MR. SHAHID MAHMOOD BHATTI, MEMBER (JUDICIAL).-(1). This order will dispose of Customs Appeal No. 327/LB/2010 filed by the appellants against order in appeal No. 340/2010 dated 29.10.2010 passed by the learned Collector of Customs (Appeals), Lahore.
2. Brief facts of the case as reported by the Deputy Collector of Customs (AIB), Customs House, Lahore vide seizure report C. No. 01 /AIB/HQ/256/08/427 dated 19.09.2008 are that on 24.06.2008, an information was received through the Chief Collector of Customs that one Haji Irshad Ahmad had stored a huge quantity of foreign origin non-duty paid paper including coated, uncoated paper, self adhesive paper, self adhesive PVC sheets, PVC rigid film etc. In his godown situated at 48- Rajgarh Road, Lahore and at 12-Sandha Road, Lahore. In pursuance of the above information, the Collector of Customs Lahore constituted a team. On 24.06.2008 warrant under section 162 of the Customs Act, 1969 was obtained from the concerned Judicial Magistrate to search the godown situated at 48-Raj garh Road, Lahore. On 27.06.2008 another warrant under section 162 ibid was also obtained from the concerned Judicial Magistrate to search the other godown situated at 12- Sandha Road, opposite Shahnaz Banquet Hall, Sandha Lahore. After completion of all the legal formalities the aforesaid two godowns were searched. A huge quantity of aforesaid goods was found lying in the above two godowns. The above said Haji Irshad Ahmad present on the spot was neither in a position to segregate the aforesaid goods for detailed examination/checking/weighment nor was he able to provide any documentary evidence in support of legal import and lawful possession of the aforesaid goods. Therefore, at the request of Haji Irshad Ahmad the aforesaid goods were detained and detention notices dated 24.06.2008 and 27.06.2008 were issued to Haji Irshad Ahmad for physical examination/weighment etc. Of the goods available in the godowns. After completing the legal formalities as incorporated in the show cause notice as well as order dated 05.05.2010 adjudication proceedings of the case were finalized and the Collector of Customs Lahore has passed the aforesaid order holding that the impugned goods were confiscated. However, the same were allowed release against payment of 20% redemption fine besides penalty of rupees five lacs each upon the appellants.
3. The aforesaid order was challenged before the learned Collector of Customs (Appeals) who also dismissed the appeal of the appellants. Hence this appeal on the following grounds incorporated in the memo, of appeal:-
(a) That the raid and search of the godowns were carried out by the respondent No. 2 on the basis of search warrant obtained from Judicial Magistrate by him in terms of section 162 of the Customs Act, 1969.
(b) That the entire action on the part of the respondent No. 2 of conducting raid, carrying out search of the godowns and seizure of goods was illegal and without jurisdiction because being non-gazetted section 162 of the Customs Act, 1969 are vested in him. It was only a gazetted officer of Customs who can search any premises under the said provisions of law. Thus, raid, search and seizure by respondent No. 2 and subsequent proceedings on the basis thereof were void, illegal, without jurisdiction of no legal effect.
(c) That since the raid, search and seizure were carried out by exercising powers under section 162 of the Customs Act, 1969, thus the questions of detention of goods under section 186 read with section 2(kk) of the Customs Act, 1969 does not arise because for action under section 186, no search warrant is required to be obtained. Moreover, the detention can only be made if any fine and penalty had already been imposed or any inquiry or investigation was underway. Moreover, section 186 deal with the goods which are under the control of the department because sub- section (1) is to be read in harmony with sub-section (2) and not in isolation.
(d) That "detention" as defined under section 2(kk) of the Customs Act, 1969 means to prohibit the disposal or use of the goods pending finalization of any proceeding. It is humbly pointed out that since neither any fine or penalty was to be recovered from the appellants nor any proceedings were pending against them and as such there was no justification of any detention and the goods would be deemed to have been seized on 24.06.2008 and 27.06.2008 by the respondent No. 2.
(e) That according to respondent department itself the goods were giving in custody of petitioner No. 1 in terms of section 168 (1) which further supports the contention of the appellants that the goods were duly seized on 24.06.2008 and 27.06.2008. Moreover, obtaining search warrant, conducting raid and carrying out search of the godowns of the appellants made it crystal clear that the goods were seized on 24.06.2008 and 27.06.2008 and there was no detention at all because the seizure of goods are of two forms i.e. Either the customs authorities may take the goods away and keep them under their custody or where the same is not possible can be kept with the owner after obtaining bond for their safe custody as was done in the case of the appellants and as such the date of seizure of the goods shall be taken for all purposes as 24.06.2008 and 27.06.2008.
(f) That admittedly the goods were seized on 24.06.2008 and 27.062008 or at the best on 12.07.2008 on which date the same were given in custody of the appellants in terms of section 168(1) of the Customs Act, 1969.
(g) That as per sub-section (2) where any goods are seized under sub section (1) of section 168 and no show cause notice in respect thereof is given under section 180 within 2 months of the seizure of the goods, the same shall be returned to the person from whose possession they were seized.
