JAVED IQBAL VS DIRECTOR, DIRECTORATE GENERAL OF INTELLIGENCE AND INVESTIGATION, FBR, KARACHI, 2017 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 2357 (2016)

Customs Act (IV of 1969)---

----Ss. 2(s), 9, 10, 16, 156(1)(8)(89), 157(2), 179 & 194-A(4)---"Smuggling"---Seizure and confiscation of goods---Information was received by the department that an attempt of smuggling of huge quantity of antiques was being undertaken, to move the items from Islamabad to Karachi for onward transportation abroad in a Trailer/container---Team was constituted under the supervision of Superintendent, Range Office, which intercepted said truck---Said container was filled with 28 boxes found subsequently to contain 700 articles of antiques---Adjudicating Collector of Customs, passed order-in-original, in which he agreed with the contention of seizing agency that the seized antiques were brought into the country through an unauthorized route---Seized antiques were confiscated in terms of cls.(8) & (89) of S.156(1) of Customs Act, 1969 for the violation of S.2(s)(ii)(iii) and S.157(2) of the Customs Act, 1969---Validity---Scheme and structure of S.2(s) of the Customs Act, 1969, was that the offence of 'smuggling', was defined to have occurred only when the offending goods brought into or taken out of the country, meaning thereby that the criminal action had been completed and offence had already taken place---Exception to such definition, was provided under Cl.(iii) of S.2(s) of Customs Act, 1969, whereby an attempt, to bring into or taken out of the country, offending goods through an unspecified route was also stated to constitute offence of "smuggling"---Adjudicating authority, having realized that the "attempt to smuggling" per se was not an offence at par with that of "smuggling" unless it was in relation to the use of an unspecified route, instead of deciding the case on merits and upon basis as were stated clearly in the law, chose to introduce the same in the order-in-original despite knowing that such was not an allegation against the appellant in the case made by Detecting Agency---Such an action of the adjudicating authority was prejudicial to the interests of the appellant, as there was no such allegation against him in the show-cause notice, and he was effectively denied an opportunity to be heard in that regard which was violation of the principles of natural justice---Impugned order-in-original, was outright illegal on account of being, neither warranted nor sustainable under the law---Order-in-Original was time barred; as proceedings under S.179(3) of Customs Act, 1969 were to be completed within 120 days of the issuance of the show-cause notice, but in the present case these were completed in 425 days, in violation of mandatory provisions of law---Proceedings, actions and orders passed by adjudicating authority completely suffering from grave legal infirmity, were declared ab initio illegal, and of no legal effect on various accounts---Appeal was accordingly allowed.

2009 PTD 762; 2008 PTD 578 and PTCL 2005 CL 841 ref.

Zain A. Jatoi for Appellant.

Ghulam Muhammad, I.O. Present for the Respondent.

Date of hearing: 19th July, 2016.

JUDGMENT

MUHAMMAD NADEEM QURESHI, MEMBER JUDICIAL-I.---By this judgment we intend to dispose of the instant appeal filed by the appellant against the Order-in-Original No. 347 of 2014 dated 12.06.2014, passed by the Additional Collector of Customs (Adjudication), Quetta.

2.Brief facts of the case as reported by the Superintendent, FIU Directorate of Intelligence and Investigation-FBR, Hyderabad that credible information was received from Director General, Directorate of Intelligence and Investigation-FBR, Islamabad through Regional office Karachi that an attempt of smuggling of huge quantity of antiques shall be transported from Islamabad to Karachi and further transportation to abroad. The information further added that the same huge quantity shall be transported from Islamabad to Karachi, in a Bed Ford Trailer/ container No.JT-0439 (Karachi), via Sukkur. Acting upon the aforesaid information a team was constituted under the supervision of superintendent, Range Office Sukkur. On 17.02.2013 at about 18.00 hours near Ali Wahan Rohri Bypass, Rohri intercepted the required aforesaid Truck loaded with container (1" x 20") No.GESU-2113607, on demand, the driver of said truck produced a copy of check sheet of M/s. Overland Express (TCS Cargo) attached with a bilty No.278 dated l4.02.2013 issued by M/s. Super Five star goods company Islamabad the said bilty showed consignor namely (1). Cluntor and (2) Muhammad Iqbal shop of M/s. Overland Express revealed that receiver name as Muhammad Iqbal, from Islamabad to Karachi duly signed by the officials of TCS. On query, the driver stated that the container is loaded with wooden boxes and he did not know about the goods packed in the wooden boxes. He was also inquired about the seal of Messrs TCS which was not intact in this response he told that at check post of Excise and Taxation the said seal was broken by staff and the consignment could not be checked due to strongly pinned with iron nails. On cursory checking of the some wooden boxes, presence of idols/antiques was seen packed in the boxes loaded in the container. Accordingly the intercepted Bedford truck along with container was brought into the Range Office Sukkur and unloaded the wooden boxes with the help of lifter and labor. Therefore, for want of further verification/expert opinion from the Archeology department, the said consignment along with truck/container was hold for the purpose". The details of the seized goods are as under:

