Appeal No. 1934/LB of 2001, decided on 16th August, 2005. VS Appeal No. 1934/LB of 2001, decided on 16th August, 2005., 2006 PTD-INCOME-TAX-APPELLATE-TRIBUNAL-PAKISTAN 703 (2005)

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

----S.162---Power to issue search warrant---Seized goods were released subject to payment of legal dues and penalty in spite of the fact that raids conducted over the premises were illegal and goods were released but the appellant was directed to make payment of legal dues and penalty---Appellant contended that seizing officer did not follow the procedure as prescribed in S.162 of the Customs Act, 1969 and the raid and procedure thereof was of no legal effect---Validity---Goods in an identical case were released without payment of duties and taxes even without examination in compliance of order of the High Court---In case of violation of mandatory provision of law looking into the things available at the spot was illegal and unjustified---Proper course of action was that the Customs authorities should have come back and after compliance of the provision of law, the raid should have been conducted---Examination of goods at later stage was illegal and that the discrimination made by Adjudicating Officer was without any basis or legal grounds---Order-in-original was set aside and Appellate Tribunal ordered that the goods owned by the appellant should be released immediately.

PTCL 1991 CL 2000 ref.

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

----S.187---Burden of proof---Fake/forged or irrelevant documents---Initial burden of proof was upon the appellant to defend the allegation by sound and convincing evidence in accordance with the provision of S.187 of the Customs Act, 1969---Appellant produced bills of entries either original or in photocopy, in such a situation burden of proof had shifted and it was the duty of the prosecution to prove through evidence that the documents were fake, forged or irrelevant---In order to verify the documents the prosecution sent the same to Customs authorities which re-submitted these documents without attesting the same---Order-in-original did not show that the documents were found bogus, even in this connection the statement of the concerned officer was not recorded---Observations of Adjudicating Officer in connection with the documents being irrelevant were not correct and was without any basis in circumstances.

Mian Abdul Ghaffar for Appellant.

Munawar Iqbal Inspector Legal, F.I.A. for Respondent.

Date of hearing: 28th April, 2005.

JUDGMENT

MIAN MUHAMMAD JAHANGIER, MEMBER (JUDICIAL).-This appeal is directed against Order-in-Original No.80 of 2001 passed by Collector of Customs Central Excise and Sales Tax, (Adjudication) Lahore dated 7-8-2001 whereby the seized goods (second hand serviceable auto parts, iron and steel scrap in the form of rail wheel, bars and other steel items), were released subject to payment of legal dues and a penalty of Rs.5,00,000 (five lac) was imposed due to violation of different provisions of law.

2. Some relevant facts of the case are that on the basis of secret information, the staff of F.I.A. State Bank Circle and Customs Authorities raided at the premises situated in the area of Nisbat Road, Lahore at night time as a result of which second hand serviceable auto parts, iron and steel scrap in the form of rail wheel, bars and other steel items valuing Rs.72,81,124 were recovered. In absence of evidence on lawful possession and import, the goods were taken into possession. Criminal case was registered with Police Station Misry Shah vide F.I.R. No.359/99 dated 20-10-1999. After completion of proceedings the matter was referred for adjudication. The Adjudication Officer ordered for confiscation of the goods and imposed penalty as well.

3. Being aggrieved from Order-in-Original dated 31-1-2000 Mr. Asghar Ali, the present appellant filed an appeal before the Appellate Tribunal, while relying on the judgment passed by the Honourable Lahore High Court, Lahore dated 21-12-1999 in an identical case and Order-in-Original No.16 of 2001 dated 31-1-2001passed in an other identical case titled as Abdul Qayyum versus Staff of F.I.A. The Appellate Tribunal had remanded the case to the Collector Adjudication. It may be mentioned here that in the abovementioned cases including the present case the facts were same because in the premises of the abovementioned cases, the raid was conducted by the Authorities as mentioned above at night time on 21-10-1999. In the identical cases, it was held that the raid conducted was illegal without jurisdiction and of no legal effect. Consequently the goods were returned to the affecties without payment of duty and taxes. While the Department filed intra-Court appeal which in accordance with the Order-in-Original dated 7-8-2001 is still pending.

4. When this matter was again disposed of by the Adjudication Officer, it was observed that the facts of the instant case are quite identical with the facts of the abovementioned cases so far as the matter of raid, search and seizure are concerned, however the difference is to this extent that at the time of raid the documents showing legal import and lawful possession were not produced before the raiding party nor furnished later on. before the Collector Adjudication.

5. Now in this appeal the required documents were annexed which were referred to Collectorate at Quetta for verification but the documents were received back without any attestation and it was observed by the Adjudication Authority that there is shortage of link between the goods and the documents, consequently the documents were found irrelevant therefore, while relying on a case reported in PTCL 1991 CL 2000 the Collector Adjudication decided this case as under:

"The goods are released on payment of duty and taxes leviable thereon.

A penalty of Rs.5,00,000 (Rupees five lac) is also imposed on Asghar Ali son of Haji Abbas Khan, Caste Pathan resident of House No.6, Nisbat Road, Lahore for violating the aforesaid provisions of law."

