Full Judgment Text & Judicial Ruling

2017 P T D (Trib.) 569 [Customs Appellate Tribunal] Before Tahir Zia, Member (Judicial-II) Messrs AL-FAZAL INTERNATIONAL Versus DEPUTY COLLECTOR OF CUSTOMS and 2 others Cus. Appeal No.K-1634 of 2015, decided on 13th July, 2016. (a) Customs Act (IV of 1969)--- ----Ss. 4, 80, 168, 171, 179, 182 & 194-A---Pakistan Plant Quarantine Rules, 1967, R.20---SRO No.371(I)/2002, dated 15-6-2001---Confiscation of imported goods---Consignment of 14986 Kgs. of Bananas was imported and on receipt of import documents, goods were delivered to Clearing Agent; who transmitted Goods Declaration with MCC of Appraisement---As per pre-condition of availing the regime of "WeBOC" upfront duty and taxes was paid---Appraiser completed the assessment, subject to clearance order from the Plant Protection Department---Importer agitated upon the condition alleging that same did not exist---Importer contended that demand of department was unlawful---Principal Appraiser issued show-cause notice to the importer but Deputy Collector of Customs, while ignoring the condition of certificate, insisted that the submission of 'RO' was mandatory and ordered the confiscation of imported goods---Appeal filed against said order was rejected by Appellate Authority---Validity---Containers of imported Bananas, were held by Deputy Collector of Customs, which squarely fell within the ambit of notional seizure and provision of S.168(1) of Customs Act, 1969 would apply with full force---Since detention, which was notional seizure had been made under S.168(1) of the Customs Act, 1969, a notice to said effect under S.171 of Customs Act, 1969 had to be mandatorily served on the person, from whose possession the goods had been seized, but no such notice had been served on the importer---Non-serving the notices, had rendered the whole proceedings as of no legal effect, hence, was void ab initio and without lawful authority/jurisdiction---No provision of the Customs Act, 1969, had been spelled out in the show-cause notice, which importer contravened---Instead a non-issue had been made an issue, on the strength of which the case could at the most be termed as non-fulfilment of condition of Import Policy Order i.e. of no revenue loss---Case, in circumstances, fell within the provisions of S.80 of the Customs Act, 1969, under which Principal Appraiser had jurisdiction in the terms of Notification No. SRO 371(I)/2002, dated 15-6-2002, and he was the only authority to adjudicate the case---Deputy Collector of Customs, on the one hand had committed grave illegally and on the other hand usurped the powers of his subordinate i.e. Principal Appraiser, which he could have only exercised under S.4 of the Customs Act---Deputy Collector of Customs had acted without lawful authority, jurisdiction and superstructure built upon by way of order-in-original and order-in-appeal were without power/jurisdiction and coram non judice---Orders by Authorities were not judicial orders; nor independent and reflected non-application of mind, and based on personal biased opinion---Impugned order smacked of mala fide, as not a single argument of the importer advanced was considered or rebutted---Impugned orders being violation of basic principles of good governance, was not only illegal and void, but also not sustainable order---Show-cause notice was vacated and impugned order was set aside---Authorities, were directed to pay the cost of goods including the refund of the paid duty and taxes, in circumstances. Case law referred. (b) Administration of justice--- ----Principle that every judicial or quasi-judicial findings should be based on reasons containing the justification for the finding in the order itself, was an established principle of dispensation of justice. Nadeem Ahmed Mirza for Appellant. Asfandyar, Deputy Collector and Mubarik Shah for Respondents. Date of hearing: 13th April, 2016. JUDGMENT TAHIR ZIA, MEMBER (JUDICIAL-II).---The subject appeal has been directed against Order-in-Appeal No. 10757/2015 dated 06.11.2015 passed by Collector of Customs, Appeals (hereinafter to be referred as respondent No.3) maintaining the Order-in-Original No.SI/MISC/71/2015-Group-I (A/W) dated 07.09.2015 passed by the Deputy Collector of Customs, Adjudication, MCC of Appraisement- West, Karachi (hereinafter to be referred as respondent No.2). 