MUHAMMAD ALI VS FEDERATION OF PAKISTAN through Secretary, Revenue Division, 2013 PTD-KARACHI-HIGH-COURT-SINDH 628 (2013)

Customs Act (IV of 1969)---

-----Ss.186, 80, 32 & 25---Constitution of Pakistan, Art. 199---Constitutional petition---Import of goods---Detention of goods under S.186 of the Customs Act, 1969---Scope---Petitioner paid the duty and taxes assessed by the Customs Authorities, and the consignment of the petitioner was made "out of charge", however, the consignment was not released by the Authorities---Contention of the Authorities was that an inquiry was to be conducted on the consignment of the importer (petitioner) on basis of mis-declarations made in previous consignments of the petitioner and that the goods had been detained under S. 186 of the Customs Act, 1969---Validity---Once goods had been examined and assessed to duty and taxes and reassessed in terms of S.80 of the Customs Act, 1969, and the same were paid, and clearance of consignment had been made and goods were "out of charge"; Customs Authorities had no jurisdiction to refuse release of such goods nor the same could be detained on the basis of alleged misdeclaration of some previous consignment by the importer---Customs Authorities could reassess only if duty and taxes were not levied correctly by invoking the provisions of S.32 of the Customs Act, 1969 provided the same were attracted to facts and circumstances of the case---Neither any inquiry or investigation was pending nor any proceedings for misdeclaration had been initiated against the petitioners---No notice for detention, seizure or confiscation was issued---Detention of petitioner's consignment, was therefore, illegal and without jurisdiction---High Court directed the release of the consignment forthwith---Constitutional petition was allowed, in circumstances.

Messrs Wall Master v. Collector PTD 2004 3018; Messrs Sunny Traders v. Federation of Pakistan 2009 PTD 281; Messrs Safe Way v. Deputy Collector Customs 2009 PTD 201; Shahzad Ahmed Corporation v. Federation of Pakistan 2005 PTD 23; Messrs Zeb Traders v. Federation of Pakistan 2004 PTD 369and Sus Motors (Pvt.) Ltd. v. Federation of Pakistan 2011 PTD 235 rel.

Shahzad Ahmed Corporation v. Federation of Pakistan 2005 PTD 23 ref.

Ms. Ismat Mehdi for Petitioner.

Kashif Nazeer, Jawaid Farooqi, D.A.-G. and Ilyas Ehsan, Custom Officer for Respondents.

Date of hearing: 16th November, 2012.

ORDER

AQEEL AHMED ABBASI, J.---Through instant petition, following relief has been sought by the petitioner:--

(a)declare that the imported consignment of the petitioner falls under HS Code 8418.9990;

(b)direct the respondents to release the petitioner's consignment in terms of goods declaration and to allow delivery of the same to the petitioner forthwith;

(c)direct the respondents to grant detention and demurrage charges of the container and part to the petitioner;

(d)grant compensation for illegal detention of the consignment;

(e)compensation for losses accrued to the petitioner on account of such detention of consignment;

(f)grant any other/further relief (s), which this Hon'ble Court may deem fit and proper in the circumstances of the case; and

(g)grant cost of the petition.

2.Brief facts as stated in the petition are that petitioner who is carrying on his business in the name and style of "Messrs Kashif Electronics", imported a consignment of 1725 Kg. water dispenser parts from China at the price of 0.80 US$ per KG. On arrival of the consignment, goods declaration was filed, which was registered as KCSI-HC 41803 on 27-9-2012. The declared value of the imported consignment was not accepted by the respondents, and the same was enhanced to 1.2440 US$ as against the declared value at 0.80 US$. It has been stated that though, such re-assessment by the respondent was in violation of the provisions of section 25 of the Customs Act, 1969 and the relevant rules framed thereunder, however, the petitioner paid the duly assessed amount of duty and taxes, whereafter the consignment was made out of charge for release. However, inspite of lapse of about two months from the date of clearance of the consignment and after examination and re-assessment by the respondents, the goods were not released, hence, the petitioner was forced to file instant petition.

