KHAWAR SHABBIR VS MEMBERS JUDICIAL/TECHNICAL, CUSTOMS EXCISE AND SALES TAX APPELLATE TRIBUNAL, LAHORE, 2008 PTD-LAHORE-HIGH-COURT-LAHORE 1928 (2008)

Customs Act (IV of 1969)---

----Ss. 2(s), 116, 178 & 196---Notification S.R.O. 255 (I)/2007, dated 17-3-2007---Imports and Exports (Control) Act (XXXIX of 1950), S.3(1) & (3)---Provincial Motor Vehicles Ordinance (XIX of 1965), S.33---Smuggled vehicle---Confiscation or redemption fine---Principle---Motor registration---Incorrect particulars---Vehicle owned by applicant was confiscated by customs authorities on the ground that it was smuggled vehicle with cut and welded chassis number-Validity---Confiscated vehicle had nothing of original vehicle except for chassis frame number, which, after cut, was welded---Vehicle had no soul, it had only a body, which comprised of a frame, compartment of seating and driving and engine, thus adjudication of all parts, as a whole was to be undertaken---Adjudication, when culminated into confiscation, vehicle as a whole was confiscated---Seating compartment, body frame and engine in car in question, were components of a car, which was of year 1994 model car and not one which petitioner had purchased in auction---Appellate authority committed illegality in considering just one part of chassis frame (where number was engraved) as vehicle and treating engine, seating compartment and body frame as parts---Smuggled vehicles with tampered chassis were not only loss to National Exchequer but were security threat as well---Applicant had been plying the vehicle in contravention of provisions of Ss.3 (1) and (3) of Imports and Exports (Control) Act, 1950---Applicant did not intimate Provincial Registration Authority that particulars contained in registration certificate, no longer remained accurate and thus offended provisions of S.33 of Provincial Motor Vehicles Ordinance, 1965---Customs authorities could not take any action with regard to violation of provisions of Provincial Motor Vehicle Ordinance, 1965---Smuggled vehicles with non-tampered chassis frame and auto parts imported as used or in second hand condition, brought into Pakistan through specified routes, mentioned at serial (d) and (g) in table annexed to notification S.R.O. 255(I)/2007, dated, 17-3-2007, could be released on payment of fine in lieu of confiscation, at rates specified in column (3) of the table---Vehicle of applicant as per clause (a) of notification S.R.O. 255(I)/2007, dated, 17-3-2007, was not subject to release against redemption fine---No option to pay fine in lieu of confiscation, was available to applicant and held rightly so by the authorities while passing order in original---.No infirmity or illegality was seen in the order passed by Customs, Federal Excise and Sales Tax Appellate Tribunal, restoring order in original passed by the authorities--Reference was rejected in circumstances.

Collector of Customs and another v. Zeeshan Haider Civil Petition No.1217 of 2003 and Mr. Muhammad Amjad s/o Haji Gos Buksh, Nawan Shehr Multan v. Superintended Customs Anti-Smuggling Squad, Multan and others distinguished.

Muhammad Ameer Bhatti for Petitioner.

Ahmad Raza for Respondents.

ORDER

The vehicle of the petitioner Toyota Crown, Model 1976 bearing Registration No.RIW-1880, was intercepted and on inspection, it was found that EFI Diesel Turbo Engine with automatic transmission, model 1994, was fitted in it. It further transpired further that the chassis frame where the chassis number exists, was manipulated to give it cover of, registration documents of an old model condemned/deteriorated vehicle. The vehicle, as it exists, it actually, a Toyota Super Salon Right Hand, fully loaded Toyota Crown Car, with automatic transmission, fitted with EFI Diesel Turbo engine, having manufacturing year 1994. Precisely, it's chassis frame was manipulated to camouflage the same.

2. Respondent referred the matter for chemical examination of chassis frame of the vehicle. Forensic Science Laboratory, Islamabad, after though examination of the vehicle, reported that front portion of the frame had been cut from both sides and the piece of chassis frame portion bearing the above mentioned chassis number, had been welded to chassis frame of the vehicle. Second report of Forensic Science Laboratory Punjab, Lahore, is available on file. It reflects that welding spots are visible on both the sides of chassis number frame. Yet it has been reported that chassis frame has not been cut and welded.

