Full Judgment Text & Judicial Ruling

2020 P T D (Trib.) 1890 [Customs Appellate Tribunal] Before Syed Tanvir Ahmad, Member Technical-III Messrs SYMBIOS PK, KARACHI Versus DIRECTOR, DIRECTORATE GENERAL OF INTELLIGENCE AND INVESTIGATIONS FBR and 2 others Customs Appeal No.K-1056 of 2017, decided on 28th February, 2019. (a) Customs Act (IV of 1969)--- ----Ss.2(s), 16, 156(1)(8), 156(1)(89), 156(2), 168 & 177---Qanun-e-Shahadat (10 of 1984), Arts. 117 & 121---Smuggling---Power to prohibit or restrict importation or exportation of goods---Possession of smuggled goods---Seizure of goods liable to confiscation---Restriction on possession of goods in certain areas---Production of purchase invoices---Onus to prove---Scope---Appellant's warehouse was raided by officials of Directorate General of Intelligence and Investigation and seized items of different kinds---Deputy Collector of Customs (Adjudication) ordered for confiscation of some goods and imposed redemption fine on others---Appeal filed before Collector of Customs was dismissed---Validity---Goods displayed/warehoused by appellant were purchased/procured from the local market against valid invoices---Appellant discharged the initial burden of proof laid upon him by producing valid invoices/bill/payment vouchers and the onus to prove the allegation stood shifted on the shoulders of department---Validity of invoices and payment vouchers was not disputed by the department nor were they proved fake or fabricated---Negative inference could not be drawn as none of the suppliers denied the issuance of invoices and receipts of payments---Department lost sight of the presumption that if the goods found during search were freely available in the local market without restriction then such goods did not fall within the degree of "smuggled goods"---Appellate Tribunal allowed the appeal and set aside the orders passed by Customs authorities.

S.M. Anwar Sethi v. South British Insurance Company Ltd. PLD 1975 Kar. 458; Barkat Ali 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. Imdad Ali 1969 SCMR 708; Messrs Latif Brothers v. Deputy Collector of Customs, Lahore 1992 SCMR 1083 and Kamran Industries v. Collector of Customs (Exports) and Order PLD 1996 Kar. 68 ref. Sikandar A. Karim v. The State 1995 SCMR 387 and Muhammad Mir v. Collector of Customs (Adjudication), Karachi Customs Appeal No.K-391 of 2004 rel. (b) Customs Act (IV of 1969)--- ----S.193A(3)---Order in appeal---Delay of 109 days---Effect---Appeal was filed on 29.12.2016, in terms of subsection (3) of S.193A of Customs Act, 1969---Order had to be passed within 120 days or within further extended period of 60 days, upon availability of exceptional circumstances and recording of those after issuance of notice to the appellant---Order on appeal was passed on 12.08.2017, i.e. after 120 days, without any extension---Said illegality rendered the order passed by Collector of Customs, barred by 109 days, rendering same without power/jurisdiction, hence void ab initio and not enforceable under law. Khalid Mahmood v. Collector of Customs 2009 SCMR 1881; 2017 PTD 1756 = Collector of Customs Sales Tax Gujranwala and others v. Super Asia Mohammad Deen and Sons and others 2017 SCMR 1427; Messrs Super Asia Muhammad Din Sons (Pvt.) Ltd. v. Collector of Sales Tax Gujranwala 2008 PTD 60; Messrs Hanif Strawboard Factory v. Additional Collector (Adjudication) Customs, Sales Tax and Central Excise Gujranwala 2008 PTD 578, Messrs Tanveer Weaving Mills v. Deputy Collector Sales Tax and 4 others 2009 PTD 762; Messrs Syed Bhai Lighting Limited, Lahore v. Collector of Sales Tax and Federal Excise, Lahore and 2 others 2009 PTD (Trib.) 1263; Leo Enterprises v. President of Pakistan and others 2009 PTD 1978; Innovative Impex, v Collector of Customs, Sales Tax and Federal Excise (Appeal) 2010 PTD (Trib.) 1010; Fazal Ellahi v. Additional Collector of Customs, MCC of PaCCS 2011 PTD (Trib.) 79; Unique Wire Industries v. Additional Collector of Customs, MCC of PaCCS 2011 PTD (Trib.) 987; Kaka Traders v. Additional Collector of Post Clearance Audit 2011 PTD (Trib.) 1146 and Pak Electron Ltd. v. Collector of Customs, Lahore and others 2012 PTD (Trib.) 1650 ref. (c) Customs Act (IV of 1969)--- ----Ss. 168, 3A, 2(s), 9, 10 & 177---S.R.O. No.486(I)/2007, dated 9.6.2007---S.R.O. No.118(I)/83, dated 02.02.1983---Seizure of goods---Restriction on possession of goods in certain areas---Jurisdiction of Directorate General of Intelligence and Investigation within city---Scope---Appellant's warehouse was raided by officials of Directorate General of Intelligence and Investigation and seized items of different kinds---Validity---Director of Intelligence and Investigation and his subordinates were appointed and designated as "Officer of Customs" under S.3A and they derived their powers for functioning under S.R.O. No. 486(I)/2007 dated: 09.06.2007 