2. Briefly facts are that the appellant imported a consignment of 14986 kgs of Bananas from Ahmed pore, Gujrat, India stuffed in 2 x 40 refrigerated container through invoice No. BNA/NAB/119 dated 10.06.2015 and B/L No. NSA/KHI/FCL/2015 4283 dated 15.06.2015, upon receipt of import documents delivered those to his clearing agent who transmitted Goods Declaration with the MCC of Appraisement West and as per pre-condition of availing the regime of WeBOC, paid upfront duty and taxes of Rs.783,818.00. Consequent which G.D was numbered as KAPW-HC-206680 dated 24.06.2015. Upon appearance of Goods Declaration on his desktop the nominated Appraiser opted for examination of the goods first, which were found in accordance with the declaration and the examination report so recorded was uploaded in the system. The Appraiser completed the Assessment but held the clearance order subject to submission of RO from the Plant Protection Department. Which was agitated upon as no condition existed in Serial No. 5 of Part-I of Appendix-B to Import Policy Order, 2013. Notwithstanding to the said fact and proposition of law, right from PA to Collector insisted upon submission of that, the appellant tried his best to make them understand that their demand is unlawful but of no avail. The Principal Appraiser issued show cause notice dated 24.07.2015, while the same was under consideration of the appellant, the respondent No. 2 issued show cause notice dated 04.08.2015, which was replied on 08.08.2015. The respondent No. 2 while ignoring the condition laid in Serial No. 5 insisted upon that the submission of RO is mandatory in terms of Serial No. 3 and ordered confiscation of the appellant goods vide dated 07.09.2015 para 8 is relevant, which is reproduced here-in-below:-- 8. The case record has been examined, written and verbal arguments of Consultant have been considered and as a result, the question raised above have been determined/answered as under:-- (i) The bananas are importable from India and these are not included in the negative list i.e. Appendix-G of the Import Policy Order. (ii) As per Sr. No. 3 of Part-I of Appendix-B of Import Policy Order, against all species of plants and parts thereof, whether living or dead, stems, branches, tubers, bulbs, corns stock, bud-wood, layers, slips, suckers, green scum on stagnant pool, leaves, fruits, rhizomes etc, a valid PPRO is required. Hence, the bananas imported in the instant case, cannot be released in the absence of PPRO and in the wake of information communicated vide the Plant Protection Department Ministry of National Food Security and Research communicated vide letter No. C. No. PQS-2015/2016 (Import- Banana) dated 06.07.2015. (iii) The certificate from the country of export i.e. India that the goods are free from quarantine pest and that the same are in conformity with the phyto-sanitary regulations of the importing country, is not sufficient to release the goods as it does not fulfill the condition of Sr. No. 3 of Part-I of Appendix-B of Import Policy Order. 3. The varies of the order was challenged before Respondent No.3 by the appellant vide Appeal No. Cus/7517/2015/A-West , who also vide his order dated 06.11.2015 rejected that by observing in para 5 that:-- "5- I have examined the case record and also heard the representative of Plant Protection Department. The goods not listed in appendix -G of Import Policy Order are importable from India subject to conditions and requirement prescribed under Import Policy Order. The Plant Protection Department working as watch dog agency for food and agricultural safety and health have already stated that without a valid permit issued by the said department and in the absence of release order which is issued after proper examination and fumigation, no plant or plant material can be imported. The said department has specifically disallowed the impugned shipment of banana. I, therefore hold that the original order is legitimately passed and there are no grounds to interfere with the same. The appeal being without merit fails." 4. Being aggrieved and dissatisfied with the impugned Orders the appellant filed the instant appeal before this Tribunal on the ground incorporated in the Memo of Appeal. Mr. Nadeem Ahmed Mirza (Consultants) and appeared and argued inline with the grounds of appeal and stated further that the imported banana has been rotten due to delay clearance and the appellant has to suffer a colossal loss in the shape of cost of goods, paid duty and taxes, profit etc, and on the consignment more than Rs.10 million container detention/rental/plugging charges and 8 million terminal demurrage/storage charges have accumulated and for payment of which Messrs Riazeda (Pvt.) Ltd (shipping company) and Karachi International Container Terminal (Pvt.) Ltd (KICT) are pressing him hard, in spite no fault or default on his part and against the fact that the goods after confiscation are deems to be the property of respondents in terms of the expression of Section 182 of the Customs Act, 1969. The grounds of appeal are reproduced herein below for easement and perusal. (i) The respondent No. 1 and his subordinate held the clearance of the appellant consignment since, 27.06.2015. Such hold amount to notional seizure as held by High Court of Sindh in reported judgment 2003 PTD 2821 Syed Muhammad Razi v. Collector of Customs (Appraisement), Karachi and 2 others in the following words:-- "A careful consideration of section 168(1) and section 2(rr) leads to the conclusion that the word "possession" is not confined to the physical