' GULAB SHAH AFRIDI, MEMBER (JUDICIAL).---This appeal filed by Messrs Khyber Tea and Food Company, Peshawar (appellants here-in) is against the Order-in-Appeal No,464 of 2010 dated 27- 8-2010 (issued on 22-9-2010) passed by the learned Collector Customs (Appeals), Peshawar, whereby he while maintaining the Order-in-Original No,34 of 2010 dated 1-4-2010.
2. Brief facts of the case as recapitulated in the order-in-appeal are the Customs Anti-Smuggling Unit, D.I. Khan on a prior information intercepted a Bed Ford Truck bearing Registration No,K-9529- Peshawar coming from Peshawar side near Shinwari Petrol Pump, Bannu Road D.I. Khan on 23-11- 2009. Search of the vehicle led to the recovery of foreign origin Welding Electrodes and Black Tea regarding which, on demand the occupants namely Irfanullah son of Khadi Gul driver/owner of the vehicle and Nisar son of Siraj-ud-Din (Cleaner) could not produce any legal document in respect of the goods mentioned at S.Nos.1, 2 and 3 of the Column-4 of the seizure report, however, produced photocopies of GD No,I-HC-867123-020109 and Sales Tax Invoice No, 176 dated 20-10- 2009 for Black. Tea of 20-Bags. The Sales Tax Invoice No, 176 dated 20-10-2009 revealed that quantity of 8316 kgs blended back tea was purchased by Messrs Khyber Tea and Food Company Peshawar from Messrs SPATCO'S Karachi (against the said invoice without mentioning the origin of country). The same has been entered/recorded in Purchase Register of Messrs Khyber Tea and Food Company, Peshawar maintained under Sales Tax (amended) Act, 1990 and has already been supplied to different buyers as was evident from the Supplier's Register and as on 30-10-2009 the stock (Inward and Outward) Register was showing Nil stock that the imported tea was of Indian origin while the seized tea was of Kenya origin. Therefore, the aforesaid truck bearing Registration No,9529-Peshawar loaded with F/o non-duty paid Black Tea and Welding Electrodes were brought to the premises of Anti-Smuggling Unit Kohat where in the foreign origin goods (detailed as per recovery memo.) were recovered. Both the goods as well as the truck were formally seized under section 168 of the Customs Act, 1969 for the violation of sections 2(s), 16, 157 of the Act ibid read with section 3(1) of the Import and Exports (Control) Act, 1950 punishable under sections 156(1)(8) and
(89) and 157(2) of the Customs Act, 1969 read with section 3(3) of the Imports and Exports (Control)
Act, 1950.
3. Subsequently, after completion of the requisite formalities, the case was decided by the Assistant Collector Customs, Kohat vide Order-in-Original No,34 of 2010 dated 12-4-2010, wherein the goods were out-rightly confiscated whereas the vehicle was released on payment of redemption fine of 20% of the customs value thereof.
4. Aggrieved of the Order-in-Original No,34 of 2010, the appellant filed appeal before the learned Collector Customs (Appeals), Peshawar who vide his Order-in-Appeal No,464 of 2010 while maintaining the Order-in-Original No,34 of 2010 dismissed the appeal as mentioned in para-1 above. Hence the instant appeal on the following grounds:--
(i) That the impugned Order-in-Appeal No, 464 of 2010 dated 22-9-2010 and Order-in-Original 34 of 2010 dated 12-4-2010 are against the law, facts and evidence available on record;
(ii) That the respondent No, 1 as well as respondent No, 2 passed the impugned order in appeal as well as order in original in haphazard manner;
(iii) That the impugned order-in-appeal as well as Order-in-Original are not speaking one;
(iv) That the findings of the lower forums revolving around the provisions of Sales Tax Act, 1990 but he has confiscated the tea in question under the provision of Customs Act, 1969 which is not tenable;
(v) That the sections of law leveled against the tea in question are not applicable;
(vi) That the respondents Nos. 1 and 2 have failed to apply their judicious mind while passing the impugned order in appeal as well as order in original;
(vii) That the respondents Nos. 1 and 2 have failed to appreciate the documentary evidence produced by the appellant as a proof of legal import of confiscated black tea.
