Muhammad Anwar Ali, Member (Technical) and Al-Haj Firoz-ud-Din VS Muhammad Anwar Ali, Member (Technical) and Al-Haj Firoz-ud-Din
2005 P T D (Trib.) 1470
[Income-tax Appellate Tribunal Pakistan]
Before Muhammad Anwar Ali, Member (Technical) and Al-Haj Firoz-ud-Din, Member (Judicial)
Appeal Nos.7(201)CU/IB, 7(202)/CU/IB, 7(203)CU/IB, 7(204)CU/IB and 7(291)/CU/IB of 2000, decided on 30/11/2004.
Customs Act (IV of 1969)---
----Ss. 13, 19, 32, 156(1)(a)(10-A), (14), (44), (45), (46), (50), (51), (59), (61), (62), (77), (81), (82), (86), (90), (91) & 194-A---Altering/ tampering bills of entry fraudulently---Imposition of penalty---Appeal to Appellate Tribunal---Appellants/importers allegedly misdeclared facts/ particulars of consignments imported by them and had fraudulently altered/tampered bills of entry after clearance and, in circumstances succeeded in removing the goods without properly in-bonding, ex-bonding and without payment of duties and taxes otherwise leviable on import of such goods---Scrutiny of record had revealed that Appellants/ importers, in collusion with clearing agents and customs staff knowingly misdeclared the facts/particulars of goods and presented false/incomplete invoice misdeclaring the value of goods imported and keeping the description and quantity of goods ambiguous giving no details to conceal the correct amount of imported goods---Authorities, after issuing show-cause notice and affording full opportunities of hearing, imposed penalties on appellants---Minute scrutiny of original examination report, had revealed that some of figures were tampered with deleting original quantities with ink remover and less quantities were entered in their place---Though an effort had been made to rub the quantities, but original figures were not deleted completely and could be read very clearly---Not all, but some entries had been tampered with in examination report---Prosecution could not prove criminal proceedings against certain appellants/accused due to lack of criminal evidence in strict judicial scrutiny of Trial Court i.e. Special Judge Customs as well as at appellate stage of High Court---Tampering and alteration had fully been proved---Criminal proceedings and departmental adjudication proceedings were independent of each other---Contention of appellants that department had no case in quasi-judicial proceedings as the main prosecution case had been set aside by High Court, was not tenable---Not all the entries had been tampered with in the examination report---Original bill of entry had shown most of the quantities were intact whereas only some of entries of items had been changed---Duties and taxes liable to be paid by appellants related only to the entries which were found altered/tampered with and did not relate to entire consignments imported into the containers---Appellants were to pay the duties and penalties adjudged in the impugned orders-in-original and orders-in-appeal, and appeals were dismissed.
PLD 1975 Lah. 1314; 2003 PTD (Trib.) 1857; PLD 1992 SC 485; 1983 PCr.LJ 676; PLD 1986 Pesh. 186; 2002 MLD 700; PLD 1997 Lah. 1318; 1985 PCr.LJ 286; 1983 CLC 786; 1995 SCMR 387; PLD 1992 SC 393; 1990 PCr.LJ 26; 2001 PCr.LJ 1919; 1989 PCr.LJ 601; 2003PTD(Trib.)1857;1980SCMR114and1987SCMR1840ref.
Muhammad Naeem Qazi and Mian Nazir Azhar for Appellants.
Farhat Nawaz Lodhi with Mrs. Sarwat Tahira Habib, Additional Collector/Departmental Representative and Agha Sabir Intelligence Officer for Respondents.
JUDGMENT
MUHAMMAD ANWAR ALI, MEMBER (TECHNICAL-I).---By this judgment rendered in Appeal No. 7(201)CU/IB/2000, we intend to dispose off the following cases of appeal as the facts and the points of law involved are almost identical in nature:--
(i)Appeal No.201 of 2000---against Order-in-Original No.355 of 1999, dated 11-9-1999 passed by the Additional Collector of Customs, AFU Building, Islamabad Airport and the Order-in-Appeal No. 118-27 of 2000, dated 29-3-2000 and despatched on 5-4-2000 passed by the Collector of Customs, Central Excise and Sales Tax (Appeals), Northern Zone, Rawalpindi, filed by Messrs R.M.S. Diplomatic Bonded Warehouse, Islamabad.
(ii)Appeal No.202 of 2000---against Order-in-Original No.363 of 1999, dated 11-9-1999 passed by the Additional Collector of Customs, AFU Building, Islamabad Airport and the Order-in-Appeal No. 118-27 of 2000, dated 29-3-2000 and despatched on 5-4-2000 passed by the Collector of Customs, Central Excise and Sales Tax (Appeals), Northern Zone, Rawalpindi, filed by Messrs Noon Trading Diplomatic Bonded Warehouse, Islamabad.
(iii)Appeal No.203 of 2000---against Order-in-Original No.361 of 1999, dated 11-9-1999 passed by the Additional Collector of Customs, AFU Building, Islamabad Airport and the Order-in-Appeal No. 118-27 of 2000, dated 29-3-2000 and despatched on 5-4-2000 passed by the Collector of Customs, Central Excise and Sales Tax (Appeals), Northern Zone, Rawalpindi, filed by Messrs Abrar and Co. Diplomatic Bonded Warehouse, Islamabad.
