ELGA CONTROLS through Proprietor VS FEDERATION OF PAKISTAN through Secretary, Ministry of Commerce, Islamabad, 2010 PTD-LAHORE-HIGH-COURT-LAHORE 487 (2009)

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

----Ss.3-A, 3-E [as amended by Finance Act (VII of 2005)], Ss. 25, 26, 80, 156 & 168---Constitution of Pakistan (1973), Art.199--Constitutional petition---Import of "Spraying Lorries"---Conversion into truck chassis---Examination and assessment---Seizure of imported goods after clearance---Petitioner/importer imported used "Spraying Lorries", which were examined and assessed on the basis of valuation fixed by the valuation committee---Petitioner paid customs duties and taxes duly assessed by the appropriate officer of the customs department and said imported consignments were made out of charge/cleared---Later on Intelligence Officer, seized said vehicles on the plea that petitioner had changed spraying mechanism fitted in said Spraying Lorries and converted into truck chassis frames fitted with engine and cab and that such trucks as converted by the petitioner, were not importable under Import Policy Order, 2008---Sprinkler Lorries, which the petitioner had imported, were classified under PCT Heading 8705.9000, whereas truck mounted on chassis with cab, fell under PCT Heading 8706.0000---Customs duty in the former case was more than the import of vehicle under the latter Heading---Importer had to pay additional taxes and duties in case of import of Spraying Vehicle, as such Lorry. was equipped with Spraying System for which the tax was separately leviable---Element of evasion of customs duty and taxes, was not involved in the case, in circumstances---No ban, prohibition or restriction existed under the Import Policy Order 2008-09 for conversion of vehicle into any other shape, like truck, bus or a trailer---Such vehicles, in circumstances were not liable to be seized or detained on the plea of conversion/modification---Impugned seizure of the vehicles on the basis of their conversion and modification was not justified, more so when those vehicles were importable under the policy without any condition or restriction---Impugned order/action of the authorities qua seizing, detaining the vehicle, was declared as illegal and without lawful authority---Authorities were directed to release forthwith the seized vehicles of the petitioner.

Messrs Zeb Traders through Proprietor v. Federation of Pakistan through Secretary, Ministry of Finance, Islamabad and 3 others 2004 PTD 369; Mazhar Iqbal v. Collector of Customs (Preventive) Karachi and 2 others 2004 PTD 2994; Messrs Ali Trade Linkers, Lahore v. Federation of Pakistan through Secretary, Ministry of Finance Government of Pakistan, Islamabad and 4 others 2005 PTD 1164 and Shahzad Ahmed Corporation through Shahzad Ahmed v. Federation of Pakistan through Secretary, Ministry of Finance, Government of Pakistan, Islamabad and 2 others 2005 PTD 23 ref.

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

----Ss.2, 3-A, 3-E, 4 & 80 [as amended by Finance Act (VII of 2005)]--Constitution of Pakistan (1973), Art.199---Constitutional petition--Powers to re-examine and re-assess goods which were out of charge after assessment by the concerned Collectorate of Customs---Under provisions of amended Ss. 3-A, 3-E of Customs Act, 1969, F.B.R. was vested with the powers to specify the functions, jurisdiction and powers of the Directorate--Various officers of the Directorate of Intelligence had been conferred the powers to discharge the duties of the Officers of the customs under the provisions of Customs Act, 1969---Director had full powers to investigate and re-examine even if the goods were out of charge after the completion of the process of appraisement, if it had reason to believe that goods were possessed by the importer in contravention of provisions of Customs Act, 1969---Authorities had ample powers under the amended law to re-examine and re-assess goods even if the same were out of charge after assessment by the concerned Collectorate of Customs.?

F.A. Corporation through Proprietor v. Director-General Customs, Intelligence and Investigation and 3 others' 2008 PTD 1365 ref.

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

----S.168---Seizure of goods---Power to seize goods was an extraordinary power and it could be exercised in the extraordinary circumstances---Condition precedent for seizure of the goods under S.168(1) of the Customs Act, 1969 was that the goods seized should be liable to be confiscated---Appropriate officer of the customs had to see that some prima facie material was available with him to the effect that the goods were liable to be confiscated---Goods (vehicles) could be seized or taken into possession by the Customs Authorities provided they were being plied or possessed in contravention of provisions of Customs Act, 1969---Phrase "Anything liable to confiscation under the Customs Act, 1969" made it clear that liability of confiscation had already been determined and was no longer in dispute.?

