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Petitioner: FEDERATION OF PAKISTAN and others VS Respondent: SAMAN DIPLOMATIC BONDED JUDGMENT
Court Name: Sindh High Court Judge(s): Gulzar Ahmed, Shabbir Ahmed Title:FEDERATION OF PAKISTAN and others vs SAMAN DIPLOMATIC BONDED
JUDGMENT
Reported As: 2004 PTD 1189 Result: Order accordingly Judgment JUDGMENT SHABBIR AHMED, J.---Through this appeal, the appellants impugned the judgment and decree, dated 25-11-2002 passed by the learned Judge on Original Side in Suit No,706 of 2002 filed by the respondent against the appellants. By the impugned decree, show-cause notice and the order passed in adjudication proceedings in pursuance thereof passed by the appellant No,4 were declared to be without jurisdiction and void. Appellant No,3 was directed to renew the licence of the respondent forthwith. The appellant No,1 was also directed to issue import permit to the respondent immediately. The appellants Nos.3 and 4 were further directed to allow the respondent to continue In-bonding of the goods and not to charge any penal surcharge for the custody of the goods in- bond from the respondent. The appeal has arisen in the following background:-- The respondent is a licence holder of Diplomatic Duty Free Bonded Warehouse issued by the appellant No,3 for the import of different brands of liquor renewed from time to time and the validity of last renewal was up to 30-6-2000. On its expiry the application for renewal was submitted on 20-7-2000 by the respondent. During the validity of the licence, the respondent imported two consignments of Scotch Whisky, from Glasgow on vessel 'SIMAR MADANto Karachi detailed as follows:--- (a) First consignment consisting of 1x20 STC 714 cases of Scotch Whisky reached Karachi Port vide IGM No, 518 of 2000, dated 30-3-2000. (b) Second consignment consisting of 1 x 20 STC cases of Scotch Whisky reached at Karachi Port vide IGM No, 518 of 2000, dated 30-3-2000.
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The respondent requested the appellant No,4 for permission to in-bond the goods which was granted for the period of one year. It was also the case of the respondent that licence is renewable by the appellantsthe normal course of business and in case of any serious allegation against the licencee, the same cannot be cancelled without proof of the charge. According to the respondent, the appellant No,3 kept pending the matter of renewal of licence, without any reason with the result that the respondent was not able to operate the bonded warehouse, which is causing colossal loss as the goods imported are lying in the bond unutilized. It was also their case that import permits are issued by the appellant No,1 in routine either when the goods are on their way or when,it reach in Pakistan. It was also the case of the respondent that on arrival of the goods they requested the appellant No,1 for issuance of import permit which was delayed on one or the other pretext. Without the import permit, the respondent was not allowed to clear the goods. It was further their case that in order to create a new pretext for victimizing and harassing the respondent, the appellant No,3 issued a show-cause notice on 18-12-2000 alleging that the respondent with a view to under-value the invoice, had tampered with the same and printed the words US $ instead of the words GBP. The show-cause notice contains the fact that the Consulate of Pakistan in Glasgow has also confirmed that the value of the invoices were in Pound Sterling instead of US $ when the importer submitted the same for attestation. The respondent pleaded that the allegation in the show-cause notice was without substance as the respondent was not be benefited in any way by tampering with the documents and there was no loss to public exchequer by under-invoicing. It was their further case that the inquiry was completed by the appellant No,4 but no decision was given till the filing of the suit. The appellant No,1, did not issue import permit causing heavy losses to the respondent. As a consequence thereof, the renewal of licence for operation of the Diplomatic Duty Free Bonded Warehouse also remained stuck-up. Hence the suit was filed by the respondent for following reliefs:-- (a) To grant mandatory injunction requiring the defendant No,3 to renew the license of the plaintiff without any further delay; (b) to grant mandatory injunction requiring the defendant No,1 to issue the Import Permit immediate:y; (c) declare that the defendants have erred in concluding that the plaintiff has tampered with the invoices, dated 25-2-2000 and 28-2-2000; (d) declare that the action of the defendant No, 5 in issuing the show-cause notice is illegal, mala fide and without jurisdiction; (e) direct the defendants Nos.3 and 4 to allow to plaintiff to continue in-bond of the goods, as the designated period of one year is about to expire; (f) direct the defendant Nos. 3 and 4 to charge any penal surcharge from the plaintiff for the custody of the goods in the bond. The appellant No,1 in their written statement had taken the plea that the terms and conditions laid down in the office memorandum, dated 29-9-1992 for the import of liquor by Diplomatic