Al Wakeelo
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Petitioner: Sheikh FAHEEM AHMED VS Respondent: DIRECTOR, DIRECTORATE GENERAL OF INTELLIGENCE AND INVESTIGATION-FBR
2018 P T D (Trib.) 341 [Customs Appellate Tribunal] Before Tahir Zia, Member (Judicial-II), Sheikh FAHEEM AHMED Versus DIRECTOR, DIRECTORATE GENERAL OF INTELLIGENCE AND INVESTIGATION-FBR Appeal No.K-1074 of 2016, decided on 27th March, 2017. (a) Customs Act (IV of 1969)--- ----S. 194-A(1)(4)---Appeal against order-in-original passed by Collector of Customs (Adjudication)---Non-submission of counter affidavit by the (respondent) Authority---Effect---Appeal, in circumstances, could be allowed on the short point of not controverting the affidavit submitted by the appellant on the facts and grounds of the case, confirming that the deposition made by and on behalf of the appellant in the memo. of appeal and affidavit were deemed to be true and correct and no controversy was left behind with regard to the fact of the case---Non-submission of counter affidavit whether by will or default, therefore, would forfeit the respondent's right to deny assertion made in the affidavit. [Case-law referred] (b) Customs Act (IV of 1969)--- ----Ss. 2(s), 9, 10, 168 & 177---SRO No.486(I)/2007, dated 9-6-2007---SRO No.188(I)/83, dated 12-2-1983---"Smuggling"---Delegated powers of Officials of Directorate General of Intelligence and Investigation---Scope and extent---Officials of Director, Directorate General of Intelligence and Investigation, were delegated powers through SRO No.486(I)/2007, dated 9-6-2007 for functioning as Officer of Customs within the territory of Pakistan for thwarting smuggling---Said powers were not unfettered; their jurisdiction was in fact restricted to the area falling outside the area expressed in Ss.9 & 19 of the Customs Act, 1969 and beyond 5 Kilometers of the border of India and Iran as expressed in S.177 of the Customs Act, 1969 and Notification S.R.O. No.188(I)/83, dated 12-2-1983---In the present case, officials seized the goods from an open warehouse situated within the city---Goods stored in warehouse, did not fall within the ambit of "smuggling" as only either imported or purchased goods were invariably stored in the warehouse, well supported with valid and lawful legal import documents and purchase receipt/bills, available with the person, who warehoused the goods---Seizure of goods from open warehouse, was without any lawful authority/jurisdiction which being of no legal effect, was void and ab initio. [Case-law referred] (c) Customs Act (IV of 1969)--- ----Ss. 162 & 163---Power to issue search warrant and to search and arrest without warrant---Search of an open ware house under S.163, Customs Act, 1969---Scope---Search under S.163 of the Customs Act, 1969 of open warehouse where appellant/importer's goods were warehoused---Every search under S.163 of the Customs Act, 1969, had 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 S.162 of Customs Act, 1969 from the Judicial Magistrate on the basis of application by Gazetted Officer of the Customs, stating the grounds of his belief that the goods liable to be confiscated or documents or things, while in his opinion, would be useful as evidence in proceeding under the Act and those were hidden in some secret place where search had to be made after having knowledge of the place which was earlier a guarded secret---Judicial Magistrate, after going through the application if felt appropriate, would issue search warrant which had to be executed in the same manner having the same effect as of search warrant issued under the Criminal Procedure Code, 1898---Requirement of issue of search warrant by the Magistrate, could be dispensed with under S.163 of the Customs Act, 1969, which empowered Assistant Collector of Customs or the other officer of like rank to make search without warrant, if he was satisfied that there was danger of removal of goods, if search warrant was obtained; 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---In the present case, the search had been conducted at the warehouse under S.163 of the Customs Act, 1969 by the subordinates of Directorate General of Intelligence and Investigation FBR (Anti-Smuggling) without recourse to the mandated requirement of S.162 of the Customs Act, 1969---Obtaining of search warrant under S.162 of the Customs Act, 1969, was pre-requisite without exception---Search conducted under S.163 of the Customs Act, 1969, without recourse to the mandated requirement of S.162, would render the same