MUHAMMAD FAISAL IQBAI, QURESHI VS ADDITIONAL COLLECTOR CUSTOMS, 2009 PTD-ISLAMABAD 932 (2009)

Customs Act (IV of 1969)---

----Ss.32, 156(1)(14)(77), 157 & 178---Import and Export (Control) Act (XXXIX of 1950), S.3 (1)---Pistols, import of---Cancellation of import licence by Ministry of Commerce after such goods reached Pakistan---Effect---Such cancellation would not affect importer's right to import such goods.

Messrs A.R. Hosiery Works, Karachi v. Collector of Customs (Export), Karachi and another 2004 PTD 2977 ref.

Mian Abdul Ghaffar for Applicants.

Mujeeb-ur-Rehman Warriach for Respondents.

Date of hearing: 16th December, 2008.

JUDGMENT

MUHAMMAD MUNIR PERACHA, J.---Brief facts leading to the disposal of this reference are that Additional Collector, Customs was reported by the Customs Staff posted at AFU (Import), Islamabad Airport that Messrs Jhelum Enterprises Customs Clearing Agent has presented a Goods Declaration No.16713/07 dated 22-4-2007 for the clearance of consignment consisting of 100 pistols made in U.S.A. During the examination, the Import Authorization No. 05582 dated 6-9-2006 provided by clearing agent along with import documents was found suspicious. Therefore, the original copy of the said import authorization was obtained from the official record which showed import ceiling worth Rs.5,00,000 (Rupees five lac only) and when it was tallied with the import authorization presented by the clearing agent on behalf of Messrs Trans International (Pvt.), Islamabad, was found tampered/ forged, showing the amount of import authorization as Rs.50,00,000 (Rupees fifty lacs). As import authorization was suspected tampered/ forged, the authorization was got verified from the Ministry of Commerce vide letter C. No. V. Cus(ADC-AFU)Misc/07/1838 dated 25-4-2007. In reply Ministry of Commerce confirmed vide its letter No.19(29)2006-imp.1 dated 2-5-2007 that no authorization for Rupees five million was ever issued by Ministry of Commerce. Therefore, the imported consignment consisting of 100 pistols along with Goods Declaration No.16713/07, House Airway Bill, Delivery orders, Master Airway Bill, LC, Invoice, original cargo manifest and US department of State Transaction No.196 were seized after proper documentation and regular case was registered against Muhammad Faisal Iqbal Qureshi son of Riaz Iqbal Qureshi, Islamabad, Syed Irfan Ali son of Syed Suleman, Islamabad both of Messrs Trans. International (Pvt.) Ltd., Islamabad and Raja Abid Mehmood son of Sultan Mehmood of Messrs Jhelum Enterprises Customs Clearing Agency vide F.I.R. No.17/2007 dated 30-4-2007 with the Investigation and Prosecution Branch of Collectorate of Customs, Rawalpindi for violation of provisions of sections 32, 156(1)(14)(77), 157 and 178 of the Customs Act, 1969 read with section 3(1) of the import and Export (Control) Act, 1950. The clearing agent had also contravened the provisions of Rule 102 (iv)(v) punishable under Rule 103 & 104 (2) of the Customs Agents Licensing Rules, 2001.

2. It was further reported that hectic efforts were made to arrest the accused persons. Messrs Faisal Iqbal Qureshi, Syed Irfan Ali (Import) and Raja Abid Mehmood (Customs clearing agent) who after getting pre-arrest bail from the Court of Special Judge, Customs, Rawalpindi, joined the investigation on 19-6-2007. During the investigation, their detailed statements were reduced into writing in which they admitted the factum of recovery but denied the allegations of tampering/forgery of import authorization. The clearing agent stated that the tampered import authorization amounting to Rs.50,00,000 (Rupees fifty lac) was faxed to him by his accomplice Syed Irfan Ali Shah, while all other documents were received by him personally from Syed Irfan Ali Shah from his office at Islamabad. It was also found that Ministry of Commerce has also issued cancellation of import authorization of Messrs Trans International (Pvt.) Ltd. Islamabad owned by Syed Irfan Ali and Faisal Iqbal Qureshi vide Letter No.19(29)2009-imp.1 dated 12-5-2007.

