MACCA TRADERS VS SUPERINTENDENT SPECIAL ANTI SMUGGLING SQUAD, 2016 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 2230 (2015)

Customs Act (IV of 1969)---

----Ss.162, 163, 164 & 179---Arrest, search warrant and adjudication, powers of---Contention of importer was that mode and manner of search and issuing show-cause notice by Department was without jurisdiction as provided under S.179 of Customs Act, 1969---Held, that impugned goods were lying at delivery godown of transport company and there was a possibility that consignee could have taken delivery and vanished away---Resorting to procedure of search prescribed under S.162 of Customs Act, 1969 may have provided ample time to consignee to remove goods from godown of transport company, thus in such a situation possible way out was to resort to procedure as prescribed under S.163 of Customs Act, 1969---Department in present case did not opt for either of said two option, hence, search of premises, which was neither done under S.162 nor S.164 of Customs Act, 1969 were unlawful and illegal---Accordingly all subsequent actions i.e. seizure outright confiscation also became void ab initio and unlawful---Appeal was accepted in circumstances.

Case-law referred.

Nadeem Mirza for Appellant.

Ms. Nawabzadi Aliya, D.C. and Aqil Jaffari Inspector present for Respondents.

Date of hearing: 18th June, 2015.

ORDER

MOHAMMED YAHYA, MEMBER (TECHNICAL-I)---By this order I intend to dispose of the Customs Appeal No.K-673/2015 filed by Messrs Macca Traders, Hyderabad, under section 194-A of the Customs Act, 1969, against Order-in-Original No.13/2015 dated 18.03.2015 passed by the Collector of Customs (Adjudication), Quetta.

2.Brief facts of the case are per Show Cause Notice No.252-Cus/Adj/Coll/Hyd/Blade/Hyd/2013-14/0800-8 dated 24.12.2014 that it has been reported by the Superintendent, Special Anti-Smuggling Squad, Model Customs Collectorate, Hyderabad that on receipt of credible information through Assistant Collector (Preventive), Model Customs Collectorate, Hyderabad that foreign origin/smuggled 'Shaving Blades' have been transported from Karachi to Hyderabad through Transport Company M/s. Hyderabad International Goods Transport Company Hala Naka Road, Hyderabad and the same goods lying at delivery godown of above said Transport Company. Pursuant to information on 17.09.2014 at about 11:00 hours, the staff of SPASS Hyderabad along with mushers reached at above said Transport (Adda), where the above goods were found available and ready to move towards its destination. The Adda Munshi of Transport Company was asked about the documents of the said goods, he replied that 200 cartons of 'Blades' under bilty No.3154 dated 12.09.2014 have been received without documents from Messrs Hyderabad International Goods Transport Company, Karachi. However, the Customs Staff examined each packet of blades of the above goods of the said bilty which reveals the every blade found marks number and origin as per details below:--

(Safety Razor Blade) Razor blade Blank in Strips (200 Cartons)

a)Vidyut Super Max Blade

b)Vidyut Saloon pack blade

c)Viydyut Zoorik Super blade

(Indian Origin)

3.The Superintendent has further reported that as the goods belongs to Indian Origin and as per Import Policy Order, 2013 of Appendix-G at serial No.680 "the aforesaid goods is not importable from India" and the said goods were taken into lawful custody and seized the same after serving mandatory notice under Section 171 of the Customs Act, 1969 upon the Adda Munshi of Messrs Hyderabad International Goods Transport Company for onward transmission to consignor/ consignee of goods for violation of Section 16 of the Customs Act, 1969 read with Section 3(1) of Imports and Exports (Control) Act, 1950, punishable under clauses (9) & (90) of Section 156(1) of the Customs Act, 1969. The seized goods brought in the Custom House, Hyderabad for further legal action. The details of the seized goods are as under:--

4.In the light of above reported facts, the owner(s)/claimant(s) of the above mentioned seized goods were called upon in terms of Section 180 of the Customs Act, 1969 to show cause as to why the seized goods should not be confiscated in terms of clauses (9) & (90) of Section 156(1) of the Customs Act, 1969 for violation of Section 16 of the Customs Act, 1969 read with Section 3(1) of Imports and Exports (Control) Act, 1950, as to why the penalties should not be imposed upon them of clauses (9) & (90) of Section 156(1) of the Customs Act, 1969.

