GAS AND OIL PAKISTAN (PVT.) LIMITED VS SUPERINTENDENT PREVENTIVE SERVICE ANTI-SMUGGLING ORGANIZATION/HQ NMB, WHARF, KARACHI, 2017 PTD-CUSTOMS-APPELLATE-TRIBUNAL-LAHORE 945 (2016)

Customs Act (IV of 1969)---

----Ss. 2(s), 16, 156(2), 157(2), 168, 171, 178 & 194-A---S.R.O. No.499(I)/2009, dated 13-6-2009---Smuggling---Seizure and confiscation of oil tankers containing smuggled diesel oil---Two oil tankers, loaded with 109098 liters diesel oil, allegedly smuggled, were seized and confiscated by Customs Authorities---Representative of appellant/Gas and Oil Company, appeared, and claimed ownership of said diesel oil, contending that said oil tankers were loaded from Hub area (Pakistan) and produced photocopies of two delivery orders, and not the original delivery orders---Chemical Analysts Reports, reflected that the flash point range/specification of detained diesel in both the oil tankers did not match with the given flash range/specification of the company at Hub (Pakistan) which led to the conclusion, that the detained diesel in both the oil tankers was smuggled, non-duty paid---Diesel oil thus recovered was seized along with two oil tankers under S.168 of Customs Act, 1969 for violation of Ss.2(s), 156(2) and 178 of Customs Act, 1969, punishable under Cl.89 of S.156(1), read with S.157(2) of the Customs Act, 1969---Collector of Customs did not agree with the reply of the appellant to show-cause notice issued and decided the case vide order-in-original, imposing penalty of Rs.500,000 on claimant for misuse of documents to cover smuggled diesel brought into the country---Validity---Oil company from whom, the claimant alleged to have purchased the diesel in question, besides refining crude oil, was also occupied in illegal purchase and sale of smuggled/non-duty paid diesel---Such was a serious matter which called legal action against said company and the appellant by the concerned departments---No reason existed to differ with impugned order-in-original and same was upheld being lawful order---Appeal filed by the claimant was dismissed being devoid of merits, in circumstances.

Mian Abdul Basit for Appellants.

Malik Safdar, Preventive Officer for Respondents.

Date of Hearing: 20th February, 2016.

ORDER

MUHAMMAD NAZIM SALEEM (MEMBER TECHNICAL-II).---By this order, we intend to dispose off Customs Appeal No.K-1717/ 2015 filed by the appellant against Order-in-Appeal No.134/2015-16 dated 07.10.2015, passed by the Collector of Customs (Adjudication-I), Custom House, Karachi.

