O.S. CORPORATION VS FEDERATION OF PAKISTAN through Secretary Revenue Division, 2015 PTD-LAHORE-HIGH-COURT-LAHORE 560 (2014)

Customs Act (IV of 1969)---

----S.186---Constitution of Pakistan, Art.199---Constitutional petition---Detaining of goods---Fine or penalty, non-imposing of---Grievance of importer was that despite payment of all duty and taxes, and release of goods, authorities had illegally detained goods at the exit gate---Validity---As no fine or penalty had been imposed or was even under consideration at the relevant time, therefore, provisions of S. 186 of Customs Act, 1969, were not relevant---Authorities were acting on a hunch and still had to satisfy themselves that goods imported by importer were in fact tin plates and not electrical silicon steel sheets---Authorities also could not show whether any investigation or adjudicatory process was pending under Customs Act, 1969, against importer---Consignments were opened and samples were drawn by authorities to check contents of consignments and two reports were furnished in favour of importer---Allegation of mala fide on the part of testing laboratory had also been inferred by authorities but there was nothing on record to substantiate such claim---Detaining goods at exit gate after having released by them was totally contrary to the provisions of Customs Act, 1969---Authorities had available to them provisions of Customs Act, 1969, and to proceed with the matter where they were unsure of classification or status of goods imported---Due process was followed and goods were cleared---While acting on a hunch, authorities detained goods at exit gate even though taxes and duties were paid and goods had been released---High Court directed the authorities to release goods of importer instantly---Petition was allowed in circumstances.

Mian Abdul Ghaffar for Petitioner.

Ch. Muhammad Zafar Iqbal along with, Aziz-ur-Rehman Principal Appraiser Customs and Nadeem Mahmood Mian, Standing Counsel for Respondents.

Date of hearing: 3rd April, 2014.

JUDGMENT

MRS. AYESHA A. MALIK, J.---Through this petition, the petitioner has impugned the blocking and detaining of its consignments consisting of 13 containers of electrical silicon steel sheets imported by the petitioner.

2.The case of the petitioner is that it has imported 13 containers of electrical silicon steel sheets falling under PCT heading 7225.1900 at unit value of US$ 600.00 per M.Ton on the basis of its transaction value vide GD-LAPR-HC-9675 dated 3-3-2014. The consignments of the petitioner were examined and found to be in accordance with the declaration. Assessment was made and duty and taxes were paid. After payment of the duties and taxes the consignments should have been released. However, instead samples were drawn from the consignments and sent to the Pakistan Standard and Quality Control Authority, Lahore as well as People Steel Mills, Ltd., Karachi for reconfirmation of the description of the goods. The report of both testing labs stated that the goods imported were electrical silicon steel sheets as per the declaration made by the petitioner. The goods were to be released, however, they were blocked at the exit gate again on the allegation that the department is not satisfied with the testing reports and that fresh samples shall be taken for the purposes of having them tested from another lab. The petitioner is aggrieved by this act of the respondents on the ground that the respondents cannot illegally detain the goods of the petitioner once they have been released and duties and taxes have been paid. Furthermore, learned counsel argued that this entire exercise is being undertaken at the behest of one Principal Appraisal and his so called hunch that the consignments do not contain electrical silicon steel sheets. Learned counsel argued that even his hunch is based on speculation in relation to some other consignment of electrical silicon steel sheets wherein it was found that in fact the consignment contained tin plates and not electrical silicon steel sheets. Learned counsel argued that in the case of the petitioner the consignments have been physically examined and tested twice and it has been found that the consignments contain the goods declared. The duties and taxes were paid and they were released by the respondents.

3.Report and para wise comments have been filed by the respondents. Learned counsel for the respondents argued that the respondents have good cause to believe that the goods imported and described as electrical silicon steel sheets are in fact tin plates. Learned counsel argued that the samples have been sent to yet another lab. Learned counsel argued that the entire department and the testing laboratoris are involved in this fraudulent transaction, hence the goods have been detained for further testing purposes. Learned counsel further argued that the respondents are authorized under section 186 of the Customs Act, 1969 (Act of 1969) to detain the goods as an inquiry is underway on the basis of which the proper categorization of the goods has to be made so as to ensure that the appropriate duties and taxes are paid. Learned counsel argued that there is sufficient evidence with the respondents on the basis of which this act of detaining has been taken and as such no illegality is made out.

4.Heard the learned counsel for the parties and reviewed the record available on the file.

5.The basic issue before this court is whether the 13 containers of the petitioner could be detained after having been released by the respondents. Admittedly, the goods were examined and samples were drawn. One set of sample was tested by Pakistan Standard and Quality Control Authority, Lahore. In terms of the report provided on 10-3-2014 the consignment contained electrical silicon steel sheets. The consignment was also tested to confirm the findings of Pakistan Standard and Quality Control Authority, Lahore. The samples were sent to the Peoples Steel Mills Ltd, Karachi and the report was issued on 10-3-2014, which also confirmed that the consignment contained electrical silicon steel sheet. The respondents have relied upon a letter issued with respect to another consignment by some other company, which was sent for testing and found that the goods were not electrical silicon steel sheets but were in fact contained tin plates. On the basis of this report, in relation to another consignment, the respondents have detained the consignments of the petitioner for yet another round of testing and re-examination. The samples have been sent to HFJ Lab by the respondents by virtue of their letter dated 25-3-2014. Learned counsel for the respondents was not able to satisfy this court on the question as to what necessitated a third testing of the sample when two independent labs had confirmed that the consignment contained electrical silicon steel sheets. The record shows that the only material available to the respondents is the letter issued on 25-3-2014 in relation to similar consignments. Learned counsel for the respondents has also relied upon the section 186 of the Act of 1969. However, a bare reading of the section shows that it is not relevant to the case at hand because no fine or penalty has been imposed or is even under consideration at the moment. The respondents are acting on a hunch and still have to satisfy themselves that the goods imported by the petitioner are in fact tin plates and not electrical silicon steel sheets. Learned counsel for the respondents was also not able to show whether any investigation or adjudicatory process was pending under the Act of 1969 against the petitioner. Admittedly, the consignments were opened and samples were drawn by the respondents to check the contents of the consignments. Admittedly, two reports have been furnished in favour of the petitioner. Although, allegations of mala fide on the part of the testing labs have also be inferred by the respondents, there is nothing on the record to substantiate this claim. Detaining the goods at the exit gate after having released them is totally contrary to the provision of the Act of 1969. The respondents have available to them the provision of the Act of 1969 and to proceed with the matter where they are unsure of the classification or status of the goods imported. In the instant case, due process was followed and the goods were cleared. However while acting on a hunch, the respondents have detained the goods at the exit gates even though taxes and duties have been paid and the goods have been released.

6.Under the circumstances, this petition is allowed and the respondents are directed to release the goods of the petitioner instantly. It is noted that in the event, the respondents need to investigate into this issue, they have already detained samples of the goods of the petitioner and are free to adopt due process of law and investigate into the matter in accordance with law.

MH/O-2/LPetition allowed.