Collector of Customs and others v. S.M. Yousaf 1973 SCMR 411 ref.

Mian Abdul Ghaffar for Petitioner Izhar ul Haq Sheikh for Respondents.

Date of hearing: 24th September, 2009.

JUDGMENT

SYED HAMID ALI SHAH, J.---Writ Petitions Nos.16589, 16020, 16021 and 16022 of 2009 are being disposed through this common judgment, as questions of law involved therein are identical and the facts are the same.

2. The backdrop of the instant controversy in its narrow compass is that the petitioners imported used "Spraying Lorries" the detail whereof is under, in the month of July 2009, duly fitted spraying mechanism:--

3. The petitioners sought clearance of these vehicles through filing GD No.KAPR-HC-4916, KAPR-HC-7055, KAPR-HC-7627, KAPR-HC-7624, KAPR-HC-7623 and KAPR-HC-5614 on 21-7-2009, 27-7-2009, 29-7-2009 and 22-7-2009 respectively, along with other documents. The vehicles were examined and assessed on the basis of valuation fixed by the Valuation Committee. The petitioners paid the Customs duties and taxes, duly assessed by the appropriate officer of the Customs Department and the imported consignments were made of charge.

4. Respondent No.7 seized above vehicles on the plea that the petitioners have changed spraying mechanism fitted in these lorries and converted Sprinkler Lorries into truck Chassis, frames fitted with engine and cab and that such trucks (as converted by petitioners) were not importable under Import Policy Order 2008.

The petitioners through filing instant petitions have assailed the action of respondents Nos. 3 & 5 to 7 of intercepting, detaining and seizing the vehicles.

5. Learned counsel for the petitioners contended that the petitioners imported subject vehicles under the prevalent import policy of the Government, paid duties/taxes leviable thereon and got the imported vehicles released in a lawful manner. The conversion is neither prohibited nor has any restriction, under the prevalent policy. Learned counsel referred to the letter dated 17-6-2009 communicated to respondent No. 3 by his Director (Annex-J) and the letter, dated 22-9-2008 of the Collector of Custom addressed to Member Customs F.B.R. (Annex-B) and contended that respondents had themselves admitted that there is no restriction in the Import Policy Order, for conversion of these vehicles by way of removal of tanks and spraying mechanism etc. Learned counsel submitted that validity of conversion of sprinkle lorry into truck, was adjudicated upon in "Custom Order-in-Original No.17 of 2009 in Case No.7 of 2009". The Adjudicating Authority directed for the release of vehicle and held that there is no prohibition or ban on the conversion, under the import policy. Learned counsel contended that various vehicles are being released and seizure of the vehicles of the petitioners, is sheer discrimination and unequal treatment to the petitioners. Learned counsel then contended that respondent No.3 & 5 to 7 have no power or authority to seize the imported consignment, which has been appraised, assessed to customs duties and taxes, where taxes and duties so assessed have been paid. Learned counsel supported his contention by referring to the cases of Messrs Zeb Traders through Proprietor v. Federation of Pakistan through Secretary, Ministry of Finance, Islamabad and 3 others (2004 PTD 369), Mazhar Iqbal v. Collector of Customs (Preventive), Karachi and 2 others (2004 PTD 2994), Messrs Ali Trade Linkers, Lahore v. Federation of Pakistan through Secretary, Ministry of Finance Government of Pakistan, Islamabad and 4 others (2005 PTD 1164) and Shahzad Ahmed Corporation through Shahzad Ahmed v. Federation of Pakistan through Secretary, Ministry of Finance, Government of Pakistan, Islamabad and 2 others (2005 PTD 23). Learned counsel vehemently contended that petitioners imported vehicles as per policy of the Government; paid duties and taxes and the same were released by the Customs Authorities, therefore, these vehicles do not fall within the ambit of smuggled goods. The provisions of section 156 of the Customs Act, 1969, therefore, have no application to the case of the petitioners.

