MUHAMMAD HUSSAIN VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2008 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 1452 (2006)

Customs Act (IV of 1969)---

----Ss.216 & 201---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.2(3)---No compensation for loss or injury except on proof of neglect or wilful act---Appellate Tribunal directed to release illegally seized goods---Goods were found short in number/ quantity, which were seized and stored in warehouse and the same were also not in genuine condition----Complainant requested the department to arrange delivery of seized goods in genuine conditions---Seizing agency was reluctant to release the same quantity/number of goods as were seized and entered in the seizure report nor were they willing to release them in their original condition---Complainant contended that the department may be directed to release the same quantity/number of goods as were seized and in genuine/original condition and loss caused due to illegal seizure and wrong prosecution, based on mala fide intention, may be calculated---Validity---Necessarily an inquiry was to be instituted to inquire into the allegations levelled regarding loss of and damage to the goods stored---Revenue Division should appoint an inquiry officer to inquire into the allegations---Inquiry Officer so appointed should examine the stored goods in the presence of complainant or his authorized representative as well as in the presence of concerned functionaries to determine the veracity/truth or otherwise, of the allegations levelled---If the Inquiry Officer came to the conclusion that the goods were missing or/and they were seriously damaged or deteriorated he may call upon the complainant or his authorized. representative to prove that such loss or damage had occurred due to negligence of the officer/officers or by their wilful acts as per the requirements of S.216 of the Customs Act, 1969---If the Inquiry Officer concludes that the loss and damage had indeed occurred due to negligence and wilful acts of the concerned functionaries he will identify the officer responsible for such loss or damage/injury to the goods; he will also determine the extent of loss and the damage in monetary terms---Federal Tax Ombudsman recommended that Revenue Division appoint an Additional Collector, belonging to Collectorate/formation other than the Directorate of Customs Intelligence and the Collectorate, as an Inquiry Officer for inquiring into the allegations made by the complainant independently and impartially to determine the truth of the matter---While conducting the inquiry, the Inquiry Officer will also keep in view the issues discussed and the questions framed, and report his detailed findings to Ombudsman to enable it to further process the case under the provisions of Establishment of Office of Federal Tax Ombudsman Ordinance, 2000, including section 22(1) thereof.

Muhammad Akbar, Advisor, Dealing Officer).

Ch. Muhammad Asghar Saroha for the Complainant.

Ahmad Kamal, Deputy Director (Intelligence) for Respondent.

DECISION/FINDINGS

JUSTICE (RETD.) MUNIR A. SHAIKH, FEDERAL TAX OMBUDSMAN.---Facts of the complaint are that the respondents seized on 31-5-2003 two trucks loaded with plastic Water Coolers of Iranian origin believed to be smuggled. These water coolers with plastic spouts of water coolers were seized despite the fact that the complainant had shown to the seizing officer the documentary evidence of their legal import. The D.C., Customs (Adjudication), Multan, vide Order-in-Original No.598 of 2003 dated 20-8-2003 released the seized goods unconditionally. The seizing agency filed appeal against D.C's orders before the Collector of Customs (Appeals) who remanded the case to the D.0 vide Order-in-Appeal No.122 of 2004 dated 21-1-2004 for passing -a fresh order. The D.0 passed fresh Order-in-Original No.238 of 2004 dated 5-4-2004 against ordering release of the seized goods unconditionally. The seizing agency filed yet another appeal against Order-in-Original dated 5-4-2004 which too was dismissed by the Collector of Appeals. Upon receipt of the final appellate order dated 18-11-2004, the complainant visited the warehouse where his seized goods were stored to obtain their release but found that the goods were short in number/quantity vis-a-vis the number/quantity of goods, which were seized and stored in the warehouse and the same were also not in genuine condition. Subsequently, the complainant wrote a letter dated 7-1-2006 to the Deputy Director pointing out the shortage of goods as well as the damage sustained by them requesting him to arrange delivery of seized water coolers and plastic spouts of water coolers in genuine condition. The Deputy Director had not responded to the written complaint. The seizing agency was reluctant to release the same quantity/number of goods as were seized and entered in the seizure report nor were they willing to release them in their original conditions. All this proved `maladministration', corruption and mala fide intention on the part of the seizing agency. The complainant had suffered a loss of Rs.15 lac. Respondents Nos.2 and 7 may be directed to release the same quantity/number of goods as were seized and in genuine/original condition. The loss caused to the complainant due to illegal seizure and wrong prosecution, based on mala fide intention, may be calculated. Any other relief admissible under law may also be allowed to the complainant.