possession and is inclusive of constructive possession as well. We are further of the considered opinion that the seizure of goods cannot be confined to the cases where an order in writing in this behalf is made but is inclusive of notional seizure as well, meaning thereby, that if the customs officials has not passed any specific order in writing about the seizure of goods but has verbally given instructions or by his conduct has made the release for removal of goods under restraint thereby depriving to the owner of the goods of exercising all the incidents of the right had title and interest in the goods, it would also amount to seizure of goods within contemplation of section 168(2) of the Customs Act. (ii) That by virtue of notional seizure the provision contained in Sections 171 and 168(1) of the Customs Act, 1969 comes into operation. Meaning thereby in the case of seizure of goods under section 168 the reason are to be recorded and notice under Section 171 of the Customs Act, 1969 has to be served on the person from whose possession the goods are seized. (iii) In the instant case inspite of notional seizure as far as 27.06.2015 under Section 168(1) inspite of the said fact the no notice under Sections 168(1) and 171 have been served on the appellant to this date. Non serving the notices 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 PCr.LJ 786, PTCL 1983 CL 47(sic), 1987 PCr.LJ 1413, 1987 PCr.LJ 1091 and 2004 PCr.LJ 1958. (iv) That it is mandated requirement of law that a show cause notice has to be issued by the competent authority having jurisdiction after going through the fact of the case and applicable provision of the Act and penal clauses so that the person to whom it has been served is able to reply the allegation. In the instant case the show cause notice dated 24.07.2015 was complete in all respect and has been transmitted by the competent authority, that can only be withdrawn in case of any discrepancy in figure by the issuing authority only and by none else. By withdrawing the show cause notice issued by the Principal Appraiser, the respondent No. 3 encroached his jurisdiction. His this act is in derogation of the law laid down by the Superior Judicial Fora and render the show cause notice dated 04.08.2015 as void and ab-initio and such coram non judice. (v) That irrespective of the above fatal illegality, second show cause notice is permitted in a situation where the show cause notice issued earlier contains several errors. Upon examination of the show cause notices dated 04.08.2015, it can be gathered that it is based on same facts as narrated in show cause notice dated 24.07.2015 i.e. based on the opinion communicated by the Department of Plant Protection in letters dated 03.07.2015 and 06.07.2015. Beside is nullity to the submission made by the appellant clearing agent during the course of assessment and in the letter dated 02.07.2015 to Collector of Customs. Since the first show cause notice is complete, second show cause is barred by principal analogous to res-judicata and this has been held in clear terms in reported judgment AIR 1961 Cal.195. (vi) The respondent No. 3 has also no power under section 179 of the Customs Act, 1969 by virtue of no evasion of duty and taxes as these have to be collected upon allow of clearance for home consumption and if it is not allowed, no duty or taxes are payable and in that case, it squarely falls within the ambit of Section 80 of the Customs Act, 1969 and under the said Section power vest with the Principal Appraiser under Notification S.R.O. No.371(I)/2002 dated 15.06.2002 read with Section 2(a) ibid. Meaning thereby that he is the only authority to proceed in the matter instead of respondent No. 3 because it is settled elementary principle of law that action of executive functionaries are to be restricted to specific sphere permitted by the statute. Since, in Serial No. 80 of SRO 371(I)/2002 dated 15.06.2002, the respondent No. 3 figure nowhere, rendering the show cause notice as well as the order-in-original to be passed as ab-initio and void and the super structure built there upon is ought to be crumble down. (vii) That if the opinion often adopted by the hierarchy of customs that superior authorities can exercise the powers of their subordinate under section 4 of the Customs Act, 1969 is considered valid for a while then the hierarchy of distribution of jurisdiction explicitly provided by section 179 of the Act and SRO 371(I)/2002 dated 15.06.2002 shall be rendered redundant. Also the consequent result would be a total anarchy where the superior officers would be making all efforts to exercise the adjudication powers clearly conferred by law upon their subordinates. The powers of adjudication are specific and empowered by the statute. It is an elementary principle of law that where there is a conflict between special and general provision of law, the special provision shall prevails (reference is invited to the case of Lt.