(a) Establishment of Office of Federal Tax Ombudstdan Ordinance (XXXV of 2000)-----

----S. 9---Jurisdiction, functions and powers of the Federal Tax Ombudsman---Matter relating to Provincial Excise and Taxation Department, Government of Punjab---Jurisdiction of Federal Tax Ombudsman did not extend to the acts of omission and commission of the officials of the Provincial 'Excise and Taxation Department, Government of Punjab---No direction to the Provincial Excise Authorities thus could be given by Federal Tax Ombudsman-- Complainant should better. approach the relevant Provincial Authorities for redress of his grievances.

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

----S. 168---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.2 (3)---Seizure of things liable to confiscation---Complaint purchased car after seeing verification report regarding payment of customs duty and taxes issued to the Excise and Taxation Department by the Customs Authorities---Said verification was subsequently withdrawn---Show-cause notice by the Registration Authority for cancellation of. registration and visit by the Customs Officials for seizure of car---Validity---Fraudulent activity about the sale of car seemed to include the car dealer, the Motor Registration Authority, Clearing Agent; the Customs Officials and Customs Intelligence Staff---When sale of car was arranged, the Motor Registration Authority showed to the buyer/complainant one set of documents to satisfy him that import duty and taxes had been paid and the documents were in order---After having been satisfied about the genuineness of the documents, transaction was completed and thereafter buyer was told that in subsequent customs report, the documents had been found to be forged---Motor Registration Authority's notice for cancellation of new registration numbers and the Customs Intelligence Officials visit to seize the car seemed to be a pre-planned scheme aimed at blackmailing the bona fide buyer for extorting money after selling him the car---Noticeable maladministration thus existed on the part of the Customs Authorities, which required serious investigation to unearth the malpractices and fraudulent activities of the Customs Department-- Federal Tax Ombudsman recommended that Revenue Division to initiate a proper investigation/enquiry into the case, also identify other cases of similar nature and take punitive action against those found responsible for forging and tampering with official documents/records and for committing fraud and that till the investigation is completed the complainant be allowed to keep possession of the car on the condition that he will not sell, transfer or create any third party interest in it and shall furnish a security or Bank guarantee in the sum of Rs.500,000 to the satisfaction of the Collector of Customs, Karachi.

Iftikhar Ahmad Malik for the. Complainant.

Azhar Hussain Merchant, A.C. Appraisement-for Respondent.

DECISIONS/FINDINGS

The complainant has alleged maladministration on the part of the Appraisement Wing of Customs House, Karachi and the Motor Registration Authority (Excise and Taxation Department), .Government of Punjab., Lahore on the ground that while the staff of Directorate of Intelligence and Investigation, Lahore is threatening to seize his used car, Toyota Corona Model 1990, Engine No.1660569, Chassis No.CT-170-0035335, legally bought by him, the latter is refusing to issue Registration Book of the said vehicle. Brief facts of the case as stated by the complainant are as under:--

(i)One Farooq Alivi had applied for registration of the subject vehicle to the Provincial Excise and Taxation Department, Government of the Punjab, Lahore. The complainant had purchased the car from him on 3-4-2001 for an amount of Rs.5,00,000 but before purchasing the vehicle, he had seen in the Excise and Taxation Department's registration file a verification report issued by Customs House, Karachi confirming payment of customs duty and taxes on the said vehicle, signifying its legal import. The verification report also showed the date on which the custom duty and taxes had been paid. On that basis, he applied for transfer of car in his name to the Provincial Excise Authorities and also paid the Registration fee. The car was registered and assigned a number: LXW 4401.

(ii)On approaching the Registration Authority for issue of Registration Book, he was informed by the Provincial Excise Department that the Principal Appraiser Group No. VIII, Appraisement, Customs House, Karachi had, vide, a letter, dated 27-6-2001, withdrawn the earlier verification, dated 8-8-2000 on the ground that the duplicate bill of entry on the basis of which the first verification was made had been found forged and the same did not tally with their, genuine record. The customs had earlier confirmed that the vehicle was duty paid. He was issued a notice by the Car Registration Authority to show-cause notice why the registration should not be cancelled in view of the latest customs advice.