2. In reply, the Director-General, Intelligence and Investigation (Customs and Excise) has submitted that the complainant had levelled baseless allegations. The seizure was legally effected in good faith. The brand of water coolers as per bill of Entry No.691 dated 18-4-2003, produced by the complainant on the spot was `Khalig' which was evident from the examination report on the back of bill of entry. On the other hand, out of a total number of 4796 water coolers seized in this case only 30 cooler were found of `Khalig' brand. The aforesaid bill of entry could not be entertained as its contents did not tally with the seized goods. Later, during the adjudication proceedings the complainant produced three more bills of entry on the basis of which water coolers were released unconditionally. No suit or prosecution or other legal proceedings could be brought against the Federal Government or any public servant for anything which was done in good faith in pursuance of the Customs Act, 1969 nor could such proceedings be undertaken by any Government agency against any officer/official for anything done in his official capacity under the Customs Act, 1969, rules and instructions etc. The appeal against D.C's order was filed because the seizing agency did not agree with the findings of the Adjudication Authority. The complainant's representative Mr. Saddu Khan, did visit the office after decision of second appeal by Collector of Appeals, Multan, and the then incharge, State Warehouse, Mr. Amjad Pervaiz, Investigating Officer, allowed him to load the water coolers on the truck. The complainant's representatives refused to take delivery on the ground that water coolers had deteriorated. As a result of hot weather, a sizeable quantity had deteriorated as the goods were stored in open space on the roof of office building. As to the complainant's letter dated 7-1-2006, the complainant was advised vide officer letter dated 18-1-2006 to visit the officer so that his complaint could be addressed and settled. The complainant, along with his Advocate, visited the office on 28-1-2006 and submitted an application for release of coolers in original condition but refused to take delivery on the grounds that goods had deteriorated. The total value of seized consignment, including duty and taxes, amounted to Rs.401925 instead of Rs.15 lac as worked out by the complainant. The department never refused the delivery of goods. It was ready to deliver the same at any time. Since a sizable quantity of water cooler had deteriorated due to prolonged storage in open space on roof of the office building, the charges of mala fides and corruption were baseless. The goods had to be stored in open space due to shortage of covered area in the office building. The complainant may be advised to take delivery of the consignment as deterioration of goods had occurred due to the ill-effects of harsh weather.

3. During the hearing, the AR reiterated the arguments advanced in the written complaint emphasizing that in all 4800 water coolers in two sizes (medium and small) and 2000 plastic spouts of water coolers were seized. The goods got damaged/deteriorated as these were irresponsibly stored on the roof of office building in open air. Half the quantity (50%) of water coolers seized in the case was missing and the rest had deteriorated. The complainant along with his Advocate met the Deputy Director in response to his letter dated 18-1-2006 (received by the complainant on 29-1-2006) but the complainant was asked to lift/clear the goods as they were and complainant's request for returning the goods in the same quantity and condition in which they were seized was not considered. The respondents had caused loss and harm to the goods due to their negligence and wilful act. The complainant may be allowed compensation under the provisions of section 216 of the Customs Act, 1969. Asked as to who were responsible, the AR submitted that respondents Nos.2 to 7, specifically the Superintendent Customs (Intelligence), the officer/officers Incharge of the warehouse and the Deputy Director of Customs (Intelligence) were responsible for loss and injury to the goods. He pleaded that action may also be taken against Mr. Qaswar Shah, Intelligence Officer, who, acting in a mala fide manner, seized and intercepted legally imported goods.