(h) That the seizure of goods in this case took place on 24.06.2008 and 27.06.2008 or as the case may be 12.07.2008 and no extension in time period under proviso to sub section (2) was granted by any competent authority and thus the show cause notice should have been issued prior to 24.08.2008 and 27.08.2008 or at the best 12.09.2008 whereas the show cause notice was issued on 30.09.2008 which was badly barred by limitation.
(i) That admittedly the raid, search and seizure were conducted on 24.06.2008 and 27.06.2008 or at the best on 12.07.2008 and the show cause notice in terms of section 180 of the Customs Act, 1969 was issued on 30.09.2008 after expiry of the limitation prescribed under sub section (2) of section 168 and as such the goods shall be required to be returned to the appellants because continuing with the seizure of the goods after expiry of limitation prescribed under the law would be void, illegal and of no legal effect.
(j)That as per section 179 of the Customs Act, 1969 the power for adjudication of the cases involving confiscation of goods or imposition of penalty are entrusted to various officers of Customs and appeal against their orders is provided before the Collector of Customs (Appeals). No powers of adjudication of such cases are vested in Collectors.
(k) That under sub section (2) of section 179, FBR may by notification in the official gazette fix or vary the jurisdiction and power of any officer of Customs or a class of officers and may also assign or transfer any case to any Collector of Customs irrespective of the territorial jurisdiction while under sub section (4) FBR is empowered to regulate the system of adjudication including transfer of cases and extension of time limit in exceptional circumstances.
(l) That respondent No. 6 cannot entrust power of adjudication to respondent No. 4 as he being Revisional Authority in terms of section 195 of the Customs Act, 1969 does not figure in section 179 ibid. Moreover, no powers of adjudication can be entrusted nor any case can be assigned or transferred to him by respondent No. 6. Moreover, respondent No. 6 cannot exercise powers under sub section (2) except by notification in the official gazette and as such the order dated 29.09.2008 being not a notification and not passed by FBR is void and illegal.
(m) That even if it is presumed for the sake of argument (without conceding) that FBR can assign or transfer any case from the jurisdiction of the Adjudicating Authority competent to adjudicate the same under sub section (1) to respondent No. 4, it would tantamount depriving the aggrieved person from his legal right of appeal provided under section 193 and 194-A of the Customs Act, 1969. As per section 193 any person other than an officer of Customs aggrieved by any decision or order passed under sections 73, 80 and 179 may prefer an appeal to the Collector (Appeals). No appeal against the order of Collector is provided under section 193.
(n) That similarly any person or an officer of Customs aggrieved by any order passed by the Collector (Appeals) under section 193 or by the Board or the Collector of Customs under section 195 may appeal to the Appellate Tribunal but no appeal against the order of Collector if passed under section 197 is provided to Appellate Tribunal under section 194-A.
(o) That the perusal of section 179 in juxta position with section 193 and 194-A of the Customs Act, 1969 made it clear that respondent No. 4 does not figure in the scheme of adjudication and no powers of adjudication can be delegated to him as it would tantamount depriving the aggrieved person or as the case may be department of his legal right of appeal provided under section 193 and 194-A of the Customs Act, 1969. It is further pointed out that if the adjudication order is passed by respondent No. 4 even no reference would lie in terms of section 196 of the Customs Act, 1969 because it only lies in respect of any question of law arising out of the order of the Appellate Tribunal. Since no appeal is provided before the Appellate Tribunal against the order of Collector if passed under section 179, thus, the question of filing reference in terms of section 196 before. High Court would also not arise hence the order dated 29.09.2008 passed by the respondent No. 6 is void, illegal without jurisdiction and of i.o legal effect.
(p) That although there was no provision of filing appeal against the order passed by respondent No. 4 under section 179 of the Customs Act, 1969 yet by complying with his direction contained in preamble of the impugned order the appellants filed an appeal before respondent No. 7 agitating the grounds regarding jurisdiction of respondent No. 4 as narrated at grounds (m) to (o) above but while passing the impugned order she did not utter a single word in this behalf and rejected the appeal of the appellants in arbitrary and mechanical manner. Thus the reservations of the appellants as narrated in the aforesaid grounds of appeal are yet to be answered in this case.
(q) That according to show cause notice and other seizure documents appellants allegedly were found in possession of non-duty paid paper of different kinds weighing 1,640,457 Kgs. And as such invoking import related provisions under section 32 (1) and (3A) is illegal and unjustified. Since clause (90) does not carry any criminal liability, thus respondents in order to pressurize and harass the appellants also invoked irrelevant provisions in a matter adjudicatable in terms of section 179 whereas import relating misdeclaration is to be adjudicated under section 32 of the Customs Act, 1969.
(r) That the allegation against the appellants is that they were allegedly found in possession of non-duty paid paper of various kinds and there was no charge of making, signing or causing to be made or signed dr delivering or causes to be delivered to an officer of customs any declaration, notice certificate or other documents or making statement in answer to any question put to them knowing or reasons to believe that the same were false in material particular or there is any duty or charge not levied, short levied or erroneously refunded and, thus invoking section 32(1) and (3A) punishable under clause (14) of section 156(1) is patently void, illegal and malafide.
