FARAZ SHEIKH VS SECRETARY, REVENUE DIVISION, ISLAMABAD
2011 P T D 1425
[Federal Tax Ombudsman]
Before Dr. Muhammad Shoaib Suddle, Federal Tax Ombudsman
FARAZ SHEIKH
Versus
SECRETARY, REVENUE DIVISION, ISLAMABAD
Complaint No.264/Khi/Customs(114)/1006 of 2010, decided on 25/10/2010.
Customs Act (IV of 1969)---
----Ss. 2(s), 157, 168 & 195---Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), Ss.2(3), 9, 10 & 22---Seizure and confiscation of goods---Complainant purchased artificial jewellery from open market at 'L' against proper sale receipts/cash memos. but same was seized on arrival at 'H' alleging that same was of foreign origin and that the complainant failed to produce documents about legal import of the same---Department admitted that the complainant had produced valid copies of sales receipts issued by suppliers at 'L'---No evidence were brought on record by the department to prove that seized goods wereof foreign origin and were smuggled into the country---If any violation of law was committed, same was committed by the supplier from whom the goods were purchased in open market by the complainant---Seizure and confiscation of non-barred goods, purchased from open market and being transported within the country, was illegal, unless it was proved that same were smuggled---Complainant who was bona fide purchaser and a local trader, could not be held guilty for wrong, if any, committed by the suppliers of the goods against whom no action was taken by the department---Seizure and confiscation of artificial jewellery purchased from local market and transported within the country, was against law---Recommendations were made that Federal Board of Revenue to ensure that the wrong committed by the officials of the department was rectified, exercising powers under S.195 of the Customs Act, 1969; to direct the relevant officials to explain as to why compensation could not be recovered from them under S.22(1) of Establishment of Office of Federal Tax Ombudsman Ordinance, 2000 to compensate the complainant for wrongful detention of goods for more than 6 months causing him inconvenience and monetary loss andcompliance be reported within 30 days.
1995 SCMR 387 and 1996 PLD 68 ref.
Justice (Retd) M. Nadir Khan, Advisor, Dealing Officer.
Aqeel Ahmed, Authorized Representative.
Abdul Rehman Rindh, Deputy Collector, Departmental Representative.
FINDINGS/RECOMMENDATIONS
DR. MUHAMMAD SHOAIB SUDDLE, FEDERAL TAX OMBUDSMAN.---The complainant is proprietor of Faraz General Store, Resham Gali, Hyderabad. According to the complainant, on 2-3-2010, he purchased artificial jewellery from Messrs Ghosia Jewellery House, Lahore and Messrs Malik Abdul Razzaq Jewelers, Lahore, against proper sales receipts/cash memos. The goods were transported from Lahore to Hyderabad through New Lahore United Goods Transport Company. The consignment on arrival at the Godown of the Transport Company was taken into possession by the Customs Department vide detention memo. dated 6-3-2010. The complainant produced proof of purchase of the goods which was ignored the Department and the goods were seized on 17-3-2010. The complainant submitted reply to show cause notice, supported by documents regarding purchase of the goods but the Department vide order-in-original dated 23-6-2010 outrightly confiscated the goods.
2.The complainant contended that seizure and confiscation of the goods purchased by the complainant fromlocal market and being transported within the country was illegal and against the law. He placed reliance on judgments of the Hon'ble Supreme Court and High Court Sindh, Karachi reported in 1995 SCMR 387 and 1996 PLD 68 respectively. The complainant termed seizure and confiscation of the goods as maladministration, being contrary to law.
3.Notice of the complaint was sent to Secretary, Revenue Division, Government of Pakistan, Islamabad, and in response the Deputy Collector, Customs, filed para-wise comments wherein preliminary objection about the jurisdiction of the Hon'ble FTO was raised on the ground that against the order-in-original, despite having legal remedy of appeal under the Customs Act, the complainant did not avail the same. The complaint was therefore barred under section 9(2)(b) of FTO Ordinance, 2000.
4.On merits, the Department resisted the plea of the complainant contending that artificial jewellery was a free list item provided the import was made in a legal way. The goods were notified item under section 2(s) oftheCustomsActreadwithS.R.O. 566(I)/2005dated6-6-2005. The complainant could not produce any legal document to confirm that the seized goods were duty paid. The photocopies of the bills were not valid documents. The Department pleaded that the complainant himself offered to pay the duty with fine which fact supported the case of the Department that the goods were smuggled which being notified items could not be released on payment of duty/ taxes and fine. Hence seizure and confiscation of the goods was in accordance with the provisions of the Customs Act and no case of maladministration was made out.