-General (Retd) Shah Rafi Alam v. Lahore Race Club 2004 CLD 373). The power of adjudication, as already observed ,is special in nature. This cannot be eclipsed by any other general provision. Even otherwise there is another settled principal of interpretation of statute i.e. that the courts can supply construction with a view to avoiding absurdity (reference is invited to the case of Khalid Qureshi v. UBL 2001 SCMR 103). Equally it must be kept in mind that if it is held that sections 4 and 179 occupy the same fields, there is likely to be redundancy in respect of powers conferred under section 179 and SRO 371(I)/2002 dated 15.06.2002. The Supreme Court in the case of East West Steamship v. Queen Land Insurance PLD 1963 SC 663 has been pleased to hold that redundancy is to be avoided in respect of any provision of the statute. There is also plethora of case law on the point that where there is a conflict between two provisions of the statutes, the later provision prevails and has to be given precedents (reference is invited to the case of Sahibzada Sharfuddin v. Town Committee, 1984 CLC 1517. Apart from this law favour actions of the authorities to be confined to their own spheres of jurisdiction conferred by the statute. An action taken by a state functionary beyond the ambit of his jurisdiction is nullity. In this respect the judgment reported as Abida Rashid v. Secretary, Government of Sindh PLD 1995 Kar. 587 is referred. Their lordship observed as under:-- "it is trite law that power vested in an authority should only be exercised by that authority, in default whereof, the exercise of power and authority becomes without jurisdiction, illegal, void , ab-initio and of no legal effect. The term "without jurisdiction" has been judicially interpreted to include usurpation of power unwarranted by law (The Chief Settlement Commissioner Lahore v. Raja Muhammad Fazil Khan and others PLD 1975 SC 331 @ p.339) an act done which the person doing it has no jurisdiction at all to do or which was clearly outside the sphere of his activities (The State v. Zia-ur-Rehman PLD 1973 SC 49); and a judgment or order delivered by a court or a judicial or a quasi judicial authority not competent to deliver it (Muhammad Saleh and others v. M/s. United Grain and Fooder Agencies PLD 1964 SC 97). The Constitution jurisdiction can thus be exercise when it is shown that the order is passed without jurisdiction or in excess of jurisdiction. As observed earlier the respondent No. 1 has no jurisdiction to pass the impugned order. As such we declare the same to be of no legal effect. Accordingly, we allow this petition but leave the parties to bear their own cost". That while dealing with the powers of adjudication, it is needless to observe, that our Supreme Court has jealously guarded the same. In Assistant Director v. B.R. Herman Mohata Ltd. PLD 1992 SC 485 a full bench of Supreme Court was pleased to observe that section 223 of the Customs Act, 1969 could not be employed so as to interfere with the judicial or quasi judicial functionaries. It was clearly observed that the power of the CBR as to prescribed guideline were not relevant for the exercise of judicial function. To similar effect is the judgment of Supreme Court reported as Central Insurance v. CBR 1993 SCMR 1232. In this case the CBR issued direction for the reopening of Income tax Assessment under section 65 of the Income tax Ordinance 1979. It was held by the Supreme Court that the CBR did not figure in the hierarchy of the officer provided in the statute for the purpose of assessment and adjudication. On the basis of this it was held that the directions of the CBR to reopen the assessment was without jurisdiction and the adjudication officer was directed to apply its own mind. Reliance is placed on the order of the Tribunal in S.T. Appeal No. 176/2007 Messrs Muller and Phipps Pakistan (Pvt.) Ltd. v. the Collector of Sales Tax Enforcement LTU, Karachi and 2011 PTD (Trib.) 2114 Collector of Customs, Peshawar v. Collector of Customs (Appeals) Peshawar and 2011 PTD (Trib.) 2557 Messrs Wawa Garments Industries (Pvt.) Ltd. v. The Additional Collector of Customs, Export, Karachi and Order in Custom Appeal No H-510/2008 Dewan Farooque Motors Ltd. v. Collector of Customs(Appeal). (viii) The opinion of the Director, Directorate of National Food and Security and Research Department of Plant Protection, Karachi that the Banana of Indian origin is prohibited under Rule 20 of Pakistan Plant Quarantine Rules, 1967 is nullity to its expression. Which read as:-- 20. Banana: Importation of banana suckers and fruits prohibited from South West of India and any other country where the disease have been reported to have occurred to prevent the spread of bunchy Top virus disease and Panama disease due to the fungus. (Fusarium oxysoporum var.) The conscientious study of the provision it is abundantly clear that the importation of Banana sucker and fruit are prohibited from South