4A.On the basis of reply of Show Cause Notice No.252-Cus/Adj/ Coll/Hyd/Blade/Hyd/2013-14/0800-8 dated 24.12.2014 the Collector of Customs (Adjudication), Quetta passed an Order-in-Original No. 13 of 2015 dated 18.03.2015. The operative part of this order is reproduced as under:--

"I have examined the case record, considered the verbal as well as written arguments of the department. Consequently I do conclude as under:--

"Despite granting five hearing opportunities to the advocate for the defendant to defend the case no written submission was received rebutting the allegations as contained in the Show Cause Notice. The goods are of Indian Origin and no record has been submitted in support of legal import. Therefore, I do not find any reason to disagree with the contention of the Seizing Agency that the seized goods detailed at para-13 of this Order were brought into the country through an unauthorized route without payment of duties and taxes. Consequently the same are confiscated outright in terms of clauses (9) & (90) of Section 156(1) of the Customs Act, 1969 for violation of Section 16 of the Customs Act, 1969 read with Section 3(1) of Imports and Exports (Control) Act, 1950,"

5.Being aggrieved and dissatisfied with the impugned Order-in-Original No.13 of 2015 dated 18.03.2015, passed by the Collector of Customs (Adjudication), Quetta, the appellant filed the instant appeal before this Tribunal on the grounds incorporated in the Memo of Appeal which is reproduced as under:--

(a)The Section 179 of the Customs Act, 1969 expressed that the power of adjudication has to be determined by the authority on the basis of "amount of duty and taxes involved excluding the conveyance. In the case of the appellant as per the calculation of respondent No. 1 the amount of duty and taxes is 1,606,071.00 and the appropriate authority to adjudicate the cases of said amount rest with the Additional Collector instead the respondent No. 2 issued show cause notice, while usurping the powers of his subordinate. Nobody is allowed to usurp the powers of his subordinates as held by the Hon'ble Supreme Court of Pakistan in reported judgment PLD 1973 Supreme Court 49 The State v. Zia-ur-Rehman and others and 2009 PTD 1083 that "Superior authority cannot exercise the power of his subordinates for adjudication purpose powers of subordinate exercised by superior authority is held as without jurisdiction beside usurpation". Rendering the act of issuance of show cause notice and passing of order-in-original in the instant case without power/jurisdiction, hence ab initio, null and void and coram non judice. It is also settled principle that the exercise of jurisdiction by an authority is mandatory requirement and its non fulfillment would entail the entire proceeding to be coram non judice. Ref: PLD 1963 SC 663, PLD 1971 SC 184, PLD 1976 SC 514, 1983 SCMR 1232, 1984 CLC 1517, PLD 1995 Kar. 587; PLD 1992 SC 486; 2001 SCMR 103, PLJ 2003 Lah. 1660, PLD 2004 SC 600; PLD 2005 SC 842, 2009 PTD (Trib.) 1996, [(2009) 100 Tax 24 (H.C. Lah.)], 2010 PTD (Trib.) 832, 2010 PTD 465, 2010 PTD (Trib.) 1636, 2011 PTD (Trib.) 2114, 2011 PTD (Trib.) 2557 and PLD 2014 SC 514.

(b)That irrespective of the above gross illegality, it is advantageous to add that indeed the respondent No. 1 are appointed and designated as "Officer of Customs" under Section 3 of the Customs Act, 1969 and they derive powers for functioning from Notification No. S.R.O 371(I)/2002 dated 15.06.2002 within the territory of MCC of Hyderabad for thwarting the act of smuggling but this doesn't means that they have unfettered powers to approach any godown/warehouse situated in Hyderabad for inspection of the transported goods within the country. Their jurisdiction in principal is restricted to the territory not falling within the ambit of Sections 9 and 10 of the Customs Act, 1969 and beyond 5 kilometer of the border of India and Iran in terms of Section 177 of the Customs Act, 1969 to be read with Notification SRO No. 188(I)/83 dated 12.12.1983. The transported goods does not at all falls within the ambit of Section 2(s) and section 177 of the Customs Act, 1969, instead are lawfully purchased from tine local market through valid bills.

