CH. MUHAMMAD ASGHAR PASWAL, MEMBER (JUDICIAL).---This judgment shall dispose of Appeal filed against Order-in-Original No,40 of 2013 dated 26-6-2013 passed by the Collector of Customs (Adjudication), Customs House, Lahore.
2. Briefly stated the case of the department as contained in the show-cause notice is that in pursuance of an information, the staff of Directorate of Intelligence and Investigation-FBR, Lahore intercepted a half-body truck LHO-9523 loaded with motorcycle parts etc covered with tarpaulin near Babu Sabu, Band Road, Lahore while coming from Karachi at 1815 hours on 6-5-2013. On query, the person sitting on the driving seat disclosed his name as. Muhammad Mustafa son of Muhammad Taufail, resident of Chak No,66, Dina Nath, PO Khas, Tehsil Pattoki, District Kasur. The said driver produced certain bilties in respect of the goods loaded on the truck. On cursory checking, the vehicle was found loaded with foreign origin motorcycle parts etc. booked vide bilties Nos, 0716, 0717, 0718, 0726, 0727, 0728, 0729, 0730 and 0731 issued by Messrs Iqra Cargo Goods Forwarding Services, Plot No,A-103, Gate No,6, Gali No,3, New Truck Stand, Hawks Bay Road, Karachi and other certain bilties showing the goods round steel bars. On demand, the driver could not produce any document regarding legal import or lawful purchase/possession of the foreign origin motorcycle parts loaded on the truck nor such documents were found with the bilties. Thus, the truck along with goods was brought to the office of the Directorate of Intelligence and Investigation-FBR, Lahore where the same were detained under sections 2(kk) and 17 of the Customs Act, 1969. Although the driver had contacted the owners and Adda management yet no one appeared and produced any import documents and as such the goods were examined which led to the recovery of a large number of items mentioned in the show-cause notice.
3. Since neither the driver nor owners of the goods has produced documentary evidence showing legal import or lawful purchase/ possession of the recovered foreign origin goods, therefore, the same being non-duty paid/smuggled one were seized under section 168 of the Customs Act, 1969 on 7-5-2013 being liable to confiscation under section 156(1) (89) and notice under section 171 of the Customs Act, 1969 was served upon the driver. On 17-5-2013, Mr. Muhammad Nadeem Siddiqui, Manager (Legal Affairs) of the appellants appeared and submitted an application on the letter- head of the appellants duly accompanied with following GDs:-- (1)KCSI-HC-102539 dated 30-1-2013, (ii) KCSI-HC-109115 dated 12-2-2013, (iii) KCSI-HC-113027 dated 20-2-2013, (iv) KCSIHC-116519 dated 26-2-2013, (v) KCSI-HC-120851 dated 11-3-2013, (vi)
KCSI-HC-125689 dated 19-3-2013, (vii) KCSIHC-128898 dated 26-3-2013, (viii) KCSI-HC 137729 dated 9-4-2013, (ix) KCSI-HC-137810 dated 9-4-2013, (x) KCSI HC-138846 dated 11-4-2013, (xi) KCSI- HC-141185 dated 15-4-2013, (xii) KCSI-HC-142105 dated 16-4-2013 in which importer is Messrs CRLF Company, Flat No,302, 3rd Floor, Billys Paradise Phase-II, Block-A, Gulistan-e-Johar, Karachi.
(2)GD No, KCSI-HC-120866 dated 11-3-2013, in which importer is Messrs Raamis Impex, 1st Floor Madras Hotel, BLDG A Abdul Rehman Street, Jodia Bazar, Karachi.
(3)GD Nos, KCSI-HC-116522 dated 26-2-2013, KCSI-HC-132908 dated 1-4-2013, KCSI-HC-133379 dated 2-4-2013, KCSI-HC145777 dated 23-4-2013 in which Importer is Messrs A.R. Corporation, Suite No, 101, 1st Floor, Plot No, 10/3, Row No, 10, Block-D, Nazimabad, Karachi and delivery challans which are un-signed and do not show the name of the importer who has issued the same, in respect of the seized goods.
