MR. RAJ MUHAMMAD KHAN, MEMBER (JUDICIAL).-(1). Through this miscellaneous application pertaining to Appeal No. Cus. 278/PB/2004 (REMAND), the appellants/petitioners thereof have alleged non-payment of sale proceeds to them by the respondent Collectorate of Customs, Peshawar. According to the appellants/petitioners this Tribunal had disposed of their appeal in which this Bench ordered on 06.11.2004, inter alia, the release of goods on payment of duty and taxes plus redemption fine, which order by now has attained finality as no appeal was preferred against it by the respondent Collectorate. The appellants/petitioners, when they approached the Collectorate for the release of the goods, they came to know that their goods were already auctioned. They accordingly applied for the refund of the sale proceeds instead but their application was not entertained by the Auction Cell of the Collectorate. They have sought now the implementation of this Tribunal's order dated 06.11.2004 and have requested for the payment of sale proceeds of their auctioned goods after deduction of leviable duty and taxes, etc.
2. Comments of the Collectorate on the petition of the appellants/ petitioners were obtained in which it was stated by the respondents that the goods had already been auctioned prior to the issuance of this Tribunal's order dated 06.11.2004 in the appeal. It was observed from the comments, that the Collectorate was not aware of the application of the petitioners, which they had moved for the refund of sale proceeds. It was explained that this Tribunal's order could not be complied with as the goods were not available since auctioned prior to the decision of the appeal.
It was added that this Tribunal's order also did not provide for allowing refund of the sale proceeds to the appellants.
3. We have heard both the parties and have gone through the record of the case. It has been observed that after a lengthy litigation between the parties including the remand of the case by the Hon'ble Peshawar High Court, Peshawar to this Tribunal, we had disposed of the appeal of the appellants/petitioner by accepting it and, inter alia, giving an option to the rightful owners of the seized foreign origin goods to redeem the same on payment of redemption fine of 20% of the value thereof in addition to payment of customs duty and other taxes at the rates leviable on the date of seizure, if these goods were not required in any other case. The order of the Tribunal has not been challenged by the respondent Collectorate. The goods, by now, are stated to have already been auctioned even prior to the Order-in-Appeal. Now, there appears hesitation on the part of the respondent Collectorate particularly the Auction Cell, in payment of sale proceeds in lieu of the goods to the rightful owners.
4. The appellants/petitioner have produced photocopy of their application addressed to the Assistant Collector (Auction Cell), Custom House, Peshawar, wherein request for the payment of sale proceeds was made. The receipt of that application was duly acknowledged by the concerned section on 26.01.2005, which was diarised vide Diary No. 149 dated 27.01.2005. However, the application was not finally disposed by the Auction Cell since then, but rather unawareness of it was shown by the Collectorate in the comments dated 12.05.2005 furnished to this Tribunal.
5. Since we have come across similar complaints more than once regarding non-payment of sale proceeds by the respondent Collectorate, we wish to clear the issue once for all. In this regard we would like to quote the relevant provisions of the Customs Act, 1969 (hereinafter referred to as the Act), relating to the disposal/auction of the goods.
6. Goods are defined under section 2(1) of the Act as under:-- "goods"means all movable goods end includes:-
(i) conveyances;
(ii) stores and materials;
(iii) baggage; and
(iv) currency and negotiable instruments.
7. Section 169 of the Act provides as under:- "169. Things seized how may be dealt with.-(1) All things seized on the ground that they are liable to confiscation under this Act, shall, without unnecessary delay, be delivered into the care of the officer of customs authorized to receive the same.
(2) If there be no such officer at hand, such things shall be carried to and deposited at the customs-house nearest to the place of seizure.
(3) If there be no customs-house within a convenient distance, such things shall be deposited at the nearest place appointed by the Collector of Customs for the deposit of things so seized.
(4) When anything liable to confiscation under this Act is seized by the appropriate officer under section 168, the Collector of Customs, or any other officer of Customs authorized by him in this behalf, may notwithstanding the fact that adjudication of the case under section 179, or an appeal under section 194-A or a proceeding in any Court, is pending, cause the thing to be sold in accordance with the provisions of section 201 and have the proceeds kept in deposit pending adjudication of the case or as the case may be, disposal of the appeal or the final judgment by the Court.
