MUHAMMAD NAEEM, DISTRICT GUJRAT VS ADDITIONAL COLLECTOR (ADJUDICATION), CUSTOMS HOUSE, LAHORE, 2017 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 1391 (2015)

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

----Ss. 2(s), 156(1)(89), 168, 178, 181 & 187---SRO No.499(I)/2009, dated 13-6-2009---Smuggling---Seizure and confiscation of smuggled vehicle---Van was intercepted by Staff of Directorate of Intelligence and Investigation-FBR---Driver of the van and Motor Registration Authority could not provide any documentary evidence regarding legal import of the van in question, same was seized under S.168 of the Customs Act, 1969 being liable to confiscation---Adjudicating authority, after issuing show-cause notice to appellant, who claimed to be owner of the van, ordered to confiscate the van under cl.(89) of S.156(1) of the Customs Act, 1969, and in view of cl.(a) of SRO No.499(I)/2009, dated 13-6-2009, option under S.181 of the Customs Act, 1969 was not allowed---Motor Registration Authority, submitted report to the effect that van in question was registered by the Authority registration book was issued to said van, but record of the said van had been burnt/destroyed---Framers of law in order to dampen rampant business of smuggled or non-duty paid goods formulated a strict confiscatory regime with very wide connotation---On every occasion, whence goods were seized under the Customs Act, 1969, the possessor or the owner had to prove that he held the goods under lawful authority, or under a permit, licence or other document prescribed by or under any law for the time being in force---Section 2(s) of the Customs Act, 1969, stipulated a well defined classification of smuggled goods based on an intelligible differentia---Appellant, was in possession of van under valid registration book issued by Motor Registration Authority, record of which was destroyed in an arson attack during riots---Department's case hinged on the premise that unless the appellant would produce the import documents i.e. the Goods Declaration or its allied customs documents it would be presumed that van was smuggled vehicle under Customs Act, 1969---Statute required test of proportionality as the touchstone of construction and interpretation of reverse onus clause and accused could not be expected to discharge an unduly high-standard of proof---Section 187 of the Customs Act, 1969, cast an evidentiary burden subject to creation of a prima facie case by accused and the legal or persuasive burden always rested on the prosecution/department---When an accused had to rebut the presumption under S.156(2) or 187 of the Customs Act, 1969, the standard of proof for doing so was that of preponderance of probabilities---If accused was able to raise a probable defence which would create doubt about the existence of a legally enforceable debit or liability the prosecution could fail---Appellant, who claimed to be the owner of the van had succeeded in making out a prima facie case and it was held that preponderance of probability was also in favour of the appellant---Existence of factum of smuggled nature of impugned vehicle was doubtful---Burden of proof under S.187 and S.156(2) of the Customs Act, 1969 stood shifted upon the prosecution/department to establish the case---Department having failed to discharge the legal or persuasive burden which lay heavily on it, benefit of doubt was extended to the appellant---Impugned order-in-original was set aside and unconditional release of confiscated van was ordered to be given to its lawful owner.

Kamran Industries v. Collector of Customs PLD 1996 Kar. 68 ref.

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

----Ss. 2(s) & 181---S.R.O. No.499(I)/2009, dated 13-6-2009---S.R.O. No. 566(I)/2005, dated 6-6-2005---Option to pay fine in lieu of smuggled confiscated goods---Vehicles being notified smuggled goods depicted at Serial No.26 of S.R.O. No. 566(I)/2005, dated 6-6-2005, then release was prescribed under S.R.O. No. 499(I)/2009, dated 13-6-2009 and S.2(s) of the Customs Act, 1969---Section 181 of the Customs Act, 1969, though entrusted powers to the Customs Adjudicating Officer to release delinquent non-duty paid goods on payment of duties and taxes and imposition of redemption fine, but said powers were not unbridled---First and second proviso to S.181 of Customs Act, 1969, read with S.R.O. No.499(I)/2009, dated 13-6-2009, manifestly abridged those powers---Goods falling under subsection (s) of S.2 of the Customs Act, 1969, were to be outrightly confiscated without any recourse to the possessor.