3.The Seizing Agency further added that "The statement of driver namely Muhammad Ishtiaq was recorded in which he stated that he is driver of the said truck on the pay of monthly basis. He further added that on 14.02.2013 he was remained with his truck at Messrs Ibrar Goods Tranol Rawalpindi. The owner of the Messrs Ibrar Goods namely Paris carried the business of broker to supply the vehicle on demand. On the same day Paris asked him to get his vehicle to the Messrs Super Five star goods near Sabzi Mandil-9 Islamabad as he demanded the vehicle for Karachi. He further disclosed that the owner of Messrs Five Star goods namely Imran Shah is a vendor of Messrs TCS cargo shipment company Islamabad since long. He also stated that the Munshi of said Adda namely Sati Supplied a Bilty and consignment packed in wooden boxes loaded in two Shezore mazda were brought near TCS godown and then loaded with the help of lifter in the truck in the presence of Imran Shah representative of TCS and labour he finally presumed that Mr. Imran Shah and official of TCS Amir etc or involved in the subject matter as Amir loaded this consignment upon his truck against the fare about Rs.28000/- and out of which Rs. 4000/- were also deducted. Finally Amir sealed the container and told him that on reaching at Karachi near Ghas Mandi contact with consignee upon his given cell number then unload the consignment at Karachi. The Seizing Agency further added that "To probe further into the matter, letters vide C. No. 01-DC/Misc/ SK/2012/2013/63 dated 18.02.2013 and C. No.01-DCI/Misc/SK/ 2012/2013/68 dated 21.02.2013 were addressed to the Secretary Culture department of Govt. Sindh Karachi and Mr. Fazal Dad Kakar, Director General, Archeology and Museum Department Islamabad (respectively) with a request to depute an expert team of Archaeology department to ascertain the age of antique object, description, International value etc of the said consignment. Furthermore the said letters were also emailed and remained in connection with the concerned department telephonically on daily basis. In spite of daily telephonically conversation/request to the concerned department still there is no team was come in the office of the undersigned, in this regard a reminder was also issued vide C.No.88 dated 07.0.3 2013. In response, on 10.03.2013 a team headed by Muhammad Shah Bukhari, National Museum of Pakistan Karachi visited the Range office Sukkur and Physically examined the said consignment and marked the object/groups. The team stated that the objects are antiques and falls under the parameters and purview of Antiquities Act, 1975."

4.The Additional Collector of Customs (Adjudication), Quetta passed the impugned Order-in-Original No. 347 of 2014 dated 12.06.2014. The operative part of the same is reproduced as under:--

"I have examined the case record, considered the verbal as well as arguments of the department. Consequently, I do conclude as under:--

Regarding seized Antiques, "Neither any one appeared from the defendant's side nor any written reply was received rebutting the allegations as contained in the show cause notice. Being conscious of the universally established legal principle of "audi alterm partem" i.e., no one shall be condemned unheard, this office tried its best to provide the respondent an opportunity of being heard as the show-cause notice and the hearing notices were issued despite that the respondents failed to appear either in person or through authorized representative and did not furnish any written reply to the show-cause notice. The department has demonstrated that the seized Antiques were brought into country by the unspecified route and were smuggled out of country. Therefore, I do not find any reason to disagree with the contention of the Seizing Agency that the seized Antiques were brought into the country through an unauthorized route. Consequently the seized Antiques are confiscated in terms of clauses (8) and (89) of Section 156(1) of the Customs Act, 1969 for the violation of sections 2(s), (ii), (iii) 16 and section 157 of the Customs Act, 1969 and section 3(1) of Imports and Exports (Control) Act, 1950."

