O R D E R     S H E E T

IN   THE   HIGH   COURT   OF   SINDH   AT   KARACHI

 

Spl. Custom R.A. No.233 of 2010

                                                

ORDER WITH THE SIGNATURE OF THE JUDGE

 

1.         For orders on CMA No.1659/11 (Exemption)

2.         For Katcha Peshi.

 

18-10-2011:

 

Mr. Zia-ul-Hassan, Advocate for the applicant.

                                      -------

    

Through instant reference application the applicant has impugned the order dated 22.04.2010, passed by the learned Judicial Member-II, Customs, Excise and Sales tax Appellate Tribunal, Karachi Bench, in Custom Appeal No.K-1276/2005 whereby the appeal filed by the applicants against the order-in- appeal has been dismissed.

2.            Following questions of law are said to have arisen from the order of the Appellate Tribunal.

1.         Whether any offence punishable under Section 2 (s) read with Section 156(1) (14) was committed by the applicant?

 

II.         Whether in the facts and circumstances of the case, the show cause issued by the respondent is not barred by time in terms of section 168(2) of the Customs Act 1969?

 

III.       Whether the learned Tribunal as well as the respondents had not erred in law by noting taking into consideration that Section 2 of the Foreign Exchange (Temporary Restrictions Act) 1998 did not place any restriction on taking out of foreign currency from Pakistan, except those held in the foreign currency accounts as on 28.05.1998?

 

IV.       Whether the foreign currency purchased from an authorized dealer in Pakistan for any purpose can be possessed or taken out from Pakistan in terms of Section 4 of the Protection of Economic Reforms Act, 1992?

 

V.        Whether the State Bank of Pakistan's Circular/Notification No.FE-2/98-SB dated 21.07.1998 is not in conflict with the provisions of both the Protection of Economic Reforms Act, 1992 and Foreign Exchange (Temporary Restrictions) Act 1998?

VI.       Whether in the facts and circumstances of the case the Order passed by the learned Tribunal is maintainable in law?

 

3.         The brief facts of the case as recorded by the learned Tribunal in the impugned order are that on the intervening night of 6th and 7th October, 2004 at about 4.30 hours, the Customs authorities intercepted 2 passengers, who were both brothers namely Mustafa Ali Ladiwala and Rizwan Hussain Ladiwala, transpired to be Pakistani national holding passport No.LA 094375 and C-611002 (in the name of Rizwan Hussain Ladiwala, who were leaving for Rome via Dubai by Emirates Airline's through flight No.EK-605. On examination foreign currency amounting to US$ 4850 (100X48, 20X2 and 10X1) notes in denomination and Euro 59930 (500X75, 200X66, 100X22, 50X140, 20X1 and 10X1) in denomination as well as 200 British Pounds (50X4) were recovered from both the passengers, which were seized alongwith traveling documents and the containers and the musheernama was prepared on the spot. Both the persons were arrested and served with the notice under Section 171 of the Customs Act, 1969. After the recovery of foreign currency notes, musheernama was prepared and was got signed by the musheers. Show Cause Notices were issued and the applicants were confronted to submit their reply and to explain the charges as contained in the Show Cause Notices wherein, it has been stated that the applicants attempted to smuggle foreign currency illegally and unlawfully by violating the provisions of Customs Act as well as the prohibition as contained in the Notifications bearing No.41/98 dated 28.05.1998 and FE/2/98-SB dated 21.07.1998 issued by State Bank of Pakistan.

4.         The applicants submitted their reply, however, it was not accepted and the order-in-original was passed by the learned Deputy Collector (Adjudication-II) on 02.03.2005, whereby the applicants were held liable for the offence as stated in the Show Cause Notice. The amount of foreign currency was confiscated and penalty of Rs.2,00,000/- was imposed upon the applicant The applicants being aggrieved by such order preferred an appeal before the Collector (Appeal-I), Collectorate of Customs, Sales Tax & Central Excise, Karachi, who vide his order- in- appeal dated 15.10.2005, maintained the orders-in-original to the extent of confiscation, however with the modification, directing the custom authorities to release the amount of US$ 10,000/- to each of the applicants. The applicant still feeling aggrieved by such order, preferred appeal before Customs, Excise and Sales Tax Appellate Tribunal, Karachi, has maintained the order passed by the forums below, however remitted the penalty imposed on the applicants.

