7 STAR ENTERPRISES VS ADDITIONAL COLLECTOR OF CUSTOMS, 2016 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 1456 (2014)

Customs Act (IV of 1969)---

----Ss. 79, 121, 127, 129, 179(3), 194-A & 207---Pilferage and misappropriation of imported goods---Imposition of penalty---Appellants were licensed customs house agents falling under the provisions of S.207 of the Customs Act, 1969 and were mainly engaged in the clearance of goods relating to Afghan Clients, who imported their cargo through customs port at 'Port Qasim'---Appellants filed goods declaration (GDS) on the basis of documents supplied by the importers---After completion of customs formalities by the concerned Collectorate of Customs, imported cargo was lifted by National Logistic Corporation (NLC), whose operations were governed and controlled by the Army officials---After loading the goods, the containers were checked by Customs Authorities, who sealed the containers and goods were transported to their destination---Allegation was that dutiable goods were pilfred enroute under the garb of transit cargo---Responsibility of the appellants, was restricted to the extent of "Port Qasim" and not for later stage---In show cause notice NLC (National Logistic Corporation) who lifted the cargo had been exclusively held responsible for said act of pilferage---No role in the alleged pilferage, had been assigned in the charging part of the show-cause notice, except associating the appellants with importer, the NLC and the border agent on the basis of a generalized statement---Show-cause notice finally brought out contravention of different sections of the Customs Act, 1969, which were not attracted against the appellant---Despite that Adjudicating Authority imposed a penalty of Rs.250,000 on the appellants---Sole responsibility of carrier companies and others involved in the safe transportation/transit of the goods across the country, which also included to get receipt from the competent authorities as to the safe and sound arrival of the goods at the destination along with cross-border certificate---Stereo-type notices cyclostyled by the Port Qasim Authority were served upon the appellants---No specific allegation was levelled against appellants in the show-cause notices, except that the appellants were Clearing Agents---Under the relevant law, Clearing Agent's job would end with the filing of Goods Declaration, their processing and loading on the containers; and it was the sole responsibility of carrier to safely transit the goods across the country through designated destination---No evidence was available on record that appellants actively participated in the misappropriation/pilfering or smuggling of imported goods---Departmental Representative, representing various Directorates, could not point out that the goods from the containers were pilfered, smuggled or misappropriated by the appellants (Clearing Agents) or was done with their connivance---Appeals to the extent of appellants, were accepted and impugned orders, were set aside, in circumstances.

PLD 2008 SC 951 ref.

Nazeer Abbasi, M.H. Awan, Rana Zahid, Zia ul Hassan, Asim Muni Bajwa, Rfvigree, M. Ishaque, Saleem Abbasi, Nadeem Mirza, Sardar Faisal Zafar, Ch. M. Rafique, Darvesh K. Mandan, Aqeel Ahmed, S. Baqar Ali Naqvi, Raja Babar Hamid, Ms. Faima Khalid, Salahuddin Khan, Sardar Zafar Hussain, Shaikh Farukh Saleem, Sonil Ali, Ch. Mehmood Anwar and Haseeb Jhandolla for Appellants.

Shahid Ali Abbasi, D.C., Imtiaz Ahmed A.O., Kausar H.A.O., Khalil M. Dogar, Shakeel Ahmed, Ms. Maha, Rana Gulzar Ahmed SIO, Zafar Iqbal and M. Hanif for Respondents.

Dates of hearing: 4th, 5th, 6th, 7th, 11th and 12th August, 2014.

JUDGMENT

CH. MUHAMMAD TARIQ/CHAIRMAN, ISLAMABAD.---These appeals have been directed against the order-in-original dated 29-06-2013, passed by the Additional Collector (Adjudication), Port Qasim, Karachi. Since all the appeals have arisen out of same Show-Cause Notice, they are decided by this single consolidated Judgment.

2.Learned counsel for the appellants, inter alia, contends that appellants are licensed Customs house agent falling under the provisions of Section 207 of the Customs Act, 1969. The appellant companies are mainly engaged in the clearance of goods relating to Afghan clients who import their cargo through Customs ports at Karachi/Port Qasim. According to the laid down procedure, the appellant companies filed goods declarations (GDs) on the basis of documents supplied by the Afghan importers. After completing customs formalities by the concerned Collectorate of Customs, the imported cargo is lifted by the authorized national bonded carriers i.e. National Logistic Corporation (NLC), whose operations are governed and controlled by the Army officials. After loading the goods, the containers are checked by the Customs authorities who also seal the containers and goods are transported to their destination either through Spin-Boldak (Chaman) or Torkham borders.

