COLLECTOR OF CUSTOMS VS Messrs AYAZ AHMED
2007 P T D 234
[Karachi High Court]
Before Muhammad Mujeebullah Siddiqui and Faisal Arab, JJ
COLLECTOR OF CUSTOMS
Versus
Messrs AYAZ AHMED
Special Customs Reference Application No.84 of 2006, decided on 10/10/2006.
(a) Customs Act (IV of 1969)---
----Ss. 32 (1), 121 & 196---Customs Rules, 2001, Rr.335 & 341---S.R.O. 375(I)/2002, dated, 15-6-2002---Transshipment---Mis-declara tion---Port of entry and port of destination---Adjudication proceedings---Jurisdiction---Question not decided by Customs, Excise and Sales Tax Appellate Tribunal---Effect---Port of entry and port of destination of goods imported were different---Customs officials at port of entry examined the goods, prepared contravention report, issued show cause notice and passed order-in-original---Customs, Excise and Sales Tax Appellate Tribunal allowed the appeal of importer and set aside the order-in-original on the sole point of jurisdiction---Plea raised by the authorities was that proceedings against mis-declaration were rightly initiated at the port of entry---Validity---Deeming provision of R.341 of Customs Rules, 2001, read with R.335, thereof, merely empowered customs officials at the port of entry to examine whether the declaration made was correct and goods corresponded to the declaration---Such provisions of the rules did not empower the customs officials to initiate adjudication proceedings as well at the port of entry---Jurisdiction would still be governed by notification issued by Central Board of Revenue, conferring territorial jurisdiction on customs officials---Central Board of Revenue admittedly had conferred territorial jurisdiction on the customs officials posted at the port of destination---Customs, Excise and Sales Tax Appellate Tribunal did not decide the case on merits, therefore, question pertaining to merits of case required no consideration---Reference was dismissed in circumstances.
Baba Khan v. Collector of Customs, Quetta and 2 others 2000 SCMR 678 rel.
(b) Precedent---
----High Court judgment in field---Effect---Until and unless earlier judgments of High Court on a point are set-aside by Supreme Court, they hold the field and are to be acted upon.
Raja M. Iqbal for Applicant.
ORDER
This Reference Application is directed against the order, dated 15-2-2006 by the learned Customs, Excise and Sales Tax Appellate Tribunal Bench-I, Karachi, in Customs Appeal, No.702 of 2003, wherein it has been held that the customs authorities at Karachi had no jurisdiction to issue show cause notice and pass Order-in-Original in pursuance of the said notice. It has been held that the port of destination in this case was Quetta, and Karachi was Port of entry only. In doing so the learned Tribunal has placed reliance on various D.B. judgments of this Court, wherein it has been held that during transshipment of the goods from the port of entry to the port of destination the customs officials are empowered to examine the goods and prepare contravention report but thereafter, they are required to restuff and reseal the containers/carriers and pass on the same to the customs officials at the port of destination along with goods, who shall have the jurisdiction to initiate proceedings in respect of contravention detected.
Originally the applicant formulated the following questions for our consideration:
"(1) Whether the respondent No.1 has seriously erred while concluding the impugned Order-in-Appeal holding that the action of appellant was illegal, unsustainable and without jurisdiction in terms of CGO-15/89 and in terms of three judgments of this honourable Court passed on the said CGO, whereas this honourable Court while disposing of HCA Nos.306 and 307 of 2002 (filed in the instant case) vide order, dated 29-7-2003 has been pleased to hold that in terms of Customs Rules, 2001 and in view of the dictum laid down in Messrs Baba Khan's case (Supra) by the honourable Supreme Court, the Customs Authorities at the point of entry are fully competent to take cognizance of a contravention.
(2) Whether the impugned order is based on mis-reading of the evidence? The honourable Appellate Tribunal has not given due consideration to the evidence available on record and is based on presumptions, surmises and conjectures and has been passed by ignoring the law clarified by this honourable Court in HCA Nos.306 and 307 of 2002?
(3) Whether the Appellate Tribunal has seriously erred in law by not giving due consideration to the fact that the seizure on the law point of jurisdiction in this case and identical issues were already raised in Suit No.834 of 2002 which had been rejected by this honourable Court in HCA Nos.306 and 307 vide order, dated 29-7-2003?
(4) Whether on the documents and material placed on record the respondent No.2 has committed the acts of mis-declaration and smuggling in respect of the imported consignment and are liable to action under the enabling section of the Customs Act, 1969?
In the memo. of appeal it is stated that the appeal is filed on the following grounds:--
"(a) That the impugned Order-in-Appeal passed by the respondent No.1 is not sustainable in law, the same has been passed without appreciating law applicable thereto.
(b) That the learned respondent No.1. has failed to appreciate that the Customs Authorities at Karachi Port posses the jurisdiction to take action or detain the consignment destined for Dry Port in terms of Customs Rules, 2001 as amended through Notification S.R.O. 375(I)/2002, dated 15-6-2002, and paras. 3 and 4 of Rule 335 of the Notification."
