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Petitioner: Messrs AL-QUTAB ENTERPRISES VS Respondent: ADDITIONAL COLLECTOR CUSTOMS and another
Court Name: Customs Appellate Tribunal Judge(s): Muhammad Nadeem Qureshi, Ch. Naimat Ullah, Ghulam Ahmed Title:Messrs AL-QUTAB ENTERPRISES vs ADDITIONAL COLLECTOR CUSTOMS and
another Case No.: Customs Appeal No,K-1199 of 2011 Date of Judgment:2013-07-08 Reported As: 2013 PTD (Trib.) 1913 Result: Order accordingly Judgment ORDER ' GHULAM AHMED, MEMBER (TECHNICAL-II).---The appeal, filed by the appellant, is directed against Order-in-Appeal No,5738 of 2011 dated 27-8-2011 passed by the Collector of Customs (Appeals), Karachi maintaining the Order-in-Original No, 1 of 2011 dated 10-1-2011 passed by the Additional Collector of Customs, (Adjudication) , Model Customs Collectorate of PaCCS, Custom House, Karachi. 2. Brief, facts of the case as stated in the impugned order are that the Karachi office of the Directorate of Intelligence and Investigation-FBR (hereinafter the Directorate General) reported to have unearthed unlawful removal of 9901 packages/cartons/cases of imported goods such as Food staff, electronic goods etc. From Qasim International Container Terminal (QICT) by a syndicate of fraudsters in connivance with the management of QICT. As per details provided in the impugned order the syndicate consisted of Naeem Qureshi, Faisal Shahzad, Jammal Durrani, Shakoor Alam, Aslam Niazi various importers such as the appellant in whose name the 'above mentioned goods had been imported other conspirators/purchasers of the stolen/illegally removed goods and certain Customs/PRAL officials. During the interrogation by the staff of the Directorate General the main accused persons i,e, Naeem Qureshi, Faisal Shahzad and Jamal Durrani disclosed the details of how the persons/ entities named above had conspired and connived with each other in unlawful removal of the goods from the port premises by depriving the Exchequer of its legitimate revenue in duty/taxes to the tune of tens of millions of rupees. All the culprits including the appellant were accordingly charged through various show cause notices, under the relevant provisions of, the Customs Act, 1969 (hereinafter the Act). The respondent No, 1,
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after taking into consideration the explanations submitted by the appellant and the Directorate General's comments thereon held vide the impugned order that the charges against the appellant stood established. He passed the impugned order in respect of Show-cause Notice No, MCC /SCN- 13/Cont, Appg-11/34-A/KHI/A DJ / PaCCS/2010 dated 10-1-2011 and applied the same mutatis mutandis to the other show cause notices. He imposed a penalty of Rs,26.0 millions on the appellant. The part of the impugned order relating to the appellant and other importers is reproduced as under:-- "The Directorate General, Intelligence and Investigation-FBR, Regional Office, Karachi also made out thirty other identical cases, in which the facts are identical and the respondents are mostly the same except that importers/consignees are different in different cases. Replies from some of the importers were received such as Messrs Al-Qutab Enterprises, Messrs Chaudhry Brothers and Co. And Hafiz Brothers and Co. These importers deny any link with goods in question and maintain that the goods in question were not imported by them and their names have been used by other importers or clearing agents. However, it is observed that these importers have been charged in these cases on the basis of documents such as invoices, bills of lading, goods declarations and delivery orders etc., which bear their names. Thus, these importers cannot be alienated from these cases and the charges against them are established and they are liable to be penalized under clauses 1, 9, 14, 14A, 43, 47, 63, 77, 86, and 90 of section 156(1) of the Customs Act, 1969. In some of the cases becomes other persons who have been established as actual importers as they carried out the negotiation or booked the goods. These persons mentioned at sub-serial 4 of each of Serial Nos. 4,10 and 23 and sub-serial 5 of each of S. Nos. 21 and 30 of the table below, have also been established as importers and penalized under aforesaid provisions. This order therefore, also applies mutatis mutandis to all these thirty cases being identical in nature and involving identical roles and findings in respect all the respondents, with penalty being imposed under this order." 3. The appellant against Order-in-Original No, 1 of 2011 dated 10-1-2011 filed an appeal before the learned Collector of Customs (Appeals), Karachi who disposed it vide order dated 27-8-2011, the operative Para 7 of the impugned order read as under:- "I have thoroughly examined the entire case record and have given very careful consideration to the arguments advanced before me. In terms of the provisions of law contained in section 195-B of the Act, the Collector (Appeals) is not allowed to proceed with an appeal unless the appellant deposit the adjudged amount of duty/taxes and/or penalty or the Collector (Appeals) himself dispense with such deposit. The aforesaid provisions of law are reproduced as under:-- "195-B Deposit, pending appeal of duty demanded or penalty levied.