Spl.
Custom R.A. Nos.128, 129 and 130 of 2011
Present
Mr.
Justice Faisal Arab
Mr. Justice Aqeel Ahmed Abbasi.
Date
of hearing : 18.10.2011
Date
of judgment : 16 .12.2011
Applicant : The Collector, Model Customs Collectorate, through Mr.Mohsin Imam Advocate.
Versus
Respondent
Khuda Raheem and others
through Mr. Nawab
Mirza, Advocate
J U D
G M E N T
Aqeel Ahmed Abbasi, J:- Through instant reference applications the
applicant has impugned the order dated 10.11.2010, passed by the learned Member
Judicial-II, Customs, Excise and Sales tax Appellate Tribunal, Karachi Bench-II,
Karachi, in Custom Appeal No.H-947/2010 whereby the appeals filed by the
applicant against the Order-in- Appeal bearing No.3860 to 3865/2010 have been
dismissed through combined order. We intend to dispose off the above three
reference applications by a common judgment, as similar facts and the legal
issues are involved in all the three cases, whereas the questions proposed are also
common.
2. Following questions of law are said to
have arisen from the order of the Appellate Tribunal.
(i). Whether Hon'able Appellate Tribunal has
erred in law by giving undue benefit to the party/respondents without taking
into consideration the true spirit of section 2(s) of the Customs Act, 1969 and
the notification SRO.499(I)/2009 whereby the legislature has clearly ordained
the adjudication authority to decide the cases under quasi judicial powers by
confiscating out-rightly the vehicles used exclusively in the transportation of
smuggled goods and that no option to pay fine in lieu of confiscation may be
given to such vehicles?
(ii). Whether Hon'able Appellate Tribunal has
erred in law by overlooking the crucial aspect that the respondent had
miserably failed to discharge his mandatory burden of proof in terms of section
187 of the Customs Act, 1969?
(iii). Whether Hon'able Appellate Tribunal has
erred in law by accepting the plea of the respondent and by ignoring the
crucial aspect of the case that the documents submitted by the respondent
during the adjudication proceedings were entirely fake and forged and were not
supportive of his case?
(iv). Whether Hon'able Appellate Tribunal was
justified to hold the Order-in-Original dated 02.04.2010 passed by Deputy
Collector as barred by time limitation nearly by 55 days without taking into
consideration that the adjudicating authority had obtained extension of two
months from the competent authority in terms of section 179(3) of the Customs
Act, 1969 and by virtue of which it was valid upto 06.04.2010?
(v). Whether Appellate Tribunal has erred in law
by heavily relying upon the judgment of Hon'ble Baluchistan High Court in the
case of Collector of Customs Quetta vs. Muhammad Younus in which it was held
that in view of ruling of superior Courts holding that it is only at the Border
of Pakistan that taking out or bringing in the goods would be an offence but
more importantly overlooked the Hon'ble Supreme Court of Pakistan's judgment in
the case of CBR vs. Al-Haj Enterprises and another whereby the Apex Court
repelling the observation of Hon'ble High Court of Baluchistan held that
"High Court was not supposed to enter into the factual controversy in
exercise of its jurisdiction under Article 199 of the Constitution and for the
important reason that no such directions could be issued to the Customs
authorities not to intercept the trucks loaded with Oil or smuggled goods
except at Custom House Border Chaman."
3. The brief facts of the case as recorded by
the Tribunal in the impugned order are that the staff of the Hyderabad
Collectorate detained oil tankers bearing registration Nos.TTA-996, TTB-343 and
TTC-221 loaded with High Speed Diesel (HSP) suspected to be of Iranian origin.
The quantity of HSD loaded on the aforesaid oil tankers was verified as 28500
liters, 28000 liters and 29000 liters respectively. On verification the
documents submitted by the respondents were found to be faked. Therefore, the
HSD and the aforesaid three oil tankers were seized for violation of the
provisions of law as contained in section 2(s) read with sections 16 and 152(2)
of the Customs Act, 1969 and further read with section 3(1) of the Import &
Export (Control) Act, 1959 punishable under section 156(1) (89) of the Act.
4. Being aggrieved with the order passed by
the Adjudicating Officer, the respondents preferred appeal before Collector
(Appeals), who set aside the impugned orders and passed order for release of
the impugned HSD and return of the three truck/trailers to their rightful
owners. This order of the Collector(Appeals) was challenged by the applicant
through Customs Appeal No.H-947 to H-949/2010 filed before the Customs, Excise
and Sales Tax Appellate Tribunal Karachi Bench-II, who vide its order dated
10.11.2010 dismissed the appeals. The applicant being aggrieved and
dissatisfied with the finding of the Tribunal in the instant cases has filed
instant reference application before this Court and has proposed questions of
law as mentioned in para-2 hereinabove for opinion of this Court.