Duty Free Bonded Warehouse was subject to inter alia, attestation of invoices by the Pakistan Embassy in the country of export. Their plea was that the respondent tampered with the value of the goods in the relevant invoices by erasing the original entries indicating the currency in Great Britain Pound and replacing it with US currency with a view of under-value the import. It was also pleaded that in order to confirm that the respondent has resorted to forgery/tempering with the invoices, the appellant No,2 sent relevant invoices to Vice Consulate of Pakistan in Glasgow for verification, who confirmed that all the invoices attested were in Pound Sterling. And that the respondent had fraudulently erased the original currency Unit in GBP and replaced it with the US $ in order to undervalue the imports. It was also pleaded that as per licence issued by the appellant No,3 the respondent was eligible to keep the goods worth not exceeding Rs,5 million Duty Free. Since the
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respondent had indulged in forgery and tampered with invoices to misuse the said facility, the appellant did not grant the import authorization for liquor against the forged and tampered documents. The appellant No,2 was also informed about the forgery committed by the respondent with a request to cancel their licence. The appellants Nos.2 to 4 in their written statement pleaded that the respondent committed an act of misdeclaration in the invoice value, an offence under section 32 of the Customs Act, punishable under clause 14 of section 156 ibid, therefore, show-cause notice was issued. Their further plea was that the respondent instead of contesting the matter, filed the suit with intention to pressurize the appellant. The filing of application for renewal by the respondent and report with regard to mis- declaration and forgery in the invoices value, by appellant No,1, were admitted, on such account, the licence was not renewed. They pleaded delay in conclusion of the adjudication proceeding for the reasons that adjudication process taxes its own course and several documents and evidence brought on .Record were to be examined. It was also their plea that the respondent without exhausting the legal remedies, has filed the present suit which is not maintainable. During the course of hearing, a statement on 14-10-2002 was made on behalf of the appellants Nos.2, 3 and 4 that the appellant No, 4 would decide the matter expeditiously and copy would be produced before the Court on 21-10-2002 and on that day copy of order passed by appellant No,2 on 19-10-2002 was produced with following conclusion:-- "In the light of the above factual and legal aspects of the case the respondents have knowingly, averments and with mala fide intentions indulged into an act of misdeclaration within the ambit of the provisions of section 32(1) of the Customs Act, 1969. I, therefore, by dint of the powers vested in me under section 156(1) clause 14 order outright confiscation of the imported goods alongwith imposition of a penalty equal to 100% of the value of the goods. I further order cancellation of the respondent licence No,PWL 3/90 for violation of the conditions enumerated in the licence and for violation of the relevant provisions of the Act and Rules under section 13(3) of the Customs Act, 1969". On production of the order it was pleaded that since the appellant No,2 has passed the order, the respondent may prefer an appeal against the said order before the Appellate Tribunal in terms of section 194-A of the Act. Whereas, Mrs. Navin Merchant, the learned counsel for the respondent contention was that a perusal of the order shows that it is mala fide as the entire proceedings commencing from the issuance of show-cause notice and culminating with the passing of order after about six months of the filing of the suit was without jurisdiction. Her further contention was that an act is without jurisdiction and mala fide in nature, the affected person can always approach Civil Court and shall not be compelled to seek the relief before the forum provided in the statute as any act without jurisdiction and mala fide is void, inoperative and of no legal effect. The appellantcounsel vehemently maintained that the respondent committed forgery/tampering with the invoices and resorted to under-invoicing, therefore, the non-renewal of licence, non-issuance of permit, issuance of show-cause notice, dated 19-10-2002 were within the jurisdiction vested in the appellants. After recording the contentions, and on the basis of pleadings, the learned Single Judge formulated preliminary issue under Order 14 Rule 2, C.P.C., as follows:-- "Whether in the facts and circumstances of this case the respondents Nos. 3 and 4 have the jurisdiction to with hold the renewal of licence in favour of the plaintiff'. On the basis of pleadings and material available on. Record, after hearing the pros and cons contentions of the learned counsel for the respective parties, the learned Judge decided the preliminary issue in favour of the respondent and decreed the suit by the impugned judgment in terms of the decree referred to above, which is impugned through the present appeal.