---Where in any appeal under this Chapter, the decision or order appealed against relates to any duty demanded in respect of goods which are not under the control of the customs authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, pending the appeal deposit with the proper officer the duty demanded or the penalty levied. [Provided that where in any particular case the Collector (Appeals) or the Appellate Tribunal is of the opinion that the deposit of duty demanded or penalty levied would cause undue hardship to such person, the Collector (Appeals) or, as the case may be, the Appellate Tribunal may dispense with such deposit subject to such condition as he or it, may deem fit to impose so as to safeguard the interest of revenue.] [Provided further that an order dispensing with such deposit shall without effecting the appeal, cease to have effect on the expiration of a period of six months following the day on which it is made unless the appeal is finally decided earlier and nothing in the order dispensing with such deposit which has ceased to have effect shall debar the appropriate officer to recover the amount of the duty demanded or penalty levied.]
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' It is thus, clear that deposit of the adjudged amount of duty/taxes as well as penalty is a mandatory condition for proceeding further with an appeal unless the deposit of duty/taxes and/or penalty is dispensed with by the Collector (Appeals) himself in terms of the first proviso to section 195-B of the Act. In turn, the Collector (Appeals) can dispense with such deposit only when there exists a strong reason for the same. In the instant case, however, no such reason exists there is strong documentary evidence on record to the effect that the impugned goods involving millions of rupees in duty/taxes which had been illegally removed from the port by employing fraudulent means had been actually imported by the appellant. Moreover, the appellant had not joined investigation despite a number of summons issued to him by the Director General, therefore, there is no doubt that the appellant has come with unclean hands. Under the circumstances, I rule that there is no justification for dispensing with the deposit of the adjudged penalty amount of Rs,26.00 millions imposed on the appellant. In fact any such a dispensation would be unfair to the Exchequer and would tantamount to encouraging fraudsters. I therefore, reject the appeals for non-compliance of the provisions of section 195-B of the Act." 4. The appellant has now challenged the above order by way of this appeal on the strength of ground; taken in the memo of appeal reading inter alia:-- ' The respondent No, 2 in order dated 27-8-2011 failed to distinguish or discuss the law including citation, instead made academic discussion of personal nature in regard to fiscal statute, which is not sustainable in comparison to the Law and the judgments of Hon'ble superior Courts of Pakistan. Hence he erred in passing the order and it is not sustainable in law as this is clearly contrary to the Law/Rules, being erroneous and not in consonance of law, equity and natural justice and the said fact further stood validated from the following:-- (i) That as discussed in para 10 of the facts that on both the dates i,e, 26-3-2011 and 14-4-2011 of hearing, none of the officials of DG (I&I)-FBR appeared for hearing on the given time and in regard to the date of hearing para 3 of order is relevant. Resultantly, the hearing was adjourned and the Investigating Officer handed over his comments in the passage of the office of respondent No, 2 on 14-4-2011. Subsequent to that no hearing date was fixed as no communication was received by the appellant consultant. Resultant, the hearing date i,e, 13-5-2011 mentioned in the first page of order is being inserted by the respondent No, 2 himself. Hence, the question of arguments incorporated in para 5 does not arise at all and this stood re-verified from the comments of DG (I&I)-FBR on grounds of appeal and additional grounds of appellant which are silent in this regard, reference is made to para 4 of order-in-appeal. It seems that hearing on 13-5-2011 has been fixed by the respondent No, 2 in file only without intimation to the appellant and only officers of DG (I&I)-FBR were called by the respondent No, 2 for submitting the dictated arguments as per the will of respondent No, 2. Confirming that the arguments incorporated in para 5 by the respondent No, 2 himself for obtaining tool for rejecting the appeal despite merit allowing on the basis of grounds of memo. Of appeal and rejoinder submission/arguments. The said act of respondent 2 renders the order-in-appeal based on mala fide and intellectual dishonesty, hence ab inito, null and void. (ii) That taking refuge under the provision of section 195-B of the Customs Act, 1969 for rejecting the appeal by the respondent No,2 is manifestly erroneous , misconceived, illegal and above all discriminatory as the said provision of the Act empowers him to dispense with the deposit of imposed penalty for the sake of justice and fair-play and mitigating the caused undue hardship to such appellant, irrespective of its expression, which read as "the person desirous of appearing against such decision or order against an issue or a matter wherein goods are not under control of customs authority shall pending the appeal deposit with the proper officer the duty demanded or penalty levied". (iii) That even otherwise if the person is not desirous of depositing the adjudged amount of duty or imposed penalty, he is not barred under section 193 of the Customs Act, 1969 and neither the
