J.B. SHOES, KARACHI VS SUPERINTENDENT DIRECTORATE OF INTELLIGENCE AND INVESTIGATION-FBR, LAHORE, 2018 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 277 (2015)

(a) Interpretation of statutes---

----Harmonious construction---Act, in the normal course, was required to be read as a whole and while applying its various provisions, the principle of harmonious construction was required to be borne in mind.

(b) Customs Act (IV of 1969)---

----Ss. 2, 3, 4, 5 & 6---Customs authorities---Jurisdiction---Scope---Exercise of jurisdiction or power of customs authorities in respect of any action which was proposed to be taken, or had been taken, was required to be determined with reference to the operative/functional sections, read with Ss.2, 3, 4 or 6 or other relevant sections of the Customs Act, 1969.

(c) Customs Act (IV of 1969)---

----Ss. 3-A, 3-E, 4, 83, 157 & 168---S.R.O. No. 486(I)/2007, dated 9-6-2007---Jurisdiction of Directorate General of Intelligence and Investigation to seize any consignment---Scope---Officers of Directorate General of Intelligence and Investigation were appointed as Customs Officers under S.3-A of Customs Act, 1969 to exercise the function, jurisdiction and powers of Customs Officers; as notified by FBR under S.3-E of Act---Proviso to S.4 of the Customs Act, 1969, empowered the FBR to impose conditions/limitations on the powers exercised by the Authorized Officers under the relevant or functional sections of Customs Act, 1969---While exercising its powers ordained under Ss.3-E & 4 of the Customs Act, 1969, the Federal Board of Revenue had issued S.R.O. No.486(I)/2007, dated 9-6-2007; which assigned the jurisdiction upon officers of Directorate for the purpose of exercise of powers under the various operative/functional sections of Customs Act, 1969.

(d) Customs Act (IV of 1969)---

----Ss. 2(b), 3-E, 4, 168 & 171---S.R.O. No. 486(I)/2007, dated 9-6-2007---Jurisdiction/power of Directorate General of Intelligence and Investigation to detain or seize goods, documents and other things---Scope---Directorate General of Intelligence and Investigation had unfettered jurisdiction/powers to detain or seize any goods, documents and things within their territorial jurisdiction, if the appropriate officers of Directorate General of Intelligence and Investigation had grounds to believe that any goods were liable to confiscation under the Act---Only legal obligation on the appropriate officer of the Directorate was to show/communicate the grounds under S.171 of the Customs Act, 1969; on the basis of which the seized goods were liable to confiscation---Director of Customs Intelligence and Investigation and the appropriate officers working under it had the jurisdiction to take action under Ss.168, 171 of the Customs Act, 1969 in respect of any goods liable to confiscation; found within his territorial jurisdiction at any time irrespective of the place of importation of goods.

(e) Customs Act (IV of 1969)---

----Ss. 83, 157, 168 & 194-A---Proceedings for confiscation of seized goods---Proceedings for confiscation of seized goods under the Customs Act, 1969 were necessarily an action in rem, which pertained to the goods per se---Scrutiny of record, had revealed that cross-matching of consignment with goods declaration, revealed that there was mis-declaration on part of the importer in as much as the merchandise that was actually imported was not "Joggers", but some other goods---Complete mismatch of nomenclature of goods cleared under S.83 of the Customs Act, 1969 by the Officer of Customs Collectorate, with the goods seized by the Officer of Directorate General of Intelligence and Investigation, proved that there was no nexus between the clearance under S.83 of the Customs Act, 1969 and the impugned merchandise---Misdeclaration of the merchandise had the effect of breaking the nexus between the goods declaration and the seized goods---Cause of action arose within the territorial jurisdiction of the Collectorate where seizure of impugned merchandise was made---Collectorate of Customs, had ipso facto attained jurisdiction over the matter---Appropriate Officers having territorial jurisdiction over the sites of the seized goods, did not lose their authority to initiate proceedings for assessment, confiscation or penalty, merely because the goods were initially cleared for home consumption by other appropriate officer---Plea raised by appellant regarding the impugned show-cause notice and resultant confiscatory order being improper and not legal for the reason of lack of jurisdiction on the part of the department, could not be accepted---Appeal being devoid of merits was dismissed, in circumstances.

