Sheikh FAHEEM AHMED VS DIRECTOR, DIRECTORATE GENERAL OF INTELLIGENCE AND INVESTIGATION-FBR, 2018 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 341 (2017)

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

----S. 194-A(1)(4)---Appeal against order-in-original passed by Collector of Customs (Adjudication)---Non-submission of counter affidavit by the (respondent) Authority---Effect---Appeal, in circumstances, could be allowed on the short point of not controverting the affidavit submitted by the appellant on the facts and grounds of the case, confirming that the deposition made by and on behalf of the appellant in the memo. of appeal and affidavit were deemed to be true and correct and no controversy was left behind with regard to the fact of the case---Non-submission of counter affidavit whether by will or default, therefore, would forfeit the respondent's right to deny assertion made in the affidavit.

[Case-law referred]

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

----Ss. 2(s), 9, 10, 168 & 177---SRO No.486(I)/2007, dated 9-6-2007---SRO No.188(I)/83, dated 12-2-1983---"Smuggling"---Delegated powers of Officials of Directorate General of Intelligence and Investigation---Scope and extent---Officials of Director, Directorate General of Intelligence and Investigation, were delegated powers through SRO No.486(I)/2007, dated 9-6-2007 for functioning as Officer of Customs within the territory of Pakistan for thwarting smuggling---Said powers were not unfettered; their jurisdiction was in fact restricted to the area falling outside the area expressed in Ss.9 & 19 of the Customs Act, 1969 and beyond 5 Kilometers of the border of India and Iran as expressed in S.177 of the Customs Act, 1969 and Notification S.R.O. No.188(I)/83, dated 12-2-1983---In the present case, officials seized the goods from an open warehouse situated within the city---Goods stored in warehouse, did not fall within the ambit of "smuggling" as only either imported or purchased goods were invariably stored in the warehouse, well supported with valid and lawful legal import documents and purchase receipt/bills, available with the person, who warehoused the goods---Seizure of goods from open warehouse, was without any lawful authority/jurisdiction which being of no legal effect, was void and ab initio.

[Case-law referred]

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

----Ss. 162 & 163---Power to issue search warrant and to search and arrest without warrant---Search of an open ware house under S.163, Customs Act, 1969---Scope---Search under S.163 of the Customs Act, 1969 of open warehouse where appellant/importer's goods were warehoused---Every search under S.163 of the Customs Act, 1969, had to be made by the Officer concerned strictly in accordance with the spirit of its expression after exhausting recourse of obtaining a search warrant in terms of S.162 of Customs Act, 1969 from the Judicial Magistrate on the basis of application by Gazetted Officer of the Customs, stating the grounds of his belief that the goods liable to be confiscated or documents or things, while in his opinion, would be useful as evidence in proceeding under the Act and those were hidden in some secret place where search had to be made after having knowledge of the place which was earlier a guarded secret---Judicial Magistrate, after going through the application if felt appropriate, would issue search warrant which had to be executed in the same manner having the same effect as of search warrant issued under the Criminal Procedure Code, 1898---Requirement of issue of search warrant by the Magistrate, could be dispensed with under S.163 of the Customs Act, 1969, which empowered Assistant Collector of Customs or the other officer of like rank to make search without warrant, if he was satisfied that there was danger of removal of goods, if search warrant was obtained; further he had to record such reason in the statement so prepared in writing containing the ground of his belief with regard to danger he apprehended that the goods would be removed before search could be made on the basis of search warrant and secondly about the goods or documents or things for which the search was to be made---In the present case, the search had been conducted at the warehouse under S.163 of the Customs Act, 1969 by the subordinates of Directorate General of Intelligence and Investigation FBR (Anti-Smuggling) without recourse to the mandated requirement of S.162 of the Customs Act, 1969---Obtaining of search warrant under S.162 of the Customs Act, 1969, was pre-requisite without exception---Search conducted under S.163 of the Customs Act, 1969, without recourse to the mandated requirement of S.162, would render the same without lawful authority and jurisdiction and no superstructure could be built upon such search---Seizure notice and subsequent preparation of contravention report by the officer of Directorate General and issuance of show-cause notice and passing of order-in-original by Collector of Customs was as of no legal effect and as such void, ab initio.

[Case-law referred]

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

----Ss. 91, 92, 168 & 171---Powers of Officials of the Directorate General of Intelligence and Investigation to inspect private warehouse---Scope---In the absence of enabling provision in the law, said officials were barred by law to ask or demand about the Goods Declaration or purchase bills/receipts of the warehouse goods---Proceedings, right from seizure to passing of order-in-original suffered from legal infirmity and as such were void ab initio.

