KHALIDA RASHID, J.-This appeal under Section 96 of the Customs Act, 1969 is directed against the order of Customs, Central, Excise and Sales Tax Appellate Tribunal, Islamabad dated 12.2.2001 whereby penalty of Rs. 30,0, 00/- imposed by Collector Customs, Peshawar in Order-in-Original was reduced to Rs. 10,000,00/-.
2. Feeling aggrieved appellant M/s. Paper International (Pvt.) Ltd. Aman Garh, Nowshera, through instant appeal prayed for the determination of following questions of law:--
(i) "Where in the show-cause notice, the appellant have been charged for illegal removal of goods from the Bond only, under the circumstances of the case the learned Collector could invoke only clauses 58, 59, 61, 62 of Section, 156(1) of the Customs Act, 1969 whether under the afore-mentioned sections of law the learned Collector has not exceeded from his authority by imposing a heavy penalty of Rs. 10,00,000/- , hence, the order of penalty is ultra vires and exceed of jurisdiction,
(ii) Whether under the circumstances of the case search and seizure are not ab initio illegal and void as the officer of Directorate of Customs Intelligence of any rank under SRO 388(l)/82 have not been empowered to take cognizance under the sections law which were invoked in the show- cause notice, therefore, rending the subsequent proceedings nullity of the eyes of Law.
(iii) Whether. The circumstances of the case where no mala fide could be attributed to the appellant the imposition of penalty is justified.
(iv) Whether impugned order is not against the principle of consistency where in similar cases the learned Tribunal imposed lesser penalties, wherein appellant case heavy penalties have been retained.
(v) Whether order of imposition of penalties is not against the well-settled principle of law that; the proceedings for imposition of fine and penalties are proceedings criminal in nature, under the circumstances of the case, the respondent has succeeded in discharging the onus of proof to be standard as required in criminal cases to sustain the order of imposition of penalty.
3. The brief facts leading to this appeal are that on 5.10.1998 staff of Intelligence and Investigation (Customs and Excise) with the assistance of Customs Staff, Incharge bonded .Warehouse, carried out the physical stock checking of the raw material stored in the bonded warehouse situated in the appellant/factory premises and discovered a shortage of 357.361 MT of wood pulp imported fr6m Canada which had been allegedly removed from the bonded warehouse without payment of leviable duties and taxes. Eight bales weighing 1890 k.g. Of wood pulp were also recovered from the processing section of the factory. The balance lying in the bonded warehouse was seized under Section 16.8 of the Customs Act. The appellant was issued show-cause notice on 30.10.1998. The relevant para (6) of show-cause notice reads as under:- "Since M/s. Paper International (Pvt.) Ltd., Nowshera have clandestinely removed the imported pulp weighing 357.761 M. Tons from their bonded warehouse and although they have claimed to have paid the duty and taxes for which they have not yet produced any proof of clearance of these goods thereof they have contravened the provisions of Sections 16, 18, 32, 79, 104, 111, 112 and 116 of the Customs Act, 1969 punishable under Sections 156(1), 12, 43, 57, 59, 60, 62, 90 and 91 ibid, therefore, the balance quantity of pulp found in the bonded warehouse as well as recovered from pulp processing section of the unit was seized under Section 168 of Customs Act, 1969 and the case paper are being submitted for adjudication. A.I.R, in the instant case has already been sent vide C.
No. C11/1611, dated '7.10.1998."
The notice was replied to on 4.11.1998. After the discrepancy was discovered the appellant on the following day i.e. 6.10.1998 deposited the unpaid taxes and duties. Not satisfied with the reply to the show-cause notice, the Collector Customs, upon adjudication of the case, imposed penalty of Rs. 3 million (Rs. 30,00,000/-). On appeal, the Appellate Tribunal reduced the penalty to Rs. 1 million (Rs.
10,0, 000/-) through the impugned order dated 7.3.2000. Aggrieved the appellant filed instant first appeal against the order of the Appellate Tribunal.
4. Mr. Isaac Ali Qazi, Advocate, pleaded the case of the appellant while Mr. Muhammad Attique Shah, Advocate, assisted by Mr. Javed Khan, Law Officer, defended the impugned order.
5. The learned counsel for the appellant, giving background of default in. Payment of taxes etc. Submitted that appellant received two consignments of wood pulp i.e, one from Canada and the other from Indonesia in the month of May, 1998. The consignment of 3000 M. Tons of wood pulp of Indonesian origin which was cleared at Karachi and consignment of 497.361 M. Tons imported from Canada were unloaded in the factory at the same time. The labourers due to heavy rains erroneously and by mistake heaped up the Canadian origin raw material in the bonded warehouse where the raw material of Indonesian origin, cleared on cash payment at Karachi, was piled. The learned counsel went on to argue that as soon as the appellant discovered the irregularity in payment of taxes, deposited and paid the taxes for 357.361 M. Tons wood pulp of Canadian origin, fallaciously used in the production without payment of duties. The learned counsel insisted that even if the appellant is considered to have defaulted, his case would fall under clause 62 of Section 156(1) of the Customs Act, 1969 whereunder the adjudicating authority could impose penalty upto 25 thousand only. The learned counsel also maintained that while imposing penalty the mens rea or guilty intention is to be taken into consideration, in that, soon after the discrepancy was discovered, the appellant paid the deficient taxes for used raw material of 357.361 M. Tons.