(iv)Appeal No.204 of 2000---against Order-in-Original No.354 of 1999, dated 11-9-1999 passed by the Additional Collector of Customs, AFU Building, Islamabad Airport and the Order-in-Appeal No. 118-27 of 2000, dated 29-3-2000 and despatched on 5-4-2000 passed by the Collector of Customs, Central Excise and Sales Tax (Appeals), Northern Zone, Rawalpindi, filed by Messrs Shaheen Associates Diplomatic Bonded Warehouse, Islamabad.
(v)Appeal No.291 of 2000---against Order-in-Original No.21 of 2000, dated 28-4-2000 passed by the Collector of Customs, Islamabad, filed by Messrs Ravi Diplomatic Bonded Warehouse, Islamabad.
2.Briefly the facts of the case are that the Directorate General Intelligence and Investigations (Customs and Excise), Islamabad reported to the Additional Collector of Customs, Islamabad Airport that Messrs R.M.S. Diplomatic Bonded Warehouse, 88B, Nazimuddin Road, Islamabad hereinafter called the Importers, have mis-declared the facts/particulars of consignments imported by them and have fraudulently altered/tampered bills of entry after clearance and thus succeeded in removing the goods without properly in-bonding, ex-bonding andwithout payment of duties and taxes otherwise leviable on import of such goods.
3.Scrutiny of record from Customs Dry Port, Rawalpindi (RDP) revealed that the Importers filed into-Bond Bill of Entry No.425 of 1997, dated 1-11-1997 through Messrs Al-Harram Agencies, Customs Clearing Agents, Rawalindi (No.12 of 1994), hereinafter called the clearing agents. The importers in collusion with the clearing agents and the customs staff knowingly mis-declared the facts/particulars of the goods and presented false/incomplete invoice mis-declaring the value of goods imported and keeping the description and quantity of goods ambiguous giving no details. This offence is punishable under section 156(1)(14) of the Customs Act, 1969, hereinafter called the Act.
4.A general feature of most of the importers has to be kept the description of packing ambiguous. If at all a packing list was available, only number of cartons/packings was given without any further description. Similarly, goods were grossly under-invoiced.
5.Besides making false declaration at the time of filing the Bill of Entry, the description and quantity was deliberately kept ambiguous and no details i.e. mode of packing were given just to avoid to correct account of the imported goods. Violating one of the most crucial instructions of the Standing Order No. 1 of 1995, dated 4-11-1995, issued by the Acting Collector of Customs and Central Excise, Rawalpindi for streamlining the procedure regarding bond examination report was not only written using carbon but that tooon only by copies, violating the instructions that the examination report shall be written on all copies of the bill of entry without using carbon. Moreover, the examination report is invariably written with the fountain pen in blue ink making the other carbon copy illegible and subsequent alteration/ tampering on the original copy easy being in ink. Whereas, it would have been difficult, if it had been written with a ball point.
6.Having initially mis-declared the goods in description, quantity and value (under-invoiced), the importers, in collusion with the clearing agent and customs staff in this case deliberately and knowingly altered/ tampered the bills of entry after the goods have been cleared from Rawalpindi Dryport.
7.The tampering/alteration was so made as to reduce the quantity of goods mentioned on the original bill of entry. The same reduced quantity of goods was entered in the bond register. The excess quantity so obtained was illegally removed. This offence is punishable under section 156(1)(9) of the Customs Act, 1969.
8.The above illegality has been committed by the importers clearing agent, customs staff in connivance and collusion as has been stated in the written statement of Muhammad Amer, Muhammad Asher, clearing agents and Amjad Hussain, Ex-LDC at Rawalpindi Dry Port (RDP). The offence committed by the Customs Staff is punishable besides others under sections 156(1)(81)(82)(86) of the Act. The connivance and collusion of the customs staff in this case is evident, besides others by the fact that several files are still missing from the record of the RDP and columns in the bills of entry register at RDP are still incomplete in respect of several bills of entry because the files relating to diplomatic bonded warehouses were not retained at RDP, though the consignments have been out of customs charge.
9.Thus the importers in collusion and with connivanceof theclearing agent and the customs staff deliberately and fraudulently misused the exemption available and did not observe the law as prescribed under Chapter XI of the Customs Act, 1969 and the rules and orders issued on the subject. As such the violation is punishable under section 156(1)(10-A) of the Act.
10.The importers were issued the licence under the condition that due observance of the law prescribed under Chapter XI of the Act and the rules and orders issued on the subject would be made. But the instructions contained in Standing Order No.1 of 1995, dated 4-11-1995 issued by the Acting Collector of Customs and Central Excise, Rawalpindi have not been observed rather grossly violated, in connivance and collusion with the customs staff. Consequently, provisions of Chapter XI have not been adhered to and non-observance and violation of the instructions of the Standing Order has most evidently been made by the Customs Staff.
11.The importers were required to sell the goods to the diplomatic/ privileged persons against cross cheque/bank draft/pay order issued in favour of the importers from their foreign currency account maintained in Pakistanas stipulated in Customs General Order No.12 of 1994 issued by the Central Board of Revenue. The importers could not produce the evidence having received the payments of the sales made in the manner prescribed in the Customs General Order No.12 of 1994. The importers have thus contravened the provisions of Diplomatic and Counsellor Privileges Act, 1972 and Model Rules, 1963 read with the provisions of the Customs Act, 1969 including section 19 or ibid. Since the importers could not produce the evidence of sale of goods imported against the bill of entry under reference to the diplomatic/privileged persons, it isevident that the same has been sold in the open market. As such duty and taxes leviable on thesegoods are recoverable besides penal action under the law.
