HERO TEA AND FOOD COMPANY, RAMPURA GATE, PESHAWAR VS COLLECTOR CUSTOMS (APPEALS), PESHAWAR, 2017 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 141 (2014)

Customs Act (IV of 1969)---

----Ss. 2(s), 16, 17, 26, 156, 157, 193 & 194-A---Import and Export (Control) Act (XXXIX of 1950), S.3---Seizure and confiscation of goods---Truck carrying foreign goods (black tea), was intercepted---Occupants/driver and cleaner, of the truck having failed to produce any proof with regard to legal import/lawful possession of goods so recovered, goods along with truck was seized under Ss.2(s), 16 & 157 of the Customs Act, 1969, read with S.3(1) of the Import and Export (Control) Act, 1950---Adjudicating Authority vide order-in-original outrightly confiscated the goods, but vehicle was released on payment of 20% redemption fine in addition to payment of customs duty and taxes leviable thereon---Appellate Authority also imposed a personal penalty on the driver and conductor of the truck, and maintained rest of the impugned order-in-original---Appellant/owner of goods in question had filed goods declaration, paid relevant duty and taxes at import stage and goods had been cleared by the Customs Authorities---Appellant at supply stage had paid output tax---Seized/confiscated black tea, which was imported one, was packed in packing; each and every packing carried the name of importer, along with address and phone number---Transportation Bills, also showed the name of company---Seizing Officer despite all that, neither gave notice under S.26 of Customs Act, 1969, nor summoned the owner of the goods to join the investigation and produced the required documents; though seizing officer was bound to give said notice---Seizure made by the seizing officer, was illegal and without lawful authority, in circumstances---Seizure could not be made on mere suspicion; and no seizure was to be made without adequate material---Where adequate documents were not found with the consignment, but were claimed to be available, it should have been more appropriate to detain the consignment under S.17 of Customs Act, 1969; and issue notice under S.26 of the Customs Act, 1969 for furnishing the documents within 7 days, instead of making an outright seizure---Before making the seizure detecting agency was required to verify the documents from the concerned quarters; and also to check the purchase, stock and supply register of registered person or company---When the import of goods into the country for home consumption was issued a sales tax invoice in respect of said goods, provisions of Customs Act, 1969 were not applicable---Appellate Authority, had found that Goods Declaration produced by appellant, was nothing, but an afterthought---Said finding could not be accepted, because the goods declaration had been produced well within time at the adjudicating stage---Goods Declaration, could not be an afterthought---Goods (black tea) seized and confiscated in the case having been legally imported by the appellant, both order-in-original and order-in-appeal, were set aside, with direction that confiscated black tea be released unconditionally to its lawful owner.

2002 PTD (Trib.) 1455 ref.

Atiqur Rehman and Pir Alam Shah, Consultant Mufti Law Associates for Appellants.

Naseer Khan, Superintendent Customs for Respondents.

Date of hearing: 24th November, 2014.

JUDGMENT

GULAB SHAH AFRIDI, MEMBER (JUDICIAL).---This appeal filed by Messrs Hero Tea and Food Company, Peshawar (appellant here-in) is against the Order-in-Appeal No.525/2010 dated 22.10.2010 (issued on 22.10.2010) passed by the learned Collector Custom (Appeals), Peshawar, whereby he while maintaining the Order-in-Original No. 358/2010 dated 02.8.2010.

2.Brief facts of the case are reported by the Deputy Superintendent, Customs Anti-Smuggling Unit Mardan are that on 28.5.2010 at 02:30 hours on prior information a Hino truck bearing registration number K-1698 was intercepted and on search, resulted in the recovery foreign origin goods (detail as per recovery memo No. 20/2010 dated 28.5.2010). On demand the occupant/driver/owner of the vehicle namely Muhammad Sher and Aurangzeb Khan failed to produce any proof with regard to legal import/lawful possession of the goods so recovered. Therefore, the staff of Customs Anti-Smuggling Unit Mardan seized the goods along with vehicle under sections 2(s), 16 and 157 of the Customs Act, 1969 read with Section 3(1) of the Import and Export (Control) Act, 1950 punishable under sections 156(1), (8) and (89) of the Customs Act, 1969 read with section 3(3) of the Import and Export (Control) Act, 1950.