2.Brief facts of the case as detailed in the impugned Order-in-Original, are that as per Seizure Report issued vide C.No. ASO-97/2015-HQ dated 13.08.2015 by the Model Customs Collectorate Preventive, Karachi, the Station House Officer, Police Station Moachko informed Customs staff on 09.07.2015 that they have impounded/detained two oil tankers laden with smuggled/non-duty-paid diesel on 08.07.2015 and requested to take over the oil tankers along with smuggled diesel. Accordingly, a customs team was deputed to take-over the two oil tankers purportedly laden with smuggled diesel from the Police. The team reached Police Station Moachko, Karachi at about 03:00 pm on 09.07.2015. The AS1 of Moachko Police Station, Moachko handed-over two oil tankers bearing registration No.TLU-303 and TLS-528 both loaded with diesel along with two drivers Saleem Khan S/o Inam Khan and Shahidullah S/o Sharifullah. Cursory search of the aforementioned two oil tankers was carried out in presence of musheers namely Jamadar Sikandar Hayat and Sepoy Khizar Hayat and found that two chambers in oil tanker No. TLU-303 and two chambers in oil tanker No.TLS-528 were loaded with diesel. Both the above-mentioned oil tankers with diesel were taken over from the Police along with the above-named drivers and escorted to RCD Highway in front of Customs Moachko Check Post, Karachi. Mr. Amjad Samuel claiming a representative of M/s. Gas and Oil Pakistan (Pvt.) Limited, Karachi appeared and claimed ownership of the diesel loaded in both the oil tankers and contended that the oil tankers were loaded from M/s. Byco Petroleum Pakistan Refinery situated at Muza Kund, Hub and produced photocopies of two delivery orders but could not produce the original copies of the delivery orders. Samples of the POL product were drawn from both the oil tankers in presence of the above named representative and musheers at the above-mentioned place. The oil tankers laden with diesel oil were detained and kept under supervision at RCD Highway in front of Customs Moachko Check Post pending production of documents, verification, laboratory test and inquiry. Representative samples were forwarded to the Industrial Analytical Center (HEJ). University of Karachi duly accompanied by the above-named representative of Gas and Oil Pakistan for chemical analysis. Chemical Analysis Reports dated 23.07.2015 received from Industrial Analytical Center, University of Karachi on 27.07.2015 reflected that the flash point range/specification of detained diesel in both the oil tankers did not match with the given flash point range/ specification of M/s. Byco Petroleum Pakistan which led to the conclusion that the detained diesel in both the oil tankers was smuggled/ non-duty paid. Detailed examination and measurement of the diesel loaded in both the oil tankers was conducted in presence of the aforesaid musheers at Customs State Warehouse, Rasheedabd, Karachi with the help of representative of MAQ Petroleum and Allied Services, Karachi and found that two chambers of oil tanker bearing registration No. TLU-303 were loaded with 27445 liters and 27870 liters: total 55315 liters diesel and two chambers of oil tanker bearing registration No TLS-528 were loaded with 26876 liters and 26907 liters thus total 53783 liters of diesel. Therefore, total 109098 liters diesel was recovered from both the oil tankers. The diesel thus recovered was seized along with the two oil tankers as mentioned above under section 168 of the Customs Act, 1969 for violation of sections 2(s), 156(2) and 178 of Customs Act, 1969 punishable under clause 89 of section 156(1) read with section 157(2) ibid, further read with section 3 (1) of Imports and Exports (Control) Act. 1950. Notices under section 171 of the Customs Act, 1969 were also served.

3.Accordingly, a show cause notice was issued to the Appellant. The Appellant submitted reply to the show cause notice but the Collector of Customs (Adjudication-I), Custom House, Karachi did not agree with contentions/reply of the appellant and decided the case vide Order-in-Original No.134/2015-16 dated 07.10.2015. The operative part of the order is reproduced as under:--

"3. 1 have gone through the case record and considered written/ verbal arguments of the respondents and the department. As per record the Police Station Moachko intercepted two oil tankers Registration No. TLU-303 and TLS-528 laden with smuggled/ non-duty paid diesel oil and handed over to the staff of ASO MCC-Preventive. Representative of M/s. Gas and Oil Pakistan Private Limited claimed ownership of the diesel loaded in both oil tankers and contended that the oil tankers were loaded from M/s. Byco Petroleum Pakistan Refinery situated at Muza Kund, flub but could not produce the original copies of the delivery orders. Samples of the POL product were drawn from both the oil tankers and forwarded to the Industrial Analytical Center (HLJ). University of Karachi The Chemical Analysis Reports dated 23.07.2015 received from Industrial Analytical Center, University of Karachi on 27.07.2015 reflected that the flash point range/specification of detained diesel oil in both the Oil tankers did not match with the given flash point range/ specification of M/s. Byco Petroleum Pakistan. As per HKJ the flash point of high speed diesel oil was found 55oC and 56oC respectively whereas it has been confirmed by GM-Refinery Sales vide letter dated March 17, 2015 that normal flash point range/specification of M/s. Byco Petroleum Pakistan Limited is between 65oC and above. The discrepancies in lab report, invoice, timing from gate out and interception of Diesel, adequately create doubt and reason to believe that diesel is smuggled one and was transported in the garb of invoices of Byco to give it a legal cover.