within the territory of Pakistan for thwarting the act of "smuggling"---Such authority did not mean that they had unfettered powers to approach any office/warehouse situated either within the city or country for inspection of the displayed/warehoused goods---Jurisdiction of said authorities in principle was restricted to the territory not beyond the ambit of Customs Ports/Airports, landing places and limits of customs station as expressed in Ss. 9 and 10 of Customs Act, 1969 and within 5 kilometers of the borders of India and Iran as contemplated in S.177 and S.R.O. No. 118(I)/83, dated 02.02.1983---Goods available in appellant's warehouse could not be subjected to scrutiny under S.2(s), Customs Act, 1969---Appellate Tribunal declared the conducting of search to be of no legal effect and as such void ab initio. (d) Customs Act (IV of 1969)--- ----Ss.162 & 163---Power to issue search warrant---Power to search and arrest without warrant---Scope---Appellant's warehouse was raided by officials of Directorate General of Intelligence and Investigation without search warrant---Officials of Directorate General of Intelligence and Investigation seized items of different kinds---Validity---Requirement for issuance of search warrant by Magistrate could be dispensed with under S.163, Customs Act, 1969, which empowered Assistant Collector of Customs or any other officer of the like rank to make search without warrant, if he was satisfied that there was danger of removal of goods if search warrant was obtained and further he had to record such reason in the statement so prepared in writing containing the ground of his belief with regard to danger he apprehended that the goods would be removed before search could be made on the basis of search warrant and secondly about the goods or documents or things for which the search was to be made---Search, in the present case, was conducted at the appellant's warehouse under S.163, Customs Act, 1969 without having recourse to the mandated requirements of S.162, Customs Act, 1969---Appellate Tribunal declared the search conducted by department to be without lawful authority and jurisdiction. PLD 1991 SC 630; 2003 PTD 1034; 2003 PTD 2037; 2004 PTD 2952; 2005 PTD 1933; 2006 PTD 1884; 2007 SCMR 1039 and 2009 PTD 1083 ref. (e) Customs Act (IV of 1969)--- ----S.177---Restriction on possession of goods in certain areas---Scope---Director General Intelligence and Investigation and his subordinates are not even empowered to ask from the owner of the office/displayed/warehoused goods about the legality of those, unless there existed any provision in the Customs Act, 1969 or notification to the said effect containing direction that the person, who is operating office or warehouse of those goods to display the relevant documents in the office or the supply to the official on demand---In the absence of availability of any provision in Customs Act, 1969 and the notification, demanding documents/invoices/bills is nullity to law and holds no ground. 2005 PTD (Trib.) 135; PLD 1991 SC 630; 2014 PTD (Trib.) 1566; 2016 PTD (Trib.) 659; 2016 PTD (Trib.) 2190 and Collector of Customs, Sales Tax and Central Excise v. Prof. Muhammad Khan and 6 others 2007 SCMR 10 ref. (f) Customs Act (IV of 1969)--- ----Ss.80, 83 & 2(s)---Customs Rules, 2001, Rr. 438 & 442---S.R.O. No. 371(I)/2002, dated 15.06.2002---Checking of goods declaration by customs---Clearance of goods---"Smuggling"---Scope---After clearance of goods under the provisions of S.83, Customs Act, 1969 and R.442 of Custom Rules, 2001 on the strength of valid assessment order passed under S.80, Customs Act, 1969 and R.438 of Custom Rules, 2001 by the appropriate officer in exercise of the powers vested upon him through S.R.O. No.371(I)/2002, dated 15.06.2002 by Customs either from the area of sea port or dry port, goods are out of the ambit of Customs department including Directorate General of Intelligence and Investigation by virtue of having become functus officio---Any subsequent search of the displayed/warehoused goods within the territory of Pakistan is beyond their jurisdiction as none of the provisions of the Customs Act, 1969 authorized any designated official of customs to search the office/warehouse on the plea of "smuggling". 2005 PTD (Trib.) 135 and PLD 1991 SC 630 ref. (g) General Clauses Act (X of 1897)--- ----S.24-A---Exercise of power under enactment---Where any Authority, Court or Tribunal gave a finding of fact which was not based on material available on record or without discussing and considering the material available on record, it became perverse---Perverse finding of fact was violative of the established principle of appreciation of evidence---Principle that every judicial or quasi-judicial finding should be based on reasons containing the justification for the finding on the order itself is an established principle of dispensation of justice. 