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Petitioner: MUHAMMAD SOHAIL VS Respondent: The COLLECTOR OF CUSTOMS (APPEALS), KARACHIHonorable Justice Jahanzaib WahlahObaydullah Mirza,Asim Iqbal
2022 P T D (Trib.) 1545 [Customs Appellate Tribunal] Before Jahanzaib Wahlah, Member Judicial-III MUHAMMAD SOHAIL Versus The COLLECTOR OF CUSTOMS (APPEALS), KARACHI and another Customs Appeal No.K-500 of 2011, decided on 11th April, 2020. (a) Customs Act (IV of 1969)--- ----Ss.129, 198, 2(s), 16, 32, 32-A, 178 & 156(1)(64)---Constitution of Pakistan, Arts. 4 & 25 ---Transit of goods across Pakistan to a foreign territory---Power to open packages and examine, weigh or measure goods---Smuggling---Mis-declaration---Punishment of persons accompanying a person possessing goods liable to confiscation---Scope---Customs officials examined the imported goods and found the same to be alcoholic beverages instead of soft drinks---Clearing agent had filed the declaration for transit to Afghanistan under S.129 of the Customs Act, 1969, purportedly on the instruction of the appellant---Appellant was imposed upon a penalty ---Appeal filed before Collector (Appeals) was dismissed---Validity---Customs officials were not empowered to examine the goods for the reason that goods had arrived in transit to Afghanistan and were not meant for home consumption---Section 2(s) did not apply to the case as the goods were imported in transit to Afghanistan---Section 16 was a machinery section under which no charge could be framed---Appellant had not submitted goods declaration for home consumption but had sought clearance of goods for transit to Afghanistan, resultantly neither S. 32 nor S. 32-A was applicable---Invoking of S. 178 was out of place as the appellant was not found with the goods---Since there were no rules for Afghan Transit Trade when show-cause notice was issued, therefore, clause (64) of S. 156(1) contained no consequence in contravention of S. 129---Treatment meted out to the appellant was against the principles enshrined in Arts.4 & 25 of the Constitution as a person having similar role as that of appellant was not booked in the case---Appeal was allowed and the impugned orders were set aside.
Messrs Najib Zarab Ltd. v. Government of Pakistan PLD 1993 Kar. 93; Messrs Mazhar Iqbal v. Collector of Customs 2004 PTD 2994; M/s. Shazad Ahmed Corporation v. FOP 2005 PTD 23; Shakeel Ahmed v. FOP; M/s. Jamal Din and others and FOP and 2 others 710 to 714/2010; 2002 PTD 2457; PLD 1971 SC 61; PLD 1973 SC 236; PLD 1964 SC 536; 2001 SCMR 838; 2003 SCMR 1505; PLD 1996 Kar. 68; 2006 PTD 978; 2013 PTD (Trib.) 1375; 2001 SCMR 838; 2006 SCMR 1519; Rehm Din v. Collector of Customs 1987 SCMR 1840; (1957) 32 ITR 89; (1967) 64 ITR 516; I.T.As. 2400/2401/KB/91-92; 1995 PTD (Trib.) 580; 1995 PTD (Trib.) 1152; (1982) 1381 ITR 742; 1993 PTD 206; 1997 PTD (Trib.) 2209; PLD 1992 SC 485; 2013 PTD (Trib.) 353; 2002 MLD 261; 2002 PTD 976; 2002 SCMR 312; 2009 PTD 1507; 2005 SCMR 492; 1990 SCMR 1072; 1990 SCMR 1059; 1975 SCMR 352; PLD 1995 SC 396; 1998 SCMR 1404; PLD 1997 SC 582; PLD 1997 SC 334 and 1997 SCMR 1874 ref. F.O.P v. Jamaluddin and others 1996 SCMR 727; C.P. No.D-2410 of 2010 and 2010 SCMR 431 rel. (b) Customs Act (IV of 1969)--- ----Ss.193 & 194-A---Appeal to Collector (Appeals)---Appeal to the Appellate Tribunal---Scope---If a person is not desirous of depositing the adjudged amount of duty and imposed penalty, he is not barred under Ss. 193(1) & 194-A of the Customs Act, 1969, from assailing the impugned order. (c) Customs Act (IV of 1969)--- ----Ss.193, 194-A & 194-B---Appeal to Collector (Appeals)---Appeals to the Appellate Tribunal---Orders of Appellate Tribunal---Scope---Right of appeal is guaranteed to an aggrieved person against any decision or order passed by Customs officer within 30 & 60 days under the proviso of Ss. 193(1) & 194-A(3) of the Customs Act, 1969---Right of appeal is an inalienable right and cannot be made ineffective/redundant on account of non-deposit of duty or penalty---Collector (Appeals) and Appellate Tribunal are bound to grant opportunity of personal hearing to the parties to the appeal in terms of Ss. 193-A(1) & 194-B(1) of the Customs Act, 1969 and then pass order thereon---Even otherwise, no consequences are flowing in the expression of S. 195-B regarding the fate of appeal, in case of non-deposit of adjudged amount, thus it cannot be taken to mean that non-deposit would automatically mean rejection of appeal in limine. Messrs Meaple Leaf Cement Factory, Lahore v. The Collector of Central Excise and Sales Tax (Appeals), Lahore and others 1993 MLD 1645 rel. PLD 1989 SC 6; M/s. Riaz Bottlers (Pvt.) Ltd. v. Collector (Appeals) Central Excise and Sales Tax, North Zone, Lahore and 3 others 1993 CLC 1405 and Billal Fabric Ltd. and 9 others v. Collector of Customs, Excise and Sales Tax by the Customs, Excise and Sales Tax Appellate Tribunal 2005 PTD (Trib.) 731 ref. Obaydullah Mirza along with Mirza Abeer for Appellant. Asim Iqbal, Appraiser present for Respondents. Date of hearing: 4th March, 2020. JUDGMENT JEHANZAIB WAHLAH, MEMBER JUDICIAL-III.