a.The official of respondent No. 1 are even not empowered to ask from either the transporter or owner of the transported goods or from the appellant about the legality of the transported goods in the absence of enabling provision in the Act/Rules. There does not exist any provision in the Act or notified through an SRO that the person who is transporting goods from Karachi to Hyderabad should keep the purchase bill of the goods. In the absence of availability of any section in the Act and the notification, demanding Good Declaration/ Purchase Receipt is nullity to law and hold no ground and the stance of the appellant stood validated form the reported/un-reported judgments K-719/02, H-720/02, H-686/03, Q-776/04, 2005 PTD (Trib.) 135 and PLD 1991 Supreme Court 630.

b.That the official of respondent No. 1 were not empowered to search the premises of the godown of the transporter in exercise of the power vested with under the provision of Section 163 of the Customs Act 1969. It is a trite law, that if the search is not carried out in accordance with law and the dictum laid down by the Honorable Supreme Court in a number of judgments, then the whole foundation of the case falls on the ground, and, here in the instant case no search was ever carried out on the warehouse/godown of M/s. Hyderabad International Goods Transport Company, Hyderabad. who transported the goods in accordance with the rule of business.

c.That the case has been made on the basis of an alleged search under Section 163 of the Customs Act, 1969 on the warehouse M/s. Hyderabad International Goods Transport Company, Hyderabad, without recourse to mandated requirement of section 162 ibid., the search could only be carried out by the respondent No.1 in case he believes that there is a danger that before a search could be carried out in terms of Section 162 after obtaining a search warrant from the Magistrate, the documents or things or goods liable for confiscation would be removed from the said place, he after preparing a statement in writing of the grounds of his belief and of the goods, documents or things for which search is to be made, search or cause search to be made for such goods, documents or things in that place. However no such details of search were provided either to the appellant or transporter nor any due process of law was ever disclosed. Hence the search on the basis of which the whole case has been made out was illegal and all subsequent acts of the respondents including the show cause notice and the impugned order are liable to be set aside on this ground alone. It is now a well settled proposition of law that the search carried out in terms of section 163 of the Customs Act, 1969 without recourse to the mandatory provisions of section 162 of the Act ibid, the same is illegal and any case made out on the basis of documents seized on the basis of such search cannot be used against the person from whose premises the same have been obtained. The following case law is reproduced in support of the above contention and therefore the whole case made out against the appellant is illegal, mala fide, tainted with colorful exercise of use of unfair discretion and hence liable to be set aside.

2003 PTD 2037 (Lahore) M/s Ihsan Yousaf Textile Mills v. Federation of Pakistan, 2004 PTD 2592 N.P. Water Proof Textile Mills (Pvt.) Limited v. Federation of Pakistan, 2005 PTD 1933 (Supreme Court of Pakistan) Collector of Sales Tax and Central v. M/s. Mega Tecch (Pvt.) Ltd., 2003 PTD 1034 (Supreme Court of Pakistan) Federation of Pakistan v. M/s. Master Enterprises (Pvt.) Ltd., PLD 1991 SC 630 (Supreme Corut of Pakistan) Collector of Customs (Pvt.) v. Muhammad Mahfooz and 2009 PTD 1083 (Karachi High Court) A.M.Z. Spinning and Weaving Mills (Pvt.) Ltd. v. Federation of Pakistan.

d.That irrespective of the referred in above illegality it is appropriate for the appellant to state that it was mandated upon the respondent No. 1 to act within the frame work of the definition of the word "smuggle" given in subsection 2(s) of the Customs Act, 1969. For ease verbatim of the some is reproduced here-in-under:

(a) "smuggle" means to bring into or take out of Pakistan in breech of any prohibition or restriction for the time being in force, or evading payment of customs duties or taxes leviable thereon,

(i) Gold bullion, silver bullion, platinum, palladium, radium, precious stones, antiques, currency, narcotics and narcotic and pyschotropic substances; or

(ii) Manufactures of gold or silver or platinum or palladium or radium or precious stones, and any other goods notified by the Federal Government in the official Gazette, which , in each case, exceed [one hundred and] [fifty thousand rupees] in value or

(iii) Any goods by any route other than a route declared under section 9 or 10 or from any place other than a customs station and includes an attempt, abetment or connivance of so bringing in or taking out of such goods; and all cognate words and expressions shall be construed accordingly.]