Subsequently, Mr. Raja M. Iqbal has filed the following modified questions:--
"(1) Whether the learned Tribunal has seriously erred while concluding the impugned Order-in-Appeal holding that the action of appellant was illegal, unsustainable and without jurisdiction in terms of CGO-15/89 and in terms of three judgments of this honourable Court passed on the said CGO; where this honourable Court while disposing of HCA Nos.306 and 307 of 2002 (filed in the instant case) vide order, dated 29-7-2003 has been pleased to hold that in terms of Customs Rules, 2001 and in view of the dictum laid down in Messrs Baba Khan's case (Supra) by the honourable Supreme Court the Customs Authorities at the point of entry are fully competent to take cognizance of a contravention?
(2) Whether the impugned order is based on misreading of the evidence/The Honourable Appellate Tribunal has not given due consideration to the evidence available on record and is based on presumptions, surmises and conjectures and has been passed by ignoring the law clarified by this honourable Court in HCA Nos.306 and 307 of 2002?
(3) Whether the Appellate Tribunal has seriously erred in law by not giving due consideration to the fact that the seizure on the law point of jurisdiction, in this case identical issues were already raised in Suit No.834 of 2002 which has been rejected by this honourable Court in HCA Nos.306 and 307 vide order, dated 29-7-2003?
(4) Whether on the documents and material placed on record the respondent has committed the acts of mis-declaration and smuggling in respect of the imported consignment and are liable to action under the enabling section of the Customs Act, 1969?"
The learned Tribunal has not decided the appeal on merits but has decided the case on the point of jurisdiction only holding that the customs officials at Karachi have no territorial jurisdiction which lies with the customs officials at the port of destination. Consequently, the merits of the case are not required to be considered.
Mr. Raja M. Iqbal has submitted that the Hon'ble Supreme Court has decided in the case of Baba Khan v. Collector of Customs, Quetta and 2 others (2000 SCMR 678) that the customs officials at the port of entry have the jurisdiction to initiate proceedings against the person making misdeclaration. He has further submitted that by placing reliance on the above judgment of the Hon'ble Supreme Court, a Division Bench of this Court has held in H.C.A. No.307 of 2002 arising out of the same transaction which is the subject-matter of this Reference Application that the customs officials at Karachi have jurisdiction to initiate adjudication proceedings.
We have perused the Division Bench judgment of this Court, dated 29-7-2003 in H.C.A. No. 307 of 2002. In this judgment, the learned Members of the Division Bench have cited para. 5 of the judgment of Hon'ble Supreme Court in the case of Baba Khan which reads as follows:--
"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 importing goods being transported to Quetta Dry Port and if a misdeclaration 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."
A perusal of the above passage from the judgment of the Hon'ble Supreme Court shows that if misdeclaration is made at the point of entry the customs officials there, can examine the goods to ensure whether they 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. The Hon'ble Supreme Court has decided two points (1) declaration made at the point of entry or port or entry is a customs document and any misdeclaration made therein is, to be deemed to be contravention of the provisions in section 32(1) of the Customs Act. This finding of the Hon'ble Supreme Court has been subsequently incorporated in the Customs Rules, 2001. Rule 341 on which Mr. Raja M. Iqbal has placed reliance which reads as follows:--
"341. Contravention of this procedure.--Contravention of any provision of these rules shall be deemed contravention of Chapter VIII of the Customs Rules, 2001 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."
It is provided in this rule that contravention of any provision of these rules shall be deemed contravention of Chapter VIII of the Customs Rules, 2001, and sections 32 and 121 of the Customs Act. This does not provide any guidance in respect of jurisdiction for adjudication by the customs officials. This deeming provision read with Rule, 335 merely empowers the customs officials at the port of entry to examine whether the declaration made is correct and goods correspond to the declaration. It does not empower the customs officials to initiate adjudication proceedings as well at the port of entry. The jurisdiction shall still be governed by notification issued by C.B.R. conferring territorial jurisdiction on the customs officials and it is not denied that the C.B.R. has conferred territorial jurisdiction on the customs officials posted at the port of destination. (In this case at Quetta).
Following the law laid down by the Hon'ble Supreme Court in Messrs Baba Khan's case (Supra), the Division Bench of this Court observed that the customs authorities at the point of entry are fully competent to take cognizance of the contravention thereof. There is no cavil to the proposition that the cognizance of the contravention can be taken, whereby the contravention report can be prepared, but it will not confer the powers of adjudication as well which will remain with the customs officials posted at the port of destination.
Mr. Raja M. Iqbal has not denied that in the earlier judgments of this Court, it has been held that the customs officials posted at port of entry have no jurisdiction to initiate adjudication proceedings, while the Special Judge (Customs and Taxation) at Karachi, has the jurisdiction to entertain the criminal proceedings, and that the proceedings which are civil in nature in respect of retrieving the loss caused to the exchequer by misdeclaration, shall remain with the customs officials at port of destination. He has stated that, appeal has been preferred before the Hon'ble Supreme Court, and leave to appeal has been granted.
Be that as it may, until and unless earlier judgments of this Court on the point of jurisdiction are set aside by the Hon'ble Supreme Court, they shall hold the field and are to be acted upon. The learned Tribunal has decided the question of jurisdiction on the basis of various judgments of this Court and, therefore, no further opinion is required. As already observed, the Tribunal did not decide the case on merits, therefore, the question pertaining to the merits of the case requires no consideration. The Reference Application stands dismissed in limine.
M.H./C-28/KReference dismissed.