4-A. Now being aggrieved from order impugned dated 7-8-2001, the appellant has come up in appeal before this Tribunal.

5. We have heard learned counsel for the appellant and Mr. Munawar Iqbal, Inspector Legal F.I.A. for the respondent and have gone through the relevant record placed before us.

The learned counsel for the appellant mainly argued that the raids conducted over the premises of the appellant were illegal; that the raids conducted by the F.I.A. staff and the Customs Authorities over the premises owned by Ch. Abdul Qayyoum and Haji Muhammad Jalal at the same night were found illegal by the Superior Courts and the goods were released. As such the instant case is identical on account of having same facts and circumstances and it is quite strange that in the instant case the appellant has been directed to make payment of legal dues and penalty has been imposed upon him which order is illegal; that the seizing officer did not follow the procedure as prescribed in section 162 of the Customs Act, 1969 therefore, in accordance with chain of rulings the raid and procedure thereof was of no legal effect; that the Adjudication Officer followed the judgment of the Honourable Lahore High Court, Lahore passed in case of Haji Muhammad Jalal in the case of Ch. Abdul Qayyoum but without any justification avoided to follow the judgment of Honourable Lahore High Court, Lahore in this case therefore, from all angles the Order-in-Original being illegal and against the facts is liable to be set aside.

Whereas Mr. Munawar Iqbal, Inspector opposed the arguments and submitted that since the documents of possession and import brought on the record at belated stage were irrelevant therefore, same were rejected being so, the order impugned calls for no intervention.

6. After hearing both the sides at length the points for determination before us are as under:

(a) Whether the case of the appellant is identical to the case of Haji Muhammad Jalal and Abdul Qayyoum whose premises were also raided on the same night.

(b) Whether the appellant discharged onus to prove the lawful import and possession by any evidence.

7. So far as issue number "a" is concerned, there is no need of detailed analysis and in our view para. ten of the order impugned is, sufficient in this regard as reply to this issue which reads as under:-

"In the instant case Asghar Ali filed a Writ Petition No.24331 of 1999 in the Lahore High Court, Lahore which 'was withdrawn to pursue the matter before the Adjudicating Authority after getting the case remanded to the undersigned from Appellate Tribunal for adjudication with the direction to find out as what connection the aforesaid decided writ petition of Haji Muhammad Jalal and order passed by the undersigned in the case of Abdul Qayyoum has with this case and if they are on all fours with it then to decide the instant case accordingly. It is observed that the subject case and one of Haji Muhammad Jalal decided by the Honourable Lahore High Court, Lahore vide judgment dated 21-12-1999 passed in Writ Petition No.23046 of 1999 are identical in all respects. So far as raid, search and seizure in respect of goods belonging Abdul Qayyoum is concerned, the case of the respondent Asghar Ali is the same on this account only as the raiding party i.e. F.I.A. conducted raid, search and seizure and registered F.I.R. at the same time, date and located in the same locality, with the, exception that the raiding/seizing officer are different but of the same agency and the raids conducted at all the premises in the abovementioned cases were in violation of provision of section 162 of the Customs Act, 1969. In view of identical nature/circumstances of the subject case and aforesaid reasons it will not be in the interest of justice and fairplay if the same treatment is not accorded in the present case also. It is therefore held that so far as raid, search and seizure are concerned, this case is identical in nature and as such the raid, search and seizure and all subsequent actions taken by the F.I.A. are void and without jurisdiction being in violation of section 162 of the Customs Act, 1969."

7-A. Relating to this issue the connected point for determination is as to whether the seized goods owned by Haji Muhammad Jalal and Abdul Qayyoum were examined by the competent authority. It appears from the perusal of the record that Haji Muhammad Jalal having grouse in his mind against the assault of an agency '(F.I.A.), knocked the door of Honourable Lahore High Court, Lahore by filing the constitutional petition wherein the raid, search, seizure and all subsequent proceedings had been challenged as being against the provision of sections 162 and 163 of the Customs Act, 1969. Copy of the judgment is on the record which shows that his Lordship Mr. Justice Ahsan-ul-Haq Chaudhary Honourable Judge of the Lahore High Court, Lahore accepted the writ petition and declared that raid, search, seizure and all actions thereafter taken by the F.I.A. were illegal. Meaning thereby the goods owned by Haji Muhammad Jalal were not examined, even the seized goods were returned/released to the owner without charging any duty and taxes.

