COLLECTOR OF CUSTOMS VS QASIM INTERNATIONAL CONTAINER TERMINAL (PAK) LTD., 2013 PTD-KARACHI-HIGH-COURT-SINDH 392 (2012)

Customs Act (IV of 1969)---

----S.196---Reference application---Jurisdiction of High Court---Scope stated.

Scope of reference application in terms of section 196 of the Customs Act, 1969 is limited only to the extent whereby some question of law arising from the order passed by the Appellate Tribunal is referred to the High Court for its opinion, whereas question of fact, and the finding recorded by the Tribunal thereon, unless perverse or erroneous in fact and law, cannot be interfered by the High Court in its referral jurisdiction.

Sibtain Mehmood for Applicant.

Ilyas Ahsan, Customs Officer for Respondent.

Date of hearing: 25th November, 2011.

JUDGMENT

AQEEL AHMED ABBASI, J.---Through instant reference application, following questions have been formulated by the applicant, which according to learned counsel for the applicant arise from the impugned order dated 4-2-2011 passed by the Tribunal in Customs Appeals Nos.K-499 of 2009 and K-510 of 2009:--

(i)Whether on the facts and circumstances of the case theAppellateTribunalerredinlawtoholdthatinthecaseofshow-cause notice dated 13-3-2009 and Order-in-Original dated18-5-2009,therespondentTerminalOperatorcannotbepenalizedforillegalremovalofthecargoreceivedbythem?

(ii)Whether the Appellate Tribunal erred in law to circumvent and mis-read/mis-applied the facts by holding that the containers when opened for examination were "with original intact manifest seals", whereas the respondents own record shows that seals were changed, thus, the impugned order is perverse for non-reading and/or mis-reading of the record available before the Tribunal?

(iii)Whether while concluding impugned judgment dated 4-2-2011, the Appellate Tribunal has not erred in law and failed to appreciate that by virtue of sections 78 and 14-A of the Customs Act, 1969, S.R.O./Notification No.704(I)/2007, the respondent No.2, is bound to ensure the safe custody of cargo/goods and containers received either from a vessel or from the shipper trucks and to ensure that the goods, cargo and the containersare not tampered with in any manner whatsoever and the container seals are not removed or replaced in any manner whatsoever?

(iv)Whether the learned Appellate Tribunal has seriously erred in law and failed to appreciate that in case of illegal removal of goods/cargo from the Port Area in terms of clause (43) of subsection (1) of section 156 of the Customs Act, 1969, a penalty under the said provisions can not be imposed on the custodian of the imported goods?

(v)Whether the impugned order, passed by the Appellate Tribunal Bench-II, Karachi, based on misreading of evidence is sustainable under the law?

2.Brief facts as recorded by the Tribunal are that MessrsAl-Mehran Traders, Karachi imported two consignments comprising of 1740 packages packed in two containers, one container of 20 feet and the other of 40 feet. As per import general manifest one container of 20 feet bearing serial number TRLU 8935759 with seal No. OOLK 8126 arrived at Port Muhammad Bin Qasim on 12-1-2006 said to contain DVD plastic cases whereas the other container of 40 feet bearing serial number TPCU 8912120 with seal No. 002111 said to contain general goods arrived at Port Muhammad Bin Qasim on 27-12-2006. No Goods Declaration was filed against both the containers which remained under the custody of respondents Terminal Operator. The record shows that both the containers were opened for the first time by the import Auction Examination Staff i.e. the Appraising Officer in the presence of Surveyor and a representative of the respondent on 3-6-2007 and 10-6-2007 respectively, however, both containers were found in empty condition. A report was prepared by all the present and was duly signed by each of them but no proceedings whatsoever were initiated by the Collectorate apparently, for the reasons that containers were found empty, therefore, no action was required as per prevalent practice. Later on during an investigation the staff of the Directorate of Intelligence and Investigation-FBR, Regional Office, Karachi alleged that the importers in league with the Terminal Operator and the shipping companies i.e. MessrsEmirates Shipping Agency, Karachi and MessrsOrient Overseas Container Line (O.O.C.L), Karachi had removed the two containers clandestinely from the Qasim International Container Terminal (Q.I.C.T) without payment of duty/taxes leviable on the goods imported therein. It was further alleged that the said containers were full of goods containing 1740 packages/cartons, the Container No. TRLU-8935759 contained 1330 cartons and in Container No. TPCU-8912120 410 cartons. The respondent QICT and other persons were charged under the relevant provisions of law as quoted in the show-cause notice. The respondent's denied all the charges, however, the adjudication officer held that the goods from the containers in question were removed illegally during the intervening period, therefore, he confiscated both empty containers out rightly under Clauses 14, 14A of section 156(1) of Customs Act, 1969 in addition to a penalty of Rs.87,000000 was imposed on the importer/NTN holder with a like penalty of Rs.87,000000 on the respondents M/s. Qasim International Container Terminal (QICT) under Clause 43 of section 156(1) of the Customs Act, 1969.

3.Being aggrieved by such order, the respondent preferred an appeal before the Collector (Appeals), Karachi, who set-aside the order-in-original and modified the same.