4. In view of the above deliberations, the charges levelled in the Show Cause Notice stand established. I, therefore, order for outright confiscation of seized 109,098 liters Diesel (HSD) along with Oil Tankers bearing Registration No.TLU-303 and TLS-528 for violation of sections 2(s), 16, 156(2), 157(1) and (2) and 178 of the Customs Act. 1969, section 3(1) of Imports and Exports (Control) Act, 1950 read with relevant provision of Petroleum Act, punishable under clauses (8), (9), (89) and (90) of sub-sections (1) and (2) of section 156 of the Customs Act, 1969 read with clause (b) of SROs 499(I)/2009 dated 13.06.2009. A penalty of Rs.500,000/- (Rupees Five Hundred Thousand) is also imposed on the claimant for misuse of documents to cover smuggled diesel brought in to country."

4.Being aggrieved and dissatisfied with the above Order-in-Original, the appellant has filed instant appeal before this Tribunal on the grounds which are reproduced as under:---

(a)That respondent No. 2 while deciding the case relied on report of HEJ where in it was reported that the flash point of HSD was found 55oC and 56oC whereas, the flash point range/ specification given by GM Refinery Sale of M/s. Byco Petroleum Pakistan Ltd. vide letter dated 17.03.2015 was between 65oC and above. It is humbly pointed out the goods in question was seized by the police and informed to respondent No. 1 about their interception/seizure on 09.07.2015, Whereas, the letter of M/s. Byco Petroleum Pakistan Ltd. was issued as mentioned in the Order on 17.03.2015 much prior of institution of present case. Surprisingly, the goods were confiscated on the bases of report of HEJ which was match with the report M/s. Byco Petroleum Pakistan Ltd. dated 29.06.2015 in which the flashing point is given ranging 54oC to 66oC which was not considered by respondent No. 2 and relied on letter issued much prior i.e. 17.03.2015. The conduct of respondent No. 2 clearly shows that he decides the case in haphazard and without consulting the record.

(b)That the observation of respondent No. 2 made bases for confiscation the goods and oil tankers is erroneous and against the record. Respondent No. 2 observed "that the discrepancies in the lab report, invoice, timing from gate out and interception of Diesel, adequately create doubt and reason to believe that the Diesel is smuggled one". It is humbly pointed out that there was no discrepancies in the lab report of HEJ and report dated 29.06.2015 of M/s. Byco Petroleum Pakistan Ltd. in which it was mentioned that flashing point is ranging between 54oC to 66oC. So far as the delivery order, out gate time and interception of the tankers, it is submitted that the tankers were out gated from M/s Byco Petroleum Pakistan Ltd. on 08.07.2015 at 1.41 A.M. and neither time of interception by the police has been mentioned in the Show Cause Notice nor given in the impugned order. The delivery orders were verified by the respondent No.1 and authenticity thereof was duly confirmed by M/s. Byco Petroleum Pakistan Ltd. vide letter dated 14.07.2015 which was also ignored by respondent No. 2. The impugned order is liable to struck down alone this score.

(c)That the respondent No. 1 has no jurisdiction to take any action against the appellants, because the company of the appellant No. 1 is marketing company and duly permitted by OGRA for sale and marketing of petroleum product purchased from refineries situated in Pakistan. The appellant No. 1 purchased HSD from M/s. Byco Petroleum Pakistan Ltd. through delivery order No. 80156243 and 80156244 both dated 08.07.2015 which was loaded on tankers No. TLU-303 and TLS-528 respectively. This fact was also confirmed by the afore-mentioned petroleum company vide letter dated 14.07.2015.

(d)That the goods seized in the case were lawfully purchased from M/s Byco Petroleum Pakistan Ltd. which is refinery situated with in the country and selling the refined oil i.e. HSD and other petroleum products duly produced in Pakistan. The allegation that the goods in question were smuggled one is not sustainable because it is an admitted fact that the seized HSD is product of Pakistan and the provisions of Customs Act, 1969 are not attracted.

