Messrs HARIS TRADING INTERNATIONAL through Authorized Representatives VS DIRECTOR INTELLIGENCE AND INVESTIGATION (CUSTOMS AND EXCISE), KARACHI, 2005 PTD-KARACHI-HIGH-COURT-SINDH 1180 (2005)

2005 P T D 1180

[Karachi High Court]

Before Shabbir Ahmed and Azizullah M. Memon, JJ

Messrs HARIS TRADING INTERNATIONAL through Authorized Representatives and another

versus

DIRECTOR INTELLIGENCE AND INVESTIGATION (CUSTOMS AND EXCISE), KARACHI and 4 others

C.Ps.Nos. D-1512andD-1513of2003,decidedon16thMarch,2004.

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

----Ss.32(1), 121 & 156---Customs Rules, 2001, Rr.335 & 341---Constitution of Pakistan (1973), Art.199---Constitutional petition---Trans-shipment of goods without payment of duty---Untrue statement by importer---Customs Authorities, under Rr.335(3)(4) & 341, Customs Rules, 2001, have been conferred powers in respect of the suspected consignments to carry out 2% physical examination and hundred per cent weighment at the Port of trans-shipment and in case of contravention, penal action as contemplated under Ss.32(1) & 121 of the Customs Act, 1969andthecarriershallalsobeliabletotakepenalactionunderthe provisions of S.156, Customs Act, 1969 in terms of R.341, Customs Rules, 2001---Customs authorities at the port of entry are competent to take cognizance of any contravention or misdeclaration.

Messrs N.B. Trading Company, Samberial (Sialkot) v. Collector of Customs (Appraisement) and others 2003 PTD 14; Famous Corporation v. Collector of Customs 1989 MLD 2322; M. Hameedullah Khan v. Director of Customs Intelligence and 3 others 1992 CLC 57 and Shafi Shahid and another v. Director, Intelligence and investigation (Customs and Excise), Karachi and others (un-reported judgment) C.P. No.1016 of 1999 ref.

Messrs Baba Khan v. Collector of Customs, Quetta and 2 others 2000 SCMR 678 fol.

(b) Customs Rules, 2001---

----R.330, Appendex I, Columns Nos. 5 to 10 & 14 to 20---Trans-shipment permit---Carrier has to apply for trans-shipment permit through an application Appendex I of R.330 of Customs Rules, 2001 to the Assistant Collector and the Bill of Lading, the port of shipment of goods with country and importer s name and address, N.T. Number, Import Registration number are to be detailed therein which are to be furnished by the importer/consignee and the bonded carrier cannot give the details and the documents unless provided by the importer---Carrier cannot be the agent of customs.

Mian Abdul Ghaffar and Muhammad Anwar Tariq for Petitioners.

Syed Tariq Ali, Federal Counsel and Ahmed Khan Bugti for Respondents.

Dates of hearing: 12th February and 3rd March, 2004.

ORDER

SHABBIR AHMED, J.---The factum circumstances and competence of the power to detain the consignment by the Customs Officials at Karachi belonging to the petitioners are in dispute in these petitions. In other words, whether the Customs Authorities at the Karachi possess the jurisdiction to take action or to detain the consignment destined for DryPort, Lahore.

In order to facilitate consideration of questions involved in these appeals, it would be proper to deal with C.P. No. D-1512 of 2003 and the conclusion arrived on the basis of contentions raised on either side will be applied to both petitions.