5.         It is inter-alia contended by the learned counsel for the applicants that the provisions of smuggling against the applicant are not attracted in the facts and circumstances of this case as the applicants did not concede the foreign currency, which, per learned counsel, was lying in the jackets and therefore, they did not have any intention to hoodwink the Customs Authorities. Learned counsel further argued that the foreign currency was purchased from authorized dealer and the same was required by the applicants for making purchases in the foreign country. Per learned counsel, taking out foreign currency from the country is not an offence under Foreign Exchange Act, whereas protection has also been provided to the person dealing in foreign currency under the Economic Reforms Act, 1992.

6.         We have heard the learned counsel for the applicants and perused the entire case record. From the record, it is evident that the applicants were apprehended at the Quaid-e-Azam International Airport, Karachi, while trying to take out foreign exchange in excess of permissible amount of US$ 10000 or equivalent thereto in any other currency. They were confronted through a notice about the specific allegations which was duly responded by the applicants, however, no plausible explanation was furnished with regard to the allegations as contained in the Show Cause Notice. As per order in original, both the passengers while intercepted by the Customs Authorities were asked to declare if they were carrying any contraband goods or foreign currency in excess of permissible limit,   to which they replied in negative. However, being dis-satisfied by such reply their baggage was checked and during examination the foreign currency in the shape of Euro and US$ in excess of the maximum limit i.e. US$ 10000 was recovered from the possession of both the applicants. It may be noted that in terms of Notification No.107(i)/98 issued by the State Bank of Pakistan for the purposes of regulating transfer of foreign exchange through legal means no one is allowed to shift currency in excess of US$ 10000. Learned Tribunal has held that no declaration to Customs Authorities was made by the applicants, whereas the currency was apparently in excess of permissible limit of US$ 10000. It will be advantageous to reproduce Section 2(S), which defines the scope of smuggling:-

"2(S)     "smuggle" means to bring into or take out of Pakistan, in breach of any prohibition or restriction for the time being in force, or evading payment of customs-duties or taxes leviable thereon;--

 

(i)                 gold bullion, silver bullion, platinum, palladium, radium, precious stones, antiques, currency, narcotics and narcotic and psychotropic substances; or

 

(ii)               manufacturers of gold or silver or platinum or palladium or radium or precious stones, and any other goods notified by the Federal Government in the official Gazette, which, in each case, exceed [one hundred and fifty thousand rupees] in value; or

 

(iii)             any goods by any route other than a route declared under section 9 or 10 or from any place other than a customs-station.

 

and includes an attempt, abetment or connivance of so bringing in or taking out of such goods; and all cognate words and expressions shall be construed accordingly;

 

7.         From the perusal of Section 2(S) (ii), it is clear that if any goods other than as mentioned in clause (i), notified by the Federal Government in the official gazette, (which exceeds rupees 150,000/-  in value), is brought into or taken out of Pakistan in breach of any prohibition or restriction for the time being in force  will attract the provision of Section 2(S) and will be punishable under Section 156(8) of the Customs Act, 1969. Since there was restriction imposed by the State Bank of Pakistan, according to which foreign currency, in excess of US$ 10000 was not allowed to be taken out from Pakistan, except through banking channel, therefore, the act of the applicants attracted the provisions of Section 2(S) punishable under Section 156(8) of the Customs Act, 1969. We are of the view that the impugned order is based on concurrent finding of facts, which does not suffer from any factual and legal error, hence does not require any interference by this Court.

8.            Accordingly, the questions proposed at Sr. No.I, II, III and VI are answered in affirmative against the applicants, question at Sr. No.V is answered in negative against the applicants, whereas the question No.IV does not arise from the order of the learned Tribunal.

 

                                                                                                                       JUDGE                           

                                                                                  JUDGE

 

 

 

Nadeem