(e)That the supplier/seller M/s. Byco Petroleum Pakistan Ltd. admitted the sale of HSD to appellant No. 1, there for, there was no justification to intercept, seize and subsequently confiscation by respondent No. 2 of local origin HSD. The entire actions on the part of respondents are illegal/ void and without lawful authority.

(f)Besides above the interception and seizure of the HSD along with oil tankers by the police was illegal and without jurisdiction, because they are not entrusted with the power of customs officers under Section 6 of the Customs Act, 1969. The all proceedings including re-seizure by respondent No. 1, issuance of Show Cause Notice and confiscation of goods based on illegal seizure are also illegal, void and without lawful authority.

(g)That the tankers owned by appellant No.2 were carrying local origin HSD. It is evident from delivery orders which were confirmed by M/s. Byco Petroleum Pakistan Ltd., that the goods subject matter of the appeal were loaded from the above said company situated in the country.

(h)That while passing the impugned order respondent No.2 all together ignored the delivery orders on which the registration number of oil tankers were mentioned. It is further pointed out the tankers were designed for transportation of petroleum product, and being public carrier it was plying in Pakistan for transportation of petroleum products with in the country. Hence, confiscation of tankers being a public carrier is unjustified.

(i)That the goods subject matter of the appeal were of local origin neither the same were smuggled one nor there is any evidence with the department that the HSD brought into the country from such and such border and on such and such date. The tankers were carrying local origin HSD and in the absence of any evidence, the confiscation of HSD, as well as oil tankers and imposition of penalty of Rupees 5 Lac on appellant No.1 is illegal, void and without jurisdiction. Hence the impugned is not sustainable under the law.

Under the circumstances, it is respectfully prayed that this appeal may kindly be accepted, impugned order passed by respondent No. 2 be set aside being void, illegal, without jurisdiction, coram-non-judice and the goods along with oil tanker may kindly be ordered to be release to the appellants, the penalty imposed upon appellant No.l be waived/remitted.

5.The respondent department submitted their para-wise comments. The corresponding comments are reproduced as under:--

a)That the contention of the appellants is denied being fake, concocted and misleading. Facts of the case are that the laboratory report dated 29.06.2015 speaks that the flash point of HSD sold to appellant No.1 under the delivery orders No. 80156243 and 80156244 dated 08-07-2015 is 66 C but the laboratory report of seized HSD issued by HEJ, Research Institute of Chemistry, University of Karachi dated 23-07-2015 reveals that the flash point of impugned HSD is 55 C and 56 C which is indicative of the fact that the HSD in question is not the product of M/s. Byco refinery and the appellant failed to clarify their position in this regard.

b)That the contention of the appellant is not admitted being incorrect and frivolous. It is pertinent to mention that the flash point range of HSD starts from 54 C not below it, however, the lab report of M/s Byco dated 29-06-2015 speaks that the result of their HSD product is 66 C meaning thereby that the sold POL Product to the appellant have the flash point 66 C not below it. Keeping in view the aforesaid points, there is discrepancy between lab report of M/s. Byco and HEJ which reflects that the impugned diesel is not purchased from Byco refinery.

c)That the plea of the appellants in this para is denied vehemently being capricious and unfounded. The respondents have ample jurisdiction to seize the smuggled goods under the provisions of the Customs Act, 1969. The appellants are not allowed to acquire possession of, or is in any way concerned in carrying, removing, depositing, keeping or concealing, or in any manner dealing with smuggled goods or any goods in respect to reasonable suspicion that they are smuggled goods. It is evident from the lab reports that the impugned HSD is not the same which was purportedly sold to the appellants by Byco refinery.

d)That the plea taken by the appellants in this para is not admitted as the discrepancies between the lab reports, as mentioned above, reveal that the seized HSD is not the POL product of M/s Byco and the appellants absolutely failed to substantiate their lawful possession. The appellants willfully violated the provisions of the Customs Act, 1969 which attracted accordingly.

