COLLECTOR OF CUSTOMS, MODEL CUSTOMS, COLLECTORATE, FAISALABAD VS ADDITIONAL COLLECTOR (ADJUDICATION), FAISALABAD, 2018 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 2400 (2017)

Customs Act (IV of 1969)---

----Ss. 2(kk), 2(s), 16, 18, 168 & 187---SRO No. 566(I)/2005, dated 6-6-2005---"Smuggling"---Proof---Truck was intercepted by Staff of Customs and on demand, the driver of the truck failed to produce any document regarding lawful import/possession of said truck, except Registration Book---Chassis number of said truck was found to be suspicious---Truck was detained and sent to Forensic Science Laboratory for chemical examination of the chassis number plate---Seizure agency alleged that the owner of the truck manually punched the vehicle's chassis of smuggled vehicle according to Registration Book---Detention of truck was converted into seizure under S.168 of the Customs Act, 1969 for violation of Ss.2(s), 16 & 18 of the Customs Act, 1969 and SRO No.566(I)/2005, dated 6-6-2005---Adjudicating proceedings culminated into passing of an order in original, to the effect that no mens rea having been established on part of the owner of truck there remained no force in the charges levelled against the owner of the truck in the show-cause notice---Vehicle was released unconditionally to its lawful owner---Validity---Section 187 of the Customs Act, 1969, only cast an evidentiary burden, subject to creation of prima facie case and the legal or persuasive burden, always rested on the prosecution/department---If accused was able to raise a probable defence, which would create doubt about existence of a legally enforceable liability the prosecution, could fail---Prima facie, the owner was in possession of the vehicle under a valid Registration Book issued by the concerned Motor Registration Authority---Tribunal directed the department to produce cogent evidence to thwart the veracity of Form "F" or sales certificates of impugned vehicle and ascertain the manual punching of chassis numbers of truck---Department failed to produce evidence to consolidate its assertions---In absence of any finding in the laboratory report with regard to tampering of chassis number, department's contention that impugned digits of the chassis number had been punched by the owner, itself was doubtful and it also could not be ruled out that during period in question, manufacturer of truck itself was engraving chassis number manually on its locally manufactured vehicles---Owner, was successful in carving out a prima facie case---Preponderance of probabilities, also ran in his favour---Existence of factum of smuggled nature of impugned vehicle, was doubtful, in circumstances; conversely department, could not forward any cogent arguments or evidence to disconnect impugned vehicle from the evidential documents or to thwart the veracity thereof to prove that impugned truck was of foreign origin---Impugned order was upheld in toto, and departmental appeal being devoid of merits, was dismissed.

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

Tariq Mehmood for Appellant.

Muhammad Amir, A.R. for Respondents.

JUDGMENT

OMAR ARSHAD HAKEEM, MEMBER (JUDICIAL).---(1) This judgment shall dispose of an appeal filed against Order-in-Original No.55 of 2016 dated 17.06.2016 passed by the learned Additional Collector of Customs, (Adjudication) Faisalabad.

2.Precise facts of the core controversy involved in the instant appeal are that the staff of Customs (ASO), Faisalabad intercepted a Hino Truck bearing Registration No. LIT-9197 (Loralai). On demand, the driver Attaullah failed to produce any document regarding lawful import/possession of the vehicle except Registration Book. The chassis number was found to be suspicious therefore the vehicle was detained under Section 2kk of the Customs Act, 1969. The vehicle was sent to Forensic Science Laboratory, Islamabad for chemical treatment of the chassis number plate. The report was received as under:--

Chassis number before chemical treatment: FF3HKK-10 6

Chassis number after chemical treatment: FF3HKK-10 6

The chemical treatment of the Hino Truck in the case cited as subject has revealed that its chassis number, letter/digits i.e. FF3HKK-10 . 6 are intact whereas other unknown digits are probably damaged due to rust and as such not visible. Intact chassis number is manually punched.