6. Mr. M. Attique Shah, learned counsel for the respondent defending the impugned order contended that the appellant had clandestinely removed the raw material weighing 351.361 M.
Tons from-the bonded warehouse without payment of duties and taxes, therefore, provisions of clause 90 to Section 156(1) of the Customs Act were applicable whereunder penalty equal to 10 times of the value of goods could be imposed which if calculated would come to much higher amount but the Appellate Tribunal took a- lenient view and reduced the penalty to Rs. 10,00,000/-.
7. The substantive controversy that requires to be resolved is as to which of the clause 62 or 90 of Section 156(1) of the Customs Act would be applicable in the facts and circumstances of this case.
To appreciate the point in issue properly, it would be appropriate to reproduce both the clauses as under:-- Offences. Penalties Section of this Act to which offence has reference.
62: If any person illegally takes any goods out of any warehouse without payment of duty, or aids, assists or is otherwise concerned therein. Such person shall be liable to a penalty not exceeding twenty-five thousand rupees and upon conviction by a Special Judge, he shall further be liable to imprisonment for a term not exceeding five years, or to fine, or to both.
Chapter XI
90. If any person, without lawful excuse, the proof of which shall be on such person, acquires possession of, or is in any way concerned in carrying, removing, depositing, harbouring, keeping or concealing or in any manner dealing with any goods, not Such goods shall be liable to confiscation; and any person concerned shall also be liable to penalty not exceeding ten times the value of the goods.
Being goods referred to in clause 89, which have been unlawfully removed from a warehouse or which are chargeable with a duty which has not been paid,- or with respect to the importation or exportation of which there is a reasonable suspicion that any prohibition or restriction for the time being in force under or by virtue of this Act has been .
Contravened, or if any person is in relation to any such goods, in any way without lawful excuse, the proof of which shall be on such person, concerned in any fraudulent evasion or attempt at evasion or any duty chargeable thereon, or of any such prohibition or restriction as aforesaid u or of any provision of this Act applicable to those goods.
8. Ln the show-cause notice, reproduced above, both the clauses 62 and 90 are mentioned. Under clause 62, penalty upto 25 thousand can be imposed if cerson takes out the goods out of any warehouse without payment of taxes/duties. To constitute an offence under Clause 90 of Section 156(1) of the Customs Act, the following prerequisites are to be established.
Firstly, that the accused person intended to defraud the country of the duty payable on the goods or to evade the prohibition or restriction on the importation thereon for the time being in force.
Secondly, he knew that the goods were chargeable with duty which has not been paid or there was any prohibition or restriction with respect to importation of those goods and, thirdly, he was carrying, removing, depositing, harbouring those goods with intent to defraud the Government of any duty or to evade the prohibition and importation which was for the time being in force. The penalty provided therein is the confiscation of the goods and also the accused person liable to penalty not exceeding ten times of the value of the goods. We see force in the argument of the leamed counsel for the appellant that there was no such evidence to prove the existence of any of the aforesaid ingredients. The allegation made against the appellants in the show-cause notice was that he had clandestinely removed the goods from the bonded warehouse without payment of the duty, ln this background, provisions of clause 62 of Section 156(1) of the Customs Act, 1969 would be attracted which entails penalty upto Rs. 25 thousand.
9. Ln the similar circumstances involving the identical issue, the Appellate Tribunal in the case of M/s. Riaz Electric Company (Pvt.) Ltd., Lahore Vs. Collector of Customs (Appraisement), Lahore (PTCL 1999 CL 746) wherein an amount of Rs. 25 lacs was imposed had held that the Collector Customs could not exceed the monetary limit of Rs. 1,00,000/- (enhanced vide Finance Act, 1999) under clauses 1, 59, 61 and 62 of Section 156(1) of the Customs Act, -1969 while imposing penalty.
The learned Tribunal had warnt the competent authority to avoid imposition of heavy sums, for, it not only increased under litigation but even otherwise brought bad name to the Department and the Government.
10. Consequent to above discussion, we hold that the appellant was liable to penalty under Section 156(1)(62) of the Customs Act, 1969 whereunder maximum penalty into Rs. 25,000/- could be imposed. Therefore, we allows this appeal, set aside the impugned order and direct the competent forum (Customs Appellate Tribunal) to decide the appeal of the appellant in terms of the findings of this Court.