IN THE HIGH COURT OF SINDH AT KARACHI
PRESENT:
Mr. Justice Aqeel Ahmed Abbasi
Mr. Justice Mahmood A. Khan
Spl. Customs Ref. Application No.131 of 2016
The Collector of Customs,
Model Customs Collectorate,
Hyderabad………………..……..………………………………..…….Applicant
Versus
M/s. Pir Muhammad & another………….……………………..Respondents
Petitioner : Through Mr. Kashif Nazeer, Advocate
Respondent No.1 : Through Mr. Barkat Ali Awan, Advocate.
Dates of Hearing : 11.12.2019 and 07.07.2020
Date of
Announcement of
Judgment : 11th January 2021
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J U D G M E N T
Aqeel Ahmed Abbasi, J : -- Through instant Special Customs Reference Application, the Applicant/Department initially proposed five (5) questions said to have arisen from the impugned judgment dated 01.12.2015 passed by the Customs Appellate Tribunal in Customs Appeal No.H-547/2015, which according to the learned counsel for applicant, were questions of law arising from the impugned judgment, however, on examination of such proposed questions, it was observed that the questions proposed were not questions of law, and referred to the disputed questions of facts. Therefore, on 02.09.2016 when the matter was taken up for hearing at katcha peshi, learned counsel for the applicant was duly confronted to assist this Court as to maintainability of instant reference application and to point out the legal issue decided by the Customs Appellate Tribunal, if any, which may require any interference by this Court while exercising its Reference jurisdiction under Section 196 of the Customs Act, 1969.
2. Learned counsel for the applicant conceded to hereinabove observations of the Bench regarding nature of the questions proposed through instant reference application and, under instructions, filed a statement dated 02.11.2018, whereby, following questions have been proposed, which according to the learned counsel for applicant, are questions of law arising from the impugned judgment passed by the Customs Appellate Tribunal in the instant case: -
1. Whether the impugned Order passed by the bench consisting of the single Member is in violation of Section 194-C and hence without jurisdiction and void ab initio?
2. Whether the learned Member completely erred inlaw and misread the facts while observing that the impugned goods are not smuggled by any standard as the relevant GD, import documents, original registration and pre-shipment certification and clarification of shipper for the impugned truck are on record?
3. Whether the learned Member of the Tribunal misread the facts and law and failed to appreciate that the claimant of the seized foreign original goods, notified under Section 2(s), did not produce any documentary evidence (except transport receipts/bilties) to substantiate his claim of lawful possession of said foreign origin goods?
4. Whether the Hon’ble Appellate Tribunal erred in law and misread the facts, while setting aside the orders passed by the hierarchy provided under the Act of 1969?
3. Notice of instant reference application was issued to the respondents in respect of the aforesaid proposed questions, pursuant to which, learned counsel for the respondent No.1 filed his vakalatnama, whereafter, the matter was heard on 11.12.2019 and reserved for judgment on 07.07.2020.
4. Learned counsel for the applicant, after arguing the matter at some length in respect of Question No.1 proposed hereinabove, candidly submitted that in view of the judgment of the Hon’ble Supreme Court of Pakistan in the case of Collector of Customs, Customs House, Karachi v. Syed Rehan Ahmed (2017 PTD 381), he would not press the proposed Question No.1, as the issue already stands decided by the Hon’ble Supreme Court in favour of the respondent, while holding that “the amendment brought about by the Finance Act, 2007 which omitted only the explanation to section 194-C(3A) and not the second proviso to section 194-C(3) was a clear indication that the legislature no longer, wanted the Single Member Benches constituted under section 194-C(3A) to be prevented from hearing cases that involved decisions in relation to a question of law, and the second proviso to section 194-C(3) was left intact.” Accordingly, the above proposed question stands dismissed as not pressed.