West of India and any other country. The Banana imported by the appellant is not of South West of India origin instead of Gujrat region, which does not falls by any stretch of imagination within the region of South West of India. Resultant, the said Rule is not applicable on the imported banana of appellant , forming opinion contrary to the Rule 20 of Pakistan Plant Quarantine Rule, 1967 is stretching the Rule in accordance with once own whims and wishes is not permitted under law. (ix) The statute has to be read as it has been expressed, nothing can be added or subtracted in any statute to suit ones opinion as that amounts to redundancy, which has to be avoided. Even otherwise it is settled rule of interpretation that "in interpreting the taxing statute the customs must look to the words of the statute and interpret in the light of what is clearly expressed. It cannot imply anything which is not expressed, it cannot import provision in the statute so as to support assumed deficiency. There is no room for intendment. There is no equity about a tax. There is no presumption as to tax nothing is to be read in , nothing is to be implied. One only look fairly at the language used nothing else to be done" as held by High Court and Supreme Court of Pakistan in their reported judgment starting from Abbassi Steel Industries Ltd. v. Collector of Customs 1989 CLC 1463 to Messrs Fazal Ellahi v. Additional Collector of Customs, 2011 PTD (Trib.) 79. Even otherwise "if there are two or more interpretation of our provision pertaining to levy of tax on account of anomaly/ambiguity the one favorable to tax payer has to be adopted by the court" as per judgment reported as 1993 SCMR 274, 2005 SCMR 728, 2007 PTD 1656 and 2008 PTD 1227. It is considered opinion of the Superior Judicial Fora in a number of judgments "that tax payer should not be made to suffer on account of bad drafting of the statute". Reliance is placed on the judgment of High Court of Sindh reported as 2004 PTD 901, wherein the Hon'ble Judges of the Bench held that "While interpreting the taxing statute the Court must look to the word of statute and interpret it in the light of what is clearly expressed. It cannot imply anything which is not expressed. It cannot import provision in the statute as to support assumed deficiency." "While finding out intention of the legislature language of the law is not be seen and if the intention is cleared from the language used nothing else is to be done." "if the legislature has not sufficiently expressed itself Court has no duty to act for it, for court is concerned with what it lays down and not what it has only in mind, but once it has been articulated enough Court does not more than give effect to the intention that it has succeeded in expressing. The intention may be expressed in faulty language, in very faulty language, in-extremely faulty language, this is of no consequence as long as there is no doubt as to the intention. A draft'sman mistake as long as it relates to form in which the legislative intend is expressed and not to the substance of it , is of no effect. Of course ones an element of doubt as to the intention of the legislature enter the field consideration otherwise irrelevant may all become relevant. (x) That infact the disease referred in Rule 20 of Pakistan Plant Quarantine Rule, 1967 namely bunchy top virus and Panama disease stood eradicated since long and for that reason the import of banana from whole of the India is permitted as evident from Appendix-G to the Import Policy Order, 2013 and 2015 issued by Ministry of Commerce and which contains no prohibition. This was done by an authority, which is competent to either ban or restrict import of any good subject to fulfillment of conditions given in Column 3 of the Appendixes. The respondent No. 1 has to allow the clearance after realizing of leviable duty under first Schedule to the Customs Act, 1969 and in consultation with the Appendixes of the Import Policy Order. It is neither mandated upon the Director, Directorate of National Food and Security and Research Department of Plant Protection, Karachi to issue any direction nor on the respondents Nos. 1 and 3 to comply the said direction as held by Hon'ble High Court of Sindh in reported judgment 2015 PTD 1607 M. Yasin and Co. v. FOP. "The Federal Government in exercise of powers under section 3 of the Import and Exports (Control) Act, 1950 (Act XXXIX of 1950) may by an order published in the official Gazette, prohibit, restrict or otherwise control the import or export of the goods of any specified description and regulates the same through license system and sub-section (3) of Section 3 of ibid Act, provide that section 16 of the Customs Act, 1969 shall be given effect in respect of the goods, the import and export of which has been prohibited or restricted. The Federal Government has the sole authority to regulate import and…

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