(viii)That the verification report on the part of respondent No, 4 on the basis of which respondents Nos. 1 and 2 confiscated the tea in question is against the law;
(ix) That the appellant has sold out the tea in question on both unregistered persons therefore the question of bank transaction is ruled out. Because the conditions enshrined in section 73 of Sales Tax Act, 1990 are primarily binding and can be practically met only in situations where beside the seller, the buyer the person is duly registered as required under the said Act. However, in cases where buyers are not required to be so registered none of the conditions mentioned in section 73 of the said Act remains binding; ' Where buyer is not required to be registered for the purpose of the aforesaid Act, no tax credit, adjustment, deduction, refund, repayment or drawback or zero-rating of tax is involved in respect of the purchases made by such buyer and the restriction imposed under subsection (2) of section 73 of Sales Tax Act, 1990 is not required to be adhered to and hence, rendered irrelevant.
' As per explanation footnoted to section 73 only a registered person is required to maintain a business bank account and declare such account to the Collector;
(x) That the findings of the respondent No, 4 regarding the fakeness of Invoices Nos. 10 and 11 is without cogent evidence/opinion of hand writing expert therefore the findings of respondent No,4 are not sustainable in the eye of law, both the invoices be sent to the hand writing expert/FSL for getting the opinion regarding the genuineness or fakeness;
(xi) That the findings/opinion of respondent No, 4 regarding the Invoices Nos. 10 and 11 are illegal because in the report/ opinion of respondent No, 4 it is not mention anywhere that he has checked the record of the appellant in regard with the Purchase Stock and Supply but gone 'through the irrelevant issues;
(xii) That the respondent No, 4 has given his opinion without checking the Purchase Sales- Summary and Monthly Sales Tax Return for the month of 11 of 2009. The respondents Nos. 1 and 2 wrongly place reliance on the opinion of respondent No, 4;
(xiii) That the confiscated black tea is legally imported one and the appellant has locally purchased the seized black tea;
(xiv) That the tea is not a notified item under section 2 (s) of Customs Act, 1969 therefore the seizing officer is duty bound to prove that the seized tea is not duty paid and is smuggled one. The seizing officer is required to prove the case in terms of Article 1 read with the provision of Chapter-IX of Qanun-e-Shahadat Order 1984;
(xiv) That section 16 of the Customs Act, 1969 is therefore not applicable in this case because section 16 of Customs Act, 1969 read as follow: "The Federal Govt. May, from time to time, by Notification in the official Gazette, prohibit or restrict the bringing into or taking out of Pakistan of any goods of specified description by air, sea or land."
(xvi) That when .The seized black tea has not prohibited or restricted to bring into Pakistan, the invocation of section 16 of the Customs Act, 1969 is quite unjustified and unwarranted.
5. During the course of arguments, learned counsel for the appellant contended that the appellant is running a business of tea and other foods at Peshawar having a registered firm with Sales Tax Department and also with the Income Tax having NTN No,1021567-7. He further contended that the appellant is also supplier of the black tea to the Government Departments. In support of his contention, the learned counsel relied on certain documents of registration with both central and provincial Government Departments, duly annexed with the memo. Of appeal. The learned counsel submitted that the black tea in question i,e,, 20 bags recovered by the Customs Mobile Squad, D.I.
Khan was booked through Pak-Lakki-Peshawar Goods Transport Company to Messrs Super Tea Store, 10 bags and 10 bags to Messrs Fazlur Rehman Tea Store, Sukkar and were properly purchased from Messrs SPATCOS, Karachi, purchased in quantity of 10,000 kilograms at the rate of Rs,300 per kilogram against valid sales tax Invoice No,196 dated 10-11-2009. The importer Messrs SPATCOS also issued the import documents having CRN-1-HC-1198331-051109. On scrutiny of the Sales Tax Invoice No,196 dated 10-11-2009, indicate the amount/value as Rs,30,00,000, sales tax 16% (Rs,48,000), Special Excise Duty Rs,30,000, totaling Rs,35,10,000, placed on file at page 19, duly issued in favour of the appellant company. The amount of purchased black tea has been paid by the appellant company through Muslim Commercial Bank, Chowk Yadgar Branch, Peshawar to Messrs SPATCOS, Karachi, payment made by the appellant is on page 29 of the file. The learned counsel further contended that at the time of seizure the driver of the vehicle also produced the G.D. Having CRN-1- HC-1198331-051109 but malafidely the seizing officer mentioned in the Recovery Memo. At Column- 4 "f/o smuggled black tea (Kenya) booked by Messrs Khyber Tea Company against Bilty No, 644 dated 20-11-2009 and Bilty No,663 dated 21-11-2009, irrelevant documents i,e,, G.D., Purchase Invoice presented.