Regarding seized Vehicle. "The owner/ claimant of the seized vehicle has failed to establish that the seized vehicle is not involved in the transportation of the smuggle seized antiques, therefore, the seized vehicle is confiscated outright in terms of section 157(2) of the Customs Act, 1969."

5.Being aggrieved and dissatisfied with the Order-in-Original, the appellants filed the instant appeal before this Tribunal on the grounds mentioned in the Memo of Appeal.

6.On the date of hearing Mr. Zain A. Jatoi, Advocate appeared on behalf of the appellant and reiterated the contents of the appeal and contended that, the allegation against the appellant, as per the SCN, is that the goods were being brought from Islamabad to Karachi and it will be appreciated that such movement of goods does not fall within the provision of Section 2(s) of the Customs Act, which pertains only to those goods which are being brought into or taken out of Pakistan. Both Islamabad and Karachi as well as the traveling route between them being situated within Pakistan, no offence in terms of Section 2(s) could even be alleged much less determined as has been so done vide the impugned order-in-original. That Clause (iii) of Section 2(s) specifically provides that for an offence of smuggling to have been committed the goods must be shown to have been moved by any route other than a route declared under Section 9 or 10 or from any place other than a Customs Station. It will be appreciated that the department neither demonstrated nor attempted to demonstrate what could otherwise conveniently be termed as the mandate of a statutory provision of law. He further contended that, the Show-Cause Notice having been issued on 12.04.2013 and the impugned order-in-original having been purportedly passed on 12.06.2014, the same militates against the periodicity requirements of Section 179 of the Customs Act, 1969, which allowing for any permissible extension and adjournments does not provide for conclusion of adjudication proceedings by way of passing of an order-in-original beyond a period of 210 days. It will be appreciated that the adjudication proceedings in the present case were stretched over a period of 426 days, which is a clear-cut violation of the mandatory provisions of section 179 of the Customs Act and such illegality renders the adjudication proceedings as so also the passing of the impugned Order in Original as being outright unlawful and void ab initio. He also argued that, the impugned Order in Original is arbitrary, unjust and against the established principles of law insofar as the Show-Cause Notice was never issued to the appellant. In this manner the Order in Original has been passed at the appellant's back in clear contravention of the maxim Audi Alterm partem. The Adjudicating Authority, the second respondent, arrived at the conclusion that the goods had been moved through "the unspecified route and were smuggled out of country", however, it will be appreciated that such observation is not born out of facts, as contained in the Show-Cause Notice and FIR, since the goods could not have been seized if these "were" smuggled out of the country. Furthermore, in the absence of any information, as obtained from the two so-called expert departments neither stated anything about the origin of the goods no determination could have been made as to the goods having been brought into the country through an unspecified route. He prayed that in the interest of justice and equity that this Hon'ble Customs Appellate Tribunal may kindly be pleased to call for the Record and Proceedings emanating from the Show-Cause Notice and culminating in the impugned Order in Original and having examined the legality and propriety thereof to set-aside/strike-down the same as being unlawful, illegal and devoid of any judicial sanctity.

7.No Cross-objections under subsection (4) of Section 194-A of the Customs Act, 1969 were submitted by the department/respondents. However, on behalf of the Respondents, Mr. Ghulam Muhammad, I.O, appeared and contended that the Order-in-Original passed by the Additional Collector of Customs (Adjudication), Quetta is well within the ambit of law and passed after the detail scrutiny of the evidence available on record, he prayed for the dismissal of the appeal in the interest of justice.

8.Arguments heard and concluded, record perused.

