COLLECTOR OF CUSTOMS through Assistant Collector of Customs VS The COLLECTOR OF CUSTOMS, 2017 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 1569 (2016)

Per Muhammad Nadeem Qureshi, Judicial Member-I

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

----Ss. 2(s), 16, 156(1)(8)(89), 157(2), 168, 171, 181 & 194-A---S.R.O. No. 566(I)/2005, dated 6-6-2005---S.R.O. No. 499(I)/2009, dated 13-6-2009---Smuggling---Seizure and confiscation of alleged smuggled Diesel oil---Redemption of vehicle loaded with smuggled diesel oil---Notice under S.171 of the Customs Act, 1969 was issued to the arrested person and proper recovery memo was also prepared---Adjudicating Officer after fulfilment of codal formalities decided to confiscate vehicle loaded with diesel oil in question and also to be confiscated under S.157(2) of Customs Act, 1969---Collector of Customs, Appellate Authority allowed vehicle in question to be redeemed on payment of fine and modified order passed by Adjudicating Officer---Validity---Seizure had been made far from the border area and near populated city---Such seizure was made on the basis of presumptions and assumption---Seizing authorities, had not fulfilled the legal criteria, nor preformed their duty in accordance with prescribed law and rules, and failed to collect the samples from High Speed Diesel Oil loaded on the vehicle in question---Seizing authorities without conducting the chemical process or obtaining any opinion from the concerned laboratories, made declaration that the subject diesel was of foreign origin---Allegation attributed against the respondents, in circumstances, could not be considered as admissible evidence in proof of the claim made by the authorities at the time of seizure---After issuing the show-cause notice, nobody had claimed ownership of diesel oil in question, nor any body had appeared to contest the show-cause notice for the claim of seized property, only owner of the oil tankers contested the subject show-cause notice---Department had relied only on the official statements---Mashirs/witnesses had not been produced before the competent authority---Department had failed to present any substantial evidence to establish the mens rea and connivance of owners of vehicle with the alleged offence---Order of collector (appeals) to release the vehicle in question was well founded in circumstances---No person was to be deprived of his property by way of penalty, unless, it was clear that he was, responsible for assisting or furthering the commission of the offence committed---Discretion given to the Authority to confiscate the goods or vehicle must be exercised on sound judicial principles and on the basis of principles of natural justice---Vehicle in question was not part of the act which was prohibited by law---Equity was the soul of law in dispensation of justice---Orders passed by the Collector (Appeals), needed no interference---Subject appeals, were rejected, in circumstances.

Syed Muhammad Hussain, Karachi v. Collector of Customs (Adjudication-I) and others Karachi Customs Reference No.157 of 2008 and Imtiaz v. Ghulam Ali PLD 1963 SC 382 ref.

(b) Administration of justice---

----All judicial, quasi judicial and administrative authorities while exercising their mandatory or discretionary jurisdictions must follow the rule, for fair exercise of power in a reasonable manner, and must ensure the dispensation of justice with spirit of law---Proper place of procedure in any system of administration of justice was to help and not to thwart the grant to the people of their rights---All the technicalities had to be avoided, unless it was essential to comply with them on ground of public policy---Any system, which by giving effect to the form, not to the substance, would defeat substantive rights---Ideal, must always be a system that would give to every person what was his right under the law.

Per Muhammad Nazim Saleem, Member Technical, agreeing with Muhammad Nadeem Qureshi, Judicial Member

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

----Ss. 2(s), 156(1)(8)(89), 157(2) & 161---Smuggling---Seizure and confiscation of vehicle loaded with smuggled diesel oil---Main thrust of the appellant/Collector of Customs, was that seized vehicle was a truck and not an 'oil tanker' having special cavities/internal tanks---Narrative part of notice revealed that there was a mention of 'truck', which was found along side the road, loaded with smuggled foreign diesel, but in a table which summarized, details about oil and the vehicle, it was mentioned as "Hino Oil Tanker"---Order-in-original, indicated said vehicle as "truck", but in another para of the order it was shown as "Oil Tanker"---Said position unambiguously, confirmed that the seized/confiscated vehicle was an 'oil tanker' and not a truck---Emphasis of authorities that there were special tanks/cavities in the vehicle carried no weight---Tribunal observed that seizing agencies needed to be very careful in highlighting facts of the case besides meeting legal requirements while effecting seizures under the Customs Act, 1969.

