' IFTIKHAR MUHAMMAD CHAUDHRY, .J.---This appeal is by leave of the Court against the judgment dated 7-2-2003 passed by Lahore High Court in Customs Appeal No,337 of 2 01.
2. Precisely stating facts of the case are th t appellant acted as indentor on behalf of Messrs Eastman Chemical C mpany, Switzerland in Pakistan for supply of 306 M.T of acetic anhydride being purchased by Messrs Army Welfare Pharmaceutical (AWP). The delivery whereof was to take place according to following schedule:---
(a) 36.00 MTs in 2 containers (18.00 MTs each)
(b) 126.00 MTs in 7 containers (18.00 MTs each)
(c) 144.00 MTs in 8 containers (18.00 MTs each)
' The first lot of 36 M.Ts. Was got cleared by AWP but the second consignment received at Dry port Lahore was not found in accordance with shipment documents and consequently consignment was confiscated and case was registered against appellant and others under the Customs Act 1969. Show-cause notices were issued to shipper as well as indenters in pursuance whereof proceedings were drawn by the Collector vide order 10-6-1998 and indenter (petitioner) and others were burdened with following penalty.
"A penalty of Rs,10 million is imposed on each of the shippers and the indenters as they are clearly and deliberately involved in the misdeclaration. A penalty of Rs,10 million is also imposed on Hyder Naqvi of Arfeen for his criminal involvement in this case. The penalties are payable by the shippers, indentors and accused Hyder Naqvi in Pakistan."
3. In appeal the amount of penalty was reduced to one million each and the consignment confiscated was ordered to be given to M/s Army Welfare Pharmaceutical subject to payment of duties and taxes vide judgment dated 19th July, 2001 passed by Customs, Excise & Tax Appellate Tribunal. Against the order of Tribunal, appellant preferred Civil Appeal No,337 of 2001 before the High Court which has been dismissed.
4. Leave to appeal was granted on 30th April, 2003.
5. Learned counsel contended that appellant being an indentor (One who indents or writes order for goods) has no responsibility or involvement for the access dispatch of acetic anhydride, therefore, appellant cannot be held responsible for violation of the provisions of law if any.
6. On the other hand learned counsel for the department argued that indentor being agent/representative of Messrs Eastman Chemical Company, Switzerland in Pakistan is liable for any irregularities or illegalities committed by the principal, both under the Customs Act and the Contract Act.
7. It is to be noted that according to section 2(aa) agent means : "a person licensed under section 207 or permitted to transact any business under section 208 of the Customs Act". A perusal of section 207 suggests that it speaks in respect of Customs House Agents who are to be regularized under the rules to regulate licensing of the Customs House Agents. And section 208 of the Customs Act casts duty upon a licensed agents to produce authority if required. This section seems to be one of _ the important provisions of law in view of the controversy namely that what is the responsibility/liability of an indentor. For convenience same is reproduced herein below: "Person to produce authority if required.---(1) When any person licensed under section 207 applies to any officer of Customs for permission to transact any, specified business with him on behalf of any principal, such officer may require the applicant to produce a written authority from the principal on whose behalf such business is to be transacted, and in default of the production of such authority refuse such permission.
(2) Where the principal chooses to transact business directly without using an agent licensed under section 207, he may do so himself or may authorize an employee or representative that may transact business generally at the customs-port, airport or land customs-station or custom-house for such principal: ' Provided that the appropriate officer may refuse to recognize such an employee or representative unless such a person produces an authority in writing duly signed by the principal."
' A perusal of above provisions pursued us to hold that a principal either has to transact business directly without employing licensed agent or such business has to be run through agent, the liability of principal agent is governed under section 209 9f the Customs Act. On having gone through sections 207, 208 and 209 one can conveniently understand that there is no concept of indentor under the Customs Act. Meaning thereby that the principal is not bound to appoint an indentor under these provisions of law, however, to regularize relationship between the principal and indentor, parties enter into an agreement.##TE# Learned counsel for the appellant referred to such agreement executed between the appellant and the principal i,e, M/s Eastman Chemical Company, Switzerland in Pakistan dated October 28, 1997. Its study indicates that instrument has been executed in pursuance of which appellant has been appointed by the principal as their non- exclusive sale representative, only for Pakistan and in this capacity the appellant was obliged to promote and develop trade on behalf of its principal as per the provision of Article 2 of the Obligation of Representative. Clauses 6, 7 and 15, being important are reproduced herein below:-- "6. Shipments: D eliveries:-- ' Orders for sales by us to customers, pursuant to section 1 hereof will be shipped direct to the customer.