----The instant appeal has been directed against Order-in-Appeal No.5079/2011 dated 03.03.2011 passed by the Collector of Customs (Appeals), Karachi by maintaining the Order-in-Original No.09/2010 dated 30.09.2010 passed by the Additional Collector of Customs-II, Model Customs Collectorate of Appraisement, Custom House, Karachi. 2. Brief, facts of the case as reported are that officials of the Directorate of Intelligence and Investigation-FBR, (DGI&I-FBR) and MCC of Appraisement (MCCA) conducted joint physical examination of the goods imported in container No.MSCU-8889924 at scanning area of PICT and recovered assorted "Alcoholic Beverages" as against the declared description of goods. The details of declared and found goods are as under:- The goods declared
S.No.
Description
Quantity (in cases)
1.
Coca Cola 330 ML
450 cases (Each contain 24 cans)
2.
Sprite 330 ML
420 cases (Each contain 24 cans)
3.
Schwepps Soda Water 330 ML
400 cases (Each contain 24 cans)
4.
Awafi Mineral Water 500 ML
530 cases (Each contain 24 cans)
5.
Awafi Sparking Water 500 ML
150 cases (Each contain 24 cans)
Found Goods
S.No.
Description
Quantity
1.
Assorted Beer
Carlsberg (500 ML X 24)
500 cartons = 12000 cans
Heieken (500 ML X 24)
100 cartons= 2400 cans
Amsterdam (500 ML X 24)
900 cartons= 21600 cans
Total
36000 cans of 500 ML
2.
Assorted Scotch Whisky
Johnnie Walker (R.Lable (1 Ltrs x 12)
40 cartons = 480 bottles
Grants (1.125 ltr x 12)
55 cartons = 660 bottles
Ballantine (1.14 ltr x 12)
40 cartons = 480 bottles
Black Dog (1 ltr x 06)
100 cartons = 600 bottles
Teacher (1.14 ltr x 12)
10 cartons = 120 bottles
Whyte and Mackey (1.13 Itr x 12)
15 cartons = 180 bottles
Cattos (1.14 x 12)
40 cartons = 480 bottles
Johniie Walker (B. Lable) 1 ltd x 12
100 cartons = 1200 bottles
Chivas (1 ltd x 12)
50 cartons = 600 bottles
Total
450 cartons = 4800 bottles
3. The value of the declared goods as per invoice had been shown as 48,258/- (AED) whereas the value of the goods found as per physical examination had been worked out to Rs.11,519,547/- involving duty / taxes of Rs.15,000,293/-. The clearing agent had filed the Good Declaration for transit (GD-AT) under the provision of Section 129 of the Customs Act, 1969 (Act) purportedly on the instruction of the appellant. 4. The respondent No.2 did not agree with reply of the appellant and passed Order-in-Original No.09 of 2010 dated 30.09.2010 through which he held the charges levelled in the show-cause notice stand established against the appellant and imposed penalty of Rs.10,00,000/-. The appellant being aggrieved with Order-in-Original filed an appeal before respondent No.1, who rejected the same for non deposit of penalty as stipulated in section 195-B of the Act, prior to preferring appeal before him under the provision of Section 193 ibid. 5. The appellant has now challenged the above order by way of appeal. The Advocate Mr. Obaydullah Mirza, appeared on behalf of the appellant and reiterated the arguments incorporated in the memo. of the appeal and summarized facts and grounds. No cross objection as expressed in subsection (4) of Section 194A of the Act have been submitted by any of the respondent within the stipulated period of 30 days instead comments were submitted by the respondent, which are made part of the case record and for consideration in order to meet the end of justice. 6. Argument heard, case record perused, in addition with the documents and citations submitted by the appellant counsel during the course of hearing. It is felt appropriate by me to first to deliberate on the issue of non compliance of deposit of leviable duty and taxes and imposed penalty prior to preferring appeal before respondent No. 1 and to the fact that whether appeal so filed was competent and as to whether the respondent No.1 was empowered to dismiss the appeal for non deposit as expressed in Section 195-B of the Act. Taking refuge of respondent No.1 under the provision of Section 195-B of the Act in the order and cross objection are manifestly erroneous, misconceived, illegal and above all discriminatory as the said provision of the Act empowers the Appellate Authority / Tribunal to dispense with the deposit of adjudged amount through order-in-original for the sake of justice, fair play and to mitigate the cause undue hardship to the appellant, irrespective of the expression of the provision which read as the person desirous of appealing against such decision or order appealed against relates to any duty demanded in respect of the goods, which are not under control of customs authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order stand pending the appeal, deposit with the proper officer the duty demanded or penalty levied. The respondents failed to take into consideration the settled proposition of law that if the person is not desirous of depositing the adjudged