Aftabullah Shah Deputy Collector and Muhammad Umer, Inspector, present for Appellants.

Mallag Assa Dashti for Respondents.

Date of hearing: 12th February, 2016.

JUDGMENT

MUHAMMAD NADEEM QURESHI, MEMBER JUDICIAL-I.---By this Judgment we intend to dispose of above appeals filed by the appellants under Section 194-A of the Customs Act, 1969, against orders-in-Appeal dated 11-09-2015 and 22-09-2015, passed by the Collector of Customs (Appeals), Karachi. These appeals have identical issues of law and facts and are therefore being heard, dealt with and disposed of simultaneously through this common order in the light of judgment of the Honourable High Court of Sindh in Customs Reference No.157/2008 (S.M. Naqi son of Syed Muhammad Hussain, Karachi v. Collector of Customs (Adjudication-I) and others, Karachi).

2.Since these 10 appeals are based on similar facts and question of law, therefore, it is needless to reproduce the facts of each case separately. Hence, for the reference, the facts of appeal No.G-1546/2015 are taken into consideration for decision, wherein the brief facts of the case as per show-cause notice are that the Superintendent (Preventive) of Custom House, Gaddani in pursuance of credible information to the effect that a vehicle loaded with Iranian smuggled diesel oil is parked along with the road in Uthal, which will attempt to smuggle said diesel to down country. Hence a strategy was devised by the Assistant Collector (Preventive), Custom House, Gaddani, to approach the said vehicle. A mobile team comprising of Mr. Shafique Ahmed, Superintendent, Mr. Shujaat Hussain, Inspector and class IV Staff along with staff of Frontier Corps Wing-113 Hub, proceeded towards the above location. On 05-03-2015 at about 02-00 a.m. the said team reached at the required squad and saw a truck parked along with the road in Uthal driver of said vehicle was found sitting on driving seat. The Customs and F.C. staff took the possession of the said vehicle which was found loaded with smuggled Iranian diesel oil. The driver along with vehicle was taken into custody. Jan Muhammad and Gul Muhammad came there with armed people and tried to hinder vehicle movement but later they ran away. Finally the above said vehicle was brought to the Custom House, Gaddani under the escort of FC 113-Wing, for safe custody and further legal formalities. Detailed checking measuring was carried out and recovered 15,000 liters Iranian smuggled diesel oil from the concealed tanks in the body of above said vehicle. Therefore the Custom staff seized the smuggled diesel oil along with vehicle under Section 168 of the Customs Act, 1969, for violation or Section 3(1) of Imports and Exports (Control) Act, 1950, sections 2(s) and 16 of the Customs Act, 1969, read with S.R.O. 566(I)/2005, dated 06-06-2005, punishable under clauses 8, 89(a) 92 read with sections 156(1) and 157(2) of the Customs Act, 1969. Notice under section 171 of the Customs Act, 1969 was also issued to arrested person and pasted to notice of Custom House Gaddani. Proper recovery memo was also prepared in the presence of two musheers. Accordingly a show-cause notice was issued to the respondents and after fulfillment of codal formalities the matter was decided by the adjudicating officer as follows:--

"I have examined the case record and considered the arguments put forth by the respondents as well as representative of the seizing agency/ department. No one came on the date of hearing to claim the ownership of the Diesel. It is therefore, proved that the seized Diesel is of foreign origin and smuggled one. I accordingly hold that seizing agency/ department has been able to prove conclusively that the seized Diesel has been smuggled into the country without payment of leviable duty and taxes. The charges leveled against the defendant are established. The seized Iranian origin diesel 15,000 liters, is therefore, ordered to be confiscated outrightly under clauses (8), (89) of Section 156(1) of the Customs Act, 1969, subsection (1) of section 3 of Imports and Exports (Control) Act, 1950, sections 2(s) and 16 of the Customs Act, 1969, read with S.R.O. 499(I)/2009 dated 13-06-2009. The vehicle bearing registration No. TTC-082 Chassis No. FDIJLC-10323, Engine No. JO8CTA-17381 is used in the importation of smuggled diesel is also confiscated under section 157(2) of Customs Act, 1969."

