FEDERATION OF PAKISTAN through Secretary, Ministry of Finance, Federal Board of Revenue, Islamabad VS HORIZON INTERNATIONAL, KARACHI, 2018 PTD-SUPREME-COURT 1403 (2018)

(On appeal from the judgment/order 18.09.2017 passed by High Court of Sindh, Karachi in C.Ps. Nos. 6000, 6927 and 6951 of 2010)

Customs Act (IV of 1969)---

----Ss. 26, 79 & 155-M---Import Policy Order, 2016, Para. 5(B)(iii)---Qanun-e-Shahadat (10 of 1984), Arts. 122 & 129(g)---Goods imported from a 'banned' country---Burden of proof---Scope---Provisions of the Ss. 26, 79 & S. 155M of the Customs Act, 1969, empowered the customs authorities to demand information, documents and record to satisfy themselves about, inter alia, the validity of the import of the goods, therefore it would be erroneous to presume that the burden of proof rested upon the customs authorities for establishing the origin of the imported goods from a banned jurisdiction---Material in relation to the origin of goods laid in the hands of the importers because they possessed knowledge about the specific details of the manufacturer, shipper, carrier, trans-shipper and ports of movement of the imported goods---Both, under the provisions of the Customs Act, 1969 and the ordinary principles of the law of evidence as provided in Arts. 122 & 129(g) of the Qanun-e-Shahadat, 1984, the primary onus of proof rested upon the importers to demonstrate the origin of the goods whereafter the secondary burden of disproof rested upon the customs authorities---Supreme Court remanded the present matter to the adjudicating authority for decision about the factual dispute between the parties relating to the origin of the subject goods---Appeal was disposed of accordingly.

Nemo for Appellants (in C.A. 1577 of 2017).

Raja M. Iqbal, Advocate Supreme Court for Appellants (in C.As. 1578 and 1579 of 2017).

Rasheed A. Rizvi, Senior Advocate Supreme Court, Shafqat Mehmood Chohan, Advocate Supreme Court and Ghulam Haider Sheikh, Advocate Supreme Court for Respondents (in C.As. 1577 and 1579 of 2017).

Nemo for Respondents (in C.A. 1578 of 2017).

Date of hearing: 6th February, 2018.

ORDER

UMAR ATA BANDIAL, J.---The appellants are aggrieved by the impugned judgment dated 18.09.2017 delivered by a learned Division Bench of the High Court of Sindh. It declares that the textile products imported by the respondents were not subject to the import restriction imposed in paragraph 5(B)(iii) of the Impart Policy Order, 2016 ("IPO") framed under the Imports and Exports (Control) Act, 1950 because these goods were not proven to be of Indian origin. The impugned judgment notes that the origin of the imported goods is disputed by the appellant-Customs Authorities. However, after holding that the appellant-Customs authorities carried the burden to prove the "Indian origin" of the imported goods, that is "the country of supply where goods are produced or manufactured" [paragraph 2(h) of IPO], it was further held that the failure by the respondent-importers to establish the claimed Chinese origin of such goods is inconsequential.

2.Learned counsel for the appellants has read from section 79(1)(a) of the Customs Act, 1969 ("Act") which empowers the Federal Board of Revenue to require an importer, inter alia, to produce any document necessary for the clearance of his imported goods. Learned counsel has also read from section 26(1) of the Act that authorises an officer of the Custom department to require information relating to importation, exportation, purchase, sale, transportation or holding of any goods imported or exported. Likewise, section 155M of the Act envisages a notice to the importer to produce for inspection before an officer of Customs any documents or record for the purposes of investigation or audit or for recovery of dues payable under the Act. It is contended that these provisions of the Act oblige an importer to satisfy the concerned Customs officer, inter alia, as to the lawful importability of goods. This has to be done on the basis of material produced by such importer.

3.It is noticed that the Act lacks any provision imposing the burden of proving the origin of imported goods upon the Customs authorities. In fact paragraph 2(h) of the IPO as well as Rules 16 and 17 of the Rules of Origin, 1973 envisage that a certificate be provided by the importer to establish the place of manufacture or of production of the imported goods. Consequently, the first ground of the High Court's impugned judgment is not in consonance with the law. The second ground of the said judgment as to the irrelevance of the respondent-importers' failure to establish their claim of Chinese origin of the imported goods is flawed because it overlooks the consequent misdeclaration about the claimed Chinese origin of such goods made by the respondent-importers under section 79 of the Act.

4.Learned counsel for the respondents have strenuously argued that the Certificates of Origin from the Chinese Council for Promotion of International Trade are sufficient to disprove the allegations made by the appellant-Authorities. Therefore, neither a certificate of origin issued by the manufacturer or producer of the imported goods, nor a copy of the master bill of lading for the imported goods issued to the Chinese supplier for shipment to the UAE importer asked by the appellant-Authorities, are necessary nor available.

5.Having heard learned counsel for the parties, we observe straightaway that the controversy between the parties involves a serious factual dispute regarding the Chinese origin of the imported goods claimed by the respondents. Ordinarily such disputes are not decided in the exercise of the Constitutional jurisdiction. Admittedly, the goods arrived in Pakistan from Dubai and were not shipped from China. Also the respondent-importers do not possess any documentation to establish the shipment details of such goods from China to Dubai. Their documents merely relate to the shipment of these goods from Dubai to Pakistan in favour of the respondents. The impugned judgment, however, decided the matter by presuming the burden to prove the Indian origin of the imported goods to rest upon the Customs authorities. There is no provision of law to sustain such a view. In fact the tenor of the provisions of the Act as a whole and in particular sections 79 and 26 and section 155M thereof empower the Customs authorities to demand information, documents and record to satisfy themselves about, inter alia, the validity of the import of the goods in question.

6.We consider that the approach taken by the learned High Court in relation to the matter involving a disputed question of facts by presuming the burden of proof to lie upon the Customs authorities for establishing the origin of the imported goods from a banned jurisdiction is erroneous and unsustainable. The material in relation to the question in issue, namely, origin of goods, lies in the hands of the respondent-importers because they possess knowledge about the specific details of the manufacturer, shipper, carrier, trans-shipper and ports of movement of the imported goods. Both, under the provisions of the Act and the ordinary principles of the law of evidence as provided in Articles 122 and 129(g) of the Qanun-e-Shahadat Order, 1984, the primary onus of proof rests upon the respondent-importers to demonstrate the origin of the goods whereafter the secondary burden of disproof rests upon the appellants. Here the primary burden has not been discharged by the respondent-importers.

7.For the foregoing reasons, the impugned judgment dated 18.09.2017 is set aside and the matter is remanded to the adjudicating authority under the Act for decision about the factual dispute between the parties within a period of six weeks from the date of receipt of a certified copy of this judgment. No order as to costs.

MWA/F-3/SC Order accordingly.