4. The GDs and other documents produced by Mr. Muhammad Nadeem Siddiqui on behalf of the appellants were scrutinized and in order to verify the same, Sales Tax Profile/returns/AT List of the appellants were obtained from PRAL data, comparison of which revealed that:--
(a) GD Nos, KCSI-HC-102539 dated 30-1-2013, KCSI-HC-109115 dated 12-2-2013, KCSI-HC-113027 dated 20-2-2013, KCSI-HC116519 dated 26-2-2013, KCSI-HC-120851 dated 11-3-2013, KC S I- HC - 125679 dated 19-3-2013, KCSI-HC-128898 dated 26-3-2013, in which importer is Messrs CRLF Company, Flat No,302, 3rd Floor, Billys Paradise, Phase-II, Block-A, Gulistan-e-Johar, Karachi have been provided in respect of as many as 22 items detail of which has been given in the show-cause notice.
On compilation of the said GDs with the sales tax profile/return of Messrs CRLF Companies, Karachi, it has been transpired that during the period 1/2013 to 3/2013, no credit balance has been carried forwarded which clearly shows that all the goods imported during the above mentioned period have already been consumed in the respective months, whereas the goods have been detained on 6-5-2013. Furthermore, no sales tax invoices etc have been provided. Scrutiny of the produced documents and sales tax profile/return has been revealed that the above said goods have already been consumed:- (b)GD Nos, KCSI-HC-137779 dated 9-4-2013, KCSI-HC-137810 dated 9-4-2013, KCSI-HC-138846 dated 11-4-2013, KCSI-HC141185 dated 15-4-2013, KCSI-HC-142105 dated 16-4-2013 in which importer is CRLF Company, Flat No,302, 3rd Floor, Billys Paradise, Phase-II, Block-A, Gulistan-e-Johar, Karachi were provided in respect of 11 goods mentioned in the show-cause notice.
The above GDs tally in terms of description and quantity of the goods but no sales tax invoice has been provided nor any record maintained under section 211 of the Customs Act, 1969 read with Rules 126 of the Customs Rules, 2001:-- (c)GD No, KCSI-HC-120866 dated 11-3-2013 in which importer is Messrs Raamis Impex, Office No,17, 1st Floor, Madras Hotel BLDG-A, Abdul Rehman Street, Jodia Bazar, Karachi has been provided in respect of the seized goods mentioned in the show-cause notice.
On scrutiny of the import record of Messrs Raamis Impex for the period 2/2013 and 3/2013, it has been observed that he said importer has sold all his imported goods to Messrs Crown Motor Company (Pvt.) Ltd., situated at Sadiqabad meaning thereby that the goods were sent in the factory for consumption. In the present case goods have been booked from Karachi to Lahore in the name of Messrs AAM, Traders, Lahore. Further more, neither the sale record of Messrs Crown Motor Company has been provided nor any sales tax invoice issued by Messrs Raamis Impex has been shown/provided to show the sale of goods at Lahore as stated in their letter dated 16-3-2013.
(d)GD No, KCSI-HC-132908 dated 1-4-2013, KCSI-HC-133379 dated 2-4-2013, KCSI-HC-145777 dated 23-4-2013, KCSI-HC116522 dated 26-2-2013, Importer Messrs A.R. Corporation; Suite No, 101, Ist Floor, Plot No, 10/3, Row No,10, Block-D, Nazimabad, Karachi have been provided in respect of the following seized goods:- Sr.
No,Description of the Goods QT GD No, 1 Brake Cable, CRLF Brand, model CD70F, Made in China1000-Pcs132908 2 Bearing, CRLF Brand, Model 6300 2 RS, Made in China6000-Pcs145777 3 Rocket Pins, CRLF Brand, Model CG 125, Made in China500-Pcs133379 4 Piston Kit, CRLF Brand Model Sohrab JH7OSTD, Made in China.500-sets133379 and 116522 5 Bearing, CRLF Brand, Model 6000-2Rs, Made in China600-Pcs145777 6 Brake Rod (rear) CRLF Brand, Model CG 125, Made in China100-sets145777 7 F/o Clutch Cable, CRLF Brand100-Pcs132908 These goods tally in term of description/quantity but no sales tax invoice has been produced nor any record maintained under section 211 of the. Customs Act, 1969 read with Rules 126 of the Customs Rules, 2001:--
(e) Regarding seized "Spokes, CRLF Brand, 30-Cartons" it has been verbally informed by Muhammad Nadeem Siddiqui that the same are being manufactured locally but he could not produce any document in this regard.