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Appellate Authority from hearing the appeal for issuance of decision on merit as the right of appeal granted to an aggrieved person against any decision or order passed under the provision of law as mentioned therein by customs officer within 30 days under the proviso of section 193(1) of the Customs Act, 1969. The right of appeal is an in-alienable right guaranteed under the Constitution of Islamic Republic of Pakistan and cannot be made ineffective/redundant on account of non- deposit and the Collector (Appeal) is bound to grant opportunity of personal hearing to the parties to the appeal in terms of subsection (2) of section 193-A and then pass an order "as he thinks fit to confirm, modify or annul the decision or order appealed against in terms of Subsection (3) of Section 193-A ibid. The prerequisite for passing "such an order as he thinks fit" is only "after giving both parties to the appeal an opportunity of being heard", (iv) The provision of section 195-B of the Customs- Act, 1969 is synonymous to the provision of pre- revised subsection (4) of section 45-B of the Sales Tax Act, 1990, so as far as it relates to deposit of adjudged amount before presenting appeal and it is directory in nature and not mandatory. Hence, on the basis of non-deposit of the adjudged amount, the appeal cannot be dismissed straight away as it is nullity of Quran and Sunnah and Constitution of Islamic Republic of Pakistan, 1973. No consequence has been laid down in section 195-B regarding the fate of appeal, in case of non deposit of adjudged amount thus it cannot be taken that non-deposit would automatically mean rejection of appeal in "Limine". The same view has been taken by the Customs, Excise and Sales Tax Appellate Tribunal in its reported judgment 1993 CLC 1405, 2005 PTD (Trib.) 731 Messrs Bilal Fabric Ltd. And 9 others v. Collector of Customs, Excise and Sales Tax and Hon'ble High Court vide its judgment dated 10-4-1993 Writ Petition No, 1058 of 1993 titled as Messrs Meaple Leaf Cement Factory, 1993 MLD 1645; PTCL 1993 CL 686(sic), 1993 CLC 1405. Beside disposing appeal on the said basis is contravention to the Article 10A of the Constitution of Islamic Republic of Pakistan. Beside the order of the respondent No, 2 deprived the appellant from fair trial despite mandated under Article 10A of the Constitution of Islamic Republic of Pakistan. (v) That from the referred in above commentary, it is confirmed without any ambiguity that the condition laid down in section 195-B is directory in nature and not mandatory. Hence, the respondent No, 2 was under obligation to ignore the provision of section 195-B of the Customs Act, 1969, which he does invariably in umpteenth order passed/issued by him, even otherwise, the provision has no binding force and least debar the Appellate Authority/Tribunal to dismiss the appeal on the pretext of non-deposit of imposed penalty as it defeats the injunction of Quran and Sunnah and the Articles of Constitution of Islamic Republic of Pakistan, 1973 and settled proposition of law by the judicial forums. (vi) That line 5 of para 1 of show cause notice itself proves the innocence of the appellant that he has no nexuses with the import of the impugned consignment as it reads as "12x40" containers from Port Muhammad Bin Qasim (instead of MCC of PaCCS against fake and fictitious goods declaration without payment of duties and taxes levied thereon" and lines 43, 44 and 45 of the said para, "wherein Collector, Collectorate of Port Muhammad Bin Qasim vide letter C.No,SI/MISC/15/2007/PQ-imports dated 15-11-2007 intimated that the clearance of containerized cargo is dealt with by Model Customs Collectorate of PaCCS" meaning thereby that nobody including the appellant can obtain clearance of containerized cargo unless he/they file online GD under Rule 433 of Sub-Chapter-II of Chapter XXI of the Customs Rules, 2001 with MCC of PaCCS and neither the GDs referred in the show cause notice has undergone the procedure prescribed in Rules 437 to 442 ibid. Whereas, against the said impugned containers the appellant had not filed any online GDs with the MCC of PaCCS, hence' allegations in regards to getting those cleared without following the laid down procedure is out of question as neither Shipping Company issues delivery order and nor Terminal effect the deliveries in the absence of transmitted clearance message as per the expression of clause (ii) of Sub-Rule (c) of Rule '556 of Sub-Chapter XIV Custom Rules, 2001.
