KHYBER TEA AND FOOD COMPANY VS COLLECTOR OF CUSTOMS (APPEALS), 2015 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 2480 (2014)

2015 P T D (Trib.) 2480

[Customs Appellate Tribunal]

Before Gulab Shah Afridi, Member (Judicial)

Messrs KHYBER TEA AND FOOD COMPANY and others

Versus

COLLECTOR OF CUSTOMS (APPEALS) and 2 others

Cus. No.119/PB of 2011, decided on 03/12/2014.

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

----Ss. 2(s), 16, 26, 156, 157, 180, 187, 193-A, 194-A & 215---Imports and Exports (Control) Act (XXXIX of 1950), S.3(1)(3)---Seizure and confiscation of goods---Customs squad, seized the goods in question for violation of Ss.2(s), 16 & 157 of Customs Act, 1969 read with S.3(1) of the Imports and Exports (Control) Act, 1950---Adjudicating Authority in order-in-original confiscated goods in question---Appeal filed by appellant/importer against order of Adjudicating Authority, was dismissed---Finding of Adjudicating Authority was that production of documents by appellant was an afterthought---Validity---Seizing Officer was duty bound to issue notice under S.26 of Customs Act, 1969 asking about the documents of legal import and lawful possession of goods from the appellant; and should have given at least period of 7 days to the appellant for production of required documents---Goods declaration produced by appellant had proved that goods in question was imported by another company; and that appellant had purchased the same from said company---Goods in question, incircumstances, was a legally imported, and all the relevant duty and taxes had already been paid---Goods in question could not be treated as "smuggled goods"---Locally manufactured goods and imported goods purchased from the local market, were not liable to confiscation---Appellate Authority under S.193-A(3) of Customs Act, 1969, was bound to pass order within 120 days from the date of filing of appeal or within further extended period of 60 days, prior to expiry of 120 days but said Authority passed order after 10 months of filing of appeal---Appellate Authority, had neither got fixed any extended period, nor recorded any reasons for passing order-in-appeal long after period of 120 days---Order-in-appeal, passed by Appellate Authority, being time-barred, was not maintainable---Adjudicating Authority, had observed that it was forced to hold his opinion for ordering the confiscation of the seized goods, as, a number of cases were made out against the appellant; and there had been litigation between the department and the appellant---Said observations were neither plausible nor convincing, because appellant had discharged his onus of proof within the meaning of S.187 of the Customs Act, 1969; who had successfully met with the burden to prove the legal import---Burden to prove smuggling, had shifted to prosecution, who had failed to prove the charge, by producing a direct evidence against the appellant---Prosecution had failed to produce any evidence, which could prove that the import of such kind of goods was prohibited or restricted by Federal Government---Mere factum of importation or exportation of certain goods being prohibited by law, would not amount to smuggling---Goods in order to be smuggled, must be notified by the Federal Government under S.2(s) of the Customs Act, 1969---Department having failed to prove case against the appellant, punishable under S.156(1)(8)(89) & S.157, appeal was accepted and impugned order-in-original and order-in-appeal were set aside.

2013 PTD (Trib.) 1636; 2001 YLR 635; 1995 SCMR 387 and 2003 PTD 2116 ref.

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

----S. 193---Appeal before Appellate forum---Scope---Appeal, basically was a complaint to the appellate forum against the lower forum---Appellate Authority did not carefully peruse the record, and had based its findings on the observation of the Adjudicating Authority---Appellate forumwaslegallyboundtosee as to what mistake, had been madeby the lower forum; and what illegality had been committed by it.

Ateeq ur Rehman, Syed Sikandar Hayat Shah, Pir Alam Shah, Consultant Mufti Law Associates Fakhr-e-Alam Paracha, Managing Director for Appellants.

Naseer Khan, Superintendent Customs for Respondents.

Date of hearing: 1st September, 2014.

JUDGMENT

GULAB SHAH AFRIDI, MEMBER (JUDICIAL).---This appeal filed by Messrs Khyber Tea and Foods Company is against the Order-in-Appeal No.188 of 2011 dated 22-7-2011 passed by the learned Collector Customs (Appeals), Peshawar whereby he, while maintaining the Order-in-Original No.358 of 2010 dated 25-8-2010 dismissed the appeal.

2. Brief facts of the case are that the Customs Anti-Smuggling Unit, Mardan on 28-5-2010 on prior information intercepted a Hino Truck bearing Registration No.K-1698-Peshawar at Mardan Malakand Road, search of which resulted into foreign origin goods (as detailed in the Recovery Memo No.20 of 2010 dated 28-5-2010). The occupant of the truck identified themselves as (1) Muhammad Sher son of Gul Roze R/o Maulana Kali District Mardan (driver) (2) Aurangzeb Khan son of Saif-ur-Rehman R/o Afzal Imam Colony Taghbai District Mardan (cleaner) who on demand failed to produce any proof of legal/lawful possession of the goods so recovered. Therefore the Customs Squad seized the goods along with vehicle for violation of sections 2(s), 16 and 157 of Customs Act, 1969 read with section 3(1) of the Import and Export (Control) Act, 1950 punishable under section 156(1)(8) & (89) of the Customs Act, 1969 read with section 3(3) of the Import and Export (Control) Act, 1950.