amount of duty or imposed penalty, he is not barred under sections 193(1) and 194-A of the Act from assailing the impugned orders and neither the respondent No.1 and Appellate Tribunal from hearing the appeal for issuance of decision on merit, as the right of appeal is guaranteed to an aggrieved person against any decision or order passed by Custom officer within 30 and 60 days under the proviso of Sections 193(1) and 194(3) of the Act. The right of appeal is an in-alienable right and cannot be made in effective/redundant on account of non deposit and respondent No.1 and the Tribunal are bound to grant opportunity of personal hearing to the parties to the appeal in terms of Section 193-A(3) and 194-B(1) of the Act and then pass order thereon for "extending, confirming, modifying or annulling the decision or order appealed against "and "as it think fit confirming, modifying or annulling the decision or order appealed against". The prerequisite for passing "such order as he/it think fit" is only "after giving both parties to the appeal an opportunity of being heard. The Tribunal is also empowered to record additional evidence for deciding the case instead of remanding, which find no place in the expression of Section 194-B(1) and the principle laid down by the superior judicial fora. The provision of Section 195-B of the Act, is synonymous to the provision of pre-revised Subsection (4) of Section 45-B of the Sales Tax Act, 1990 (STA), 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 filed appeal cannot be termed as invalid and neither can be dismissed straight away as it is nullity to The Holy Quran, The Sunnah and The Constitution of Islamic Republic of Pakistan, 1973. Even otherwise no consequences are flowing in the expression of Section 195-B regarding the fate of appeal, in case of non deposit of adjudged amount, thus it cannot be taken to mean that non-deposit would automatically mean rejection of appeal in "Limine". Same opinion has been validated by the Lahore High Court, Lahore in reported judgment 1993 MLD 1645 M/s. Meaple Leaf Cement Factory, Lahore v. The Collector of Central Excise and Sales Tax (Appeals), Lahore and others that "In the Islamic polity and system of dispensation of Justice the right of appeal has been held to be a natural right vesting in an individual which cannot be taken away even by a provision in the enactment--- In the Islamic polity and system of dispensation of justice, the importance of the right of appeal cannot be understated. It has been held to be a natural right vesting in an individual which cannot be taken away even by a provision in the enactment. It is ordained by Holy Quran and Sunnah of Holy Prophet that an affected person must have a right to go in appeal against the decision. In Pakistan through Secretary, Ministry of Defense. The General Public (PLD 1989 SC 6), the Supreme Court went to the extent of striking down the laws, which did not provide for a right of appeal". The same view was endorsed by the Lahore High Court and Customs Excise and Sales Tax Appellate Tribunal in reported judgment 1993 CLC 1405, M/s. Riaz Bottlers (Pvt.) Ltd. v. Collector (Appeals) Central Excise and Sales Tax, North Zone, Lahore and 3 others and 2005 PTD (Trib.) 731, Billal Fabric Ltd. and 9 others v. Collector of Customs, Excise and Sales Tax by the Customs, Excise and Sales Tax Appellate Tribunal in its reported judgment 2005 PTD (Trib.) 731 Messrs Bilal Fabrics Ltd. and 9 others v. Collector of Customs Excise and Sales Tax. Beside rejecting of appeal under the garb of section 195-B is nullity to Article 10-A (Fair Trial) of the Constitution of Islamic Republic of Pakistan guarantees to every citizen of Pakistan. The Hon'ble High Court and the Tribunal has issued/passed several judgments, wherein it has been held as per ratio decidendi that rejection of appeal under the garb of Section 195-B is nullity and ultra virus and fails to stand the test of judicial scrutiny. 7. Now we determined the question of power/jurisdiction of the DG I&I-FBR and the respondent No.2 and his subordinate under the provision of Section 129 of the Act, invoked in the show-cause notice for dilating on that reproduction of Section 129 is vital: "Transit of goods across Pakistan to a foreign territory. Where any goods are entered for transit across Pakistan to a destination outside Pakistan, the appropriate officer may, subject to the provisions of the rules, allow the goods to be so transited without payment of the duties which would otherwise be chargeable on such goods." 