3. It was also reported that during the clearance of another consignment of Arms and Ammunition vide goods Declaration No.1231 dated 22-7-2006, Syed Irfan Ali Shah of Messrs Trans International submitted an undertaking in which he stated that their annual limit of import is Rs.50,00,000 (Rupees fifty lacs) which clearly shows their Mensrea that they were already planning to get their consignments cleared through tampered /forged documents, they clandestinely changed the amount of import authorization from Rupees five lac to Rupees fifty lacs for clearance of the present seized consignment.

4. A show-cause notice was issued to Muhammad Faisal Iqbal Qureshi son of Riaz Iqbal Qureshi, Syed Irfan Ali son of Syed Suleman (Importer) and Raja Abid Mehmood son of Sultan Mehmood (Customs Clearing Agent).

5. After hearing the learned counsel for the importer and the representative of the department, the additional Collector vide his Order -in-Original dated 5-9-2007 came to the cancellation.

"In the light of above mentioned facts and sole evidence placed on record by the department, the involvement of the respondents is clearly established with pre-planned and mala fide intention and clear mensrea to defraud the Government by violating the legal provisions of section 32 inter alia sections 157 and 178 of Customs Act, 1969 read with section 3(1) of the Imports and Exports (Control) Act, 1950 to be read with section 16 of Customs Act, 1969 and whereas the charges against the Custom House Agent Viz Raja Abid Mehmood, Proprietor of Messrs Jhelum Enterprises also fully stands established as charged in the Show-Cause Notice No. O No. V. Cus (Adj)11/7/3219 dated 27-6-2007 and it is therefore established that all the three respondents with full knowledge of the Act committed this forgery and fraud. As a result of the above, I order out right confiscation of the seized goods for violation of above mentioned provisions of law. A penalty equal to three times the value of the goods is also imposed upon all the three respondents under section 156 (1)(9)(14) of the Customs Act, 1969. The Customs House Agent License of Raja Abid Mehmood son of Sultan Mehmood, proprietor of Messrs Jhelum Enterprises is revoked forthwith and the amount of Rs.30,000 deposited as security is also forfeited."

6. The petitioners challenged the Order-in-Original through an appeal filed before the Collector of Customs, Sales Tax and Federal Excise (Appeals). However, the appeal was dismissed by the Collector vide Order-in-Appeal No.164 of 2008. The petitioners then approached the Customs, Federal Excise and Sales Tax Appellate Tribunal through an appeal. The appeal was dismissed by the learned Tribunal vide its judgment dated 23-5-2008. In paragraph 15 of the judgment, the learned Tribunal recorded a finding that:--

"Viewing the matter in the perspective of the law expounded by the Superior Courts of Pakistan, in the instant case mis statement or the alleged submission of false declaration was not with a view to cause loss to the Government exchequer or to defraud the public revenue, thus, on this score, I am of the view that section 32 of the Sales Tax Act, 1990 and the penal clauses referred to 156(1) (14) (77), 157 & 178 of the Customs Act, 1969 are not applicable."