3.Subsequently, on completion of the requisite formalities, the matter was placed before the Deputy Collector vide Order-in-Original No.358/2010 dated 25.08.2010 whereby he outrightly confiscated the goods, however, the vehicle was released on payment of 20% redemption fine.

4.Aggrieved of the impugned Order-in-Original No.358/2010 dated 25.08.2010, the appellants filed appeal before the Collector Customs (Appeals), Peshawar, who vide Order-in-Appeal No.525/2010 dated 22.10.2010 released the goods mentioned at serial No.3 of the Recovery Memo against 30% redemption fine in addition to payment of customs duty and taxes leviable thereon. He also imposed a personal penalty of Rs.5,000/- each on the appellants namely Muhammad Sher and Aurangzeb Khan and maintained rest of the impugned Order-in-Original to the extent of goods mentioned at serial 1 and 2 of the Recovery Memo. Hence the instant appeal on the following grounds:--

i.That the order in appeal as well as order-in-original are against the law, facts and material available on record.

ii.That the entire action from seizer and adjudication by the respondents is with out any factual and legal grounds.

iii.That the order in appeal as well as order-in-original are erred both in law and facts hence not sustainable.

iv.That seizure and confiscation on lawful imported black tea is void, ab-initio and Coram non judice.

v.That the show-cause notice is based on misconception of law and suffering from incurable legal infirmities, thus liable to be vacated.

vi.That with out prejudice as supplies are made by the importer and issues a sales tax invoice, therefore, Customs Act, 1969 is not applicable.

vii.That it is humbly submitted that the Learned Collector Appeals and Learned Adjudication officer instead of processing the import documents presented, evasively passed the order in appeal as well as order in original on frivolous grounds.

viii.That the seized black tea is a freely importable and has not been placed on the negative list or restricted items list of the existing Import Policy Order. As such does not attract the provisions of section 3(1)(3) of the Import and Export (Control) Act, 1950.

ix.That the penal provision of 156 are not applicable in this case because the said provisions of law deal with the smuggled goods for the offense with in the mischief of section 2(s) of the Customs Act, 1969 whereas the goods seized in this case are the goods other than the smuggled goods.

5.In rebuttal, the respondent-department submitted their parawise 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 effected 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 merit 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.In turn, learned counsel for appellant also filed rejoinder to the comments submitted by the respondent.

i.Comments on ground (i) of appeal are incorrect. The Learned Collector (Appeals) and Learned Adjudication officer has been failed to decide the case in its true prospect. The Sections 2(s), 16 of the Customs Act, 1969 and Section 3(1) of the Import and Export (Control) Act, 1950 are not applicable because the law clearly contemplates two separate categories of goods, one clause (s) of section 2 and the other goods the import or export of which is prohibited under any other law or for that matter under any other section of the Customs Act, 1969. The Bill of Entry is a solid proof that the import of black tea is neither prohibited nor restricted. Therefore the appellant has not violated sections 2(s) and 16 of the Customs Act, 1969. Therefore Sections 3(1) of the Import and Export (Control) Act, 1950 is too not applicable. If the appellant has not violated Sections 2(s), 16 of the Customs Act, 1969 and 3(1) of Import and Export (Control) Act, 1950 then the penal sections 156(1), (8) and (89) of the Customs Act, 1969 and 3(3) of the Import and Export (Control) Act, 1950 cannot be invoked. Hence Para is specifically denied.

ii.That comments on ground (ii) of the appeal are incorrect. The Seizing officer has not fulfilled the legal requirements of seizer. The goods seized were consist of small packets of black tea which carries the name of appellant's Company as Hero Tea Co. and his address and the phone No. of the Company. The seizing officer neither detained the goods nor issued notice under section 26 of the Customs Act, 1969. If the seizing officer called the record of the Company pertaining to the seized goods then the seizing officer came to clear cut decision. The Adjudication officer has also been failed to appreciate the documentary evidence produced by the appellant. Hence Para is specifically denied.

iii.That comments on ground (iii) of the appeal are incorrect. The detail reply has already been given in the above Pares. Hence Para is specifically denied.