' Learned counsel for the appellant submitted that all the above mentioned goods seized with the approval of the Superintendent Customs Circle, D.I. Khan". The seizing officer was bound to mention the GD, CRN number which was actually produced, mere mentioning the irrelevant GD by the seizing officer without number and mentioning irrelevant documents before investigation of the produced GD and Sales Tax Invoice issued by Messrs SPATCOS, is against law and facts. In fact the driver produced the relevant GD on the spot but the seizing officer while submitting the Seizure Report on 17-12-2009 before Adjudicating Officer for adjudication after 24 days of seizure, mentioned in the Seizure Report that the driver produced G. D. No,1-HC-867123-020109, which in fact was produced in case Seizure Report No,29/2009 dated 10-10-2009, while replying to the Show- Cause Notice C.No, Cus (14)59/2009/2822 dated 4-11-2009, submitted vide Diary No,1059 dated 18- 11-2009, before Adjudicating Officer is also under Appeal No,Cus.359/PB/2010 before this Tribunal.
The instant reply sent to the Seizing Officer for comments, which were filed by him, wherein .The Seizing Officer admitted that the driver had produced GD No,CRN-1-HE-867123-020109 dated 2-1- 2009. This male practice, on the part of the seizing officer is also against law and facts of the case and shows mala fide on the part of the seizing officer.
' Learned counsel for the appellant further submitted that the G.D. No,CRN-I-HC-1198331-051109 and the Sales Tax Invoice No,196 dated 10-11-2009 from Messrs SPATCOS regarding purchase of 10,000 kilograms of tea were produced before the Adjudicating Officer while replying to the Show-Cause Notice No,Cus (14)/70/2009 dated 26-12-2009, but no weight was given to the said documents nor any investigation had been carried out by respondent No,2 in this respect, comments filed by the Seizing Unit in response of reply to the show-cause notice is not in detail and without investigation.
6. On the other hand, learned Departmental Representative Mr. Naseer Khan, Deputy Superintendent Customs, opposed the contentions of the learned counsel for the appellant and reiterated their written comments and contended that the seized black tea (being notified item) was smuggled through unauthorized routes in violation of section 2(s) of the Customs Act, 1969 and was rightly confiscated by the lower forums. He further contended that the origin of the tea is not mentioned in the Sales Tax Invoice. He submitted that the GD produced showing origin of Kenya, while GD produced by the driver mentions origin of India was not relevant to the seized tea and the recovery memo. Prepared on the spot is according to law. He stressed for maintaining the orders of the lower forum.
7. I have heard both the parties and have gone through the record of the case carefully. To authenticate the allegations, the record of both Seizure Reports No,29 of 2009 dated 10-10-2009 and No,33 of 2009 dated 23-11-2009 were requisitioned from the seizing agency. .On scrutiny of both the files, it transpired that after seizure of 20 bags of black tea (the subject matter of the instant appeal), the Seizing Officer was bound to summon the owner of the goods for investigation as his company's name was mentioned in the Bilty being a sender and enquiring him regarding lawful possession of the goods in question but on perusal of the said record, no summon or call letter is available which indicate that the appellant was called upon and produced certain documents, which were investigated and were found not relevant to the seized consignment. On perusal of the record, it is noticed that the documents which were produced in Seizure Case No,29 of 2009 dated 10-10-2009 of the same unit, in reply submitted on 16.11.2009 to Show-Cause Notice C.No,Cus(14)59-2009 dated 4-11-2009 was mentioned in the Seizure Report of the present case i,e,, Seizure Case No,33/2009 dated 23-11-2009 (of the same unit), was submitted before the Adjudicating Authority on 17-12-2009 which supports the stance of the appellant's counsel.
