The matter pertains to the payment of wharfage in respect of storage of confiscated/un-cleared goods kept in Faisalabad Dry Port at Faisalabad by the Revenue Department.
2. It is the case of the petitioner that for a period of seven days such storage was permissible gratis but beyond that a reasonable rent is to be paid. He further went on to say that the other ports in the country, particularly the biggest port of the country, i.e. Karachi was paying wharfage for storage of such goods which do not get cleared within a period of 30 days as required by section 82 of the Customs Act.
3. From the Customs Department on a previous date, Audit Officers were present and they were also unable to satisfy the Court with respect to the demand which has been raised by the petitioner through this writ petition as well as the relief being asked in this connection.
4. The petitioner is a trust and is governed by the Board of Trustees. In paragraphs 3 and 4 following averment is made by the petitioner.
"That petitioner is managing and owning the premises of Dry Port Faisalabad. Adequate accommodation for offices of Customs Department, sheds for examination of goods, detention and storage charges thereof have also been constructed by the petitioner. All utility bills and other taxes in respect of such accommodation are being paid by the petitioner. Petitioner as well as other dry ports and Karachi Port Trust and Port Muhammad Bin Qasim, etc., are providing accommodation for detention and storage of goods free of cost for initial period of 7 days and after expiration of initial period of 7 days the wharfage or storage fee is paid by the importers or as the case may be exporters and where goods are not confiscated or cleared these charges are deducted from sale proceeds realized in auction and paid to the petitioner by Customs Department. This practice is being followed by all the Customs ports in the country. Copy of letter, dated 21-6-2002 along with Standing Order, dated 17-11-2001 and its Annex: A as well as cases sheet showing payment of wharfage, storage charges to the port authorities by Customs Port Karachi are enclosed as Annexs. B, C and D. That petitioner was being paid wharfage/storages in respect of confiscated goods and the goods not cleared by importers and auctioned by the Department. Similarly all Collectorates are paying such charges to the authorities managing and owning ports in the country. Collectorate of Customs Faisalabad vide Circular letter, dated 24-4- 1998 instructed all concerned that prior to auction of goods list thereof be sent to the petitioner for lodging claim regarding demurrage, services, freight charges etc., for including the same in reserve prices of confiscated or not cleared goods reported for auction. Copy of circular, dated 14-4-1998 is enclosed as Annex: E."
5. It is further stated that wharfage was being paid in the past until 30-7-2004 when the internal Audit Officer of the Revenue raised objection against such payment and also asked for the recovery of the payments made in the past against which an explanation was given by the petitioner side, but it is stated that it fell on deaf ears. In ground(s) of the petition the note of the Audit Department has also been produced, which says as under:- "Under the provisions of Auction Rules, 1996, the auctioned money required to be deposited in the Government account under proper head of account. While reviewing the revenue accounts related to auction cases, it came to notice that the bided amount was reported to the Central Board of Revenue, whereas the total reported figures were unlawfully reduced by way of unlawful payment to the Faisalabad Dryport Trust and welfare surcharges. This unlawful payment caused short realization of Government revenue of Rs.26,89,958 as tabulated in the Annexure-I but excess reporting to the Central Board of Revenue. The amount pointed out may please be realized from the quarter concerned and deposited in the National Exchequer. Further more the amount involved in similar cases paid in preceding years may also be worked out and similar action be initiated in this regard and audit may be informed accordingly."
6. It is argued that this note is based on the Audit Rules, 1996 which has nothing to do with the matter in issue.
7. Learned counsel has made a mention to the provisions of section 82-A of the Customs Act and says that whereas, the law requires the provision of the facility, but it nowhere prohibits the demand for the expenses incurred and the rent for accommodation. In this connection, a reference is made to sections 203 and 201 of the Customs Act, 1969, where wharfage and storage fee is required to be fixed. Section 203 reads as under:-- "203 Wharfage or storage fees.---The Collectorate of Customs may from time to time fix the period after the expiration of which goods left in any custom-house, customs area wharf or other authorized landing place or part of the custom-house premises, shall be subject to payment of fees and the amount of such fees."
8. It is stated that sections 40-A and 203 of the said Act are to be read in harmony. Learned counsel went on to say that the provisions of section 201 had also to be understood by the Auditors where provisions have been made for meeting such like expenses. Section 201 of the Customs Act reads as follows:-- "201 Procedure for sale of goods and application of sale proceeds.--(1) Where any goods, other than confiscated goods are to be sold under any provision of this Act, they shall be sold after due notice to the owner by public auction or by tender or by private offer or, with the consent of the owner in writing, in any other manner.
(2) The sale proceeds shall be applied to the following purposes in their respective order, namely:- -
(a) first to pay the expenses of the sale;
(b) then to pay the freight or other charges if any, payable in respect of the goods, if notice of such charges has been given to the person holding the goods in custody;
(c) then to pay the customs duty other taxes and dues payable to the Federal Government in respect of such goods;
(d) then to pay the charges due to the person holding such goods in custody;
(3) The balance, if any, shall be paid to the owner of the goods, provided he applies for it within six months of the sale of the goods or shows sufficient cause for not doing so."
9. From the department side, it is stated that the provisions of section 201 were applicable only in the case of non-confiscated goods. Learned counsel for the petitioner side stated that this was not correct in view of the provisions of subsection (5) of section 169 of the Customs Act, which reads as follows:-- "169(5) If no such adjudication or, as the case may be, in such appeal or proceeding in Court, the thing so sold is found not to have been liable to such confiscation, the entire sale proceeds, after necessary deduction of duties, taxes or dues as provided in section 201, shall be handed over to the owner."
10. Any way when a dispute has arisen the precedents of Karachi Port and the other Ports become relevant and are to be followed. It is, therefore, the duty of the senior hierarchy of the Customs Department to look into the matter and then decide whether the audit objection which has been taken in respect of future wharfage fee to be paid to the petitioner and against the fee already paid call for a review and whether the audit objection is based on correct consideration of law, past practice and the provisions quoted above.
11. Therefore, this Court is issuing a direction to the Collector Customs, Faisalabad to decide the issue forthwith after consulting with his counterparts at the different ports and to place on the record the inter-office notes which he may be receiving from his aforementioned counterparts for the purpose of adjudication. In case, it is discovered that the audit objection is based on a wrong consideration, then he shall override the same through an order in accordance with law. This shall be accomplished within two months from today and the report shall be submitted by the Collector Customs, Faisalabad to this Court by the 15th of March, 2005 through Deputy Registrar (Judicial). A copy of the this order be sent to the Collector of Customs, Dry Port, Faisalabad by the Deputy Registrar (Judicial) under a sealed cover A.D.