' Subject to our acceptance of each order, shipments may be made either from the United States or from available stocks which we may have in our section. Our forwarding agent at port of shipment will obtain the ocean bill of lading.
7. Transfer of Title: Title to beneficial ownership and control of and all property rights in the goods shall pass to buyer in accordance without form of acknowledgement.
15. No Agency: ' Nothing herein authorizes you to act as agent or legal representative for us, or to assume or create any obligation on our behalf. You will not make any statements to others or do any advertising, or use material on your letterheads, business cared, or otherwise, that may lead others to believe you have any such authority. No contract, statements, or representations by you will be binding on us. It is understood that no partnership or joint venture is formed by this agreement."
8. A perusal of statutory provisions of the Customs Act namely sections 207, 208, 209 and the conditions of appointment of the petitioner as indentor in the agreement, suggests to hold that office of indentor is distinct and different from the office of license-holder agent, appointed by the Customs Department. A perusal of the scheme of the Customs Act indicates that the business of the licensed agent is to interact on behalf of principal with the authority of Customs Department, whereas the indentor has no concern with internal business of the Customs Department, nor legally he can have an access on its affairs. Thus, if a person other than the licensed agent including indentor is found involved in committing violation of any of the provisions of the Customs Act or rules framed thereunder, it can be held responsible for the same in its private capacity but not as indentor.
9. Learned counsel appearing for the department emphasized that liability of the indentor and the licensed agent would be same. But we are not inclined to agree with his such contention in view of the above discussion, but at the same time we are also of the opinion that as per the charter of the duty the indentor is also bound to ensure the supply of the goods to the purchaser for which he has issued an indent to the principal and if there is any discrepancy it, being a responsible sales representative, is bound to first of all inform the principal about such discrepancy and if principal is not ready to listen to indentor, then indentor also owe a duty being a person who enjoys authority to negotiate on behalf of the principal with the purchaser about the supply of the consignment, particularly in respect of such a consignment which otherwise is very important but for non- discharging such duty it cannot be penalized under any of the provisions of the Customs Act as it had happened in the case in hand. It is now a settled principle that a person cannot be penalized under a particular provision of law unless it is established that its such action falls within the mischief of the said provisions of law. ##TE#Reference in this behalf may be made to the case of Haji Abdul Razzaq v. Pakistan; through Secretary, M/O Finance and others PLD 1974 SC 5. In this case a vehicle was intercepted and thereafter a notice was issued under section 177-A of the Sea Customs Act, to its owner Abdul Razzaq calling upon him to produce evidence in support of the legal import and possession of the goods recovered and seized from it. The vehicle was ultimately confiscated which was challenged in the Court and ultimately matter came before this Court. The Court observed as follows:-- "It appears to us that there is a great deal of force in the reasoning of the learned Judge in this case. If the word "liable to confiscation" give a discretion to the confiscating authority to deprive a person of his property then it follows that this discretion must be exercised upon the principles of natural justice; that is to say, the persons sought to be deprived of the property must be given notice to show cause, they must be furnished with adequate. Opportunity of putting forward their point of view and the same must receive due consideration. Furthermore, according to one of the principles now well-accepted, no person should be deprived of his property by way of penalty unless it is clear that he is in some measure responsible for assisting or furthering the commission of the offence committed.
' No innocent person should be unjustly punished or deprived of his property. This was the cardinal principle which was followed by the learned Judge of the Calcutta High Court in the last mentioned case. We too think that this was the correct principle upon which the authorities should proceed."
