention any short shipment seal. The commission of tampering on the part of Customs examination staff is proved by the fact that all the copies of GD are having "passed in full, stamps and there is no mention of any short shipment of goods by Preventive Collectorate staff posted at the entrance gate. Besides, after allow shipment by the Principal Appraiser Examination, East Wharf, the loading of the said container was allowed by Preventive Collectorates staff. Besides, duplicate copies of the GDs were also submitted to the Shipping Line. The Exporter/Clearing Agent also paid wharfage charges of the container, which clearly established mensrea/mala fide on the part of the Exporters/Clearing Agent and the Customs staff." ' The F.I.R. Further contains that during preliminary investigation it was revealed that the customs examining staff after detention of the container by the Directorate, tempered the examination report. ' Interim challan has been submitted, according to which the applicant was arrested on 4-5-2006 at Islamabad. During the course of investigation it was revealed that the applicant is Chairman of several companies and has misused the licences issued under DTRE scheme, the comprehensive audit whereof was under progress. It was further stated that containers of export and import consignments were not examined by the customs staff and the export was allowed without examining the contents of the container. Fake endorsements were made by the customs officials. On an information furnished by the applicant Raja Muhammad Zarat, 99,026 yards of cloth/fabric illegally disposed of were also recovered. It was further found that 100% Polyester Printed Ladies Suits valuing Rs, 88,12,830 which were allegedly declared to have been consumed were in the container against Shipping Bill No, KEXP-106071 leather goods valuing Rs,4,66,31,029 declared in Shipping Bill No, KEXP-106070 and KEXP-106072, dated 27-3-2006 were not found in the container. It is also stated that but for the interception by the Directorate General a huge loss to the tune of Rs,12,74,740 would have been caused on account of evasion of customs duty and income tax and a further loss of Rs,24,05,195 would have been caused on account of false claim of rebate of customs duty on export of leather goods which was not found in the container. ' The facts in Special Criminal Bail Application Nos. 37 and 38 of 2006 arising out of F.I.R. Nos. Appg- 12-A/DCl/2006 and Appg12-B/DCl/2006, dated 31-3-2006 are that two containers which were cleared for export were intercepted and re-examined. In shipping bills in both the cases declaration was made that 100% Polyester Printed Ladies Suits were being exported but on re- examination not a single piece of the said description was found. Instead blended/cotton fabric/cloth of Pakistani origin were stuffed. ' The facts involved in Special Criminal Bail Application No,39 of 2006, arising out of F.I.R. No, Appg- 12-DCl/Seiz/2006, dated 4-5-2006 are that spy information was received that Messrs Bawan Shah Trading Company Karachi, Messrs B.S. Enterprises and Messrs Bawan Shah Corporation Karachi, exported a consignment declaring to contain Cow/Sheep Analine Leather Jackets/Coat, Sheep Analine Leather Jackets, 50% Cotton 50% Polyester Printed bed sheet sets and 100% Cotton dyed Terry Towels and Sheep/Cow Analine Leather Jackets/coat. According to F.I.R. The shippers Messrs Universal Shipping (Pvt.) Ltd., was directed not to discharge the said container at Dubai and redirect/return back the said container with intact seal to Karachi. The shippers in compliance of the directive of the department returned back the container to Karachi Port. The said container was unloaded from vessel on 5-4-2006 in presence of Directorate staff and representative of Messrs Universal Shipping (Pvt.) Ltd., as well as Badaruddin, Terminal Operator, East Wharf. Before opening
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of the container Messrs Bawan Shah Group of Companies filed a contempt application in C.P. No,D- 333/2006 on 6-4-2006, before the High Court. The High Court passed the following order:-- "In the meanwhile, the respondents and the alleged contemners are directed not to open the containers of take any other action without prior permission of this Court." ' The Directorate-General, filed an application on 7-4-2006 seeking permission to open to container returned from Dubai and to prepare inventory of the goods contained therein. The High Court directed the opening of said container on 10-4-2006 at 3-00 p.m. In presence of the representative of the petitioner. The container was opened and reexamined by the staff of Directorate-General of Intelligence and Investigation, in presence of learned counsel for the petitioner and others. The entire process of de-sealing, opening, re-examination and resealing was properly recorded through video and audiovisual. The mashirnama and inventory were also prepared on the spot duly signed by the witnesses. The container was declared to contain three consignments containing 6349 pcs of Leather Jackets valuing Rs,49,722,700 ($ 828988), 1220 sets printed bed sheets valuing Rs,373,195 ($ 6222) and 4260 pieces of Terry Towel valuing Rs,485,478 ($ 8094) and benefit of S.R.Os. 509(1)/97, dated 8-7-1997 and 698(I)/2002, dated 9-10-2002 were claimed. ' The joint re-examination of the container led to the recovery of following goods:-- (a) 4 cartons containing 20 pieces of Black Sheep Leather Jackets (assorted sizes) each carton comprising 5 pieces. (b) 20 cartons containing 600 sets of Blended Printed Bed Sheets sets, each set comprising 2 bed sheets and 2 pillow covers, having 30 sets per carton. (c) 240 bales bearing marks "Z-31", containing 4596 dozens, dyed/white 100% cotton Terry Towels, assorted sizes/colours. ' The report of re-examination of the container and inventory were submitted to the High Court in compliance of the order, dated 7-4-2006. On furnishing of this report the C.P. No, D-333 of 2006 was disposed of by the High