Sheikh FAROOQ AHMAD VS COLLECTOR OF CUSTOMS (APPEALS), 2013 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 1786 (2013)

(a) Customs Act (IV of 1969)---

----Ss.194-A (5) & 215---Appeal to the Appellate Tribunal---Service of order, decision etc.---Condonation of delay---Copy of order-in-original was not served/communicated to the appellant as he was out of Pakistan for quite a long time---Factum of passing the order-in-original came to the knowledge of the appellant on 20-02-2012 certified/attested copy of the order-in-original was issued and was received on 14-3-2012, in such scenario the order-in-original could not be communicated or served upon the appellant in person---Section 215 of the Customs Act, 1969had enumerated the modes and the manner in which service of order, summons etc. could be affected---Evidently, such mode of service had not been followed for the purpose of service of order-in-original upon the appellant---Where an order or judgment had not been communicated or served or conveyed to the party, limitation in filing the appeal would not start running---Circumstances warranted to condone the delay in filing the appeal and it was ordered by the Appellate Tribunal accordingly.

1960 PTD 1045; 2002 PTD 1035; 2010 PTD 2261 and 2010 PTD (Trib.) 1904 rel.

(b) Customs Act (IV of 1969)---

----Ss. 156(1) (14) (50) (51) (58) (59), (61), (62) (90), 13, 32(1)(2), 79, 84, 86, 88, 97, 104, 116, 162, 163, 168(3) & 178---Punishment for offences---Removal of goods from private bonded warehouse---Penalty was imposed on the appellant on the ground that he had played pivotal role in evasion of customs, duty and other taxes as he settled the deal with the indenter for import of consignment; and in league with co-accused hired a premises which premises was used for illegal storage of bonded goods and he, keeping himself behind the screen managed all the affairs and committed the fraud; that he had neither joined the investigation nor had appeared before the Trial Courtand that he had been declared absconder by the court of Special Judge Customs, Taxation Anti Smuggling---Validity---Assuming that the appellant guided in arranging the premises on rent as alleged in the show cause notice that did not in any manner whatsoever led to an adverse inference to be drawn against the appellant and that no element of mens rea or actus reus was involved or alleged in the show cause notice against the appellant---Penal provisions, in circumstances, were not attracted against the appellant, as it was nowhere alleged in the show cause notice, that the appellant removed the goods from the bonded warehouse or for that matter was privy to the alleged offence---Proprietor of the firm made it very much clear that the goods were actually removed by him only and rest of the parties to the show cause noticewerehavingnolinkage/concernwithanyactivitycarriedoutby him---Licensee of the private customs bonded warehouse, duringthehearinghadalsoadmittedthatthegoodswereremovedby him and such submission had been incorporated in the showcausenotice---Inthepresenceofconfessionalstatementgiven before the Special Judge, Customs and also in the written statementbeforetheCollector(Adjudication)thereremainednologic and reasoning to implicate andimposepenaltyontheappellant---Actionon the part of Department imposing penalty upon the appellant was illegal, void ab initio, without lawful authority and jurisdiction, preposterous, based on wanton and callous behavior and as such was nullityintheeyesoflaw---Order-in-originalwassetasidetotheextent of the appellant only by the Appellate Tribunal.

(c) Customs Act (IV of 1969)---

----S.86---Wherehousing of goods---Removed of goods---Evidence---Presumption or assumption, howsoever strong and high it might be would not lead to an adverse inference in the absence of any solid and concrete evidence to the contrary.

(d) Customs Act (IV of 1969)---

----S.86---Wherehousing of goods---Removal of goods---Purported evidence---Purported parrot-like statements of the partisan witnesses had been projected to have been recorded by the Investigating Officer, as was reasonably suspected, to besmear the reputation of the appellant---No evidence much less incriminating evidence was available with the prosecution qua the appellant, and the purported evidence, if any, had no sanctity in the eyes of law, as the statements of parties' witnesses, if any, were not substantive piece of evidence, as such, was not admissible in the process of law.