3.It has been contended by the learned counsel for the petitioner that no reason whatsoever, has been assigned by the respondents for not allowing the release of the consignment nor any show cause notice has ever been issued to the petitioner intimating any violation by the petitioner in respect of subject consignment. Learned counsel further states that similar consignments are being released on the declared value, whereas the petitioner is being discriminated and harassment has been causedtothepetitionerinthis regard by the respondents.Insupportof her contention, learned counsel for the petitioner has referred to columns 43, 44 and 45 of the goods declaration filed by the petitioner (available at page 19 as annexure "A") and also to System Generated Message dated 28-9-2012 (available at page 19-A). Learned counsel for the petitioner has also readout the provisions of Section 80 of the Customs Act, 1969, and submitted that once, goods are examined, assessed in terms of subsection (3) of section 80, duty and taxes paid by the importer and placed out of charge and sent to Gate Out Staff for check out, the customs authorities have no jurisdiction under law to detain such consignment. It has been vehemently argued by the learned counsel for the petitioner that such conduct of the respondents, under the facts and circumstances of this case, is not only illegal, discriminatory but the same is also tainted with mala fide. It has been prayed that the respondents may be directed to immediately release the petitioner's consignment and to issue Delay Detention Certificate in respect of subject consignment, whereas compensation for illegal detention of the said consignment may also be paid. In support of her contention, learned counsel has placed reliance on the following reported judgments;

(1)Messrs Wall Master v. Collector PTD 2004 3018

(2)Messrs Sunny Traders v. Federation of Pakistan, 2009 PTD 281

(3)Messrs Safe Way v. Deputy Collector Customs, 2009 PTD 201

(4)Shahzad Ahmed Corporation v. Federation of Pakistan, 2005 PTD 23.

(5)Messrs Zeb Traders v. Federation of Pakistan, 2004 PTD 369

(6)Sus Motors (Pvt) Ltd. v. Federation of Pakistan, 2011 PTD235.

4.Conversely, Mr. Kashif Nazeer, learned counsel for respondent No.2 submitted that in view of the information provided by the Collectorate of Intelligence, the consignment of the petitioner has been detained, whereas, the department intends to conduct an inquiry and to re-examine the subject consignment of the petitioner, as according to learned counsel, the previous two consignments of the petitioner have already been subjected to scrutiny as mis-declaration was made by the petitioner. It has been further contended that the respondent is in the process of initiating an inquiry and investigation against the petitioner, however, no material whatsoever has so far been collected, therefore, proper show cause notice could not be issued by the respondent to the petitioner. However, per learned counsel for the respondent, the goods have been detained in terms of section 186 of the Customs Act, 1969. Learned counsel has also referred to the words "or pending any inquiry or investigation in respect of any goods", as used under section 186 of the Customs Act, 1969 and submitted that since an inquiry and investigation is pending against the petitioner, therefore, the respondents are authorized to detain the subject consignment until such inquiry and investigation is completed. In support of his contention, learned counsel for the respondent has relied upon the case of Shahzad Ahmed Corporation v. Federation of Pakistan, reported as 2005 PTD 23 andhas referred to para 29 of such judgment. While concluding his arguments, learned counsel for respondent No.2 has submitted that after inquiry and investigation and on re-examination of the goods, the respondent will issue show cause notice to the petitioner whereafter appropriate orders may be passed in accordance with law and till thenthe subject consignment of the petitioner cannot be allowed to be released.

5.Mr. Jawaid Farooqi, learned D.A.-G. has also referred to the provisions of section 186 of the Customs Act, 1969, which according to learned D.A.-G. authorizes the custom department to detain any consignment if imposition of any fine or penalty is under consideration. It has been contended by the learned D.A.-G. that Since information has been received by the respondent though Directorate of Intelligence with regard to previous two consignments of the petitioner in respect of which notices have already been issued, therefore, the respondent was justified to detain this future consignment of the petitioner during pendency of the inquiry and investigation in respect of earlier consignments of the petitioner.