Messrs Zeb Traders v. Federation of Pakistan 2004 PTD 369 and Messrs Yousaf Re-rolling Mills v. Collector of Customs (appraisement) Karachi 1986 CLC 77 ref.

Nemo for Appellant.

Sultan Mehmood for Respondents.

JUDGMENT

OMAR ARSHAD HAKEEM, MEMBER (JUDICIAL).---This judgment shall decide the above mentioned Customs Appeal filed against an Order-in-Original No. 35/2014 dated 28.03.2014 passed by the learned Additional Collector of Customs (Adjudication), Lahore.

2.The crux of the facts, culminating in the commencement, relevant for the purpose of deciding the core controversy, involved in the instant appeal and emanating from the record, and impugned show-cause notice are that, in pursuance of an information, the staff of Directorate of Intelligence and Investigation FBR, Lahore intercepted a Trailer No. TLV-891 loaded with Container No. TGHU-9294639 (1x40'). On query driver of the truck/trailer introduced himself as Ashiq Hussain and produced a bilty No. 1234 dated 08.10.2013 in which consignor is Messrs J.B. Shoes Karachi. The GD No. KAPW-HC-42523 dated 07.10.2013 shows the clearance of gents joggers, ladies joggers and girls shoes. The said truck/trailer along with container were detained under section 2(kk) and section 17 of the Customs Act, 1969. On the same day, one Ahmad Khan son of Muhammad Zai appeared in the customs office and claimed the ownership of the goods. The examination of the goods was conducted which led to the recovery of foreign origin shoes as follows:--

3.The produced GD was carefully examined and compared with the recovered goods which revealed that the shoes as indicated against S. Nos. 1 and 2 are not shown in the GD. The GD shows the same as Gents and Boys Joggers. The items as indicated against S. No. 3 are covered with the GD. Furthermore, the Joggers has been assessed @ 1.76 US$ and 0.80 US$ per pair whereas the recovered shoes are to be assessed @ 2.90 US$ per pair. It is evident that the description of the shoes had been changed in order to avoid proper application of Valuation Ruling and government exchequer was deprived of its legitimate revenue.

4.Subsequent to completion of the formalities and in pursuance of the legal and factual inquiry, a show-cause notice was issued to the appellant under sections 18 and 32(1) of the Customs Act, 1969 and the appellant was called upon to show cause as to why the aforesaid short paid amount of duty and taxes may not recovered under the relevant provisions of law.

5.In sequel to impugned show-cause notice adjudication proceedings were conducted which concluded into an adjudicatory order and the adjudicating officer precisely, ruled as follows:-

"In view of above, I am of the considered opinion that charges as mentioned in the show-cause notice are established against the respondents. Accordingly I hereby order as follows:--

(a)The seized goods mentioned in this order which were directed by the Hon'ble Lahore High Court, Lahore vide order dated 26.11.2013 in Writ Petition No. 28249 of 2013 to be released to the petitioner (respondent namely J.B. Shoes) subject to the payment of all customs duties and taxes, the seized consignment be released to the petitioner against payment of differential duty and taxes along with redemption fine equal to 35% (thirty five percent only) on assessed value of the seized goods.

(b)The truck/trailer bearing registration No. TLC-891 along with container used for transportation of impugned goods is confiscated under section 157 of the Customs Act, 1969. However, an option under section 181 of the Customs Act, 1969 is allowed and confiscated truck/trailer bearing registration No.TLC-891 along with container, provisionally released earlier against Bank Guarantee of Rs.1,50,000/- (Pak rupees one lakh and fifty thousand only) by the Deputy Collector of Customs (Adjudication), Lahore vide order C. No. V-Cus/DC/ADJ/ HQ/44/2013/439 dated 31.10.2013 is redeemed to its lawful owner on payment of redemption fine of Rs. 50,000/- (Rupees fifty thousand only).