5.Copy of para-wise comments was supplied to the complainant. However, he did not file any rejoinder. The complaint was fixed for hearing on 22-9-2010 Mr. Aqil Ahmed, Advocate, appeared along with the complainant whereas the Department was represented by Mr. Abdul Rehman Rindh, Deputy Collector. The learned DR requested for an opportunity to allow the Department to redress the grievance of the complainant. The complainant did not resist the request of the Department. As per request the complaint was fixed for final hearing on 4-10-2010. On the said date the learned DR resiled from the stand taken on 22-9-2010 and supported the action taken by the Department for confiscation of the goods. During arguments both the parties supported the averments of their pleadings. However, the learned AR referring to the judgment of the Hon'ble Supreme Court (1995 SCMR 387) raised the following questions:--
(1)What was the basis for seizure of the goods purchased from the open market and being transported within the country?
(2)What evidence was available to prove that the goods were of foreign origin, if so what evidence was available to show that the goods were smuggled?
(3)What action was taken against the suppliers who sold the goods to the Complainant?
6.According to the learned AR, the seizure and confiscation of goods could not be justified without furnishing explanation to the above questions. As order-in-original and parawise comments do not provide the requisite explanation, the seizure and confiscation of the goods was illegal.
7.The learned DR on being confronted with the above plea of the complainant felt difficulty to answer the questions and contended that he had nothing to add to the submissions already made by the Department in parawise comments.
8.Submissions made by the parties have been considered in the light of the documents available on record. There appears to be no dispute between the parties about the fact that artificial jewellery purchased by the complainant from open market at Lahore was seized on arrival at Hyderabad. The Department pleaded that the artificial jewellery was seized as it was of foreign origin and the complainant failed to produce documents about legal import of the jewellery. However, the Department admitted that the Complainant produced copies of sales receipts issued by Messrs Ghosia Jewellery House, Shah Alam Market, Lahore, and Messrs Malik Abdul Razzaq Jewelers, New Alamgir Market, Lahore. The Department ignored the receipts labelling these as invalid, but no evidence was brought on record to prove that the goods of foreign origin were smuggled into the country. It would not be irrelevant to point out that as per show-cause notice and order-in-original the artificial jewelry though was alleged to be of foreign origin but the country of origin had not been mentioned. Besides, even if it was so, the violation of law, if any, was committed by the suppliers from whom the goods were purchased in open market by the complainant. The Department despite having evidence to reach the suppliers avoided to do so. The superior courts have settled the issue by holding that seizure and confiscation of non banned-goods, purchased from open market and being transported within the country, was illegal unless it was proved that the same were smuggled. Reliance can be placed on the judgment of the Hon'ble Supreme Court 1995 SCMR 387. In such view of the matter, mere an offer made by the complainant to pay duty and taxes could not absolve the Department from legal obligation to prove that the goods were of foreign origin and smuggled into the country and that the complainant was in knowledge of said fact at the time of purchase. The circumstances rather show that the complainant was bona fide purchaser and a local trader, He could not be held guilty for the wrong, if any, committed by the suppliers of the goods against whom no action was taken by the Department.
9.Before parting with the file the legal objection raised by the Department needs to be addressed. This complaint has been filed against seizure and confiscation of the goods in violation of law. The action of the Department according to the complainant was illegal and in excess of authority which the complainant termed to be maladministration. The bar of section 9(2)(b) of the FTO Ordinance could not be applied in the complaint filed against the maladministration of the Department. The objection of the Department, being irrelevant, is therefore rejected.
Findings:
10.In view of what has been discussed above the seizure and confiscation of the artificial jewellery consignment purchased from local market and transported within the country was against the law.
Recommendations:
F.B.R. to ---
(i)ensure that the wrong committed by the officials of the Department is rectified, exercising powers under section 195 of the Customs Act;
(ii)direct the relevant officials to explain as to why compensation may not be recovered from them under section 22(1) of the FTO Ordinance to compensate the complainant for wrongful detention of goods for more than 6 months causing him inconvenience and monetary loss;
(iii)compliance be reported within 30 days.
H.B.T./103/FTOOrder accordingly.