12.Messrs R.M.S. Diplomatic Bonded Warehouse, Islamabad were issued the licence under section 13 of the Act to operate a diplomatic bonded warehouse under various conditions including that due observance of the law as prescribed under Chapter XI ofthe Customs Act, 1969 and the rules and orders issued on the subject would be observed which they have violated.
13.Messrs R.M.S. Diplomatic Bonded Warehouse, Islamabad were asked by the prosecution/detecting agency to supply certain information/ record to clarify their position but they failed to do so. However, Mr. Amjad Ali Butt, Chief Executive of Messrs R.M.S. Diplomatic Bonded Warehouse, Islamabad attended the office ofthe Adjudicating Officer and his statement was recorded wherein he has admitted the above malpractices.
14.In view of above, it is quite evident that Messrs R.M.S. Diplomatic Bonded Warehouse, Islamabad with the collusion of other aforesaid accused persons have deliberately and knowingly altered/ tampered with the quantity and the value of the imported goods and removed the excess goods illegally and evaded the leviable Government taxes. They have also misused the facilityof duty free import of goods for supply to various Diplomatic and other privileged persons entitled under Diplomatic and Counsellors Privileges Act, 1972 and Model Rules, 1963 read with Customs Act, 1969 and thus violated sections 13, 19 and 32 and Chapter XI of the Customs Act, 1969 read with Diplomate and Counsellors Privileges Act, 1972 and Model Rules, 1963 punishable under sections 13(3) and 156(1)(9)(10-A)14)(44)(45)(46)(50)(51)(59)(61) (62)(77)(81)(82)(86)(90) and (91) of the Customs Act, 1969.
15.Thus the import of goods against the said bill of entrybecomes invalid under the law. The CIF value of the goods involved comes to Rs.805414 on which duty and taxes amounting to Rs.574109 are involved.
16.A show-cause notice, dated 7-12-1998 was issued and having afforded full opportunity of hearing, the case was decided by the AdjudicatingOfficervideOrder-in-OriginalNo. 355of1999,dated11-9-1999. By this order, the Adjudicating Officer, inter alia, decided 25 different cases of Messrs R.M.S. ordering to pay total adjudged amount of duty and taxes of Rs.3,061,832 as againstRs.14,938,450 given in the various show-cause notices. Besides a personal penalty of Rs.1,500,000 was also imposed on Messrs R.M.S. Diplomatic Bonded Warehouse. Aggrieved by this Order-in-Original Messrs R.M.S. filed appeal to the Collector of Customs, Central Excise and Sales Tax (Appeals), Rawalpindi who vide hisOrder-in-Appeal No.118-27 of 2000, dated29-3-2000 and dispatched on 5-4-2000, inter alia, decided ten cases of similar nature belonging to different importers and rejected the appeals. Aggrieved by that order-in-appeal Messrs R.M.S. Diplomatic Bonded Warehouse, Islamabad have filed this appeal to this Appellate Tribunal on 9-5-2000.
17.Before this appeal case is discussed, it is important to mention that the prosecution agency had filed F.I.R. 15 of 1998, dated 16-6-1998 against the owner of Messrs Al-Harram Agency, Rawalpindi, clearing agent of Customs Dry Port, Rawalpindi, Customs Staff and owners of the Customs bonded warehouses including one Mr. Amjad Ali Butt S/o Asad Ali Butt, owner of Messrs R.M.S. Diplomatic Bonded Warehouse, Islamabad, the appellants in this case. Challans were filed in the Court of Special Judge (Customs, Taxation and Anti-Smuggling), Rawalpindi/ Islamabad for trial on the basis ofexpert opinion and laboratory reports, dated 27-7-1998 and 29-9-1998 obtained from the office of Director (Technical), F.I.A., Islamabad regarding the bills of entry and assessment sheets. In total thirty seven challans were filed. The charge against them was to fraudulently alter/tamper the bills of entry for bonds after out of charge of imported goods, thus injuring the Government revenue by showing less quantity imported than the actual one. The weight of the goods was shown as less in bonded warehouses record as compared to weight declared by them in the bills of lading and bills ofentry. The detailed investigations had revealed that total 340 bills of entry were filed during the periodfrom 5 of 1996 to 5 of 1998 out of which more than one hundred bills of entry pertaining to twelve diplomatic bonded warehouses were found, fraudulently altered/tampered and all were filed by one Customs Clearing Agency namely Al-Harram Agency, Rawalpindi. Departmental contravention cases were alsoinitiated against these twelve different bonded warehouses and in the adjudicating proceedings a liability of over 10 million rupees was determined. The Special Judge (Customs, Taxation and Anti-Smuggling), Rawalpindi/Islamabad vide his judgment, dated 26-6-2002 imposed afine of Rs.3,433,996 equivalent to theamount of duties and taxes evaded on Mr. Amjad Butt, owner of Messrs R.M.S. Diplomatic Bonded Warehouse, Islamabad. In case of non-payment of fine, imprisonment for a term of one year was awarded. The Trial Court also imposed various amounts of fine on other accused/owners of diplomatic bonds. The owner and organizer Messrs Abdul Hanan Tariq and Muhammad Maroof Qadir of Al-Saira Diplomatic Bonded Warehouse, Islamabad pleaded guilty and were fined Rs.50,000 and Rs.10,000 respectively and similarly Messrs Javed Akhtar owner and Abdul Rauf Bhatti employee of Messrs Ravi Diplomatic Bonded Warehouse, Islambad pleaded guilty and were fined Rs.100,000 and Rs.15,000 respectively by the trial Court which they paid and all the four accused were sentenced till the rising of the Court. These owners of these diplomatic bonded warehouses filed appeals against the order of the Special Judge Customs, Rawalpindi/ IslamabadvideCr.Appeals Nos.313of2002to320of2002,Cr. Appeal No. 322 of 2002, Cr. Appeals Nos. 362 of 2002 to 365 of 2002, Cr. Appeal No. 429 of 2002 and Cr. Appeals Nos. 505 to 510 of 2002. Appeals filed in theHonourableLahore High Court, Rawalpindi Bench, Rawalpindi were heard on 20-5-2003 and allowed by setting aside conviction and sentence in each case. The prosecution agency has filed Cr. PLA to the Honourable Supreme Court of Pakistan against this judgment which is pending for decision.