e)That seller i.e. M/s Byco Petroleum Pakistan (Pvt) Ltd. confirmed that they sold the HSD to the appellant under delivery orders dated 08.07.2015 with the flash point of 66 C not otherwise but the seized HSD comprises the flash point 55 C and 56 C which cannot be termed as product of Byco Pakistan. Therefore, the sized HSD cannot be connected with the above mentioned delivery orders issued by the said refinery. The entire actions of the respondents are as per law.

f)That the contention of the appellants is denied being incorrect and misleading. The smuggled HSD was not seized by the Police but the same was seized by the Anti-Smuggling Organization of MCC Preventive which is empowered to seize the smuggled goods and exercise the powers conferred upon them under the Customs Act, 1969. Admitted facts of the case are that the police stopped the tank lorries loaded with smuggled diesel, asked for the relevant documents and when the drivers failed to provide any document pertaining to the diesel, loaded on the tank lorries, they informed the Customs and handed over the same to them for completion of legal formalities under the Act. Making the seizure of smuggled HSD, issuance of show cause notice and confiscation of impugned HSD is in compliance with the law and rules made thereunder.

g)That the contention of the appellant is not admitted being fake, frivolous and based on whimsical grounds. It has already been submitted herein above that the tank lorries of appellant No. 2 were loaded with smuggled diesel which cannot be attached to the above mentioned delivery issued by M/s. Byco Petroleum Pakistan (Pvt.) Ltd. as they confirmed that they sold the HSD with flash point of 66 C not otherwise.

h)That para 3 of order in original dated 07-10-2015, passed by the respondent No. 2 reveals that all the aspects / issues arising out during the course of adjudication proceedings were discussed in detail and appellants failed to prove their stance, hence, the order of adjudicating officer is as per law.

i)That the contention of the appellants is not admitted as it has already been submitted hereinabove that the appellant failed to prove that the impugned HSD is not smuggled. The seized POL Product was not the product of M/s. Byco refinery. The tank lorries of the appellant No. 2 were carrying/removing the smuggled goods. The confiscation of smuggled HSD, oil tankers are in accordance to law.

In view of above mentioned facts and circumstances of the case, it is submitted that the appellant found involved in possession of smuggled diesel. The appellants contravened the provisions of sections 2(s), 156(2), 178 and 157(2) of the Customs Act, 1969. It is prayed before the Honorable Tribunal to graciously dismiss the appeal of the appellants being devoid of merit.

6.We have heard the contesting parties as well as examined the relevant record. The respondent departments' case is that the confiscated diesel in both the tank lorries was got tested from Industrial Analytical Centre (HEJ), University of Karachi which confirmed Flash Point of HSD contained in both the tank lorries bearing registration No.TLU-303 and TLS-528 as 55oC and 56oC respectively whereas Byco's Lab Test Report dated 17.03.2015 confirms that they manufacture/refine oil having Flash Point of 65oC and above. The department also rely upon another Test Report of Byco itself dated 29.06.2015 which indicates Flash Point of HSD specific to loaded on the aforementioned vehicles as 66oC. Quite interestingly, the Appellant's main reliance is also on the aforementioned Test Report dated 29.06.2015 stating that the Flash Point is ranging between 54oC to 66oC. The Appellant also contend that "so far as the Delivery Orders, out gate time and interception time of the tankers, it is submitted that the tankers were outgated from M/s. Byco Petroleum Pakistan Ltd. on 08.07.2015 at 1.41 A.M. and neither time of interception by the Police has been mentioned in the Show Cause Notice nor given in the impugned Order." Another point of the Appellant is that the said company being owner and supplier of the confiscated oil confirmed vide their letter dated 14.07.2015 addressed to the Superintendent, Preventive Services, MCC Preventive, NMB Wharf, Karachi that the Delivery Orders # 80156243 and 80156244 both dated 01.07.2015 were issued by them in favour of M/s. Gas and Oil Pakistan (Private) Limited against tank lorries bearing registration No.TLU-303 (56 Kls) and TLS-528 (54 Kls). During the course of hearing, the Departmental Representatives strongly emphasized that both the tankers left gate of M/s. Byco Petroleum Pakistan Limited at 1.41 A.M and 1.27 A.M respectively on 08.07.2015 as per Delivery Orders, however, Seizure Report dated 09.07.2015 prepared and issued by the respondent department, indicates time of interception of both the tank lorries by Police party of Police Station Moachko as 8.30 A.M on 08.07.2015. The Departmental Representative stated that the normal distance between M/s. Byco Petroleum Pakistan Limited to the interception point i.e. Lucky Chowrangi is almost 20 K.Ms which could be covered between 1 to 2 hours, as such, it is not possible that the two tank lorries took almost seven (7) hours for the purpose. The said position shows that the two Delivery Orders dated 08.07.2015 did not relate to two tank lorries under reference.