3.Being aggrieved and dis-satisfied with the impugned Order-in-Original, the respondent filed appeal before the Collector of Customs (Appeals), Karachi, who decided the matter in the following terms:--

"I have examined the case record. The appeal essentially revolves around one point, weather the adjudicating officer was within his lawful authority to confiscate and subsequently deny option to redeem the tanker/carrier used in transportation of smuggled goods. The adjudicating officer has ordered confiscation under section 157(2) of the Customs Act, 1969 which is a generic provision for creating liability to confiscation for conveyance used in removal of any goods liable to confiscation, nevertheless this subsection applies to every conveyance used in removal of smuggled goods as well. Therefore the adjudicating officer was right in ordering confiscation of the tanker under section 157(2) of the Act. Having confiscated the tanker, the officer was required to apply his judgment as to weather option to redeem seized conveyance should be given or not under section 181 of the Act. He did not give option to redeem the confiscated diesel as it was established that the same attracted mischief of sections 2(s), and 16 of the Customs Act, 1969. In terms of first proviso to section 181, Board has the authority to specify goods or class of goods, where no option to redeem the goods is to be given. In this regard under clause (a) of S.R.O. 499(I)/2009 dated 13.06.2009, no option is to be given to the owner of goods falling under section 2(s) of the Act. Similarly no option is to be given for conveyance exclusively or wholly used for transportation of goods falling under section 2(s) or which have false cavities or exclusively used for carriage of smuggled goods. However, if there are no false cavities for carrying smuggled goods or the conveyance is not used exclusively or wholly for carriage of goods falling under section 2(s), although they are found carrying such goods can be allowed redemption against payment of fine under clause (f) of Sr. No. 2 to the table under the said SRO. The seizing agency has not been able to bring on record that the owner of the vehicle was involved in smuggling or that there was exclusive use of vehicle in smuggling, therefore depriving a person of his property by way of penalty is not justified. It has also not been proved that the owner of vehicle was consciously assisting or furthering the offence of smuggling. It is also-worth mentioning that in number of cases having identical circumstances, wherein smuggled diesel was seized from common carriers and the owner of conveyance was not criminally linked with the smugglers, the conveyance were allowed to be redeemed as per aforesaid SRO. In view of the above discussion, the confiscated Hino Oil Tanker bearing registration No. TTC-082 is allowed to be redeemed on payment of fine as per clause (f) of Sr. No. 2 to table under S.R.O. 499(I)/2009. The original order stands modified to this extent only."

4.Being aggrieved and dis-satisfied with the impugned Order-in-Appeal, the appellant filed appeals before this Tribunal on the grounds incorporated in the memo of appeal.

5.Learned D/R for the appellant on the date of hearing argued the matter and contended that the impugned order is vague, absurd, illegal, unlawful and is liable to be set aside forthwith. The impugned order is a non speaking order as the learned respondent No.1 has not touched the important and material facts of the case and on this score alone the impugned order is unsatisfactory and not versed in the principles of law. Respondent No.1 has not considered the very fact that in the instant case no one has claimed the goods neither any one appeared to defend the case and as such the respondents were fake claimant of the goods and vehicle at the appellate stage and on this score alone the impugned order is liable to be set aside. The respondent No.1 has misreported and infact the Iranian diesel was recovered from the truck having special/concealed tanks and cavities and respondent No.2 has stated that the diesel was loaded in the oil tankers which is absolutely wrong as the vehicles involved in the instant case is truck and not the oil tanker. It is pertinent to mention here that in the instant case the goods were loaded and carried in special designed cavities and special fitted/concealed tanks in the truck and as such involving of the vehicle in transportation of smuggled goods has been proved without any shadow of doubt and as such outright confiscation of the goods and vehicle is absolutely legal, lawful and in accordance with the relevant provisions of Customs Act, 1969. The respondent No.1 himself admitted the fact that no option is to be given for conveyance exclusively or wholly used for transportation of goods falling under section 2(s) or which have false cavities exclusively used for carriage of smuggled goods, the impugned vehicle is fully covered in clause (b) of paragraph 1 of the S.R.O. 499(I)/2009 dated 13-06-2009, which is reproduced below:--

"1 (b). lawfully registered conveyance including packages and containers found carrying smuggled goods in false cavities or being used exclusively or wholly for transportation of offending goods under clause(s) of Section 2 of the Customs Act, 1969."

