Rana MUHAMMAD NAEEM VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2008 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 1578 (2005)

(a) Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000)---

----Ss.9 & 2(3)---Jurisdiction, functions and power of the Federal Tax Ombudsman---Whenever maladministration is alleged independent of the controversy in the matter, there will be no bar to jurisdiction of the Federal Tax Ombudsman to investigate into the allegation of maladministration irrespective of the fact that a remedy under the statute has been provided---Whenever maladministration is alleged and proved, then the Federal Tax Ombudsman can give recommendations and findings which may even affect the merits of case.

2002 PTD 2984 rel.

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

----S.16---S.R.O. 634(I) of 2004---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.2(3)---Power to prohibit or restrict importation and exportation of goods---Confiscation of vehicle---S.R.O. 634(I) of 2004 was made the basis for confiscation of vehicle---Since the vehicle in question was 1993 Model which was registered in February, 1994, therefore, the S.R.O. issued in 2004 could not have been applied.

(c) Interpretation of statutes---

---All official acts are presumed to have been done in accordance with law and under authority vested in this regard unless contrary is proved.

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

---Ss.16, 32(2)(3), 156(1), Cl. (89)(90), 168(2), 180, 186, 187 & 211---Import Trade and Procedure Order, 2004, Appendix-C, S.No.10---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.2(3)---Power to prohibit or restrict importation and exportation of goods---Confiscation of vehicle/car after ten years of its registration with Motor Registration Authority due to non-production of its import documents---Validity---Presumption was that vehicle was registered by Motor Registration Authority under valid documents required for registration of vehicle--Department did not challenge the genuineness of the registration book---Complainant was in possession of the vehicle under the valid registration book issued by the Motor Registration Authority under the law---Complainant, who was the sixth purchaser of vehicle, had produced valid registration book which was never doubted and he discharged the burden cast upon him by S.187 of the Customs Act, 1969---Federal Tax Ombudsman recommended that Central Board of Revenue to set aside the order-in-original and release the vehicle and return the same to its lawful owner.

Custom Appeal No.H-866 of 2002 and 1992 SCMR 1898 ref.

2003 PTD 2118 rel.

Nadeem Ahmed Mirza, Consultant.

Dr. A. Rehman Rind, Deputy Collector of Customs.

DECISION/FINDINGS

JUSTICE (RETD.) MUNIR A. SHEIKH, (FEDERAL TAX OMBUDSMAN).---This complaint has been filed against the alleged misadministration arising out of confiscation of a vehicle by order of the Deputy Collector (Adjudication) vide Order No.45 of 2005, dated 29-1-2005.

2. The brief facts of the case are that the complainant purchased a vehicle Toyta Corona Saloon Car Model 1993 bearing Registration No.2326 on 4-9-2002 from one Mr. Idris for Rs.3,67,500. Necessary receipt, transfer letters etc. were obtained from the seller in addition to the Registration Book and, on the strength of these documents, he got the vehicle transferred in his name on 9-9-2002 from the Motor Registration Authority (M. R. A) and subsequently paid annual tax for renewal of registration as per law.

3. On 27-5-2004, the official of Directorate of Intelligence and Investigations, (Customs Excise and Sales Tax) Karachi approached the complainant and took the car away on the plea that the same was smuggled one and directed him to provide import documents. Since the car was purchased from the open market, he supplied the documents of purchase along with original Registration Book to the official of Directorate for confirmation of ownership. The officials, however, insisted on supply of import documents which were not available with the complainant and thus, they took the car under a detention notice with the direction to supply the requisite import documents and then prepared a seizure report. After issuing a show-cause notice which was duly replied explaining the entire position of the case, the Deputy Collector (Adjudication-II) passed an Order-in-Original No.45 confiscating the car under section 16 of the Customs Act, 1969 (hereinafter called the Act) on the ground that the import of old and used car prohibited in Serial No.10 of Appendix-C to the Import Trade and Procedure Order (ITPO) 2004.

4. The learned A.R. of the complainant has urged that the order was passed without any lawful authority and several arguments advanced by the complainant's representative at the time of hearing were neither rebutted in the order nor any reasons were assigned as to why these arguments were not considered. It is argued that a notice under section 186 of the Act could only be issued where levied fine or penalty has to be recovered or where imposition of any fine or penalty was under consideration and that merely for the purpose of verification as to whether the vehicle plying on the road was duty paid or not, a detention notice could not be issued for the reason that no imported vehicle was allowed to be taken out of the port premises by the KPT or the shipping company, unless given out of charge by the Customs, which is mandatory for all such imports. It is contended that seizure in terms of section 168(2) of the Act could only be made of smuggled vehicles liable to confiscation under section 180 of the Act and that since the complainant's vehicle was not smuggled one and had not been proved to be so by the Customs, therefore, in the presence of the valid and true registration documents, the vehicle could not have been seized/ confiscated by the Adjudicating Authority.