2005 YLR 1019; 2007 PTD 2500; 2004 PTD 1973; 2005 YLR 1719; 2003 PTD 777; 2003 PTD (Trib) 2369; 2002 MLD 357; 1983 CLC 2882; 2005 PTD 2519; 2005 PTD 1189; 2003 PTD 2369; PLD 1995 SC (Pak) 272; PLD 1970 SC 158; PLD 1970 SC 173; 1984 SCMR 1014 and 2012 PTD (Trib.) 619 ref. Nadeem Ahmed Mirza (Consultant) for Appellant. Syed Mohsin Ali, Investigating Officer, Appraiser for Respondents. Date of hearing: 3rd January, 2019. JUDGMENT SYED TANVIR AHMAD (MEMBER TECHNICAL-III).----This Judgment disposes off Appeal No. K-1056/2018 filed by the appellant against Order-in-Appeal No. 454/2017 dated 15.08.2017 passed by the learned Collector of Customs (Appeals), Karachi. 2. Briefly facts of the lis are, the appellant is an online mega store alike Daraz.Pk and sell goods that are freely available in the local market. The ordered goods are supplied to their buyers from their warehouse, where the goods are kept after procuring. That the officials Anti-smuggling Unit of Directorate General of Intelligence and Investigations-FBR, Karachi (respondent No.1) raided the Office / warehouse of appellant and desired to conduct search the premises, which was agitated upon as no illegal activity was carried out by the appellant. The subordinate of the respondent No. 1 made appellant and his staff hostage and thereafter conducted the search, despite of the fact that all the items listed in the show-cause notice were lying openly in the office/warehouse. They took the possession of those namely (i) 35 Laptops/Tablets (Refurbished) (ii) 145 Smart Watches (New) of different brands (iii) 33 Branded Mobile Phones (Refurbished) (iv) 5 Branded New Phones (v) 4 Sports Music Watches (New) and (vi) 35 Laptop Bags (New) of different brands and origins comprehensive details in regards to model and quantity is detailed in inventory dated 16.06.2016 available at page 50 to 55 as Exhibit "E" of memo of appeal and directed appellant to substantiate the lawful possession/display of the items/goods, respective invoices/bills were supplied, the subordinate of respondent No.1, despite finding those answering to the description of the possessed goods/items refused to accept those as valid on one pretext and another and seized those under the provision of Section 168(1) of the Customs Act, 1969 (Act). On the strength of which subsequently framed contravention report and forwarded that to the Collector of Customs (Adjudication-I), who marked it to respondent No. 2, being the competent authority to proceed with the matter under the provision of Section 179 of the Act, who issued show-cause notice dated 09.08.2016, alleging that the appellant is involved in the act of smuggling in addition to in possession of smuggled goods as defined in Section 2(s) of the Act, hence, contravened the provision of Sections 2(s) and 16 of the Act, punishable under clauses (8) and (89) of subsection (1) read with subsection (2) of Section 156 of the Act. The appellant consultant submitted reply to the show-cause notice through which he challenged the powers/jurisdiction of respondent No. 1 of conducting search, and thereafter seizing the goods, otherwise available freely in the market and requested her to vacate the show-cause notice and order restoring of the goods to the appellant. However, the respondent No.2 passed ordered dated 05.12.2016 through which mobile phones were ordered to be confiscated and redeeming of the remaining items/goods upon payment of imposed 20% /penalty of Rs.75,000.00 in addition to leviable duty and taxes on the value determined by the subordinate of respondent No.1. Paras 5 and 6, which read as: "5- I have examined the case record and heard arguments of both the sides. The consultant of the respondent has mainly relied that the official of DG I&I-FBR were not empowered to search the premises of the warehouse in exercise of the powers vested under the provision of 163 of the Customs Act, 1969. The seizing officer personally visited number of time to the showroom/shops who has issued purported invoices for verification but no response was received from any of the purported seller of the impugned goods. Accordingly, the proof of purchase from local market is not established as laid down by the Supreme Court of Pakistan in the referred cases, there is no doubt that the imported goods that are not ban and freely available in the local market can be freely move from one place to another on the presumption that the leviable duty/taxes have been paid. However, when there is specific translation or reasonable belief contrary to this presumption specially regarding notified goods (Notification No. 566(I)/2005 dated 06.06.2005). Section 156(2) is attracted and the concerned /prosecution are duty bound to check the veracity of any such information/reasonable belief etc. Section 156(2) of the Customs Act, 1969 clearly states that if goods