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

----Ss. 2(s), 9, 10 & 177---Notification No. S.R.O. 118(I)/83, dated 12-2-1983---"Smuggling"---Scope---Goods in question should have been brought into or taken out of Pakistan either in breach of any prohibition or restriction for the time being, or by evading payment of customs duty and other taxes leviable thereon; goods should be either those specifically listed in the definition, or be notified by the Federal Government in the official gazette in case those were not freely available in the local market for purchase by the general public, or be brought into or taken out of Pakistan by a route other than one declared under Ss.9, 10 of the Customs Act, 1969 or from a place other than a customs station---In the absence of such perquisites case would not fall within the definition of "smuggling".

Nadeem Ahmed Mirza(Consultant) for Petitioner.

Arif Maqsood, S.I.O (for respondents)

Date of hearings: 27th January, 2017.

ORDER

TAHIR ZIA (MEMBER JUDICIAL-II).---Through this order, I intend to dispose of appeal directed against Orders-in-Original No. 666/2015-2016 dated 20.04.2016 passed by the Collector of Customs (Adjudication-I) (here-in-after referred as respondent No. 2).

2.Briefly facts of the case are that the appellant is a Broker/ Commission Agent and he sells the goods imported by different companies of Pakistan and charge commission of 1% on the selling of the goods. During the course of his business activities he received 120 drums of motor oil from M/s. Imran Ali Lubricant, Faisalabad against Bilty No. 603 dated 15.09.2015 of Messrs Sitara Al-Usman Goods Forwarding Agency, Quetta, imported vide GD No. 99819 dated 07.08.2015, 120 drums motor oil and 104 drums of base R.P.O (Rubber Processing Oil) vide Bilty No. 1453 of Messrs Pakistan Good Transport Company, Quetta from Messrs Ali Enterprises, Quetta imported vide GD No. 2012 dated 04.05.2015, 120 drums base oil vide Bilty No. 1466 dated 15.09.2015 of M/s. Pakistan Good Transport Company, Quetta from Messrs Gul Brothers, Quetta imported vide GD No. HC-841 dated 14.09.2015 and 125 drums of calcium based grease from Messrs Saad Enterprises, Quetta, upon reaching those at Karachi the appellant warehoused those at Messrs H.Akber Open Ware House, situated at Plot No. D-267. Shershah, S.I.T.E., Karachi on agreed warehousing charges between the appellant and warehouse owner. The appellant out of stored goods sold 32 drums of motor oil, 30 drums of base oil, consequent to which 208 drums of motor oil, 90 drums of base oil, 42 drums of R.P. Oil and 125 drums of calcium base grease were lying in the warehouse for sale. The official of Directorate General of Intelligence and Investigation-FBR (Anti-Smuggling) (here-in-after to be referred as respondent No. 1) on 18.09.2015 arrived at the warehouse and directed the warehouse owner that they intend to search the warehouse and upon finding of warehousing 208 drums of motor oil, 90 drums of base oil, 42 drums of R.P.Oil and 125 drums of calcium base grease, demanded bill of GD's against those. Since, no conditions are laid by the Government for the warehouse owners, not to warehouse the goods unless the person who desires to warehouse the goods supply to him either copies of Goods Declaration or purchase bills, he answered in negative. Nevertheless, he called the appellant, who informed the subordinate of respondent No. 1 that he warehoused the goods in question after arrival of those from Quetta through valid bilties and the goods in question are imported from Iran and were cleared from the MCC of Quetta after completion of all the codal formalities and payment of leviable duty and taxes. He further informed that at this very moment he is not in possession of relevant documents, but can be supplied later on. The official of respondent No. 1 detained the goods under the provision of Section 186 of the Customs Act, 1969. The appellant subsequently supplied the respective Goods Declaration and connected documents confirming that the goods were imported and cleared from MCC of Quetta as stated by him earlier, the officials refused to accept the documents as valid on one pretext and another and seized the goods in terms of 168(1) of the Customs Act, 1969 on the pretext of smuggling as defined in Section 2(s) ibid. The officials of respondent No. 1, thereafter prepared contravention report C.No.2121/DCI/Seiz/2015 and forwarded that to Respondent No.2, who issued Show-Cause Notice dated 04.11.2015. The appellant submitted reply dated 02.03.2016 through which he challenged the jurisdiction and powers of the respondent No. 1 and the act of search under section 163 directly without recourse to the mandated provision of 162 ibid and once again submitted respective documents substantiating the ownership of the goods. The respondent No. 2 however disregarded the arguments and documents and passed Order-in-Original dated 20.04.2016, through which he ordered outright confiscation of the goods after forming opinion that the goods are smuggled as defined in section 2(s) punishable under clauses (8) & (89) of subsection (1) read with section 2 of section 156 ibid and Section 3(1) of Import and Export (Control) Act, 1950, in addition to imposition of penalty of Rs. 300,000/-.