4. The DR submitted that seizure of goods took place on 31-5-2003. The adjudication proceedings were completed on 18-11-2004 after one and half year. The complainant filed application dated 7-1-2006 for returning the goods after one year and two months of the final order of appeal. He was, therefore, himself responsible for the delay in obtaining delivery of goods. Even in response to Deputy Director's letter dated 18-1-2006 for settling the matter the complainant appeared in the office on 28-1-2006. The DR added that the. seizing agency had to deposit the subject goods in the State Warehouse, Multan, but, unfortunately, the State warehouse at the relevant time was full of narcotics as a result of which complainant's goods could not be stored therein; hence those were stored on the roof top, which deteriorated due to delay in process of adjudication and delay on the part of the complainant in taking delivery of goods. There was no loss or pilferage or replacement of goods, as alleged. As the goods had deteriorated due to harsh weather conditions no `maladministration' was committed. The complainant could have applied for release of goods against a bank guarantee pending adjudication of the case. It was not possible to return the goods in original condition. The complainant claimed compensation of Rs.15 whereas he had himself declared the value of the consignment on the relevant bills of entry at Rs.263780, add to it duty and taxes etc., and the value of the consignment would not be more than Rs.4 lac.

5. The AR submitted that the allegation that the complainant had failed to take timely delivery of the goods was not tenable. Para. 7 of respondents' written reply showed that the respondents had acknowledged that the complainant did approach them for delivery of goods after the final appellate decision. He submitted that seizure report showed the C&F or FOB value at Rs.8 lac and market value of goods at Rs.12 lac. The DR argued that the market value shown in the seizure report was not the correct value of goods. The correct value of goods was the value on which the goods were finally appraised. The AR also argued that pending adjudication of the case the respondents could have auctioned the goods under section 201 of the Customs Act, 1969 to avoid loss or deterioration but they failed to do so.

6. The arguments of the parties and records of the case have beer considered and examined. It is observed that vide his final Order-in-Original No.238 of 2004 dated 12-4-2004, the D.C., no doubt, ordered unconditional release of seized water coolers but confiscated plastic spouts of water coolers for complainant's failure to produce proof of their legal import and lawful possession, giving, however, the owner of the goods to redeem the spouts on payment of redemption fine, equivalent to 10% of the value of goods, and the leviable duty and taxes. The aforesaid order was upheld by Collector of Appeals vide Order-in-Appeal No.224 of 2004 dated 18-11-2004. The complainant's contention, therefore, that all the goods were released unconditionally and the seizure was made with mala fide intention is not correct. To the extent as indicated above, the charges framed against the complainant well established. However, the complainant's grievance that (i) the respondents, despite D.C. and Collector's orders, were not returning the goods in the same quantity/number and the condition in which these were seized and (ii) he had suffered a monetary loss on account of loss of goods and deterioration thereof for which he may be compensated merits consideration. The complainant pleads that the goods may either be released in the same quantity/number and condition in which these were seized or, alternatively, the respondents should pay compensation for the loss of good (50% allegedly missing) and the damage/injury caused to the goods by them. While the department does not accept that any quantity of the seized and stored goods was missing, it does admit that the goods had deteriorated due to prolonged storage in open space on the roof of office building due to non-availability of proper space in the warehouse.

7. The above-mentioned scenario raise a fundamental question: whose responsibility was it to store the seized goods in a safe place and to safeguard them against any loss or serious damage or injury? Was not in the responsibility of the warehouse keeper to keep the goods safe and secure? Was he not responsible for due receipt of goods into the warehouse, delivery therefrom and for the safe custody while the goods remained deposited therein and to account for original quantity, weight or gauge, as the case may be, while returning the goods? Arguing that 50% of the goods were missing from the warehouse and the remaining had suffered serious deterioration, the AR pleaded during the complaint proceedings that the complainant be allowed compensation under the provisions of section 216 of the Customs Act, 1969. Section 216 of the Act reads as under:--

"No compensation for loss or injury except on proof of neglect or wilful act.---No owner of goods shall be entitled to claim from any officer of customs compensation for the loss of such goods or for damage done to them at any time while they remain or are lawfully detained in any customs-house, custom-area, wharf or landing place under the charge of any officer of customs unless it be proved that such loss or damage was occasioned by gross negligence or wilful act of such officer".