without lawful authority and jurisdiction and no superstructure could be built upon such search---Seizure notice and subsequent preparation of contravention report by the officer of Directorate General and issuance of show-cause notice and passing of order-in-original by Collector of Customs was as of no legal effect and as such void, ab initio. [Case-law referred] (d) Customs Act (IV of 1969)--- ----Ss. 91, 92, 168 & 171---Powers of Officials of the Directorate General of Intelligence and Investigation to inspect private warehouse---Scope---In the absence of enabling provision in the law, said officials were barred by law to ask or demand about the Goods Declaration or purchase bills/receipts of the warehouse goods---Proceedings, right from seizure to passing of order-in-original suffered from legal infirmity and as such were void ab initio. (e) Customs Act (IV of 1969)--- ----Ss. 2(s), 9, 10 & 177---Notification No. S.R.O. 118(I)/83, dated 12-2-1983---"Smuggling"---Scope---Goods in question should have been brought into or taken out of Pakistan either in breach of any prohibition or restriction for the time being, or by evading payment of customs duty and other taxes leviable thereon; goods should be either those specifically listed in the definition, or be notified by the Federal Government in the official gazette in case those were not freely available in the local market for purchase by the general public, or be brought into or taken out of Pakistan by a route other than one declared under Ss.9, 10 of the Customs Act, 1969 or from a place other than a customs station---In the absence of such perquisites case would not fall within the definition of "smuggling". Nadeem Ahmed Mirza(Consultant) for Petitioner. Arif Maqsood, S.I.O (for respondents) Date of hearings: 27th January, 2017. ORDER TAHIR ZIA (MEMBER JUDICIAL-II).---Through this order, I intend to dispose of appeal directed against Orders-in-Original No. 666/2015-2016 dated 20.04.2016 passed by the Collector of Customs (Adjudication-I) (here-in-after referred as respondent No. 2). 2. Briefly 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 1% on the selling of the goods. During the course of his business activities he received 120 drums of motor oil from M/s. Imran Ali Lubricant, Faisalabad against Bilty No. 603 dated 15.09.2015 of Messrs Sitara Al-Usman Goods Forwarding Agency, Quetta, imported vide GD No. 99819 dated 07.08.2015, 120 drums motor oil and 104 drums of base R.P.O (Rubber Processing Oil) vide Bilty No. 1453 of Messrs Pakistan Good Transport Company, Quetta from Messrs Ali Enterprises, Quetta imported vide GD No. 2012 dated 04.05.2015, 120 drums base oil vide Bilty No. 1466 dated 15.09.2015 of M/s. Pakistan Good Transport Company, Quetta from Messrs Gul Brothers, Quetta imported vide GD No. HC-841 dated 14.09.2015 and 125 drums of calcium based grease from Messrs Saad Enterprises, Quetta, upon reaching those at Karachi the appellant warehoused those at Messrs H.Akber Open Ware House, situated at Plot No. D-267. Shershah, S.I.T.E., Karachi on agreed warehousing charges between the appellant and warehouse owner. The appellant out of stored goods sold 32 drums of motor oil, 30 drums of base oil, consequent to which 208 drums of motor oil, 90 drums of base oil, 42 drums of R.P. Oil and 125 drums of calcium base grease were lying in the warehouse for sale. The official of Directorate General of Intelligence and Investigation-FBR (Anti-Smuggling) (here-in-after to be referred as respondent No. 1) on 18.09.2015 arrived at the warehouse and directed the warehouse owner that they intend to search the warehouse and upon finding of warehousing 208 drums of motor oil, 90 drums of base oil, 42 drums of R.P.Oil and 125 drums of calcium base grease, demanded bill of GD's against those. Since, no conditions are laid by the Government for the warehouse owners, not to warehouse the goods unless the person who desires to warehouse the goods supply to him either copies of Goods Declaration or purchase bills, he answered in negative. Nevertheless, he called the appellant, who informed the subordinate of respondent No. 1 that he warehoused the goods in question after arrival of those from Quetta through valid bilties and the goods in question are imported from Iran and were cleared from the MCC of Quetta after completion of all the codal formalities and payment of leviable duty and taxes. He further informed that at this very moment he is not in possession of relevant documents, but can be supplied later on. The official of