(s) That clause (14) and (90) of sub section (1) of section 156 of the Customs Act, 1969 cannot be invoked together because section 32 relates to the declaration at import stage while clause (90) deals with the non-duty paid goods seized inside the country not appearing in section 2(s) or in the notification issued by the Federal Government under the said provision of law. At the one hand the respondent department has alleged that the aforesaid goods were brought into the country without payment of duty and taxes while on the other hand section 32 has also been applied which is contradictory to each other.
(t) That as per section 171 of the Customs Act, 1969 when anything is seized the officer or other person making such seizure as soon as may be is required to inform in writing the person from whose possession the things are seized of the grounds of such seizure or arrest.
(u) That the raid, search and seizure were carried out by respondent No. 2 while the notices under section 171 were issued by respondent No. 1. Moreover, the seizure took place on 24.06.2008 and 27.06.2008 whereas the notices were served upon the appellants on 19.09.2008 by respondent No. 1 and as such it would be presumed that no notice in terms of section 171 was ever served upon the appellant which makes the entire action illegal.
(v) That the entire quantity of assorted type of paper and printing ink etc. Weighing 2,569,000 Kgs.
Found lying in both the godowns was lawfully imported/purchased by the appellants and the allegation that out of the said quantity, 1,640,467 assorted types of papers etc. Were found non- duty paid is false and fabricated. It is further pointed out that the documents of import and purchase were not taken into consideration intentionally by respondent No. 4 under the influence of respondent No. 5 just to make out a false case against the appellants.
(w) That the assorted paper etc. Weighing 965,451 Kgs. Were purchased by the appellants against proper tax invoices which were provided to the respondents which were got verified from the concerned Collector of Sales Tax and Federal Excise but in order to avoid these papers un- necessarily the matter was referred to the Customs Authorities at Karachi which has nothing to do with these invoices.
(x) That the show cause notice in this case was issued on 30.09.2008 while the impugned order was passed on 05.05.2008 whereas according to sub section (3) of section 179 of the Customs Act, 1969 the case was required to be decided within 120 days of issuance of the show cause notice or within such period extended by respondent No. 4 for which reasons were to be recorded in writing and as such extended period shall in no case exceed 60 days. According to first proviso the period during which the proceedings were adjourned on account of stay order or Alternate Dispute Resolution or time taken through adjournment by the appellants not exceeding 30 days shall be excluded for the accumulation of the said period.
(y) That in this case the show cause notice was issued on 30.09.2008 while the appellants filed writ petition on 08.10.2008 which was dismissed by the Hon'ble Lahore High Court, Lahore vide judgment announced in the open court on 24.06.2009 and as such the limitation for decision of this case was as under:- (a)initial period: 120 days: (b)extended period: 60 days.
(c)Adjournments by the appellants:30 days.
(d)Total: 210 days.
(z) That as earlier stated that show cause notice was issued on 30.09.2008, stay was granted on 08.10.2008 while the petition was decided on 24.06.2009, thus the time available with the respondent No. 4 for decision of this case was expired on 20.01.2010 but he decided this case on 05.05.2010 and as such the impugned order being barred by limitation has no validity in the eyes of law.
(aa) That respondent No. 4 while dealing with the aforesaid objection of the appellants had referred Article 25A of the Constitution of Islamic Republic of Pakistan which has nothing to do in such matter. The said Article deals with constitutional matters. Had the said Article been applied to all case, there would have no need to prescribe time for decision of the case under the Customs Act, 1969, Sales Tax Act, 1990 and Federal Excise Act, 2005 and as such the observation given by respondent No. 4 is frivolous and baseless.
(bb) That the impugned order consists of 17 paragraphs and 13 pages out of which paragraph No.1 to 14 and page 1 to 13 contained reproduction of show cause notice, grounds of appeal filed by the appellants and parawise comments of the department while paragraph No. 15 and 16 comprising few lines contained her decision.
(cc) That the perusal of the aforesaid decision of respondent No. 7 clearly shows that she neither dealt with the objections raised by the appellants with regards to the raid, seizure, show cause notice limitation, jurisdiction of respondent No. 4 and her own and just by mentioning that the appellants have failed to provide record rejected the appeal whereas she was fully aware that the record covering the entire goods was produced by the appellants and held on the record of the case.
(dd) That in fact respondent No. 7 neither gone through the record of the case nor passed the impugned order. These two paragraphs were written by his clerk as a routine practice in her office and she signed it. It was a great injustice with the appellants that the original order was passed by respondent No. 4 who was senior officer in BS-20 and the appellants was directed to file appeal against his order before respondent No. 4 newly promoted officer in BS-20. Moreover, respondent No. 7 did not deal with any issue and rejected the appeal of the appellants in arbitrary manner as is evident from perusal of paragraphs No. 15 and 16 of the impugned order and as such it is not sustainable under the law.
(ee) That during the hearing of the case it was observed by respondent No. 4 that no provision of law relating to smuggling of seized goods was ever invoked either in the seizure report as the case may be show cause notice and that only section 32 was mentioned which related to import of the goods. This fact was also recorded in interim order dated 07.11.2009 at para. 133(b)(3).