(e) Customs Act (IV of 1969)---

----S.86---Wherehousing of goods---Removal of goods---Show cause notice---Adjudicating officer cannot go beyond the scope of the allegations/charges levelled in the show cause notice, and if it does so, the very action together with the super structure built thereon is blown to smithereens.

Shoeb Ahmad for Appellant.

Ghulam Bari, Inspector for Respondents.

Date of hearing: 16th May, 2013.

JUDGMENT

CH. MUHAMMAD ASGHAR PASWAL, MEMBER (JUDICIAL).---This appeal has been filed against Order-in-Original No.35 of 2003 dated 19-4-2003 passed by the Collector of Customs (Adjudication) Lahore.

2.Brief facts of the case are that specific information was received to the effect that goods imported by Messrs Standard Engineering and in-bonded in their customs private bonded warehouse have been removed illegally and substituted with other coils of less weight and quality. The scrutiny of record of bond Section reveals that a consignment of (191 coils of HRC Secondary Quality) was in bonded out of 79 coils were ex-bonded against various ex-bonded bills of entry. In this way, there should have been 112 coils weighing 2345.640 M.Ton in balance.

2A.Therefore, a team comprising of customs officers and staff was constituted. On 10-10-2001, the members of the team visited the premises of Messrs Standard Engineering, Multan Road, Lahore. The premises were found locked and customs lock was also found replaced. In these circumstances, there was sufficient reason to believe that the bonded goods have been removed before adhering to the procedure under Section 162 of the Customs Act, 1969. Therefore, after completing the formalities of Section 163 of the Customs Act, 1969 and preparation of memo for breaking the locks, members of the team entered the above private bonded warehouse for verification of stock position. Before pressing into service the provisions of breaking of the locks, a formal report No.12 dated 10-10-2001 was registered with Police Station Phool Nagar, District Kasur. Search of the said premises, was conducted in the presence of independent witnesses, which led to the recovery of 112 coils of HRC, GP and of Pak origin with detail of weight as under:--

The weight of the available coils was ascertained as 276.006 M.Ton instead of 2345.640 M.Ton which should have been in the balance. It was, thus, evident that bonded goods were illegally removed and replaced with the other coils of less weight and quality. Therefore, the available coils, which assumed the character of tainted goods, were seized in terms of section 168(3) of the Customs Act, 1969 punishable under clauses (1), (57), (58), (59), (61), (62) & (90) of section 156(1) read with section 178 of the Customs Act, 1969. A criminal case vide F.I.R. No.715 of 2001 dated 29-10-2001 was also registered with Police Station Phool Nagar, District Kasur.

3.In view of the above facts, it was apparent that Messrs Standard Engineering, Lahore and others removed imported 112 coils weighing 2345.640 M.Ton and deprived the Government of its legitimate duty and taxes leviable thereon which amounted to Rs.17,034,954. Therefore, they contravened the provisions of sections 13, 32(1)(2), 79, Chapter-X1 Sections 84,86, 88, 97, 104,116 and 178 of the Customs Act, 1969 punishable under clauses (1), (14), (50), (51), (58), (59), (62) and (90) of Section 156(1) ibid.

4.Therefore, in exercise of the powers conferred under section 179 of the Customs Act, 1969, a show cause notice dated 22-6-2002 was issued wherein Messrs Standard Engineering, Yaser Iqbal, Zahid Hussain, Farooq Ahmad, Muhammad lqbal, M/s. Prudential Commercial Bank (now Saudi Pak Commercial Bank Ltd.), Messrs Harvester Services (Pvt.) and Messrs Standard Agencies (customs clearing agent) were charged for imposition of penalties for contravention of the provisions of law enumerated in above besides recovery of evaded amount of duty and taxes chargeable under section 18 read with sections 84, 86, 97 and104 of the Customs Act, 1969.