3.Learned counsel for the appellants contended that the responsibility of the appellant companies is restricted to the extent of Karachi port/Port Qasim and not for any later stage. They further contended that according to the laid down procedure (para-31 of CGO 12/2012, Public Notice No.16/ 200/A dated 30-9-2000 and public Notice No.5/ 2003 (PQ) dated 06.11.2003) the concerned Collectorates of Customs have been made bound to send a copy of the GD, called as ATTI, to exit Customs point for their information and endorsement of crossing the goods across Pakistan to Afghanistan as detailed in the G.D (ATTI). The procedure further stipulates that at the exit point Customs authorities are then required to return the GD/(ATTI) containing endorsement of "Cross border" back to concerned Collectorate at Karachi, who processed and released the goods previously. They stated that Show Cause Notices had been issued by the then Additional Collector to the appellants. The Show Cause Notice comprised three pages containing seven paragraphs in which, inter-alia, it was stated that consignments were cleared from the Port Muhammad Bin Qasim, as Afghanistan destined cargo and on scrutiny it was found that after processing the documents the consignments were handed over to M/s. NLC, who being the carrier, was under obligation to ensure safe and secure transportation of the cargo to the notified exit point. The Show Cause Notice further stipulates that at the "Cross border certificates of the aforesaid consignments are not available in the record of exit border Collectorate". On this presumption, it was alleged that the dutiable goods were pilfered enroute under the garb of transit cargo. At charging Para 4 of the Show Cause Notice, the NLC (National Carrier who lifted the Cargo) had been exclusively held responsible for afore mentioned act of pilferage in the following words:--

"and whereas M/s. NLC the authorized carrier who have directly facilitated the smuggling and fraud in violation of their undertaking for safe transportation of the said goods, are equally responsible for playing an active role in the smuggling and fraud."

4.Learned counsel contended that no role in the alleged pilfer, whatsoever, had been assigned to appellants in the charging part of the show cause notice except associating the appellants with importer, the NLC and the border agent on the basis of a generalized statement. The Show Cause Notice finally brought out contravention of different sections of the Customs Act, 1969, such as Sections 2(s), 32(1), 32(2), 32(A), 79, 121, 127, 128, 129, 192 and 209, punishable under clauses (14), (14-A), (44), (63), (64), (86) and (89) of Section 156(1) of the Customs Act, 1969 which are not attracted against the appellants in any manner under the given circumstances. In response to the Show Cause Notice the appellants filed written replies on 03.10.2011 along with the related documents such as cross border certificate (ATTI) and NLC Trip Detail Report/undertaking of each container. They further pointed out that the appellants companies had collected the copies of ATTI after receipt of the Show Cause Notice from the exit point Collectorate with the help of Border agent. Whereas under the rules and law, the role of the appellants was restricted only to the extent of processing of the GD's at the Karachi Port. Later on the adjudication proceedings in present cases and in of similar nature, were conducted in haphazard manner by the respondent Collectorate till the time the appellants received the impugned Order-in-Original, whereby the learned Additional Collector disposed of 567 Show Cause Notices through a single order without properly giving/conducting hearings to appellants and without considering written replies and legal evidences produced before them in their defense. So much so the learned Additional Collector imposed a penalty of Rs.250,000/- on the appellant Customs agents also. It is further contended that clearing agents were not supposed to over-see the transportation of the said cargo enroute or at the exit point, although, evidently, all the impugned consignments had properly crossed the Pak-Afghan Border as certified by the Customs own authorities in the ATTI. Moreover, the respondent also passed further illegal order by asking the appellants to bear one 4th part of the alleged evaded amount, in sheer violation of law. Hence, these appeals.

5.Learned counsel for the appellants raised a number of legal as well as factual grounds and contended that the impugned Order-in-Original is time-barred for more than 600 days as the same are badly hit by the time frame as prescribed under subsection (3) of section 179 of the Customs Act, 1969. They submitted that the Show Cause Notices had been issued on 05.10.2011, the respondent was bound to pass order within 120 days i.e. up to 05.02.2012, whereas the impugned Orders-in-Original had been passed on 4.09.2013, the day when the same were dispatched to the appellants companies through TCS. Hence, the impugned orders are hopelessly time barred having no value in the eyes of law. The learned Additional Collector has seriously violated the principles of natural justice by showing back date on the impugned orders to cover the time-frame prescribed for creating liability in section 179 of the Custom Act, 1969. The para 8 of the impugned order indicates that time extension was obtained from FBR, purportedly, up to 30-06-2013. However, the respondent even failed to pass order within purportedly extended period. He explained here that the impugned orders were dispatched by the respondent on 04.09.2013 whereas the date of judgment in the impugned order has been shown as 29.06.2013. This has been done intentionally to show that the order has been passed: within extended time. But the document itself speaks the act of back dating which amounts to tempering and bogus entries. Therefore, the Orders-in-Original are time barred by more than two months even if it is presumed that FBR extended limit (up to 30- 06-2013) lawfully.