The facts as disclosed in the petition are that the petitioners in their routine business imported consignment of general commercial goods like cosmetics. Toys, eye-liners. T.V. Sets, betel nut etc. of total value of US$ 14711.24 destined for LahoreDryPort via Karachi. It is their case that the petitioner No.2 had been importing Sodium Sulphide from Messrs Saif Al-Qama Trading Co. LLC, Dubai in the past and supplier mentioned the description of goods as Sodium Sulphide on the Bill of Lading instead aforesaid goods. On arrival of consignment at Karachi, application for grant of trans-shipment permit was submitted to the respondent No.2 who granted the trans-shipment permit and allowed the consignment to be trans-shipped. They admitted that in application for trans-shipment and trans-shipment permit, description was indicated as Sodium Sulphide, on the basis of description mentioned in the Bill of Lading. The consignment/container was intercepted by respondent No.3, it was desealed, opened and goods were examined which led to the recovery of cosmetics, perfumes, toys, T.V. sets, Bath Soap, Creams, Betel nuts etc. After examination, the goods along with container were seized on the allegation that same were misdeclared on Bill of Lading as well as Trans-shipment permit. The respondent No.3 after seizure of goodsaswellascontainergotcancelledtheTrans-shipmentpermitand registered a case against the petitioner No.1 and Customs Bonded Carrier for contravention of sections 2(s), 16, 32(1)(2), 121 vide F.I.R. No. Appg/53/DCI/2003, dated 17-11-2003. The entire action on the part of respondents Nos. 1 and 2 of interception of container after consignment was out of charge and allowed to be trans-shipped to Dry Port Lahore, de-sealing the container, examination and seizure of goods at Karachi, registration of case in respect of a consignment distant to Dry Port Lahore, cancellation of Trans-shipment permit as wellas initiating departmental and criminal proceedings are illegal, void, unjust, fanciful, mala fide, withoutjurisdiction and of no legal effect on the grounds that the container once sealed and allow to be trans-shipped to Dry Port Lahore cannot be intercepted, de-sealed, opened and examined at Karachi notwithstanding any information which respondents Nos.1 and 3 might possesses regarding misdeclaration or other contravention of law. In case of authentic information with respondents which could lead to detection of contravention of Customs Law, the same should have been conveyed to the respective Collector or Additional Collector of Customs. Incharge of Dry Port or to the Directorate of Intelligence and Investigation (Customs and Excise) having territorial jurisdiction over port of clearance, who are competent to take any action as deem proper as prescribed in Customs General Order 59/89, dated 21-1-1989. The respondents Nos. 1 and 3 have no authority to detain or seize or to refuse trans-shipment of goods to up-country ports as required under section 121 of the Customs Act, Customs General Order 15 of 1989 and thus interception, de-sealing, opening container and examination and seizure of goods and registration of case in respect of trans-shipped imported cargo at Karachi is illegal. The common prayer in the petitions are as follows:--

(a)Thatinterception, de-sealing, opening, examination andseizure of trans-shipped imported cargo contained in Container No. IKMU-500143-2 which was duly sealed with seals of respondent No.2 and security company namely Messrs Phones Brinks after the T.P. was out of charge of dispatching the container to Dry Port Lahore are illegal, without lawful jurisdiction and of no legal effect being violative of section 121 of Customs Act, 1969 read with CGO 15/89, dated 21-1-1989.

(b)That interception, opening of container, examination of goods, seizure of consignment meant for trans-shipment to Dry Port Lahore,initiationdepartmentalaswellascriminalproceed-ingsatKarachiinrespectoftrans-shippedimportedcargo meantfor Dry Port, Lahore by respondents Nos. 1 and 3 is illegal, void, unjust, without lawful authority and of no legal effect.

That while granting such declaration, this Hon ble Court may be gracious enough to direct respondents Nos.1 and 3 to re-seal the container and dispatch the same toDry Port Lahore in terms of section 121 of the Customs Act, 1969 and CGO 15/89 for clearance by petitioners on payment of duties/taxes leviable thereon along with information/report regarding alleged mis-declaration if passed by them.