3. The vehicle was found by the department as smuggled one as defined in sections 2(s), 16 and 178 of the Customs Act, 1969. The vehicle was seized under the provisions of Customs Act, 1969. Show-cause notice was issued to the petitioner and the Addl. Collector Customs, Sales Tax and Federal Excise (Adjudication) Multan vide his detailed order passed in Customs Order-in-Original No.222/2006, confiscated the vehicle. The petitioner filed an appeal against Order in Original before Collector Customs (Appeals) who vide order dated 17-3-2007 allowed the appeal and directed for release of the vehicle on payment of 10% of the redemption fine, of the ascertained value in lieu of confiscation, in addition to leviable duty and taxes on the body parts only. The department/respondents assailed the .order of Collector Customs (Appeals) before the Customs, Excise and Sales Tax Appellate Tribunal. Learned Tribunal vide judgment dated 21-7-2007, set aside the order of Collector Customs (Appeals) and resorted Order-in-Original No.222/2006.

4. In, this tax reference, the following questions were .proposed for reconsideration:--

"(a) Whether the judgment impugned is not against the law and clear violation of the mandatory provisions of law?

(b) Whether in the presence of two reports, out of which latest favour the version of the petitioner, the order of the learned appellant Tribunal is not against law which has not properly considered the report issued by the lab which is an independent authority and keeping in view the contradiction in report, the benefit must have been given to the petitioner?

(c) Whether the order impugned is not contrary to law declared by the Honourable High Court which was upheld by the apex Court.

(d) Whether the learned appellate Tribunal has not erred grievously while reversing the order of learned respondent No.2, particularly when the Collectorate failed to substantiate it's claim through any tangible evidence?

(e) Whether the impugned order is not unsustainable when neither the chassis frame is cut and welded nor any tempering has been reported?

(f) Whether the impugned order is not injudicious in view of the established fact that chassis (being the fundamental organ of the vehicle) was duty paid and only mounting of body parts was disputed?

(g) Whether legitimate right does not accrue to the petitioner to make the vehicle operational whether the chassis number and documents were found correct and related to non-smuggled vehicle sold/auctioned by Army Auction Central MT and Store?

(h) Whether the impugned order does not run counter to principle of consistency as under similar circumstances, the customs authorities have ordered for release of vehicle?

(i) Whether the seizure of vehicle under section 168 of Customs Act, 1969 finds any legal justification when no violation of section 3(1) of Import and Export (Control) Act, 1950, section 2(s) read with 156(1)(89) of Customs Act, 1969 has been committed by the petitioner.

(j) Whether the impounding of vehicle is not a recurring wrong when such modification is neither restricted nor prohibited and there is no provision available in Customs Act, 1969 in which modification in body of vehicle is shown as offence?

(k) Whether the act of customs authorities is not repugnant to provision of fundamental rights and contrary to authoritative pronouncements of the Honourable Apex Court?"

5. Learned counsel for the petitioner, in support of the questions formulated in this tax reference, has referred to the un-reported case titled "Collector of Customs and another v. Zeeshan Haider" (Civil Petition No.1217 of 2003), wherein the Honourable Supreme Court of Pakistan affirmed .the order passed by Peshawar. High Court, whereby it was observed that engine purchased from Rawalpindi, receipt whereof was placed on the record by the owner of the vehicle, prove that the customs duty was paid. It was contended that according to ratio of judgment, it was duty of the department to inquire from the seller and not from the purchaser about the payment of duty. It can be presumed otherwise that engine and other parts are duty paid. Learned counsel then referred to the case of "Mr. Muhammad Amjad s/o Haji Gos Buksh, Nawan Shehr Multan v. Superintended Customs Anti-Smuggling Squad, Multan and others" and submitted that matter falls within the jurisdiction of Customs Authorities only, when through cogent evidence, it is substantiated that the charge of smuggling against the appellant, is made. Learned counsel summed up his arguments with the contention that replacement of parts of the vehicle, cannot be termed as act of smuggling.

6. Learned counsel for the respondents, on the other hand, has fully supported the impugned judgment of learned Appellate Tribunal and Order-in-original of the Adjudicating Authority. He has contended that the vehicle of the petitioner is a smuggled one within the contemplation of provisions of Customs Act, 1969.