(b)That customs ports etc. as expressed in clause (iii) of Section 2(s) are notified through various notifications in terms of Section 9 of Customs Act, 1969. Whereas, the border area of Pakistan Territory, whereas restriction on the possession of goods in certain areas (borders) as expressed in Section 177 ibid is also notified vide Notification No. SRO 118(I)/83 dated 12.02.1983, ear marking the area of 5 miles adjacent to the Frontier of Pakistan with India and Iran to be the area to which Section 177 of the Customs Act, 1969 shall apply

That the goods warehoused by the appellant were legally imported by his supplier from the MCC of Quetta after fulfillment of all the codal formalities meaning thereby those were neither brought by his supplier or by the appellant into Pakistan in breech of any prohibition or restriction for the time being inforce under the Import Policy Order, 2009 or while evading payment of customs duties leviable thereon as expressed in clause (a) of Section 2(s). Nor were brought into Pakistan by any other route then the routes expressed in section 9 or 10 of the Customs Act, 1969 or from any other place then a customs station as per clause (a)(iii) of Section 2(s) instead were lawfully transported from Quetta by the appellant's supplier and warehoused by him in Karachi through proper bilty and after payment of warehouse charges, those cannot be considered as smuggled by any stretch of imagination. Hence searching of warehouse, seizure subsequently for the purpose of adjudication is nullity to the definition of the word "Smuggle" rendering the entire act of the respondent No. 1 and the respondent No. 2 right from search interruption till issuance of show cause notice and subsequently passing order-in-original on that as ab-inito, null and void.

(f)That it is also imperative for the appellant to add that in the light of expressed provision of Section 2(s) and Section 177 of the Customs Act, 1969 and SRO 118(I)/83 confirms that the transportation of the goods within the territorial limit of Pakistan do not constitute an offence, meaning thereby that transportation of the goods cannot be termed as smuggling. It would also not be out of place to state that after purchase of the goods from the local market, the goods are outside the ambit of Customs Department including the respondent No. 1 and any subsequent search of the carrier or the godown within the territory of Pakistan is beyond their jurisdiction as none of the provision of the Customs Act, 1969 authorizes any designated official of Customs to search the warehouse on sham pleas of smuggling. Reference is placed on the order of the Tribunal in Customs Appeals Nos. K-719/02, H-720/02, H-686/03 Q-776/04 and PLD 1991 Supreme Court 630.

(g)That the officials of the Customs including the officials of respondent No. 1 has also to look into the fact that whether the goods transported by the appellant or any other person are included in the list of smuggled goods defined in Clause (a) of sub section (s) of Section 2 and subsection (2) of Section 156 of the Customs Act, 1969 in the light of notification issued by the Board vide SRO No. 566(I)/2005 dated 06.6.2005. If the goods intercepted, are not included in the said list, those cannot be interrupted, detained or seized for any purpose including adjudication. The goods transported by the appellant are outside the ambit of list of smuggled. Resultant, the customs official including of the respondent No. 1 are not empowered to detain and subsequently seize the goods of the appellant shippers on even slightest presumption of smuggling. Reliance is placed on 1981 PCr.LJ 66, 1981 PCr.LJ 986, 1984 PCr.LJ 3096(2), 1987 Cr.LJ 325, 1988 PCr.LJ 435 and Customs Order-in-Appeal No. 26/2005 dated 09.01.2006.

(h)That the respondent No. 1 has also to look into the third aspect for confirmation of smuggling i.e. whether the goods so transported are retrieved from the hidden/false cavities made for time being or artificially or the vehicle was exclusively used for the smuggled goods as defined in clause (b) of preamble Notification No. 499(I)/2009 dated 13.06.2009, meaning thereby that the goods lying openly in the godown of the transporter after transporting those from Karachi would not fall within the definition of false cavity . Resultant, the goods unloaded at godown cannot be either detained as has been done by the respondent No. 1. The said act amounts to exercise of powers based on forced construction of law, rendering the same nullity to law. Reliance is placed on the order of Customs Appellate Tribunal in Customs Appeal H-185/2009 Noor Muhammad son of Muhammad Gul, Imtiaz Ali son of Pir Buksh v. Deputy Collector of Customs, (Adjudication) Hyderabad and Lahore High Court reported judgment 2010 PTD 2015 Collector of Customs v. Rehmat Afridi.