An other relief which this

The respondents Nos. 1 and 3 in para-wise comments, adopted on behalf of the respondent No.2 by their counsel, have stated that the consignments were declared as Sodium Sulphide imported by petitioner No.1 for trans-shipment to Lahore Dry Port by Messrs Multimodel Transport International (Pvt.) Ltd., Karachi C.H.A.L. No.2035 filed vide T.Ps. Nos.10067 and 10068, dated 10-11-2003, who completed customs formalities at Customs House, Karachi. On 15-11-2003and17-11-2003, the containers were detained and examined, which resulted in recovery of smuggled Cosmetic, Perfumes, Toys, T.V., Bath soaps, Creams and Betel nuts etc. valuing Rs.50,00,000. Since the recovered goods were being smuggled under guise of import of Sodium Sulphide , therefore, the containers along with recovered goods and trans-shipment documents were seized under proper Mushirnama and inventoryprepared on the spot for the violation of the provisions of section 2(s), 16, 32(1)(2), 121 and 178. In absence of the importer, notice under section 171 of the Customs Act was served upon Muhammad Imran and goods were given under the Supardari of Incharge of Messrs D.G. Shed, EastWharf, Karachi and Incharge of Messrs Cosco Saeed Yard M.I. Yard, WestWharf, Karachi respectively. The report has been recorded, investigation is being conducted. On facts, they have admitted the seizure of the goods lodging of the report but denied that Messrs Saif Al-Qama Trading Co. LLC Dubai have inadvertently mentioned the description of Sodium Sulphide on the Bill of Lading instead the goods recovered. They have admitted that the goods were destined for CustomsDryPort, Lahore and importer was legally bound to give correct andaccurate declaration in the trans-shipment permit filed under section 121 of the Customs Act. Concealment of the facts regarding the physical availability of the goods contained in the containers to be trans-shipped to the up-country Dry port abundantly prove that the intention of the importer was just to evade the duty and taxes and to seek clandestine clearance of the recovered goods in the guise of Sodium Sulphide which he never imported. Their further plea was that under section 32 of the Customs Act and Rule 329 of the Customs Rules, 2001, the importer as well as bonded carrier are legally bound to make accurate and actual declaration, in respect of quantity, quality, description and weight of the goods under trans-shipment any misstatement attract the provisions of section 32 of the Customs Act. The Customs Authority has lawful jurisdiction to intercept the consignments at Karachi, meant for up-country dry ports. Since the importer has made untrue statement within the meaning of section 32 of the Customs Act, action has been initiated in accordance with the relevant provisions of law when it was found that the goods were grossly misdeclared. It was also pleaded in reply to the grounds that CGO No.15 of 1989 and 1 of 1994 are no more operative as these have been replaced by the Customs General Order 12 of 2002 which does not contemplate any embargo to exercise jurisdiction by the Collector of Customs (Appraisement) or the Director of Intelligence and Investigation (Customs and Excise) to examine the goods under trans-shipment to up-country Dry Ports. Rule 335 of the Customs Rule, 2001 issued vide Notification No.S.R.O. 450(I)/2001, dated 18-6-2001, deals with clearance of goods from port and sub-rules (1), (2), (3) and (4) of the above Rules provide such powers.

Learned counsel for the parties were put on notice that the aforesaid petitions would be heard and would be disposed of finally on merits at Katcha Peshi stage and the learnedcounsel have argued the petitions for final disposal.

We have heard Messrs Mian Abdul Ghaffar and Muhammad Anwar Tariq, learned counsel for the petitioners, Syed Tariq Ali,learned Federal Counsel for respondents Nos.1, 3 and 5and Mr. Ahmed KhanBugti,learnedcounselfortherespondentNo. 2,whohasadopted the arguments of learned counsel for the respondents Nos. 1, 3 and 5.