3. Subsequently, after completion of the requisite formalities, the matter was placed before the Deputy Collector Customs Peshawar (Adjudication),whovideOrder-in-Original No. 358of2010dated25-8-2010 confiscated the goods,however, released the vehicle against 20% fine of the Customs value of the vehicle.

4. Aggrievedofthe Order-in-OriginalNo.358of2010dated25-8-2010, the appellant filed appeal before the Collector Customs (Appeals), Peshawar, who vide Order-in-Appeal No. 188 of 2011 dated 22-7-2011 dismissed the appeal and upheld the Order-in-Original No. 358/2010 dated 25-8-2010. Hence the instant appeal on the following grounds:--

(1) That, it is an admitted position of the case that out of the recovered goods mentioned in the Recovery Memo, the appellant claimed and owned only 10 bags of black tea each bag weighing 30 kgs only.

(2) That, it is also an admitted position of the case that the recovered tea was packed in small plastic bags which were prominently marked and printed with the name of the manufacturing company as well as phone numbers of the manufacturing company. Copies of the representative samples of the plastic wrappers in which he seized/confiscated tea was packed are enclosed herewith. (Annex-E, F & G).

(3) That, elaborating here further it is submitted that the seized/confiscated 10 bags of tea so claimed and owned by the appellant were containing black tea detailed as under;

(i) Plastic bag of 30 kgs each bag containing 150 packets of 500 Grams = 6 Bags.

(ii) Plastic bag of 30 Kgs each bag containing 90 packets each packet of 1000 Grams = 3 Bags.

(iii) Plastic bag of 30 kgs each bag containing 300 packets each packet of 100 grams = one Bag.

(4) That, the appellant purchased a quantity of 10,000 Kgs of black tea from Messrs SPATCO'S Karachi vide invoice No. 364 dated 1-4-2010 (Annex-H) who had imported the same vide Goods Declaration No. KAPR-HC-72139 dated 30-3-2010 and CRN No. I-HC-1279015-140110 (Annex-I & J).

(5) That the said black tea when purchased was booked from Karachi vide Bilty No.008831 dated 1-4-2010 (Annex-K) issued by Messrs Lucky Peshawar Goods Transport Co. Karachi.

(6) That after purchasing the said quantityof tea, the same was entered in the Purchase Register and Stock (Inward and Outward) Register for the month of April and May 2010 in compliance with the provisions of section 22 of the Sales Tax Act, 1990. Copies of the relevant pages are enclosed herewith for ready reference (Annex-L & M).

(7) That theabovementionedsaleandpurchaseisreflectedinthe Monthly Sales Tax Return for the month of May, 2010 (Annex-N).

(8) That, the transaction in between the seller namely Messrs SPA TCO'S Karachi and the purchaser namely Messrs Khyber Tea and Food Company Peshawar (now appellant) had occurred through banking channel in terms of section 73 of the Sales Tax Act, 1990.

(9) That, the appellant then sold out a quantity of 300 Kgs against valid Sales Tax Invoice No. 54 dated 26-5-2010 (Annex-O) to Messrs Gulf Tea Company Batkhela in compliance with the provisions of section 23 of the Sales Tax Act, 1990 which was booked against Bilty No. 6546 dated 26-5-2010 (Annex-P) through Messrs Mumtaz, Goods Forwarding Agency Peshawar and reflected in Supply Register for the month of 5/2010(Annex-P/1).

(10) That, the goods having been imported through declared route after payment of leviable of duty and taxes, the undeniable proof of which has already been provided and the goods having been purchased after payment of sales tax through valid sales tax invoice cannot be termed as smuggled goods within the meaning of section 2 (s) of the Customs Act, 1969.

(11) That, where the seized goods are importable under the free list any presumption of their being smuggled requires direct evidence which is absent in this case. As such, the order in original passed by the Deputy Collector of Customs (Adj) MCC Peshawar and the order in appeal passed by the Collector of Customs (Appeals) are patently incorrect.

(12) That, when the onus within the meaning of section 187 of the Customs Act, 1969 has been discharged with documentary evidences that the appellant was in possession of the seized/confiscated black tea with lawful authority and other documents prescribed by or under law for the time being in force, the confiscation of goods is unlawful and without any legal authority.

(13) That, when the appellant has already discharged its evidential burden of proving legal import the legal burden to prove smuggling shifts-upon the customs authorities to discharge which they have failed so far to discharge.