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We have heard Syed. Tariq Ali, learned Fedral counsel for the appellants Nos. 1 to 3 and Mrs. Navin S. Merchant, learned counsel for the respondent. Mr. Ashfaq Hussain, learned counsel for the appellant No,4, adopted the arguments of learned Federal counsel. Syed Tariq Ali and Mrs. Navin S. Merchant, learned counsel for the parties, who argued the matter, had requested that this appeal may be disposed of finally at Katcha Peshi stage. Mr. Ashfaq Hussain, learned counsel for the appellant No,4 did not object to the request and it was agreed that this appeal would be disposed of finally at Katcha Peshi stage. The learned Federal counsel has raised following contentions in support of the appeal:-- (i) That the learned Judge has erred by exercising the jurisdiction in the matter, in utter disregard of provisions of section 9 of C.P.C. And section 217 of the Customs Act which bar the jurisdiction of the Civil Court. (ii) The learned Judge has erred by examining the adjudication proceedings and order passed thereunder in absence of a cause before the Court and thus exercised the appellate jurisdiction in respect of the adjudication proceeding and lastly. (iii) The learned Judge has considered the extraneous facts not borne out from the record attributed to Mirza Yousuf Baig with regard to the facts that neither any loss of revenue has been caused by under invoicing nor the liquor has been imported or stored in the bonded Warehouse in excess of permissible limit/quantity. Conversely, Mrs. Navin S. Merchant, learned tounsel for the respondent supported the impugned judgment by contending that the issuance of show-cause notice with regard to the adjudication proceeding and cancellation/non-renewal of the licence by the appellatits was without jurisdiction mala fide. Her second contention was that in the absence of any loss of revenue by purported untrue statement in terms of section 32 of the Customs Act, all the actions taken by the appellants were without jurisdiction and mala fide as the consignment was duty free as no loss to public revenue had occasioned. Her third contention, was that where the public functionaries have acted without jurisdiction and mala fide, the aggrieved person can approach the Civil Court and cannot be compelled to seek the relief from the form provided in the statute as any act without jurisdiction and mala fide is void, in-operative and of no legal effect. Her last contention was that the respondent has invested colossal amount in setting up the Bonded Warehouse and necessary infrastructure and so the licence was coupled with interest and thus irrevocable. Before considerirg the pros and cons contentions of the learned counsel for the parties, it would be advantageous to recapitulate the provisions of the Customs Act, more particularly, section 2(a), (b) with reference to definition of 'appropriate officerand 'adjudicating authority'. Section 13 pertains to the grant of licence to private Bonded Warehouse and its cancellation or suspension, whereas, section 32 pertains to misstatement and misdeclaration in connection with any matter of Customs. Section 179 with regard to powers of the Customs Officer in respect of adjudication proceedings and lastly section 180, pertaining to show-cause notice. The provisions read as follows:-- "2.(a) 'Adjudicating Authoritymeans any authority competent to pass any order or decision under this Act, but does not include the Board, the Collector (Appeals) or the Appellate Tribunal; (b) 'appropriate officer', in relation to any functions to be performed under this Act, means the officer of customs to whom such functions have been assigned by or under this Act. (13) Power to license private warehouses.---(1) At any warehousing station, the Collector of Customs may, from time to time, license private warehouse wherein dutiable goods may be deposited. (2) Every application for a licence for a private warehouse shall be made in such form as may be prescribed by the Collector of Customs.