8. The complainant also alleges that it was the negligence/wilful act of the concerned officer/officers that had occasioned loss of and damage/injury to goods. The respondents do not admit, as aforesaid, that 50% of the stored goods were missing but they do admit that the stored goods had suffered deterioration on account of being stored out in the open. The seized goods were stored on the roof of office building, exposed to elements rather than storing them in safe, secure and covered place where they might have suffered the normal wear and tear but would have escaped loss, as alleged by the complainant, and deterioration, as accepted by the respondents. This state of affairs raises another question whose responsibility was it to provide proper, safe and secure warehouse space for storage of seized goods? Was it responsibilities of concerned officers or of the department or of both?

9. The facts of the case as well as the arguments advanced on both sides call for an impartial and independent inquiry, involving on-the-spot examination of stored goods, to determine whether or not the allegation levelled by the complainant regarding loss of or injury/damage to the goods was correct. On the spot examination of the stored goods with reference to goods seized/received/deposited in the warehouse will determine whether or not part of the goods were really missing and whether the remaining lot had suffered irreparable deterioration and damage, as alleged by the complainant. Since the complainant is claiming compensation under section 216 of the Customs Act, 1969 it will be for the complainant or his authorized representative to establish before the inquiry that the loss and damage being claimed had occurred due to the negligence or wilful acts of the concerned officer/officers.

10. Considering the overall circumstances surrounding the case, it is considered necessary that an inquiry is instituted to inquire into the allegations levelled by the complainant regarding loss of and damage to the goods stored by the respondents. The Revenue Division should, therefore, appoint an inquiry officer of the rank of an Additional Collector belonging to a Collectorate/formation other than the Directorate of Customs Intelligence and the Collectorate of Multan to inquire into the allegations. The Inquiry Officer so appointed should examine the stored goods in the presence of the complainant or his authorized representative as well as in the presence of concerned respondents to determine the veracity/truth or otherwise, of the allegations levelled by the complainant. If the Inquiry Officer---who will associate both the complainant or his authorized representative as well as the concerned respondents in the inquiry---comes to the conclusion that the goods were missing or/and they were seriously damaged or deteriorated he may call upon the complainant or his authorized representative to prove that such loss or damage had occurred due to negligence of the officer/officers or by their wilful acts as per the requirement of section 216 of the Customs Act, 1969. In ease, the Inquiry Officer concludes that the loss and damage had indeed occurred due to negligence and wilful acts of the concerned respondents he will identify the officer/officers responsible for such loss or damage/injury to the goods. He will also determine the extent of loss and the damage in monetary terms.

11. The Inquiry Officer should report the findings of his inquiry to this forum to enable it to examine whether or not the respondents have committed `maladministration', as alleged by the complainant, and whether this is a case fit for initiating action under section 22(1) of the FTO Ordinance XXXV of 2000 for possible payment of compensation to the complainant, as claimed by him. The aforesaid section is reproduced below:-

"The Federal Tax Ombudsman may, where he deems necessary call upon a Tax Employee or the Revenue Division to show cause why compensation be not awarded to an aggrieved party for any loss or damage suffered by him on account of any maladministration committed by such Tax employee or Revenue Division, and after considering the explanation, and hearing such. Tax Employee or Revenue Division, award 'reasonable costs or compensation and the same shall be recoverable, as arrears of land revenue from the Tax Employee or Revenue Division.

12. In view of the foregoing position, it is recommended that the Revenue Division:

(i) Appoint an Additional Collector, belonging to a Collectorate/formation other than the Directorate of Customs Intelligence and the Collectorate of Multan, as an Inquiry Officer for inquiring into the allegations made by the complainant independently and impartially to determine the truth of the matter. While c conducting the inquiry, the Inquiry Officer will also keep in view the issue discussed and the questions framed in the preceding paras, and report his detailed findings to this forum to enable it to further process the case under the provisions of FTO Ordinance, 2000, including section 22(1) thereof, as referred to above.

(ii) Compliance be reported within 30 days of the receipt of this order.

C.M.A./77/FTOOrder accordingly.