6.He further contended that in fact the smuggled goods were transporting through truck and not the oil tanker. The same has special cavities and as such the instant case is not covered under the ambit of those cases in which the vehicle has found with common cavities. That by allowing the release of vehicles having special designed cavities on redemption fine will open a Pandora box and will encourage the smugglers under the grab of these type of findings which will cause the damages of revenue to the government exchequers and so also will badly damage the business of legal importers of the goods. The vehicles involved in the transportation of smuggled goods are liable to be confiscated outrightly without giving any option whatsoever and prayed that impugned order be set aside to the extent of redemption fine only by declaring that the order of outright confiscation is legal, lawful and is sustainable.

7.The respondent filed counter objections as required under Section 194-A (4) of the Customs Act, 1969 and argued the matter in favour of the respondent and vehemently opposed the grounds of appeal. He further argued that present appeal is not maintainable in the eye of law and filed without lawful grounds and detention of vehicle and imposition of penalty be declared as illegal, void, ab initio and without jurisdiction and declare that the act of appellant staff detaining the said vehicle as illegal, ultra viral and without lawful authority. In identical cases vehicle was released by the appellant which was decided by different adjudicating authority but in our case they preferred to file appeal and ignored guideline letter C. No. 10(17)L&P/2005 dated 8th March 2006 issued by the FBR for the implementation of amendments made in S.R.O. vide letter C. No-10(17)L&P/2005 dated 8th March 2006 para 2 (ii) in which directed as under:--

"Para 2 (ii) The amendment shall be applicable prospectively that is from date of issuance of S.R.O. 179(I)/2006 dated 02.03.2006 and the vehicles already confiscated through adjudicating order shall not be liable to be released under this notification. However, in case appellate authority released the vehicles against 30% redemption fine, the department will not prefer an appeal against the said order."

8.He further argued that it is fundamental law that all citizens are equal before the law in terms of Article 25 of the Constitution of Islamic Republic of Pakistan, 1973 and to avoid discrimination with respondent vehicle may be released and prayed that this Tribunal may be pleased to declare that impugned Order-in-Appeal is strictly in accordance with law and no interference is required and the appeal be dismissed in limine.

9.Argument heard and concluded, record of the case perused.

10.After considering the arguments extended by both the parties and perusal of record, it has been observed that the seizure has been made far from the border area near populated city area at Othal. The said seizure was made on the basis of presumptions and assumptions. Evidentally, the seizing agency has not fulfilled the legal criteria nor performed their duty in accordance with prescribed law and rules laid down and fail to collect the samples from the HSD oil loaded on each and every vehicle and without conducting the chemical process or obtaining any opinion from the concerned qualified laboratories, they made declaration that the subject diesel is of Iranian origin. Without doing so the allegation attributed against the appellants does not have any warrant under the law to be considered as admissible evidence in proof of the claim made by the appellant at the time of seizure. In spite of that legal lacuna the Collector (Appeals) passed the order and released the subject vehicles against redemption fine as per clause (f) of Serial No.2 to the Table under S.R.O. 499(I)/2009. The present respondents accepted the subject orders and not assailed the same before this august Tribunal/Court for any further relief.

11.It has also been observed that, after issuing the Show-Cause Notice nobody claimed the ownership of the seized HSD diesel oil nor any body appear to contest the show-cause notice for the claim of the said seized property. Only owners of the oil tankers bearing registration Numbers TTC-082, TKX-731, CH-786, TTC- 121, TTA-054, TKU-755, TUA-015, TKT-495, TKL-884 and TUB-087 contested the subject show-cause notice. Evidently, there is no supporting evidence available on record in proof thereof, the department has to establish the claim as allegedly made in the show-cause notice against the owner of the vehicles. The department only relied on their own statements and act or omissions, but on the contrary for reasons better known to the appellants, mushiers/witnesses were never produced before the competent authority for their statements during the hierarchy of the customs, as such the credibility of their statements have never been proved nor to be treated as admissible evidence under the law. It is also evident that the department fails to present any substantial evidence in proof to establish the mens rea and act of connivance with the alleged offence against the respondents/claimants of the said seized vehicles. In the absence of such evidence the observations made by the Collector in the Order-in-Appeal are well under the warrant of law.

12.It is a fundamental principle of administration of justice that all judicial, quasi judicial and administrative authorities while exercising their mandatory or discretionary jurisdictions must follow the rule, for fair exercise of power in a reasonable manner and must ensure the dispensation of justice with spirit of law.