3.The appellant filed appeal on the basis of grounds enumerated therein. No cross objection under subsection (4) of Section 194A have been filed by the respondent No. 1 himself or through his subordinate, instead comments dated nil were filed by SIO Mr. Arif Maqsood dated nil signed by Madam Sadia Sadaf, Deputy Director, which are placed on record of the case for consideration and perusal.

4.Rival parties heard case record examined. Prior to dilating upon the merit of the case, it is of vital importance to subscribe here that no counter affidavit has been filed by the respondent No. 1, resultant, the instant appeal can be allowed on the short point of not controverting the affidavit submitted by the appellant on the facts and grounds of the case, confirming that the deposition made by and on behalf of the appellant in the memo of appeal and affidavit are therefore, deems to be true and correct and no controversy is left behind in regards to the fact of the case. Non submission of counter affidavit whether by will or default forfeit the respondent No. 1 right to deny assertion made in the affidavit. This proposition of law stood validated from the following judgments of the Superior Judicial Fora reported as (1974) 94 ITR 1, PLJ 1979, 71 and 72 (sic), 1986 CLC 745 Kar., (1984) 146 ITR 140, 1986 PTD (Trib.) 119, 1986 CLC 1119, 1986 CLC 1408 Kar., 1991 MLD 1243, PLD 1992 SC 317, 1993 SCMR 662, PLD 1996 Karachi 68, and PLJ 197 (sic) Quetta 66 and 2003 PTD 2118.

5.Reverting to the core issue, it is my considered view that indeed the officials of respondent No. 1 are delegated powers through S.R.O. No. 486(I)/2007 dated 09.06.2007 for functioning as Officer of Customs within the territory of Pakistan for thwarting the maniac of smuggling. However, these powers least give them unfettered powers for playing havoc with the business community, their jurisdiction is in fact restricted to the areas falling outside the area expressed in sections 9 and 10 of the Customs Act, 1969 and beyond 5 kilometers of the border of India and Iran as expressed in section 177 of the Customs Act, 1969 and Notification S.R.O. No.188(I)/83 dated 12.02.1983. In the case under scrutiny they seized the goods from an open warehouse situated within the city. Goods stored in warehouse does not falls within the ambit of smuggle as only either imported or purchased goods are invariably stored in the warehouse, well supported with valid and lawful legal import documents and purchase receipt/bills available with the person, who warehoused the goods. However, it is not mandated under law to supply the copies of those to the warehouse owner as there exist no enabling provision either in the Customs Act, 1969 or notification issued to the said fact by the Federal Government. My opinion stood vindicated from the Hon'ble Supreme Court of Pakistan in reported judgment PLD 1991 SC 630 Collector of Customs (Preventive) v. Muhammad Mehfooz that "Federal 'B' Area in which the raid was made and the subject goods were seized was not included within the limit of Port of Karachi. There is no doubt about the appointment of Collector of Customs, Deputy Collector of Custom and Assistant Collector of Customs and other Officer of Customs infact had jurisdiction only in port area and not in entire Karachi". Therefore, seizure of appellant's goods from Messrs H.Akber Open Warehouse situated at Plot No. D-267, Shershah, S.I.T.E., Karachi is without any lawful authority/jurisdiction. Hence, of no legal effect, as such void and ab-initio.

6.It has also been noticed that the case has been made by the Official of respondent No. 1 on the basis of search under section 163 of the Customs Act, 1969 of the Messrs H.Akber Open Warehouse situated at Plot No. D-267, Shershah, S.I.T.E., Karachi, where appellant goods were warehoused. Every search under Section 163 of the Customs Act, 1969 has to be made by the Officer concerned strictly in accordance with the spirit of its expression after exhausting recourse of obtaining a search warrant in terms of Section 162 ibid from the Judicial Magistrate on the basis of an application by Gazetted Officer of the Customs, stating the grounds of his belief that the good liable to be confiscation or documents or things, which in his opinion shall be useful as evidence in proceeding under the act and those are hidden in some secret place where search has to be made after having knowledge of the place which was earlier a guarded secret and the Judicial Magistrate after going though the request if felt appropriate issues search warrant, which has to be executed in the same way and have the same effect as of search warrant issued under the CCP 1898. It is beneficial to reproduce sections 162 and 163 of the Customs Act, 1969 prior to deliberation on the spirit and essence of these:--

162: Power to issue search warrant:---(1) Any Judicial Magistrate may, on application by a Gazetted Officer of Customs stating the ground of his belief that goods liable to confiscation or documents or things, which in his opinion will be useful as evidence in any proceeding under this Act are secreted in any place within the local limits of the jurisdiction of such magistrate, issue a warrant to search for such goods documents or things.