5.Being aggrieved and dis-satisfied of the said order, Sh. Frooq Ahmad S/o Muhammad Siddique of Lahore filed the instant appeal before this Tribunal on the following grounds:-

(a)Proceedings in this case were initiated on the basis of contravention report submitted by one of the official of Collectorate of Customs Department and a show cause notice was issued on 22-6-2002. Prior to issuance of the impugned notice, the appellant departed to USA p.m. 23-7-2001 to settle down there along with his family. To substantiate the contention photo copy of the passport is annexed. Accordingly the impugnedorderinoriginalwaspassedinabsentiai.e.on3-2-2003.

(b)On 27-1-2011, the appellant came into Pakistan and sometime after 15-2-2012, it was intimated to the appellant at the residentialaddress through someofficialoftheCustomsthatan amount of Rs.350,000 is outstanding against the appellant. On 20-2-2012, an application for issuance of certified copy of the order in original was moved which was communicated on 14-3-2012. To support the assertion, affidavit has also been filed by the appellant. It was thus, prayed that since, the facts stated supra are that sufficient cause which prevented the appellant from lodging the appeal, therefore, limitation in filing the appeal may be reckoned from the date of service and communication of the order upon the appellant and the delay, if any, may be condoned.

(c)That limitation in filing the appeal in the instant case would run from the date of communication of order in original because no order whatsoever was ever communicated/served upon the appellant till 14-3-2012 as the appellant was out of Pakistan. Customs Act clearly provides that any order or decision passed or any summons or notice issued under this Act shall be communicated and served upon the party preferring the appeal which fact is evidently missing in the instant case.

(d)That as regards the allegations levelled against the appellant, not an iota of evidence is available on record which could connect the occurrence to the offence mentioned in the show cause notice. The appellant has no link with Messrs Standard Engineering and its owner except the appellant is his real uncle. Evidently, the appellant has no concern whatsoever with Messrs Standard Engineering and the offences committed by the said concern or its management. The allegations levelled in the show cause notice as well as in the order in original.

(e)It is a cardinal and established principle that the limitation in filing the appeal shall run from the date of communication or service of the order. This ratio is laid down in quite a number of case-law e.g. 1960 PTD 1045, 2002 PTD 1035, 2010 PTD 2261 (Trib.) and 2010 PTD (Trib.) 1904.

6.On the contrary the learned DR vociferously and strongly opposed the contention raised supra that the condonation of delay for such a long period may not be condoned on the facts and in the circumstances of the case.

7.After appraising the facts available on record and on going through the case-law cited at the bar, we have come to an inescapable conclusion that copy of the order in original could not be served/communicated to the appellant as he was out of Pakistan for quite a long time. Factum of passing the order in original came to the knowledge of the appellant some days after his arrival in Pakistan. On an application filed by the appellant on 20-2-2012 certified/attested copy of the order in original was issued and was received on 14-3-2012. Obviously, in the present scenario, how come the order in original could be communicated or served upon the appellant in person. Section 215 of the Customs Act, 1969 has enumerated the mode and the manner in which services of order, summons etc. couldbe affected. Evidently, those have not been followed for the purpose of service of order in original upon the appellant. It is well settled by now that where an order or judgment had not been communicated or served or conveyed to the party, limitation in filling the appeal would not start running. We are, therefore, constrained to hold that circumstances of the warrant to Condon the delay in filling the appeal in the present case and it is ordered accordingly.

8.After condoning the delay, the learned counsel for the appellant was ordered to argue the case on merits. It was stated that a show cause notice was issued to eight parties inclusive of the appellant on the ground that Messrs Standard Engineering and its proprietor Yasir Iqbal (the licensee), illegally removed the imported goods in bonded in the Customs Private bonded warehouse and replaced with other coils of less weight and quality. A criminal case was also registered against the licensee on account of violation of provisions of the Customs Act. As regards the appellant, it was alleged that the provisions of Chapter-IX of the Customs Act, 1969 punishable under Clauses (1), (57) (58), (59) (61), (62) and (90) of section 156(1) read with section 178 of the Customs Act, 1969 was contravened. A detail investigation was carried out as a result of which the following role was attributed to the appellant, the relevant paras of which are that the:--

(a)Accused Sh. Farooq Ahmad (uncle of the warehouse) was the person who settled the deal with indenter for import of the above consignment.