(c)A penalty of Rs. 50,000/- (Pak Rupees fifty thousand only) each is imposed upon the respondents Nos. 2 and 3 in terms of clauses (14) (90) of section 156(1) of the Customs Act, 1969.

(d)The deposited amount by the respondents may be adjusted at the time of final payment of the total liabilities."

6.Aggrieved from decision of the learned Additional Collector (Adjudication) the appellant has approached this forum and filed instant appeal. The case set up by the petitioner, in brief in so far as relevant, is as follow;--

(i)That the impugned order-in-original has been passed in a mechanical fashion and without proper appreciation of law points involved in the case. As such the same is liable to be set aside on this score alone.

(ii)That the allegations against the appellant are not based on any evidence and reasoning. The allegations are based on presumptions only.

(iii)That at the time of interception the appellants provided the complete documents showing the legal import and its proper assessment and clearance by the MCC Staff, Karachi under sections 25, 79 and 80 of the Customs Act, 1969. But the respondent No. 2 passed an order-in-original against the facts of the case. Hence the impugned order-in-original is liable to be set aside on this score alone.

(iv)That it is an admitted fact that the consignment imported by the appellant was properly examined, assessed, out of charged and cleared by the Model Customs Collectorate, Karachi on payment of leviable duty and taxes and as such the detection and seizure of the goods on the part of the seizing agency is patently without jurisdiction and of no legal effect.

(v)That it is also an admitted fact that the consignment was assessed by Model Customs Collectorate, Karachi on the basis of evidence of previous imports in terms of section 25(5) and (6) of the Customs Act, 1969. Before its clearance the same was properly examined assessed and out of charged by Model Custom Collectorate, Karachi on payment of leviable duties and taxes and as such according to the directive of the Federal Board of Revenue contained in its letter dated 01.09.2009 issued on making reference by Lahore Collectorate vide letter dated 10.08.2009, if there was any dispute with regards to the importability, value, mis-declaration or as the case may be, evasion of tax, it was only the clearing Collectorate to take care thereof and seizing agency had no authority, whatsoever in this behalf. Thus had there been any reservation on the part of detecting agency they would have referred the matter to Model Custom Collectorate, Karachi for taking appropriate action in accordance with law.

(vi)That it is by now a settled proposition of law that once the consignment is examined, assessed and out of charged and cleared on payment of leviable duties and taxes by the customs authorities, it cannot be intercepted, detained or seized by any other authority or agency on the allegation for violation of any sort or the relevant laws and rules. At the best such authority or agency can inform the Collectorate of clearance to take care of such violation irrespective of the fact that the same pertained to importability or as the case be evasion of taxes as held in case "Messrs Zeb _Traders v. Federation of Pakistan" (2004 PTD 369) "Messrs Yousaf Re-rolling Mills v. Collector of Customs (Appraisement ) Karachi" (1986 CLC 77).

(vii)That in case the assessment made by the clearing Collectorate was considered any subsequent stage incorrect or wrong, then only sub section (2), (3) or (4) of section 32 of the Customs Act, 1969 can be invoked and that too by the authorities at the port of clearance. Thus the respondent No. 2 had no authority to take any action in this behalf under the aforesaid provisions of law.

(viii) That even if there was any short levy or wrong assessment, the seizing staff was not authorised to seize the goods which were earlier examined, assessed and out of charged by the concerned staff of Customs Karachi. As earlier stated, at the best can inform the clearing Collectorate who can issue show-cause notice for recovery of any escaped amount or violation of import policy order and pass an appropriate order after affording an opportunity of hearing to the appellant.

(ix)That the goods subject matter of the appellant were rightly assessed under section 25 of the Customs Act, 1969 on the basis of previous import evidence by the Customs staff.

7.Leveling a variety of allegations and narrating the sequence of events, in all, Mr. Sultan Mehmood, Advocate representing respondent/ department, while defending the case vehemently rebuked and rebutted the appellants articulations on the following point:

(i)Denied. The order-in-original passed by the adjudicating authority as per facts of the case on merit and the same is liable to be upheld.