(2) Search warrant shall be executed in same way, and shall have the same effect as the search warrant issued under the Code of Criminal Procedure 1898 (Act V of 1898)

163. Power to search and arrest without warrant:---(1) Whenever any office of Customs not below the rank of an Assistant Collector of Customs, or any other officer of like rank duly employed for the prevention of smuggling having reasonable grounds for believing that any goods liable to confiscation or any documents or thing which in his opinion will be useful for or relevant to any proceeding under this Act are concealed or kept in any place and that there is danger that they may be removed before a search can be effected under section 16, he may 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 search goods, documents or things in that place.

(2) An officer or person who makes a search or causes a search to be made under subsection (1) shall leave is a signed copy of the aforementioned statement in or about the place reached and shall at the time the search is made or as soon as practicable thereafter, deliver further more a signed copy of such statement to the occupier of the place at his last known address.

(3) All searches made under this section shall be carried out mutatis mutandis in accordance with the provision of the Codes of Criminal Procedure 1898 (Act V of 1898)

(4) Notwithstanding anything contain in foregoing subsection and subject to previous authorization by an officer of customs not below the rank of an Assistant Collector of Customs, any officer of the Customs or any person duly empowered as such may be, with respect to an offence related to exportation of such goods as the Federal Government may, by notification in the official Gazette specified in this behalf-

(a) Arrest without warrant any person concerned in such offence or against whom reasonable suspicion exist that he is about to be concerned in such offence;

(b) Enter an search without warrant any premises to make an arrest under clause (a) or to seize any goods which are reasonably suspected to be intended for exportation contrary to any prohibition or restriction for the time being enforce, and all documents or things which in his opinion will be useful for relevant to any proceeding under this Act; and

(c) for the purpose of arresting, detaining or taking into custody or preventing the escape of any person concerned or likely to be concerned in such offence, or for the purpose of seizing or preventing the removal of any goods in respect of which any such offence has occurred or is likely to occur use or cause to be used such force to the extent of causing death as may be necessary.

(5) The provision of subsection (4) shall apply only to the areas within 5 miles of the land of frontier or Pakistan, and within 5 miles belt running along the sea coast of Pakistan.

(6) No suit, prosecution or other legal proceeding shall be instituted except with the previous sanction in writing of the Federal Government against any person in respect of anything done or purporting to be done in exercise of the power conferred by subsection (1) or subsection (2) or, in areas specified in subsection (5) by subsection (4).

7.The requirement of issue of search warrant by the Magistrate could be dispense with under Section 163 of the Customs Act, 1969, which empowers Assistant Collector of Customs or any other Officer of like rank to make search without warrant, if he was satisfied that there was danger of removal of goods if search warrant was obtained and further he had to record such reason in the statement so prepared in writing containing the ground of his belief with regard to danger he apprehend that the goods would be removed before search could be made on the basis of search-warrant and secondly about the goods or documents or things for which the search was to be made. In the instant case the search has been conducted in H.Akber Open Warehouse situated at Plot No. D-267, Shershah, S.I.T.E., Karachi under section 163 of the Customs Act, 1969 by the subordinates of respondent No. 1 without recourse to the mandated requirement of section 162 ibid., which was indispensible by virtue of the fact that the drums warehoused could had not be removed by the appellant in very shot span of time because for loading on a truck lifter is required, which could not be obtained on immediate basis, nor drums could be loaded manually as stated here-in-above. Therefore, obtaining of search warrant under Section 162 was pre-requisite without any exception. Search conducted under Section 163 directly without recourse to the mandated requirement of Section 162 render it without lawful authority and jurisdiction and no super structure can be built upon such search. Hence, the seizure notice and subsequent preparation of contravention report by the Officers of respondent No. 1 and issuance of show-cause notice and passing of order-in-original by the respondent No. 2 as of no legal effect and as such void and ab-initio and this stood fortified from the reported judgments of superior judicial fora at PLD 1991 SC 630, 2003 PTD 1034,2003 PTD 2037, 2004 PTD 2952, 2005 PTD 1933, 2006 PTD 1884, 2007 SCMR 1039 and 2009 PTD 1083.

8.That irrespective of the above dicta, the Officials of respondent No. 1 are not empowered under any provision of the Customs Act, 1969 to approach any private warehouse with the exception of custom bonded warehouses for inspection of the warehouse/stored goods by the public on payment of ware house charges and neither they are empowered to ask either from the owner of the warehouse or from the person whose goods are warehoused in that, as no provision in this regard is available either in the Act or notification. Therefore, in the absence of availability of enabling section they are barred by law to ask or demand about the Goods Declaration or purchase bills / receipts of the warehoused goods, rendering their act of demanding the corroborated documents corresponding to the warehoused goods and this has been held on many occasion by the superior judicial fora in the unreported/reported judgments relied upon by the appellant.

