IN THE HIGH COURT OF SINDH AT KARACHI

 

 

                                                                  PRESENT:

     Mr. Justice Aqeel Ahmed Abbasi

      Mr. Justice Zulfiqar Ahmed Khan

 

 

C. P. No.D-296 of 2019

 

M/s. Steel Vision (Pvt). Ltd…….…………………………………….Petitioner

 

C. P. No.D-231 of 2019

 

Royal Impex (Pvt) Ltd…….….……………………………………….Petitioner

 

C. P. No.D-610 of 2019

 

Royal Impex (Pvt) Ltd…….….……………………………………….Petitioner

 

C. P. No.D-611 of 2019

 

Muhammad Rizwan………….……………………………………….Petitioner

 

C. P. No.D-1145 of 2019

 

M/s. Steel Vision (Pvt). Ltd…….…………………………………….Petitioner

 

C. P. No.D-3203 of 2019

 

Balochistan Engineering Works Ltd.……………………………….Petitioner

 

Versus

 

Federation of Pakistan & others…………….…………………..Respondents

 

Petitioner in                         

CP No.D-296/2019  :           Through Mr. Ahmed Ali Hussain, Advocate

 

Petitioners in

other Petitions          :           Through Mr. Zain A. Jatoi, Advocate.

 

Respondent  No.5    :           Through Syed Mehmood Alam Rizvi, Advocate

 

Respondents

Nos.2 to 4 & 6           :           Through M/s. Khalid Rajpar, Aamir Raza & Ms.                                                 Masooda Siraj, Advocates alongwith Manager                                                  Legal EPZA/Respondent No.6 Syed                                                                  Muhammad Kazmi.

 

Respondent No.1    :           Through Ms. Lubna Pervez, D.A.G.

 

Dates of Hearing      :           03.09.2019 and 01.10.2019

 

Date of Short Order :           01.10.2019

 

J U D G M E N T

Aqeel Ahmed Abbasi, J : -- In above captioned Petitions, the petitioners have expressed their grievance against the detention of their goods by the officers of the Directorate of Intelligence & Investigation (Customs), Karachi, intended for Export Processing Zone, at Port as well as during transit to Lahore from Export Processing Zone, whereas, common relief has been sought seeking a declaration to the effect that the officers of the Directorate of Intelligence & Investigation (Customs), Karachi have no authority or jurisdiction to stop and detain the goods, intended for Export Processing Zone or to issue notice for assessment or adjudication in respect of such goods meant for Export Processing Zone.

2.         Briefly, the facts as stated relevant for the purpose of disposal of instant petitions are that the petitioners are engaging in the business of import and export of various items of steel, including iron and steel sheet in bars, whereas, the petitioner are aggrieved and prejudiced by the arbitrarily and illegal action of the respondents, particularly respondents No.3 and 4, who vide Office Order No.08/2018/CUS/EPZ have assigned the powers to the respondent No.5 i.e. Director, Directorate of Intelligence & Investigation (Customs), Karachi, who has issued notice under section 26 of the Customs Act, 1969 to the petitioners for audit and past transaction of the petitioners. According to the petitioner, the Customs Authorities can only check and examine the goods at exit and entry gate of Export Processing Zone and only if in such situation, any violation has been discovered, then appropriate action can be taken by the officers having jurisdiction in respect of such goods meant for Export Processing Zone in accordance with law.

3.         Learned counsel for the petitioners have argued that the goods meant for Export Processing Zone cannot be examined and detained by the officers of the Directorate of Intelligence & Investigation (Customs), Karachi, who have no jurisdiction whatsoever nor any notice under section 26 of the Customs Act, 1969 or proceedings for assessment or adjudication can be undertaken by any authority, other than Collectorate of Customs at Export Processing Zone. According to the learned counsel for the petitioners, the petitioners are the licensees of Export Processing Zone, whereas, the Customs Authorities only have the authority to check the consignment at entry point. Regardless of the same, respondents have detained the goods at Port Qasim and are refusing to allow the same to be imported into Export Processing Zone. It has been prayed by the learned counsel for the petitioners that declaration may be issued to the effect that the respondent No.5 i.e. Director, Directorate of Intelligence & Investigation (Customs), Karachi have no authority or jurisdiction to stop the goods of the petitioners from reaching the Export Processing Zone, whereas, the detention of such consignments of the petitioners by the officers of Directorate of Intelligence & Investigation (Customs) Karachi at Port Qasim is also illegal and beyond the jurisdiction. It has been further prayed that Office Order No.08/2018/CUS/EPZ for the removal / examination / assessment of cargo meant for Export Processing Zone as well as Notice bearing C.No.02/SIU/DCI/KHI/2019/115, dated 15.01.2019 are illegal and liable to be set aside. In support of their contention learned counsel for the petitioners have placed reliance following cases:

              i.      M. Hameedullah Khan v. Director Customs Intelligence and 3 others (1992 CLC 57);

            ii.      Saadat Khan v. Federation of Pakistan through Secretary Revenue Division, Islamabad and 2 others (2014 PTD 1615);

           iii.      An unreported judgment dated 23.07.2002 of the Hon’ble Supreme Court of Pakistan passed in Civil Petition for Leave to Appeal No.273-K of 2020 in the case of Collector of Customs (Exports), Customs House, Karachi and 2 others v. Ahmed Muhammad Ismail and another; and

           iv.      An unreported judgment dated 26.11.2001 of a Divisional Bench of this Court passed in C.P. No.D-2310 of 2001. 

4.         Conversely, learned counsel for the respondent No.5 while filing parawise comments has opposed the contention of the learned counsel for petitioners and has raised an objection as to maintainability of instant petitions on the ground that the petitioners have not approached this Court with clean hands, whereas, the disputed fact has been agitated through instant petitions, which according to the learned counsel for respondent No.5, cannot be examined by this Court while exercising Constitutional jurisdiction under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973. According to the learned counsel, the impugned consignments are meant for home consumption in tariff area at Karachi, but the same were released from Port (QICT) for Karachi Export Processing Zone (KEPZ) fraudulently on the basis of tempered/fabricated import documents. Learned counsel for the respondent No.5 has further submitted that the actual documents pertaining to the impugned consignments retrieved from the concerned bank i.e. LC, MBL, Proforma Invoices, Invoice, packing list, etc. confirm that actual importer/owner of the goods is M/s. Zubair Steel Karachi and not M/s. Steel Vision (Pvt.) Ltd. i.e. petitioner in C.P. No.D-296/2019. According to the learned counsel, both Goods Declarations No.KPQI-HC-7033-09-01-2019 and KPQI-HC-7034-09-01-2019 have been filed by the petitioners with the manipulated and fabricated documents through change of consignee / owner’s name and address etc., therefore, according to learned counsel, petitioners are not entitled to any equitable relief from this Court under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973. While concluding his arguments, learned counsel for the respondent No.5 has submitted that in terms of SRO 486(I)/2007, dated 09.06.2007 the officers of the respondent department have the jurisdiction to investigate the matters of “money laundering” as per Section VI of the Schedule of the Anti-Money Laundering Act, 2010, whereas, in the instant cases, the provisions of the “money laundering” goods are also attracted, which needs to be examined by the Customs Authorities in accordance with law. It has been prayed by the learned counsel for respondent No.5 that instant petitions involving disputed facts are liable to be dismissed alongwith listed applications.

5.         We have heard the learned counsel for the parties, perused the record with their assistance and have also gone through the relevant provisions of law, SRO as well as case law relied upon by the learned counsel for the parties in support of their contention.

6.         Primarily, the common legal controversy agitated through instant petitions revolves around determination as to whether the consignments, which are meant for KEPZ, can be subjected to examination, detention and seizure or assessment or adjudication by the officers of the Directorate of Intelligence & Investigation (Customs) Karachi, and can be detained and seized at Port or during transportation to or from Karachi at KEPZ, on the allegation of “money laundering” or violation of the provisions of the Customs Act, 1969, by any officer of the Customs other than the officers of Customs at Export Processing Zone under the Customs Act, 1969. From perusal of record and the documents produced by the petitioners in these cases, it appears that the subject consignments of above petitioners were meant for KEPZ, as the Goods Declarations alongwith relevant documents were filed by the petitioner, claiming the subject consignments to be meant for re-export at KEPZ in accordance with law and the relevant licensing rules. As per jurisdiction assigned by the Competent Authority to the officers of Customs, all the consignments meant for KEPZ are to be assessed by the Collector of Customs (Exports), whereas, prima facie, it appears that respondent No.5 has no jurisdiction either to intercept or detain such consignments at Port or during transshipment from or into KEPZ, or to make any contravention or assessment in respect of consignments meant for KEPZ.