8. On perusal of the Recovery Memo. No,33 of 2009 dated 23-11-2009 at Column No,4, the seizing officer has mentioned production of abilities, irrelevant documents i,e,, GD, Purchase Invoice, each and every GD has visible CRN-GD number and the same is of Purchase Invoice but the Seizing Officer even did not bother to have mentioned their numbers in the said Recovery Memo which is the mandatory requirement of the recovery proceedings. The seizing officer while submitting the Seizure Report on 17-12-2009 allegedly mentioned in the said Seizure Report that "however, produced photocopies of GD No,1-HC-867123-020109 and Sales Tax Invoice No, 176 dated 20-10- 2009 for Black Tea of 20-Bags. The Sales Tax Invoice No, 176 dated 20-10-2009 revealed that quantity of 8316 kgs blended black tea was purchased by Messrs Khyber Tea and Food Company Peshawar from Messrs SPA TCO'S Karachi (against the said invoice without mentioning the origin of country). The same has been recorded in Purchase Register of Messrs Khyber Tea and Food Company, Peshawar maintained under Sales Tax (Amended) Act, 1990 and has already been supplied to different buyers as was evident from the Supplier's Register and as on 30-10-2009 the stock (Inward and Outward) Register was showing Nil stock. Moreover, the documents produced by the driver were also scrutinized and found that the imported tea was of Indian origin while the seized tea was of Kenya origin".
9. It is astonishing as to how the seizing officer had got the record of the instant case without calling and investigating the respondent (appellant herein) as there was issued no notice to the appellant for production of the documents (relied upon by the appellant) and associating him in investigation of the case. Here the stance of the appellant has got weight that the seizing officer malafidely mentioned those documents in the present Seizure Report, which were produced before the Adjudicating Officer on 16-11-2009 in reply to the show-cause notice of the prior Seizure Case No,29 of 2009 dated 10-10-2009. Even otherwise, the Seizing Officer was supposed to only detain the goods in question before making seizure for the reason that when the documents relied upon/produced to him by the appellant, were required to be verified and investigated but the seizing officer without taking into consideration the said documents straight forward made a seizure report and mentioned the irrelevant documents of another seizure case No,29 of 2009 as stated above. The learned counsel stated that according to the higher forum, the seizing officer was under obligation to detain the goods in spite of seizure of the goods when the documents of import were produced before him. In regard, the counsel drawn the attention of this court to the Collector of Customs, Lahore's letter C. No,1/ASO-293/ 2004/3004 dated 19-4-2005 wherein the Collector Customs Lahore endorsed the FTO recommendation to the effect that the Revenue Division must, therefore, work out a procedure to ensure that the seizures are not made on mere suspicion and that no seizure is made without adequate material. Furthermore, where adequate documents are not found with the consignment but are claimed to be available, it should be more appropriate to detain the consignment, pending furnishing of documents within a reasonable time, instead of making an outright seizure".
10. Contention of the respondent-department that there is no mentioning of the country of origin in the Sales Tax Invoice produced by the appellant is not plausible because there is no column to be mentioned the origin in the Sales Tax Invoice, so no need to be mentioned the origin in the Sales Tax Invoice. Further in light of the judgment of the Honourable Peshawar High Court, Peshawar passed in S.A.O.No,175 of 2004 dated 11-10-2004.
11. As for as the question of payment of purchase on the seized consignment of tea is concerned, it is clear from the record i,e,, copies of Cheques, which proves that payment was made to the seller (importer) through banking channel under section 73 of the Sales Tax Act, 1990. Appellant company is registered with the Sales Tax Collectorate for the purpose of import/export, whole seller and manufacturers who duly maintained record under section 22 of the Sales Tax Act, 1990 and issued Sales Tax Invoices on his supplies as required under section 23 ibid. Thus the arguments of D.R for the respondent have no force, as per law once the good imported into the country for home consumption and the import documents are produced then the sections of law levelled in the Show-Cause Notice are not applicable and by producing such documents as prescribed under section 187 of the Customs Act, 1969, the appellant has discharged his liability, while replying to the Show-Cause Notice.