(i)That the respondents have also lost sight of the legal fiction that if the goods found during the search are freely available in the local market without any curb or restriction such goods least falls within the degree of smuggled as defined in Section 2(s) of the Customs Act, 1969 and are presumed to have been duty paid. The said opinion stood validated from the reported judgment of Apex Court 1995 SCMR 387 Sikandar A. Karim v. The State. The Double Bench of the Hon'ble Supreme Court comprised of Justice Saeed-uz-Zaman Siddiqui and Justice Mukhtiar Ahmed Junejo held in unambiguous term that" if the item alleged to be smuggled by the prosecution were freely available in the open market and the import of such goods were not banned in the country, presumption could arrive that the goods in question were lawfully brought in the country unless contrary was shown". As per dictum laid down by the Hon'ble Supreme Court the Appellate Tribunal in Customs Appeal No.339/2000 Mr. Muhammad Hanif v. The State and 301/2003 Nasser Ahmed v. Collector of Customs, Sales Tax and Excise, Quetta that held that "to produce legal import documents is nothing but to put undue pressure on the business community in spite of the fact that it has been observed number of time by the Supreme Court of Pakistan that the goods which are freely available in the market are presumed to be have been legally imported and duty paid. Even otherwise no reasonable ground has been given in the order-in-original that even for the sake of arguments, it is taken that the receipt produced by the appellant and issued by Saifullah Khan have no legal status then also it cannot be concluded that the said transaction was illegal, making way to call upon appellant to produce import documents.

(j)That upon submission of purchase bill, payment voucher and bilty of transportation from Karachi to Hyderabad, the question of non importability under Serial No. 680 of the Appendix-G of the Import Policy Order, 2013 stood diluted because if the goods are not importable then by their openly and freely being sold in the local market and why the official of respondent No. 1 have not seized those in exercise of their vested powers. Detaining and seizing of the goods bought by appellant is nothing more than abuse of power. Notwithstanding, with the submission of the bill, voucher and bilty the appellant discharged the initial burden laid upon him and the onus of burden to prove the allegation stood shifted on the shoulders of the respondent No. 1 under Articles 117 and 121 of Qanun-e-Shahadat (10 of 1984) as per laid down law by the Superior Courts of Pakistan namely S.M. Anwar Sethi v. South British Insurance Company Ltd. PLD 1975 Kar. 458; Barkat Ali v. The State PLD 1973 Kar. 659; Cross on evidence 1967 , 3rd Edn., London Butterworth; A Practical Approach to Evidence by Peter Murphy 1988 3rd Edn. London, Black Stone Press Ltd; The Modern Law of evidence by Adrian Kean 1985, Ist Den. Oxford , Professional Books Ltd.; Mst. Safia Begum v. Mst. Malkani and another PLD 1965 Lah. 576; Akber Ali v. Ehsan Ellahi PLD 1980 Lah. 145; Government of Pakistan v. Moulvi Ahmed Saeed 1983 CLC 414; Muhammad Sarwar v. Fazal Rehman 1982 CLC 1286 Sardar Ghulam Nabi Khan v. Azad Government of State of Jammu and Kashmir 1984 CLC 325; Eastern Rice Syndicates v. CBR PLD 1959 SC (Pak) 364; The Collector Central Excise and Land Customs v. Imdad Ali 1969 SCMR 708 and M/s. Latif Brothers v. Deputy Collector of Customs, Lahore 1992 SCMR 1083.