5. Learned counsel for the applicant has mainly made his submission in respect of findings as recorded by the Customs Appellate Tribunal relating to allegation of smuggling of the subject goods and has contended that the Customs Appellate Tribunal was not justified to hold that the prosecution has failed to make out a case of smuggling against the respondent in terms of Section 156(1)(89) of the Customs Act, 1969, as according to the learned counsel, the respondents while intercepted by the Customs Authorities could not produce import documents in respect of the subject goods i.e. 31 bundles weighing 3440 kgs. of foreign origin ‘Nylon/Poly Cotton fabrics’ loaded in the trucks, whereas, the burden was upon the respondent to establish that subject fabric found in possession of the respondent was lawfully imported, and leviable duty and taxes have been paid. It has been further submitted that in terms of Section 2(s), Section 16 read with Section 156 (1)(8)(89) of the Customs Act, 1969, the offence of smuggling is made out against the respondent, therefore, it has been prayed that the impugned judgment may be set aside and the questions proposed may be answered in favour of the applicant and against the respondent.
6. Conversely, learned counsel for the respondent has vehemently opposed the maintainability of instant reference application, as according to the learned counsel, questions proposed hereinabove are not the questions of law, as the same refer to the disputed questions of facts. Whereas, according to the learned counsel, the judgment passed by the Customs Appellate Tribunal in the instant case is based on findings of facts, which otherwise does not suffer from any factual error or legal infirmity, therefore, does not require any interference by this Court while exercising its Reference jurisdiction under Section 196 of the Customs Act, 1969. It has been further contended by the learned counsel for respondent that the subject fabrics, which is freely importable without any restriction, and also freely available in the open market, was purchased by the respondent from a local shop at Karachi, namely, Abdul Ghafoor Cloth House situated at Star Shopping Centre near Bohri Bazaar, Saddar, Karachi, vide cash memo / Bill No.702 dated 25.08.2014 and booked through Super Swabi Goods Transport Company, Quaid-e-Azam Truck Stand, Hawks Bay Road, Karachi, vide Bilty No.10442 dated 27.08.2014 and Bilty No.10459 dated 28.08.2014 for its destination to Peshawar, but the applicant illegally and unlawfully detained/seized/confiscated the same at Hyderabad Bypass near Al-Falah Hotel, Main Hyderabad City. According to the learned counsel for respondent, in view of the judgments passed by this Court as well as by the Hon’ble Supreme Court, the offence of smuggling under section 2(s) of the Customs Act, 1969, can said to have been committed only if, the goods expressly mentioned in section 2(s) or any other goods notified therein, are brought into Pakistan by evading the payment of customs duty and taxes leviable thereon. It has been further contended by the learned counsel for respondent that since the import of subject goods/fabric is not banned and the same are freely importable and available in the open market, whereas, the Customs Authorities with malafide intention on mere presumption have intercepted and detained the subject fabric within the city limits of Hyderabad, without confronting the respondent with any alleged material to support the allegation that the subject fabric is smuggled, therefore, the entire action of seizing and detention of the fabric and the adjudication by the Adjudicating Authority on such basis, is illegal and without lawful authority. While concluding his arguments, learned counsel for the respondent submitted that the judgment passed by the Customs Appellate Tribunal depicts the correct legal position and has been based on the decision of the Hon’ble Supreme Court on the subject controversy, therefore, does not require any interference by this Court. It has been prayed that instant reference application, being devoid of any merits, may be dismissed and the questions proposed may be answered against the applicant and in favour of the respondent.
7. We have heard the learned counsel for the parties, perused the record with their assistance and have also examined the relevant provisions of Customs Act, 1969 and the case-law as referred and relied upon by the learned counsel for the parties.