5. It is inter alia contended by the learned
counsel for the applicant that the Tribunal has erred in law and fact by
allowing the appeal, inspite of fact
that the applicant could not discharge the onus of proof in terms of Section
187 of the Customs Act, 1969. Per learned counsel, when three trucks containing
huge quantity of HSD oil were intercepted by the customs authorities on
National Highway and queries were made with regard to documents relating to the
purchase of the oil contained in the tankers, no plausible explanation was
offered whereas fake and forged documents were produced by the respondents. Per
learned counsel, since the respondents were carrying the smuggled oil,
therefore, confiscation of the trucks under the circumstances was strictly in
accordance with law. It has been further contended by the learned counsel that
the evidence produced by the applicant, as well as the laboratory test reports,
have not been properly examined by the Tribunal, as the same fully connects the
respondent with the crime in terms of Section 2(s) read with section 16 and 152
(2) of the Customs Act, 1969 punishable under Section 156 (1) (89) of the
Customs Act, 1969.
6. Conversely, learned counsel for the
respondent has vehemently opposed the arguments advanced by the learned counsel
for the applicant and submitted that the entire case against the respondent is
based on malafides, whereas no evidence as alleged in the show cause notice
issued by the customs authorities was committed by the respondent. Per learned
counsel, there is concurrent finding in favour of the respondent wherein the
Collector (Appeals) as well as the Tribunal after placing reliance on the
documents produced, particularly test reports of two Laboratories, held that
the seized oil was not foreign origin hence no charge of smuggling is made out
against the respondent. It is further contended that inspite of concurrent
finding against the applicant, the applicant is not releasing the confiscated
trucks to the respondents and the delay in this regard has badly effected the
condition of the trucks, which are rusting. Per learned counsel, the respondents
being transporters for hire had no direct role in transporting the subject
goods even if it was smuggled, since they had no means to know as to whether
the goods were of foreign origin. While concluding the arguments learned
counsel for the respondent has submitted that the impugned order passed by the
Tribunal is based on concurrent finding of fact recorded on the basis of documents
available on record hence cannot be agitated by the applicant through instant
reference application as the scope of reference is confined only to examine the
questions of law arising out of the order of the Tribunal, whereas in the
instant case no question of law has arisen, which may be answered by this
Court. It has been argued by the learned counsel that instant reference
applications be dismissed in limine.
7. Since the learned counsel for the
applicant has mainly assailed the finding of the Tribunal with regard to the
offence of smuggling and the discharge of burden of proof in terms of Section
187 of the Customs Act, 1969 and has not advanced any arguments on other
grounds, we would therefore, by consent of the parties, answer the questions
No.2 and 3 only which read as under:
(ii). Whether the Appellate Tribunal has erred in
law by overlooking the crucial aspect that the respondent had miserably failed
to discharge his mandatory burden of proof in terms of section 187 of the
Customs Act, 1969?
(iii). Whether the Appellate Tribunal has erred in
law by accepting the plea of the respondent and by ignoring the crucial aspect
of the case that the documents submitted by the respondent during the
adjudication proceedings were entirely fake and forged and were not supportive
of his case?
8. We have noted that the impugned order has
been passed by the Tribunal in respect of the owners of oil tankers which were confiscated
by custom authorities on the allegation of smuggling the HSD oil of foreign
origin. Admittedly, these trucks were intercepted by the customs authorities
near Bhirya City at National Highway on the basis of spy information and the
same were detained for three days for verification. Such detention was
converted into seizure and High Speed Diesel alongwith oil tankers were seized
on the charges of violating the provision of Section 2(s) read with section 16
& 157 (2) of the Customs Act, 1969 read with section 3(1) of the Import and
Export Control Act, 1950 punishable under section 156 (1) (89) and 157 (2) of
the Customs Act, 1969. The respondent when confronted with the allegations took
a plea that the Diesel Oil seized by the customs authorities is of Pakistani
origin and not of foreign origin and the same is purchased from Haji Ismail of
Al-Makkah Petroleum Service, which is a sales tax registered firm. Sale
Certificate, voucher, material gate pass and tank dip chart, issued by
Al-Makkah Petroleum Service to Haji Ismail were also produced. On the request
of respondents the representative samples of seized Diesel Oil were sent to
Hydrocarbon Institute of Pakistan, Karachi for Laboratory test. Accordingly,
samples from each tank of seized HSD were drawn in the presence of
representative of the department and claimant of HSD Oil. Hydrocarbon
Development Institute of Pakistan, Karachi submitted the test report wherein it
has been remarked that “samples confirm
to Pakistan standard Institute specification number 344: 1977 for HSD, to the
extent of tests carried out.” However, the Adjudicating Officer was not
satisfied with the explanation hence, passed the order-in-original, whereby HSD
Oil and tankers were confiscated.