Court on 27-4-2006 with the direction to the customs officials to take action strictly in accordance with the law. In the interim challan it is stated that the value of exported consignment was declared at Rs,505,60,337 involving colossal loss at Rs,25,73,746 on account of rebate etc. By way of fraudulent and phony export. ' Applicant submitted bail applications in all the four F.I.Rs, before the learned Special Judge (Customs and Excise) Karachi, on various grounds including sickness of the accused/applicant but this ground was not pressed before the learned trial Court and the bail plea was pressed on merits only. ' The first plea taken before the learned trial Court was that even if prosecution allegation regarding evasion of customs duty and taxes is correct, the applicant was ready and prepared to pay the said amount. So far, the allegation of claiming rebate after export is concerned, it was contended that the allegation was imaginary. ' The second plea was that the offence mainly attracts provision of section 32-A of the Customs Act, 1969 and placed reliance on section 32-B of the Customs Act, 1969, which provides that notwithstanding anything contained in sections 32 and 32-A or any other provision of the Customs Act, where any person has committed a duty or tax fraud the Collector may, with the prior approval of the Board, either before or after the institution of any proceedings for recovery of duty or tax, compound the offence if such person pays the amount of duty or tax due along with penalty as is determined under the provisions of the Customs Act. ' Further reliance was placed on the provisions contained in section 195-C of the Customs Act, 1969, according to which any aggrieved person in connection with any matter of customs pertaining to liability, customs duty, admissibility of refund/rebate, waiver or fixation of penalty or fine, confiscation of goods, relaxation of any time period or procedural and technical condition may
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apply to the Central Board of Revenue for the appointment of a committee for the resolution of any hardship or dispute mentioned in detail in the application. ' It was urged that the matter involved in these cases can be resolved by ADR Committee and no criminal proceedings can be initiated in such cases. ' It was also maintained that the case of applicant has become of civil nature dispute and no criminal proceedings can be initiated in view of the above provisions of law. It was further stated that the applicant was prepared to pay the total amount involved in the cases or any amount deemed fit by the Court. ' It was also submitted that interim challans were submitted, liabilities were determined, the applications for resolving the issue through ADR were pending, the offences do not fall under the prohibitory clause of section 497, Cr.P.C. And now-a-days a trend of law was that if applicant/accused is prepared to return the said amount then he is not sent to the jail but he is released after taking the amount. It was pleaded that the offences alleged against the applicant were not having punishment of 10 years or above and therefore, the applicant/accused has right of bail. ' With reference to the provisions contained in sections 2B, sections 3A and 3E of Customs Act, 1969 read with S.R.O. 2005, dated 6-1-2005 it was contended that the customs authorities have not exercised their jurisdiction properly as warranted under the law for seizing the containers. ' The prosecutor before the learned trial Court opposed the grant of bail contending that the applicant has been avoiding to appear before the trial Court. He got protective bail from Lahore High Court up to 19-4-2006. He appeared before the trial Court on 17-4-2006 with a bail application, which was fixed for hearing on 19-4-2006, but instead of appearing before the trial Court he obtained another protective bail from Sindh High Court up to 27-4-2006. He did not appear before the trial Court on 27-4-2006 for obtaining bail but submitted contempt application before the High Court with a plea that the customs officials may be directed not to open the containers and interim order was passed in favour of applicant. The containers in the first three F.I.Rs, were opened prior to the receiving of the Court's order. The applicant submitted another contempt application before the High Court. The petition before the High Court was finally disposed of on 27-4-2006. After disposal of Constitution Petition by the High Court, the applicant instead of approaching the trial Court submitted bail application before the Hon'ble Supreme Court, which was fixed for hearing on 5-5-2006. However, he was arrested on 4-5-2006. The co-accused Muhammad Raza absconded after withdrawing Rs,40 Million as per statement of applicant. The learned prosecutor produced a letter, dated May, 17th, 2006 written by the applicant in his own handwriting while in custody addressed to Chairman C.B.R. In the said letter in the handwriting of applicant and bearing his signature it was stated that his partner has ran away after withdrawing Rs, 40 Million from the bank and their factories are closed. He further stated that during investigation he offered through Investigating Officer, that although he was not aware of the matters which happened yet he was ready to make the payment of taxes:-- (1) Against the fabric imported under DTRE but not yet exported. It is approximately Rs,10 Million. (2) Against the fabric exported in the month of March, 2006, (Imported under DTRE by Messrs Early Morning Textile (Not legible) the doubt is created. It is further stated that, it will be difficult for the department to prove it in Court of law that exported fabric is not actually imported under DTRE scheme, I also do not know, but in the interest of our nation this offer was given by me tax amount approximately Rs,40 Million. (3) This is also undertaken that if all F.I.Rs, are withdrawn or compounded we will not claim any rebate against the export made in container (re-called) neither will claim return of withholding tax or permission of re-export of dollars, remitted excessively. ' It was further stated in the letter as follows:--