Learned counsel for the petitioners main contention was that the trans-shipment consignment cannot be intercepted by the Customs Authorities at the Port of Entry. His further contention was that this issue has been settled by the Division Bench of this Court and to support such contentions, reference was made to the judgment rendered by the Division Bench of this Court in Messrs N.B. Trading Company, Samberial (Sialkot) v. Collector of Customs (Appraisement) and others (2003 PTD 14), wherein the plea taken by the petitioner was that the Customs Officials at Karachi, have no territorial jurisdiction over the goods meant for trans-shipment to Dry Ports. The plea was accepted with following observations:--

We find no hezitation in holding that the question of Customs Official at Karachi in respect of the consignment destined to up-country already stands settled by the three earlier Division Benches. We are in respectful agreement with the views held in earlier three judgments of this Court.

It was further observed that a very careful consideration of all the judgments cited before us, and the material placed on record, we are of the opinion that, so far, the territorial jurisdiction of the Customs officials is concerned, it already stands decided by three earlier judgments of this Court and consequently, respectfully following the cited judgments, we find that the action of the Customs Officials at Karachi is legally unsustainable.

Above viewwas expressed on the basis of decisionsrendered by the Division Benches of this Court in (1) Famous Corporation v. Collector of Customs (1989 MLD 2322), (2) M. Hameedullah Khan v. Director of Customs Intelligence and 3 others (1992 CLC 57) and lastly, (3) Shafi Shahid and another v. Director, Intelligence and Investigation (Customs and Excise), Karachi and others (un-reported judgment) C.P. No.1016 of 1999.

On the other hand, Syed Tariq Ali, learned Federal Counsel appearing for the respondents urged that the view taken in cases referred by the learned counsel for the petitioners, were based on CGO 15/89, which no longer is available applicable. According to him subject consignments are governed by the provisions of Customs Rules, 2001, particularly Rules 236 and 241 as added by S.R.O. 375(I)/2002, dated 15-6-2002, whereby Chapter XIV in Customs Rules, 2001, pertaining to trans-shipment was added which contains Rules 326 to 341. According to the learned Federal Counsel in terms of the above Rules, the Customs Authorities at Karachi has jurisdiction to examine detained/suspected consignment and take action in accordance with the Law. His further contention was that in the instant petitions, the petitioner No.1 tried to hoodwink the Customs Authorities and adopted modus operandi to avoid customs duty by submitting the Bill of Lading, pertaining to the Sodium Sulphide in respect of containers destined for DryPort through containing commercial goods detailed in the contravention report admitted by the petitioners. Criminal prosecution after due formalities has been set in motion by means of F.I.R. No. Appg-53/DCI/2003, dated 24-11-2003 and F.I.R. No.Appg-54/DCI/2003, dated 24-11-2003 respectively.

It may be observed that the cases relied upon by the learned counselforthepetitionersturneduponCGO15/89,whereunderitwas specifically provided that the trans-shipment goods are to be dispatchedatthePortofdestinationbytheCustomsAuthoritieswithout examination atKarachi and in case they have any information as to thecontravention, it may be passed on at Port of destination foraction.

Learned Federal Counsel contention was that power of Customs Authorities at the Port of Entry to examine whether the goods correspond to the declaration made in relation to trans-shipment goods in the light of section 32(1) of theCustoms Act were examined in Messrs Baba Khan v. Collector of Customs, Quetta and 2 others (2000 SCMR 678) by the apex Court, he particularly referred the observations contained in para. 5 thereof:--

The question is whether the aforesaid misdeclaration or wrong statement about the goods related to any matter of customs. The answer is in the affirmative. Goods arrived at the border and were meant to be cleared from customs at Quetta Dry Port. A statement was required to be made at Mand about the imported goods being transported to Quetta Dry Port and if a mis-declaration was made to avoid payment of duty or with the object of avoiding payment of duty or with the object of importing goods which were totally prohibited for import, the High Court rightly held that the concerned authority at Mand where the declaration was made were entitled to examine whether the goods correspond to the declaration made so that no change in the goods takes place from the starting point at Mand to the Dry Port. Such statement or declaration at the starting point, therefore, related to a matter of Customs and attracted penal provisions of section 32(1) of the Customs Act in case it was untrue in any material particulars.