5. On the basis of aforesaid comparison of the documents with the seized goods, it was alleged that GDs provided, in support of the goods as shown against Chart-A were not supported with credit balance shown in the Sales Tax profile. Similarly, the goods shown against Chart-C were allegedly already sold to Messrs Crown Motor Company (Pvt.) Ltd., Sadiqabad while the goods show against Chart-B & D found tallies with the documents but no record required to be maintained under Section 211 of the Customs Act, 1969 read with Rule 126 of the Customs Rules, 2001 was provided pertaining to all the GDs.
6. On the basis of aforesaid observations, the appellants and certain other persons were served with show-cause notice dated 29-5-2013 for contravention of sections 16 and 18 punishable under section 156(1) (89) of the Customs Act, 1969 and section 3(1) & (3) of the Imports and Exports (Control) Act, 1950. The show-cause notice was replied by the appellants but by not satisfying with the reply, the same culminated in impugned Order-in-Original No,40/2013 dated 26-6-2013 passed by respondent No,2, where-under he upheld the charges mentioned in the show-cause notice and in consequence thereof the goods showing against Chart-A, B, C & D aforementioned were confiscated under clause (89) of section 156(1) of the Customs Act, 1969 besides imposition of penalty of Rs,300,000 on each of the appellants while the other persons to whom the show-cause notice was also issued which included the persons to whom the goods were to be delivered, transport company and driver etc were warned to be careful in. future. Hence, the instant appeal has been filed by the appellants on the following grounds:--
(a) That the goods indicated at Chart "A" in the impugned order were duly imported on payment of leviable duties and taxes. The appellants being commercial importers, also paid taxes on value addition at import stage. On importation of these goods, the sale was shown in the record and invoices were also issued against the said import but physically the goods were not transferred to the buyers as they had not cleared their earlier outstanding dues. It is further added that the entire sale, as per practice, is always made on credit and as the goods were not dispatched to the buyers pending clearance their previous outstanding liabilities and it was the reason that record was showing no balance at the credit in record of appellant No,
1. However, the said goods were later- on dispatched and on arrival near Lahore the same were seized by the staff of respondent No,2.
(b) That as regards the items mentioned in Chart "B" of the impugned order, the same on scrutinization of GDs by the staff of respondent No,2 found tallied with import document furnished by appellants which including GDs, commercial invoices, packing lists and bills of lading as well as sales tax returns and this fact is also duly admitted by respondent No,2 in the impugned order.
Hence, there was no justification at all for confiscation thereof.
(c) That as regards items mentioned in Chart "C" of the impugned order, it is stated that Chain Kit and Sprocket (Chain Kit) were imported by appellant No,3 and thereafter sold to Messrs Crown Motors Company (Pvt.) Ltd. which subsequently sold these goods to unregistered person namely Messrs Aamis Lahore vide invoice No, 3454 dated 20-5-2013. The observation of the respondents that the goods imported by appellant No,3 and sold to Crown Company (Pvt.) Ltd. were consumed by the said company and that the goods mentioned at Chart "C" were not the same has been based on presumption, suppositions, conjectures and surmises. The goods were never utilized in production by the said company and the same were sold to unregistered person namely Messrs Aamis Traders, Lahore against proper tax invoices.
(d)That as regards goods mentioned at Chart "D" of the impugned order, it is stated that according to their own showing by respondents, the items tallied in term of description and quantity and on such confirmation neither any further explanation was required to be furnished by the appellants nor any evidence except the import documents was required to be produced. It is, however, astonishing enough that even after satisfying that the goods tallied with the import documents, the same have been confiscated by respondent No,2 for the reasons best know to him.
(e) That respondent No,2 was neither justified nor required under the law to declare the lawfully imported goods as non-duty paid or as the case may be smuggled merely because the importer has not maintained record under section 211 of the Customs Act, 1969 more particularly when no penalty has been provided for such lapse on the part of the importer.
(f) That the appellants are commercial importers and deposited duty and other taxes at the statutory rates. They also paid taxes on the value addition at import stage and as such they were otherwise exempted from audit of their record. Moreover, non-maintenance of record in term of section 211 of the Customs Act, 1969 read with. Rule 126 of the Customs Rules, 2001 would not convert the lawfully imported goods into smuggled goods and the observation of respondent No,2 in this behalf is totally void, illegal, erroneous and nullity in the eyes of law.
