MUHAMMAD AKRAM VS SUPERINTENDENT, CUSTOMS ANTI-SMUGGLING ORGANIZATION, JHANG, 2018 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 1467 (2015)

Customs Act (IV of 1969)---

----Ss. 2(s), 16, 18, 156(1)(89)(i), 168, 180 & 181---S.R.O. No.566(I)/ 2005, dated 6-6-2005 and SRO No.499(I)/2009, dated 13-6-2009---Smuggling---Seizure and confiscation of goods---Customs Anti-Smuggling staff intercepted container, loaded with foreign origin cloth, used machinery as well as local products---Driver of the trailer failed to produce any documentary evidence showing legal import or lawful possession of the goods---Due to non-production of valid evidence of its legal import or lawful possession said goods were seized under S.168 of the Customs Act, 1969 for violation of S.2(s) read with SRO No.566(I)/2005, dated 6-6-2005 and Ss.16 & 17 of the Customs Act, 1969, punishable under S.156(1)(89)(i) of said Act, read with SRO No.499(I)/2009, dated 13-6-2009---Photocopies of Goods Declaration produced by owner of truck, were not found relevant/tallied with the subject goods---Additional Collector of Customs (Adjudication) ordered confiscation of seized goods in favour of Federal Government under S.156(1)(89) of the Customs Act, 1969---Validity---Law required test of proportionality as touchstone of construction and interpretation of onus clause and accused could not be expected to discharge an unduly high standard of proof---Section 187 of the Customs Act, 1969, cast an evidentiary burden subject to creation of a prima facie case by accused and the legal or persuasive burden always rested on the prosecution/department---Legal position was that when an accused had to rebut the presumption under S.156(2) or 187 of the Customs Act, 1969 standard proof for doing so was that of preponderance of probabilities---If accused was able to raise a probable defence, which created doubt about the existence of a legally enforceable debt or liability, prosecution could fail---Twenty eight items of multifarious nomenclature were seized and consequently confiscated vide impugned order-in-original---Appellant/accused claimed lawful validity of confiscated merchandise to the extent of four items, depicted within Serial Nos.13, 15, 17 & 18 of impugned examination/seizure report and showed his acquiescence to payment of statutory duties and taxes on the remaining goods---Appellant, succeeded in not only making out a prima facie case, but also raised a probable defence creating doubt concerning the existence or factum of smuggled nature of impugned merchandise---Burden of proof under Ss.187 & 156(2) of the Customs Act, 1969 stood sufficiently discharged and shifted to the prosecution to establish the case---Department had not only failed to rebut the veracity of documentary evidence produced by the appellant/accused, but also could not forward any cogent reasons which could dislodge substantiated goods from the goods declarations or invoices---Benefit of doubt was extended in appellant's favour---Impugned order-in-original was modified to the extent that the merchandise would be unconditionally redeemed/released to its lawful owners.

Kamran Industries v. Collector of Customs (Exports) PLD 1996 Kar. 68; Barkat Ali v. State PLD 1973 Kar. 659; PLD 1980 Lah. 145; 1983 CLC 414, 1984 CLC 325 and PLD 1975 Kar. 458 ref.

Raza Ahmad for Appellant.

Ms. Amna Parveen for Respondents.

JUDGMENT

OMAR ARSHAD HAKEEM, MEMBER (JUDICIAL).---(1) This judgment shall decide the above mentioned Customs Appeal filed against an Order-in-Original No. 76/2014 dated 05.11.2014 passed by the learned Additional Collector of Customs (Adjudication), Faisalabad.

2.Precise facts for deciding the core controversy involved in the instant appeal are that the staff of Customs Anti-Smuggling, Jhang intercepted a Container No. TGHU-895484-6(1x40') examined on Trailer bearing Registration No. FDS-1888. The same was examined and foreign origin cloth, used machinery as well as local products were found. The driver failed to produce any documentary evidence showing legal import or lawful possession of the subject goods, but he produced bilty Nos. 7003, 7999, 8000 all dated 08.09.2014 and 7006 dated 09.09.2014. Due to non-production of valid evidence of its legal import or lawful possession, the goods were seized under section 168 of the Customs Act, 1969, for violation of section 2(s) read with S.R.O. 566(I)/2005 dated 06.06.2005 and sections 16 and 18 of the Customs Act, 1969, section 3 of the Sales Tax Act, 1990, section 148 of the Income Tax Ordinance, 2001, read with section 3(1) of the Import and Export (Control) Act, 1950 punishable under section 156(1)(89)(i) of the Customs Act, 1969 read with S.R.O. 499(I)/2009 dated 13.06.2009.