iv.That comments on ground (iv) of appeal are incorrect. The confiscated black tea is legally imported one. It has not been brought to country through an unauthorized route neither in violation of any law. Bill of Entry produced by the appellant is the cogent evidence which proves that the confiscated tea is not a smuggled one, it is dully duty and tax paid. But the Learned Collector Appeals and Adjudication officer has been failed to appreciate the documentary evidence produced to them and has been failed to apply their judicious mind while deciding the order in appeals as well as order-in-original. Hence Para is specifically denied.

v.That comments on ground (v) of appeal are incorrect. The confiscated black tea was packed in small packets which carries the name as Hero Tea, address and phone No. of the Company but the Adjudication officer did not issue show-cause notice to the appellant according to Section 180 of the Customs Act, 1969 show-cause notice must be issued to the owner of the good. According to Section 168 (2) of Customs Act, 1969 if show-cause notice not issued to the owner of the goods within two months then the goods shall be return to the owner. The entire action of Customs authorities seizing the black tea and confiscated the same with out issuance of show-cause notice to the appellant (owner) is illegal, without lawful authority and of no legal effect. Hence Para is specifically denied.

vi.That comments on ground (vi) of appeal are irrelevant. The appellant has imported the tea in question through a specified route and has dully paid relevant duty and taxes. The Customs Authorities has dully cleared the tea in question and dully issued bill of entry then the provision of Customs Act, 1969 are not applicable and the Customs officer has no authority to seize the same. The goods which once have been cleared by the Customs Authorities then if falls with in the domain of Sales Tax Department to check that whether the Output Tax has been paid at Supply stage or not. In the instant case the appellant has dully paid the Output Tax. Hence Para is specifically denied.

vii.That comments on ground (vii) of appeal are incorrect. It is crystal clear from the order-in-appeal as well as order-in-original that both the lower forums have ignored the documentary evidence, their findings based on hypothesis. Both the lower forums have been failed to bring on record a cogent reason of confiscation. Both the lower forums have passed their judgments evasively. Hence Para is specifically denied.

viii.That comments on ground (viii) of appeal are irrelevant. The replying person could not understand the language of the Para. There is no such notification under which the import of black tea is prohibited or restricted. The bill of entry is the solid proof of this fact that confiscated black tea is not a bended Item. Hence Para is specifically denied.

ix.That comments on ground (ix) of appeal are irrelevant. Detailed reply has already been given in the reply of said Paras.

7.During the course of arguments, learned counsel for the appellant reiterated the above grounds of appeal as well as rejoinder and requested for unconditional release of the goods.

8.On the other hand, Mr. Muhammad Azeem Khan, Deputy Superintendent Customs/representative of the respondent department opposed the contention of the learned counsel and requested for dismissal of the appeal.

9.I have examined the case record and considered the written as well as verbal submissions of both the parties. It has been observed that the appellant has imported 26400 Kg vide black tea (China Origin) vide GD No. PDRY-HC-1690 dated 13.1.2009 (GD available as annexure B at page 9). The GD shows that the appellant has paid relevant duty and taxes total amount Rs. 432535/- at Import stage. The said black tea has been cleared by the Customs Authorities at Customs Dry Port Peshawar. The appellant entered the said black tea in his Stock Register for the month of 01/2009 (Stock Register is available as Annexure C on page 10). The appellant sold out 600 Kg black tea to Younas Tea Store Batkhela vide Sales Tax Invoice No. 6 dated 26.5.2010 (sales tax invoice No. 6 available as annexure D on page 14). The appellant booked the same through Mumtaz Goods Forwarding Agency vide Bilty No. 6715 dated 26.5.2010 (available as annexure K on page 29) the appellant entered the sold quantity in his Supply Register for the month of 05/2010 (supply register is available as annexure E on page 15). The appellant at supply stage has paid out put Tax Rs.8215/- which is confirm from acknowledgment slip (available as annexure F on page 16), Monthly Sales Tax Return for the month of 05/2010 (available as annexure G on page 17). Further more in the month of 05/2010 the appellant issued two sales tax invoices No. 6 dated 26.5.2010 and No. 7 dated 30.5.2010 which is also confirmed from the Sale Summary (available as annexure H on page 18).