10. As it has been observed that the appellant may not be an innocent but the action can only be initiated against it if it falls within the mischief of any provisions of the Customs Act, particularly, relating to the affairs of licensed agent in terms of sections 207 and 209 of the Customs Act. At this juncture reference to the case of Alliance Insurance Co. Ltd. v. Burjorjee and Co. Karachi and others PLD 1977 Kar. 765 may be made. In this case a question for consideration before the High Court was whether the service of the summons effected on the local agent of the foreign owners, characters or the persons issuing Bills of Lading in good service of law in the facts and circumstances of the case.
' Learned author Judge, Mr. Justice Zafar Hussain Mirza examined the relevant provisions of the law of the Customs Act in following terms:- "It is obvious from the facts of these cases that the main work entrusted to the shipping agents was as Custom House agents. Section 207 of the Customs Act, 1969 provides that no person shall act as an agent for the transaction of any business relating to the entrance or departure of any vessel unless such person holds a licence granted under the rules. Section 208 of the same Act provides that when any person applies to any officer of the Customs for permission to transact any specified business with him on behalf of any other person, such officer may require the applicant to produce a written authority from the person on whose behalf such business is to be transacted.
Section 2(a) defines "agent" to mean a person licensed under section 207 or permitted to transact any business under section 208. Section 55(e) of the Customs Act provides for refusal to give port clearance to a vessel until certain conditions enumerated therein are fulfilled or complied with and sub-clause (e) of subsection (1) thereof provides as under: "The agent, if any delivers to the appropriate officer a declaration in writing to the effect that such agent is answerable for the discharge of all the claims for damage or short delivery which may be established by the owner of any goods comprised in the import cargo in respect of such goods."
' In exercise of the powers conferred by section 219 of the Customs Act the Central Board of Revenue made the Customs Agents (Licensing) Rules. In rule 2(b) "Customs Agents" was defined to mean an agent licensed under these rules for the transaction of any business relating to the entrance or clearance of any conveyance (vessel) or the import or export of goods or baggage in a Custom House or Land Custom Station. These rules provide for making application and grant of license as a Customs agent and other allied matter. An examination of the aforesaid provisions of the Act, and the rules, clearly spell out the statutory obligation and the scope of the authority of a shipping agent. It is quite obvious that such agent is responsible for performing specified duties and discharging specified obligations for which he is personally liable under the statute, whatever may be his right for contribution or compensation against his principal. But in the performance of his limited duties such an agent cannot be said to be carrying on generally the business of a particular principal by the exercise of his discretion as an agent doing business on behalf of his principal. The shipping agent provides his services to all and sundry who may choose to avail his services, so that he does not act for a single principal but does his own business in his own name for his clients. The essence of agency relevant for the purposes of service, on the other hand seems to be that the agent must be authorized to initiate any business himself on behalf of his principal and must have the power to enter into contracts on behalf of such principal. I am therefore, of the opinion that the person simply employed for a particular voyage to obtain freight or to issue delivery orders or to settle claims is not an agent within the purview of rule 13 of Order V, C.P.C. None of the circumstances relied upon by the plaintiffs from the evidence of the shipping agents, therefore, establish that they were carrying on business for the concerned defendants."
11. It is significant to note that in the reported case the licensed agent was held liable only to the extent of his specific duties defined under the law. Applying this principle on the case in hand, we are inclined to hold that; ' Firstly, applicant is not licensed agent therefore, in its such capacity it has no business to do with Customs Department in terms of provision of sections 207, 208 and 209; ' Secondly, as terms and conditions of appellant are regulated by a private contract with its principal, relevant conditions therefrom have been reproduced hereinabove, therefore, appellant is not answerable to anyone except to his principal; ' And thirdly, papers of the consignment received from the principal were not to be clarified by appellant as it is the job of the licensed agent.
12. For the foregoing reasons, we are of the opinion that learned High Court may have made an attempt to deal with the case of the appellant differently than the case of the licensed agent as in our opinion these offices i,e, Indentor privately appointed and the licensed agent are different and distinct from each other, because conditions of service of former are regularized by a private contract whereas later's conditions are regularized by a statutory provision as it has already been observed hereinabove.
' Thus for the foregoing reasons, appeal is allowed and the impugned judgment is set aside leaving parties to bear their own costs.