However, it was further held by the Tribunal:--

"As per record, the appellant imported a consignment of 100 pistols made in U.S.A. The Customs Clearing Agent presented a Goods Declaration No.16713/2007 dated 22-4-2007 for the clearance of consignment of above mentioned goods. During the examination the import authorization No.05582 dated 6-9-2006 provided along with import documents were found suspected. The original copy of the Import Authorization was obtained from the official record which showed import ceiling worth Rs.5,00,000 and when it was tallied with the import authorization presented by the clearing agent on behalf of Messrs Trans International (Pvt.) Ltd., it was found tampered/forged showing the amount of import authorization of Rs.5 Million. As import authorization was found tampered/forged subsequently the same was got verified from the Ministry of Commerce which confirmed vide letter 19 (29) 2006-Imp-1 dated 2-5-2007 that no such authorization of Rs.5-millions was ever issued by the Ministry of Commerce. Therefore, the impugned consignment consisting of 100 pistols along with Goods Declaration No.167131/07, house airway bill delivery orders, Master airway bill, L.C. Invoice, original cargo manifest and US department of State Transaction No.196 were seized after proper documentation and regular case was registered against the appellant. The D.R. appearing on behalf of the appellant submitted that the appellants are involved in making of forged documents and previously they were involved in such like fraudulent activities. He negated the contentions of the learned counsel for the appellant that value of the imported goods was less than 20 lacs and, therefore, there was no necessity or need for presenting any forged authorization worth Rs.5 Million. The D.R. maintained that the appellant had imported four consignments, the value of these comes to Rs.3.4 Millions and the valid authorization of Rs.20-lacs was not covered. The department was obliged to take action against the appellant. I feel that in the circumstances the provisions of the Import and Export (Control) Act, 1950 are fully attracted. Vide letter dated 12-5-2007, the Ministry of Commerce had cancelled the import authorization No.05582 dated 6th September, 2006 and No. 057717 dated 12-12-2006 issued to Messrs Trans International. In consequence of this cancellation letter the appellants were not authorized or competent to import the goods in issue."

8. The Tribunal also came to the cancellation that petitioner No.3 being agent was fully liable for acts and omissions of the principal and he has violated Rules 102 (4 & 5) of the Customs agent Licencing Rules and that his licence was rightly revoked. The petitioners approached this Court through the present reference.

9. We have heard the learned counsel for the petitioners as well as the learned counsel appearing for the department and have gone through the record of the case with their assistance.

10. The learned Tribunal relying on the judgment Messrs A.R. Hosiery Works, Karachi v. Collector of Customs (Export), Karachi and an other (2004 PTD 2977), came to the conclusion and rightly so that the provisions of section 32(1) of the Customs Act, 1969 would be attracted only when mis-declaration or mis-statement was made with a view to obtain the illegal gain of evasion of payment and custom duty and other taxes or by causing loss to Government revenue. The Tribunal was right in holding that section 32 of Customs Act, 1969 and the Penal Clauses of section 156 (1)(14)(77), 157 and 178 of the Customs Act, 1969 are not applicable.

11. However, the matter does not end here. The import of Arms and ammunitions is restricted. The Arms and ammunitions not otherwise banned is importable in accordance with the procedure laid down by the Federal Government. It can only be imported against import authorization. The clearing agent produced the Import Authorization No.05582 dated 6-9-2006 showing the import authorization of Rupees Fifty lacs. However, on verification, it was found that the importer has ceiling for Rupees five lac only. The case of the department was that the importer has already imported four consignments,' the value whereof was Rs.3.4-Millions.

12. The department also pleaded that the import authorization of Messrs Trans International (Pvt.) Ltd., Islamabad was cancelled by the Ministry of Commerce vide Letter No. 19 (29)2009-imp.1 dated 12-5-2007. The Tribunal dismissed the appeal filed by the petitioners on the ground that in consequence of this cancellation letter, the petitioners were not authorized or competent to import the goods in issue. In view of this, we are of the opinion that the following questions of law arise from the judgment of the Tribunal:--

(i) Whether the cancellation of import authorization by the Ministry of Commerce on 12-5-2007 could be made basis for holding that the petitioners were not authorized or competent to import the goods in issue?

(ii) Whether the Tribunal could have maintained the order of the Additional Collector confirmed by the Collector (Appeals) without recording a finding that the case of the petitioners is covered by section 156(1) Clause 89 of the Customs Act, 1969?

13. After hearing the learned counsel for the parties and going through the record of the case, we are of the opinion that the cancellation of import authorization vide letter dated 12-5-2007 issued by the Ministry of Commerce would not effect the right of the petitioners to import the goods in issue, as the goods have already reached Pakistan before the said cancellation. We will, therefore, answer first question in the negative.

14. We have not agreed with the finding of the Tribunal that in consequence of the cancellation of the authorization letter, the importers were not authorized or competent to import the goods in issue. No finding has been recorded by the Tribunal that the goods imported are in excess of the authorization. We, therefore, answer question No.2 in the negative. The result would be that the matter will have to be remanded to the Tribunal. The reference is answered accordingly.

S.A.K./M-83/Isl.Answer in negative.