8. From perusal of record, it appears that the Customs Authorities, while intercepting the subject consignment within the city limits of Hyderabad acted on the presumption that the subject goods are smuggled items, however, did not confront the respondent with any adverse material to support the allegation that subject fabric is either banned article or its import is restricted under the Import Policy Order. It further transpires that the documents produced in respect of purchase of the subject fabric were not duly verified by the Customs Authorities, so that it could be ascertained and verified as to whether the respondent has committed an offence of smuggling, while bringing into the country any banned/restricted articles without payment of leviable duty and taxes by violating the provisions of the Customs Act, 1969 and the Import Policy Order. The allegation against the respondent was not for having committed an offence of smuggling rather the allegation was that the respondent is found in possession of smuggled articles under Section 156(1)(8)(89) of the Customs Act, 1969. This aspect of the matter has been dealt with by the Customs Appellate Tribunal in the impugned judgment after detailed scrutiny of the facts in Paras 8 to 10, which reads as follows: -
“8. Arguments heard and concluded. After perusal of the record and arguments extended by both the parties, it has been noticed and observed that after receiving a credible information through Assistant Collector (Preventive), MCC Hyderabad, the team constituted thereon intercepted the trucks bearing Registration No.C-2523 and C-8007 of M/s. Super Sawabi Goods Transport Karachi loaded with the subject goods at bypass Hyderabad, near Al-Falah Hotel. The driver of the truck produced the bilties as per the show cause notice, same are available on record. The driver is not been able to provide any legal import about the such detained consignment, which was accordingly seized during the hierarchy of the customs at the time of passing the order by adjudicating authority as well as Collector (Appeals) without verifying the subject documents which were provided by the appellant during the hearing proceedings about the local purchase not these documents were not taken into consideration in proof thereof as mandatory under Section 187 of the Customs Act, 1969. It is evident from the record that the subject goods are importable and freely available in the open market and the imports of all such goods were not banned in the country. Under such circumstances presumptions could arises that the goods in question were brought in the country unless contrary was shown, even providing the relevant purchase documents the seizing agency never made any attempt to verify the same or to controvert the same as forged or illegal. In the subject case, it is not denied by any forum that the subject seized goods are importable and the appellant produced purchase receipts before the adjudicating officer, but they did not come any tangible reason what so ever, as to why these documentary evidence was not relied upon. The Supreme Court of Pakistan in case reported PLD 1962 (SC 440) observed that, wherein the receipt of purchase and payment of money produced by the person from whom smuggled items were recovered was accredited with truth and the Court held that he had discharge the burden of proof mandated under the law. On the grounds of such observation the Honorable Supreme Court while deciding the Customs Appeal No.68/2002 My Lord Mr. Justice Tasadduq Hussain Jillani along with My Lord Mr. Justice Asif Saeed Khosa observed that the section required reasonable belief on the part of the persons seizing the goods that act to defraud the government. If the person purchases goods from an ordinary market then in the absence of any suspicious circumstances or some defined facts leading to that inference the customs officer is not entitled to a reasonable belief that the government has been defrauded of the duty payable on the goods. The ordinary method of the import of goods from outside, into Pakistan is that they come through customs barriers and the duty payable is in fact paid, that presumptions, presumes, therefore, are accepted of any goods which may be sold in open market in the absence of any indication to the contrary would be that duty has been paid on them. It is also important to observe that the subject goods were admittedly intercepted well within the city area Hyderabad Bypass near Al Falah Hotel far from the border area, the place of seizure is not notified as border area. Section 177 of the Customs Act, 1969 and notification No.SRO-118(I)/1983 dated 02.02.1983, has notified the area of 5 miles adjacent to the frontier of Pakistan with India and Iran be area to which the provision of section 177 shall applied. There is No specific notification has been issued for other borders. Even otherwise the clause (8) and (89) of Section 156 of the Customs Act, 1969 is allegedly attributed collectively against the appellant, does not have any warrant to be implemented under the circumstances noted above.