5. It has also been stated that the subject vehicle was registered in 1993 by Motor Registration Wing in the name of one Mr. Javed Iqbal stated to be a Superintendent of Police, and that this vehicle must have been registered after receipt of import/purchase documents which were essentially required. It changed hand six times since its first Registration and was finally transferred in the name of the complainant on 9-9-2002. M.R.A., on each occasion, transferred the ownership in the Registration Book without any let or hindrance. It. is stated that Registration Book of the subject car was once even lost by the second owner who reported the matter to the police, got the said facts published in the newspaper and, thereafter, on the strength of these documents along with affidavit, applied and obtained a duplicate book. It is argued that if the registration was not valid, the M.R.A. should not have issued the duplicate Registration Book. Further, liability of the complainant under the law stood discharge upon his presentation of valid Registration Book and purchase documents and if there was any suspicion regarding import of the car, the notice should have issued to the first who got the vehicle registered in the instance.

6. The learned A.R. further urged that section 16 of the Customs Act, 1969 is not attracted in this case as no ban on import of Toyota Corona Saloon Car, 1993 was notified by the Federal Government for the relevant period. The impugned car of 1993 Model was registered in 1994, the applicable provisions of Import Trade and Procedure Order would be for the years 1993-1994 and not the one pertaining to the year 2004 which has been applied by the Deputy Collector as a basis for confiscating the car. It is further argued that a vehicle could not be seized after 10 years of its registration on the charge of smuggling on the ground of non-production of import documents as under section 211 of the Act, the importer or exporter is required to keep the record of the imported and exported goods or the vehicle for a period of 5 years only and beyond this period, no liability can be imposed on them to retain such documents. Reliance in this regard has been placed on a decision by the Appellate Tribunal in Customs Appeal No.H866 of 2002.

7. It is further urged that a show-cause notice has to be issued with specific charges and with the intended revenue loss and that mere charge of smuggling is not enough unless the amount of duty and taxes are calculated which is sought to the evaded. It is also argued that for recovery of duty and taxes, a show-cause notice has to be issued within 3 years and 6 months under subsections (2) and (3) respectively of section 32 of the Act, though this period was subsequently extended to 5 years and 3 three years respectively. It is stated that had the show-cause notice mentioned the recovery of duty and taxes under section 32 of Act, it would have been hit limitation and that is why the department deliberately omitted to mention the value of duty and taxes. Placing reliance on a case reported as 1992 SCMR 1898, the learned A.R. stated that if a law prescribes period of time for recovery of money then after it is lapse, recovery is not enforceable through Courts. It is further urged that in the presence of valid registration book issued by M.R.A., the Deputy Collector was not competent to confiscate the vehicle on the ground of non-payment of customs duty. Reliance in this regard is placed on a case reported as 2003 PTD 2118 in the case of Collector of Customs, Sales Tax and Central Excise Quetta v. Naimatullah.

8. In view of these submissions, the learned authorized representative has contended that the vehicle was detained and subsequently seized in violation of clear and unambiguous provisions of sections 168(2) and 186 of the Customs Act, 1969; and has prayed for setting aside the impugned order as having been passed on erroneous and forced construction of law and facts of the case and, thus, being of no legal effect.

9. In reply to the complaint, the Collector has first taken objection to the jurisdiction of this office in the matter in view of the bar imposed by section 9(2) of the Establishment of the Office of F.T.O. Ordinance, 2000. It is contended that the complainant has the efficacious remedy of appeal available to him at appellate forum and, therefore, this complaint was premature and not maintainable.

10. It is further stated that provisions of section 186 of the Act are not attracted to this case and that the vehicle in question was recovered from the possession of the owner for violation of the provisions of sections 16, 19 and 32 of the Act. It is stated that the owner failed to prove its legal import and lawful possession and, thus, failed to discharge his liability as required under section 187 of the Act and penal clauses (89) and (90) of section 156(1) of Customs Act, 1969 which clearly define that the burden of proof lies on the shoulders, of the complainant. In regard to timeframe prescribed by section 211 of the Act, it was stated that for the seizure of the smuggled goods, there was no time frame under the law and that legal action can be initiated at any stage and thus the provisions of section 211 were not relevant and applicable to the case in hand. In regard to the complainant's objection regarding wrong application of S.R.O. 634 of 2004 on the basis of which the vehicle was seized, the Collector has stated that the prohibition of vehicles is also listed at Serial No. 34 of the notified item vide S.R.O. 491(I)/85, dated 23-5-1985 which was in operation at the relevant time..