(k)That the said proposition of law was explained with clarity by their Lordship of High Court of Sindh in reported judgment PLD 1996 Karachi 68 Kamran Industries v. Collector of Customs (Export) and Order of the Custom Tribunal in Customs Appeal No. K-391/04 Mr. Muhammad Mir v. Collector of Customs (Adjudication), Karachi. While holding that:

"For every offence for which the accused is charged under the Customs Act he shall have to disprove the allegation of the Customs Authorities is entirely without any obligation upon the Customs Department to adduce evidence, it would amount to affording unfettered, naked and arbitrary discretion to the authorities who may at their sweet will make out false cases against importers without the need of proving the sanctity of their actions. Such cannot be the intention of Parliament while the Courts are under an obligation to place such construction on statues which would be beneficial to the widest extent and which would make the legislation operate fairly, justly and equitably and not unreasonably see Mst. Zainab v. Kamal Khan (PLD 1990 SC 1051). This Court is also of the view that a construction is to be placed upon statutes which would minimize the discretion vested upon the executive authorities. As absolute power corrupts an interpretation fettering the discretion of the executive authority would be more in line with the principles of equity and justice. The issue regarding the applicability of section 187 is to be looked from another angle i.e. in case we were to hold that due to Section 187 the entire burden to dispute the entire case rest upon the accused alone. The executive authorities would be let loose and given a wide, naked and arbitrary discretion to operate without any guidelines which would then leave section 187 susceptible to a Constitutional challenge upon its vires on this score alone. By the interpretation as proposed above any redundancy or illegality would also be avoided.

(l) That despite narrating the events and name of the appellant in the seizure report the official of the respondent No. 1 also failed to serve notices under sections 168(1) and 171 either on the appellant or transporter. Non serving the notice render the whole proceeding infested from legal infirmity and as such of no legal effect as held by Superior Judicial Fora in umpteenth reported judgment e.g. PTCL 1994 CL 22(sic), 1983 PCr.LJ 620, 1983 PCr.LJ 623, 1983 CLC 786, PTCL 1983 CL 47, 1987 PTD 420, 1987 PCr.LJ 1091 and 2004 PCr.LJ 1958.

(m)That upon receipt of the contravention report, it was mandated upon the respondent No. 2 to look into the actual facts of the case and the applicable provision of the Act, Rules and Regulation independently and fairly. Instead he copy pasted the facts and allegation of the contravention report in the issued show cause notice rendering it nullity to the law laid down by the Superior Courts of Pakistan. Reliance is placed on the reported judgment 2004 PTD 369 M/s. Zeb Traders v. Federation of Pakistan. Wherein their lordship of the High Court held in unambiguous terms that:

"The proceeding before Adjudicating Officer, under the Customs Act, 1969 are in the nature of quasi judicial proceedings and issuance of notice under section 180 of the Customs Act, is very important documents. The decision to issue show cause notice is to be taken by the Collector , Adjudication, by application of independent mind and not merely signing the draft show cause notice submitted by the investigation agency separate from the Adjudication Department and each category of officers are required to perform their respective functions/duties under the law. The practice to submit draft show cause notice by the Director General of Intelligence and Investigation to the Collector Adjudication is depreciated."

7.(sic) I have heard the arguments of the consultant appearing on the behalf of the appellant, the DR of the respondent MCC, Hyderabad. The consultant has preliminary agitated on two counts 1) mode and manner of search in the instant case 2) issuing of show cause notice by Collector is without jurisdiction as provided under section 179 of the Customs Act, 1969. Regarding mode and manner of the search, keeping in view the fact that the impugned goods were lying at the delivery godown of the transport company, therefore, there was a possibility that the consignee could have taken the delivery and vanished away as such resorting to procedure of search prescribed under Section 162 of the Customs Act, 1969 may have provided ample time to the consignee to remove the goods from the godown of the transport company. Thus in a situation like this the possible way out was to resort to the procedure as prescribed under Section 163 of the Customs Act, 1969. Unfortunately, the department did not opt for either of the two options. Hence, search of premises in the instant case which was neither, under Section 162 nor Section 163 of Customs Act, 1969 was unlawful and illegal. Accordingly all subsequent actions i.e. seizure outright confiscation also become ab initio void and unlawful. The respondent is accordingly directed to restore the impugned goods to their lawful owner. The appeal is accepted with no order as to cost.

8.Order passed and announced accordingly.

RR/98/Tax(Trib.)Appeal allowed.