9. Even otherwise, coming towards the aspect of charges attributed against the appellant through show cause notice, Section 2(s) clearly depicts that smuggling means bringing into or take out of Pakistan in breach of any prohibition or restriction for time being in force (enroute pilferage of transit goods) or evading payment of customs duties and taxes leviable thereon. Scrutiny of document clearly reveals that, the impugned goods were not banned, nor brought from unauthorized route (purchase receipts) are, therefore, Section 2(s) of the Customs Act, 1969, is not attracted in this case and the Appellant denies any violation. Similarly, Section 16 of the Customs Act, 1969, has not been violated as the section deals with prohibited items of importation as notified in the Gazette. In this case the importable goods were imported for which relevant Import Policy does not place any bar therefore, no violation of Section 16 of the Customs Act, 1969. Therefore, the Show Cause Notice is based on the presumption only which is not tenable in realm of legal connotation and statute. Penal clause 156(1)(8) (which was invoked for violation of Section 2(s) is not relevant as the impugned truck was lawfully imported into Pakistan. Similarly, Section 156(1)(89) is also not relevant as the impugned goods are not smuggled by any standard as the relevant GD, import documents, original registration and pre-shipment certification and clarification of shipper for the impugned truck are on record. Similarly, no violation of Section 3(1) of Import and Export (Control) Act, 1950, is visible as the goods were lawfully imported complying all the dictates of Import Policy Order in vogue, nothing contrary has been established or produced by the seizing agency, nor they controverted the documentary evidence produced by the appellant during the hierarchy of the customs.
10. The above discussion persuades me to observe that if a person has been found without lawful excuse in possession of smuggled goods etc., he would be dealt with under clause (89) of section 156 of the Customs Act and if the evidence produced by the prosecution establishes that accused was smuggling the goods into Pakistan, then he would be liable to be dealt with under clause (8) of Section 156 of the Customs Act 1969 and in such circumstances, would not be punished, under subsection (89) of Section 156 of Customs Act. Thus, clause (8) applies in relation to the very act (or acts together) which constitute the offence of smuggling. As Section 2(s) makes clear, this would include an attempt to smuggle and/or an abetment or connivance thereof. Clause (89) on the other hand applies to, or at, the stage when the offence of smuggling is already complete. The difference can also be understood by noting that in clause (8), the word “smuggled” is used as a verb, whereas in clause (89), it is used in a descriptive sense as part of the expression “smuggled goods” (i.e., as an adjectival participle or verbal adjective to indicate a past or completed action). When the facts and circumstances of the present case are perused, it is clear that clause (8) had no application at all.”
9. In view of hereinabove facts and circumstances of the case, we are of the opinion that the Customs Authorities have proceeded against the respondent merely on presumption, in absence of any concrete material or evidence available with them to substantiate the allegation of smuggling against the respondents in respect of the subject fabric, which otherwise is freely importable and also available in the open market. Moreover, once the respondent discharged its initial burden of proof regarding lawful possession of the subject fabric in terms of Section 187 of the Customs Act, 1969, while producing the relevant documents, including GDs, import documents, pre-shipment certificate, cash memo / Bill No.702 dated 25.08.2014, and booked through Super Swabi Goods Transport Company, Quaid-e-Azam Truck Stand, Hawks Bay Road, Karachi, vide Bilty No.10442 dated 27.08.2014 and Bilty No.10459 dated 28.08.2014 for its destination to Peshawar, the burden was shifted upon the Customs Authorities to dislodge the claim of respondent by producing any adverse material, which the Customs Authorities in the instant case have miserably failed to discharge such onus. Accordingly, we do not find any substance in instant Reference Application, which is misconceived in facts and law. Moreover, the judgment of the Customs Appellate Tribunal is based on findings of facts, which otherwise does not suffer from any factual discrepancy or legal infirmity, hence requires no interference by this Court while exercising its Reference jurisdiction under section 196 of the Customs Act, 1969, which is restricted to only examine the questions of law arising from the judgment passed by the Customs Appellate Tribunal. Reliance in this regard can be placed in the case of Messrs Japan Storage Battery Ltd. v. Commissioner of Income Tax Companies Zone-1, Karachi (2003 PTD 2849). Consequently, the Questions No.2 to 4, as referred to hereinabove, are answered in “negative” against the applicant and in favour of the respondent.
10. The above Reference Application stands disposed of in the above terms.
J U D G E
J U D G E