Mr. Izhar ul Haq, Advocate, on Court's call, has also assisted this Court.

7. Heard learned counsel for the parties and perused the record.

8. Admittedly the vehicle, which the petitioner has purchased in auction, was 1976 model Toyota Crown. The body, interior and engine of the seized vehicle is that one of 1994 model. The report of the Forensic Science Laboratory, Islamabad, reflects that both the sides of the chassis were cut and welded. Report of Punjab Forensic Science Laboratory, Lahore, reflects that spots of welding on both the sides, are visible, but it has also been stated that chassis has not been cut and welded. Report, being cryptic, sketchy, ambivalent and self-contradictory, cannot be relied upon. Moreso, a detailed report of Forensic Science Laboratory, Islamabad, is on the file, which contains supporting material including photographic impressions. This report comprehensively outweighs and dwarfs the aforesaid report of Punjab Forensic Science Laboratory.

9. The fact remains that applicant is not plying the vehicle, which exists in his name in the registration document. The vehicle, as it exists today, is Toyota Crown, Super Saloon, fully loaded and fitted with EFI Diesel Turbo Engine of 1994 Model, but it's registration book speaks otherwise, that it is 1976 Model Toyota Crown, a condemned/ deteriorated vehicle. It is significant to note that at the relevant time, there was no manufacturing plant in the country. Thus there is irrefutable presumption that the said vehicle was smuggled. Here, at this juncture, we consider it advantageous, to refer to section 2(S) of the Customs Act, 1969, which deals with the definition of term "Smuggle" Clause (iii) is relevant, which is reproduced hereunder:

Section 2(s) "Smuggle" means to bring into or take out of Pakistan, in breach of any prohibition or restriction for the time being in force, or evading payment of customs-duties or taxes leviable thereon,.

(i) gold bullion, silver bullion, platinum, palladium, radium, precious stones, antiques, currency, narcotics and narcotic and psychotropic substances; or

(ii) manufactures of gold or silver or platinum or palladium or radium or precious stones and other goods notified by the Federal Government in the official Gazette, which, in each case, exceed in value; or

(iii) Any goods by any route other than a route declared under section 9 or 10 or from any place other than a customs-station."

10. There is nothing on record to show that body parts, engine and chassis of the vehicle in question, have been brought into Pakistan, through a customs station/port or airport, within the meaning of sections 9 and 10 of the Customs Act, 1969. Thus it is clear/obvious that body, engine and other parts of the vehicle, are brought into Pakistan, through unauthorized routes and as such, it falls within the ambit of smuggled vehicle. S.R.O. 255(I)/2007 dated 17-3-2007, issued, invoking the powers conferred under section 181 of the Act, 1969, imposes prohibition on release of certain confiscated goods subject to payment of redemption fine. Relevant part of S.R.O. 255 (ibid) is reproduced hereunder:

"S.R.O. 255(I)/2007.---In exercise of the powers conferred by section 181 of the Customs Act, 1969 (IV of 1969), and in super session of its Notification S.R.O. No.574 (I)/2005 dated that 6th June, 2005, the Central Board of Revenue is pleased to order that no option shall be given to pay fine in lieu of confiscation in respect of the following goods or clauses of goods, namely:

(a) Smuggled goods including buses, trucks and chassis thereof falling under clause(s) of section 2 of the. Customs Act, 1969 (IV of 1969) excluding other vehicles with non tampered chassis frame and auto-parts imported in used or second hand condition;

(b) lawfully registered conveyance including packages and containers found carrying smuggled goods in false cavities or being used exclusively or wholly for transportation of offending goods under section 2 (s) of the Customs Act, 1969 (IV of 1969); or

(c) goods imported in violation of section 15 of the Customs Act, 1969 (IV of 1969);

(d) banned items, goods of Israeli origin and goods of Indian origin other than those importable from India in accordance with the Import Trade and Procedure Order, 2000; or

(e) job lot and stock lot goods;

(f) restricted and other items which are subject to procedural requirements under Import Trade and Procedure Order, 2000 unless such condition and procedural requirements are fulfilled; or

(g) commodities which are not importable in used or second-hand condition under the Import Trade and Procedure Order, 2000".