(c) Provincial Motor Vehicles Ordinance (XIX of 1965)---

----S. 25---Registration of motor vehicles---Registration of motor vehicles required the registering authority to take all possible steps to verify the genuineness of applications for registration and specific documents had to be produced by the person applying for registration---In case of imported vehicles, paper indicating the payment of customs duty etc. leviable or in case of locally manufactured vehicles, sale authority letter and invoice issued by the authorized manufacturer; or in case of re-registration, registration certificate issued by the original registering authority together with a "No Objection Certificate" (N.O.C.)" issued by it---According to subsection (4) of S.25 of the Provincial Motor Vehicles Ordinance, 1965, only the temporary registration could be effected on basis of initially tendered documents and that final registration certificate could only be issued subsequently after authentication by the relevant quarters; that under first and second provisos to S.25 of Provincial Motor Vehicles Ordinance, 1965, in case of non-verification by concerned agencies, the temporary registration would be annulled and the Government would wield the power to seize the delinquent vehicle and dispose it of in accordance with law---Motor Vehicle Registration Law in vogue, stipulated a narrow and strict colander so that the smuggled car/vehicle could be prevented from getting registered---Original motor vehicle registration book authenticated by the Registering authority had presumption of truth attached to it under Art.92 of the Qanun-e-Shahadat, 1984.

Khalid Mohsin for Appellant.

Khalid Ahmad, I.O. for Respondents.

JUDGMENT

OMAR ARSHAD HAKEEM, MEMBER (JUDICIAL).---This judgment shall dispose of the above mentioned appeal filed against Order-in-Original No. 25/2014 passed by the learned Additional Collector of Customs (Adjudication), Lahore.

2.A perusal of record shows that the subject appeal was the jurisdiction of Single Bench therefore the same was referred to the Hon'ble Chairman for assignment to any Member of this Bench. This appeal was entrusted to the undersigned for disposal. Arguments were heard and the case was reserved for orders.

3.The crux of the facts, culminating in the commencement, relevant for the purpose of deciding the core controversy, involved in the instant appeal and emanating from the record, and impugned show cause notice are that, the staff of Directorate of Intelligence and investigation-FBR, Gujranwala intercepted a Toyota Hiace Van bearing Registration No. BQU-116-Jafarabad. The driver of the vehicle Muhammad Naeem failed to produce any document regarding legal import or lawful possession of the same. During the course of investigation a letter was issued to the Motor Registration Authority, Jafarabad requesting therein to supply the particulars/documents on the basis of which the impugned vehicle was got registered. In response thereto they supplied Form "F" according to which the vehicle was registered with the said MRA, however no documentary evidence regarding legal import was provided on the ground that on 28.12.2007 this office had burnt due to which all the record had been destroyed.

4.As the owner of the vehicle and the concerned MRA failed to provide any documentary evidence regarding legal import of the instant vehicle, therefore the same was seized under section 168 of the Customs Act, 1969 liable to confiscation. A show cause notice was issued to the appellant asking him to explain as to why the seized vehicle may not be confiscated under sections 156(1)(89) and 178 of the Customs Act, 1969 read with sections 3(1) and 3(3) of the Import and Export Control Act, 1950.

5.In sequel to impugned show cause notice adjudication proceedings were conducted which concluded into an adjudicatory order and the adjudicating officer precisely, ruled as follows:--

"I have examined the case record. The respondent has not been able to produce any document/evidence to show lawful possession or legal import of the said vehicle. I have come to the conclusion that the charges, as mentioned in the show cause notice are established against the respondent. Accordingly I hereby order that the seized used Toyota Hiace Van bearing Registration No. BQU-116-Jafarabad Chassis No. LH61V-0071764, Engine No. not traceable. Capacity 2200-CC is confiscated under clause (89) of section 156(1) of the Customs Act, 1969. In view of clause (a) of S.R.O. 499(I)/2009 dated 13.06.2009 option under section 181 of the Customs Act, 1969 is not allowed"