7.We have given careful consideration to verbal and written arguments extended by both the contesting parties. However, in order to arrive at truth beyond any shadow of doubt, the Assistant Registrar at the instance of this Tribunal, wrote a letter dated 30.04.2016 to the General Manager-Refinery Sales, M/s. Byco Petroleum Pakistan Limited wherein certain queries were raised for clarity. The said Refinery vide letter dated 03.05.2016 has responded as under:-

"Dated: 3 May, 2016

To,

Mr. Sajjad Haider Janjua,

Assistant Registrar,

Customs Appellate Tribunal, Bench-II,

2nd Floor, Jamil Chamber, Saddar, Karachi.

Subject: Verification of Delivery Order # 80156243 and # 8015624 for Tank Lorries # TLU-303 (56 KIs) and TLS-528 (54 KIs) respectively.

Dear Sir,

In relation to your letter Ref No. Cus-K-1717/2015/936 dated 30th April, 2016, Please find below answers point by point:

i)Please note that 01.07.2015 is the date of bulk Sale Order creation in our system (SAP) under which a large amount of TLs are filled with SO# 6302 also mention on DO. Whereas the said TLs were filled at our refinery on 07.07.2015 mentioned under the heading of Date IN.

ii)Please find attach. (annexure I)

iii)Please note that M/s Byco Refinery manufactures POL products as per PSI specifications. Whereas with reference to Lab test report dated 29.06.2015, M/s Byco issued a letter dated 13th August 2015 (annexure II) where we drew the attention of the Superintended of Preventive Service to the fact that the Lab report No: LAB/533/2015 issue dated 29.06.2015 was erroneously submitted against the subject tank Lorries filled/dispatched 7/8-07-2015. Whereas these tank lorries were actually filled against the lab report No: LAB/561/2015 issued dated 07.07.2015.

iv)No, the Lab report of M/s. Byco dated 29.06.2015 does not pertain to the HSD under discussion.

v)In line with the MPNR Letter No. PL-NPA(4)/2012(Spec)Vol-1 date June 25th 2015. HSD Flash point has been revised to 54 C effective from July 1st 2015 and the said TLs were filled on 7/8-07-2015.

Hope the above clarifies the situation

Best Regards

On behalf of Byco Petroleum Pakistan Limited

Sd/-Sd/-

Shabbir Hussain Taha N. Siddiqui

Manager Refinery Sales Manager Refinery Sales"