respondent No. 1 detained the goods under the provision of Section 186 of the Customs Act, 1969. The appellant subsequently supplied the respective Goods Declaration and connected documents confirming that the goods were imported and cleared from MCC of Quetta as stated by him earlier, the officials refused to accept the documents as valid on one pretext and another and seized the goods in terms of 168(1) of the Customs Act, 1969 on the pretext of smuggling as defined in Section 2(s) ibid. The officials of respondent No. 1, thereafter prepared contravention report C.No.2121/DCI/Seiz/2015 and forwarded that to Respondent No.2, who issued Show-Cause Notice dated 04.11.2015. The appellant submitted reply dated 02.03.2016 through which he challenged the jurisdiction and powers of the respondent No. 1 and the act of search under section 163 directly without recourse to the mandated provision of 162 ibid and once again submitted respective documents substantiating the ownership of the goods. The respondent No. 2 however disregarded the arguments and documents and passed Order-in-Original dated 20.04.2016, through which he ordered outright confiscation of the goods after forming opinion that the goods are smuggled as defined in section 2(s) punishable under clauses (8) & (89) of subsection (1) read with section 2 of section 156 ibid and Section 3(1) of Import and Export (Control) Act, 1950, in addition to imposition of penalty of Rs. 300,000/-. 3. The appellant filed appeal on the basis of grounds enumerated therein. No cross objection under subsection (4) of Section 194A have been filed by the respondent No. 1 himself or through his subordinate, instead comments dated nil were filed by SIO Mr. Arif Maqsood dated nil signed by Madam Sadia Sadaf, Deputy Director, which are placed on record of the case for consideration and perusal. 4. Rival parties heard case record examined. Prior to dilating upon the merit of the case, it is of vital importance to subscribe here that no counter affidavit has been filed by the respondent No. 1, resultant, the instant appeal can be allowed on the short point of not controverting the affidavit submitted by the appellant on the facts and grounds of the case, confirming that the deposition made by and on behalf of the appellant in the memo of appeal and affidavit are therefore, deems to be true and correct and no controversy is left behind in regards to the fact of the case. Non submission of counter affidavit whether by will or default forfeit the respondent No. 1 right to deny assertion made in the affidavit. This proposition of law stood validated from the following judgments of the Superior Judicial Fora reported as (1974) 94 ITR 1, PLJ 1979, 71 and 72 (sic), 1986 CLC 745 Kar., (1984) 146 ITR 140, 1986 PTD (Trib.) 119, 1986 CLC 1119, 1986 CLC 1408 Kar., 1991 MLD 1243, PLD 1992 SC 317, 1993 SCMR 662, PLD 1996 Karachi 68, and PLJ 197 (sic) Quetta 66 and 2003 PTD 2118. 5. Reverting to the core issue, it is my considered view that indeed the officials of respondent No. 1 are delegated powers through S.R.O. No. 486(I)/2007 dated 09.06.2007 for functioning as Officer of Customs within the territory of Pakistan for thwarting the maniac of smuggling. However, these powers least give them unfettered powers for playing havoc with the business community, their jurisdiction is in fact restricted to the areas falling outside the area expressed in sections 9 and 10 of the Customs Act, 1969 and beyond 5 kilometers of the border of India and Iran as expressed in section 177 of the Customs Act, 1969 and Notification S.R.O. No.188(I)/83 dated 12.02.1983. In the case under scrutiny they seized the goods from an open warehouse situated within the city. Goods stored in warehouse does not falls within the ambit of smuggle as only either imported or purchased goods are invariably stored in the warehouse, well supported with valid and lawful legal import documents and purchase receipt/bills available with the person, who warehoused the goods. However, it is not mandated under law to supply the copies of those to the warehouse owner as there exist no enabling provision either in the Customs Act, 1969 or notification issued to the said fact by the Federal Government. My opinion stood vindicated from the Hon'ble Supreme Court of Pakistan in reported judgment PLD 1991 SC 630 Collector of Customs (Preventive) v. Muhammad Mehfooz that "Federal 'B' Area in which the raid was made and the subject goods were seized was not included within the limit of Port of Karachi. There is no doubt about the appointment of Collector of Customs, Deputy Collector of Custom and Assistant Collector of Customs and other Officer of Customs infact had jurisdiction only in port area and not in entire Karachi". Therefore, seizure of appellant's goods from Messrs H.Akber Open Warehouse situated at Plot No. D-267, Shershah, S.I.T.E., Karachi is without any lawful authority/jurisdiction. Hence, of no legal effect, as such void and ab-initio. 