3.In the light of above facts the seizing agency alleged that the owner has manually punched the vehicle's chassis number of smuggled vehicle according to registration book as produced at the spot. Therefore the detention was converted into seizure under Section 168 of the Customs Act, 1969 for violation of Sections 2(s) read with S.R.O. 566(I)/2005 dated 06.06.2005, Sections 16 and 18 ibid and Section 3(1)(3) of the Imports and Exports (Control) Act, 1950 punishable under clause 89 of Section 156(1) of the Customs Act, 1969 read with S.R.O. 499(I)/ 2009 dated 13.06.2009.

4.Accordingly, a show-cause notice was issued to the appellant for contravention of the above provisions law. The adjudicating proceedings culminated into passing of an order in original, which reads as under:--

"I have examined the case record and considered the submission by both sides. The seizing agency has instituted the case on the basis of non production of legal import/possession documents of the vehicle. Whereas Mr. Muhammad Amer represented on behalf of the respondent and stated that the vehicle, Hino Truck LIT-9197 is locally purchased and properly registered by the Motor Registration authority. In this regard the respondent through his counsel has provided the proof of local purchase of the seized Hino Truck in question by presenting the sales certificate/Form R and sales invoice of 1997 issued by Hino Pak Motors Limited, Karachi along with sales certificate issued by Maqbool Motors authorized dealer of Hino Pak Motors Limited, Karachi in favour of the owner, respondent. The DR has not refuted the authenticity of above documents which may be construed as their tacit submission of the above documents. As the seized vehicle is locally purchased the charge of smuggling could not be levelled on goods available in open market as there is no ban on such goods. Moreover the report of Forensic Science Laboratory Islamabad does not point toward tempering of the chassis number and reveals that some digits are probably damaged due to rust. Such a finding by the FSL does not indicate that the vehicle is a smuggled one. From the foregoing facts there is no mens rea established on part of the respondent. Hence there remains no force in the charges levelled in the show-cause notice. Therefore I order that vehicle be released unconditionally to its lawful owner."

5.Being aggrieved from the aforesaid order of the learned Additional Collector of Customs (Adjudication), Faisalabad the department/appellant has filed the instant appeal before this Tribunal on the following grounds:--

(a)That the seized Hino Truck showing registration No. LIT-9197 is a Japan assembled as has been reflected and confirmed from the plate (Biscuit) affixed on it.

(b)That the lab report does not confirm the chassis number as has been shown HKK10546 whereas the lab report shows chassis number as FF3HKK-10 ..6. The missing digits cannot be related to digits shown on the biscuit. Therefore the stance of the seizing agency regarding tempering of the chassis number is confirmed by the lab report. Moreover, the missing digits of chassis number shows mens rea on the part of the party.

(c)That the seized Hino Truck is not a locally manufactured/ assembled. Whereas the FSL report confirmed its chassis number is manually punched which arises suspicion that how an imported vehicle can have a manually punched chassis number.

(d)That the documents of Messrs Hino Pak produced/arranged by the party at the time of adjudication also seems suspicions as the sale certificate represents its date of delivery as 20.11.1997 and Model of the vehicle as 1998 which arise question as how it is possible to sell a vehicle prior to its manufacturing year.

(e)That the further perusal of Messrs Hino Pak documents produced/arranged by the party show that the chassis number in documents is FF3HKKA 10546 whereas on the biscuit it is FF3HKK10546. Comparison of documents with the biscuit reveals that the one digit "A" is missing which make the documents doubtful and irrelevant.

5.We have given our anxious considerations to the contentions of learned counsel of the parties and perused the records.

6.It would not be out of place to mention at the outset 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 came 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 Section 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 Kar. 68 rendered by the Hon'ble 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 Hon'ble Sindh High Court split up both the burdens of proof covered under Section 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 technical 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 I77A 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 C.J. 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 hereunder:--

"... 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)"

7.We respectfully agree with the principle of law laid down by the Hon'ble 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 Hon'ble 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 of proof for doing so is that of preponderance of probabilities' and therefore if the accused is able 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.