9.That I am also at loss to digest the fact that despite of searching warehouse and preparation of seizure report they had not served on the owner of the warehouse seizure notice as mandated under section 168(1) of the Customs Act, 1969 and the notice under section 171 ibid. Likewise, mentioning the name of the appellant in the seizure report, no notice either under sections 168(1) and 171 has been served on him, which is prerequisite prior to preparation of seizure report. The reason emerged from the perusal of the case is that, seizure notice under sections 168(1) and 171 of the Customs Act, 1969 were intentionally not served on the owner of warehouse because the seizure so conducted was unlawful as no enabling provision exist in the Customs Act, 1969 to do so in addition to demanding of Goods Declaration or purchase receipts/bills from the owner of the warehoused goods, resultant he is not under obligation to ask for those and supply to the Officials of respondent No. 1. Even otherwise if the case would had been framed against warehouse owner, the adjudicating authority would had thrown the same on their face being of no substance, lawful authority and jurisdiction. Similarly, notices to the appellant was not served as it was in the knowledge of the Officials of respondent No. 1 that their act of terming the warehoused goods as smuggled has no legs to stand in the presence of the submitted documents, confirming that the goods were lawfully imported from Iran and cleared by MCC of Quetta and thereafter transported to Karachi by the importer to their agent for selling in the local market on their behalf and thereafter remit the sale proceed after deducting his commission and transportation expenses and so the warehousing. The case has been framed mala fidely and this stood validated from non serving of mandatory notices in terms of sections 168(1) and 171 of the Customs Act, 1969, rendering the entire proceeding right from seizure to passing of order-in-original suffer from legal infirmity and as such void and ab-initio as held by the Superior Judicial Fora in the reported judgment relied upon by the appellant.

10.That as regard to the determination of the fact that as to whether the goods warehoused at H.Akber Open Warehouse, Shershah, S.I.T.E., Karachi by the appellant are smuggled or not, it is beneficial to reproduce the provision Section 177 of the Customs Act, 1969 and Notification S.R.O. 118(I)/83 dated 12.02.1983 with the exception of definition of smuggle, which the appellant and the respondent No. 1 have incorporated in the grounds of appeal/comments:--

Section 177 Restriction on the possession of goods in certain areas:---(i) This section shall apply to such areas adjacent to the frontier of Pakistan as may, from time to time, be notified by the Board in the official Gazette.

(2) In any area to which this section for the time being applies, no person shall have in his possession or control any such goods or class of goods in excess of such quantity or value as may from time to time be notified by the (Federal Government) or, with the previous approval of the (Federal Government) by the Provincial Government, in the official Gazette, except under a permit granted by the Government which issued the notification in respect of the particular goods or class of goods or by an officer authorized by such Government.

Notification of the Frontier Border area under Section 177

Notification No. S.R.O. 118(I)/83 dated 12th February, 1983--- In exercise of the power conferred by subsection (1) of section 177 of the Customs Act, 1969 (VI of 1969) and in supersession of its Notification No. S.R.O 309(I)/70 dated 22.12.1970 the Central Board of Revenue is pleased to notify the area 5 miles adjacent to the Frontier with India and Iran to be the area to which the said section shall apply.

That after examining the Section 2(s), it is observed that the definition of 2(s) can be applied only if both of two forms are fulfilled. Each of this form have two "limbs" and the form applies if either of its limbs is applicable. These position are narrated here-in-below:--

(a)Form (A): The impugned goods should be brought into or taken out of Pakistan either (i) in breech of any prohibition or restriction for the time being in force, or (ii) by evading payment of customs duty and other taxes leviable thereon; and

(b)Form (B): The impugned goods should be (i) either those specifically listed in the definition, i.e. gold bullion, platinum, radium, etc or be notified by the Federal Government in the official Gazette in case those are not freely available in the local market for purchase by the general public, or (ii) be brought into or taken out of Pakistan by a route other than one declared under section 9 or 10 or from a place other than a customs -station.