8. So far as the case of Abdul Qayyoum, is concerned, the goods were examined as far as the documents of legal import and possession are concerned and the Adjudication Officer after analysis observed that the documents are squarely and conclusively not connected with the seized goods, consequently, the goods were confiscated but option for redemption was allowed. Being aggrieved, Abdul Qayyoum went before the Appellate Tribunal which observed that the basis for observation of the Adjudication Officer is not good as he himself did not examine the goods consequently, the case was remanded and now after remand the goods were examined by Deputy Collector Customs Adjudication. During the process of hearing for the second time before the Adjudication Officer the seizing agency was represented by Khalid Anees, Inspector F.I.A. while the Customs department was represented by Mr. Arshad Ali, Superintendent. It appears from para. No.18 of Order-in-Original that Mr. Khalid Anees confirmed that the seized goods are the same were cleared by Customs authorities at Quetta while Mr. Arshad Ali frankly admitted that procedure for conducting raid and search i.e. section 162 of the Customs Act, 1969 was not followed and in compliance of order passed by the Honourable Lahore High Court, Lahore the seized goods owned by Jalal Din have been released without payment of duty and taxes. While discussing the arguments advanced by the learned counsel for the appellant. Mr. Abdul Qayyoum, the Collector (Adjudication) relied upon the judgment of the Honourable Lahore High Court, Lahore as referred above and particularly observed that since the goods owned by Jalal Din have been released on the basis of the judgment of the Honourable Lahore High Court, Lahore therefore he cannot discriminate the case of Abdul Qayyoum and it will not be in the interest of justice and fair play if the same treatment is not accorded in the case of Abdul Qayyoum therefore the seized goods owned by Abdul Qayyoum were released.

9. Now the point for determination is as to why the case of Asghar Ali has been discriminated by the same officer who disposed of the identical case wherein the same legal question i.e. violation of section 162 of Customs Act, 1969 was involved. As it is reflected from para. eleven of the order impugned that at the time of raid, the documents of import were not furnished before the competent authority but these documents were provided later on and same were sent to Collectorate of Customs, Quetta for verification. The Superintendent Customs Dry Port Quetta sent the documents without attesting the same therefore, the Adjudication Officer observed that from these documents (Bill of Entry) no linkage with the goods can be developed therefore, the documents i.e. photo copies of the bill of entry are afterthought and an attempt to cover the smuggled goods with the documents which are not relevant and being so the party concerned has failed to establish the link between the seized goods and the documents. He further observed that raid, search and seizure of the goods are illegal but it does not absolve the delinquent from the customs duty and imposition of penalty as required by section 18 of the Customs Act, 1969. Consequently, the goods were released as per decision as incorporated in para. number twelve of the order in original.

10. Here the question would arise as to whether this discrimination made by the Adjudication Officer is based on legal grounds or not. Here again we have to examine the provision of section 162 of the Customs Act, 1969 which reflects on this legal requirement that for search of place the gazetted officer of Customs has to move an application to the Judicial Magistrate for search, explaining therein the reasons of object and search warrant shall be executed in the same way and shall have the same effect as a search warrant issued under the Code of Criminal Procedure, 1898, whereas the power to search without warrant has been explained in section 163 of the Customs Act, 1969. The facts and circumstances of this case are identical to the case as discussed above which would show that the premises were searched in violation of the abovementioned provision of law which is mandatory in nature and in this situation his Lordship Mr. Justice Ahsan-ul-Haq Chaudhary Honourable Judge of the Lahore High Court, Lahore in Writ Petition No.23046 of 1999 observed as under:--

"The F.I.A. has wrongly and illegally become a super police as unfortunately it was readily available for misuse by the executive. It is not possible to permit any Agency to assume the role of Gestapo. It cannot be allowed to become a symbol of terror in the country and to tremble rights of the citizen guaranteed by the Constitution of Islamic Republic of Pakistan.

The upshot of this discussion is that this writ petition is accepted to the extent of actions of respondent Nos.1 and 2 with costs. The result is that the raid, search, seizure and all actions thereafter taken by the F.I.A. are declared illegal, without jurisdiction and of no legal effect".

11. It appears that in compliance of the judgment passed by the Lahore High Court, Lahore the goods owned by Jalal Din were released without payment of duties and taxes even without examination as it reflects from the record made available before us. Meaning thereby in case of violation of the mandatory provision of law as described above even looking into the things available at the spot was illegal and un justified. The proper course of action was that the Customs Authorities should have come back and after compliance of the provision of law, the raid should have been conducted therefore, it is observed that the examination of the goods at latest stage was illegal and that the discrimination made by the Adjudication Officer was without any basis or legal grounds.

12. Moreover we are forced to discuss the question of burden of proof keeping in view the peculiar circumstances of this case it is obvious that in accordance with the provision of section 187 of the Customs Act the initial burden of proof was upon the appellant to defend the allegation by sound and convincing evidence. He produced at least 30 bills of entries either original or photocopy, now, in such situation the burden of proof had been shifted and it was the duty of the prosecution to prove through evidence that the documents are fake, forged or irrelevant. In order to verify the documents the prosecution sent the same to Customs authorities at, Quetta which re-submitted these documents without attesting the same. Para. No.11 of the order-in-original does not show that the documents were found bogus even in this connection the statement of the concerned officer was not recorded therefore, the observation of the Adjudication Officer in connection with the documents being irrelevant was not correct and it was without any basis. Therefore, we are of the view that Order-in-Original No.80 of 2001 cannot sustain in the eye of law.

13. As a consequence of it Order-in-Original No.80 of 2001 dated 7-8-2001 is set aside and we order that the goods owned by the appellant shall be released immediately.

14. Appeal is hereby accepted.

C.M.A./557/Tax(Trib.)Appeal accepted.