3.Mr. Muhammad Saleem appeared before the seizing agency and introduced himself as the owner of Truck Adda and produced photo copies of GDs, which were examined and found not relevant/tallied with the subject goods. The Additional Collector of Customs (Adjudication), Faisalabad, issued the impugned show-cause notice under section 180 of the Customs Act, 1969, wherein the appellant was charged with the contravention of the provisions of section 2(s) read with S.R.O. 566(I)/ 2005, dated 6-6-2005, sections 16 and 18 of the Customs Act, 1969, section 3 of the Sales Tax Act, 1990, section 148 of the Income Tax Ordinance, 2001, read with section 3(1) of the Import and Export (Control) Act, 1950 punishable under section 156(1)(89)(i) of the Customs Act, 1969 read with S.R.O. 499(I)/2009 dated 13-6-20-2009 and were called upon to show-cause as to why the seized goods may not be confiscated and as to why the penal action under the aforementioned provisions of law may not be taken against them.

4.The learned Additional Collector of Customs (Adjudication), Faisalabad thereafter held the adjudication proceedings and passed an order against the appellant wherein he precisely ruled as follows;

(a)I, therefore, order for confiscation of the seized cloth in favour of the Federal Government under section 156(1)(89) of the Customs Act, 1969. However, an open is given to the lawful owners of the cloth under section 181 of the Customs Act, 1969 read with Notification No. SRO 499(I)/2009 dated 13-6-2009 to redeem their respective cloth in lieu of confiscation on payment of duty and taxes leviable on the cloth plus a redemption fine of 20% of the Customs value to be appraised by the MCC Faisalabad under relevant Customs Laws/Rules subjects to the fulfillment of conditions prescribed in Customs Tariff/Import Policy in this regard, if any before released of the goods to the lawful owner after due verification of their antecedents.

(b)The container No.TGHU-895484-6 (1x40') and the carrier vehicle bearing registration No.FSD-1888 used in the transportation of offending goods has not been seized by the seizing agency as the same have not been mentioned in column No. 05 of the seizure report. This fact has also been confirmed by Mr. Muhammad Iqbal, Inspector appeared during the hearing on behalf of the seizing agency.

5.Being aggrieved from the above said order passed by the learned (Additional) Collector of Customs (Adjudication), (Faisalabad), the appellant approached this Tribunal. At the threshold the learned counsel for the appellant argued that the impugned order is against the law and facts of the case, without consideration of evidences put-forth before him by the counsel of the appellants, without proving allegations, without consideration of written replies, comments to rejoinders of Customs Anti-Smuggling Organization, Jhang importunely, carefree with a cyclostyled approach of mind and on pre-determined notions upheld allegations; that the impugned order is illegal and without concrete footing, hence, bad in law and void being based on some sweeping statement. In presence of all supportive document of legal purchase of goods i.e. copies of sales tax return, purchase register, purchase invoices of appellants as well as copies of sales tax invoices, copies of sales tax return and copies of GDs of suppliers of appellants (commercial importers); that respondent No. 2 adopted treatment of seized cloth to appellants without differentiating facts involved in both cases which is illegal. Either any law permits to any court of law to give punishment of death of another person to other person because while operation such another person was present at such place where other person murdered someone. Every ease has its own merits and facts on the basis of which Court investigates all facts of the case and appreciate justice under the law; that the appellants produced all the relevant documents, showing payment of due taxes in national exchequer at every stage as well as bona fide of the appellant but respondent No. 2 upheld, hence illegal impugned order is liable to be set aside inter alia on the afore-stated factual ground.

6.Leveling a variety of allegations and narrating the sequence of events, in all, the learned counsel for the respondent/(Appellant), inter alia contended that order-in-original passed by the learned Additional Collector of Customs (Adjudication), Faisalabad is legal, valid and based on merits; that as description of recovered goods were quite different than the goods imported vide GDs produced by the respondent, therefore a question is raised that if the importers did not import the recovered goods then how they sold the same to the respondents/(Appellant). The produced sales tax invoices issued by the importer/sellers in favour of respondent/(Appellant) could not he verified from online system of sales tax record (Sales Tax Profile of importers); that the respondent/ (Appellant) has failed to provide mandatory import documents such as copies of GDs along with examination report, packing list, bill of lading, commercial invoice, sales tax invoice as well as copy of record register (supply register) of importers in addition to documentary evidence of its legal import or lawful possession of the seized goods.

7.The arguments of the parties heard, provisions of relevant law discerned and the available record or the case thoroughly considered.

8.It is seen that the framers of law in order to dampen rampant business of smuggled goods have formulated a strict confiscatory regime with very wide connotations. That the law is set in motion not only against the actual smuggler, but also against those who come into possession of the delinquent goods after having acquired the same; section 156 (2) and section 187 of the Customs Act, 1969 come into play on every occasion whence goods are seized; A scrutiny of taxonomy of sections 187 ibid 156(2) of the Customs Act, 1969 would reveal that these provisions impute reversal of the golden thread of criminal law that "it is the duty of the prosecution to prove the prisoner's guilt. . ." the question that then arises, is as to what extent such burden lies upon the person found in possession of allegedly smuggled or prohibited goods, and as to whether same at any stage shifts to Custom Authorities or not; at this juncture a very important reported judgment titled Kamran Industries v. Collector of Customs (Exports) (PLD 1996 Karachi 68) rendered by the Honorable Sindh High Court Karachi may be used as a benchmark to evaluate the extent of casting of the two types of burden of proof i.e. legal or persuasive burden and the evidential or tactical burden on the litigants. While addressing instant issue the Honorable Sindh High Court split up both the burdens of proof covered under action 187 of the Customs Act, 1969 and distributed the casting of these burdens as under:-