Unless both forms (A) & (B) applies the case does not falls within the definition of "smuggle" and there can be therefore neither any smuggling of the goods nor can they be held to be "smuggled goods". As far as first form is concerned none of the goods specifically mentioned in the definition are relevant to the present case, therefore for Form (B) to apply, it must be shown that either the goods warehoused have been notified by the Federal Government for the purpose of Section 2(s) and those are not freely available in the local market for purchase by the general public (the first form), or (the second form) the goods in question were brought into Pakistan via route other than one declared in section 9 or 10 of the Customs Act, 1969 or from a place other than a Customs Station each of the two forms of course applies to its own footing i.e. the applicability of one is not dependent on the existence, continuance or occurrence of the other. Obviously, if there is no notification in relation to the goods warehoused, then the first form did not apply and it was only the second form "B" that could apply. The importance of this point can be appreciated by looking at it in reverse. If there is no notification in the field (no application of the form A), and if the goods are brought into Pakistan by the route declared in sections 9 and 10 and through a customs-station i.e., the form "B" also does not apply then form "B" would not apply in such a situation, even though there may be an evasion of customs duty and other taxes or breech of any restriction or prohibition (i.e., form (A) applies ). The matter would not come within the ambit of 2(s) in other words, there would be no smuggling of goods, which could not therefore be regarded as "smuggled goods". Another aspect has to be look into in the light of Section 177 of the Custom Act, 1969 and Notification No. 118(I)/83 dated 12.02.1983, which is irrelevant and not applicable in the instant case by virtue of the fact that the goods inspected and seized were warehoused were not within 5 miles of India and Iran Borders, instead at H. Akber Open Warehouse, Shershah, S.I.T.E., Karachi Resultant, the warehousing of the goods by the appellants in Karachi least falls within the meaning of "smuggling" and nor the goods as "smuggled" through any stretch of imagination.

In the instant case the goods warehoused by the appellant were arrived at Karachi through valid bilties of the Goods Transport Company and were imported from Iran and cleared by MCC of Quetta after completion of all codal formalities and payment of leviable duty and taxes thereon and the documents relating to those were supplied by the appellant to the respondents upon demand and during the course of adjudication and even annexed with the appeal in the shape of exhibit, veracity of which has not been denied by the Officials of respondent No. 1 and this stood validated from their comments, which are silent in this context and by the representative of the respondent No.1 during the course of hearing. Notwithstanding to the said fact, the goods warehoused by the appellant are even freely available in the local market, presumption thereof is that these are duty paid as per the law laid down by the Supreme Court of Pakistan in reported judgments 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 (Late) 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 inspite 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, 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. In consideration of the ratio decidendi I hold that demanding of Goods Declaration and terming the goods as smuggled is without any substance and as such of no legal effect/jurisdiction.

11.That even otherwise, upon submission of copies of Goods Declaration/related documents and bilties confirming that the goods were imported by Messrs Imran Lubricant, Faisalabad, Messrs Saad Enterprises, Quetta, Messrs Gul Brother Quetta and Messrs Ali Enterprises, Quetta and were cleared by MCC of Quetta and subsequently transported by the importer to the appellant vide Messrs Sitara Al-Usman Goods Forwarding Agency, Quetta and Pakistan Goods Transport Company, Quetta through valid bilties and upon reaching Karachi were warehoused in H.Akber Open Warehouse, Shershah, S.I.T.E., Karachi the appellant discharge burden laid upon him under Section 187 of the Customs Act, 1969 and stood shifted on the shoulders of the Officials of respondent No. 1 as it is settled principle of law that one who level allegations has to prove those, but they miserably failed, there are umpteenth reported judgment on this issue and has been referred by the appellant in the ground. Reference is made to reported Judgments at PLD 1996 Karachi 68 and 2012 PTD 428, in this their lordship of the Hon'ble High Court of Sindh held that:

23. The next objection raised by the learned Counsel of the respondent is that under section 187 of the Customs Act, 1969 the burden of proof was on the petitioner rather than upon the customs authorities to categorically disproof the allegation of mis-declaration and under declaration leveled by the Customs authorities. In this respect Mr. S.Tariq Ali has contended that ruling relied upon by the petitioner counsel became inapplicable as the law has itself clearly cast the burden upon the petitioner. In order to appreciate this objection it is pertinent to scrutinized the provision of Section 187, which read as follows:--

187:- Burden of proof as to lawful authority, etc:---When any person is alleged to have committed an offence under this Act and any question arises whether he did any act or was in possession of anything with lawful authority or under a permit, license or other documents prescribed by or under any law for the time being enforce the burden of proving that he has such authority, permit, license or other documents shall lie upon him.

It appears to us that section 187 covers 02 situations which we states as follows:--

(a)When a person is charged with an offence under the Customs Act, 1969 the burden of proof is cast upon him to show that he had the lawful authority to commit that act;

(b)When a person is found in possession of any good the burden of proof is cast upon him to show that he was holding such goods under some lawful authority;

The situation (b) is not in issue in present case, however, we feel that it provides for an eventuality where a person is found to be in possession of certain goods which falls under a prohibited category or which, in an unlawful manner find place in the possession or custody of the accused. In such case the burden is upon the accused to show that he falls under some exemption or exception to hold such goods. This type of eventuality as envisaged and stated in situation (b) above is essentially a statement of the general principle of law of evidence contain in Article 121 of the Qanun-e-Shahadat that who ever claim to all under preferential or exempt or excepted category must show that he full fill that condition to fall within that category. This obviously, should not be confused with the factum of possession for which no presumption or burden of proof has been spelt out, in view whereof the possession itself has to be proof independently by the prosecution beyond all reasonable doubts"