(b)The premises of Haveli Saleem Khanzada, Jamber Khurd, Multan Road, Lahore was hired by accused Sh. Muhammad Iqbal (father of the licensee) and Sh. Farooq Ahmad (real uncle of the licensee). The rent of this premises was also paid by accused Sh. Muhammad Iqbal through one Ghulam Mustafa Jamali (an employee).

(c)Accused Sh. Muhammad Iqbal and Sh. Farooq Ahmad were the persons who managed all the affairs in respect of the consignment by keeping themselves behind the screen (unquote).

9.In response to show cause notice, a detailed reply was furnished by Yasir Iqbal, proprietor Standard Engineering, inter alia, stated of his reply that Sh. Farooq Ahmad, had neither settled deal with the indenter for the import of said consignment nor he had any business links. Besides, confessional statement also made by Yasir Iqbal before the Special Judge Custom, Taxation and Anti Smuggling that he is liable to pay duties and taxes on goods reported/found short.

10.As regards the allegations levelled against the appellant, not an iota of evidence in available on record which could connect to the occurrence to the offenses mentioned in the show cause notice. There is no denying the fact that the appellant did not have any business ties/links with M/s. Standard Engineering and its owner/proprietor (M. Yasir Iqbal) except the appellant is his real uncle. Evidently, the appellant has no concern/relevance whatsoever with Messrs Standard Engineering and the offence committed by the said concern or its management. The allegations levelled in the show cause notice and in the order in original are based on assumed facts such as that the appellant settled the deal with indenter for import of consignment and the godown was got hired by the appellant. It is significant to state here that rent of the premises was paid by Sh. Muhammad Iqbal father of Mr. Yasir lqal (owner of the business) moreover, Mr. Yasir Iqbal proprietor Standard Engineering has not only stated in his written reply/statement but has also confessed before the Special Judge, Custom Lahore that the entire business belong to him and he is responsible to make payment of taxes, duties etc. further, the order in original has been passed in absence of the appellant as he was out of Pakistan in those days. The replies furnished could not convince the learned Collector (Adjudication) and he concluded that the charges levelled against the appellant, that he settled deal with the indenter for import of imported goods, stood established. Accordingly, penalty of Rs.25,000, Rs.1,00,000, Rs.25,000 and Rs.2,00,000 totaling Rs.3,50,000 was imposed in terms of clauses (59), (61), (62) and (90) respectively of section 156(1) of the Customs Act, 1969.

11.It was vehemently argued that the appellant had no business relations whatsoever with Standard Engineering or its proprietor. Even not an iota of evidence was available on record which could established nexus with the occurrence to the offences motioned in the show cause notice. There is no law of the land whereby real uncle can be held liable for any alleged commission of offences by his nephew. There is also no specific allegations supported by any cogent evidence against the appellant, hence issuance of show cause notice was unwarranted and uncalled for in the eyes of law. Thus, the impugned show cause notice as well as the order in original passed is bad in law, against the facts and contrary to the circumstances of the case.

12.The learned D.R., on the other hand strongly opposed the contention raised by the learned counsel for the appellant on the following grounds:-.

(i)That impugned show cause notice and order in original are on merit on justice and valid in the eye of the law.

(ii)That there is material evidence on record to establish involvement of accused Sheikh Farooq Ahmad in commission of the fraud.

(iii)That accused Sheikh Yasir Iqbal made confessional statement before the court of Special Judge (Customs, Taxation and Anti Smuggling), Lahore on 11-12-2011 and he was convicted by the above court. In this way offence committed in the case stood established.

(iv)That accused Sheikh Farooq Ahmad has played pivotal role in evasion of custom duty and other taxes. He settled the deal with the indenter for import of the above consignment. He, in league with co-accused namely Sh. Muhammad Iqbal, hired a premises namely Havali Saleem Khanzada, District Kasur. This premises was used for illegal storage of bonded goods. He, keeping himself behind the screen managed all the affairs and committed the fraud. A penalty for Rs.350000 imposed on accused person is on merit and valid in the eye of the law.