(ii)Denied. It is evident that the description of the shoes were changed in order to avoid proper application of Valuation Ruling which caused short levy of duty and taxes and loss to the government exchequer. The goods were rightly detained/seized by this agency.

(iii)Admitted to the extent of filing of GD, however value of the goods was assessed only on the declaration of the importer who declared the goods as gents joggers, boys joggers and girls shoes whereas the seized goods were gents shoes and girls shoes. The goods were not properly examined/ assessed in accordance with the relevant provision of law.

(iv)Denied as already stated in para 'iii' above.

(v)Detailed comments stated at para above. The letter of FBR dated 01.09.2009 is of executive nature and does not settle principle of law relating to jurisdiction. Customs Act, 1969 is a special law. Though the said code in terms of section 3 ibid prescribes the territorial jurisdiction of the officer of customs but in the case where accused escapes from the original jurisdiction, the code does no provide any guide lines. In such cases in terms of section 5(2) of the Code of Criminal Procedure, the provisions of Chapter XVI which deals with the jurisdiction of the criminal courts regarding inquires and the trials becomes relevant. In the terms of section 177 of the Cr.P.C. the offence ordinarily is required to be investigated and tried at a place where the same is committed. In case of escape from original jurisdiction different principles have been laid down which have been incorporated under sections 177, 178, 179, 180, 181, 182 and 183 of the Criminal Procedure Code. In terms of section 183 ibid, the offence is triable where the accused with any offending article is apprehended.

(vi)Denied. As stated above.

(vii)Denied. The goods involving short levy of taxes through mis-declaration or otherwise are liable to confiscation under sections 156(1)9 and 14 of the Customs Act, 1969. Any goods liable to confiscation can be seized by the appropriate officer of customs under section 168 of the Customs Act, 1969. The officer of the Directorate General of Intelligence and Investigation-FBR of the rank of Intelligence Officer and above have been authorised to seize all such goods under S.R.O. 486(I)/2007 dated 09.06.2007. The seizure was thus legal and all legal and codal formalities have been complied with in true letter and spirit.

(viii) Denied. As stated in para 'g' above.

(ix)Denied. The answering respondent did not declare the proper description of their consignment which cause short payment of duty and taxes as detailed against para 3 of the seizure report as well as show-cause notice.

8.Arguments heard, record perused, relevant law discerned.

9.Prior to embarking upon the merits of instant appeal, we observe that in the normal course, an Act is required to be read as a whole and while applying its various provisions the doctrine of harmonious construction is required to be borne in mind. With this Principle in view when we address ourselves to the question of jurisdiction, we find that insofar as the Customs Act, 1969 is concerned the exercise of jurisdiction or powers in respect of any action which is proposed to be taken or has been taken is required to be determined with reference to the operative/functional section(s) read with sections 2, 3, 4, 5 and/or section 6 and or other relevant sections of the Customs Act, 1969.

10.Now coming to the question of jurisdiction of seizure of impugned consignment by the Directorate General of Intelligence and Investigation, Lahore; An overview of the schematics of Customs Act, 1969 makes it abundantly clear that the officers of Directorate General of Intelligence and Investigation appointed as Customs Officers under section 3A ibid exercise the functions, jurisdiction and powers of Customs Officers as notified by the FBR under section 3E ibid; A bare reading of proviso to section 4 of the Act would reveal that the same empowers the FBR to impose conditions/limitations on the powers exercised by the authorized officers under the relevant operational or functional section(s) of the Act of 1969; while exercising its powers ordained under section 3E and section 4 of the Act, the Federal Board of Revenue has promulgated S.R.O. 486(I)/2007 dated 9th of June 2007 which assigns the jurisdiction upon officers of Directorate for the purpose of exercise of powers under the various operative/functional sections of the Act of 1969.