7.         In the case M. Hameedullah Khan v. Director Customs Intelligence and 3 others (1992 CLC 57) a Divisional Bench of this Court, while dealing with somewhat similar circumstances, has been pleased to hold as under: -

            “We have already reproduced above the letter containing the instructions issued by the C.B.R. regarding transshipment of imported cargo to upcountry dry ports. After going through the same we are of the view, that under sub‑paragraph (i) of the above instructions, if the address of the party t: " be notified is disclosed in the Bill of Lading as of an upcountry destination or the mark and numbers on the Bill of Lading indicate an upcountry destination via Karachi, then in that case the consignment cannot be detained at Karachi. However, if any misdeclaration or suspected contravention is discovered in respect of such consignments, the information is to be conveyed to the respective Collector of Customs or Deputy Collector of Customs, Incharge of Dry Port or the Directorate of Intelligence at the dry port. These instructions are applicable both in cases where either the notifying party as indicated in the Bill of Lading is situated in upcountry destination, or the shipping marks on the consignment indicate the upcountry destination via Karachi. In the case before us it is admitted position that the Bill of Lading was allowed to be amended under section 45 of the Customs Act and the name of the notifying party has been shown as Allied International Lahore and therefore in terms of the instructions referred to above transshipment of consignment to the Dry Port Lahore should have been allowed. In our view the absence of shipping marks on the consignment, could not give jurisdiction to the Directorate of Customs Intelligence, Karachi to detain the consignment at Karachi Port when the address of notifying party ~ shown at Lahore. In such a case if the respondents had discovered any contravention of Custom Law by the importer, they should have allowed the consignment to proceed to its destination namely the dry port at Lahore and notified its offices there for action or convey the above information to the Collector or Deputy Collector of Customs at Dry Port as was required under the Law.”

Another Divisional Bench of this Court in the case of Saadat Khan v. Federation of Pakistan through Secretary Revenue Division, Islamabad and 2 others (2014 PTD 1615) while dilating upon the powers and functions of the Customs Authorities has been pleased to hold as under: -

 “15. The learned counsel for the petitioner had vehemently argued that the respondent No.2 and its officers have very restricted powers in view of S.R.O. 486 and since only section 17 is the relevant section under which they can seize or detain the goods, as such if the case does not fall within section 17, as is in the instant matter, then respondent No.2 has no jurisdiction to act any further. We are not impressed with this line of argument, as in our view it is not necessary or mandatory to notify and mention all the sections of the Act in S.R.O. 486. What S.R.O. 486 provides is merely to declare certain officers as mentioned in column 2 by designation to exercise powers of certain provisions of the Act. Since the powers to seize goods (S. 168) and to arrest (S.161) have been admittedly conferred upon such officers, any further deliberation on the issue is meaningless. The goods are which are seized in terms of section 168 are required to be adjudicated through proper show-cause notice within a specified period and for such adjudication the officers of respondent No.2 have neither any powers nor are they exercising any such powers and authority. Similarly if a person is arrested in terms of section 161 for an offence committed under the Act, the matter is to be reported to the Special Judge Customs and Taxation. Therefore, neither it is not required that powers under section 32 or for that matter under section 156 of the Act are to be conferred upon the officers specifically for exercising such authority. The process of adjudication and or criminal proceedings start after seizure of goods and arrest of a person respectively, and for such purposes the officers of respondent No.2 are duly authorized in view of the provisions of sections 161 and 168. Therefore the officers of respondent No.2 are authorized, subject to limitations, as discussed in this judgment, to either seize goods or arrest a person, as the case may be.