6. Learned counsel for the respondents contended that the petitions are not maintainable as remedy of the petitioners, lies before the Customs Authorities in hierarchy of F.B.R. for proper adjudication of the matter. Learned counsel submitted that the vehicles were imported as spraying lorries under PCT Heading 8705-9000, while the seized vehicles are normal commercial trucks fitted with engine and cab, classifiable under PCT Heading 8706-0000. The import of such vehicles, which is 5 years old, is prohibited under Appendix "C" of the Import Policy Order 2008-09. The import of banned articles entail the penal action within the contemplation of clauses (14) and (89) of subsection (1) of section 156 of the Customs Act, 1969. The vehicles were seized under section 168 (1) of Customs Act 1969 and seized vehicles are liable to be confiscated. Learned counsel went on to argue that import of sprinkler vehicle is solely for the purposes of agriculture and its different use other than the one for which it is imported, is not permissible and amounts to misuse of the concession accorded to agricultural sector. Learned counsel submitted further that import of more than 3 years old vehicle is banned and by allowing conversion, the petitioners by adopting indirect manner can achieve, what is directly prohibited. The petitioners are misusing the concession, they have invoked constitutional jurisdiction with unclean hands, which is not available. Learned' counsel contended that factual controversy has been raised in these petitions and in the similar circumstances Writ Petition No.11265 of 2009 was dismissed by the Court vide judgment/order dated 19-6-2009.

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

8. The sprinkler lorries like Hino, which the petitioners have imported, are classified under PCT Heading 8705-9000. The truck mounted on chassis with Cab, falls under PCT Heading 8706-0000. The Customs duty in the former case is more than the import of vehicle under the latter heading. An importer has to pay additional taxes and duties in case of import of spraying vehicle as such lorry is equipped with spraying system for which the tax is separately leviable. The element of evasion of customs duty and taxes is, therefore, not involved. The only advantage, which an importer can take in the import of spraying lorry is that 5 years old truck due ban as per appendix "C" of the Import Policy Order 2008-09, is not importable while the spraying lorry of the same age, under the prevalent import policy, can be imported. There is no concession regarding charge and levy of duties and taxes on the import of spraying lorry, to facilitate certain industry or agriculture. Similarly, there is no prohibition or restriction or ban under the Import Policy Order 2008-09 for conversion of the vehicles into any other shape like truck, bus or a trailer. Various Collectorates in their communications addressed to Federal Board of Revenue, had admitted this fact. Even the Director of Directorate General Intelligence and Investigation in his letter dated 17-6-2009 admits that conditions for non-transferability or modification/alteration in its original and use have not been imposed and such conditions are required to be imposed like dump trucks to avoid misuse of the Import Policy Order. The dump trucks after their import are not transferable for a period of 10 years after clearance from the Customs. No such ban or prohibition has been imposed under the existing policy, for the conversion of sprinkler lorry into commercial truck etc., therefore, such vehicles are not liable to be seized or detained on the plea of conversion/modification.

9. Adverting to the jurisdiction of respondents No.3 and 5 to 7 to re-examine and re-assess the imported goods, which have already been out of charge of the Customs officials after proper examination, assessment of duties/taxes and the duties and taxes so assessed have been paid. The main emphasis of the learned counsel for the petitioners, in this regard was the findings of Honourable Sindh High Court in the cases of Messrs Shahzad Ahmad Corporation (Supra), Mazhar Iqbal (Supra), Messrs Zeb Traders (supra) and Messrs Ali Trade Linkers (supra). The referred cases pertain to the period, prior to the amendment in section 2, 3 & 80 of the Customs Act, 1969, by Finance Act, 2005. Honourable Sindh High Court in Constitutional Petitions Nos. 1374 to 1378 of 2005, examined the powers of Officers of the Customs Department to re-examine and re-assess the imported goods, which after assessment and payment of duties and taxes are out of charge of Customs Authorities and held that under the amended provisions of law the appropriate officers of the Customs department have the powers to re-examine and re-assessee the goods. Shahzad Ahmad Corporation's case (supra) was assailed in Civil Petitions Nos.2069 and 2550 of 2004 and the Honourable Apex Court disposed of the petitions and, adverse remarks against the Customs Intelligence Department were expunged with the observation that goods on payment of taxes have already been released by the Customs Intelligence Department and the powers of the Customs Intelligence Department by way of S.R.O. No.05 (1)/05 dated 6-1-2005 have also been redefined.