8. The said provision was incorporated in the Act on the strength of the 1965 Convention on Transit Trade of Land locked States signed by the "Government of Member Countries in result of a resolution of the United Nation General Assembly recognizing the need of Land Locked Countries for adequate facilities in terms of International Law and Practice in this regard bearing in mind the future requirement resulting from the economic development land locked countries". In consonance with the said convention the Afghan Transit Trade Agreement 1965 was executed between the Government of Islamic Republic of Pakistan and the Government of Kingdom of Afghanistan on 2nd March 1965 for Regulation of Traffic in Transit. The preamble states "that the Government of Islamic Republic of Pakistan and Government of the Kingdom of Afghanistan being desirous of strengthening the economic ties between their two countries on a mutually advantageous basis, improving the difficulties in the movement of the goods through the two countries and having taking into consideration the present volume and future development of transit trade have decided to conclude an agreement ". 9. By Article I of the Agreement, the Contacting Party undertook to grant and guarantee to each other the freedom of transit to and from their territories in accordance with the provision of the agreement. It was further stipulated that no distinction shall be made which is based on the flag of vessels, the place of origin departure, entry, exit or destination or any other circumstances relating to the ownership of goods, of vessels or of other means of transport. Article II of the Agreement provides that goods including baggage, and vessels and other means of transport shall be deemed to be in transit across the territory of a contracting party, when the passage across such territory with or without transshipment, warehousing, breaking bulk or change in the mode of transport, is only a portion of a complete journey beginning and terminating beyond the frontier of the contracting party across whose territory the traffic passes----Traffic of this nature is termed in this Agreement "Traffic in Transit". Article III provided the transit route (I) Peshawar- Torkham and vice versa, (2) Chamman-Spin Baldak and vice versa, with further provision that additional routes may be agreed between the Contracting Parties from time to time. It is also provided that the goods moving via these routes shall be entered at the proper customs post prescribed by each party where adequate transit and other facilities shall be provided. Article IV of the Agreement laid down "No Customs duties, taxes, dues or charges of any kind whether national, provincial or municipal regardless of their name and purposes, shall be levied on traffic in transit except charges for transportation or those commensurate with the administrative expenses entailed by traffic in transit or with the cost of service rendered." The Contracting party also agreed to adopt the point of entry and exit the procedures laid down in the Annex to the Agreement. Article V provided that the Government of Islamic Republic of Pakistan shall earmark sheds and open spaces in the Karachi Port Area to be known as Afghan Transit Area, for the goods in transit to and from Afghanistan Article VIII states that each Contracting Party shall appoint Liaison Officer to look into the working of this Agreement and to refer, for expeditious solution, to the appropriate authorities of their own countries and to the liaison official to the other country, any question arising from the operation of this Agreement. Article X of the Agreement laid down "Nothing in this agreement shall be construed to prevent the adoption and enforcement by either party of measures necessary to protect public morals, human, animal or plant life or health and for the security of its own territory" Article XII made provision for resolving any difference relating to the interpretation of the Agreement by negotiation and in the event of failure to reach settlement "to the refer the matter to an arbitrator acceptance to both Parties, whose decision shall be binding". As per Article XIV, the Agreement was to remain in force for five years from the date of its coming into force with further provision that the agreement shall be automatically renewed for a further period of five years." Unless notice of termination is given in writing by either Contracting Party to the other six months before the expiration of the five years period and thereafter, the Agreement could be terminated by either Party at any time by giving six months notice of termination. 10. A protocol was annexed to the Agreement containing the provisions "to regulate the transport of goods by Lorries from Peshawar to Kabul, and from Chaman to Kandhar and vice versa." Under the Protocol, the two Governments agreed to grant multiple entry visas to the transporters and also road permits to transport vehicles. It was also agreed that no taxes shall be levied on transport vehicles registered in the territory of the other country except by prior consultation and on basis of equality. Provision was also made regarding the driving license and certificates of fitness in respect of transport vehicle covered by the Protocol. It was further provided in Article VIII of the Protocol that "The two Government shall consult each other with a view to adopting necessary measures to facilitate the flow of traffic between the two countries and shall seek all possible means within their power to remove any factors which may damage the normal accomplishment of the operation fore-seen on this Protocol." 