(5) If on 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."
8. It is evident from the reading of the provisions of section 169 ibid that things seized and liable to confiscation under the Act, shall be delivered in care of the authorized officer or to be deposited at the Customs House, if there is no authorized officer or at any other place appointed by the Collector of Customs for the deposit of things seized. Such things liable to confiscation, may be sold by the Collector of Customs even during the pendency of adjudication proceedings or appeal in accordance with the provisions of section 201 of the Act and its sale proceeds are to be kept in deposit till final decision of the case. In case it is found afterwards that the thing so sold was not liable to confiscation, the entire sale proceeds after necessary deduction of duties etc. As provided under section 201 of the Act, be handed over to the owner of the things.
9. The intention of the legislature, as evident from the construction of the section, appears that the provisions of sale provided in Para (4) of the section, is for the disposal of perishable goods or goods which otherwise require speedy disposal under any other law. For such perishable goods even, the provisions of section 201 shall be followed which require due notice to the owner of the goods as a pre-requisite to meet the ends of natural justice.
10. It is evident from Paras (1) to (3) of section 169 that things seized and liable to confiscation are to be properly stored and taken care of. Thus if proper care is taken of things or stored properly, there will arise no urgency for disposal of non-perishable goods.
11. There appears legal lacuna in section 169 ibid in as much as it does not provide for goods but things. While goods are defined under the Act, the things are not defined anywhere in the Act. Thus if the provisions of the said section are construed strictly, the goods cannot be covered under it for any purpose.
12. The provisions of section 201 of the Act provide for sale of goods "other than confiscated goods" and application of sale proceeds. The pre-requisite for the sale of goods is the issuance of due notice to the owner of the goods. This notice is also mandatory prior to the sale of things under section 169 of the Act. Such notice shall be served through registered post as required under section 215 of the Act. It may be mentioned here that where such notice was not given, the sale proceeds were awarded to the owner of the goods by the Hon'ble Peshawar High Court. Peshawar in case vide SAP. No. 25 of 2002 decided on 18.03.2003, titled Nowsherawan vs. Collector of Customs, Peshawar despite the fact that the goods had been out rightly confiscated. The decision was maintained by the Hon'ble Supreme Court of Pakistan vide Civil Petition No. 397-P of 2003 decided bn 04.05.2004 with modification to the extent that the payment of sale proceeds was restricted to the value of the goods involved.
13. It is evident from the aforesaid sections 169 and 201 of the Act when read together that these do not provide for sale of confiscated goods. In fact there is no section in the Act to apparently provide for sale of confiscated goods. However, there are rules called Customs Rules, 2001, made under the Act, Chapter-V of which provide for auction etc., under which confiscated goods may be auctioned or disposed of.
14. Under section 182 of the Act, confiscated goods under the Act vest forthwith in the Federal Government and the officer who orders such confiscation, shall take and "hold" the confiscated goods. The vesting of goods in the Federal Government would mean the alienation and transfer of property to the Federal Government. Such transfer will be invalid, if it is not absolute or conditional for one reason or the other. It can be considered absolute when there is no legal remedy left to be exhausted by the owner of the property to get the property back from the transferee. From this, the inference would be that the confiscation shall be attached finality under the Act. The word 'confiscated' used in section 182 of the Act, designate itself as if finally determined so.
15. Article 24 of the Constitution of Islamic Republic of Pakistan provides for protection of property rights that no person shall be compulsorily deprived of his property save in accordance with law.
Since appellate proceedings happen tc be continuation of the original proceedings, finality can only be attached to an order of confiscation of goods when it is no more sub judice in any forum available under the law. It will, therefore, be against the Constitution, if some one is deprived of his property through its arbitrary premature transfer.
