' ABID AZIZ SHEIKH, J. --- Through this Custom Reference filed u/s. 196 of the Customs Act, 1969 ("Act"), the petitioner has assailed order dated 04.07.2013 passed by learned Customs Appellate Tribunal, Bench-II, Lahore in Custom Appeal No, 177/LB/2012.
2. Brief facts are that a vehicle i.e, Mercedes Benz E240 bearing Chassis No, WDB2110612A05233, Engine No, 112913-31-296012, Model 2002 ("vehicle") was imported by the Embassy of People's Republic of China ("Embassy") bearing registration No, LZK-8888 in the year 2002 vide Bill of Entry No, 19417, dated 16.08.2002. The vehicle having been imported by a foreign mission was exempt from duties and taxes. The claim of the petitioner is that he is a citizen of China who purchased the vehicle from the Embassy vide Certificate dated 18.09.2006, after more than three years from the date of its import, therefore, no duties and taxes were leviable thereon as per SRO No, 577(1)/2006, dated 05.06.2006 ("SRO").
3. However, on 10.01.2012, the vehicle was not only seized by the Custom Authorities, but vide ex parte Order-in-Original dated 02.05.2012, the same was also confiscated. The petitioner being aggrieved preferred appeal before respondent No, 5 who vide Order-in-Appeal dated 15.08.2012 released the vehicle on payment of redemption fine equal to 20% of the customs value as was determined at the time of import in terms of SRO No, 499(1)/2009, dated 13.06.2009. The respondent No, 1 filed appeal before the Customs Appellate Tribunal ("Tribunal") which was accepted vide order dated 04.07.2013 and order-in-appeal dated 15.08.2012 was set aside whereas ex parte order-in-original dated 02.05.2012 was restored. The petitioner has assailed the order of the Tribunal dated 04.07.2013 in the instant reference.
4. Though number of questions of law are raised in the instant reference, however, during the course of proceedings, learned counsel for the petitioner confined his submissions to the following questions of law arising out of the order of the learned Tribunal:-
(i) Whether the learned Tribunal erred in law by failing to exercise the discretion vested in it under Section 181 of the Act in favour of the applicant/appellant after holding that it was the Embassy of the People's Republic of China that had violated SRO No, 577(1)/2006. Dated 05.06.2006 in the light of the law as laid down by the august Supreme Court of Pakistan in the case of Haji Abdul Razzak v. Pakistan (PLD 1974 SC 5).
(ii) Whether the impugned order is sustainable in that the learned Tribunal has failed to apply its mind to the provision of Section 181 of the Act as required under the law as laid clown by the august Supreme Court of Pakistan in the case of Abu Bakar Siddique v. Collector of Customs (2006 SCMR 705).
5. Learned counsel for the petitioner argued that vehicle was lawfully imported by the Embassy in the year 2002 and was sold to the petitioner on 18.09.2006, after expiry of three years from its import and under SRO no duties and taxes were leviable on the said sale. Submits that the Embassy took permission from the Ministry of Foreign Affairs ("Ministry") on 06.06.2006 before the said sale, hence SRO was not violated, however, even if SRO was violated, as no duties and taxes were leviable on sale of vehicle, its outright confiscation without giving an option to the petitioner to pay fine in lieu of confiscation as per provisions of Section 181 of the Act was not only harsh but also patently illegal.
6. Conversely, learned counsel for the respondent-department argued that the Vehicle was sold by the Embassy without permission from the Ministry as required under the SRO, therefore, sale was not exempt from duties and taxes. Adds that Ministry's letter of permission dated 06.06.2006, placed on record by the petitioner in this reference was not presented before the adjudicating officer, as well as, the learned Tribunal, hence it cannot be considered at this stage. Submits that provisions of Section 181 of the Act are not applicable and the case of the petitioner is covered under Section 156 of the Act, hence the vehicle was lawfully confiscated. Learned Law Officer appearing on behalf of the Ministry also supported the arguments of learned counsel for the respondent-department.
7. We have heard the learned counsel for the parties and have also perused the record with their able assistance.
8. Parties are not in dispute that vehicle in question was lawfully imported by the Embassy in the year 2002, therefore, the same was exempt from all duties, taxes and charges. There is also no denial that under SRO, the said vehicle could be sold by the Embassy with permission from the Ministry, after three years of its import and no taxes and duties were leviable on such sale under SRO. The only controversy is whether permission from the Ministry was secured by the Embassy before the vehicle was sold to petitioner under the SRO. Petitioner relies upon Ministry's permission letter dated 06.06.2006 to claim that permission under SRO was sought, whereas the respondent department denies the existence of any such permission letter on the ground that said document was never produced before the adjudicating officer or even the learned Tribunal, hence it cannot be considered by this Court. We endeavoured to resolve this controversy, by calling the concerned officer from the Ministry, however, learned legal advisor of the Ministry informed this Court that the record of said permission could not be traced in the Department. In view of above, as the said letter dated 06.06.2006 was neither presented before the lower foras nor the same is verified by the Ministry, therefore, the said permission letter cannot be allowed to be produced in the instant reference application at this stage.