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Resultant, the allegation levelled in the impugned show cause notice are without any substance as these are not supported with incriminating evidence confirming in material particular involvement of appellant. (vii) The line 9 of para 2 also states that "no Gate out, even took place against the listed index No, GDs were filed and processed against the same". For filing online GD neither IGM No, nor index No, is required, rather are filed after filing of VIR online with PaCCS by the shipping companies. When no online GDs were filed by the appellant and no clearance message under section 83 of the Customs Act, 1969 and Rule 442 of Sub-Chapter. III of Chapter XXI of Customs Rules, 2001 were transmitted to appellant, the question of gate out least exist. The said fact further stood substantiated from line 67 of para 2 which states "against fake and fictitious goods declaration through Messrs N.J. International CHAL 2392, Karachi and Messrs Durrani Traders." These two names are alien to the appellant and the said fact further stood substantiated from line 93 of the said para reading as "accused Faisal Shahzad and Naeem Qureshi arranged the phony and dubious firms of Lahore" which carries the address of some Ayesha Heights in lines 234 and 235 of para.2 reading as "the inhabitant of the locality has not identified the Ayesha Heights in the locality. Therefore the firm is bogus with fictitious address". To the contrary the appellant company is neither phony non dubious rather legally registered company as is evident from NTN/STR Certificates and issuance of User ID by the MCC of PaCCS and operates at 214, Qadri Chamber, 5 Mcload Road, Lahore. (viii) The emphasis laid upon by the Investigating Officer in the comments are that the applicant should own the consignments, which he has not imported and in regards to the reason for non- appearance is also given in the reply to the notice. Despite of non-appearance by the appellant, his representative appeared before the Investigating Officer and submitted all the relevant documents listed at Serial Nos. 3(i), (ii), (iii), (iv) of notice corresponding to appellant imports, excluding the impugned consignments as evident from letter dated 22-8-2008. With the appearance of appellant representative and submission of documents, the stance of non- appearance of appellant stood nullified. (ix) That till the time of filling F.I.R., Interim/Supplementary and Final -Challans the Investigating Officer has not implicated the appellant by name despite of the fact the agency was supplied with the copies of NTN and Sales Tax Registration Certificate by the appellant as evident from Exhibit " C & D" of the memo. Of appeal, this was done due to the reason that the agency was for the simple reason that the agency was well aware of the fact that the company which imported the impugned containers was not infact owned by the appellant instead was fake and phony firms made on papers for fulfillment of their malicious design by the accused listed at Serial No, 1 of F.I.R./Interim/ Supplementary and Final Challan along with his accomplices listed at Serial Nos. (ii) to (xv) of F.I.R. And Serial Nos.(ii) to (xiii) of final challan and for that reason the agency has not shown the applicant in the final challan under any category i,e, even "Absconder" either by his name or his company. (x) That the stance of the appellant stood validated if the Hon'ble Tribunal peruses the final challan submitted in the Hon'ble Court of Special Judge (Customs and Taxation) Karachi on 2-7-2009, the name of appellant or his company appears nowhere. Instead the F.I.R., interim, supplementary at relevant paras and Para 10.26 of the final challan with clarity states that "accused Minhaj Ali further disclosed that during the month of March 2007 accused Zahid Islam Afridi approached him and delivered two bills of Lading No, 512188282 and 854013643, in respect of 02x40 ft container Nos. MSKU9940850 and MSKU9183989 imported by Messrs Al-Qutub Enterprises, Lahore and asked to deposit securities with concerned shipping lines through Bank pay order and get the delivery orders and gate passes from Messrs Maersk Pakistan (Pvt.) Ltd., Karachi. In response accused (Minhaj Ali) deposited securities vide pay Order No, 1822760 against aforesaid 2 containers, issued by Messrs Bank Al-Habib Ltd. Karachi, Karachi, and