(iii)The complainant was not responsible for anything. He had purchased the vehicle after seeing the verification report.

(iv)While he had obtained a stay order from a Civil Court against cancellation of registration of the car, he apprehended its seizure by the Customs Authorities because of its being non-duty paid/ illegally imported. They may be restrained from seizing his car and the Registration Authority may be asked to issue the Registration Book.

2. The respondent in their reply have stated:--

(i)The Motor Registration Authority, Punjab, Lahore, had, vide their letter, dated 18-7-2000, requested them for verification of particulars pertaining to the bill of entry IGM No.453 of 1992, dated 7-3-1992, Index No.51. They did issue the verification letter, dated 8-8-2000 confirming payment of duty and taxes, but, subsequently, the Registration Authority, again addressed them a letter, dated 19-6-2001 for confirmation. of earlier verification. On closer scrutiny, it was found that the photocopy of the bill of entry supplied by Registration Authority and the original duplicate bill of entry found on record of the Customs House tallied with each other but both were found to be forged. The Collectorate informed the Motor Registration Authority accordingly vide their letter; dated 27-6-2001 revoking the earlier verification as invalid.

(ii)They have also asked the shipping agent and the Karachi Port Trust to supply particulars of the vehicle-imported against the above said IGM/Index number whose reply is still awaited.

(iii)The complaint relates essentially to the Motor Registration Authority, Lahore, who has to issue the Registration Book.

3. During the hearing tide complainant stated that, to begin with, the Provincial Excise Authorities. also confirmed to him that he could buy the car as it was duty paid. He paid Rs.71,792 as Excise Registration Fee on 11-4-2000 and was allotted No.LXW-4401. Later, he received a notice for cancellation of Registration against which he had obtained a stay order. After 10 months the Customs had revoked their, earlier letter causing complication. The Customs Intelligence, Lahore's Staff visited him to seize the car, he showed them the documents, so they did not seize it but said that they were under advice from Karachi Customs to seize it. It was Customs Intelligence, Inspector (name not known), who visited the complainant's place.

4. The respondent stated that the bill of entry bearing Machine No.73637, dated 7-3-1992 showing Rehmanuddin Akram as the importer was fake because its Chassis No.C.T. 170-0035335 is not .the same as that of the car indicated on the genuine bill of entry i.e. Chassis No.AT-170-4018409 as was ascertained with the help of the clearing agent and the Karachi Port Trust. He was asked the following questions to which he gave replies as set out against each:--

(a)How was the first verification report issued and by whom? He stated that it was given by the Principal Appraiser Group-VIII and others on the basis of the bill of entry supplied to them by the record section of the Customs House---a section headed by a Superintendent.

(b)How was the fraud detected? He replied that it was detected on close scrutiny of record on receipt of Provincial Excise Department Lahore's Letter, dated 19-6-2001 for re-verification. The clearing agent was asked to verify. He denied this to be the same bill of entry, he produced and extract of his (clearing agent's), register according to which the name of the importer was the same, make and model was the same but the chassis number was different. The chassis number of the genuine car legally imported vide the subject bill of entry was AT 1704018409.

(c)Was any action taken against those responsible for forging the official documents and the staff for giving the first verification report without proper scrutiny? He replied that no inquiry had so far been held or action taken against anybody.

(d)Asked what action the respondent intended to take vis-a-vis the vehicle of the complainant? The respondent stated that it was for the officers of jurisdiction i.e. the Lahore Customs Agencies to take any action they deem fit because the car was playing in their jurisdiction.

5. The records of the case and arguments of the parties have been examined. The complainant might have avoided the purchase of the care if he had not, as contended by him, consulted, or if he had not seen, the first verification report issued by Customs House, Karachi confirming payment of duty and taxes. The complications arose when the Customs withdrew the earlier verification report. The discrepancy between, the chassis numbers, as reported by the Customs House is as under:--

Original AT-1704018409

FakeCT-170-0035335

6. It is not understood why the Customs House, Karachi issued the first verification report without proper scrutiny. It is also not understood how the fake documents on the basis of which original verification was made had found their way into the records of the Customs House and why the officers concerned failed to take the necessary precaution and do proper scrutiny before certification. It needs to be determined whether any functionaries of the Customs House were in league with the outside elements forging official documents to hoodwink the department and others for ulterior motives.