Penultimate paragraphs of the aforesaid judgment read as under:--

"we feel that it is due to operation of the principle of incidence of burden of proof viz-a-viz "legal" and "evidential" burdens as discussed above the process of shifting of burdens become possible we have already sighted the opinion of Adrian- Keane and we hold that in order to determine as to which party based the legal or evidential burden would depend on the terms of statute, case-law on the subject as also common sense and equity. In this case we are of the view that in situation in issue i.e. (a) as discussed in para 23 above section 187 cast upon the petitioner-accused only the obligation to make out a prima facie case as it is only the evidential burden which is born upon it. Once the petitioner were to satisfy this evidential burden the legal burden to bring home the ultimate cases shifted upon the customs authorities."

24. It is situation (a) as stated above in para 23 which is directly in issue in this case i.e. whether the burden of proof solely lies on the petitioner to disproof allegation of mis-declaration mis-description leveled by the customs authorities and whether the customs authorities are under no obligation to lead evidence and discharge any onus of proof. This part of section 187 of the Customs Act, perhaps appeared to be contrary to the general principle of law of evidence contains in Article 117 of Qanun-e-Shahadat that who ever alleges existence of a particular fact must prove the same. There is little doubt that a special law or a particular statute can provide for a distinct regime of rule of evidence then contained in general law. Infact the law goes on as far as providing that the laws of evidence can be altered even by mutual consent and contrast. See S.M. Anwar Sethi v. South British Company Ltd. PLD (1975 Karachi 458). However, on a closure scrutiny of the provision of Section 187 and the case law settled by our court. 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 allegation remains with a prosecution. Before we dilate upon the concept of 02 type of burden of proof and explain the terms " tacticle", "evidential" "legal" burden of proof we shall first discuss the case decided by High Court of Sindh in Barkat Ali v. The State PLD 1973 Karachi 659. In this case the controversy resolved around section 177-A of the erstwhile sea Customs Act, 1878 which catered for a similar situation as has reason in the present case i.e. the same provided the burden of proof upon the accused to disproof the case of the prosecution that his intention was not to defraud the exchequer or evade any prohibition or restriction under the Act. Writing for quote Tufail Ali, Rehman C.J. was of the opinion that the said presumption of burden of proof could not be drawn until the expression of the accused was first taken into consideration. According to the learned judge the normal "principle" was applicable i.e. the accused was entitled to benefit of doubt where he offered a reasonable explanation which was either acceptable or raise the doubt. In such cases the burden then shifted upon the prosecution to establish the case.

25- "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.

The respondent No. 1 has unnecessarily seized/confiscated the goods of the appellant despite not warranted under law as he cannot be burdened with the expression of section 187 of the Customs Act, 1969 as evident from deliberation made herein-above and the judgment of the Superior Judicial Fora. Rendering their acts as unjust, arbitrary and even in derogation to the judgment of High Court of Lahore in C.A. No. 68/2002 Collector of Customs, Lahore v. S.M. Saleem. Wherein appeal was dismissed and order of the Tribunal was maintained while observing in Paras 6 and 7 that:--

"6. It is not denied before this Court that the goods subject matter of this appeal were importable. It is further not denied that the respondent had produced receipts before the Adjudicating Officer but he did not give any enable reason whatsoever as to why this piece of documentary evidence was not relied upon. The operative part of the judgment of the Deputy Collector Customs (Adjudicating) is to the effect that "since no documentary evidence indicating the proper import thereof has been furnished. It is hereby concluded that watches and watches part seized in this case have been brought into country without payment of duty and taxes."

7. The afore-referred view is not in consonance with the law laid down by the August Supreme Court in Pakistan v. Ziauddin (PLD 1962 Supreme Court 440). Wherein the receipt of purchase and payment of money produce by the person from whom smuggled items were recovered was accredited with truth and the court held that he has discharged the burden of proof mandated in section 177-A of the Sea Customs Act, 1978 at page 446 it was observed as under:

The Section requires reasonable belief on the part of the person seizing the goods that an act to defraud the government of duty has been committed. If a person purchases goods as in an ordinary market then in the absence of any suspicious circumstances of some definite fact leading to that inference the custom officer is not entitled to a reasonable belief that the Government has been defrauded of the duty payable on the goods. The ordinary method of the import of goods from outside into Pakistan is that they come through the customs barrier and the duty payable is infact paid. The presumption therefore, with respect to any goods which may be sold in the open market in the absence of an indication to the contrary would be that duty has been paid on them.