6.Aggrieved from the order passed by the learned Additional Collector of Customs (Adjudication) the appellant has approached this Tribunal. The learned counsel for the appellant mainly contended that a report was submitted by the Motor Registration Authority, Jafarabad Dera Allah Yar vide letter C. No. 10771 dated 12.11.2013 to the concerned Customs Intelligence and investigation-FBR, Gujranwala, wherein it has been stated that the Impugned vehicle was registered by the Motor Registering Authority, Jafarabdd and the registration book was issued to the said vehicle against registration No. BQU-116-Jafarabad. It was also mentioned in the report that record of the said vehicle has been burnt/destroyed during the demise of Mohtarma Benazir Bhutto and the complete record had been spoiled.

7.Leveling a variety of allegations and narrating the sequence of events, in all, the Senior Intelligence Officer, Directorate of Intelligence and Investigation-FBR, Gujranwala deposited parawise comments and inter alia contended that the appellant has failed to provide any documentary evidence regarding legal import or lawful possession of the impugned vehicle; That the Hiace Van is notified item of smuggling under section 2(s) of the Customs Act, 1969 and under explanation 2 of section 156 ibid the burden of proof that the same was acquired in a lawful manner after payment of duties/taxes lies on the Appellant. No such evidence has been produced; That as per provisions of the Motor Registration Ordinance, 1965 the registration book only authorizes the owner of the vehicle to drive the same but the same in no way can be deemed that duty/taxes have been paid; That if the vehicle is not tampered one even then the appellant is required to prove its legal import.

8.The arguments of the parties heard, provisions of relevant law discerned and the available record of the case thoroughly considered.

9.A brief overview of the Customs Law related to smuggled goods would reveal that the framers of law in order to dampen rampant business of smuggled or non duty paid goods formulated a strict confiscatory regime with very wide connotations. That the law is set in motion not only against the actual smuggler from whose possession the delinquent goods are seized but also against those who came into possession of the goods after having acquired the same. On every occasion whence goods are seized under the Customs Act, 1969, the possessor or the owner has to prove that he had held them under lawful authority or under a permit, license or other document prescribed by or under any law for the time being in force (italics to emphasize-sic sec 187).

10.A cursory perusal of subsection (s) of section 2 of the Act would reveal that it stipulates a well defined classification of smuggled goods based on an intelligible differentia.

11.That though section 181 of the Customs Act, 1969 entrusts powers to the Customs Adjudicating Officer to release delinquent non duty paid goods on payment of duties and taxes and imposition of redemption fine, but these powers are not unbridled; The first and second provisos to section 181 read with S.R.O. 499(I)/2009 dated 13th of June 2009 manifestly abridge these powers; conclusively speaking goods falling under sub-clause (s) of section 2 of the Act of 1969 are to be outrightly confiscated without any recourse to the possessor.

12.It is an unmitigated fact that the vehicles are notified smuggled goods depicted at Sr. No. 26 of S.R.O. 566(I)/2005 dated 06.06.2005 and consequently their release is proscribed under S.R.O. 499(I)/2009 dated 13th of June 2009 and section 2(s) (ii) of the Act of 1969, but whether the appellant has adduced adequate evidence to thwart the allegation of 2(s) attached to its vehicle is the question which needs to be answered in the instant case;

13.It is an admitted fact that the appellant is in possession of the vehicle under a valid registration, book issued by the concerned Motor Registration Authority. It is also not disputed by the respondent department that the Form "F" of the said vehicle is not authentic, admittedly entire record of MRA Jafferabad had been destroyed in an arson attack during riots that erupted on 28.12.2007 due to murder of former Prime Minister Benazir Bhutto, as evidence the appellant has also-appended an FIR No. 298 of 2077 dated 28.12.2007.

14.The respondent department's case hinges on the premise that unless the appellant produces the import documents i.e. the Goods Declaration or its allied Customs Documents, it will be presumed that instant is a smuggled vehicle under the Customs Act, 1969.