LearnedFederalcounselalsoreferredthejudgment,dated29-7-2003 passed by the Division Bench of this Court in High Court Appeals Nos. 306 and 307 of 2002 (The Director, Directorate General of Intelligence and Investigation, (Customs and Excise), Karachi v. Abdul Jabbar and others), wherein the amended Rule referred to above and the dictum of Baba Khan s case (supra) was followed. It was held that we havenodoubtthatin terms of the Customs Rules, 2001asquotedabove and in view of the dictum laid down in Baba Khan s case (supra) by the Hon ble Supreme Court, the Customs Authorities at the point of entry are fully competent to take cognizance of the contravention thereof .

LearnedFederalCounselparticularlyreferredtheparas. (3)and (4) of Rule 335ofCustomsRules, 2001whichgivesthepowertotheCustomsAuthoritiesatthePortofEntry,whichreadsasfollows:--

(3)All conveyance carrying trans-shipment goods shall invariably be weighed at Karachi Port Trust weigh bridge and the report of the same be provided in carrier manifest and weight slip be attached with the carrier s manifest. In case there is plus variation up to five per cent of five hundred kilograms whichever is less, in the declared weight and the ascertained weight. The trans-shipment may be allowed subject to the satisfaction of Collector.

(4)Hundred per cent weighing and two per cent. random physical examination to be ordered by Collector of Customs (Appraisement or Collector Port Qasim) of suspected consignment at the Port of trans-shipment in presence of bonded carrier be allowed and in case of mis-declaration of description or weight, warranted action be initiated.

Rule 341 deals with the contravention in the following words:--

Contravention of this procedure.---Contravention of any provision of these rules shall be deemed contravention of Chapter VIII of the Rules and sections 32, 121 of the Customs Act, 1969 (IV of 1969) and the carrier shall be liable to penal action under the relevant provisions of section 156 thereof and other relevant rules.

FromtheperusaloftheabovecitedRulesframedundersection 219 of the Customs Act, the Customs Authorities have been conferred authority in respect of the suspected consignments to carry out 2% physical examination and hundred per cent weighment at the Port of trans-shipment and in case of contravention, penal action as contemplated under sections 32 (1), 121 of the Customs Act and the carrier shall also be liable to take penal action under the provisions of section 156 ibid in terms of Rule 341.

The above referred Rules are in clear deviation from the earlier CGO 15/89, therefore, the contention raised by the learned counsel for the petitioners that the subject consignment is covered by CGO 15/89 is misplaced and the cases referred by them are inapt for the reason that the suspecting consignments were intercepted after the amendment of the Customs Rules, 2001 referred to above.

Therefore, we have no doubt that in terms of the Customs Rules, 2001 and in view of the dictum laid down in case of Messrs Baba Khan s case (supra) by the apex Court, the Customs Authorities at the Port of Entry are competent to take cognizance of any contravention or misdeclaration. Therefore, the point formulated is to be answered in affirmative.

At the fag-end of the arguments, the learned counsel for the petitioners tried to argue that bonded carrier is a licensee from the Customs, therefore, any misdeclaration made by the carrier would not be binding on the owner of the consignments and any action on such statement is also illegal. We are unable to persuade ourselves to accept such contention. The carrier has to apply for trans-shipment permit through an application Appendix-I of Rule 330, to the Assistant Collector and the perusal of the columns 5 to 10 and 14 to 20 thereof makes it clear that the Bill of Lading, the Port of Shipment of goods with Country and Importer s name and address, N.T. number, Import Registration Number are to be detailed therein which are to be furnished by the Importer/consignee and the bonded carrier cannot give the details and the documents referred above unless provided by the importer. Therefore, the carriers cannot be the agent of Customs.

In view of the discussions referred to above, we are of the view that the petitions have no merits, resultantly, dismissed, however, with no order as to costs.

M.B.A./H-45/KPetitions dismissed.