(v)That accused Sh. Farooq Ahmad has neither joined the investigation nor has appeared before the Trail Court. He has been declared absconder by the court of Special Judge Custom, Taxation Anti Smuggling, Lahore.

13.Having given anxious thought to the averments raised supra and on going through facts in depth as well as the rival arguments put forth at the bar, The Bench came to the conclusion that the role attributed to the appellant in the impugned show cause notice and as a result of which penalty of Rs.3,50,000 imposed by passing the impugned order-in-original has no sanctity in the eyes of law. This act of the learned Collector (Adjudication) clearly and explicitly indicated pre-conceived determination to penalize the appellant for no fault of his especially when the prosecution has miserably failed to adduce any evidence whatsoever against him qua the wild allegations levelled in the impugned show cause notice and in the order-in-original. Coupled with it, the owner of Standard Engineering namely Yasir Iqbal has categorically confessed in his statement before the Special Judge Customs that he committed the offence by himself and is responsible to make the entire payment of taxes and duties.

14.It is also noted that the investigation qua the allegation levelled by the Collector (Adjudication) against the appellant was carried out in a fanciful and colorful manner. Resultantly, the actual perpetrator of fraud has been let off and the innocent people like the appellant has been maligned and implicated as well as arraigned in impugned show cause notice only to portray the appellant to be an accused person. Further there is neither a whisper nor a shred of evidence, apart from the presumption, has been brought on record by the Collector (Adjudication). Even no wrongful and illegal act was committed by the appellant from which a reasonable inference can be drawn that the appellant has committed offences. It is trite law that presumption or assumption, how strong and high so ever, does not lead to an adverse inference in the absence of any solid and concrete evidence to the contrary. Also added that the purported parrot-like statements of the partisan witnesses have been projected to have been recorded by the Investigating Officer, as is reasonably suspected, to besmear the reputation of the appellant. Be that as it may, no evidence much less incriminating evidence is available with the prosecution qua the appellant, and the purported evidence, if any, has no sanctity in the eyes of law, as the statements of parties witnesses, if any, are not substantive piece of evidence, as such, is not admissible in the process of law.

15.Assuming that the appellant guided in arranging the premises on rent as alleged in the impugned show cause notice, does not in any manner whatsoever leads to an adverse inference to be drawn against the appellant and that no element of mens rea or actus reus is involved or alleged in the impugned show cause notice against the appellant. So far as invocation of penal provisions is concerned, in no way that is attracted against the appellant, as it is nowhere alleged in the impugned show cause notice, that the appellant removed the goods from the bonded warehouse or for that matter was privy to the alleged offence. It is settled norm, that the adjudicating officer cannot go beyond the scope of the allegations/charges levelled in the impugned show cause notice, and that, if it does so, the very action together with the super structure built thereon is blown to smithereens.

16.Coming to the confessional statement, the sole proprietor of the said firm, namely Yasir Iqbal, made it very much clear that the goods were actually removed by him only and rest of the parties to the show cause notice were having no linkage/concern with any avidity carried out by him. Further the licensee of the private customs bonded warehouse, namely above, during the hearing has also admitted that the goods were removed by him and this submission has been incorporated in the impugned show cause notice. Thus, in the presence of confessional statement given before the Special Judge, Customs, Lahore and also in thewrittenstatementbeforetheCollector(Adjudication),thereremains no logic and reasoning to implicate and impose penalty on the appellant.

17.After weighing pros and cons of the case, I have no ambiguity in my mind except to hold that the action on the part of the Collector (Adjudication) imposing penalty of Rs.3,50,000 upon the appellant is illegal, void ab initio, without lawful authority and jurisdiction, preposterous, based on wanton and callous behavior and as such is nullity in the eyes of law. Accordingly, the order in original is hereby set aside to the extent of the appellant only. Resultantly, appeal of the appellant succeeds to the extent and in the manner indicated above.

18.The appeal stands disposed of as above.

CMA/117/Tax(Trib.)Appeal accepted.