(g) That no penalty for non-maintenance of record under section 211 of the Customs Act, 1969 read with Rule-126 of the. Customs Rules, 2001 has been provided under any clause of subsection (1) of section 156 of the Customs Act, 1969 and as such no lawfully goods can be confiscated on the basis thereof.
(h) That each and every item subject matter of the impugned order tallied with the import documents even according to the staff of respondent No,1 and as such there was no justification at all for respondent No,2 of confiscation thereof.
(i) That in order to prove that each and every item mentioned in Chart "A", "B", "C" and "D" was lawfully imported, appellants Nos,1 and 2 provided all the import documents along with detailed lists showing description of each item, quantity imported, quantity seized, GD number with date.
Perusal of the said record clearly established without any shadow of doubt that all the goods were imported on payment of duty and taxes in lawful manner.
(i) That besides above, the entire action on the part of staff of respondent No,1 was illegal and, hasty as they intercepted the vehicle on 6-5-2013 and immediately detained the same on the next day without awaiting submission of import documents. Had all the import and other documents been scrutinized properly by the staff of respondent No,2 there would have been no need of detention and subsequent seizure of the goods.
(k) That the mala fide on the part of staff of respondent No,1 is also apparent on the face of record that if they suspected the goods to be smuggled then how they released the vehicle and its driver even without approaching the adjudicating authority in term of section 157(2) of the Customs Act, 1969. Release of the vehicle by the staff of respondent No,1 itself shows that they were definite that the goods in question were lawfully imported on payment of leviable duties and taxes.
(1) That the respondents also ignored the crucial issue that the consignment was being transported from Karachi to Lahore. All the items were duly covered under proper billies. All the goods were containing brand names of appellant No,
1. According to respondents all the goods tallied in description and quantity and goods mentioned in the import documents. Hence, confiscation of the goods merely on the basis that appellants had not maintained record under section 211 of the Customs Act, 1969 and Rule-126 of the Customs Rules, 2001 is totally baseless, illegal, arbitrary and mala fide.
(m) That even otherwise the detention and subsequent seizure were illegal and without lawful authority. It is pointed out that the goods were detained under section 17 of the Customs Act, 1969 whereas neither these goods were imported in contravention of section 15 nor in violation of any notification issued under section 16 of the Customs Act, 1969 and as such these goods being freely importable were illegally detained under the said provision of law. Since the initial action of detention was illegal, the subsequent seizure and confiscation would be also void and illegal.
7. The learned counsel appearing on behalf of the appellants besides reiterating the grounds mentioned in the memo. of appeal has contended that the instant case is of unique in nature in which each and every item is covered under import documents. He further contended that all the items containing registered brand name of appellant No,l. He further contended that according to the department itself all the goods found tallied with the import documents and this case was only made on the basis that the appellants were not maintaining record under sections 26 and 211 of the Customs Act, 1969 where-under no confiscation is provided. He further contended that the goods were seized while the same were dispatched by the importer under proper bilties without any concealment which fact is sufficient to establish that the same were lawfully imported.
According to him, the observation of the learned Collector, that matching of the goods with import documents is not sufficient to prove that the same were lawfully imported is patently erroneous and violative of the law on the subject because the status of the goods can only be established through the import documents. Even the tax invoice would be immaterial if it is not supported with the documents showing import of such goods. He further contended that the impugned order is otherwise illegal because it was conceded by the department itself that the goods shown in Charts-B and D tallied with import documents and there was no justification on the part of the respondent No,2 of confiscation thereof. He further contended that as regards the goods shown against Chart-C, the department should have verified as to whether the goods sold to Messrs Crown Motor Company (Pvt.) Ltd. were consumed in production or further sold by the said company to unregistered person namely Messrs Aam Traders against tax Invoice No,3454 dated 20-5-2013 but no such exercise was undertaken and the case was made merely on presumption.
He further contended that none of the document provided by the appellants was found fake or even doubtful and as such there was no justification on the part of respondents to disbelieve the authentic documents of their own customs department. According to him the impugned order has been passed on presumption that these goods were brought into the country without payment of duty and taxes. He prayed that the impugned order be struck down and the goods lawfully imported on payment of leviable duties and taxes be directed to be released un-conditionally.