11. That for accomplishment of the Afghan Transit Trade Agreement with Afghanistan and for smooth and uninterrupted flow of Transit goods another Annexure was made a part of the agreement/protocol through which procedure was laid down for adherence by the Customs and others, on the strength of which the respective Collectorate of the clearance issued public notices for the information of clearing agent/importer of Afghanistan. Consequent to which the GD-AT for transit goods were filed by the clearing agent annexed with the document specified therein under the Provision of Section 129 of the Act. The Customs officials after receipt of the GD use to attend that as per devised procedure for processing and allow of transit. These goods were allowed without any objection i.e. as to whether those falls within the ambit of banned, restricted or prohibited under the respective Import Policy of Government of Pakistan. And without examination with the exception of checking of seal on the container and the container so arrived were allowed to be loaded on Wagons of Pakistan Railway or High Mechanical Transport Vehicle of National Logistic Cell for transport to the exit station for crossing border to Afghanistan. 12. Neither the official of DG I&I-FBR nor of Clearance Collectorate are empowered to examine the goods under section 198 of the Act and to assess those under section 80 and passing of clearance order under Section 83 ibid, by virtue of the facts that the goods arrived in transit to Afghanistan are not meant for home consumption as expressed in Section 79(1) of the Act. The entire procedure adopted for clearance of those was under the provision of Section 129 of the Act, and the signed protocol by both countries and the respective public notices. By laying hand on the consignment in question despite of the fact that it was meant for Afghanistan, the official of the respondent No.2 exceeded their allotted sphere, rendering the conduction of examination and completing of assessment under Section 80 of the Act in the instant case without power/jurisdiction and similarly issuance of show-cause notice by respondent No.2 under the provision of the Act, despite not applicable on the goods in transit. In a case corresponding to import of tyres and tubes for transit to Afghanistan, which were held by the Clearance Collectorate on the bases of letter of the Board and Public Notice issued by the Collector, the Hon'ble Supreme Court of Pakistan in reported judgments PLD 1993 Karachi 93 M/s. Najib Zarab Ltd. v. Government of Pakistan and 1996 SCMR 727 FOP v. Jamaluddin and others and Najib Zarab Ltd. held that: "The question which arise for consideration is whether the CBR and /or the Collector of Customs, could lawfully banned or disallow imports of tyres by Afghan National under the afghan Transit Trade Agreement and refuse the facility through the territory of Pakistan in respect of such tyres during the subsistence of the said agreement. The question when examined on purely legal and jurisdictional plan, it answer is bound to be negative. We quite agree with the view taken by the learned judges of the High Court that keeping in view the back ground of the Transit Agreement and the fact that Afghanistan is a land locked country, the goods imported by Afghan National from other country for use and consumption in Afghanistan could not be said to have been imported into Pakistan merely because they crossed the Customs barer and entered into Pakistan through to be transited to their destination viz Afghanistan. Such goods, in fact are goods in transit to be dealt with and transshipped to Afghanistan in accordance the transit agreement an the Protocol appended thereto. Customs Law relating to importation would not, therefore be applicable to them. Assuming, however, for the sake of arguments that such goods could be construed to have been imported into Pakistan under Customs Act, and the Section 16 of the said Act, could be invoked which give powers to prohibit or restrict the importation and exportation of the goods (though in the earlier round of litigation, both parties has conceded in this Court that section 16 of the Customs Act, 1969 was not applicable in the present case and cases of the goods in transit were governed by Section 129 of the said Act). Still the impugned order/letters could not be cloth with lawful Authority for two reasons. Firstly, the powers under section 16 was conferred on the Federal Government which could not exercise by subordinate authority like Collector of Customs, who in the instant case had issued Public Notice purporting to impose the banned on the import of tyre and secondly the power was to be…
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