15.So a question arises here, is as to whether the entire burden of proof as laid out in section 187 ibid subsection (2) or section 156 or the Act of 1969 rests upon the appellant or whether the same at any stage shifts to Custom Authorities or; an inquest would also be judicious and necessary to understand the true legal purport of registration book of impugned vehicle viz its import in accordance with law.

16.Adverting to the initial question proposed above:--

Sections 187 and 156(2) have been reproduced below for ease of reference;

Section 156. Punishment for offences.---(2) Where any goods specified in clause (s) of section 2 or in a notification issued there-under are seized under this Act in the reasonable belief that an act to defraud the Government of any duty payable thereon or to evade any prohibition or restriction for the time being in force by or under this Act has been committed in respect of such goods, or that there is intent to commit such act, the burden of proving that no such act "has been committed or there was no such intent shall be on "the person from whose possession the goods were seized.

Section 187. Burden of proof as to lawful authority etc.---When any person is alleged to have committed an offence under this Act and any question arises whether he did any act or was in possession of anything with lawful authority or under a permit, license or other document prescribed by or under any law for the time being in force, the burden of proving that he had such authority, permit license or other document shall lie on him.

17.A perusal of section 156(2) and section 187 of Customs Act, 1969 reveals that these provisions impute reversal of the golden thread of criminal law that "it is the duty of the prosecution to prove the prisoner's guilt.........." the question that then arises, is as to what extent such burden lies upon the person found in possession of allegedly smuggled or prohibited goods, and as to whether same at any stage shifts to Custom Authorities or not; at this juncture a very important reported judgment, titled Kamran Industries v. Collector of Customs (Exports) (PLD 1996 Karachi 68) rendered by the Honorable Sindh High Court, Karachi may be used as a benchmark to evaluate the extent of casting of the two types of burden of proof i.e. legal or persuasive burden and the evidential or tactical burden on the litigants. While addressing instant issue the Honorable Sindh High Court split up both the burdens of proof covered under section 187 of the Customs Act, 1969 and distributed the casting of these burdens as under:--

"on a closer scrutiny of the provisions of section 187 and the case law settled by our courts on the subject it appears that in such a situation it is only the evidential and tactical burden of proof which is cast upon the accused while the legal burden to bring home the allegations remains with the prosecution. Before we dilate upon the concept of the two types of burdens of proof and explain the terms "tactical", "evidential" and "legal" burdens of proof we shall first discuss the case decided by the High Court of Sindh in Barkat Ali v. State, PLD 1973 Karachi 659. In this case the controversy revolved round section 17A of the erstwhile Sea Customs Act, 1878 which catered for a similar situation as has arisen in the present case i.e. the same provided the burden of proof upon the accused to disprove the case of the prosecution that his intentions were not be defraud the exchequer or evade any prohibition or restriction under the Act. Writing for court Tufail Ali Abdul Rehman C J was of the opinion that the said presumption of burden of proof could not be drawn until the explanation of the accused was first taken into consideration. According to the learned Judge the "normal principle" was applicable i.e. that the accused was entitled to a benefit of doubt where he offered a reasonable explanation which was either acceptable or raised a doubt. In such cases the burden then shifted upon the prosecution to establish the case. In this regard the pertinent observations ore reproduced hereunder:--

"... despite S. 177 of the Sea Customs Act if upon the end of the evidence the Court is of the opinion that there is a doubt as to the guilt of the accused the benefit of that doubt must be given to him and he must be acquitted " (at p.671)"