16. In suppression of Customs General Order No. 5 of 1989 dated 15th March, 1989 and all other orders/instructions on the subject, the Central Board of Revenue (CBR), Islamabad has prescribed certain procedure in Customs General Order No. 5 of 1992 reported as PTCL 1992 St. 650(ii) for the disposal of confiscated/seized goods such as narcotics, liquor, obscene films and literature, Gold, currency, silver, precious stones, consumer durables and other miscellaneous goods, cigarettes, motor vehicles, Arms & Ammunition & Antiques. These instructions provide that goods other than enumerated above, cannot be disposed of in any manner specified, should be sold in accordance with the prescribed Auction Rules. If any claim of refund comes up later in respect of the goods disposed of in any of the aforesaid manners, the same, where admissible, should be met from the general account relating to the sale proceeds in question. These instructions also provide that before the goods are sold, disposed of, auctioned or destroyed, the owner/importer shall be served with a notice as prescribed under the law.
17. An impression has been created with the customs authorities that as soon as any goods are confiscated by an adjudicating authority under the Act, these are considered as forthwith vest in the Federal Government under section 182 of the Act. No doubt that an order of confiscation under the Act or rules operates directly upon the status of the property and transfers an absolute title to the Government (AIR 1958 SC 845) and all rights in goods vesting in any person stand extinguished (PLD 1977 Karachi 1000) but after payment of redemption fine and duty, the goods continue to remain that of the owner (AIR 1964 Madras 504 + AIR 1962 Bom 290) and the department has no jurisdiction to sell the goods. In such cases, if the department sells the goods, the owner can recover the goods or its market price from the department (AIR 1958 Patna 439). Under section 169(4) of the Act, the department is competent to sell the goods pending the proceedings in the manner as prescribed under section 201 of the Act. In that case the sale proceeds are payable. The departmental instructions are that when an appeal against the order of confiscation has been preferred, the goods should not be sold until the appeal has been finally decided. If the order of confiscation is upheld in appeal, the goods may be sold after a final notice to the owner. Perishable goods should be sold after reasonable notice to the owner to enable him to pay the fine and obtain delivery.
18. If we look into the provisions of section 181 of the Act, these provide for option to pay, in lieu of confiscated goods. It provides that whenever an order for confiscation of goods is passed, the officer passing the order may give the owner an option to pay in lieu of the confiscation of the goods such fine as the officer thinks fit. This fine shall be in addition to payment of duty and charges payable in respect of such goods and any penalty. These provisions change the character and nature of the confiscation through the exercise of option and so the confiscation does not remain absolute but it is converted into simple fine or monetary consideration payable in lieu thereof. So in a case where order is made under section 181 of the Act by an officer and the goods are found sold, such sale will be considered as sale during pendency of the case or to say under section 169 ibid, read with section 201 of the Act, i.e., sale of goods other than confiscated' goods.
Consequently, the balance of sale proceeds would become payable to the owner under section 201(3) of the Act after deduction of duty and taxes etc., provided the owner applies for it within six months of the sale of the goods or shows sufficient cause for not doing so.
19. A question has been raised by the respondents in their arguments that the sale proceeds are payable, if the thing sold is found not to have been liable to confiscation and not in case, if the thing is found liable to confiscation. The bare reading of section 169(5) of the Act would reveal that where the thing sold is found not liable to confiscation, in that case the entire sale proceeds are to be payable after necessary deduction of dues provided under section 201 of the Act. On the other hand section 201 of the Act, which follows section 169, provides for payment of sale proceeds to the owner of any goods other than confiscated goods when sold under any provision of the Act. The word any goods covers both goods liable and not liable to confiscation.
20. From the aforesaid discussion, we are of the view that where the Adjudicating authority or the Appellate forum orders the redemption of confiscated goods or any goods liable to confiscation, against fine etc., as envisaged under section 181 of the Act, the goods no more remain absolutely vested in the Federal Government but to remain the property of the owner subject to payment of fine and duty and taxes, etc., and in such a case, the sale proceeds are to be refunded in accordance with the provisions of section 169(5) read with section 201(2) of the Act, even if such goods happen to have been auctioned or disposed of in any prescribed manner. Consequently, we dispose of this petition by directing the respondents to immediately work out the sale proceeds, that may be payable to them in terms of Order-in-Appeal passed by this Tribunal on 06.11.2004 and report compliance accordingly.
21. Announced.