"on a closer scrutiny of the provisions of section 187 and the case law settled by our courts on the subject it appears that in such a situation it is only the evidential and tactical burden of proof which is cast upon the accused while the legal burden to bring home the allegations remains with the prosecution. Before we dilate upon the concept of the two types of burdens of proof and explain the terms "tactical" evidential and "legal" burdens of proof we shall first discuss the case decided by the High Court of Sindh in Barkat Ali v. State PLD 1973 Karachi 659. In this case the controversy revolved round section 177A of the erstwhile Sea Customs Act, 1878 which catered for a similar situation as has arisen in the present case i.e. the same provided the burden of proof upon the accused to disprove the case of the prosecution that his intentions were not be defraud the exchequer or evade any prohibition or restriction under the Act. Writing for court Tufail Ali Abdul Rehman, CJ was of the opinion that the said presumption of burden of proof could not be drawn until the explanation of the accused was first taken into consideration. According to the learned Judge the "normal principle" was applicable i.e. that the accused was entitled to a benefit of doubt where he offered a reasonable explanation which was either acceptable or raised a doubt. In such cases the burden then shifted upon the prosecution to establish the case. In this regard the pertinent observations are reproduced here under:--

" ..despite S. 177 of the Sea Customs Act if upon the end of the evidence the Court is of the opinion that there is a doubt as to the guilt of the accused the benefit of that doubt must be given to him and he must be acquitted. " (at p. 671) "

9.We respectfully agree with the principle of lay laid down by the Honorable Sindh High Court, Karachi and would like to add that in our earnest interpretation the statute requires test of proportionality as touchstone of construction and interpretation of reverse onus clause and the accused cannot be expected to discharge an unduly high standard of proof; As held by Honorable Sindh High Court, Karachi that section 187 only casts an evidentiary burden subject to creation of a prima facie case by the accused and the legal or persuasive burden always rests on the prosecution/department. Keeping this in view, the legal position is that when an accused has to rebut the presumption under section 156(2) or 187 of the Customs Act, 1969, the standard proof for doing so is that of, preponderance of probabilities, and therefore if the accused is able raise to a probable defense which create doubt about the existence of a legally enforceable debt or liability, the prosecution can fail. Reference may also be drawn PLD 1980 Lahore 145, 1983 CLC 414, 1984 CLC 325, PLD 1973 Karachi 659 and PLD 1975 Karachi 458.

10.It is seen that twenty eight items of multifarious nomenclature were seized and consequently confiscated vide impugned order-in-original, however, pitted against sections 187 ibid 156(2) of the Act of 1969 appellant claimed lawful validity of confiscated merchandise to the extent of four items depicted within Sr. Nos.13, 15, 17 and 18 of impugned examination/seizure report; and showed his acquiescence to payment of statutory duties and taxes on the remaining goods.

The documentary evidences produced by appellant are tabulated below for ease of reference;

11.Evaluation of the documentary evidence adduced by the appellant in light of what has been discussed in para 9 supra convinced us that the appellant succeeded in not only making out a prima facie case, but also raised a probable defense creating doubt concerning the existence of factum of smuggled nature of impugned merchandise and therefore burden of proof under section 187 ibid section 156(2) stood sufficiently discharged and shifted on the prosecution to establish the case; Consequently, the respondent department when confronted with the documentary evidence availed the chance to controvert the appellants stance and evidence and on 04.11.2015 an undated report was submitted before this Tribunal under the signatures of Assistant Collector ASO MCC, Faisalabad; we meticulously gleaned the said report and it is quite evident that the authenticity of the sales tax invoices raised on the appellant or source goods declarations thereof have not been invalidated; the only objection raised is that of time lag between the dates of imports on evidential GDs and inclusion thereof in the impugned consignment, needless to point out that the dates of sales depicted on the sales tax invoices which were conveniently ignored by the respondents clearly bring the transaction of purchase within at or about ten days of impugned seizure.

12.Conclusively speaking the respondent department not only failed to rebut the veracity of documentary evidence produced by the appellant, but also could not forward any cogent reasons which could dislodge substantiated goods from the evidential goods declarations or invoices; Considering that the respondent department failed to discharge the legal or persuasive burden it follows that the appellant succeeds in raising a probable defense creating doubt with regards to existence of a legally enforceable liability in terms of Customs Act, 1969.

13.In view of above, we are left with no other option but to extend benefit of doubt in appellant's favour; Consequently the impugned order-in-original is modified to the extent that the merchandise tabulated in column 7 of para 10 supra shall be unconditionally redeemed/released to its lawful owners.

14.The appeal stands disposed of in the above terms.

15.Parties be informed through registered post A.D or by UMS.

16.File be consigned to record after completion.

HBT/137/Tax(Trib.) Order accordingly.