11.While examining the factual matrix of present case we find that the goods were imported at Karachi Port and were allowed clearance under section 83 of the Customs Act, 1969 by the appropriate officer of Model Collectorate of Customs Karachi. This is in fact the position undisputed by both the parties both in respect of the fact and the law. In other words, in terms of section 83 ibid, the appropriate officer of Collectorate of Customs Karachi after satisfying himself with regard to all legal and factual aspects of the impugned merchandise including assessment and payment of duties, taxes thereof had passed an order permitting clearance of the goods for home consumption. Thereafter, the goods were taken out of customs charge and purportedly sold off to the appellant. When the consignment arrived at Babu Sabu Bund Road Lahore which admittedly falls within the territorial jurisdiction of the Collectorate of Customs Lahore, the merchandise was taken over and seized under section 168 by an officer of the Directorate of Intelligence and Investigation Lahore.

12.A question has, therefore, arisen whether the officers of Directorate General of Intelligence and Investigation Lahore were competent to do so?

13.In this respect when we look at sections 168 ibid 171 and read these in harmony with sections 2(b), 3A, 3E and 4, ibid S.R.O. 486(I)/2007 dated 9th of June 2007, we find that the Directorate General of Intelligence and Investigation have unfettered jurisdiction/powers to detain or seize any goods, documents and things within their territorial jurisdiction, if the appropriate officer(s) of Directorate General of Intelligence and investigation had grounds to believe that any goods were liable to confiscation under the Act; Consequently it is manifest that the only legal obligation on the appropriate officers of the Directorate was to show/communicate the grounds (under section 171 ibid) on the basis of which the seized goods were liable to confiscation. In other words, we consider that Director of Customs Intelligence and Investigation, Lahore (and the appropriate officers working under him) had the jurisdiction to take action under sections 168 ibid 171 of the Customs Act, 1969 in respect of any goods liable to confiscation found within his territorial jurisdiction at any time irrespective of the place of importation of goods.

14.The Honorable Lahore High Court Lahore, faced with a similar situation in W.P. No. 1451 of 2008 (F.A. Corporation v. Director General Customs etc.) ruled as follows;

"The claim of the petitioner is that the exercise of jurisdiction by Director of Intelligence is beyond the power available under law. Had the petitioner satisfied this court that lawfully the said Director had no such jurisdiction, the writ jurisdiction of this court could have been exercised. However since the petitioners have failed to prove that their action was without jurisdiction, there is no question of indulgence by way of exercising writ jurisdiction. Moreover, this is a stage of show-cause notice under section 171, which is based upon proper exercise and lawful jurisdiction against which remedies are available in terms of appeal etc. after final order under section 179."

15.We have carefully considered the next argument of learned counsel for appellant which is concisely set out as under;

Whether under the facts and circumstances of the case only the clearing Collectorate wields the jurisdiction to issue show-cause notice?

16.It need not be emphasized that a proceedings for confiscation of seized goods under the Customs Act is necessarily an action in rem which pertains to the goods per se; Scrutiny of records reveals that cross matching of impugned consignment with impugned Goods Declaration revealed that there was misdeclaration on part of the importer inasmuch as the merchandise that was actually imported was not Joggers but some other goods, thus complete mismatch of no nomenclature of goods cleared under section 83 of Customs Act, 1969 by the Officer of Model Customs Collectorate, Karachi with the goods seized by the Officers of Directorate General of Intelligence and Investigation, Lahore proved that there is no nexus between the clearances under Section 83 and the impugned merchandise. In other words, the mis-declaration of the merchandise had the effect of breaking the nexus between the Goods Declaration and the seized goods. We are consequently of the considered opinion that the cause of action arose within the territorial jurisdiction of the Collectorate where seizure of impugned merchandise was made, therefore the Collectorate of Custom, Lahore had ipso facto attained jurisdiction over the matter;

17.In the above view of the matter; it is held that the appropriate officers having territorial jurisdiction over the sites of the seized goods did not lose their authority to initiate proceedings for assessment, confiscation or penalty merely because the goods were initially cleared for home consumption by other appropriate officers.

18.We are unable to accept the plea raised by the appellant regarding the impugned show-cause notice and resultant confiscatory, order being improper and not legal for the reason lack of jurisdiction on the part of the respondents, therefore instant Customs appeal being devoid of merits is dismissed with no orders as to coasts.

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

20.File be consigned to record after completion.

HBT/136/Tax(Trib.). Appeal dismissed.