18.At the initial stage of this appeal case in this Tribunal, the prosecution agency i.e. Directorate General of Intelligence and Investigation (Customs, Sales Tax and Central Excise), filed an application for being impleaded as a party. This application was heard by the Islamabad Bench and vide their judgment, dated 1-3-2001 was dismissed on the grounds that the petitioners neither being necessary nor a proper party are not entitled to bejoined as respondents in this appeal in their own right. At best they being the detecting and prosecution agency can assist the Departmental Representative to defend the appeal. The detecting/prosecuting agency filed a review application on 9-3-2001 whichwasheardbythisBenchandbyrelyinguponadecisionreported inPLD 1975 Lahore 1314, vide our judgment, dated 8-6-2004, the petitioners were allowed to be impleaded as they were a necessary party as proceeding were initiated at their instance and all relevant record onthebasisofwhichtheproceedingswereinitiatedwasintheir custody. Accordingly, Mr. Farhat Nawaz Lodhi, Advocate pleaded in subsequent hearings on behalf of the detecting/prosecuting agency.
19.The main arguments advanced by the appellants in writing in their memo. of appeal and during the detailed hearings on 16-7-2004 and 5-10-2004 through their learned advocates Mr.Muhammad Naeem Qazi and Mian Nazir Azhar are summed up as follows:--
(i)Customs Intelligence Officers have no jurisdiction to seize the record under section 26 of the Customs Act, 1969. They have been delegated powers by C.B.R. under section 6 of the Customs Act and section 26 of Customs Act, 1969 is excluded. Reliance is placed on the following judgments:--
(a)2003 PTD (Trib.) 1857.
(b)PLD 1992 SC page 485.
(ii)That the prosecution/Customs Intelligence changed its stand and contended that they seized the record under section 168(3) of Customs Act, 1969. This is not applicable as subsection (3) of section 168 shall be read not independently but as whole section and particularly with subsection (1) of section 168. As per subsection (3) only those documents are seized which are connected with goods already seized under subsection (1) of section 168 of Customs Act. In theinstant case, no goods have been seized and as per prosecution allegation, the goods were removed long time ago in 1996-97. Thus the only relevant section applicable is section 26 and not 168.
(iii)That the Customs Intelligence raided the Dryport and different Bonded Warehouses but neither any Search Warrant were obtained nor provision of section 162 were complied with. Thus the mandatory provisions of sections 162 and 163of Customs Act were violated which vitiated all the subsequent proceedings. Reliance is place on the following judgments:--
(a)1983PCr.LJ676;(b)PLD1986Pesh.186; (c);2002MLD 700; (d) PLD 1997 Lah. (page 1318).
(iv)While seizing the record of all Bonds, no ground of seizure were given which is violation of section 171 of the Customs Act, 1969. Reliance is placed on the following judgments:--
(a)1985 PCr.LJ 286; (b) 1983 CLC 786.
(c)Burden of Proof.
Tampering has been alleged and as per law, the burden is on the prosecution to prove it with evidence that applicant did the tampering. Reliance is placed on the following judgments:--
(a)SCMR 1995 page 387.
(b)PLD 1992 SC page 393.
(vi)ThatintheinstantcasecomplainantistheInvestigatingOfficer. The Investigating Officer ispartial and bias and the accused were prejudiced by the Investigations which were not fair and impartial. Reliance is placed on the following judgments:--
(a)1990 PCr.LJ Lahore page 26.
(b)2001 PCr.LJ Lahore page 1919-1920.
(c)1989 PCr.LJ Lahore page 601.
(vii)That the allegation is of tampering which attracts the provision of subsection (77) of section 1 of 156 of Customs Act, 1969. This section is outside the jurisdiction of Adjudicating Officer as the Special Judge Customs has the jurisdiction to take the cognizance of offence.
(viii) The Customs Intelligence has no powers vide SRO 388(I)/82, dated 22-4-1982 under section 32 of Customs Act which deals with mis-declaration.
On facts:--
(a)F.I.R. was registered on 16-6-1998 on the basis of Bill of Entry No.399 of 1997, dated 25-10-1997. It relates to Messrs R.M.S. Diplomatic Bonded Warehouse whereas all the Bonds have been nominated in F.I.R. This is an admitted fact that record of Dryport and all Bonded Warehouses were taken into possession on 17-6-1998. Thus the F.I.R. was registered on presumption.
(b)That the Office Superintendent, from whose possession the Original Bills of Entry were taken, stated in the Court of Special Judge (Customs), Rawalpindi that Bills of Entry were not tampered at the time of seizure.