(ff) That while passing the order by respondent No. 4 he did not even utter single word to reconcile the aforesaid discrepancy and confiscated the goods under section 156(1)(90) of the Customs Act, 1969 without altering or amending the charge levelled against the appellant in the show cause notice. If the case of the department was that the appellants contravened section 16 and 32 then the case of evasion of misdeclaration could have been made against them. This major irregularity goes to the root of the case.
(gg) That during hearing of this case the appellants were directed by respondent No. 4 to file affidavit stating / therein that the entire goods were lawfully imported/procured by him vide order dated 11.11.2009 recorded at para. 138 of the order sheet.
(hh) That in compliance with the order dated 11.11.2009 passed by respondent No. 4 appellant No. 1 sworn an affidavit stating therein that the seized goods were either imported on payment of leviable duty and taxes or locally procured against proper sales tax invoices and the seized goods also included local products as well as damaged stock as is evident from the perusal of order dated 16.11.2009 recorded at para. 147 of the order sheet.
(ii) That no counter affidavit was ever filed by the detecting agency and according to law an affidavit filed by the appellants stood accepted as correct but respondent No. 4 has miserably failed to utter a single word in this behalf. Rather he ignored these facts while passing the order confiscating the goods for the reasons that there was no reply with him in this behalf. This alone is suffice to show that no independent judicial mind was applied either by respondent No. 4 or by respondent No. 7 and the lawfully imported goods were confiscated and that too by invoking totally irrelevant provisions of law.
(jj) Lastly he prayed to set aside the orders and waive the penalty imposed upon the appellants.
4. The Deputy Collector of Customs (AIB) filed parawise comments which are as under:-
(i) (a to v) Denied. Preliminary objection and reply of the preceding paras are re-iterated here.
(ii) (w) Denied. Appellants supplied untrue and false documents and on verification from the concerned quarters (i.e. Karachi Customs and Sales Taxes through FBR and Forwarding Companies) same were found fabricated and fake.
(iii) (x) to (aa). Denied. As stated above it is further submitted that time limit has been prescribed in section 179(3) of the Customs Act, 1969. A bare perusal of the above provision of law reveals that instruction to decide the case within a specific period of time is administrative and directory in nature. Since the aforesaid instructions are not mandatory in nature therefore same do not effect the proceedings even if concluded after expiry of prescribed time limit. Neither there is anything in section 179(3) of the Customs Act, 1969 nor in any other provisions of the act ibid that specify the consequences of' nullification of the order of the adjudicating officer for non compliance of the time limit. Furthermore the concept of time limit is also incorporated in the Article 254 of the Constitution of the Islamic Republic of Pakistan. According to this Article if any act or thing required by the Constitution to be done within the given period is not done within the time limit the doing of the act or thing after expiry of the given time limit shall not become invalid or ineffective by reasons only that it was not done within the prescribed time limit. Therefore non-compliance of the directory provisions as contained in section. 179(3) of the Customs Act, 1969 do not nullify the proceedings. It is further added that appellants themselves requested for reconciliation and verification qua their supplied record.
(iv) (bb) to (ii) Denied. The order in appeal passed by the learned Collector of Customs (Appeals)
Lahore is detailed and exhaustive and have addressed at the legal issued involved in the subject case. As no law point was raised during the process of appeal and all issues were thoroughly considered and examined at the adjudication forum and the order in original passed does not suffer from any legal infirmity and the appeal being devoid of merits was dismissed accordingly by the learned Collector of Customs (Appeals) Lahore as per the powers vested by law in her.
(v) In view of the above submissions it is evident that the appellant beyond any shadow or doubt have patently failed to establish/prove lawful possession of stocks to the extent of seized paper of various types weighing 1640.457 M. Tons. The appellants deliberately suppressed the facts from this appellate forum in order to avoid their liabilities on account ' of illegal paper of various types present in their godowns. It is, therefore prayed that appeal in hand may kindly be dismissed.
5. Heard the arguments of both sides and pemsed the case record. Following issues have been framed by this Tribunal:--
(i) Whether the order in original is time barred being issued by the adjudicating officer in terms of section 179(3) of the Customs Act, 1969 beyond the period of 120 days or the extended period of
(60) days as permissible under the Customs Act, 1969?
(ii) Whether the depositions made by the appellants in their affidavit dated 16th November, 2009 placed on record as recorded by the respondent No. 4 in his order dated 11.11.2009 at para. 138 of the order sheet during the hearing proceedings have been controverted by the respondent through issuance of counter affidavit as directed by the respondent No. 4 of his order dated 16.11.2009 on the note sheet?
(iii) Whether search and seizure effected in terms of sections 162, 163 and 168 of the Customs Act, 1969 were in conformity with the requirements staled therein?
(iv) Whether the show cause notice was issued within the statutory time limit as prescribed in section 168(2) of the Customs Act, 1969?
(v) Whether charge of smuggling in terms of section 2(s) has been levelled against the appellants in the show cause notice dated 30.09.2008 issued to the appellants?
(vi) Whether invoking of clauses (14) and (90) of sub section (1) of section 156 of the Customs Act, 1969 simultaneously in this case constitute an illegality detrimental/fatal to the outcome of the merits of adjudicating order?