9. Notwithstanding the above, it is admitted position between the parties that no tax recovery is involved in the matter. Respondent No, 1 (Assistant Collector, MCC, Faisalabad) appeared before this Court on 15.10.2014 and submitted that "there is no recovery of revenue involved in the present case". In the given circumstances, now the question of law which requires determination is, whether adjudicating officer and learned Tribunal were justified in out-rightly confiscating the vehicle, without giving an option of paying fine in lieu of confiscation u/s. 181 of the Act to the petitioner. To answer this legal question, it is expedient to reproduce the relevant provisions of Section 181 of the Act as under:- "181. Option to pay fine in lieu of confiscated goods.-- Whenever an order for confiscation of goods is passed under this Act, the officer passing the order may give the owner of the goods an option to pay in lieu of the confiscation of the goods such fine as the officer thinks fit: ' Provided that the Board may, by an order, specify the goods or class of goods where such option shall not be given: ' Provided further that the Board may, by an order, fix the amount of fine which, in lieu of confiscation, shall be imposed on any goods or class of goods imported in violation of the provisions of Section 15 or of a notification issued under Section 16, or any other law for the time being in force.
'Explanation. --- Any fine in lieu of confiscation of goods imposed under this Section shall be in addition to any duty and chat es payable in respect of such goods, and of any penalty that might have been imposed in addition to the confiscation of goods."
10. From the plain reading of Section 181 of the Act, it transpires that the Adjudicating Officer enjoys the discretion to offer an option to the owner of goods to pay fine in lieu of confiscation of the goods. This discretion is not available regarding certain goods so specified by the Board. It is fundamental principle of administration of justice that all judicial, quasi-judicial and administrative authorities while exercising the mandatory or discretionary jurisdiction must follow the rule of fair exercise of power in a reasonable and just manner. The use of word 'may' in Section 181 of the Act cannot be read for 'shall' but at the same time the concerned officer in absence of any compelling reasons, must not withhold the exercise his discretion for giving an option to the owner of goods under said Section for redemption of goods in lieu of payment of fine, except in the cases in which goods are specifically excluded by the Board under the proviso referred to above.
11. It is not the case of the respondent-department that the vehicle in question is a banned item covered under the goods or class of goods specified by Board under the proviso.
Respondent/department is also not claiming that vehicle was imported by Embassy in violation of Section 15 or notification issued u/s. 16 of the Act. Though permission of Ministry under SRO could not be proved, however, the respondent No, 1 himself admitted before this Court that no recovery of revenue is involved in the matter. No doubt, giving option of Section 181 of the Act is discretionary power of the officer concerned, however, when law vests discretion in a public functionary, there is always corresponding obligation to exercise the same fairly, reasonably and justly and where the authority does not find it appropriate, to exercise its discretion, it still has to provide reasons for this inaction on its part. Discretion must be exercised to advance the cause of justice in just. Fair reasonable manner. Failure to exercise discretionary power under the statute without any legal justification cannot be justified. The august Supreme Court of Pakistan while interpreting the scope and extent of discretion under Section 181 of the Act held in Abubakar Siddique v. Collector of Customs (2006 SCMR 705) as under:--- "The word 'may' is not always used in the statute with the intention and purpose to give uncontrolled powers to any authority rather of tenly it is used to maintain the status of the authority on whom the discretionary power is conferred as an obligation and thus the legislative expression in the permissive form, sometimes is construed mandatory. It is, however, only in exceptional circumstances in which a power is conferred on a person by saying that he may do a certain thing in his discretion but from the indication of the relevant provisions and the nature of the duty to be done, it appears that exercise of power is obligatory. This is an accepted principle of law that in a case in which the statute authorizes a person for exercise of discretion to advance the cause of justice, the power is not merely optional but it is the duty of such person to act in the manner it is intended.
'The use of word 'may' in Section 181 of the Act cannot be read for 'shall' but at the same time The concerned officer in absence of any compelling reasons, must not withhold the exercise of the discretion of giving an option to owner of goods under said Section for redemption of goods in lieu of payment of fine, except in the cases in which goods cannot be allowed to be circulated in the market or the goods which were imported in violation of Section 15 or of the notification issued u/s. 2(s) of Customs Act, 1969."
' In this context reliance is also placed on Haji Abdul Razzak v. Pakistan through Secretary, Ministry of Finance, Islamabad and another (PLD 1974 SC 5), Irfan Naseer Baig and another v. Province of Punjab through Secretary, S GAD and 2 others (2011 PLC (CS) 1537), Raz Muhammad v. Inspector- General Frontier Corps. Balochistan, Quetta and others (1999 MLD 3414), Sherzada v. Collector Customs, Peshawar (2011 PTD 301) and Muhammad Hussain and another v. Province of Sindh through Home Secretary and 4 others (2014 MLD 174).
12. In view of above discussion, we are of the opinion that confiscation of vehicle without giving option of redemption subject to fine u/s. 181 of the Act was not a reasonable exercise of discretion.
The adjudicating officer should have exercised the discretion vested in it u/s. 181 of the Act by providing the petitioner to pay fine in lieu of confiscated vehicle at the time of passing the confiscation order. Accordingly in the present circumstances, by upholding the order of confiscation of the seized vehicle, we direct the adjudicating officer to give an option to the petitioner u/s. 181 of the Act to pay fine in lieu of the confiscated vehicle. Accordingly the questions of law raised in Para No, 3 of this reference application are answered in the above terms.
13. The office is directed to send copy of this judgment under seal of this Court to the learned Tribunal.