(c)Expert opinion from FIA Laboratory was taken on 27-7-1998 and 29-9-1998 after delay of 1-1/2 month and 3-1/2 months respectively. The Findings of the expert were deliberatelynot incorporated in Order-in-Original 35/9, dated 11-9-1999. Similarly in the impugned orders against rest of the appellants does not contain the findings of expert.
(d)How the prosecution calculated the amount allegedly evaded, when the digit were illegible as per expert opinion. The liabilityalleged in the show-cause notice was different from liability adjudged. Similarly in the rest of the appeals disparity may be noted.
(e)The audit of appellant was conducted on the instruction of C.B.R. by the same officers including Investigating Officer and they took into possession bills of entry from Dryport. It includes the Bill of Entry No.399 of 1997 mentioned in F.I.R. No.15 of 1998,dated16-6-1998.Theauditbeingconductedfrom6-2-1998 to 9-3-1998but no tampering was pointed out.
(f)In the show-cause notice,theappraiserwasalsochargedbutthe prosecution conceded that the appraiser was wrongly charged.
(g)That clearing agent was exonerated and no appeal was filed by the prosecution.
(h)That audit of appellants was conducted by different agencies and none of them pointed out any tampering or cutting in the record including bills of entry.
(i)In the contravention report liability of full container was proposed to be charged which was not accepted by the respondent and the prosecution conceded that it was wrong. It can easily be inferred that the whole casewas made on presumption.
(j)The ground of weight was not taken in show-cause notice. It was an afterthought.
(k)That the contention of the prosecution that the erasing figures can be seen with naked eyes and on the basis of this, they calculated the liability. It is to be submitted that all thedocuments were referred to FIA Laboratory by the Investigating Officer, no digits were deciphered. How the digits were visible aftersomanymonths. Theexpertfindingsweregivenon27-7-1998 and 29-9-1998 whereas the liability was proposed by prosecution as per Order-in-Original on 11-9-1999. The prosecution failed to substantiate their version on cogent and plausible reasons.
(l)That the pro forma invoice reliedbytheCustomsIntelligenceisNo. 1023of1998,datedMarch, 1997longtimebeforethe institution of case. It relates to Messrs Noon Trading Pvt. Ltd. and the same is white bill of entry and not bond consignment.
(m)That the copies of invoices taken from Karachi tallies with the invoices produced by the Bonders in the instant case.
(n)That all the accused have been acquitted by Honourable High Court.
(o)Motive. The prosecution was feeded with information which proved false. Since they arrested the Clearing Agent, Sub-Agent and two employees before the seizure of record, they tried to cover up this illegalityby fabricating the evidence by tampering thedocuments themselves. The attraction of reward was also the motive. The entire huge liabilities were shown to earn the reward.
(p)That the highhandedness of the Customs Intelligence is evident from the fact that all the record of all Bonds was kept with them for 3-1/2 months. All the Bonds were closed and appellants were unable to ex-bond the goods already in the stock. The goods beingfood stuff/perishable expired and appellants suffered heavy financial loss. Contravention cases were initiated on basis of retention of goods beyond prescribed period as perprovisions of Customs Act, 1969.
20.Mr. Muhammad Naeem Qazi, Advocate and Mian Nazir Azhar, Advocate verbally reiterated and stressed the arguments as already mentioned in para. 19 above. Mr. Farhat Nawaz Lodhi replied to these arguments ad seriatim as follows:--
(i)Section 26 of the Customs Act, 1969 was not invoked in this case at all. Even otherwise this section does not deal with seizure of goods. Officers of the Directorate General of Intelligence and Investigation have been authorized to exercise various powers and discharge duties of the officers of customs under the provisions of sections 3 and 4 of the Customs Act, 1969 inclusive of section 26 asis evident from C.B.R. notification SRO No. 388(I)/82, dated 22-4-1982. The case law 2003 PTD (Trib.) 1857, quoted pertains to situation where an Examiner of Customs Intelligence had seized the goods and recorded statements during the course of investigation. It was held by the Appellate Tribunal,Peshawar Bench that an Examiner of Intelligence and Investigation was neither an appropriate Officer of Customs nor an Officer of Customs nor Officer entrusted with the powers to exercise functions of a Customs Officer. This judgment is not applicable tothis particular case as all acts were performed by appropriate and duly authorized officers. Similarly, in the judgment of case law PLD 1992 Supreme Court 485, it has been concluded that the authorized officer can call upon any importer or exporter tofurnish information in case where such determination is required. It cannot make a roving inquiry or issue a notice by merely shooting in the dark in the hope that it will be able to find out somematerial out of those documents and then charge the party or irregularity or illegality. As already stated above, in this case no notice was issued under section 26, hence this judgment is also not applicable in this case.
(ii)Subsection (3) of section 168 of the Customs Act, 1969 is independent to the provisions contained in subsections (1) and (2) thereof. The documents were seized under section 168(3) as section 26 does not contain any provision to seize anything.
(iii)No raid was conducted at the Dry Port or any bonded warehouse. Only requisite documents were collected therefrom under proper receipts. Hence no search warrants were required to be obtained under section 162 or 163 of Customs Act, 1969. As such five judgments relied upon are not attracted in thiscase.