8.It cannot be denied that the vehicles are notified smuggled goods under section 2(s)(ii) of the Act as a consequence of being depicted at Sr. No. 26 of S.R.O. 566(I)/2005 dated 06.06.2005, resultantly their release is prescribed under S.R.O. 499(I)/2009 dated 13th of June 2009 read with Section 181 of the Act of 1969; but whether sufficient evidence exists on record to consolidate the allegation of smuggling attached to respondent's vehicle is the question which needs to be answered in the instant case;

9.Prima Facie the respondent is in possession of the vehicle under a valid Registration Book issued by the concerned Motor Registration Authority, however the edifice of appellant/ department's case stood on two legs, firstly the learned counsel disputed the veracity of Form "F" as well as the sales certificate of the impugned vehicle, secondly the current configuration of surviving digits of chassis number of impugned vehicle was challenged by the learned counsel on the premise of manual punching which according to him was done on respondent's own volition. Conversely the Authorized Representative of the respondent refuted these allegations and argued that the impugned documents had already been verified by the forum below; To the allegation of manual punching he retorted that during the relevant period the chassis numbers were being manually punched by Messrs Hino Pak Motors Pakistan.

10.In view of the divergence in stance of opposing parties this Tribunal directed the appellant/department on 05.01.2017 to produce cogent evidence to thwart the veracity of Form "F" or sales certificates of impugned vehicle, the department was also directed with the task to ascertain the manual punching of chassis numbers by Hino Pak Motors. However, even subsequent to a lapse of approximately two months the appellant/department failed to produce an iota of evidence to consolidate their verbal assertions. The initial objection having been demolished due to the appellant's inaction, this Tribunal was thus left with adjudication of the sole surviving assertion of learned counsel for appellant, department that the impugned test report of even number dated 15.01.2016 carried a finding of missing digits as well as manual punching of impugned vehicle's chassis number thus proving tampering, consequently according to the learned counsel disengaging the impugned vehicle from the documents produced.

11.Relevant portion of impugned test report No. 64/2016 dated 15.01.2016 thus is reproduced below for ease of reference:--

"The chemical treatment of the Hino Truck in the case cited as subject has revealed that its chassis number, letter/digits i.e. FF3HKK-10 6 are intact whereas other unknown digits are probably damaged due to rust and as such not visible. Intact chassis number is manually punched"

12.Forensically speaking there are two salient methodologies being adopted by the unscrupulous smugglers to effectuate legal cover to delinquent vehicles; One is the "cut and weld" methodology and the other is "re-stamping". When we look at the "cut and weld" methodology juxtaposed with laboratory opinions the forensic foot prints so raised therein clearly show the remnants of fusings surrounding the piece of metal carrying devised chassis number replacing the original "VIN" place. The "re-stamping" form of replacement of chassis number entails the obliteration of original "VIN" number through "grinding down" or hammering off of the original chassis number, and subsequent re-engraving thereof on the delinquent vehicles.

13.A thorough judicial scrutiny of the afore transcribed Laboratory Test Report juxtaposed with what has been discussed in preceding para reveals that the same neither alleges cutting and welding of "VIN" place nor does it impart any findings with regards to obliteration of the original "VIN" of the impugned vehicle, nor are there any findings with regards to re-stamping of chassis number;

14.Manifestly the impugned Laboratory Report confirms matching of first two digits as well as the last digit with the impugned evidential documents, it has also been explained by the Laboratory Expert that the missing of certain digits had occurred due to rust.

15.We are of the considered opinion that in absence of any finding in the Laboratory Report with regards to tampering of chassis number as explained in para-12 supra the appellant's contention that the impugned digits of the chassis number had been punched by the respondent itself is doubtful, it also cannot be ruled out that during the period in question Messrs Hino Pakistan itself was engraving chassis numbers manually on its locally manufactured vehicles.

16.In the light of what has been discussed above we are convinced that the respondent was successful in carving out a prima facie case moreover the preponderance of probabilities also ran in his favour thus the existence of factum of smuggled nature of impugned vehicle is doubtful; Conversely the appellant department could not forward any cogent arguments or evidence to disconnect impugned vehicle from the evidential documents or to thwart the veracity thereof or to prove that the impugned Hino Truck bearing Registration Number LIT9197 was of a foreign origin.

17.In view of aforementioned circumstances the impugned order is upheld in toto and this customs appeal being devoid of merits is dismissed with no orders as to costs.

18.Parties be informed through registered post A.D or by VMS.

20(sic) File be consigned to record after completion.

HBT/96/Tax(Trib.) Appeals dismissed.