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[(3) A licence granted under this section may be cancelled by the Collector of Customs for infringement of any condition laid down in the licence or any violation of any of the provisions of this Act or any rules made thereunder after the licensee has been given proper opportunity of showing cause against the proposed cancellation.] (4) Pending consideration whether a licence be cancelled under subsection (3), the Collector of Customs may suspend the licence . ' "32.[Untrue] Statement, error, etc.---(1) If any person, in connection with any matter of customs,-
(a) makes or signs or causes to be made or signed, or delivers or causes to be delivered to an officer of customs any declaration, notice certificate or other document whatsoever, or
(b) makes any statement in answer to any question put to him by an officer of customs which he is required by or under this Act to answer.
[Knowing or having reason to believe that such document or statement is false] in any material particular, he shall be guilty of an offence under this section.
(2) Where, by reason of any such document or statement as aforesaid or by reason of some collusion, any duty or charge has not been levied or has been short-levied or has been erroneously refunded, the person liable to pay any amount on that account shall be served with a notice within three years of the relevant date, requiring him to show cause why he should not pay the amount specified in the notice.
(3) Where, by reason of any inadvertence, error or misconstruction, any duty or charge has not been levied or has been short-levied or has been erroneously refunded, the person liable to pay any amount on that account hall be served with a notice within [six months] of the relevant date requiring him to show cause why he should not pay the amount specified in the notice.
(4) The appropriate officer, after considering the representation, if any, of such persons as is referred to in subsection (2) or subsection (3) shall determine the amount for duty payable by him which shall in no case exceed the amount specified in the notice, and such person shall pay the amount so determined.
(5) For the purpose of this section, the expression 'relevant datemeans---
(a) in any case where duty is not levied, the date on which an order for the clearance of goods is made;
(b) in a case where duty is provisionally assessed under section 81, the date of adjustment of duty after its final assessm ent;
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(c) in a case where duty has been erroneously refunded, the date of its refund;
(d) in any other case, the date of payment of duty or charge.
179. Power of adjudication.-(1) subject to subsection (2) in cases involving confiscation of goods or imposition of penalty under this Act or the rules made thereunder, the jurisdiction and powers of adjudication of the Officers of Customs shall be as follows:--
( i )Collector Without limit ( i i ) Additional Collector Confiscation of goods the value of which does not exceed Rs,1,500,000 excluding the value of conveyance and the value of non-dutiable goods, and imposition of the penalty under the rules. ( i i i ) Deputy Collector Confiscation of goods the value of which does not exceed Rs,500,000 excluding the value of conveyance and the value of non-dutiable goods, and imposition of the penalty under the rules.
(2) The Board may, by notification in the official Gazette, vary the jurisdiction and powers of any Officer of Customs or a class of officers.
(3) A Collector, an Additional Collector or a Deputy Collector shall decide the case within forty-five days of the issuance of show-cause notice or within such extended period for which reasons shall be recorded in writing, provided that such extended period shall in no case exceed ninety days,"
(4) The Board shall. Have the powers to regulate the system of adjudication including transfer of cases and extension of time limit in exceptional circumstances;
(180) Issue of show-cause notice before confiscation of goods on imposition of penalty.---No order under this Act shall be passed for the confiscation of any goods or for imposition of any penalty on any person, unless the owner of the goods, if any, or such person-
(a) is informed in writing (or if the person concerned consents in writing, orally) of the grounds on which it is proposed to confiscate the goods or the impose the penalty;
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(b) is given an opportunity of making a representation in writing (or if the person concerned indicates in writing his preference for it orally), within such reasonable time as the appropriate officer may specify, against the proposed action; and
(c) is given a reasonable opportunity of being heard personally or through a counselor duly authorized agent.
From the reading of section 13(3) it is manifest that licence granted is subject to cancellation by Collector of Customs on the ground (i) infringement of any condition laid down in the licence or; (ii) for violation of any of the provisions of the Customs Act or any rule made thereunder after proper opportunity to the licencee of showing cause. Whereas, section 32 contains three parts, subsection (1) provides that if any person in connection with any matter of Customs; (a) makes or signs or causes to be made or signed, or delivers or causes to be delivered to an officer of customs any declaration, notice, certificate or other document whatsoever, or (b) [Knowingly or having reason to believe that such document or statement is false] is any material particular, he shall be guilty of an offence under this section. Whereas, subsection (2) pertains where, by reason of any document or statement as aforesaid or by reason of some collusion, any duty or charge has not been levied or has been short-levied or has been erroneously refunded, the person liable to pay any amount on that account shall be served with a notice within three years of the relevant date requiring him to show cause why he should not pay the amount specified in the notice. Whereas, subsection (3) pertains where, by reason of any inadvertence, error or misconstruction, any duty or charge has not been levied or has been erroneously refunded, the person liable to pay any amount on that account shall be served with a notice within six months of the relevant date requiring him to show cause why he should not pay the amount specified in the notice. The appropriate officer in terms of subsection (4) shall determine the amount of duty payable by him, which shall in no case exceed the amount specified in the notice.