(vii) Whether jurisdiction in terms of provisions of section 179 regarding power of adjudication can be assigned to a Collector of Customs without issuance of a notification in the official gazette by Member Legal FBR in terms of sub section (2) of section 179 of the Customs Act, 1969?
6. As regards issue No. (i) of para. 5, the order in original was issued under section 179(3) of the Customs Act, 1969 being time barred as not issued within the prescribed time limit of (120) days or extended period of (60) days, it is observed that the show cause notice in this case was issued on 30.09.2008 and the order in original was issued on 05.05.2010. As such the order in original is admittedly time barred by 112 days. Even if the adjournments sought by the appellants which is approximately (30) days and the stay given by the Court which is approximately (260) days is excluded then, too, the order in original is time barred by (112) days. The issue of time bar has time and again being discussed in a number of judgments delivered by the superior judicial fora and the provisions relating thereto are mandatory in nature for implementation by all sub-ordinate judicial and quasi'-judicial forum in view of the Doctrines of Binding Precedents and Stare Decissvs.
In this connection the department has vehemently contested that time period prescribed under the statute namely, section 179(3) of the Customs Act, 1969 is administrative and directory in nature and not mandatory, hence does not effect proceedings, if any, concluded after expiry of time limit. It further says that there is nothing in section 179(3) of the Customs Act, 1969 nor in any provision of Act that specifies the section for the nullification of the order to the adjudicating officer for noncompliance of the time limit. In this regard, the department has referred to the Article 254 of the Constitution of Islamic Republic of Pakistan and the judgment of the Supreme Court of Pakistan reported as PTCL 1994 CL. 322. The Article 254 of the Constitution is general in nature and does not specify or rebut statutory provisions contained in special/specific Acts. Otherwise there is no requirement for legislative to prescribe different limitation periods for different statutes.
Redundancy cannot be attributed to these statutory prescribed time limits.
7. The judgment of the Hon'ble Supreme Court referred to by the respondent is in respect of issuance of a notice to the incumbent under section 171 of the Customs Act, 1969 to apprise him of the' grounds of any action either of seizure or detention of goods and is deemed to be completed if the incumbent is otherwise informed of the grounds either through issuance of a notice under section 26 of the Customs Act, 1969. This notice under section 171 even otherwise does not specify any time limit. This contention of the department that the prescribed limitation is merely directory is not tenable in view of the following judgments of Hon'ble Lahore High Court, Lahore in the case of Super Asia Muhammad Din and Sons (Pvt.) Limited vs. Collector of Sales Tax Gujranwala and others reported as [(20Q8) 97 Tax 156 (H.C. Lahore)]:- "The claim of the Revenue that the prescribed limitation of 45 days for completion of adjudication proceedings as provided through Finance Ordinance, 2000 and enhanced to 90 days by Finance Act, 2003 is merely directory cannot be accepted. It is settled law that where in action on the part of public functionary within the prescribed time is likely to affect the rights of a citizen the prescription of time is deemed directory. However, where a public functionary is empowered to create liability against a citizen only within the prescribed time, it is mandatory. The acceptance of contention of the Revenue in that regard will make a provision of law redundant and nugatory.
Redundancy or superfluity of an act of parliament and a provision of law cannot be readily accepted. All the more so when the prescribed limit is beneficial for the citizen and restricts the executive power to touch the pocket of the taxpayer thereby creating a threat after its expiry even if there was goods case for creation of liability he will not be dragged in."
8. The above contention of the Revenue is also negated by the ratio decidendi settled by the Hon'ble Supreme Court of Pakistan in Nagina Silk Mills Lyalpur vs. The Income Tax Officer and the Appellate Tribunal, Pakistan reported as PLD 1963 SC 322:- "..... In so many words referred to legal position that once limitation has started to run and had come to end the assessee has required vested rights of escapement of assessment by lapse of time."
9. The Hon'ble Supreme Court of Pakistan in the above referred two judgments observed as under:- "The Court must lean against giving a statute retrospective operation on the presumption that the legislature does not intend what is unjust. It is chiefly where the enhancement would prejudicially affect vested rights, are the legality of past transactions or impair existing contracts, that the rule in question prevails reference may be made in this connection to page 206 of Maxwell on the Interpretation of Statute, 11th Eddition. Even if two interpretations are equally possible, the one that saves vested rights would be adopted in the interest of justice specially where we are dealing with a taxing stature. The appellant herein had already acquired the vested rights of escaping assessm ent by lapse of time, when the 1960 Ordinance was enforced. In all probability, the legislature never intended that the period of limitation prescribed in the Act should become variable with the charges in the "financial year" or "year" inserted in the Act for certain other purposes, namely to accord with the new accounting years adopted by Government."
10. In the case of Pace International Rawalpindi vs. Secretary, Revenue Division, Islamabad, the Federal Tax Ombudsman (FTO) while their judgment reported as PTCL 2005 CL. 836 has observed that the assessm ent of sales tax of a person in default was to be made within 45 days of the issuance of show cause notice and passing of order in original beyond that period is time barred.