12. From the available record it is established that the appellant are doing business of black tea and duly registered with the sales tax department, Income tax department, Sarhad Chamber of Commerce and Pakistan Tea association, besides maintain all the relevant record as required under the law. Reliance is placed on 1983 PCr.LJ 1351, which reads as "possession of a very large quantity of gold with person dealing in that business does not create suspicion that gold is smuggled.---There is no evidence which can give rise to a reasonable belief for suspicion that gold found in possession of the appellant- was smuggled. Appellant and his father were engaged in the business of gold and were members of the Sarafa Bazar Association. The presence of a very large quantity of gold in his possession could hardly be regarded as suspicious circumstances.
There were no markings on the gold bars. The fineness of the gold was 999.1. Such gold was available in the local market. In view of these circumstances there was no basis for entertaining any belief or suspicion that the gold found in possession of the appellant was possibly smuggled."
13. The crux of the matter is that the appellant produced the documents in shape of Sales Tax Invoice No, 196 dated 10-11-2009 along with GD No,CRN I-HC-198331-051109. According to the above mentioned Sales Tax Invoice the appellant has paid sales tax Rs,480,000 and Rs,869,685 deposited as output tax which is evident from the purchase register for the month of 11/2009. Moreover the appellant sold out 600 kg of black tea in 10 bags to Super Tea Store Mewa Mandi Market Sakkar against sales tax invoice No, 10 dated 20-11-2009 and D 680 kg in 10 bags to Fazal-e-Rehman Tea Store Mewa Bazar Sakkar against sales tax invoice No, 11 dated 21-11-2009 and has paid out put tax Rs,29,760 and Rs,33,728 on the seized consignment of black tea. Furthermore all the relevant documents were produced and according to, section 187 of the Customs Act, 1969 as held in 2003 PTD 2118, 2005 PTD (Trib.) 135 the onus of proof lies on the shoulder of the prosecution to proof its case. For convenience of perusal, section 187 of the Customs Act, 1969 is reproduced:-- "187. Burden of proof as to lawful authority etc. ---When any person is alleged to have committed an offence under this Act and any question arises whether he did any act or was in possession of anything with lawful authority or under a permit, license or other document prescribed by or under law foil the time being in force, the burden of proving that he had such authority, permit, license or other document shall lie on him."
On perusal of the record, as stated above in para-5, the appellant produced lawful' import and purchase documents of the seized consignment. The import documents are not disputed and the prosecution is roaming with allegation of irrelevant documents produced. Reliance is placed on S.A.O. No,175 of 2004 dated 11-10-2004, whereby his Lordship Mr. Justice Nasir-ul-Mulk, has concluding as under:- "The sales tax invoice has only mentioned the tea as black tea as distinguished from green tea. In the sales tax invoice the origin of the tea need not be mentioned. The tea imported had been repacked by the importer for distribution to the retailers and, therefore, it was quite un-necessary to mention the countries from which the tea was imported. It was on account of these facts that the Appellate Tribunal as well as the Collector Appeals had found that the tea seized had been lawfully imported and that the burden to prove its lawful import had been duly discharged by the owner on production of the relevant documents. "
14. A question also arises that once a G.D. And other relevant documents were produced during adjudication before the Assistant Collector, which pertains to the seized consignment, without investigation, then how one can declare the same as smuggled goods or the documents are irrelevant. Similarly, the allegation in the Show-Cause Notice that the company is using irrelevant import/purchase documents, is not proved and the documents which even produced during adjudication are tallying with the seized consignment. The contents of seizure report incorporated in the Show-Cause Notice containing incorrect facts, have no legal sanctity. Reliance is placed on 2008 PTD (Trib.)
36. Furthermore, the submission of the DR that the goods were brought into the country through unauthorized routes and liable to confiscation in terms of section 2(s) of the Customs Act, 1969 is not tenable as the tea does not fall in the Appendix-A (banned item) and freely importable nor is restricted under the. Import Policy, therefore, any presumption of their being smuggled goods require direct evidence, which is not so in the present case. Reliance is placed on 2005 PTD (Trib.) 135.
15. In view of the above discussion, I allow the instant appeal, set aside both the impugned Order- in-Original No,34 of 2010 dated 12-4-2010 as well as Order-in-Appeal No,464 of 2010 dated 27-8- 20.10 and order that the seized black tea be restored to its lawful owner, if not required in any other case.