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received Delivery orders and gate passes from the aforesaid shipping lines which he handed over to Zahid Islam Afridi. (xi) The challan further states at Para 10.27 that During the interrogation accused Zahid Islam Afridi, disclosed that he is proprietor of Messrs Azad Afridi Goods Transport Company, situated at Hawksbay Road, Karachi. Four years back he established business terms with accused Muhammad Naeem Qureshi, when he was providing his transport company's services to Messrs Imex International Logistics, Islamabad who was clearing containerized cargo for NATO Forces based at Afghanistan through accused Muhammad Naeem Qureshi, who at that time was representative of Messrs Imex International Logistics, Islamabad at Karachi. During that period accused Muhammad Naeem Qureshi started his commercial import also and in connection with the import of 12 containers imported in the name of style of Messrs Al-Qutub Enterprises, Lahore accused Muhammad Naeem Qureshi delivered him two original bills of lading at his office situated at 1- Marium Palace, Bohri Road, Opposite Customs House, Karachi which he delivered to accused Minhaj Ali for deposit of securities and subsequent issuance of Delivery orders and Gate passes, from the concerned shipping lines which were subsequently given to him (Zahid Islam Afridi), upon receipt of these Delivery Orders and Gate Passes from accused Minhaj Ali he delivered the same to accused Muhammad Naeem Qureshi. After that Muhammad Naeem Qureshi arranged the clearance and transportation of these containers from QICT to a private container yard namely Z.K. Niazi Container Yard situated at Hawksbay Road, Maripur Road, Karachi to further transport these containers to Lahore, accused Muhammad Naeem Qureshi contacted accused Zahid Islam Afridi and on his instructions he transported these containers at the required destinations at Lahore, as told by accused Muhammad Naeem Qureshi and the transportation charges of these containers were paid to accused Zahid Islam Afridi by accused Muhammad Naeem Qureshi. (xii) That there is nothing in the challan whether the impugned containers were actually transported to Lahore for delivery to the appellant as alleged. The agency is well aware of the fact that the containers never ever were transported to Lahore, instead were disposed off at Karachi, if the containers would had transported to Lahore and were delivered to the appellant company addressee. What stopped the agency for not incorporating the said fact in the challan. The agency in fact is shooting in the dark and trying to implicate the appellant by hook and by crook in the crime, which he has not committed. The fake and phony company Messrs Al-Qutab Enterprises which imported the impugned containers were not the appellant company as the same was not operating at 214, Qadri Chamber 5 Mecload Road, Lahore instead at Ayesha Heights, and the said fact proves from the last two fines of Para 10.23 of the Final Challan reading as "the inhabitant of the locality has not identified the Ayesha Heights in the locality therefore, the firm is bogus with fictitious address". (xiii) That it is appropriate for the appellant to add further that after hearing on 14-4-2011 before the Appellate Authority the Investigating Officer forwarded a call notice dated 21-4-2011 to the appellant despite not warranted under the law as its amounts to mala fide to issue the said call notice at this belated stage. It is interesting to note from notice that the Investigating Officer once again asked the appellant to bring all relevant documents (in original) in connection with the subject) case, instead of communicating and forwarding copies of CR Nos. Through which the consignment in question were allowed clearance by the PaCCS in terms of sections 80 and 83 of the Customs Act, 1969 read with Rules 438 and 442 of Sub-Chapter III of Chapter XXI of the Customs Rules, 2001. (xiv) That since the call notice was devoid of legal infirmity the appellant forwarded reply to the Investigating Officer vide letter dated 29-4-2011 with the request to supply incriminating documents relied upon i,e, copies of CANs showing his company NTN and STRN for the confirmation that the clearance of the impugned container were obtained by the appellant. In the absence of
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compliance of the mandated requirement of law, the Investigating Officer was advised to first find out some material from the documents available with him corresponding to the subject containers or the statements of the accused persons pointing finger at the appellant and then approach him with the pointation of irregularity or illegality. Law does not permit him for making indiscriminate, roving or fishing inquiries irrespective of the facts whether any determination of legalities or illegalities in import made by appellant documents of which has already been supplied to the agency As regards the imported containers of the F.I.R./Show Cause Notice, these were not imported by the appellant and as such he is not answerable for the legality or illegality of those. The Investigating Officer was also forewarned through not to forward such type of letter of personal appearance…
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