The study of above letter from M/s. Byco Petroleum Pakistan Limited shows that they have clearly stated that their Lab Test Report dated 29.06.2015 highlighting Flash Point as 66oC does not pertain to two tank lorries under discussion and the said report was erroneously submitted against the subject tank lorries. They have further added that these lorries were filled against their Lab Test Report dated 07.07.2015. We have examined the said Report and find that it indicates Flash Point as 57oC. The said statement has infact categorically negated stance taken by the Appellant as their main reliance is on Byco's Lab Test Report dated 29.06.2015. Furthermore, the Lab Test Report dated 07.07.2015 cannot be accepted as they were not authorized by Ministry of Petroleum and Natural Resource, Islamabad to manufacture/ refine HSD with Flash Point 57oC. M/s. Byco Petroleum Pakistan Limited vide above-referred letter has also stated that the said Ministry vide letter No.PL-NPA(4)/2012(Spec)Vol-1 dated 25.06.2015 authorized them to manufacture/ refine HSD with 54oC Flash Point. On telephonic request of the Assistant Registrar of this Tribunal to M/s. Byco Petroleum Pakistan Limited to provide copy of the aforesaid letter through fax, they responded that the Ministry's letter is dated 25.06.2014 and not dated 25.06.2015 and they mistakenly mentioned date as 25.06.2015 in their letter dated 03.05.2016. Vide their letter dated 30.05.2016, they have confirmed the said position by stating that "MPNR letter reference No.PL-NPA(4)2012(Spec)Vol-1 was issued on June 25th, 2014 (instead of June 25th, 2015 which was erroneously mentioned in our aforesaid letter).

8. It is important to mention here that the letter of the Ministry dated 25.06.2014 authorized Refineries including M/s. Byco Petroleum Pakistan Limited to manufacture/ refine diesel with Flash Point of 66oC and the said letter was in the field when these tank lorries were intercepted by Police and seized by the Customs in July, 2015. The Lab Test Report of HEJ Laboratory dated 27.07.2015 indicates Flash Point of 55oC and 56oC for tank lorries bearing registration No.TLU-303 and TLS-528 respectively. Quite shockingly, they have misstated through letter dated 03.05.2016, that "in line with the MNPR letter No.PL-NPA(4)2012(Spec)Vol-1 dated 25th June, 2015, HSD Flash Point has been revised to 54oC effective from July 1st, 2015 and the said TLS were filled on 7/8.07.2015." The fact of the matter is that the Ministry of Petroleum and Natural Resources has neither issued letter dated 25.06.2015 nor revised Flash Point to 54oC. This single evidence of Flash Point is irrefutable evidence to conclude that though the Appellant purchased 109098 liters of High Speed Diesel contained in aforementioned tank lorries from M/s. Byco Petroleum Pakistan Limited, as also owned by them, however, the same was not manufactured/ refined by M/s. Byco since they were authorized to manufacture HSD only with Flash Point 66oC. Furthermore, we also subscribe to plea taken by the respondent department that it is neither believable nor acceptable that these two lorries took seven (7) hours to reach at Lucky Chowrangi after covering a distance of just 20 K.Ms from M/s. Byco Petroleum Pakistan Limited, Hub. We have also perused Police Report dated 08.07.2015 which also confirms time of interception of these tank lorries as 8.30 A.M. on the aforesaid date. The said position leads us unhindered to conclude that the Appellant have miserably failed to establish their bona fide. On the contrary, their mala fide intent is clearly manifested through their deeds/actions discussed above. As mentioned earlier, they have been largely relying on the Lab Test Report of M/s. Byco Petroleum Pakistan Limited dated 29.06.2015, which is otherwise of no help to them on the issue of Flash Point, however, the same has been unambiguously denied by M/s. Byco Petroleum Pakistan Limited having any relevance to HSD contained in two tank lorries.

9.It would be unfair and unjust if we do not highlight here role played by M/s. Byco Petroleum Pakistan Limited, Hub. They had been changing their stance not once rather at every turn of the whole episode. Initially, vide letter dated 14.07.2015 addressed to Superintendent Preventive Service, MCC (Preventive) Karachi they verified that the two Delivery Orders No.80156243 and 80156244 for two tank lorries bearing registration No.TLU-303 (56 Kls) and TLS-528 (54 Kls) in favour of M/s. Gas and Oil Pakistan (Private) Limited were issued against Lab Test Report dated 29.06.2015, however, vide letter dated 13.08.2015, they stated that the Lab Test Report dated 29.06.2015 was erroneously submitted against the subject tank lorries dispatched on 7/8.07.2015. The said letter being important and quite relevant is reproduced hereunder:--

"August 13th 2015

To,

Khalid Masood,

Superintendent Preventive Services,

MCC-Preventive-Office of the Superintendent Preventive Service,

Anti-Smuggling Organization NMB Wharf, Karachi.