10.The perusal of the record shows that the seized/confiscated black tea was imported one. The seized/confiscated black tea was packed in packing From the examination of the packing it has been observed that each and every packing carries the name of Messrs Hero Tea and Food Company Peshawar along with address and phone number. The Transportation Bilty No. 67/15 also shows the name of Hero Tea and Food Company as sender. Despite this fact the seizing officer neither gave notice under section 26 of the Customs Act, 1969 nor summoned the owner of the goods to join the investigation and produced the required documents. However the seizing officer was bound to give notice under section 26 of the Customs Act, 1969 or issue summon to owner of the goods before seizing the goods in question but the seizing officer without observing the legal requirement has directly seized the goods which is not the mandate of law. Therefore the seizure made by the seizing officer is illegal and without lawful authority. The seizure could not be made on mere suspicion and that no seizure is made without adequate material. Furthermore, where adequate documents are not found with the consignment but are claimed to be available, if should be more appropriate to detain the consignment under section 17 of Customs Act 1969 and issue notice under section 26 of the Customs Act, 1969 for furnishing the documents within 7 days instead of making an outright seizure.

11.Before making the seizure detecting agency must require to verify the documents from the concerned quarters and also to have check the Purchase; Stock and Supply Registers of a registered person or company/firm. The legislature has also made the issuance of sales tax supply invoice mandatory for a registered person because it is the outcome of the purchase, stock and supply quantity, value exclusive of tax and amount of sales tax and value inclusive of tax. Once the goods imported into the country for home consumption and issued a sales tax invoice in respect of that goods then the provisions of Custom Act, 1969 are not applicable. Moreover now a day it is very easy for the seizing officer to verify the documents produced by a party because computerized system, generated by the FBR especially for this purpose. I have observed in many cases the seizing officer do not get benefit of this facility and create more agony for the innocent people.

12.I am not agreed with the contention of DR that the sales tax invoice has only mentioned the black tea not the origin of the tea. Here reliance placed on SAO No. 175 of 2004 dated 11.10.2004 titled Collector Customs Peshawar, v. Messrs Khyber Tea and Food Company Peshawar wherein his Lordship Mr. Justice Nasir-u-Mulk has concluding 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 need not be mentioned. The tea imported had been repacked by the importer for distribution to the retailers and, therefore, it was quite unnecessary 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 production of the relevant documents."

The question decided by the High Court is binding to all the Benches of Tribunal in the country. Therefore, the question of origin has already been decided by the Peshawar High Court in the said SAO No. 175/2004 so this tribunal is also binding to the question decided by the Peshawar High Court Peshawar. Reliance placed on 2002 PTD (Trib.) 1455.

13.The learned adjudication officer in Para 6 of his judgment held 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 while seizure in the instant case was effected on 28.5.2010 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. While, the Collector Appeals also upheld the findings of the adjudication officer in this regard. I am not agreed with the findings of both the lower forums because admittedly the seized/confiscated black tea was in packs and the same time both the lower forums asserts that the it didn't tally with the GD produce by the appellant. So far as the question of expiry of the seized confiscated black tea is concerned in this regard the learned counsel for appellant produced some Bill of Entry, packing lists and Bill of Lading wherein mentioned the manufacturing and expiry dates of black tea. From the scrutiny of the Bill of Entry, packing lists and Bill of Lading it inspires that the life of black tea is of three years. In the instant case the import was made on 13.1.2009 and seizure was made on 28.5.2010. The appellant sold out the tea in question on 26.5.2010 after 16 months of its import. It proves that the tea in question was not expired. It is not mandatory for the importer to sold out the import goods like tea as soon as after its import but he is legally bound to sold out it within the period before its expiry.

14.The Collector Appeals also held in his findings that the GD produced by the appellant is nothing but and after thought. I am not agreed with the findings of the Collector Appeals because the GD has been issued by the Customs Authorities at Peshawar Dry port and was produced well within time at the adjudication stage, so how it would be an after thought.

15.In view of the above discussion I am convinced to conclude that the black tea seized and confiscated in this case was legally imported therefore I allow the instant appeal, set aside both the Order-in-Original No.358/2010 dated 25.8.2010 and Order-in-Appeal No.525/2010 dated 02.10.2010 and order that the confiscated black tea be released unconditionally to its lawful owner, if not required in any other case.

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