notified for the purpose of Section 2(s) of the Customs Act, 1969 are seized on a reasonable belief that an act to defraud the Government of any duty payable thereon has been committed the burden of proving that no such act has been committed shall be on the person from whose possession the goods were seized, section 156(1), (89), (1) of the Customs Act, 1969 constitute it to be an offence. The sections reads "if any person without lawful excuse, the proof of which shall be on such person, acquires possession of or in any way concerned in carrying, removing depositing harboring , keeping or concealing , or in any manner dealing with the smuggled goods or any goods in respect to which there may be reasonable suspicion that they are smuggled goods". Hence, the presumption of law import of goads has been rightly questioned by the seizing agency/prosecution. It is also clearly contrary to the presumption of lawful import as neither the GD nor the local Sales Tax invoice provided by the advocate of the respondent has been found to be relevant to the seized goods. 6- In view of the foregoing deliberation and legal proposition of law, the charges leveled in the Show-Cause Notice stand established and the respondents have not been able to discharge burden of proof as per section 156(2) of the Customs Act, 1969. Hence, section 2(s) of the Customs Act, 1969 stands established. Accordingly, I therefore, order confiscation of the seized foreign origin goods under clauses (89) (90) of Section 156(1) ibid of the Customs Act, 1969. However, an option is given to the owner /claimant of the goods except foreign origin mobile Phones under section 181 of the Customs Act, 1969 read with SRO 499(I)/2009 dated 13.06.2009 to redeem the seized foreign laptop and smart watches on payment of duty and taxes leviable on the goods as well as fine equivalent to 20% of the value of the offending goods. A penalty of Rs. 75,000/- (Seventy Five Thousand only) is also imposed upon the claimant /owner of the goods . the goods may be handed over to the right full owner after payment of duty and taxes, redemption fine etc., however, the foreign origin Mobile Phone are confiscated outright." 3. The appellants challenged the vires of the order before the respondent No. 3, who rejected that and maintain the order passed by respondent No. 2 vide order dated 15.08.2017. Para 5 of which is relevant and as such verbatim of which is reproduced here-in-under: "I have gone through the record of the case and the verbal/written arguments of the appellant counsel and Respondents. The impugned goods of the appellants appear to have been smuggled in to the country which were purchased by the appellant from the local market. No documentary proof of payment of duty and taxes have been brought forth despite considerable time afforded to the appellant since the time of seizure. The burden of proof has not been discharged by the appellant to prove the goods are non smuggled. Therefore, despite my sympathy for the appellant who purchased the goods in good faith from the local market considering these to be duty paid, I am constrained to disallow the appeal and uphold the Order-in-Original." 4. The Appellant has now challenged the vires of the order through appeal for decision of the Appellate Tribunal on the strength of the grounds taken therein. No cross objection under subsection (4) of section 194A of the Act were filed within the stipulated period of 30 days by the respondent No. 1 instead comments, which do not in any manner qualify as memo. of cross-objection, were submitted to be termed as cross appeal as per the contemplation of subsection (3) as expressed in aforesaid section. These could be considered merely an opinion, having no binding force, are placed on record of the case for perusal and consideration. 5. Heard and case record perused and so the relied upon judgments, this appeal could be decided on a short point of limitation among others, which shall be deliberated after the said point of law. Appeal before respondent No.3 was filed by the appellant on 29.12.2016, in terms of subsection (3) of Section 193A of the Act, Order has to be passed within 120 days i.e. on or before 28.04.2017 or within further extended period of 60 days in terms of its proviso by the Board, upon availability of exceptional circumstances and recording of those after issuance of notice to the subject as held by Hon'ble Supreme Court of Pakistan in reported judgment 2009 SCMR 1881, Khalid Mahmood v. Collector of Customs. In the instant Order has been passed on 12.08.2017 after the expiry of initial period of 120 days, without any extension as evident from the order which is silent. This vital illegality render the order passed by respondent No. 3 barred by time by 109 days. Rendering it without power/jurisdiction, hence void, ab-initio and not enforceable under law as