(14) That, the Deputy Collector of Customs (Adj) MCC Peshawar had burdened the appellant with the unproven charge the appellant was involved in a number of cases where as he had utterly failed to bring to fore any concrete evidence to substantiate his view point. No body can be held guilty on mere conjectures and surmises.

(15) That, he has totally misconceived the provisions of Rule 126 of the Customs Rules, 2001 which, inter alia, undertake the importer to maintain manual or electronic accounts of imports and disposal and supply thereof in the prescribed form whereas the appellant is not an importer in this case and he is not liable to maintain the record of import etc.

(16) That, the Deputy Collector of Customs (Adj) MCC Peshawar has also failed to appreciate the fact that the goods seized/confiscated in this case were admittedly packed in small plastic bags and each bag was containing full name of the company, address of the company and, telephone numbers of the company but the prosecution failed to issue notice under section 26 of the Customs Act, 1969 enabling the appellant to produce before him the legal documents against which the seized/confiscated goods were imported, purchased and transported from Karachi to Peshawar.

(17) That, not to speak of this, the Deputy Collector of Customs (Adj) MCC Peshawar never bothered to provide the appellant an opportunity of being heard in person so that the factual as well as legal position of the case could have been explained to him and he thus acted in a manner derogatory to his status and in violation of the principles of natural justice.

(18) That, the Deputy Collector of Customs (Adj) MCC Peshawar also failed to give any convincing reasons for ordering confiscation of the seized/recovered goods and simply rested upon the unreasonable plea that the seized black tea of foreign origin packed in small plastic bags was smuggled one though he could not prove that the same was brought through unauthorized route by evading leviable duty and taxes.

(19) That, the Collector of Customs (Adj) MCC Peshawar has also wrongly appreciated the provisions of the Sales Tax Act, 1990 by holding in para-13 of the order in appeal under reference that sales tax invoice has to be issued by the importer at the time of sale/purchase and the same shall be dispatched with the goods which procedure was not followed in this case whereas in actual fact, the appellant is not an importer in this case and he sold certain quantity of black tea after having been purchased from the real importer namely Messrs SPATCO'S Karachi.

(20) That, neither the prosecution nor the Deputy Collector of Customs (Adj) MCC Peshawar or the Collector of Customs (Appeals) bothered to verify the authenticity and genuineness of the legal documents so produced before them and they failed to meet the ends of natural justice and exercised discretion at their whims, sweet will whereas they were bound to act fairly, evenly and justly.

(21) That they deliberately avoided verification of the above documents scaring that the documents so produced if verified would help the appellant to prove his case and therefore the goods in question would have to be released unconditionally

(22) That, as stated above the appellant was not importer in this case and he had evidently purchased the goods from importer and if the prosecution, adjudicating authority and the appellate authority had bothered the said aspect to be verified from the importer, the correct position would have been revealed upon them.

(23) That, the appellant doesn't feel any hesitation in saying that the legal documents so produced may kindly be got verified at this stage from the concerned quarters so that the correct position thereof could be ascertained.

(24) That, the Collector of Customs (Appeals) has based his opinion on unjustified and unwarranted perception of his view that the legal documents if not produced at the time of interception of the goods amount to "after thought" as there exists no provision under the Customs Act, 1969 where there is a bar to produce the legal documents subsequent to the seizure of the goods either before the seizing agency or before the adjudicating authority instead the law envisaged under section 26 of the Customs Act, 1969 contemplates to produce the same at any time and it very unequivocally requires the prosecution to call for documents relating to importation, exportation, purchase, sales, transportation, storage or handling of any goods imported or exported.

(25) That, a thorough perusal of the whole case would certainly reveal that the prosecution, adjudicating authority and the appellate authority have in their respective capacities acted arbitrarily and have deliberately ignored the submissions made before them by the appellant and have pushed aside the documents regarding import, sale, purchase and transportation of the seized/confiscated goods so produced by them in support of lawful import and bona fide possession of the seized/ confiscated goods.

(26) That, it further reveals that it was blithering incompetence, ineptitude and reckless skillfulness on the part of prosecution, adjudicating authority and the appellate authority who failed to verify the documents and prove their case against the appellant.

5. In rebuttal, the respondent-department filed their para wise comments as follows:--

(i) Incorrect. Both Order-in-Appeal No. 525/2010 dated 22-10-2010 and Order-in-Original No. 358/2010 dated 25-8-2010 are speaking ones, in accordance with law and are based on merit of the case.

(ii) Incorrect. Right from seizure till adjudication of the goods all legal aspects were adhered to and were kept in view.

(iii) Incorrect. Both order in appeal and order-in-original reflect merit and legal aspects of the case.