6. It has also been noticed that the case has been made by the Official of respondent No. 1 on the basis of search under section 163 of the Customs Act, 1969 of the Messrs H.Akber Open Warehouse situated at Plot No. D-267, Shershah, S.I.T.E., Karachi, where appellant goods were warehoused. Every search under Section 163 of the Customs Act, 1969 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 Customs Act, 1969 prior to deliberation on the spirit and essence of these:-- 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) Whenever any office of Customs not below the rank of an Assistant Collector of Customs, or any other officer of like rank duly employed for the prevention of smuggling having reasonable grounds for believing that any goods liable to confiscation or any documents or thing which in his opinion will be useful for or relevant to any proceeding under this Act are concealed or kept in any place and that there is danger that they may be removed before a search can be effected under section 16, he may 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 search goods, documents or things in that place. (2) An officer or person who makes a search or causes a search to be made under subsection (1) shall leave is a signed copy of the aforementioned statement in or about the place reached and shall at the time the search is made or as soon as practicable thereafter, deliver further more a signed copy of such statement to the occupier of the place at his last known address. (3) All searches made under this section shall be carried out mutatis mutandis in accordance with the provision of the Codes of Criminal Procedure 1898 (Act V of 1898) (4) Notwithstanding anything contain in foregoing subsection and subject to previous authorization by an officer of customs not below the rank of an Assistant Collector of Customs, any officer of the Customs or any person duly empowered as such may be, with respect to an offence related to exportation of such goods as the Federal Government may, by notification in the official Gazette specified in this behalf- (a) Arrest without warrant any person concerned in such offence or against whom reasonable suspicion exist that he is about to be concerned in such offence; (b) Enter an search without warrant any premises to make an arrest under clause (a) or to seize any goods which are reasonably suspected to be intended for exportation contrary to any prohibition or restriction for the time being enforce, and all documents or things which in his opinion will be useful for relevant to any proceeding under this Act; and (c) for the purpose of arresting, detaining or taking into custody or preventing the escape of any person concerned or likely to be concerned in such offence, or for the purpose of seizing or preventing the removal of any goods in respect of which any such offence has occurred or is likely to occur use or cause to be used such force to the extent of causing death as may be necessary. (5) The provision of subsection (4) shall apply only to the areas within 5 miles of the land of frontier or Pakistan, and within 5 miles belt running along the sea coast of Pakistan. (6) No suit, prosecution or other legal proceeding shall be instituted except with the previous sanction in writing of the Federal Government against any person in respect of anything done or purporting to be done in exercise of the power conferred by subsection (1) or subsection (2) or, in areas specified in subsection (5) by subsection (4). 