8. On the other hand the learned Departmental Representative has supported the impugned order as according to him the appellants have failed to provide record maintained under sections 26 and 211 of the Customs Act, 1969 without which it cannot be ascertained as to whether the goods were lawfully imported or as the case may be the same are non-duty paid.. He, however, admitted that all the goods were branded and containing brand name of the appellant No,l. He also admitted that the goods found tallied with the import documents provided on behalf of the appellants. According to him since the appellants have failed to provide the aforesaid record and as such it cannot be determined whether the goods were lawfully imported or otherwise. He, however, conceded that no penalty of confiscation of goods is provided for nonproduction of the record maintained under sections 26 and 211 of the Customs Act, 1969 and rules made there-under.
He also admitted that the penalty clauses (12) & (96) of section 156(1) for violation of sections 26 and 211 of the Customs Act, 1969 were not invoked in this case.
9. I have heard the arguments advanced by the rival parties and perused the case record carefully.
On seizure of the goods, the GDS supported with relevant documents were provided by the appellants which were scrutinized and found tallied with the goods. On production of import documents tallying with the seized goods, the burden of proof stood shifted to the seizing agency to prove that the goods in question were not lawfully imported and instead thereof brought into the country without payment of duty and taxes. It is observed that the department has failed to bring on record any proof or evidence that the goods were brought into the country without payment of duty and taxes consequently the detecting agency miserably failed to discharge the said burden of proof. It is also very strange that the learned Collector of Customs (Adjudication) repeatedly observed in the impugned order that "the goods do match with the import documents" but even then he has out rightly confiscated the same merely because the appellants have failed to provide record maintained under sections 26 and 211 of the Customs Act, 1969 and rules made there-under but he lost sight that the penalty for violation of section 26 is provided under clause (12) of subsection (1) of section 156 of the Customs Act, 1969. Similarly, the penalty for non-compliance of section 211 is provided under clause (96) of subsection (1) of section 156 of the Act ibid. It is further observed that the Collector of Customs (Adjudication) has based his entire findings for violation of sections 26 and 211 of the Customs Act, 1969 but it is strange that perusal of the show-cause notice and even the impugned order revealed that neither sections 26, 211 nor penal clauses thereof (12) &
(96) of subsection (1) of section 156 of the Customs Act, 1969 were invoked. No penalty of any sort can be imposed under the charge which was not arisen out of the contents of the show-cause notice. The learned Collector also lost sight that the appellants were charged under clause (89) of subsection (1) of section 156 of the Customs Act, 1969. In this case the importer has provided documents which tallied with the goods. All the articles were containing brand name of the appellants. The truth or accuracy of the import documents provided by the appellants was never doubted. Thus, the importer discharged the burden of proof, hence, the confiscation of such goods is otherwise un-justified. Thus, I feel no hesitation to hold that the learned Collector of Customs (Adjudication) has exercised his powers beyond the scope of show-cause notice which is not permissible under the law. The contention of the learned counsel for the appellants that all the goods were containing brand name of the appellant No,1 which also tallied with the brand indicated on the import documents and as such their confiscation was illegal is correct. Moreover, there would be no justification of confiscation of the goods when the same were found tallied with import documents provided by the owner/importer. It is further observed that the goods were imported and dispatched by the importer and as such production of import documents to establish the status of the goods was enough proof and the same cannot be confiscated merely on the basis that no record as required under sections 26 and 211 of the Customs Act, 1969 was maintained or provided by the importer. Similarly, there is nothing on record that the department has taken any step for verifying the tax invoice No, 3454 dated 20-5-2013 issued by Messrs Crown Motor Company (Pvt.) Ltd., Sadiqabad, hence, the allegation that the goods sold to the said company by appellant No,3 were consumed in production is patently baseless. The contention of the learned counsel that the entire action on the part of the detecting agency was without any justification and based on mala fide also carries weight because if the goods were suspected to be non-duty paid, how the vehicle was released by the detecting agency without recourse to section 157(2) of the Custom Act, 1969. Thus, it is established that the goods in question containing brand name of the appellants duly supported with valid import documents were lawfully imported and their confiscation for violating the provision of sections 26 and 211 of the Customs Act, 1969 is not sustainable at law.
10. In view of the foregoing reasons, I feel no hesitation to hold that the goods subject matter of the instant appeal were lawfully imported on payment of leviable duty and taxes under the import documents indicated in the impugned order. Consequently the appeal is allowed and the impugned order is set aside.
11.File be consigned to the record after completion.