(iv) Incorrect. The seized confiscated goods are not lawful but are smuggled and non-duty paid because no valid import documents were produced to the seizing staff on the spot therefore the seizure and confiscation of the goods have been affected judiciary with in the purview of the Customs Act, 1969.

(v) Incorrect. Show cause notice issued to the delinquents from whose possession the goods were recovered is in accordance with law.

(vi) Incorrect. Right from seizure till submission of seizure case papers to the adjudicating officer no valid import documents were produced to the seizing staff and producing any documents at belated stage are after thought.

(vii) Incorrect. Orders passed by the learned Collector (Appeals) as well as adjudicating officer are not evasive but are speaking ones; threadbare rather reflects merits of the case.

(viii) Incorrect. Status of the black tea involved in the sub-judice case has been established as smuggled and non duty paid one and falls with in the orbit of notified goods.

(ix) Incorrect. Both speaking orders of Collector (Appeals) and adjudication officer proved the status of the seized confiscated goods as smuggled and non-duty paid one therefore the penal provision of section 156 are in accordance with law.

6. The appellant in response of the above comments, also filed rejoinder to the following effect:--

(i) That, in reply to comments on ground-i it is stated that the commenting authority has given his comments in irrelevant appeal Order-in-Appeal No. 525/2010 dated 22-10-2010 is not the appeal of appellant. The order in appeal challenged in this Hon'ble Tribunal is Order-in-Appeal No. 188/2011. This is sufficient of eligibility of commenting authority that he has passed comments with close eyes. The Order-in-Original No. 358/2010 dated 25-8-2010 and Order-in-Appeal No. 188/2011 dated 22-7-2011 are against the law, facts and material available on record. It is pertinent to mention here that the adjudicating officer confiscated the black tea only on evasive allegations of smuggling. Before this case the competent authorities have released the consignments of appellant unconditionally and those authorities have thrown out the allegations of smuggling levelled against theappellant. The adjudicating officer without mentioning any proof in order in original regarding the involvement of appellant in smuggling has passed the order in original arbitrarily without lawful reasons, without appreciating the documentary evidence produced to him and has passed the order-in-original in slip shod manner which is not maintainable, vide and ab-initio therefore it is liable to be set-aside. The Collector Appeals has also been failed to apply its judicious mind while passing the impugned order in appeal and has based his findings on documentary evidence of other person i.e. Hero Tea Company who produced GD No. PDRY-HC-1690 dated 13-1-2009 which is evident from the Para-6 of order in original. Here it is proved that the Collector Appeals also passed the order in appeal in haphazard manner which is also not sustainable in the eye of law. However the appellant produced GD/ Machine No. KAPR-HC-72139 and GD CRN-I-HC-1279015-140110 sales tax invoice No. 364 dated 1-4-2010 issued by importer i.e. Messrs SPATCO'S Karachi sales tax invoice No.54 dated 26-5-2010 issued by appellant (Messrs Khyber Tea and Food Co. Peshawar) which is evident from the page 2 of order-in-original.

(ii) That, in reply to comments on ground-ii it is stated that the seizing officer without observing the procedure has illegally seized the tea in question. According to the law the seizing officer must have detained the tea in question under section 17 of Customs Act, 1969 because the address, telephone Numbers, Fax Numbers and Email Address were printed on recovered each and every packet. The seizing officer was duty bound to gave notice under section 26 of Customs 1969 and directed the appellant to produce his record i.e. purchase, Stock and Supply Registers but the Seizing officer being violated the law and procedure illegally seized the tea in question. The adjudication, Officer as well as the Collector Appeals without observing these illegalities have passed the order-in-original as well as order in appeal in slip shod manner.

(iii) That, the comments on ground-iii are incorrect both the authorities below have been failed to observe the legal aspects of the case therefore both order in appeal and order in original are without merit.

(iv) That, the comments on ground-iv are incorrect because the driver of the truck has produced the documents of valid import and lawful possession pertaining to the tea in question, but it was the seizing officer who refused those documents and has illegally seized the tea in question. Both the authorities below have illegally confiscated the validly imported black tea.

(v) That, the comments on ground-V are incorrect because the show, cause notice is the outcome of illegal seizure therefore the show-cause notice extent to the appellant's goods is liable to be vacated.

(vi) That, the comments on ground-vi are incorrect because at the time of interception the driver of the vehicle has produced the documents regarding the valid import and lawful possession of tea in question. Those documents also produced by the appellant at adjudication as well as appellate stage but both the authorities below has been failed to verify the produced documents from the concerned quarters. If the authorities below has conducted fair inquiry and verified the produced documents from the concerned quarters then they will come to the clear cut decision.

(vii) That, the comments on ground-vii are incorrect because both the order-in-original as well as order in appeal are based on evasive allegation, surmises and conjectures and are non speaking one.