10. Sections 3A and 3E have been inserted by the Finance Act, 2006 (Act VII of 2005). By the virtue of the amendment through Finance Act, 2005 the F.B.R. is vested with the powers to specify the functions, jurisdiction and powers of the Directorates. Various officers of the Directorate of Intelligence have been conferred the powers to discharge the duties of the officers of the Customs under the provisions of the Act, 1969, vide Notification/S. R.O.388(I)/82, dated 22-4-1982. S.R.O.39(I)/2005, dated 6-1-2005 was modified and S.R.O.486(I)/2007, dated 19-6-2007 was issued, whereby various officers of the Directorate of Intelligence and Investigation (Customs and Excise) were conferred the authority to exercise the powers, and discharge the duties of the officers of the Customs under Act, 1969. The authority to exercise the powers and duties of the officers of the Customs pertains to sections 17, 26, 48, 60, 62, 91, 92, 111, 112, 139, 157(2), 158 to 169, 171, 174, 175, 185-F, 186, 193, 194-A, 196 to 199, 201 and 202. Viewing the powers of the officers of the Directorate-of Intelligence and Investigation (Customs and Excise) vide above referred S.R.O, this Court- in the case of F.A. Corporation through Proprietor v. Director-General Customs, Intelligence and Investigation and. 3 others (2008 PTD 1365) has observed that in the cases of misstalernent, under statement and mis-declaration of goods, law provides ample and wide powers to Directorate of Intelligence and Investigation to stop the clearance of any consignment even if the same was out of the charge.

The Directorate has full powers to investigate and re-examine even if the goods are out of charge after the completion of the process of appraisement, if it has reason to believe that the goods are possessed by the importer in contravention provisions of Customs Act, 1969, The above discussion brings me to conclude that respondents No.3 and 5 to 7 have ample powers under the amended law to re-examine and re-assess goods even if the same are out .of charge after assessment by the concerned Collectorate of Customs. The cases referred by the learned counsel for the petitioners have no- relevance as the matter involved therein pertain to the period prior to the amendment in sections 3, 4 and 80 of the Customs Act, 1969.

Now I will advert to impugned seizure of the vehicles. The element of evasion, tax fraud, short levy or non-levy of duties and taxes is not involved in the instant matter. The petitioners are not even guilty of misdeclaration. The imported vehicles were examined, appraised and assessed to the customs duty and taxes. The value of these vehicles was assessed on the basis of the valuation fixed by the Valuation Committee. The imported vehicles were out of charge, on payment of duties and taxes, so assessed. The power to seize goods is an extraordinary power and it can be exercised in the extraordinary circumstances. The condition precedent for seizure of the goods under section 168(1) of the Customs Act, 1969 is that the goods seized should be liable to be confiscation: The appropriate officer of the Customs has to see that some prima facie material is available with him to the effect that the goods were liable to be confiscated. The goods can be seized or taken into possession by the Customs Authorities provided they are being plied or possessed in contravention of provisions of Customs Act, 1969. The Honourable Apex Court in the case of Collector of Customs and others v. S.M. Yousaf (1973 SCMR 411) held the seizure to be illegal and direction for the return of the goods was made, where the appropriate officer of Customs Department failed to record grounds for believing that the seized goods were liable .to confiscation. It was observed by the Apex Court that the phrase "Anything liable to confiscation under the Act" makes it clear that liability of confiscation has already been determined and is no longer in dispute. The respondents have seized the vehicles without making it clear that liability of confiscation had been established against the petitioners or establishing that the goods were plied in contravention of the provisions of the Act.

The impugned seizure of the vehicles on the basis of their conversion and modification is not justified, more so when these vehicles are imported under the policy without any condition or restriction. The impugned order/action of the respondent qua seizing, detaining the vehicles, is declared as illegal and without lawful authority.

12. For the foregoing these petitions are allowed, the act of respondents intercepting and detaining the vehicles of the petitioners is declared illegal and without lawful authority. The respondents are directed to release forthwith the seized vehicles of the petitioners.

H.B.T./E-20/L????????????????????????????????????????????????????????????????????????? Petition allowed.