9.Perusal of the record of the case, which reveals that upon receipt of information that an "attempt of smuggling" (an expression used in the Show-Cause Notice, FIR and the Order-in-Original) of antiques being in place, to be moved from Islamabad to Karachi for onward transportation abroad, surveillance was mounted by the officers of the Range Office-Sukkur of the Directorate General of Intelligence and Investigation-FBR. Accordingly, a Truck, laden with a container, was intercepted near Ali Wahan By-Pass, Rohri. The container, which had commenced its journey in Rawalpindi to be concluded at Karachi, was filled with 28 boxes found subsequently to contain 700 artefacts of antiques. A team comprising of National Museum of Pakistan, Karachi, physically inspected the said consignment on 10.03.2013 and opined on the same day that the subject objects were antiques and fell within the parameters and purview of the Antiquities Act, 1975. To such effect Report dated: 12.03.2013 was also issued. Thereafter the Show-Cause Notice was issued on 12.04.2013 subsequent to which the FIR was lodged on 13.08.2013 wherein the value of the 700 purportedly antique objects was shown as Rs. 700 million in the international market. A perusal of the Order-in-Original also shows that a further examination of the consignment was carried out by the officers of Department of Archeology and Museums, Ministry of Information, Broadcasting and National Heritage, Government of Pakistan, whose report in relation 1162 objects reveals 105 objects to be fake/counterfeit and 1057 objects to be as antiques falling within the purview of the Antiquities Act, 1975. It was stated in the second report that some of the objects were from Gandhara region, some were from Balochistan and then there were those which were from Islamic Period. The respective time periods in the past as could be attributed to the purportedly antique objects to belong to are stated to be ranging between the 2nd to 5th Centuries AD, 11th to 15th Centuries AD and 3000 to 2000 BC. That on the basis of the allegation as to violation of Clauses (ii) and (iii) of Section 2(s) and Sections 16 and 157 punishable under Clauses (8) and (89) of Section 156(1) of the Customs Act, 1969, the Adjudicating Authority passed the following order:--

"The department has demonstrated that the seized Antiques were brought into country by the unspecified route and were smuggled out of country. Therefore, I do not find any reason to disagree with the contention of the Seizing Agency that the seized Antiques were brought into the country through an unauthorized route. Consequently the seized Antiques are confiscated ".

10.The appellant's counsel, other than arguing on the merits of the case as well the issue as to the Order-in-Original, impugned by the appellant, being badly time-barred, drew our attention to the following: (1) the number of objects are shown in the first report as 700 whereas in the second report these are numbered as 1162; (2) there was nothing on record to establish that the government officers who examined the consignment, were the experts in the field of "carbon aging" (process by which age of fossils and antiques is determined); (3) the said officials could not have the relevant and requisite experience to determine the "international market value" of the subject consignment since it was a specialized field and such work was carried out by renowned international auction houses. When the learned DR was enquired about the discrepant numbers of objects and also the level of expertise of the officers who conducted the examination of the subject consignments, he informed that the relevant government department had deputed such officers and, therefore, he could not comment upon the same. We do not find the learned Advocate's contentions to be without weight insofar as even the age of the objects is not properly stated in the two reports and mere estimates have been rendered viz. 2nd to 5th Centuries AD (covering 400 years), 11th to 15th Centuries (covering 500 years) and 3000 to 2000 BC (covering 1000 years). Accordingly, in our view the two referred reports do not fulfill the requisite standard of expertise and utterly lack the objectivity otherwise so required of the expert reports in such matters and, therefore, could not have been relied upon in initiating any proceedings against the appellant.