In alike situation the Hon'ble Supreme Court of Pakistan reported 2007 SCMR 10 Collector of Customs, Sales Tax and Central Excise v. Prof. Muhammad Khan and 6 others. Their lordship examined the aspect that whether Directorate General-FBR can demand import documents of any goods or item within the city or during their transport within the territory of Pakistan or not and held that "law certainly provided protection to a public servant for doing lawful act in discharge of his duty but no such immunity was to be claimed by a person for committing illegal act in his official capacity as a public servant in the absence of proof that the goods in possession of a person were brought into Pakistan in violation of any law, customs authorities and such other public functionaries had no authority to detain such goods merely on suspicion---petitioner had showed documents of registration in his name to customs official who, having detained the car, insisted the production of import documents for release of car----Detention of car was an act of highhandedness which was committed through misuse of official authority and it might constitute misconduct in terms of Civil Servants (Efficiency and Discipline) Rules, 1973 read with Removal from Service (Special Powers) Ordinance, 2000----Exercise of official authority in a manner in which a person was made victim of misuse of process of law was violative of constitutional guarantees of rights of citizens and a person responsible for violation of such rights of citizens and a person responsible for violation of such rights was to face legal consequences---Act of customs officials might also constitute misconduct, therefore, concerned authorities were under legal obligation to initiate appropriate proceedings against officials involved in the matter."

12.It is also gathered from the order that the documents submitted by the appellant were discarded by the officials of respondent No. 1 and also by 2 on the pretext that corresponding sales tax invoices was not presented. It is imperative to add that on import by a commercial importer 3% value addition tax is ought to be charged by the customs in addition to the leviable sales tax of 17%, which has been charged/paid by the MCC of Customs/appellant, validated from the annexed Goods Declaration, the said payment of additional sales tax is on sale. Even otherwise, the sales tax invoices under section 23 of the Sales Tax, 1990 has to be issued after sale of the goods, which the appellant would had informed the importer after sale and they would had issued in the name of the buyers. It is to be noted that the monitoring of payment of sales tax and additional tax rest with the Regional Tax Office of their respective jurisdiction, respondent are non entity in this regard after formation of Inland Services and availability of Sections 30 and 30A in the Sales Tax Act, 1990 and Sections 230 and 230A of the Income Tax Ordinance, 2001. Wherein, appointment of Directorate General of Intelligence and Investigation, Inland Services and Directorate General of Withholding Taxes have been made by the Federal Government, which has been delegated powers under different Sections of the Sales Tax, 1990 through S.R.O. No. 776(I)/2011 dated 19.08.2011 and under Section 207 of the Income Tax Ordinance, 2011 respectively. In the said sections none of the respondents figures anywhere, even otherwise the respondents have no mandate under any provision of the Customs Act, 1969 and S.R.O No. 486(I)/2007 dated 09.06.2007 to scrutinized or dispute purchase and sale transaction of an business entity or a person. Resultant, the respondent No. 2 in this context abused his power and needlessly despite not warranted under law demanded Sales Tax Invoices and adduced his opinion in the order being violative of fundamental rights guaranteed to a citizen under the Constitution of Islamic Republic of Pakistan. I therefore, hold that opinion of respondent No. 2 is of no legal effect and cannot be made basis for confiscation of the goods when those were lawfully legally imported and cleared and transported to the appellant and were validly warehoused.

13.In the light of law laid down and observation here-in-above and ratio decidendi set-froth by the Superior Judicial Fora and this Tribunal in umpteenth judgments specifically 2016 PTD (Trib.) 2190 Muhammad Jawed and 03 others v. Director, Directorate General of I&I-FBR which has attained finality by virtue of not filing Special Custom Reference under section 196 of the Customs Act, 1969. I hold that the conduction of search of the warehouse, preparation of contravention report by the official of respondent No. 1 and issuance of show cause notice and passing of order-in-original by respondent No. 2 are without power /jurisdiction beside based on mis-conception and inapt interpretation of the provision of the Act and Notification. Resultant, void and ab-initio and as such is of no legal effect. Therefore, I cancel that and set aside order-in-original dated 20.04.2016 and allow the appeal as prayed, consequent result of which is that the appellant is free to conduct their business of selling the goods and the owner of Messrs H. Akber Open Warehouse, D-267, Shershah, S.I.T.E., Karachi is ordered to deliver the goods to him as and when required as the phenomena of superdari is alien to the provision of the Customs Act, 1969, which is also declared to be of no legal effect and as such void. Office is directed to forward copy of the order to Messrs H. Akber Open Warehouse, D-267, Shershah, S.I.T.E., Karachi for compliance.

HBT/27/Tax(Trib.) Appeal allowed.