(viii) That, the comments on ground-viii are incorrect because the prosecution/seizing officer has been failed to prove that the import of that kind of tea (tea in question) is prohibited or restricted by the Federal Government. The seizing officer has also been failed to bring on record such notification under which the import of that kind of tea (tea in question) is restricted and prohibited by the Federal Government. The section of law levelled against the appellant is not applicable. On this score too the seizure report as well as the show cause notice is illegal.

(ix) That, the comments on ground-ix are incorrect both the order-in-appeal as well as order-in-original are not speaking and are against the law. Both are based on illegal seizure and show cause notice. The section of law under which the appellant has been charged are not applicable therefore the proceeding since seizure till order-in-appeal are illegal void, ab initio and are not sustainable in the eye of law. In such like cases section 156(1)90 of Customs Act, 1969 is applicable not section 156(1)(8)(89).

7. I have heard both the parties and gone through the case record and considered the written as well as verbal submission of both the parties. Before going into the exhaustive discussion regarding factual as well as legal points, arose in the appeal under reference it would be appropriate to have a bird's eye view on the import, sale and transportation of the confiscated black tea and the emerging position which is briefly summarized as under:--

(1) As per the case record, the appellant's company is registered with Income Tax having NTN Number 1021567-7, registered with Sales Tax Department as manufacturer having Sales Tax Number 05-01-0902-089-64, Member of Sarhad Chamber of Commerce and Industry, Member of Import and Export Promotion Bureau of Pakistan, Pakistan Tea Association, Rice Exporter Association of Pakistan and Pak Malaysia Business Counsel as well.

(2) The appellant purchased 10000 KG black tea against sales tax invoice No. 364 dated 1-4-2010 from Importer namely Messrs SPATCO'S 215 Panorama Center-I Fatima Jinnah Road Karachi and paid Rs. 512000 as sales tax, Rs.32000 as Special Excise Duty. After purchasing the said blended black tea booked the same through Lucky Peshawar Goods Transport Company Karachi vide Bilty No. 008831 dated 1-4-2010. After its arrival at Peshawar the appellant entered the same in his Purchase, Stock (Inward and Outward) Registers for the month of April 2010 in compliance of Section 22 of Sales Tax Act, 1990.

(3) The appellant then sold out 300 Kg black tea to Gulf Tea Store Main Bazaar Batkhela against supply sales tax invoice No. 54 dated 26-5-2010 incompliance of Section 23 of Sales Tax Act, 1990 and booked the same through Mumtaz Goods Forwarding Agency Peshawar vide Bilty No. 6546 dated 26-5-2010.

(4) The case record further shows that the appellant at the adjudication as well as appellate stage produced the documents of import and lawful possession of the said black tea which contained purchase sales tax invoice No. 364 dated 1-4-2010, GD Machine No. KAPR-HC-72139 dated 31-3-2010 and GD No.CRN HC-1279015-1412010, Bilty No. 008831 dated 1-4-2010 issued by Lucky Peshawar Goods Transport Company Karachi, Purchase, Stock (Inward and Outward) Register for the month of AprilandMay, 2010, Supply sales tax invoice No. 54dated26-5-2010 and Supply Register for the month of May, 2010, Monthly Sales Tax Return Cum payment Challan for the month of May, 2010. The appellant also produced all the above mentioned documents at this stage too.

8. The record further shows that the Superintendent ASU Mardan during the pendency of appeal before this Forum sent a letter C.No.55 dated 6-3-2012 to the Salman Khan Proprietors Lucky, Peshawar Goods Transport Company Karachi for verification of transportation bilty from Karachi to Peshawar Bilty No. 008831 dated 1-4-2010. The Salman Khan dully verified the said bilty vide his letter dated 8-3-2012 and also attested the copy of the Bilty No. 008831 dated 1-4-2010. The Superintendent ASU Mardan didn't verify import, GD, Purchase and Sales tax invoices produced by the appellant during the course of adjudication before the Collector Appeals and at this stage too proves that all the import, Sale purchase documents were genuine. The SuperintendentASU Mardan only verified the Bilty No. 008831dated1-4-2010 because he has a doubt only to the bilty which has been dully verified by the authority of Lucky Peshawar Goods Transport Company Karachi.

9. The crux of the findings of the Deputy Collector Adjudication is that the appellant has produced afterthought documents. I am not agreed with the findings of Deputy Collector Adjudication. If the said documents are afterthought so why the Deputy Collector Adjudication Peshawar issued the show cause notice and why he called upon as why Penal action should not be taken against that appellant and why the seized black tea should not be confiscated under section 156(1)(8)(89) of the Customs Act, 1969 read with section 3(3) of Imports and Exports (Control)Act,1950.Producealldocumentaryevidence showinglegal possession or payment of customs duty and taxes on the date of hearing.