This position was reinforced in their judgment of SS Oil Mills Ltd. Vs. Secretary Revenue Division, Lahore reported as GST 2005 CL. 592 regarding the orders issued beyond statutory limitation period. The judgment of the Federal Tax Ombudsman (FTO) in the case of Pace International Rawalpindi by the president in their order reported as PTCL 2005 CL. 841 states that the time limit prescribed under section 36(3) is mandatory because a public functionary is empowered to create a liability against a citizen.
11. The same viewpoint has been taken by the Hon'ble Supreme Court of Pakistan in their judgment reported as 1992 SCMR 1898. It in so many words states that while construing the financial statues, its terms are strictly to be followed: - "..... Thirdly, while considering a financial statue, its terms are strictly to be followed. Keeping in view these principles, for short-levied duties on account of "inadvertence, error or misconstruction", section 32(3) of the Customs Act, 1969 provides that for recovery notice shall be served 'within six months'. If that is not done, like a suit for recovery of money after lapse of time prescribed by law of limitation, the recovery becomes unenforceable. Therefore, the provision is not merely directory as concluded by the learned Deputy Attorney General............................ "
12. The Central Board of Revenue has also clarified this issue vide its letter No. 5(4)/CEJ/2000 dated 23.12.2000 that the provisions relating to time period within which the Order-in- Original is to be passed are mandatory. The relevant part of CBR's aforesaid letter reads as under:- "It has been observed with concern in the Board that at present a huge number of cases as reported by the Collectorates of (Adjudication) are pending adjudication. Collector (Adjudication) are aware that provisions relating to adjudication of cases in the Customs, Sales Tax and Central Excise Law which bind the adjudicating authorities to decide the cases within 45 days of the issuance of the show cause notice or within such extended period, for which reasons shall be recorded in writing and that such extended period shall in no case exceed 90 days in all. The Member (Central Excise) while expressing concern over the huge back log has directed that all out efforts be made to ensure due compliance of the aforesaid mandatory provisions of the law and decide the pending cases within the prescribed time limit of 45 days to avoid any legal complications."
13. The above view that once limitation period expires the order or assessment becomes time barred is also supported by various judgments of the superior judicial fora reported as 2009 SCMR 1126, 2002 MLD 180, 2003 PTD 1354, 2003 PTD 1797, 2008 PTD 578, 2009 PTD 762, 2009 PTD Trib. 107, (2010) 109 Taxation 221. Hence issue No. (1) is therefore, answered in the affirmative.
14. As regards issue No. (ii) of para. 5 regarding the submissions of counter affidavit filed by the respondents. It is observed that the appellants have deposed in their affidavit dated 16.11.2009 in respect of stock taking of total quantity of assorted types of papers and paper products weighing 2569 metric tons which was initially detained and thereafter a quantity of 1640 metric tons was seized. The appellants discharged their burden of proof through submission of relevant documents showing lawful import and purchase of the above referred seized goods. They also submitted sales tax record requisitioned by the Deputy Collector of Customs (AIB). For ease of reference the affidavit dated 16.11.2009 deposed by the appellant is reproduced as under:-- "Affidavit of Irshad Ahmad son of Muhammad Shamshad Proprietor of M/s. Madni Paper Mart, Abkari Road, Urdu Bazar, Lahore.
I, the above named deponent do hereby solemnly affirm and declare as under:-- i. That the deponent and his brother Iftikhar Ahmad are engaged in the business of importation, sale and purchase of paper and paper products since many years and they are also maintaining two godowns owned by their wives at 47-48 Rajgarh Road, Rajgarh Lahore and 12-Sandha Road, Lahore.
Ii. That the godowns of the deponent and his brother were raided upon by the customs staff on 24.06.2008 and after carrying out stock taking the total quantity of assorted types of paper and paper products weighing 2569.000 M. Tons was firstly detained and thereafter seized.
Iii. That during the preparation of this case, the deponent was directed by the Deputy Collector Customs (AIB) Customs House, Lahore and Mr. G. M. Zafar to produce the documents showing lawful import/purchase of the seized goods and in response thereto the deponent provided bills of entry covering about 4500.000 M. Tons of paper and paper products. Besides this the deponent also provided tax invoices showing local purchase of 965.467 M. Tons.
Iv. That the deponent was asked by the Deputy Collector Customs (AIB) and Mr. G. M. Zafar to produce sales tax record which was not being maintained by the deponent being a commercial importer. The deponent informed that authorities concerned that he was not maintaining sales tax record being commercial importer and that the sales tax on value was being paid by him at the stage and as such he could not produce the same. v. That the deponent was threatened of registration of a criminal case against him on his failure to produce the said record. He was specifically told that in case die sales tax record was not produced a criminal case shall be registered against him and it was the reason that they invoked section 32 of the Customs Act, 1969 in case of seizure of non-notified goods.
Vi. That on showing inability to produce the said record by the deponent he was directed to prepare the same within 24 hours and that the record so prepared shall be accepted. Thus, there being no alternative the deponent prepared sales tax record and produced the same which was got signed from the deponent under duress.