16. This however, does not mean that the officers of respondent No.2 are authorized to act as a supervisory body over and above the officers of respective Collectorates of Customs. As we have already discussed that the facts of the instant case are entirely different to the facts of the earlier reported case of Shahzad Corporation supra and others, in as much as in those cases the consignments after processing of the documents and goods declaration were detained within the Port area and were not allowed to be cleared despite fulfillment of all requisite and codal formalities, whereas in the instant matter the goods have been assessed by the officers of respondent No. 3 and had been allowed to be cleared from the Customs area and were being transported from Hyderabad to Karachi, and thereafter they were intercepted by the officers of respondent No. 3. We are in respectful agreement, despite their being change in law, with the observations of the learned Division Bench in the case of Shahzad Corporation supra that in so far as the detention of goods within the port area before or after the processing of goods declaration is concerned, the officers of respondent No. 3 do not have any lawful authority to detain such goods and then to act as a supervisory body of the respective Collectorate of clearance. They can only intercept goods upon any credible information in respect of such goods outside the port area and within the domain of their respective jurisdiction. It must be appreciated that they have to act as in intelligence agency, supposed to be fully equipped with the related machinery, intelligence network and know how required for such a specialized agency. They cannot enter into a roving or fishing expedition. In fact this is what they had attempted to do in Shehzad Corporation Supra and was accordingly disapproved by this Court. It should also be noted that such interception could only be done once there is a prima facie material available with the officers of respondent No. 2 that the goods which are being intercepted, are such, that they are liable to confiscation and not otherwise. This is so, because the officers of respondent No. 2 have been conferred with powers under section 168 of the Act and therefore there is a clear intention that they can seize any such goods which are liable to confiscation and liable to confiscation would only mean, that either there is an apparent mis-declaration of description of goods or a mis-declaration in respect of quality and quantity of the goods, resulting in a definite loss of revenue. It would not mean and include any alternate or contrary interpretation of an exemption notification or an interpretation regarding classification of goods and or nor application or wrong application of a Valuation Ruling, as firstly this is not within their domain and jurisdiction, and for which specialized departments and or bodies have been established by FBR, and secondly, it is a settled proposition of law that an interpretation of a notification as well as the classification of goods does not fall within the definition of mis-declaration. Now if the facts of the instant matter are looked into, it appears that when the goods were intercepted and seized, the officers of respondent No. 2 had a credible information and prima facie evidence to the effect that there was some mis-declaration involved in the description and or of quantity of the goods, hence the goods became liable for confiscation and the powers under section 168 of the Act could be lawfully exercised by the officers of respondent No. 2. We have been informed that after such detention and seizure of goods, a show-cause notice has been issued after a proper issuance of notice under section 171 of the Act and now the matter is pending before the concerned Adjudicating authority before whom the petitioner has not chosen to proceed with. We are of the view that in the given facts and circumstances of the instant case prima facie, the officers of respondent No. 2 did not act without jurisdiction and the detention/seizure of the instant goods was with lawful authority and subsequent to such detention/ seizure a proper show-cause notice has been issued to the petitioner. Therefore, we are unable to agree with the contention of the learned counsel for petitioner that such authority and jurisdiction was without any lawful authority. We have consciously not given any finding on the merits of the case as firstly the learned counsel for the petitioner had confined its arguments only on legal issues, and secondly, lest it may prejudice the case of the petitioner. However, if the petitioner makes out a case before the Adjudicating authority that no such mis-declaration as alleged was made in the instant matter, the adjudicating authority is fully authorized and vested with powers to order for release of the goods after vacating the show-cause notice.”

8.         Similarly, the Hon’ble Supreme Court of Pakistan in an unreported judgment dated 23.07.2002 passed in Civil Petition for Leave to Appeal No.273-K of 2002, copy of which has already been annexed alongwith instant petition, has been pleased to hold as under: -

“6.        We have considered the arguments of the learned counsel for the parties and also minutely examined the material available on the file. We do not find any substance in the arguments of the learned counsel for the petitioners. The Ordinance IV of 1980 clearly declares the Zone free from any action by any authority other than respondent No.2. The Customs Authorities can only check and examine the goods at exit and entry gates, and, in case, any violation is committed by the importer or exporter, they can be proceeded under the Customs Act and not otherwise. We have also perused the Rules mentioned hereinabove, but the same are not helpful in the case of the petitioners.

 