10. The purpose of issuance of show cause notice is affording an opportunity to the accused that he should know about the allegations levelled against him and prepared to defend himself. This is the legal right of appellant to defend himself and produce the evidence pertaining to legal import and lawful possession of tea in question. However, there is no restriction in the Customs Act, 1969 and other laws of land that the accused cannot produce any documentary evidence in support of his defence or version at the adjudication stage.

11. The DR admitted that the recovered packing having the name and address of the Khyber Tea and Food Company Peshawar. The Bilty No. 6546 of Mumtaz Goods Forwarding Agency Peshawar having mentioned the name of sender as Khyber Tea Company Peshawar. Under the law the seizing officer was duty bound to issue notice under section 26 of Customs Act, 1969 asking about the documents of legal import and lawful possession of the goods from the appellant. The seizing officer should have given at least period of 7 days to the appellant for the production of required documents. But the seizing officer violated the law and has directly seized the goods. Such action of the seizing officer would be illegal and nullity in the eye of law. The adjudication officer as well as the Collector Appeals Peshawar has totally overlooked this important legal aspect of the case. The Deputy Collector Adjudication as well as the Collector Appeals didn't look into the ignorance of law by the seizing officer and has based their findings that the appellant produced afterthought documents. The Monthly sales tax return Cum Payment Challan produced by the appellant confirmed that the appellant has paid the sales tax both on purchase and sale stages. The GDs produced by the appellant proved that the tea in question has been imported by the M/s. SPATCO'S Karachi further the purchase sales tax invoice No. 364 dated 1-4-2010 confirmed that the appellant has purchased the tea in question from Messrs SPATCO'S Karachi. In my view the tea in question is a legally imported and all the relevant duty and taxes has already been paid.

12. Moreover the Collector Appeals upheld the Order-in-Original No.358/2010 dated 25-8-2010 with the findings reproduced as follow:--

"The above observations of the adjudication authority have been found correct because on perusal, it has been observed that the appellantproduceda copy of GD No. PDRY-HC-1690dated13-1-2009 before the Adjudicating authority showing the import of black tea dully out of charge on 13-1-2009 whereas seizure in the instant case was made on 28-5-2010 i.e. 16 months and 15 days after its import and no businessman could dump/store such like perishable goods for such a long period.

Moreover it has further been observed that before this Forum the appellant has changed his stance and produced a copy of GD No. KAPR-HC-72139 dated 30-3-2010 showing import of black tea and production of such changed supportive documents is nothing but and after thought and to get the release of goods by producing irrelevant documents".

Basically the appeal is a complaint to the Appellate Forum against, the lower Forum. The Appellate Forum is legally bound to see what mistake has been made by the lower Forum and what illegality has been committed by it. But in the instant case the Collector Appeals didn't carefully peruse the record and has based his findings on the observations of the adjudication officer.

13. The seizure report shows that the Anti-Smuggling Unit Mardan has seized:--

(i) Black tea F/O = 65 bags marked as in transit to Afghanistan 4340 KGs.

(ii) 30 bags of F/O black tea packed in plastic bags = 30 bags (900 KGs).

(iii) F/O Sewing Machines marked as in transit to Afghanistan = 70 Nos.

Out of 30 bags of F/O black tea 20 bags were claimed by the Hero Tea and Food Company Peshawar and 10 bags were claimed by Messrs Khyber Tea and Food Company Peshawar. The Hero Tea and Food Company Peshawar at the adjudication stage in reply to show cause notice produced its own GD bearing Machine No. PDRY-HC-1690 dated 13-1-2009 while the Messrs Khyber Tea and Food Company Peshawar produced two GDs bearing KAPR-HC-72139 dated 31-3-2010 and GD CRN-IHC-1279015 dated 14-1-2010.

14. The Deputy Collector Adjudication Peshawar while passing the Order-in-Original in Para 6 of the same order in original observed that:--

GD No. PDRY-HC-1690 dated 13-1-2009 produced by Messrs Hero Tea and Food Company was made out of charge on 13-1-2009 whileseizureintheinstantcasewasaffectedon28-5-2010 i.e. 16 months and 15 days after import. Black tea being perishable and cannot sustain such a long period of time after its import and becomes unfit for human consumption, which connotes that GD No. PDRY-HC-1690 is not relevant to the seized black tea, therefore, the stand of Messrs Hero Tea and Food Company cannot be maintained.