9. It may be noted that while passing the
impugned order, the Adjudicating Officer did not bring any evidence on record nor
produced any test report from the Laboratory which could substantiate the
allegations of smuggling of the HSD oil by the respondents. We are of the view
that the impugned order was based on presumptions. It has been held that since
the respondents could not discharge their onus in terms of section 187 of the
Customs Act, hence the alleged offence of smuggling against respondents was
established. An appeal was preferred before the Collector (Appeals) against the
order-in-original, who, after hearing both the parties and after perusal of the
record and evidence produced, passed order in appeal dated 3.6.2010 wherein it
has been held that since the report of HDIP Karachi suggested that confiscated oil was of
Pakistani origin and not of Irani origin, therefore, the custom
department was not authorized to confiscate such oil and the tankers in terms
of section 168 of Customs Act, 1969. While reaching to such conclusion the
Collector (Appeals) has placed reliance on an identical case wherein the
Appellate Tribunal vide order dated 31.7.2008 passed in a Custom Appeal No.H-116/2008
has held that “Though it is the case of the department that the diesel confiscated by
the Anti Smuggling Squad was of foreign origin and smuggled one but they have
failed to produce even a single document or evidence in support of their
contention. On the contrary, the examination report issued by Hydrocarbon
Development Institute of Pakistan, Karachi shows that the sample confirmed to
be of Pakistan standard with exception of water.” Accordingly,
order-in-original was set aside with the direction to release the HSD oil and
three truck/trailers to their rightful owners.
10. The order of the Collector (Appeals) was
assailed by the department before the Customs, Excise and Sales Tax Appellate
Tribunal Karachi Bench-II Karachi in Custom Appeal No.H-947, 948 and 949 of
2010. The Tribunal, vide consolidated order dated 10.11.2006, after examining
the entire evidence, has maintained the order of Collector (Appeals), however,
to the extent of releasing the oil tankers to the respondents.
11. It may be noted that inspite of having acknowledged
the receipt of letter dated 04.03.2010 issued by M/s Al-Makkah Petroleum
Service, whereby delivery of HSD oil to the respondent was duly confirmed, the
Adjudicating Officer has discarded such evidence. Similarly, the evidence
produced by the respondent in the shape of sales tax invoice issued by M/s Al-Makkah
Petroleum Service, sales tax return for the relevant tax period, sale through
banking channel, source of purchase of HSD oil sold by one Haji Ismail and the
issuance of the voucher in respect of HSD oil, were also discarded by the Adjudicating
Officer without assigning any cogent reason. Test report dated 17.12.2009 in
respect of the seized oil, which confirmed it as “Pakistani standard instead of Irani” has also been discarded and
mis-interpreted by the Adjudicating Officer.
12. From perusal of the order-in-appeal and the
order passed by the Tribunal, it is seen that both the appellate forums have
found the documentary evidence produced by the respondents to be correct and sufficient
evidence to discharge the burden of proving the innocence by the respondents
whereas order-in-original has been set-aside. It has been held that initiation
of the proceedings by the department in the instant case was based merely on
suspicion, whereas there was no positive evidence or material available with
the custom authorities to establish the charge of smuggling against the
respondents. It has been further held that since the respondents have
discharged their initial burden by producing certain documents relating to
lawful possession of the seized oil as well as by producing the lab report, which
has nullified the allegation that the seized HSD oil was of Irani origin, the
burden was shifted upon the department to establish the charge of smuggling
against the respondents through positive evidence, which the department has failed
to do in the instant case. We are of the view that the finding of the Collector
(Appeals) and the Tribunal in this regard is based on proper appreciation of
facts and correct application of law.
13. Reference in this regard can be made
to the case of Kamran Industries Vs.
Collector of Customs PLD 1996 Karachi 68, wherein a division bench of this
Court, while examining the scope of burden of proof in terms of Section 187 of
the Customs Act, has held as follows:
“23. The next objection raised by the
learned counsel for the respondents is that under section 187 of the Customs
Act, the burden of proof was on the petitioner rather than upon the Customs
Authorities to categorically disprove the allegations of misdeclaration and
under-declaration leveled by the Customs Authorities. In this respect Mr. S.
Tariq Ali has contended that the rulings relied upon by the petitioner counsel
become inapplicable as the law has itself clearly cast the burden upon the
petitioner. In order to appreciate this objection it is pertinent to scrutinize
the provisions of section 187 which reads as follows:--
‘187.