6.Learned counsel further contended that without prejudice of the foregoing submissions, in these cases the appellants have been implicated in the quasi-judicial proceedings, through the impugned Show Cause Notice, without any lawful grounds. As earlier explained, the Afghan Transit Trade is governed by section 129 of the Customs Act, 1969, para 31 of CGO 12 of 2002, a public notice of the appraisement Collectorate bearing No.16/(A)/2000 and a Public Notice No.5/2003 issued by the MCC Port Qasim and agreement signed by both the Governments. He further stated that we have examined all these provisions of law and unable to find any section, subsection or any substance in different paras of the public notices which lay any responsibility upon the Customs agent for safe and secure transportation of the transit cargo up to the exit point except processing of the GD's at the clearance Collectorate and we have also examined the entire Show Cause Notice and failed to find a single discrepancy with regard to any part of the declaration of goods or the processing of GD's at the Collectorate level. Evidently all the GD's, mentioned in the Show Cause Notices were found without any defect during the checking and processing and were out of charged after due satisfaction by the authorized principal appraiser in terms of section 83 of the Customs Act, 1969. Therefore, penalizing the appellants who did not violate any provision of law is totally illegal, whereas it is evident that the appellants discharged their part of responsibilities without fail and pray that the appeals be accepted, impugned Orders-in-Original be set aside and the Show Cause Notices be vacated.

7.Conversely, the departmental representatives (D/Rs) representing the respondents, have vehemently opposed these appeals and have prayed that the impugned orders be maintained and appeals be dismissed because the appellants were in the knowledge of pilferage and smuggling of impugned goods misappropriated from containers.

8.D/Rs further contended that after pilfering and misappropriation of impugned goods they were consumed within the territory of Pakistan and that the appellants are abettors. The NLC and the importers misappropriated and pilfered impugned goods in league with appellants who are the clearing agents. The D/Rs. representing various respondents also prayed that the impugned orders be maintained as the adjudicating officer has already taken a lenient view.

9.Arguments of both the parties heard at considerable length and also perused the record.

10.Before discussing the merit of the case, this Larger Bench has observed that a number of appeals are time barred. Since a sensitive and of significant importance question of law and public importance is involved, some of appeals have already been admitted for regular hearing. Therefore, in the light of law laid down by the Honourable Supreme Court of Pakistan in case reported as PLD 2008 SC 951, the delay is condoned and appeals admitted for regular hearing.

11.There is no denial from either side that all the appellants are licensed Customs house agents who were engaged in the clearance of goods relating to their Afghan clients. Admittedly the consignments arrived at Karachi port/Port Qasim were cleared by Customs for onward transit to Afghanistan and were put on the containers in presence of concerned Customs authorities which were checked by them. After fulfillment of necessary formalities, the containers were sealed. Thereafter, the imported cargos was lifted by the authorized national bonded carriers i.e. National Logistics Corporation (NLC) to safely transit the goods across Pakistan through designated destination i.e. either through Spin-Boldak (Chaman) or the Torkham borders.

12.The responsibility of the appellant companies was restricted to the Karachi port/Port Qasim till the cargo was loaded into the containers, checked by the customs authorities and containers are sealed and handed over to the bonded carriers. Thereafter, it is sole responsibility of carrier companies and others involved in the safe transportation/transit of the goods across the country, which also included to get receipt from the competent authorities as to the safe and sound arrival of the goods at the destination along with cross, border certificate.

13.In the instant cases, this Tribunal has observed that the stereo type notices were cyclostyled, by the Additional Collector, Port Muhammad Bin Qasim, Karachi, and were served upon the appellants. Perusal of Show Cause Notices reveals that no specific allegation was leveled against the appellants except that the appellants are clearing agent who allegedly joined hands with the NLC management and misappropriated the goods from the containers within the territory of Pakistan.

14.There are certain admitted facts in this case that the appropriate goods arrived at Karachi port which were loaded in the containers; they were checked by the competent Customs authorities; GDs were filed by the appellants; containers were sealed, and were handed over to the NLC for further transportation to Afghanistan.

15.As per the relevant law, the clearing agent's job ends with the filing of GDs, their processing and loading on the containers, etc, and it is the sole responsibility of carrier to safely transit the goods across the country through designated destination via Chaman or Torukam borders.

16.The above appeals were heard continuously for three days. There is no evidence in the record that the appellants actively participated or convinced in the misappropriation/pilfering or smuggling of impugned goods. Similarly, the D/Rs representing various Directorates could also not point out that the goods from the containers were pilfered, smuggled or misappropriated by the appellants or with their connivance.

17.The upshot of the above discussion is that this Larger Bench is unanimously of the view that no sufficient evidence is available on the files/record to connect the appellants i.e. clearing agents with the smuggling, pilfering or misappropriation of impugned goods. As a consequence, all these appeals to the extent of appellants/clearing agents are accepted and the impugned orders to the extent of clearing agents are set aside.

HBT/100/Tax(Trib.)Appeals accepted.