13.It is one of the principles now well-accepted that no person should be deprived of his property by way of penalty unless it is clear that he is, in some measure responsible for assisting or furthering the commission of the offence committed, unless material was brought on record by customs staff to show that owners of the vehicles were criminally linked with the smugglers or had definite knowledge that goods to be transported were smuggled or that either of them was consciously assisting or furthering commission of offence of smuggling, prima facie presumption could not be, to the effect that vehicle for transportation was being willfully used in transportation of smuggled goods, the same was not liable for confiscation. The appellant picked the load against normal hire charges. The respondents were neither the owners of the goods nor had any other material interest therein whatsoever.

14.We also prefer to place our observations in consideration of Section 157 subsection (2) of the Customs Act, 1969 which means that the term shall also be liable to confiscation" does not mean liable to confiscation automatically. The discretion given to the authority to confiscate the goods or vehicles must be exercised on sound judicial principles. If the words 'liable to confiscation' give a discretion to the confiscating authority to deprive a person of his property, then it follows that this discretion must be exercised upon the principles of natural justice. According to one of principles now well accepted, no person should be deprived of his property by way of penalty unless it is clear that he is in some measure responsible for assisting or furthering the commission of the offence committed and no innocent person should be unjustly punished or deprived of his property. Indeed, there was no indication even that the owners of the vehicles were also involved. If that be so, then it is difficult to appreciate on what basis even a reasonable suspicion could arise as to the complicity of the respondents. There is nothing on record which shows any collusion between the owners of the vehicles and the owner of the smuggled goods. In the absence of any proof on the record, it is not in accordance with law to hold such vehicles as part of the act which is prohibited by the law. Therefore, it is established that the said vehicles are not deliberately part of the act which is forbidden by law. It is imperative to place on record that equity is the soul of the law in dispensation of justice, the Honourable Supreme Court of Pakistan in a hallmark judgment namely Imtiaz v. Ghulam Ali reported as PLD 1963 SC 382 laid down the rule that the proper place of procedure in any system of administration of justice is to help and not to thwart the grant to the people of their rights. All the technicalities have to be avoided unless it is essential to comply with them on ground of public policy. Any system which by giving effect to the form not to the substance defeats substantive rights is defective to the extent. The ideal must always be a system that gives to every person what is his right under the law.

15.By getting the strength stated herein above particularly the interpretation of law and legal proposition, in the light, of the prescribed law and by following the ratio decidendi observed by the Superior Courts, along with our additional observations made thereon, we are of the considered view that, the orders passed by the Collector (Appeals) needs no interference, subject appeals are without substance, fails its merits being devoid from law, hereby rejected with no order as to cost.

16.Judgment passed and announced accordingly.

MUHAMMAD NAZIM SALEEM, MEMBER TECHNICAL-II.---In addition to above findings/conclusion authored by my learned colleague to which I agree, I would like to add here some factual glaring mistakes which are usually committed by the seizing agencies while making out seizures under the Customs Act, 1969. Such mistakes on the part of seizing agencies lead to confusion about facts of the case and may impact decisions/judgments. The main thrust of the appellant MCC Gawadar in the instant case is that the seized vehicle was a truck and not an oil tanker having special cavities/internal tanks. A careful study of show-cause notice dated 2.5.2015 shows that in narrative part of the said Notice, there is mention of "truck" which was found parked alongside the road at Uthal loaded with smuggled Iranian diesel. However, at the end of the same para, there is a table which summarizes details about oil and the vehicle. In this table, there is categoric mention of "Hino Oil Tanker Registration No. TTC-082". Now, I come to the Order-in-Original No.67/2015 dated 27.6.2016. Here again para 09 of the said order indicates vehicle as "truck", however, para 11 thereof shows the same as "Oil Tanker" as per contention of the seizing agency. The para 12 indicates confiscation of "vehicle". The aforementioned position unambiguously confirms that the seized/confiscated vehicle was an oil tanker and not a truck, therefore, the emphasis of appellant that there were special tanks/false cavities in the vehicle, carries no weight or little weight, least to say. The seizing agencies need to be very careful in highlighting facts of the case besides meeting legal requirements while effecting seizures under the Customs Act, 1969.

HBT/80/Tax(Trib.) Appeal rejected.