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"It is requested in the light of my above request/offer that, let us do our export business. We will earn more foreign exchange for the country. All four F.I.Rs, may kindly be either withdrawn or compounded and the amount undersigned offered be allowed to pay in six instalments, because, I will located my partner, if I come out from prison and make arrangement for the payment otherwise I will try to sell my house the only asset I have. ' The second option if F.I.Rs, are not withdrawn or compounded than it is requested that department may not oppose my bail in the Court, so that I can cooperate more to the department to locate my partner M. Raza and other culprits who played with me and with government." ' The learned prosecutor further contended before the trial Court that looking to the conduct of applicant and the factum of abscondance of co-accused namely Mukhtar Hussain Lakhani, Muhammad Raza, Rahil Ahmed A. Gill, Khalid Pervaiz, Zulfiqar Ali Shaikh and Assad Ali, the bail may not be granted as there is likelihood of absconsion of the applicant. It was also stated that there are about 20 more F.I.Rs, in the pipeline. The learned prosecutor further submitted that the application under section 195-C of the Customs Act, 1969, for resort the ADR already stands rejected by the C.B.R. Vide order, dated 23-6-2006 and the applicant has not approached for compounding the matter pertaining to the recovery of tax under section 32B of the Customs Act. ' The learned Standing counsel, submitted before the learned trial Court that the offence falling under section 32A of the Customs Act, is punishable with the imprisonment for 10 years and that no enmity has been alleged against the applicant on the part of prosecution and that he is very influential person belonging to ruling party who cannot be falsely involved in the present cases. It was further contended that compounding of offence under section 32B and the alternative dispute resolution under section 195-C of the Customs Act, were applicable to the recovery proceedings only and have no bearing on the criminal prosecution. ' The learned trial Court after considering the facts and the case law observed that the contents of F.I.R. And interim challan have not been disputed which clearly show that on re-opening of containers and re-examination of the goods exported and shipped for exporting it was found that the containers, contained entirely different articles than shown in the shipment documents. ' The learned trial Court further observed that several points were raised which require deeper appreciation which was not proper to do and for the purpose of bail plea that Court was required to examine whether prima facie the accused is connected with the commission of offences alleged. The learned trial Court held that the applicant/accused is prima facie connected with the offences alleged by the prosecution and further investigation was still in progress, therefore, the applicant was not entitled to the grant of bail. ' I have heard Messrs Azizullah K. Shaikh and Ismat Mehdi, learned Advocates for the applicant, Mr. Abdul Hafeez Prizada, learned counsel for the Directorate of Intelligence and Investigation (Customs, Sales Tax and Federal Excise) and Mr. Mehmood Alam Rizvi, learned Standing counsel for the State. ' Mr. Azizullah K. Shaikh, has taken me through the F.I.Rs, the contents of the interim challan and the order passed by the learned trial Court. Mr. Shaikh reiterated the contentions raised before the learned trial Court. In addition Mr. Azizullah Shaikh, contended that the applicant/accused Raja Muhammad Zarat, did not authorize any export, he has not signed any customs document and he has not contacted any customs official. However, he conceded that the applicant is Chairman of Bawan Shah Group of Companies. He next contended that there is main allegation of conspiracy but there is no evidence with the prosecution in this behalf. ' Mr. Azizullah Shaikh, next contended that the trend of law developed in Pakistan is that instead of prosecuting a person involved in causing loss to the State revenue and keeping him in jail the resort be made to the resolution of dispute through negotiated settlement and recovery of the losses caused to the State. In this behalf he referred to the law pertaining to the plea bargain
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contained in the NAB Ordinance, 1999 and placed reliance on the judgment of Hon'ble Supreme Court in the case of Khan Asfandyar Wali v. Federation of Pakistan, PLD 2001 SC 607 (relevant finding in Para 267 of the judgment Page 932). ' He then referred to section 32B of the Customs Act, 1969 which reads as follows:-- "32B. Compounding of offence.---Notwithstanding anything contained in sections 32 and 32A or any other provision of this Act, where any person has committed a duty or tax fraud, the collector may, with the prior approval of the Board, either before or after the institution of any proceedings for recovery of duty or tax, compound the offence if such person pays the amount of duty or tax due along with penalty as is determined under the provisions of this Act." ' He further referred to section 195-C of the Customs Act, 1969, which is as follows:-- "195-C Alternative Dispute Resolution. (1) Notwithstanding any other provision of this Act, or the rules made thereunder, any aggrieved person in connection with any matter of Customs pertaining to liability of customs duty, admissibility of refund or rebate, waiver or fixation of penalty or fine, confiscation of goods, relaxation of any time period or procedural and technical condition may apply to the Central Board of Revenue for the appointment of a committee for the resolution of any hardship or dispute…
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