SUN TUBE (PVT.) LTD. VS DEPUTY DIRECTOR INTELLIGENCE AND INVESTIGATION, F.B.R., 2014 PTD-LAHORE-HIGH-COURT-LAHORE 2135 (2013)

Customs Act (IV of 1969)---

----Ss. 26 & 196---General Clauses Act (X of 1897), S. 24-A---ConstitutionofPakistan, Art. 10-A---Decisionofappealwithoutnotice---Condemning unheard---Due process of law, principle of---Applicability---Grievance of importer was that Customs Appellate Tribunal set aside order in original without ensuring service ofprocess---Validity---Authorities should have adopted all lawful modes to ensure that importer was duly served---Tribunal had acted with undue haste in deciding appeal filed by authorities without due process of law and giving an opportunity to importer to defend its position, as such the same constituted Fundamental Right enshrined in Art. 10-A of the Constitution---Customs Appellate Tribunal did not examine the matter closely nor it recorded any reasons for setting aside order of adjudicating officer---Tribunal also did not record any reasons for disbelieving documentation submitted by importer showing that entire consignment was lawfully imported and requisite documentation showing lawful import and payment of all leviable duties and taxes were available---Such defect in the order passed by Appellate Tribunal was hard to ignore and furnished good reason for setting it aside---Tribunal disregarded documentary evidence in order to rely on an unsubstantiated statement made by manager of importer, which was disowned on the ground that the same had been procured under coercion---After setting aside order passed by adjudicating authority, the Tribunal did not issue any direction on the question whether goods in question were to be confiscated or released on payment of duties---Such technical omission in the order of Appellate Tribunal also rendered it unsustainable---Order passed by Customs Appellate Tribunal was set aside---Reference decided in affirmative.

Mian Abdul Ghaffar for Petitioner.

Nadeem Mehmood Mian for Respondents.

ORDER

This custom reference arises out of an order dated 15-7-2013 passed by the Custom Appellate Tribunal, Bench No.1, Lahore. Through the impugned order, the Custom Appellate Tribunal has set aside the order in original passed by an Additional Collector of Customs (Adjudication) Lahore.

2.The petitioner has agitated this matter through this reference and has raised various questions of law for the determination of this Court. For the purpose of answering this reference, the following questions of law have been considered by us:---

Whether learned Tribunal has fallen in error of law to decide the appeal filed by respondent No.2 within 19 days without ensuring the service upon the applicant and whether the impugned ex parte judgment/order passed in extraordinary hasty manner would be termed as having been passed fairly, justly, reasonably and for the purpose of advancement of the enactment in term of section 24-A of the General Clauses Act, 1897?

Whether the learned Tribunal has fallen in error of law by not recording reasons and findings for setting aside the original order dated 20-12-2013 passed by respondent No.3 after scrutinization of the import documents and assigning cogent reasons and whether the impugned ex-parte judgment/order is factual incorrect so far as it relates to non-submission of import documents by the applicant to respondents Nos.1 and 2 which were provided and duly discussed in the original order?

Whether the learned Tribunal has fallen in error of law to hold that the applicant has failed to submit import documents in respect of 7 Coils which were provided by the applicant vide letter dated 18-2-2013 and respondent No.3 has given her findings on the said documents?

3.The brief facts giving rise to this reference are that the petitioner is a manufacturing unit engaged in production of pipes. It imports Hot Rolled Coils (HRCs) for the purposes of its business. On 29-5-2012, the staff of respondents Nos.1 and 2 raided the factory premises of the petitioner and served a notice under section 26 of the Customs Act, 1969 dated 28-5-2012 upon an employee of the petitioner. Thereafter it carried out a search and seized Hot Rolled Coils stored in the premises on the allegation that the same were smuggled.

4.On receipt of information of the raid, the petitioner provided import documents consisting of Proforma Invoice, Commercial Invoice, Packing List, Bill of Lading, GDs etc. to the concerned officials. On verification it was found that the entire consignment tallied with the documents which indicated lawful import after payment of customs duties.

5.It appears that the staff of respondent No.1 obtained a statement from the manager of the petitioner stating that the petitioner was not in possession of import documents in respect of 07 HRCs. On the basis of such statement, a contravention report was prepared and sent to respondent No.3 who issued a show-cause notice dated 26-6-2012. The petitioner responded to the said show-cause notice and took the stance that the entire consignment of 211 HRCs has lawfully been imported, which was duly supported by import documents. On scrutiny of import documents and after hearing both parties, respondent No.3 vacated the show cause notice holding that the entire consignment of HRCs including 07 HRCs, on the basis of which a show cause notice had been issued, were lawfully imported.

6.Respondent No.2 was aggrieved of the said order and filed an appeal before the Custom Appellate Tribunal. The matter came up for hearing before Tribunal on 12-6-2013 when a notice was issued to the applicant for 18-6-2013. The applicant claims that no such notice was received. The record indicates that the appeal was thereafter adjourned to 2-7-2013 for service of the petitioner. The matter came up for hearing again on 19-7-2013 when no one appeared to contest the appeal. The petitioner was proceeded against ex-parte. The matter was fixed for hearing on 15-7-2013. On the said date, the appeal was allowed without hearing the petitioner.