Subject: Verification of Delivery Order # 80156243 and 80156244 for Tank Lorry # TLU-303(56Kls) and TLS-528(54Kls) respectively.

Dear Sir,

This is further to our letter dated 14th July, 2015 on the above subject. We wish to draw your attention to the fact that, a Lab Report No.LAB/533/2015 issue date 29.06.2015, was erroneously submitted against the subject tank Lorries' filled/dispatched on 7/8-7-2015. These tank Lorries were actually filled against the Lab Report No:LAB/561/2015 issue date 07.07.2015 (attached) herewith for your reference.

Further, we would like to submit here that effective 1st July 2015, HSD Flash Point is 54oC in line with the MPNR letter dated June 25th 2015 with the subject "Production of 66oC Flash Point HSD."

Hope the above clarifies the situation.

With Regards,

Sd/-Sd/-

Shabbir HussainKamran I. Lari

Manager - Refinery SalesGeneral Manager -

Refinery Sales"

Furthermore, the above letter shows that they are manufacturing HSD with Flash Point 54oC since 01.07.2015 in line with Ministry's letter dated 25.06.2015. Again vide their letter dated 03.05.2016 reproduced at para 7 supra, they have repeated that the Ministry of Petroleum and Natural Resources have revised Flash Point of HSD as 54oC vide their letter No.PL-NPA(4)/2012(Spec)Vol-1 dated 25.06.2015 effective from 01.07.2015. On the contrary, as mentioned earlier, the said Ministry has neither issued any such letter on the said date nor revised Flash Point from 66oC to 54oC. Vide their letter dated 30.05.2016, they have again stated that Ministry's letter dated 25.06.2014 was erroneously mentioned as dated 25.06.2015. The said position confirms that M/s. Byco Petroleum Pakistan Ltd. are continually and deliberately mis-stating facts with regard to Flash Point and wrongly attributing its revision by the Ministry of Petroleum and Natural Recourses, Islamabad, in order to cover-up their misdeeds. With regard to Appellant's point that the Police had no power to seize their goods, as such, their seizure is illegal. They have also termed customs seizure as re-seizure. We do not agree with aforestated plea of the Appellant because the Police Party intercepted both tank lorries for verification only and did not make any seizure. Next day, they handed over the same to the concerned customs authorities who seized the tank lorries with HSD under section 168 of the Customs Act, 1969.

10.In view of above, we are not reluctant to conclude that 109098 liters HSD contained in two tank lorries bearing registration No.TLU-303 and TLS-528, was not refined by M/s. Byco Petroleum Pakistan Limited, Hub, instead the same is smuggled/ non-duty-paid. The aforementioned fact further establishes that the present management of the said company besides refining crude oil, is also indulging in illegal purchase and sale of smuggled/ non-duty-paid diesel. It is a serious matter which calls for legal action against them by the concerned departments including OGRA, OCAC and MCC Preventive, Karachi. The Appellant also need the same treatment. After discussing the issue at some length, we do not find any reason to interfere with the impugned order-in-original and the same is upheld being a lawful Order. The instant appeal is dismissed being devoid of merit.

11.The Assistant Registrar, Customs Appellate Tribunal, Bench-II, Karachi is directed to send a copy of this Judgment to Chairman, Oil and Gas Regulatory Authority (OGRA), Islamabad, Chief Collector, Customs Enforcement (South), Karachi, Collector, MCC (Preventive), Karachi and the Secretary General, Oil Companies Advisory Committee, Karachi for necessary action under the relevant laws.

12.Announced.

HBT/90/Tax(Trib.) Appeal dismissed.