"both classical and contemporary treaties on the law of evidence (Cross on "Evidence" 1967 3rd Edition. London Butter Worth. "A practical approach to evidence" by Peter Murphy 1988, 3rd Edition. London Blackstone Press Ltd, and "The Modern Law of Evidence" by Adrian Keane 1985, 1st Edition Oxford Professional Books Ltd) talk in terms of two burdens of proof i.e. the "Legal" or "persuasive" burden and the "evidential" or tactical" burden The legal burden is defined as "the burden of proof or the probative burden and the ultimate burden" (See Keane at p. 46). The same has also been defined as "the burden of persuading the tribunal or fact, to the required standard or proof and on the whole of the evidence, of the truth or sufficient probability of every essential fact in issue." (See Murphy at p. 78). On the other hand the "evidential" or "tactical" burden has been defined as "the quantum of evidence which would "establish a prima facie case" (See Murphy at p. 70). The legal burden is according in our view the ultimate and final burden whereas the evidential burden requires only establishment of a prima facie case. According to the learned authors in every case there is a distinction between these two burdens. On a general principle both these burdens are cast upon the asserter of a proposition whereas in some case the incidence of these two types of burdens may not concide. According to Keane the determination of where the burden falls would depend upon substantive law as well as common sense (See pp. 49 & 50). The mode of operation of the rules of evidence would be that the party upon whom the evidential burden is cast shall have to establish through prima facie evidence that he has an arguable case. In such an event it would then be obligatory upon the person bearing, the legal burden to bring on record such material which would ultimately bring home his case. In circumstances where both the evidential and legal burdens are cast upon the same party the entire burden of proof shall be on that particular party and the distinction between legal and evidential burdens would not, serve a fructuous purpose. However, it is in such cases where the incidence of the legal and evidential burdens are distinct i.e. the legal burden is placed on one party whereas the evidence burden lies on another, that the party to whom the evidential burden is placed has to satisfy the same by establishing a prima facie case. In such an eventuality the burden would shift to the other party who shall have to bring forth the ultimate evidence to make out a case i.e. he would have to satisfy or discharge the legal burden. The concept of shifting of burdens of proof is not alien to even our jurisprudence. The shifting of burdens of proof have been discussed and approved in Mst. Safia Begum v. Mst. Malkani and another (PLD 1965 Lahore 576), Akbar Ali v. Ehsan Elahi (PLD 1980 Lahore 145) Government of Pakistan v. Moulvi Ahmad Saeed 1983 CLC 414, Muhammad Sarwar v Fazal Rehman (1982 CLC 1286) and Sardar Ghulam Nabi Khan v. Azad Government of State of Jammu and Kashmir, (1984 CLC 325).

"In fact, even in the cases relied upon by Mr. Farogh Naseem i.e., Eastern Rice Syndicate v. C.B.R. (PLD 1959 SC Pak 364) The Collector Central Excise and Land Customs, Chittagong v. Imdad Ali (1969 SCMR 708) and Messrs Latif Bros v. Deputy Collector Customs, Lahore (1992 SCMR 1083), the Supreme Court has clearly held that the ultimate burden of proof lay upon the customs authorities which cannot be said to have been discharged merely on account of weakness in the evidence of the importer"

"This Court is also of the view that a construction is to be placed upon statues which would minimize the discretion vested upon the executive authorities. Its absolute power corrupts an interpretation fettering the discretion of the executive authority would be more in line with the principles of equity and justice. The issue regarding the applicability of section 187 is to be looked from another angle i.e., in case we were to hold that due to section 187 the entire burden to disprove the entire case rest upon the accused alone, the executive authorities would be let loose and given wide, naked and arbitrary discretion to operate without any guidelines which would then lease section 187 susceptible to a constitutional challenge upon its vires on this score alone. By the interpretation as proposed above any redundancy or illegality would also be avoided"

18.I respectfully agree with the principle of law laid down by the Honorable Sindh High Court Karachi and would like to add that in my earnest interpretation the statute requires test of proportionality as touchstone of construction and interpretation of reverse onus clause and the accused cannot be expected to discharge an unduly high standard of proof; As held by Honorable Sindh High Court, Karachi that section 187 only casts an evidentiary burden subject to creation of a prima facie case by the accused and the legal or persuasive burden always rests on the prosecution/department. Keeping this in view, the legal position is that when an accused has to rebut the presumption under section 156(2) or 187 of the Customs Act, 1969, the standard of proof for doing so is that of preponderance of probabilities and therefore if the accused is able to raise a probable defence which creates doubt about the existence of a legally enforceable debt or liability, the prosecution can fail.