7. Reportedly the officials of the Customs Intelligence and Investigation, Lahore are threatening to seize the car because of its being non-duty paid/illegally imported. However, the car, as admitted by the complainant, is still in his possession. The complainant was pointedly asked to let this forum know the names of the officials of Customs who were threatening to seize the car but he- could not disclose the name of anyone of them, nor could he produce any document indicating seizure/detention of the car. On the other hand, the representative of the respondent stated that the Customs House had not given any direction to the Directorate of Intelligence and Investigation, Lahore to seize the car but opined that the Customs Officers of jurisdiction could act on their own, if the care is found to be non-duty paid/illegally imported.

8. The jurisdiction of the FTO does not extend to the acts of omission and commission, of the officials of the Provincial Excise and Taxation Department, Government of Punjab. Therefore, it is not possible to give any direction to the Provincial Excise Authorities in respect of the Registration Book. The complainant should better approach the relevant Provincial Authorities for redress of his grievances.

9. The following significant points have emerged from the investigation in the two complaints:--

(i)Before purchasing the vehicles, both the buyers/complainants had checked up files/the verification reports issued by the Karachi Custom House from the Excise and Taxation Department.

(ii)On completion of formalities for registration, they were informed that the Principal Appraiser Group-VIII has withdrawn the verification reports because the duplicate copies of the bills of entry had been found forged. It is significant that the Customs still retained the bills of entry filed on 30-4-1992 and 7-3-1992. The Group officials also verified the payment of duty and taxes from Accounts Section, which means this section, too retained the record of 1992.

(iii)The fact that the Registration Authority wrote to the Customs for re-confirmation of earlier verification raises more doubts because if the import documents were available further confirmation should not have been necessary.

(iv)The Customs checked up from the records of the clearing agent to send their report. It is intriguing the clearing agent also retained the old record and made it available to the Customs.

(v)The Motor Registration Authority first allotted the new Registration numbers and later issued notices for the cancellation of Registration.

(vi)The Lahore Customs Intelligence Staff visited the complainant for seizure of the cars.

(vii)The Assistant Collector of Customs, Karachi Custom House, stated that the Custom House had not given any direction to the Customs Intelligence Staff to seize the cars.

(viii)The car is of 1990 Model. Its first Registration number has not been reported.

10. The fraudulent activity about the sale of car seems to include the car dealer, the Lahore Motor Registration Authority, clearing agent, the Karachi Customs Officials and Lahore Customs Intelligence Staff. When the sale of a car is arranged,' the Motor Registration Authority shows to the prospective buyer one set of documents to satisfy him that import duty and taxes have been paid and the documents are in order. In the present case after the prospective buyer was satisfied about the genuineness of the document and the transaction was completed, he was told that in subsequent Customs report, the documents have been fount to be forged. The Motor Registration Authority's notice for cancellation of new Registration numbers and the Customs Intelligence Officials visit to seize the cars seems to be a pre-planned scheme aimed at blackmailing bona fide buyers for extorting money after selling them old cars.

11. There is noticeable maladministration on the part of the Customs Authorities, which requires serious investigation to unearth, the malpractices and fraudulent activities of the Customs Department.

12. It is recommended that:--

(i)Revenue Division institute a proper investigation/enquiry into this case, also identify other cases of similar nature and take punitive action against those found responsible for forging and tampering with official documents/ records and for committing fraud.

(ii)Till the investigation is completed the complainant be allowed to keep possession of the car on the condition that he will not sell, transfer or create any third party interest in it and shall furnish a security or bank guarantee in the sum of Rs.500,000 to the satisfaction of the Collector of Customs, Karachi.

(iii)Compliance be reported within sixty days.

C.M.A./650/FTO.Order accordingly