(iv)Copies of recovery memos./receipts were supplied to the appellants at the time of taking over relevant documents. In this context ruling given in Supreme Court's judgment reported as 1980 SCMR 114 is reproduced below:--
"Recovery memo. mentioning grounds of seizure furnished to person from whose possession goods recovered---Requirement of section 171, held, met notwithstanding refusal of such person to receive same---Petitioner at liberty to ask later on for recovery memo. or rounds of seizure---Such request however, nevermade---Objection as to violation of requirements of section 171 in circumstances, held, without substance."
(v)To verify alteration/tampering made in the bills of entry, expert opinion from the Technical Wing of FIA was obtained which vide reports, dated 27-7-1998 and 29-9-1998 confirmed that the "signs of chemical treatment and bleaching or correction are present on encircled portions of the bills of entry and their extra sheets".
(vi)That complainant was not alone as the Investigating Officer in the instant case. In fact a team of officers was constituted to investigate this case.
(vii)It is correct that Special Judge Customs has jurisdiction to take cognizance of offence fallingunder clause (7), subsection (1) of section 156 of the Customs Act, 1969, but obviously the Special Judge can take cognizance only when a report in writing is made by an Officer of Customs.
(viii) The staff of the Directorate General of Intelligence and Investigation (Customs and Excise) forward cases to the relevant Adjudicating Officers ofappropriate Collectorate to take action for violation of section 32 of the Customs Act, 1969. This matter has been clarified by this Tribunal in paragraph 5(ii) of its judgment, dated 19-12-2002 passed in Appeal No.376 of 2001 that the staff of Directorate General simply submits a report in his regard to the appropriate officer who adjudicates the case. This reporting of mis-declaration and other breaches of the law are within the purview of Directorate General and in fact this Directorate General was setup to curb all kinds of attempts of duty and tax evasion.
On Facts:
(a)F.I.R. was registered on 16-6-1998 on the basis of tampering in Bill of Entry No. 399 of 1997, dated 25-10-1997. However, there was authentic information that similartampering was also made in the bills of entry filed on behalf of the diplomatic bonded warehouses nominated in the F.I.R.
(b)From the perusal of statement of Mr. Ghulam Hassan, Office Superintendent, it may be observed that he has given statementonly about two bills of entry mentioned against S. Nos.5 and 9 of Exh.PA. He stated that "I did not observe any tampering orcutting on the bill of entry P-1". He did not categorically alleged that all bills of entrywere not tampered at the time of handling them over to the I.O.
(c)Findings of Expert have been duly re-produced in paragraph 24 of Order-in-Original No.355 of 1999.
(d)The evaded amount of duties and taxes was calculated on the basis of legible digits, which could be seen with naked eyes clearly even after tampering.
(e)No audit was conducted by the staff of Customs Intelligence, Islamabad. In fact physical stock taking of Messrs R.M.S. Diplomatic Bonded Warehouse was conducted on the basis of stock in hand and figures available on record/computer. Although Bill of Entry No.399 of 1997 was also taken along with other bills of entry from Customs Dry Port, Rawalpindi but the same were returned as the balance required for stocktaking was available on record and in computer also. Hence, these bills ofentry were not scrutinized. Moreover, tampering case was not registered as a result of stocktaking.
(f)No comments.
(g)As the clearing agent was not the ultimate beneficiary, no appeal was filed against his exoneration.
(h)Actually audit was conducted at the premises of diplomatic bonded warehouses where third copy ofthe bills of entry containing photocopies of calculation sheets was available in which tampering was not legible/visible. Hence tampering could notbe pointed out by audit officials.
(i)Observations contained in para. 20(d) of Order-in-Original No.35/9, dated 11-9-1999 are correct but it cannot be inferred that the whole case was made on presumption.
(j)Weight is always declared in the bill of entry at the time of customs clearance and it can be taken into consideration at any time.
(k)This is a fact that the tampering could be seen with naked eyes and this fact was also mentioned in the order passed by the Court of Special Judge (Customs).
(l)Pro forma Invoice referred to herein was not the only document which was relied upon. In fact there are other evidence based on which the cases have been made out.
(m)That copies of invoices taken from Karachi did not tally in 12 cases.
(n)An appeal has been filed in the Supreme Court of Pakistan against acquittal of all accused persons which is pending decision.
(o)Motive. The information proved correct and in 80 contravention cases relating to five bonded warehouses, duties and taxes have been adjudged in these cases. Reward is notthe motive. In fact according to the charter of functions, officers of Directorate General are supposed to plug leakage of revenue.
(p)In fact after institution of case by staff of Customs Intelligence, joint stock taking of bonded warehouses was carried out by the officials of Collectorate of Customs and Directorate of Customs Intelligence as aresult of which bonded warehouses were sealed and their licences were suspended.
21.We have gone through the record/documents of the case and given due consideration to the arguments/submissions of both the sides in the light of various provisions of the Customs Act, 1969, especially in Chapter XI, and procedures related to clearance of goods from diplomatic warehouses laid down in C.B.R. Customs General Order No.12 of 1994 and Standing Order No. 1 of 1995, dated 4-11-1995 issued by Collector of Customs, Rawalpindi. Scrutiny of documents reveal that an into-bond entry No.425 of 1997, dated 1-11-1997 relating to foodstuffs in a container was filed by Messrs R.M.S. International Diplomatic Warehouse, Islamabad through Messrs Al-Harram Clearing Agents. Separate sheets bearing the Customs examination report was attached with the bill of entry. A minute scrutiny of original examination report reveals that some of the figures were tampered deleting the original quantities with ink remover and less quantities were entered in their place. Although an effort had been made to rub the quantities but the original figures were not deleted completely and could be read very clearly. It was also noticed that not all but some entries had been tampered in the examination report. Keeping this aspect in view, the Adjudicating Officer had asked the detecting agency to work out the liabilities only on those entries which had been tampered as originally the contravention reports/show-cause notices contained full liability of all the quantities of the containers being treated as tampered. The Adjudicating Officer had, therefore, determined that the owners of bonded warehouse were legally liable to pay the duty and taxes where tampering had been done. The tampering in this bill of entry, inter alia, is confirmed by the findings of the laboratory of F.I.A. contained in their report received through Letter No.277/T.W./FIA/98, dated 29-9-1998 which is as under:--
"Findings.Theexaminationofbillofentryandextrasheets under ultraviolet and normal light has revealed the following.