15. It is clearly reflected from the above observation of adjudication officer those were pertaining to the Hero Tea and Food Company Peshawar. The GDs produced by the Messrs Khyber Tea and Food Company Peshawar reflects that the Messrs SPATCO'S' imported black tea on 31-3-2010 through GD KAPR-HC-72139 and on 14-1-2010 through GD CRN-IHC-1279015 and according to the sales tax invoice No. 364 the Messrs Khyber Tea and Food Company Peshawar purchased 10000 KGs black tea on 1-4-2010 which shows that the tea sold by the Messrs Khyber Tea and Food Company Peshawar was not out of charge. Moreover it proves from the record that the Messrs Khyber Tea and Food Company Peshawar at the stage of adjudication while submitting its written reply to the show-cause notice annexed the copies of GD Machine No. KAPR-HC-72139 dated 31-3-2010 and GD CRN-IHC-1279015 dated 14-1-2010. Further at the appeal stage the Messrs Khyber Tea and Food Company Peshawar also annexed both the said GDs with its appeal which fact is mentioned in part A (brief facts of the case) Para (a). The findings of the Collector Appeals are totally contrary to the facts and record. This shows that the Collector Appeals passed the Order-in-Appeal No.188/2011 dated 22-7-2011 in hurry which is against the golden principle of natural justice. Therefore the findings and observations of the adjudication officer and the Collector Appeals as well are not maintainable.

16. The recovered black tea was in plastic bags having the name of Messrs Khyber Tea and Food Company Peshawar along with address and monogram which means that the tea in question was locally manufactured. According to the Sales Tax Registration produced by the appellant shows that the appellant is a registered manufacturer. The locally manufactured black tea was seized and confiscated without any lawful reason. There is no law to detain, seize and confiscate locally manufactured/packed goods. The black tea was loaded on a truck was seized within the country as such this black tea could not be treated as smuggled goods. Locally manufactured goods and imported goods purchased from the local markets are not liable to confiscation. "Moreover once the goods imported into the country for home consumption and issue a sales taxinvoice in respect of that goods the provisions of Customs Act, 1969 are not applicable because after process and mixing the same is repacked".

17. In the instant case the tea in question was imported by Messrs SPATCO'S Karachi and the appellant has purchased the same from Messrs SPATCO'S Karachi against purchase sales tax invoice No. 364 dated 1-4-2010. Thereafter the appellant being registered manufacturer manufactured the tea in question at Peshawar and packed in the bags having its own trade mark/monogram along with name and address of the company. Repacking of goods comes within the scope and definition of manufacturer Section 2 and subsections (16) and (17) of Sales Tax Act, 1990 and section 153 of Income Tax Ordinance, 2001 provides the definition of manufacturer.

Section 153 of Income Tax Ordinance, 2001 provides as under:

"Manufacturer" for the purpose of section means a person who is engaged in production or manufacture of goods which includes;

(a) Any process in which an article singly or in combination with other articles; material, components, is either converted into another distinct article or produced is changed, transferred or reshaped that it becomes capable of being put to use differently or distinctly; or

(b) A process of assembling, mixing, cutting or preparation of goods in any other manner.

Section 2(16) and (17) of Sales Tax Act, 1990 provides as under:

"Manufacture or "produce" includes;

(a) Any process in which an article singly or in combination with other articles; material, components, is either converted into another distinct article or product is so changed, transformed or reshaped that it becomes capable of being put to use differently or distinctly and includes any process incidental or ancillary to the completion of a manufactured products;

(b) Process of printing, publishing lithography and engraving; and

(c) Process and operation of assembling, mixing, cutting diluting, packing, repacking or preparation of goods in another manner.

The Messrs Khyber Tea and Food Company Peshawar has been registered with Sales Tax and Income Tax Department as manufacturer; therefore the Company isbound under the law that the company cannot sale out itsgoods (black tea) in the original import shape/packing, mark and number. The company must sale out the same after manufacturing, processing, mixing and then repacked it in other bags. So the seizing and confiscation of the tea in question was unlawful andwithout any valid reason.

18. From bare perusal of show-cause-notice it reveals that the adjudication officer did not issue show-cause notice to all the owners of miscellaneous goods. However, the recovered bags of black tea having the name of Messrs Khyber Tea and Food Company along with address. The bilty produced by the driver of the truck to the Customs Authorities also carrying the name of sender as Messrs Khyber Tea and Food Company Peshawar, but the adjudication officer issued show cause notice only to the driver of the truck namely Muhammad Sher and cleaner namely Aurangzeb Khan. Though the miscellaneous goods were recovered from possession of the said persons, those were not the owners of the miscellaneous goods, they were only the driver and cleaner of the Mumtaz Goods Transport Company Peshawar. According to Section 180 of the Customs Act, 1969 show-cause notice will be issued to the owners of the goods. The adjudication officer has committed a severe illegality not issuing the show-cause-notice to the owners of all miscellaneous goods as required under section 215 of the Customs Act, 1969 which is against the norms of justice. The whole proceedings conducted by the adjudication officer were not covered under the law. The Collector Appeals while passing the order in appeal didn't note the illegality committed by the adjudication officer. Further it transpires that the Collector Appeals didn't carefully peruse the record. Reliance takes place on 2013 PTD (Trib.) 1636.