19.Now adverting to the ancillary question, posed in context of evidential value of registration book of impugned vehicle and its legal value with regard to lawful import of impugned vehicle, it would be proper to advert to the relevant provisions of West Pakistan Motor Vehicles Ordinance, 1965.

Section 25 thereof has been reproduced below for ease of reference;

"25; Registration how to be made.--(1) An application for registration of a motor vehicle shall be made to the registering authority by the owner personally or through a duly authorized agent, in Form "F" as set forth in the First Schedule to this Ordinance, and shall be accompanied by the following:--

(a)Import permit and the bill of lading through which the motor vehicle is imported and paper indicating the payment of customs duty, etc, leviable on the import of such a motor vehicle;

(b)Sale authority letter and invoice issued by the authorized manufacturer of the motor vehicle or by his authorized dealer in Pakistan; and

(c)In case of re-registration under section 30 of this Ordinance the registration certificate issued by the original registering authority together with a No. Objection Certificate (NOC) issued by it.

(2)-----

(3)-----

Provided---

Provided---

(4)The certificate issued under subsection (2) shall be provisional certificate till documents referred to in clauses (a), (b) and (c) of subsection (1) are verified from the concerned agencies by the registering authority:

Provided that if the concerned agencies fail to verify the documents within a period of one year from the date of reference, it shall be presumed that the documents produced are fake and the provisional certificate shall stand suspended and cancelled as provided in sections 35 and 35 of this Ordinance:

Provided further that the motor vehicles of which the registration certificate is cancelled under the first proviso of the motor vehicles Ordinance the owners or keepers whereof may fail to produce any valid documents in support of their ownership, shall be seized by Government and disposed of in the prescribed manner.

20.A perusal of section 25 as reproduced above reveals that the registration of motor vehicles requires the Registering Authority to take all possible steps to verify the genuineness of applications for registration and in connection with this specific documents have to be produced by the person applying for registration, i.e. in case of imported vehicles paper indicating the payment of customs duty etc, leviable or in case of locally manufactured vehicles Sale Authority Letter and invoice issued by the authorized manufacturer or in case of re-registration, registration certificate issued by the original Registering Authority together with a No Objection Certificate (NOC) issued by it. It would be noteworthy to mention here that according to subsection (4) of section 25 of the Ordinance, only temporary registration can be effectuated on basis of initially tendered documents and that final registration certificate can only be issued subsequent to authentication by the relevant quarters; that under first and second provisos to section 25, in case of non verification by concerned agencies, the temporary registration stands annulled and the Government wields the power to seize the delinquent vehicle and dispose it of in accordance with law. Conclusively speaking with context to instant case. Motor Vehicle Registration Law in vogue stipulates a narrow and strict colander so that the smuggled car could he prevented from getting registered; I am therefore of the considered opinion that an original motor vehicle registration book authenticated by the Registering Authority has presumption of truth attached to it under Article 92 of the Qanun-e-Shahadat Order, 1984.

21.I have evaluated the evidence adduced by the appellant, in the light of what has been discussed above; I am convinced that the appellant has succeeded in making out a prima facie case and it is also held that preponderance of probability is also in favour of appellant, thus the existence of factum of smuggled nature of impugned vehicle is doubtful. Consequently, burden of proof under section 187 ibid and section 156(2) of the Act stands shifted upon the prosecution to establish the case.

22.As the respondent department failed to discharge the legal or persuasive burden which lay heavily on it, I am left with no other option but to extend benefit of doubt to the appellant consequently the impugned order-in-original is set aside and I order unconditional release of confiscated Toyota Hiace Van bearing Registration No. BQU-116-Jafabadad to its lawful owner.

23.Parties be informed through registered post A.D. or by UMS.

24.File be consigned to record after completion.

HBT/3/Tax(Trib.) Appeal allowed.