7. The requirement of issue of search warrant by the Magistrate could be dispense with under Section 163 of the Customs Act, 1969, which empowers Assistant Collector of Customs or any other Officer of 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 apprehend 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. In the instant case the search has been conducted in H.Akber Open Warehouse situated at Plot No. D-267, Shershah, S.I.T.E., Karachi under section 163 of the Customs Act, 1969 by the subordinates of respondent No. 1 without recourse to the mandated requirement of section 162 ibid., which was indispensible by virtue of the fact that the drums warehoused could had not be removed by the appellant in very shot span of time because for loading on a truck lifter is required, which could not be obtained on immediate basis, nor drums could be loaded manually as stated here-in-above. Therefore, obtaining of search warrant under Section 162 was pre-requisite without any exception. Search conducted under Section 163 directly without recourse to the mandated requirement of Section 162 render it without lawful authority and jurisdiction and no super structure can be built upon such search. Hence, the seizure notice and subsequent preparation of contravention report by the Officers of respondent No. 1 and issuance of show-cause notice and passing of order-in-original by the respondent No. 2 as of no legal effect and as such void and ab-initio and this stood fortified from the reported judgments of superior judicial fora at 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. 8. That irrespective of the above dicta, the Officials of respondent No. 1 are not empowered under any provision of the Customs Act, 1969 to approach any private warehouse with the exception of custom bonded warehouses for inspection of the warehouse/stored goods by the public on payment of ware house charges and neither they are empowered to ask either from the owner of the warehouse or from the person whose goods are warehoused in that, as no provision in this regard is available either in the Act or notification. Therefore, in the absence of availability of enabling section they are barred by law to ask or demand about the Goods Declaration or purchase bills / receipts of the warehoused goods, rendering their act of demanding the corroborated documents corresponding to the warehoused goods and this has been held on many occasion by the superior judicial fora in the unreported/reported judgments relied upon by the appellant. 9. That I am also at loss to digest the fact that despite of searching warehouse and preparation of seizure report they had not served on the owner of the warehouse seizure notice as mandated under section 168(1) of the Customs Act, 1969 and the notice under section 171 ibid. Likewise, mentioning the name of the appellant in the seizure report, no notice either under sections 168(1) and 171 has been served on him, which is prerequisite prior to preparation of seizure report. The reason emerged from the perusal of the case is that, seizure notice under sections 168(1) and 171 of the Customs Act, 1969 were intentionally not served on the owner of warehouse because the seizure so conducted was unlawful as no enabling provision exist in the Customs Act, 1969 to do so in addition to demanding of Goods Declaration or purchase receipts/bills from the owner of the warehoused goods, resultant he is not under obligation to ask for those and supply to the Officials of respondent No. 1. Even otherwise if the case would had been framed against warehouse owner, the adjudicating authority would had thrown the same on their face being of no substance, lawful authority and jurisdiction. Similarly, notices to the appellant was not served as it was in the knowledge of the Officials of respondent No. 1 that their act of terming the warehoused goods as smuggled has no legs to stand in the presence of the submitted documents, confirming that the goods were lawfully imported from Iran and cleared by MCC of Quetta and thereafter transported to Karachi by the importer to their agent for selling in the local market on their behalf and thereafter remit the sale proceed after deducting his commission and transportation expenses and so the warehousing. The case has been framed mala fidely and this stood validated from non serving of mandatory notices in terms of sections 168(1) and 171 of the Customs Act, 1969, rendering the entire proceeding right from seizure to passing of order-in-original suffer from legal infirmity and as such void and ab-initio as held by the Superior Judicial Fora in the reported judgment relied upon by the appellant. 10. That as regard to the determination of the fact that as to whether the goods warehoused at H.Akber Open Warehouse, Shershah, S.I.T.E., Karachi by the appellant are smuggled or not, it is beneficial to reproduce the provision Section 177 of the Customs Act, 1969 and Notification S.R.O. 118(I)/83 dated 12.02.1983 with the exception of definition of smuggle, which the…
Read the unabridged text and precedent citation network on Al Wakeelo Legal Research Platform.