11. The case of the applicant falls under clause (a) of the aforementioned S.R.O. 255, therefore, such vehicle is not subject to release on payment of redemption fine. Central Board of Revenue (now FBR) had issued following guidelines for the implementation of S.R.O. 255(I)/2007 vide C.No.10(17) L and P/05) dated 17-3-2007:--

"I am directed to refer to the subject cited above and to say that the smuggled vehicles with non-tempered chassis frame and vehicles imported in violation of the Import Policy Order were allowed release against redemption five vide S.R.O. 179(I)2006 dated 2nd March, 2006. Import statistics of vehicles released on payment of redemption fine shows that the number of buses, trucks and chassis being released under redemption has tremendously increased during the current financial year with the result that lawful imports are decreasing in number and the tainted imports, utilizing redemption regime have started effecting lawful imports."

12. It follows from the above that Federal Government through Federal Board of Revenue, is empowered under Section 181 of the Customs Act, 1969, to fine for release of confiscated goods (redemption fine) of keep certain smuggled goods or class of smuggled goods in "no option". Smuggled vehicles, within the contemplation of section 2(s) (iii) of the Customs Act, and as per S.R.O. 255(I)/2007, are not subject to release against redemption fine. The option of fine, in lieu of confiscation, is not available to the applicant, therefore, it cannot be extended. The case law, referred to by learned counsel for the applicant, being on different facts and circumstances, is not applicable to the case in hand. In the case of Zeeshan Haider, C.P. No.1217 of 2003 (supra), the reports of both the Forensic Science Laboratories i.e. Islamabad and Peshawar with regard to confiscated vehicle, were in favour of owner of the vehicle. Additionally, release of confiscated vehicle against redemption fine, was permissible at the relevant time, under S.R.O. 179(I)/2006 dated 2-3-2006, but the said S.R.O, now stands superceded by S.R.O. 255(I)/2007. Collector (Appeals) while passing the order in appeal (Appeal No.45 of 2007) has wrongly concluded that due to availability of part in abundance in market, like engine body and other parts, same are replaced with old and damaged parts and allowed release of vehicle against redemption fine on payment of duties and taxes on body parts only. The confiscated vehicle has nothing of original vehicle except for chassis frame number, which after cut was welded in this vehicle. A vehicle has no soul. It has only a body, which comprises of a frame, an apartment of seating and driving and an engine. The adjudication of all parts, as a whole is to be undertaken. The adjudication, when culminates into confiscation, the vehicle as a whole, is confiscated. Here, in the instant case, the seating compartment, body frame and the engine are the components of a car, which is of 1994 model car and one, which petitioner has purchased in auction. Thus the appellate authority has committed grave illegality in considering just one part of chassis frame (where the number is engraved) as vehicle and treating engine, seating apartment and body frame as parts.

The smuggled vehicles with tampered chassis, are not only the loss to National Exchequer, but are security threat as well.

13. Additionally, the applicant has been plying the vehicle, in contravention of provisions of subsections (1) and (3) of section 3 of the Imports and Export (Control) Act, 1950. Besides the applicant has not intimated Motor Registration Authority that particulars contained in the registration certificate, no longer remain accurate and has thus offended the provisions of section 33 of the Motor Vehicle Ordinance, 1965. There is no denial of the fact that Customs Authorities cannot take an action with regard to the violation of provisions of Motor Vehicle Ordinance, 1965.

14. Smuggled vehicles with non-tampered chassis frames and auto parts imported as used or second hand condition, brought into Pakistan through specified routes, mentioned at (d) and (g) in the Table annexed to S.R.O. 255(I)/2007, can be released on payment of fine in lieu of confiscation, at the rate specified in column (3) of the said Table. The vehicle of the applicant as per clause (1) of the Notification S.R.O. 255, reproduced hereinabove is not subject to release against redemption fine. No option to pay fine in lieu of confiscation, is available to the petitioner and held rightly so, by respondent No.2, while passing the order in original. No infirmity or illegality is seen in the impugned order of learned Tribunal.

15. For what has been discussed above, we answer to questions No. "a", "c", "f", "g", "h" and "k" in negative, while the questions at "b", "d" and "e", being questions of fact, require no answer. Question at "J", does not arise out of the judgment of Tribunal and as such, cannot be considered.

16. For the foregoing, this reference application is rejected.

M.H./K-37/LReference rejected.