6.While Exercising right of rebuttal, learned counsel for the petitioner has vehemently controverted the submissions made by the counsel for the respondent and the learned D.A.-G. It has been contended by the learned counsel that the provisions of section 186 of the Customs Act, 1969, are not attracted in the instant matter as no investigation or inquiry whatsoever is pending against the petitioner in respect of the subject consignment. It has been further contended that even the alleged proceedings against the petitioner in respect of previous two consignments, neither the goods were detained nor any investigation and inquiry whatsoever was made by the respondents. Per learned counsel, the illegal proceedings alleging mis-declaration have been initiated against the petitioner in respect of previous two consignments after the same were allowed to be released, whereas no detention or seizure was made by the department at the time of processing the GD. It has been further stated that a Constitution Petition has already been filed by the petitioner in respect of above mentioned illegal proceedings before this Court. Per learned counsel, none of the ingredients of section 186 are attracted under the facts and circumstances of the instant case, whereas action/inaction on the part of the respondent is patently without jurisdiction, illegal and tainted with mala fide. Learned counsel has also referred to a letter dated 7-11-2012, issued by the Intelligence Officer and addressed to The Incharge (Imports) PICT, East Wharf, Karachi, whereby the respondent has been intimated that detention notice issued by the Intelligence Officer in respect of Container No.TEMU-2155985 of the petitioner has been withdrawn. Per learned counsel, though the petitioner was never confronted with any such detention notice either by the respondents or the Directorate of Intelligence in respect of the subject consignment, however, after issuance of this letter, the withholding of the consignment of the petitioner by the respondent speaks volumes about their arbitrary and mala fide conduct, which needs to be addressed by this Court. It has been prayed that instant petition may be allowed as prayed.

7.We have heard both the learned counsel, perused the record and also examined the judgments relied upon by the learned counsel for the petitioner in this regard. It has been noted that the fact regarding checking of consignment and its assessment in terms of section 80 of the Customs Act, 1969 by the respondent in the instant case has not been disputed. It has also come on record that pursuant to such assessmentand enhancement of value, duty and taxes were paid by the petitioner. Therespondents have also issued a System Generated Messagedated28-9-2012 in respect of the subject consignmentsofthepetitionerinthe following terms "GD;KCSI-HC-41803-27-9-2012 has sent to Gate OutStaffforcheckout." The fact regarding issuance of a letter i.e.C-No. Appg-498-A/DCI/Enf-I/2012 dated 7-11-2012, issued by Directorate Intelligence, FBR addressed to the Incharge (Imports), PICT, East Wharf, Karachi, intimating withdrawal of detention notice in respect of import of the petitioner through Container No.TEMU-2155985 (IX20) has also not been denied by the respondents. Neither any show cause notice, either for detention, seizure or confiscation of the subject consignment has so far been issued to the petitioner nor any proceedings of mis-declaration have been initiated by the respondent. Nothing has been brought on record by the respondents which may demonstrate that, after checking and assessment of the subject consignment in terms of section 80 of the Customs Act, 1969, payment of duly assessed duty and taxes on the enhanced value, and after clearance and placing the subject consignment "out of charge", any inquiry, investigation or other proceedings under the Customs Act, 1969, were pending against the petitioner in respect of subject consignment.

8.It will be advantageous to examine the ratio of the judgments relied upon by the learned counsel for the petitioner relating to controversy involved in the instant petition.

(i)In the case of Wall Master v. Collector reported as 2004 PTD 3018, it has been held as under:--

"Respondents' counsel has frankly admitted that the consignment has been detained against the demand notices pertaining to other consignments imported by the petitioner in respect of which mis-declaration was made. It was further contended by him that subject consignment has been detained but no notice under section 32(3) has been issued in respect thereof.

We have examined the contentions with reference to the provisions of Customs Act. Once the consignment is cleared duty has been paid and the goods are out of charge the same cannot be detained against any sum due as duty, penalty or other charges unless same has been adjudged, and notice under section 202 of Customs Act, has been served."

It has been further held as follows:--

In the present case respondents candidly conceded that neither amount has been adjudged against the petitioner in respect of show cause notices nor the notice under section 202 till date has been served. In such circumstances, the action of the respondent in detaining subject consignment is declared without awful authority and without jurisdiction. Consequently, petition is allowed and the respondents are directed to release the subject consignment forthwith."

(ii)In the case of Shahzad Ahmed Corporation v. Federation of Pakistan reported as 2005 PTD 23, it has been held as under:--

The condition precedent for seizure of the goods under section 168(1) is that it should be liable to confiscation. At least there should be some prima facie material available with the appropriate Customs officer to the effect that the goods were liable to confiscation. Once the goods duly imported have been examined by the appropriate Customs officers under the first appraisement system, evaluated and assessed to duty and taxes then prima facie the goods are not liable to confiscation. However, if there are sufficient reasons and grounds available with an appropriate Customs officer that the goods are still liable to confiscation then the reasons should be recorded in writing and communicated to the owner or person from whose possession the goods are seized as soon as may, meaning thereby within a reasonable period which may differ from case to case but it cannot be deferred for indefinite period. The reason being that once the goods have been assessed to duty and taxes under section 80 of the Customs Act, and the appropriate officer makes an order for clearance of the goods under section 83, the owner acquires a vested right for clearance of the goods. Any act depriving owner of goods of the vested right acquired by hilt in due course of law must be backed with sufficient reasons and grounds, failing which any such action shall always be liable to be struck off."