4.Being aggrieved with the order passed by the Collector (Appeals), the Director General of Intelligence and Investigation-FBR, Karachi and the Collector of Customs, MCC (PaCCS), Customs House, Karachi, preferred two appeals i.e. bearing Customs Appeal No. K-499 of 2002 and Customs Appeal No. K-510 of 2009 before the Customs Appellate Tribunal Bench II, Karachi, who vide impugned common order dismissed the same which has been assailed by the appellant through instant reference application by raising the questions as referred to hereinabove para 1 of this judgment.

5.Learned counsel for the applicant has argued that the impugned order passed by the Tribunal is erroneous in fact and law, whereas the learned Tribunal has recorded its finding, which is based on non-reading and mis-reading of the evidence. It has been contended by the learned counsel that the Customs Appellate Tribunal, Karachi, has not appreciated the fact that in case of illegal removal of goods/cargo from the Port Area, a penalty in terms of section 156 (1) (43) of the Customs Act, 1969, is to be imposed on the custodian of the imported goods. Per learned counsel, the respondent was required to ensure the safe custody of cargo/goods and containers received either from a vessel or from the shipper trucks, whereas, in the instant case, the container's seals were tampered, hence the respondents were liable to be penalized in accordance with law.

6.We have heard the learned counsel for the applicant and have perused both the orders passed by the customs authorities, and the impugned order passed by the Customs Appellate Tribunal, Karachi. From perusal of the order passed by the Collector (Appeals) and the Customs Appellate Tribunal, it has been noted that concurrent finding has been recorded by both the forums, which has been based on the finding of fact, whereas the appellant could not establish the mense rea. It will be advantageous to reproduce the relevant finding of the Collector (Appeals), which reads as follows:--

"The department has not been able to bring on record any evidence of involvement of the QICT management in unlawful removal of the goods: in fact, the departmental representative has categorically stated that the department is not in position of any such evidence, thus, no mens rea has been proved against the appellant and the superior Courts of law have consistently held that no one should be punished in terms of the penal provisions contained in section 156(1) of the Customs Act, 1969 until clear evidence of involvement in the offence is brought on record. It has to be said that even higher level of evidence is required if such punishment is sought to be meted out to a multi national company of the stature of the appellant. From the record, it is apparent that even the modicum amount of evidence is not available against the appellant and, unfortunately, they have still been saddled with heavy amount of penalty. The only argument available with department is that since the appellants were custodian of purportedly imported/unlawfully cleared goods, penalty imposed on them is justified in terms of the provisions of the law contained in Clause (43) of subsection (1) of 156 of the Customs Act, 1969. However, the aforesaid arguments possess no weight in view of the fact that the department has completely failed to prove the element of mens rea on the part of the appellants. Under the circumstances, I am of the considered view that imposition of penalty on the appellant is neither morally justified nor maintainable in law. The same, therefore, remitted. The impugned order is modified to the aforesaid extent only and the appeal is allowed accordingly."

7.Similarly, the Appellate Tribunal after having taken note of all the factual and legal grounds raised by the appellant has recorded its findings in the following terms:--

"During the course of hearing before us we repeatedly called upon the appellants to supply any direct or indirect evidence corroborating that the said containers were discharged at the terminal with stuff goods and that the same were subsequently removed from the port as it is evidence that for the removal of two containers, two vehicles are required entry and exit into and from the port area which is not possible unless the officers of Customs and the port authority close their eyes. The Directorate have conducted fullfledged enquiry and they must have gathered evidences of illegal removal and unloading of the goods somewhere out of the port. The investigation is also totally silent as to how the both containers re-entered in the port area and the seals of the same numbers were again fixed on the containers. On the other hand, the respondent terminal operator has produced evidences of examination report duly signed not only by the private Surveyor and the representative of the respondent but both reports are also signed by an Appraising officer. The appellants did not dispute these reports except arguing that the containers were full of goods which were clandestinely removed. We are not inclined to agree with the contentions of the appellant particularly in wake of examination report which even show seal numbers and date and time of seal cuttings. We have also observed that the Directorate even did not bother to find out the position of the container at the time of examination from the said three persons who had signed the reports. Under the circumstances, we are constrained to hold that both the containers were found empty at the time of their first examination conducted on 3-6-2010 and 10-6-2010 and the appellants have failed to submit any direct or indirect evidence regarding removal of the containers from the port and their re-entrydespitethepostingoflargenumberofstaffattheexitand entry gates. A higher degree of proof is required for imposition of penal action against the accused in view of the judgment of the Honourable High Court of Sindh reported as PLD 1996 Karachi 68. As such issue No. (i) is answered in the negative."

8.As we have already noted that a factual controversy has been resolved by recording concurrent finding of fact by both the appellate forums below, which otherwise depicts correct legal position, whereas the learned counsel for the applicant has not been able to show any perversity or error in such finding. We are of the view that no question of law arises from the impugned order passed by the Customs Appellate Tribunal, hence the same does not require any interference by this Court in its reference jurisdiction. Scope of reference application in terms of section 196 of the Customs Act, 1969 is limited only to the extent whereby some question of law arising from the order passed by the Appellate Tribunal is referred to this Court for its opinion, whereas question of fact, and the finding recorded by the Tribunal thereon, unless perverse or erroneous in fact and law, cannot be interfered by this Court in its referral jurisdiction.

9.We do not find any merits in the instant reference application, which was accordingly dismissed in limine vide our short order dated25-11-2011 and these are the reasons for such order.

SAK/C-10/KReference dismissed in limine.