The sign of chemical treatment and bleaching or correction are present on encircled portions of the following bills of entry/extra sheet numbers."
Such a report has confirmed the conclusion that the appellants had tampered the entries of the quantities in the invoices to show less quantities in bills of entry, assessment sheets and bond registers than the originally imported quantities which were subsequently removed from the bonded warehouses and sold in the market without payment of duty and taxes and without the cover of any exemption certificate/C.B.R. booklet. The appellants have also failed to produce their triplicate copy of the bills of entry which was vital and most important for true comparison. The seized documentswere produced during hearing which were analyzedand debated but the appellants could not rebut the same. Both the Adjudicating Officer and the Collector of Appeals have discussed the possible connivance of the Customs staff without which the appellants could not have been successful in their attempt. Instead of the original documents, the bond inspector had relied on photocopies of documents due to which the vast discrepancies of weight mentioned in the bills of entry and in actual consignments could not have been noticed. The documents remained for a belated period in the custody of the appellants and their clearing agents which provided them opportunity to tamper the particulars of documents. The stock taking of the bond on a particular date showed most of the items in excess as well as short when compared to the bond register. The un-becoming conduct of the Customs staff, un-explained excess and shortages in quantities as compared to the bills of entry & bond register, vague entries pertaining to description, quantities and value of goods, laboratory test reports are glaring violations of various provisions of the Customs Act, General Order of the C.B.R and Standing Orders of the Collectorate, have abundantly proved that all ranks and files of relevant Customs law enforcing staff, the Customs Agents and the warehouse owners had worked in perfect harmony to achieve the desired common objective of removing the goods without the cover of proper exemption certificates/C.B.R. booklets. Theconfessional statement of Mr. Amjad Ali Butt, owner of Messrs R.M.S. bonded warehouse before the Adjudicating Officer, as well as the detailed judgment, dated 26-6-2002 in R.M.S.-1 case of theSpecial Judge (Customs. Taxation and Anti-Smuggling), Rawalpindi/Islamabad imposing fine and to suffer imprisonment in case of non-payment thereof, confessions of owners and employees of other bonded warehouses like Messrs Al-Saira and Messrs Ravi abundantly prove that the appellants like the other warehouses in the wholeracket were the real beneficiaries.
22.It is noted that prosecution could not prove the criminal proceedings against certain accused due to lack of criminal evidence in the strict judicial scrutiny of the trail Court i.e. Special Judge Customs as well as at the appellate stage of the Honourable Lahore High Court, Rawalpindi Bench. The learned advocate for the respondents have stressed that civil liability to be seen instead of criminal liability as the tempering of documents is very much there and has been proved by the FIA's laboratory report in clear words so much so that the same is visible to the naked eye in the ordinary day light. Who has done that and who is the beneficiary is precisely the question before this forum. He argued that provisions of clause 10-A of section 156(1) have been violated. This provision deals with the offence that if any condition, limitation or restriction imposed by Federal Government or by the C.B.R. for the grant of partial or total exemption from customs duties is violated in respect of the goods on which exemption has been granted, it is punishable under this clause. The appellants were granted licence under sections 11 and 13 of Chapter III of the Customs Act, 1969. They were supposed to strictly follow the provisions of Chapter XI on 'warehousing' along with other related provisions like section 19 of the Customs Act, 1969. They were also required to follow the variousconditions and restrictions laid down in the various orders and instructions of the Central Board of Revenue e.g. Customs General Order No.12 of 1994 and Standing Order No.1 of 1995, dated 4-11-1995 for the owners of diplomatic bonded warehouses to supply the duty-free goods to the entitled diplomats and otherprivileged persons under the Diplomatic Counsellors Privileges Act, 1972 and Model Rules, 1963. Provisions of clause 10-A of section 156(1) inter alia, besides others of the Customs Act, 1969 have been violated.
23.Both the learned advocates for the appellants have advanced various arguments which have been adequately rebutted by the Departmental Representative and the learned advocate of the prosecution agency. We are satisfied with the replies made ad seriatim in responseto arguments made by the learned advocatesfor the appellants. However,thefollowingmainargumentsofthelearnedadvocatesforthe appellants under which they have taken shelter needs to be analyzed:--
(i)that both trial Court as well as the Honourable High Court did not accept forgery in this case and have acquitted the accused.
(ii)that the duties and taxes ordered to be recovered have been takeninrespectofalltheitemsmentionedinthebillsofentry.