11. The arguments advanced by both the parties have been heard and the record produced has been examined.

12. The objection raised by the Collector, in time and regard to jurisdiction of this office in the matter is not valid. It has again been explained that whenever maladministration is alleged independent of the controversy in the matter, there will be no bar to jurisdiction of the FTO to investigate into the allegation of maladministration irrespective of the fact that a remedy under the statute has been provided. Wherever maladministration is alleged and proved, then the FTO can give recommendations and findings which may even affect the merits of case. Reference in this regard may be made to a case reported as 2002 PTD 2984.

13. From the perusal of the order-in-original it is observed that the S.R.O. 634(I) 2004 was made the basis for confiscation of the vehicle. Since the vehicle in question is 1993 Model which was registered in February, 1994, therefore, the S.R.O. issued in 2004 could not have been applied. The Collector in his report stated that the relevant S.R.O. in the field was 491(I) of 1985 dated 23-5-1985 in which Serial No.34 reads as under:--

"Vehicles falling under Chapter 87 of the First Schedule excluding non-motorized vehicles."

14. It is, however, observed that even the above entry was made by Notification No.S.R.O.997(I) of 1998, dated 14-9-1998 and, thus, at the relevant time i.e., 1993-94 the vehicles were not a prohibited item and the provisions of section 156 of the Act would not thus apply. When this was pointed out to the Deputy Collector, .he requested for time to re-examine the issue. Time was accordingly allowed but on the adjourned date none appeared for Customs nor any material was produced to establish that the vehicle could be confiscated even on the basis of S.R.O. 491(I) of 1985.

15. The Collector's contention regarding application of section 187 of the Act also carries no weight. It is an admitted fact that the complainant purchased the vehicle in question from the open market which he got registered with M.R.A., Karachi. It is settled law that all official acts are presumed to have done in accordance with law and under authority vested in this regard unless contrary is proved. Applying this principle, it is presumed that the vehicle was registered by M.R.A. under valid documents required for registration of the vehicle. The Customs Department did not challenge the genuineness of the Registration Book and thus prima facie, it is established that the complainant was in possession of the vehicle under the valid Registration Book issued by the M.R.A. under the law and such, the burden cast upon the complainant under section 187 of the Act was discharged by him. In a similar case reported as 2003 PTD 2118, Customs staff intercepted a Toyota Land Cruiser Jeep on the ground that the same was non-duty paid vehicle. The adjudication, officer confiscated the vehicle as, , according to him the owner failed to discharge his burden as provided under section 187 of the Act and prove that the vehicle was lawfully imported into the country and all payable taxes were duly paid. The appeal before the Appellate Tribunal was accepted, the confiscation order set aside, the Customs Authorities directed to release the vehicle to the respondent. The Customs Department then filed an appeal before the learned High Court which was dismissed with the following observations:

"It is not the case of the appellant that the Registration Book under which the vehicle was registered was not issued by the M.R.A. as such; was fake book prima facie it is established that the respondent was in possession of the vehicle under the valid permit issued by the Motor Registration Authority under the law, as such the burden cast upon the respondent under section 187 of the Act was discharged by him. On the other hand the Customs Authorities failed to discharge the ultimate or legal burden cast upon it and it was doubtful as to whether the vehicle in question was registered on fake documents as no such document was produced nor the concerned authorities initiated any proceeding regarding fake registration of the vehicle against the original owner or the concerned officials of Motor Registration Authorities which, if committed was not only an offence under the .ordinary law but an offence punishable under Customs Act. Thus it was doubtful under the given facts and circumstances of the present case as to whether the vehicle in question was got registered under the Motor Vehicle Ordinance through the valid documents or otherwise, as such; the respondent was entitled to the benefit of doubt on general principle and rightly extended by the learned Appellate Tribunal to him.

For the foregoing reasons we find no merit in the instant appeal within the meaning of section 196 of the Customs Act, 1969 and same is accordingly dismissed in limine."

16. In the present case also, the complainant, who is the sixth purchaser of the vehicle, had produced valid Registration Book which was never doubted and thus he discharged the burden cast upon him by section 187 of the Act. As such, the contention raised by the Department is not tenable.

In view of above, it is recommended that:

(i) C.B.R. to set aside the Order-in-Original No.45 of 2005.

(ii) Release the vehicle and return the same to its lawful owner.

(iii) Report compliance with 45 days.

C.M.A./577/FTOOrder accordingly.