7.The learned counsel for the petitioner submits that the impugned judgment is illegal. The record indicates that no effort was made by the tribunal to ensure that the petitioner was duly served. The petitioner was condemned unheard which is violative of his legal and constitutional rights. He further submits that the impugned order is silent on the questions whether any action could be carried out merely on the basis of notice under section 26 of the Customs Act, 1969. He maintains that even the raid, search and seizure which are required to be conducted in accordance with procedure provided under section 162 of the Customs Act was illegal in view of failure on the part of the respondents to obtain a warrant or preparing a statement containing grounds to believe that the goods, which are believed to be non-duty paid, were likely to be removed. He further maintains that the impugned order, neither discloses reasons nor does it meet the requirements of a speaking order as enshrined in Section 24-A of the General Clauses Act. He finally argues that the Tribunal has not assigned any reason for its decision. He points out that the Tribunal has solely relied on the statement of the manager of the mills to the effect that no documents were available indicating lawful import of 7 HRCs which in any event had been taken by the functionaries of the respondents under duress. Further submits that there was enough material on the record to substantiate the stance of the petitioner that the entire consignment of 211 HRCs had lawfully been imported after payment of all duties. It is finally argued that by failing to state whether the goods which had allegedly been imported without payment of duty would be confiscated or released on payment of duties and taxes, the order of the learned Tribunal is not sustainable.

8.The learned counsel for the respondent has defended the order passed by Custom Appellate Tribunal. He has argued that the tribunal was justified in setting aside the order of Addl. Collector Customs and placing reliance on the statement made by the Manager of the petitioner that import documents of 7 HRCs were not available and petitioner was ready and willing to pay duties and taxes for the same. He, therefore, argues that in the presence of the said admission, there was no need to go any further. Therefore, the learned Tribunal was quite justified in setting aside the order of the Addl. Collector Customs.

9.We have heard the learned counsel for the parties and examined the record.

10.Inouropinion,theanswerstothequestionsoflawraisedinthe petitioner have to be in the affirmative for the followingreasons:--

(a)It appears that the appeal against the order passed by the Addl. Collector Customs (Adjudication) came up for hearing before the Tribunal on 12-6-2013 when notice was issued to summon the petitioner for 18-6-2013. There is nothing on record that may indicate that such notice was sent or in any event received by the petitioner. On the said date, the matter was again adjourned to 2-7-2013 for service of the applicant. We have gone through the record and have not found anything to indicate that notices were issued or the petitioner was served. However, the matter came up for hearing on 9-7-2013 when without due application of mind and ensuring that the process of service has been completed, the petitioner was proceeded against ex parte and ultimately the appeal filed by the respondent was decided in its favour behind the back of the petitioner and without giving him an opportunity of being heard. In our opinion, the respondent should have adopted all lawful modes to ensure that the petitioner was duly served. The tribunal appears to have acted with undue haste in deciding the appeal filed by the department without due process of law and giving an opportunity to the petitioner to defend its position, which now constitutes a fundamental right enshrined in Article 10-A of the Constitution of Islamic Republic of Pakistan, 1973.

(b)The record indicates that the petitioner provided all requisite documents to the competent authorities indicating lawful import of 211 HRCs. These documents included import documents consisting of Proforma Invoice, Commercial Invoice, Packing List, Bill of Lading and GDs. The said documents were duly verified and the concerned authorities found that all coils imported by the petitioner including the 07 coils in question were lawfully imported. The sole ground on the basis of which the matter was referred to the Addl. Collector Customs for adjudication appears to be that a manager of the petitioner had made a statement that he was unable to submit documents showing lawful import of 07 HRCs and that the petitioner was ready and willing to pay all leviable duties and taxes on the same. However when a show-cause notice was issued and situation was explained to the Addl. Collector Customs (Adjudication), the said official did not find any substance in the allegation and discharged the notice on being satisfied that all 211 HRCs were duly accounted for and tallied with the import documentation presented by the petitioner. The fact that the admission may have been procured under duress appears to have escaped notice of the learned Tribunal.

(c)The learned Appellate Tribunal did not examine the matter closely nor did it record any reasons for setting aside the order of the adjudicating officer. Further, the tribunal did not record any reasons for disbelieving the documentation submitted by the petitioner showing that the entire consignment of 211 HRCs had lawfully been imported and the requisite documentation showing lawful import and payment of all leviable duties and taxes were available. This is a defect in the order passed by the Appellate Tribunal which is hard to ignore and furnishes good reason for setting it aside.

(d)Notwithstanding what has been stated above, the learned Tribunal disregarded the documentary evidence in order to rely on an unsubstantiated statement made by a manager of the petitioner, which was disowned on the ground that the same has been procured under coercion. Even otherwise the import of the HRCs has been established through official documentation issued by the Competent Department. There was no valid reason for the Tribunal to believe a self-incriminatory document without carefully verifying its authenticity and base its findings on a statement of a manager of the petitioner which was subsequently disowned by the petitioner. By the same token no reason is forthcoming to disbelieve official records of the customs department itself. Relying on self-incriminatory statements which are disowned is not favoured by courts and should be undertaken with great circumspection, if the same are substantiated by any corroborative material. In the present case, we have asked the learned counsel for the respondent to indicate corroborative material which could justify the order passed by the learned Tribunal. Hehas not been able to point to any such material.

(e)Finally, after setting aside the order passed by the adjudicating authority, the tribunal has not issued any directions on the question whether the goodsinquestionaretobeconfiscatedorreleasedonpaymentofduties.Thesaidtechnical omissionin the order of the Appellate Tribunal also renders it unsustainable.

11.In view of the foregoing reasons, we answer the questions of law reproduced above in the affirmative. Consequently the impugned orderpassedbyCustomAppellateTribunal, Bench No. 1,Lahoredated 15-7-2013 is set aside. A copy of this judgment be sent under the seal of this Court to the Custom Appellate Tribunal, Bench No.1, Lahore.

MH/S-78/LReference declared in affirmative.