9.         From perusal of hereinabove cited judgment and the relevant provisions of Customs Act, 1969, as well as the SROs and directives issued by the FBR relating to powers and functions of the Customs Authorities, it has emerged that detention of goods within the port area before or after the processing of goods declaration is outside the domain of officers of Directorate of Intelligence and Investigation, whereas, such authority can be exercised by the respective Collectorate of Customs in accordance with law. Similarly, the authority to examine and assess the consignment(s) in respect of which goods declaration has been filed for Export Processing Zone (EPZ) vested in the Collectorate of Customs, EPZ, only, whereas, the Customs Authorities only have the authority to check the consignment(s) at entry point. In the instant matters, the officers of Directorate of Intelligence and Investigation, Customs, Karachi, have acted in total violation of law while detaining the goods meant for EPZ at Port Qasim and refusing to allow the same to be transported to EPZ for further proceeding in accordance with law. The office order No.08/2018/CUS/EPZ for removal/examination of Cargo meant for EPZ as well as Notice No.02/SIU/DCI/KHI/2019/115 dated 15.01.2019 have also been issued without lawful authority as the officers of Directorate of Intelligence and Investigation, Customs, Karachi, have no authority to initiate any fishing and roving inquiry in respect of consignment(s) meant for EPZ or to examine/assess or to adjudicate upon such consignment(s). It will not be out of place to observe that during pendency of instant petition(s), the offices of concerned Collectorate and the Directorate of Intelligence and Investigation, Customs, Karachi, were summoned to assist this Court with regard to their authority, powers and functions, particularly, in respect of consignment meant for EPZ and pursuant to such query, the Collector of Customs, EPZ, candidly stated that such authority is vested in the office of Collectorate of Customs, EPZ, whereas, officers of Directorate of Intelligence and Investigation have no authority in this regard. Similar view was expressed by allthe officers of the concerned Collectorate and the Directorate, who were present in Court on various dates of hearing, except one, Dost Muhammad, Superintendent/SIO, Customs, Intelligence and Investigation, Customs House, Karachi, who has been instrumental in initiating the proceedings against the petitioners, and has alleged that petitioners are involved in money laundering as certain discrepancies have been found in the documents furnished by the petitioners, particularly, by M/s. Steel Vision (Pvt) Ltd., before the bank, in which L.C. has been opened. During the course of hearing these petitions various interim orders were passed after hearing the learned counsel for the parties as well as concerned officers of the Customs to the effect that subject consignment(s) meant for EPZ after compliance of codal formalities, may be allowed to be transported in the Karachi Export Processing Zone under supervision of officers of the Directorate of Intelligence and Investigation, Customs, Karachi, however, the abovenamed officer reportedly created hindrance in this regard and petitioners were constrained to file contempt application(s), whereafter, notices were issued to the alleged contemnor(s) and only thereafter, the orders passed by this Court were duly complied with. The conduct and the legal approach of the Superintendent/SIO, namely, Dost Muhammad, during the course of hearing of these petitions, in the presence of superior officers of Customs including respective Collector of Customs and the Director of Intelligence and Investigation, Customs, Karachi, as well as Collector Adjudication, Karachi, reflected upon his arrogant attitude in dealing with legal matters, who has even attempted to question the Court’s authority to pass the interim orders in these petitions, which were not duly complied with until the contempt applications were filed, and notices were issued to the alleged contemnor(s). We have restrained ourselves from the proceeding against the alleged contemnor(s) for violating and creating hindrance in Court’s orders, and have also not examined the allegations of the learned counsel for petitioners against the above officer for having become personal in these matters to cause harm and injury to the petitioners. However, would observe that while implementing any law the public functionaries are required to act fairly, reasonably and in a transparent manner, strictly in accordance with law and before taking any adverse action, opportunity of being heard has to be provided by confronting the aggrieved party with the adverse material, if any, so that requirements of fair trial as guaranteed under Article 10A of the Constitution of Islamic Republic of Pakistan, 1973, and principles of Natural justice shall be met. During pendency of these petitions while regulating the legal course and proceeding to be undertaken by the relevant Customs Authorities, we have not recorded any finding as to the merits of the case, including the allegations of respondent No.5, and have left the matter open for the respective Collector of Customs and the Adjudicating Authority, having jurisdiction in the case of the petitioners, who may pass appropriate order in accordance with law, and have therefore, disposed of above petitions vide our short order dated 01.10.2019 in the following terms:-

              “                                 O  R  D  E  R

                  01.10.2019

 

For the reasons to be recorded later on, instant petitions are disposed of in the following terms:-

(1)   The detention of subject consignment(s) of the petitioner(s) at Port by the Customs Authorities, which were admittedly meant for Export Processing Zone and without allowing such consignments to reach the Export Processing Zone, was without lawful authority and in violation of directives issued by the Federal Board of Revenue (FBR) in this regard. Accordingly, the letters issued or action taken in respect of consignments meant for Export Processing Zone by the Directorate of Intelligence and Investigation are also illegal and without lawful authority.

(2)   Since the consignment(s) of the petitioner(s) have now been duly examined through joint inspection, whereafter a joint report dated 14.07.2019 has been furnished, concerned Adjudication Collectorate may proceed in respect of such consignments in accordance with law and may conclude the adjudication proceedings after providing opportunity of being heard to the petitioner, preferably, within a period of one month from the date of receipt of this order.

(3)   The Directorate of Intelligence and Investigation, however, will be at liberty to initiate lawful proceedings against the petitioner(s), irrespective of the aforesaid adjudication proceedings by the concerned Collectorate (Export Processing Zone) provided, there is concrete material available with them, which may require their intervention and preparation of contravention, if any, however, strictly in accordance with law, whereas, the relevant SROs as well as directives issued by the FBR in this regard and the case law on the subject shall also be taken into consideration.

 

Petition(s) stands disposed of in the above terms along with listed applications.

            Above are the reasons for such short order.

           J U D G E

                   J U D G E

Farhan-PS/Nadeem