We have considered theargumentat (i)andhaveobservedthatboththe judicial forums in their respective judgments did not hold that customs documents/record have not been tampered or altered or forgery has not been committed. It is very much there as the two laboratory reportsabundantlyproveit. Infactthealternationsandtamperingcanbeseenwiththenakedeyeinordinarydaylight.ThetrialCourtin the last para. of the judgment, dated 26-6-2002 have held as follows:--
"The perusal of B/E and assessment sheet reveal that entries in these documents showing the quantity of goods were tampered with the figures written in the documents originally were erased and new figures showing less quantity were re-written in the assessment sheet the testimony of Shoukat Ali Inspector FIA is fully supporting prosecutioncase. Photographs of tampered portion of above mentioned documents taken by expert have also been tendered in evidence which are also establishing the fact of tampering. The Bonder made entries in his registers which are tallying with the tampered figures hence it can beconcluded that Bonder reduced the quantity of goods in the assessment sheet and the B/E after the consignment was out of charged and thus he certainly caused loss of revenues in the shape of taxes and duties to Government as the excess goods were sold in open market no doubt the audits were got conducted by department but the audit report alone cannot be made basis to throttle the prosecution case. The tampering on B/E and assessment sheets can be seen even with naked eye. It can be said with certainty that Amjad Ali Butt accused owner of bonded warehouse indulged himself in tampering with the B/E and assessment are illegal gain. In my considered opinion prosecution has been successful to prove the charge against Amjad Ali Butt accused owner of RMS."
24.What the Honourable Courts have held is that the prosecution did not produce evidence to connect the various accused persons with the commission of offence as no definite evidence was produced to show who was custodian of record and during that custody a particular accused has committed the offence of tampering and altering the customs documents. We, therefore, take cognizance of the fact that forgery is there and who was the beneficiary in this case? Obviously the owners of the Diplomatic Bonded Warehouse. The Court's criminal proceedings and the departmental adjudication proceedings are independent of each other and we are fortified by the judgment of the Honourable Supreme Court of Pakistan in case law 1987 SCMR 1840 namely The Collector Central Excise and Land Customs, Quetta and others v. Rahm Din, in CivilPetitionforLeavetoAppealNo. 44-Qof1986,decidedon11-4-1987 (on appeal from the judgment and order of the High Court of Baluchistan, Quetta, dated 2-6-1986 in C.P. No.44 of 1985) in which the decision of the Honourable Balochistan High Court was upheld and it was held that:--
"We also agree with the High Court that the conviction in the criminal prosecution has no bearing on the adjudication proceedings which are independent proceedings under the provisions of the Act."
In view of the above judgment of the apex Court, the argument of the appellant that department has no case in quasi-judicial proceedings as the main prosecution case has been set aside by the Honourable Lahore High Court, Rawalpindi Bench, is not tenable.
25.In addition to the above and to satisfy ourselves about the argument at (ii) above regarding the extent of duties and taxes actually involved in the civil liabilities, we have observed that the Adjudicating Officerinpara. 23 of his Order-in-Original No. 355 of 1999,dated11-9-1999 has already examined this aspect. It has been ascertained that not all the entries have been tampered in the examination report. The original bill of entry shows most of thequantities are intact whereas only some of the entries of items havebeen changed. Keeping that observation in view the prosecution agency was asked to point out those entries which have been tampered with. The quantities where ink remover used could not delete the entries completely and original quantities were visible. This was ordered so as the prosecution agency hadinitiallytakenallthequantitiesofthecontainerastamperedandchargeddutiesandtaxes.Strictlyspeakingthattheownersofthe bonds were liable to account for the duties and taxes where tampering had been done. In order to satisfy ourselves, the prosecution agencywasaskedtosubmitastatementshowingliabilityofdutiesandtaxes and personal penalties in the five bonded warehouses cases made out and being decided by this judgment. The Directorate GeneralofIntelligenceandInvestigation(Customs,ExciseandSales Tax), Islamabad vide their letter, dated 1-11-2004 has submitted the following details through the Departmental Representative videletter, dated 2-11-2004 addressed to the Assistant Registrar of this Bench:--
| S. No. | Appeal No. | Name of Bond | No of cases decided | Duty and taxes involved in all cases | Duty and taxes adjudged/payable | Personal penalty | O-in-O No. and date | Order-in-Appeal |
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 |
| 1 | 201/2000 | R.M.S. | 25 | 14,938,450 | 3,061,832 | 1,500,000 | 355/99 | 118-27/ 2000 |
| 2 | 202/2000 | Noon Traders | 12 | 6,492,182 | 1,838,957 | 1,200,000 | 363/99 | -do- |
| 3 | 203/2000 | Abrar & Co. | 23 | 14,118,938 | 2,846,790 | 2,000,000 | 361/99 | -do- |
| 4 | 204/2000 | Shaheen | 19 | 11,058,781 | 1,107,105 | 700,000 | 354/99 | -do- |
| 5 | 291/2000 | Ravi | 1 | 1,148,218 | 318,167 | 50,000 | 21.2000 | - |
| | | G. Total: | 80 | 47,756,569 | 9,172,851 | 5,450,000 | | - |
Duty and Taxes involved47,756,569
Duty and Taxes adjudged9,172,851
Percentage of involved amount20% (approx)
We are satisfied that duties and taxes liable to be paid by the appellants relate only to the entries which were found altered/tampered and do not relate to the entire consignments imported into the containers.
26.In view of the above analysis, we hold that the appellants should pay the duties and taxes and penalties adjudged in the impugned orders-in-original and orders-in-appeal and the appeals are dismissed.
27.Ordered accordingly.
H.B.T./394/Tax (Trib.)Appeals dismissed.