held in the reported judgments 2017 PTD 1756 and 2017 SCMR 1427 Collector of Customs Sales Tax Gujranwala and others v. Super Asia Mohammad Deen and Sons and others, 2008 PTD 60 Messrs Super Asia Muhammad Din Sons (Pvt.) Ltd. v. Collector of Sales Tax Gujranwala and 2008 PTD 578 Messrs Hanif Strawboard Factory v. Additional Collector (Adjudication) Customs, Sales Tax and Central Excise Gujranwala, 2009 PTD 762 Messrs Tanveer Weaving Mills v. Deputy Collector Sales Tax and 4 others 2009 PTD (Trib.) 1263, Messrs Syed Bhai Lighting Limited, Lahore v. Collector of Sales Tax and Federal Excise, Lahore and 2 others 2009 PTD 1978; Leo Enterprises v. President of Pakistan and others 2010 PTD (Trib.) 1010 Innovative Impex v. Collector of Customs, Sales Tax and Federal Excise (Appeal), 2011 PTD (Trib.) 79, Fazal Ellahi v. Additional Collector of Customs, MCC of PaCCS, 2011 PTD (Trib.) 987 Unique Wire Industries v. Additional Collector of Customs, MCC of PaCCS, 2011 PTD (Trib.) 1146 Kaka Traders v. Additional Collector of Post Clearance Audit and 2012 PTD (Trib.) 1650 Pak Electron Ltd. v. Collector of Customs, Lahore and others. 6. The appellants are of the view that Orders are without jurisdiction and as such void ab-initio. Indeed the respondent No.1 and his subordinates are appointed and designated as "Officer of Customs" under Section 3A of the Act and they derive powers for functioning under the section incorporated in column 3 of SRO 486(I)/2007 dated 09.06.2007 within the territory of Pakistan for thwarting the act of smuggling but this doesn't means that they have unfettered powers to approach any office/warehouse situated either within the city or country for inspection of the displayed/warehoused goods. The appellants contended that their jurisdiction in principal is restricted to the territory not falling beyond the ambit of Customs Ports/Airport etc. and landing places and limits of custom station as expressed in Sections 9 and 10 of the Act and within 5 kilometer of the borders of India and Iran as contemplated in Section 177 of the Act and SRO No. 118(I)/83 dated 02.02.1983. The premises/warehouse of the appellant situated in the posh locality of the city not beyond the places other than defined in sections 9 and 10 of the Act or within 5 kilometers of India and Iran Border as per the enunciation of section 177 of the Act and SRO 118(I)/83 dated 02.02.1983, resultant, goods/item displayed therein are not subject to scrutiny i.e. their imports/purchased a defined in section 2(s) of the Act. Now the question arise that as to whether respondent No.1 and his subordinates were/are empowered to conduct search of the company , who is pioneer in the IT business and known of repute when introducing the companies of Pakistan dealing in IT, he is one of those , who started online mega store, the well known "Daraz" started. business subsequently and much later, directly under the provision of Section 163 without recourse to 162 of the Act. The respondent No. 1 subordinates conducted search under section 163 of the Act of the premises of appellant situated at House No. 2, 43/1/Q, Razi Road, Block-6, PECHS, Karachi, where appellant display/warehouse goods/item meant for sale online. The appellants, argued that every search under Section 163 of the Act has to be made by the officer concerned strictly in accordance with the spirit of its expression after exhausting recourse of obtaining a search warrant in terms of Section 162 ibid from the Judicial Magistrate on the basis of an application by Gazetted Officer of the Customs, stating the grounds of his belief that the good liable to be confiscation or documents or things, which in his opinion shall be useful as evidence in proceeding under the act and those are hidden in some secret place where search has to be made after having knowledge of the place which was earlier a guarded secret and the Judicial Magistrate after going though the request if felt appropriate issues search warrant, which has to be executed in the same way and have the same effect as of search warrant issued under the CCP 1898. It is beneficial to reproduce Sections 162 and 163 of the Act: 162 : Power to issue search warrant:- (1) Any Judicial Magistrate may, on application by a Gazetted Officer of Customs stating the ground of his belief that goods liable to confiscation or documents or things, which in his opinion will be useful as evidence in any proceeding under this Act are secreted in any place within the local limits of the jurisdiction of such magistrate, issue a warrant to search for such goods documents or things. (2) Search warrant shall be executed in same way, and shall have the same effect as the search warrant issued under the Code of Criminal Procedure, 1898 (Act V of 1898) 163. Power to search and arrest without warrant:- (1)…

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