Burden of proof as to lawful
authority, etc.—
When any
person is alleged to have committed an offence under this Act and any question
arises whether he did any act or was in possession of anything with lawful
authority or under a permit, licence or other document prescribed by or under
any law for the time being in force the burden of proving that he had such
authority, permit, licence or other document shall lie on him.’
It appears to us that
section 187 covers two situations which we state as follows:
(a) when a person is charged with an offence under
the Customs Act, the burden of proof is cast upon him to show that he had the
lawful authority to commit that act;
(b) when a person is found in possession of any
goods the burden of proof is cast upon him to show that he was holding such
goods under some lawful authority, permission or licence, etc.
Situation (b) is not
in issue in the present case, however, we feel that it provides for an
eventuality where a person is found to be in possession of certain goods which
fall under a prohibited category or which in an unlawful manner find place in
the possession or custody of the accused. In such case the burden is upon the
accused to show that he falls under some exemption or exception to hold such
goods. This type of eventuality as envisaged and stated in situation (b) above
is essentially a statement of the general principle of the law of evidence
contained in Article 121 of the Qanun-e-Shahadat that whosoever claims to all
under a preferential or exempt or excepted category must show that he fulfils
that conditions to fall within that category. This obviously should not be
confused with the fectum of possession for which no presumption or burden of
proof has been spelt out, in view whereof the possession itself has to be
proved independently by the prosecution beyond all reasonable doubt.”
It has been further held as under:
“We feel that it is
due to operation of the principles of incidence of burdens of proof vis-à-vis
“legal” and “evidential” burdens as discussed above that the process of
shifting of burdens become possible. We have already cited the opinion of
Adrian Keane and we hold that in order to determine as to which party bears the
legal or evidential burden would depend on the terms of the statute, the
case-law on the subject as also common sense and equity. In this case we are of
the view that in the situation in issue i.e. (a) as discussed in para 23 above,
section 187casts upon the petitioner-accused only the obligation to make out a prima facie case as it is only
the evidential burden which is borne upon it. Once the petitioners were to satisfy
this evidential burden, the legal burden to bring home the ultimate cases
lifted upon the customs authorities.”
“24. It is situation (a) as stated above in
para 23 which is directly in issue in this case i.e. whether the burden of
proof solely lies upon the petitioner to disprove allegations of misdeclaration
and misdescription leveled by the Customs Authorities and whether the Customs
Authorities are under no obligation to lead evidence and discharge any onus of
proof. This part of Section 187 of the Customs Act perhaps appears to be
contrary to the general principle of the law of evidence contained in Article
117 of the Qanun-e-Shahadat that whosoever alleges existence of a particular
fact must prove the same. There is little doubt that a special law or a
particular statute can provide for a distinct regime of rules of evidence than
contained in general law. In fact the law goes on as far as providing that the
laws of evidence can be altered even by mutual consent and contract. See S.M.
Anwar Sethi v. South British Insurance Company Ltd., (PLD 1975 Karachi 458).
However, on a closer scrutiny of the provisions of section 187 and the case-law
settled by our Courts on the subject it appears that in such a situation it is
only the evidential and tactical burden of proof which is cast upon the accused
while the legal burden to bring home the allegations remains with the
prosecution. Before we dilate upon the concept of the two types of burdens of
proof and explain the terms “tactical”, “evidential” and “legal” burdens of
proof we shall first discuss the case decided by the High Court of Sindh in
Barkat Ali v. The State PLD 1973 Karachi 659. In this case the controversy
revolved round section 177A of the erstwhile Sea Customs Act, 1878 which
catered for a similar situation as has arisen in the present case i.e. the same
provided the burden of proof upon the accused to disprove the case of the
prosecution that his intentions were not to defraud the exchequer or evade any
prohibition or restriction under the Act. Writing for Court Tufail Ali Abdul
Rehman, CJ was of the opinion that the said presumption of burden of proof
could not be drawn until the explanation of the accused was first taken into
consideration. According to the learned Judge the “normal principle” was
applicable i.e. that the accused was entitled to a benefit of doubt where he
offered a reasonable explanation which was either acceptable or raised a doubt.
In such cases the burden then shifted upon the prosecution to establish the
case.”
14. In view of hereinabove, we would answer the
questions No.2 and 3 in negative
against the applicant. Resultantly, the order of the Tribunal to the extent of
release of the tankers to the respondents is maintained. As regards remaining
questions proposed by the applicant, we are of the view that the same are
questions of fact which have otherwise become redundant in view of our decision
on questions No.2 and 3 hereinabove. The above reference applications are
accordingly dismissed alongwith listed applications.
JUDGE
JUDGE