(iii)In the case of Sus Motors (Pvt.) Ltd. v. Federation of Pakistan reported as 2011 PTD 235, it has been held as under:--

"The duty which the customs officer now have to perform has likewise undergone, a fundamental shift. Their task is no longer what it was under the previous scheme, which was to assess the goods to duty. It is now simply to determine whether the importer has correctly self-assessed. It is only if it is established that the importer has not correctly self-assessed the goods that the customs officer can stop in and reassess the goods. It will be noted that the power of the customs officer to reassess under section 80(3) is only exercisable if he detects any incorrect statement, declaration or information "during the checking of goods declaration", and not otherwise.

It has been further held as follows:--

"The exercise required to be carried out under section 81 has been examined in detail in the paras supra. For reasons that will presently become clear, this exercise needs also to be considered from another perspective. It is important to keep in mind that what the customs officer is statutorily required to do is satisfy himself that the importer's self-assessment is correct. He is not empowered to satisfy himself that the self-assessment is not incorrect. There is a substantive difference between these two formulations, and it is not merely a matter of a rearrangement of words. The difference lies in the approach that the customs officer is legally empowered to take. While the customs officer must exercise vigilance when examining the importer's self- assessment, he must not be over-zealous. He must look at the goods declaration and the documents and information supplied or statements made by the importer critically and not suspiciously unless of course on a critical examination, he finds something in there that legitimately arouses suspicion. The exercise under section 81 can be regarded as a two-stage process. First, the customs officer must satisfy himself whether the importer's self-assessment is correct. If he is so satisfied, then the matter ends (and there is, e.g., no need for any "final assessment"). If however, he is satisfied that the self-assessment is not correct, then (and only then) is he to move on to the second stage, i.e., reassess the goods and make a final determination of the duty and taxes payable. Insofar as valuation is concerned, this exercise must of course be carried out in accordance with section 25. What is of critical importance is that he cannot, and must not, reverse this process by, in effect, purporting to "assess" the goods himself (on whatever basis) and then, in the light of such "assessment", examine the importer's self-assessment, and he goods declaration and the documents and information supplied and statements made by the latter, to satisfy himself that they are not incorrect. As already noted, he hays not the power to assess, but only to reassess, should the circumstances so warrant."

9.After having examined the ratio of the above referred judgments it can safely be concluded that once goods have been examined and assessed to duty and taxes which have been paid, clearance of the consignment has been made and goods are "out of charge", the Customs Authorities have no jurisdiction to refuse release of such goods nor the same can be detained on the basis of alleged misdeclaration of some previous consignment by the importer. Customs Authorities can re-assess only if duty and taxes are not levied correctly by invoking the provisions of section 32 of the Customs Act, 1969, provided the same are attracted to the facts and circumstances of the case. Admittedly, in the instant case neither any inquiry or investigation was pending nor any proceedings for misdeclaration have been initiated against the petitioner. Goods were examined and re-assessed in terms of section 80 of the Customs Act, 1969, duty and taxes on enhanced value determined by Customs Authority were paid, clearance of the goods was allowed which were out ofcharge.Nonoticefordetention,seizureorconfiscationofthesubject consignment was issued, whereas the letter issued by the DirectorateofIntelligencetotheCustomsAuthorities,inviewofwhich the subject consignment was detained, has duly been even withdrawn.

10.In view of hereinabove facts and the case-law relied upon by the learned counsel for the petitioner, we are of the view that the detention of the subject consignment of the petitioner by the respondent wasillegal and without jurisdiction. Accordingly, vide our short order dated 16-11-2012 instant petition was allowed to the extent that respondents were directed to release the consignment and to allow the delivery to the petitioner forthwith. It was further held that request of the petitioner for issuance of delay detention certificate may also be considered in accordance with law, and these are the reasons for such short order. Petition stands disposed of along with listed application in the above terms.

KMZ/M-10/KPetition allowed.