19. The record shows that the appellant filed appeal on 23-9-2010, while the Collector Appeals passed the Order-in-Appeal No. 188/2011 on 22-7-2011. Subsection (3) of Section 193-A of Customs Act, 1969 provided that "the Collector Appeals may after making such further inquiry as may he necessary passed in order within 120 days from the date of filing of appeal or within such extended period as the Collector Appeal may for reasons to be recorded in writing, extended, confirm, modify or annul the decision or order appealed against". In the instant case appeal was filed on 23-9-2010 while order in appeal requires to be passed within 120 days of its filing i.e. by 20-1-2011 or within further extended period of 60 days prior to expiry of 120 days. There is nothing on the record which could prove that the FBR has extended the period of 60 days for further proceedings and decision of the appeal. The Collector Appeals had neither got fixed any extended period nor recorded any reasons for passing the order in appeal after period of 120 days. The Collector Appeal was bound under the law to pass the order in appeal within 120 days of the filing of the appeal. The Collector Appeal had been failed to pass the order within 120 days then it was legally bound to obtain extension for further period which would not in any case accede 60 days that such extension must be in writing and the reasons for delay must be incorporated in that Order-in-Appeal No. 188/2011 dated 22-7-2011 in the case was passed beyond the prescribed time limit of 120 days. Thus the order in appeal is time barred hence not maintainable.

20. The Learned DR submitted that according to the bill of entry four kinds of tea were exported, namely Kenya, Uganda, Congo and Burundi. Black Tea and sales tax invoice issued by the Messrs Khyber Tea and Food Company Peshawar, mentioned only black tea. That there is, therefore, contradiction between the bill of entry through which the tea was imported and the sales tax invoice regarding the sale of tea by the owner locally. The learned DR referred to Section 187 of the Customs Act and contended that it was the burden on the owner i.e. appellant to prove that he had purchased lawfully imported tea which he has failed. The learned DR contended that there is no mentioning of the country of origin in the sales tax invoice produced by the appellant is not plausible because there is no column to be mentioned the origin in the sales tax invoice. So no need to be mentioned the origin in the sales tax invoice. Reliance is placed on SAO No. 175 of 2004 dated 11-10-2004 wherein his Lordship Mr. Justice Nasir-ul-Mulk has held as under:--

"The sales tax invoice has only mentioned the tea as black tea as distinguished from green tea. In the sales tax invoice the origin of the tea neednot be mentioned. The, tea imported had been repacked by the importer for distribution to the retailers and therefore, it was quite un-necessary to mention the countries from which the tea was imported. It was on account of these facts that the appellant Tribunal as well as the Collector Appeals had found that the tea seized had been lawfully imported and that the burden to prove its lawful import had been duly discharged by the owner on productionof the relevant documents."

21. As regards the observation of the Deputy Collector Adjudication that he was forced to hold his opinion for ordering the confiscation of the seized goods as a number of cases were made out against the appellant and litigation had undergone between the department and appellant, the same is neither plausible nor convincing reason because the appellant had discharged his onus of proof within the meaning of section 187 of the Customs Act, 1969 who had successfully met with the burden to prove the legal import and now the burden to prove smuggling shifted to the prosecution who has been failed to proof the charge of smuggling by producing a direct evidence against the appellant. The prosecution has been failed to produce any evidence which could prove that the import of such kind of tea (tea in question) was prohibited or restricted by the Federal Government. Mere factum of importation or exportation of certain goods being prohibited by law would not amount to smuggling. Goods in order to be smuggled must be notified by the Federal Government under section 2(s) of the Customs Act, 1969. On the other hand the appellant produced GD CRN No. 1-HC-1279015 dated 31-3-2010 and GD KAPR-HC-72139 dated 14-1-2010 dully issued by the Pakistan Customs Computerized System proved that the import of black tea is not prohibited nor restricted by the Federal Government. PTCL 2004 CL 551, 2001 YLR 635 LHC, 1995 SCMR 387. Burden of proof as laid down under S. 187 of the Customs Act, 1969 is evidential burden requiring the accused to only establish a prima facie case and ultimate burden or legal burden is on the customs authorities to prove the case against the accused beyond reasonable doubt. The appellant proved that the tea in question is imported one. Reliance takes place on 2003 PTD 2118.

22. In view of the discussions detailed above, the respondent could not prove its case against the appellant punishable under clauses (8) and (89) of subsection (1) of section 156 and section 157 of the Customs Act, 1969 read with Section 3(3) of the Imports and Exports (Control) Act, 1950. Consequently, this appeal is accepted and the impugned Order-in-Original No. 358/2010 dated 25-8-2010 and Order-in-Appeal No. 188/2011 dated 22-7-2011 are set-aside to the extent of 10 (Ten) bags of black tea each bage weighing (30-KG) only claimed in para-1, part-B of grounds of appeal and released unconditionally.

HBT/2/Tax(Trib.)Appeal accepted.