Vii. That the perusal of the exercise undertaken by the Principal Appraiser (AIB) and communicated to the deponent vide letter C. No. V.Cus/AIB/256/HQ/2008 dated 07.10.2008 revealed that the bills of entry covering 675.467 M. Tons paper and paper products have been rejected on the basis of said record got prepared from the deponent under duress on the lame excuse that the said quantity was shown sold in sales tax record by him.
Viii. That the deponent produced bills of entry and other relevant record showing lawful import of the said 675.467 M. Tons paper and paper products which are held on record of AIB and rejection thereof on the basis of sales tax record got prepared from the deponent under duress is totally unjustified and illegal.
Ix. That the deponent placed on record sales tax invoices covering the total quantity of paper and paper products weighing 1640.67 M. Tons and all the said sale was duly reflected in the sales tax returns and summaries thereof filed by the seller and the same were duly verified by the Collectorate of Sales Tax and Federal Excise, Karachi vide letter C. No. 82/TFD- ST/RTO/09/6718 dated 18.07.2009. x. That the deponent, Deputy Collector Customs House, Lahore and her staff and also the then Collector of Customs Lahore that out of seized goods near about 125.000 M. Tons paper and paper products were damaged, expired and unserviceable but this fact was never taken into consideration by the authorities concerned nor the deponent was associated in audit and other exercise undertaken by the seizing and reporting officers/staff.
Xi. That the entire seized paper of various types were lawfully imported/procured and none of the item was either smuggled or as the case may be brought into the country without payment of duty and other taxes.
Xii. That the entire business of the deponent has been ruined by the seizing staff by making seizure of lawfully imported/procured paper and paper products without any fault on the part of the deponent.
Sd/- DEPONENT VERIFICATION Verified on oath at Lahore this 16th day of November, 2009 that the contents of above affidavit are correct and true to the best of my knowledge and belief.
Sd/- DEPONENT
15. The initial or persuasive burden of proof in terms of section 187 of the Customs Act, 1969 have been discharged by the appellants. However, the respondent despite the orders dated 16.11.2009 of respondent No. 4 failed to controvert these affidavits through submissions of counter affidavits.
Since no counter affidavit has been filed by the respondent, the depositions made by and on behalf of the appellants in the Affidavits are therefore, deemed to be true and correct and no controversy in this behalf can be allowed to be generated. In other words the department failed to discharge their legal burden or ultimate burden in terms of section 187 of the Customs Act, 1969.
Reference is made to the judgments of M/s. Kamran Industries vs. The Collector of Customs, Exports and 4 others reported as PLD 1996 Karachi 68 Karachi and NLR 2003 Tax 134. In addition to above, the affidavit is a piece of evidence which carries full legal weight as per relevant provisions of Civil Procedure Code as well as principle of justice, equity and good conscience. An affidavit is based on information received from any source and such information should be disclosed in the affidavit. It is sworn in either on Islamic Principles or on solemn affirmation. This fact is also fortified by the judgment of Indian Supreme Court AIR 1992 SC 317 and other judgments reported as 1986 CLC 1119.
The crux of the above judgment is that an affidavit is a piece of evidence which alongwith other material on record have to be taken into consideration by the Tribunal before arriving at a finding.
This was observed in the case of SMT Guanwantibai Patel vs. Commissioner of Income Tax, M.P.
16. As regards non-controverting through submissions of counter affidavit it has been held by the Court that where no evidence has been produced by the Revenue to show that the depositions made by the taxpayer in the affidavit is incorrect or disproved by documentary evidence the Tribunal would be justified in relying upon the veracity of the facts sworn by the deponent in the affidavit submitted. In case the other party files a counter affidavit he can well request the court for permission to cross examine the deponent and lead other evidence to rebut the contents of the affidavit. The non-submission of the counter affidavit whether by will or default forfeits the adversary's right to deny the assertions made in the affidavit. The above legal position is also supported by the following judgments of the superior judicial fora reported as PLJ 1979, 71 and 72, 1986 CLC 745 KAR, 1986 CLC 1408 KAR, 1993 SCMR 662, 1991 MLD 1243, (1974) 94ITR 1, (1984) 146ITR 140, (1985) 53 Taxation 1 (Trib.), (1978) 114 ITR 19. Hence, issue No. (ii) is therefore, negative.
17. As regards issue No. (iii) of para. 5 regarding search and seizure in terms of section 162, 163 and 168 of the Customs Act, 1969 as to whether the same were in conformity with the requirements stated therein have been dealt at length by the Hon'ble Lahore High Court in their judgment in Writ Petition No. 13293/08 dated 24.06.2009. This issue has already been conceded by the learned counsel for the appellants during the hearing proceedings and is, therefore, answered in the affirmative.
18. As regards issue No. (iv) of para. 5, as to whether the show cause notice issued was time barred in terms of provisions of section 168(2) of the Customs Act, 1969 the same has been dealt at length by the Hon'ble Lahore High Court in their judgment in Writ Petition No. 13293/08 dated 24.06.2009.
The Hon'ble High Court clearly adjudged that the show cause notice was issued well within the statutory time limit and was not time barred. The learned counsel for the appellants conceded this factual aspect during the hearing proceedings. This issue is, therefore, answered in affirmative.