11.Reverting to legal aspects of the case, we note that allegedly an "attempt of smuggling" was being made, as stated in the Show-Cause Notice and the Order-in-Original, purportedly in terms of Clauses (ii) and (iii) of Section 2(s) of the Customs Act, 1969. We have also noted such part of the Order-in-Original wherein the Adjudicating Authority has stated the subject consignment to have been brought into the country through an unspecified route. The referred allegations need to be analyzed in the proper contextual background as is duly provided in the Show-Cause Notice, the FIR and the Order-in-Original, the contents whereof reveal that the subject consignment was intercepted near Ali Wahan By-Pass, Rohri, having commenced its journey from Rawalpindi and prior to its reaching Karachi where-for an "attempt of smuggling" was to be made. Firstly, the allegation as to attempt of smuggling is highly speculative and conjectural in nature specially so since the subject consignment was seized during its inland movement and had not even reached a Customs Area where-from it could have been taken out of the country. If at all the Detecting Agency had credible information that the subject consignment was to be smuggled out of the country then it could have continued with its surveillance up-to such point and time where/when the allegation as to attempt of smuggling could have been shown to have crystallized through filing of export goods declaration/ shipping bill giving therein the false description of the goods. Secondly, we note that the Adjudicating Authority, in the operative part of the Order-in-Original, has contended that the subject goods were brought into the country through an unauthorized route. What is peculiar about such contention is that it is neither found in the Show-Cause Notice nor, for that matter, in the FIR. As per the Show-Cause Notice, the subject goods are of Gandhara or Balochistan origin, which are both in Pakistan, and also from Islamic period, which too remained prevalent in the region where Pakistan today exists. Accordingly, there was no scope left for an allegation that the subject goods had been brought into the country through an unspecified route. Now we address the question as to why such a non-existent issue has been highlighted into the Order-in-Original despite the same having so much as not even mentioned elsewhere.

12.The scheme and structure of Section 2(s) of the Customs Act, 1969, is such that the offence of "smuggling" is defined to have occurred only when the offending goods are brought into or taken out of the country meaning thereby that the criminal action has been completed and offence has already taken place, however, an exception to such definition is provided under Clause (iii) of the referred Section, whereby an attempt, among others, to bring into or take out of the country of any offending goods through an unspecified route is also stated to constitute the offence of "smuggling". That the Adjudicating Authority - having realized that the "attempt of smuggling" per se was not an offence at par with that of "smuggling" unless it was in relation to the use of an unspecified route, instead of deciding the case on merit and upon such basis as are stated clearly in the law - chose to introduce the same in the Order-in-Original despite knowing that such was not an allegation against the appellant in the case made by the Detecting Agency. Such an action of the Adjudicating Authority is clearly prejudicial and detrimental to the interests of the appellant, who, on account of there being no such allegation against him in the Show-Cause Notice, was effectively denied an opportunity to be heard in this regard in glaring violation of the principle of natural justice Audi Alteram Partem. Accordingly, we have no difficulty in finding that the Order-in-Original, impugned by the appellant, is outright illegal on account of being neither warranted nor sustainable under the law.

13.Now we turn to deal with the issue as to whether the impugned Order-in-Original was time barred. It is noted that the Show-Cause Notice having been issued on 12.04.2013 and the Order-in-Original having been passed on 12.06.2014, the Adjudication proceedings were completed in 425 days. A perusal of Section 179(3) makes it abundantly clear that the Adjudication proceedings are to be completed within 120 days of the issuance of the Show-Cause Notice or within such period extended by the collector, which, however, shall be no more than sixty days. The referred provision being constituting a mandatory requirement under a statutory prescription, it cannot be allowed to be deviated under any circumstances whatsoever unless the same is covered under the Proviso to the referred Section. We have gone through the impugned Order-in-Original and find that the same having been issued 425 days after the issuance of the Show-Cause Notice, the Adjudicating Authority did not even so much as exercise his authority to extend the time-limit of the Adjudication proceedings and passed the impugned Order-in-Original as if it was within time and there was no delay in the matter. In view of such state of affairs and the principles stated in the authorities/decisions reported at 2009 PTD 762, 2008 PTD 578 and PTCL 2005 CL 841, we have no difficulty in concluding that the impugned Order-in-Original is also badly time-barred, having been passed in violation of Section 179(3) of the Customs Act, 1969.

14.By getting the strength, to what have been discussed herein above, particularly the interpretation of law and legal proposition in the light of prescribed law and observations made thereon and to follow the ratio decidendi, observed by the superior courts and my own observations, we hold that, the proceedings, actions and orders passed during hierarchy of the customs completely suffer from grave legal infirmities are declared illegal, ab-initio and of no legal effect on various accounts as detailed above, appeal is accordingly allowed with no order as to cost.

15.Judgement passed and announced accordingly.

HBT/126/Tax(Trib.) Appeal allowed.