Likewise, section 179 pertains to power of adjudication by the officers of the Customs and such proceeding is a quasi-judicial proceedings. Section 180 pertains to the issue of show-cause notice before confiscation of goods or imposition of penalty which mandates that no order under the Act shall be passed for the confiscation of any goods or for imposition of any penalty on any person, unless the owner of the goods, (a) is informed in writing (or if the person concerned consents in writing, orally) of the grounds on which it is proposed to confiscate the goods or to impose the penalty; (b) is given an opportunity of making a representation in writting (or if the person concerned indicates in writing his preference for it orally) within such reasonable time as the appropriate officer may specify, against the proposed action; and (c) is given a reasonable opportunity of being heard, personally or through a counselor duly authorized agent.
Section 217 pertains to ouster of jurisdiction. The text thereof
217. Protection of action taken under the Act.-[(1)] No suit, prosecution or other legal proceeding shall lie against the [Federal Government] or any public servant for anything which is done or
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intended to be done in good faith in pursuance of this Act or the Rules.
[(2) No suit shall be brought in any civil Court to set aside or modify any order passed, any assessm ent made, any tax levied, any penalty imposed or collection of any tax made under this Act.]"
It may also be noted that the effigy of the respondent case is built on show-cause notice issued on 1-12-2000 which is not disputed by either side,-the salient features thereof are as follows:-
`(1) The supplier in UK normally issues invoices in GBP currency whereas in this case word GBP was tampered with the word US$. The print of US$ was also different from other entries of the invoices.
(2) The Consulate of Pakistan in Glassgow, which had attested the invoices also confirmed that value of the invoices were in Pound Sterling instead of US$ when the importer submitted the same for attestation. Therefore, it is clear that the invoices had been tampered with the intention to under-invoice the value. It is thus evident that the aforesaid tampered document were submitted to the Customs Authorities for the clearance of liquor from the Customs against the forged documents.
(3) The act committed by you Messrs Saman Diplomatic Duty Free Bonded Warehouse, Karachi attracts the provisions of section 32 of the Customs Act, 1969 punishable under clause 14 of subsection (1) of section 156 of the said Act. The aforesaid Act also tantamount to infringement of the conditions of the licence issued to them and also in view of the above cited violation of the provisions of the Customs Act, 1969, the Diplomatic Duty Free Bonded Warehouse Licence No, P.W.1-/3/90 issued to you Messrs Saman Diplomatic Duty Free Bonded Warehouse is liable to be cancelled under section 13(3) of the Customs Act, 1969.
(4) Messrs Saman Diplomatic Duty Free Bonded Warehouse Karachi, are therefore, called upon to show cause within 15 days of the date of this notice as to why the Diplomatic Duty Free Bonded Warehouse Licence No, P. W. 1-3/90 issued to them should not be cancelled. Hearing is fixed for 2- 12-2001 at 11-00 a.m. In the Chamber of the undersigned on 6th floor. Custom House, Karachi when you, your accredited lawyer or a duly briefed lawyer may appear to plead the case.
(5) If no reply is received within the given time and no one appears for the personal hearing on the date and time so fixed, the case will be decided ex parte on merit on the basis of documents available on record.
(Sd.)
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(ABDUL WAHEED KHAN) Collector of Customs Preventive
'After recapitulating the relevant provisions of the Customs Act and the admitted facts, now we proceed to examine the respective contentions
The crucial points in the instant appeal are that:--
(i) whether untrue statement in absence of its effect with regard to the…
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