19. As regards issue No. (v) of para. 5, the charge of smuggling in terms of section 2(s) of the Customs Act, 1969 has nowhere being levelled at against the appellants either in the show cause notice dated 30.09.2008 nor in the Order-in-Original dated 05.05.2010. In fact the appellants during the hearing proceedings while discussing legal repercussions of simultaneous incorporation of clause (14) and (90) of sub section (1) of section 156 of the Customs Act, 1969 had alleged that the show cause notice contained the charge of smuggling whereas the Order-in-Original was issued for mis-declaration and importation of prohibited/ restricted items in terms of sections 32 and 16 of the Customs Act, 1969. However, the incorporation of allegation of act of smuggling has nowhere been stated in the show cause notice or the Order-in- Original in question. Hence, this issue is answered in the negative.
20. As regards issue No. (vi) of para. 5, clause (14) of sub section (1) of section 156 of the Customs Act, 1969 is a penal clause and deals with punishment of an offence committed under section 32 of the Customs Act for untrue statement, error in connection with any matter of customs through various modes stated therein. Clause (90) of sub section (1) of section 156 is a penal clause deals with carrying, removing, deposing, harboring, keeping or concealing or in any manner dealing with any goods not being goods referred to in clause (89) (smuggled goods) by any person without any lawful excuse. As such there is apparently no anomaly committed by the adjudicating officer while stating both the penal clauses in the show cause notice. The charge of smuggling as stated supra while dealing with issue No. (e) has nowhere been levelled at against the appellants. The appellant's objection in this respect is not based on sound footings substantiated by any evidence on record. Hence, this issue is answered in the negative.
21. As regards issue No. (vii) of para. 5, the Federal Board of Revenue may through a notification in the official Gazette either fix or vary jurisdiction of power of any officer of Customs or class of officers and may also assign or transfer any case to any Collector of Customs irrespective of the territorial jurisdiction in terms of section 179(2) of the Customs Act, 1969. The powers of the Federal Board of Revenue are very vast in this respect. However, in the present case the Federal Board of Revenue has assigned Collector of Customs, Lahore for adjudication of the subject case in terms- of section 179(2) and (4) ibid through an office order signed by Mr. Mumtaz Ahmad, Member (Legal) dated 29.09.2008 addressed to the Chief Collector North Region, Lahore. For ease of reference the subject order is reproduced as under:-- "Government of Pakistan, Revenue Division, Federal Board of Revenue.
C. No. 6261-M(L)/08 Islamabad the 29th September, 2008.
(Customs, Federal Excise and Sales Tax)
In exercise of the powers conferred by sub section (2) and (4) of section 179 of the Customs Act, 1969 (IV of 1969), the Federal Board of Revenue (Board) after considering the amount of revenue and the technicalities involved in the case is pleased to transfer the following cases from the jurisdiction of existing adjudicating authority, competent to adjudicate the same under sub section
(1) of the said section, to the Collector of Customs, MCC, Lahore for adjudication of the same as per request made by the Chief Collector (North Region), Customs House, Lahore vide his letter C.
No.1/CC(N)Region-70/2008/580 dated 23.09.2008.
Sd/- (Mumtaz Ahmed)" s. S. No.Case/seizure report No. And Date Date Value of seized goods
1. 221/2008 19.09.2008 115.1 million
2. Case relating to seizure of bus No. 451120 and 21.09.20084.5 million The Chief Collector, (North Region), Lahore With reference to his letter referred above.
Copy for information to:~ S.A. To Chairman, Federal Board of Revenue, Islamabad.
Sd/- (Mumtaz Ahmed)"
22. The subject order issued in contradiction of the aforesaid stated provisions of section 179(2) of the Customs Act, 1969 which prescribed the issuance of such order through a notification in the official Gazette. This is a mandatory condition, which has not been fulfilled while issuing the subject order and hits at the very root of the legality of this order. More appropriately the order becomes corem non judice and unenforceable at law.
23. As regards the above assertion the Hon'ble Supreme Court has ruled in case of M/s. Al-Faiz Industries (Pvt.) Limited reported vide 2006 SCMR 129, that if the law requires something to be done in a particular manner that thing is to be done in the manner as prescribed under the law, otherwise it should not be done at all. In this case the department has committed various types of violations of mandatory provisions of law as discussed in the preceding paras winch has vitiated the whole proceedings and the order impugned before us cannot sustain in the eyes of law.
24. In the case of Khalid Saeed vs. Shamim Rizwan and others 2003 SCMR 1505 the Hon'ble Court while considering the impact of violation of non-observance of the method prescribed by law for doing an act in a particular manner or mode observed that if the law had prescribed method for doing of a thing in a particular manner, such provision of law is to be followed in letter and spirit and achieving or attaining the objective of performing or doing of a thing in a manner other than provided by law would not be permitted. Hence, issue No. (vii) is answered in the negative.
25. In view of the foregoing the adjudication proceedings as well as the super structure built thereon is infested with legal infirmities and patent violations of mandatory provisions of the relevant statutes, which make the whole proceedings ab initio null and void. In view of the issues No. (i), (ii) and (vii) which have been answered in favour of the appellant and against the respondent, orders of the forums below are set aside and the subject appeal is accordingly allowed.