' MUHAMMAD NAZIM SALEEM, MEMBER TECHNICAL-II.-By this order, we intend to dispose off Customs Appeal No,K-752/2015 filed by the Appellant against Order-in-Original No,461/2014-15 dated 17.03.2015, passed by the Collector of Customs (Adjudication-I), Custom House, Karachi.
2. Brief facts of the case, as reported in the impugned order-inoriginal are that the Directorate General of Intelligence and Investigation FBR, Karachi received information to the effect that huge quantity of smuggled/non-duty paid foreign origin Generators are lying/stored at Messrs S.S. Power open workshop situated at Plot No,H.No,2/10-D, Gali/Muhallah Survey 90, Rafah-e-Aam, Golden Town, Karachi for its further disposal and illegal sale in the open market at Karachi. In pursuance of the said information, a team of officers of ASO, on 27.05.2014, visited the aforesaid workshop and found that a large quantity of foreign origin heavy duty Generators, were lying/ stored there. The person found available on the spot introduced himself as Shahid Nadeem Akram (Owner/ Claimant of the Generators) and upon query regarding lawful import/ possession of the Generators, he failed to produce any legal import documents of lawful import/ possession thereof.
Upon detailed examination/ checking in presence of witnesses and Owner/claimant, total quantity of 13 units foreign origin Heavy Duty Generators (Different Brands, Origin and Capacity) were recovered and seized, after preparation of mushirnama and inventory, duly signed by witnesses and owner/claimant under provisions of sections 2(s) (iii) and 16 of the Customs Act, 1969, punishable under clauses (89) of subsection (1) of the Customs Act, 1969.. Notice under section 171 of the Customs Act, 1969 was also served upon Shahid Nadeem Akram S/o Muhammad Akram, owner/claimant of the Generators as well as pasted on the notice board of the Directorate General of Intelligence and Investigation-FBR, Regional Office, Karachi. Since the shifting of the seized goods to the Intelligence State Warehouse, was not practicable, therefore, aforesaid seized goods were given under Superdari of owner/ claimant in terms of section 168(1) of the Customs Act, 1969, with the directions not to remove, dispose of, part with, alter, sell, mortgage or deal with the seized Generators in any manner whatsoever without prior permission of the Directorate General of Intelligence and InvestigationFBR, Regional Office, Karachi.
3. In the light of above reported facts, Shahid Nadeem Akram son of Muhammad Akram H.No,2/10- D, Gali/ Muhallah Survey 90, Rafahe-Aam, Golden Town, Karachi (Owner/ Claimant of the Generators) was called upon to show cause under Sections 2(s)(iii) and 16 of the Customs Act, 1969, as to why short-paid duty and taxes totalling Rs,10,850,820/- may not be recovered from them and penal action may not be taken under clause (89) of subsection (1) of -the Customs Act, 1969. The Appellant submitted reply to the show cause notice. The Collector of Customs (Adjudication-I), Custom House, Karachi did not agree with contentions/reply of the appellant and decided the case vide Order-in-Original No,461/2014-15 dated 17.03.2015. The operative part of the order is reproduced as under:-- "I have gone through the record of the case and considered written/ verbal arguments of the advocate of the respondents and the department. During the course of hearing the respondents argued that the seized generators were locally purchased or were parked for maintenance purpose. Therefore, the DR was directed to re-examine the impugned goods and compare/verify with the relevant documents. The department reported that no import documents/ Sales Tax Invoice in respect of seized generators have been provided. Only un-authorized debit vouchers/ Gate passes have been produced wherein no details like Model No, KVA Capacity, Manufacturing Date, Origin has been found. It is evident that the documents provided by the respondent are not in conformity with the seized goods. The department has also submitted a detailed report pertaining to the seized goods as reproduced in para 4 above. It is pertinent to mention that section 156(1) (89) of the Customs Act, 1969 constitute it to be an offence "If any person without lawful excuse, the proof of which shall be on such person, acquires possession of, or is in any way concerned in carrying, removing, depositing, harboring, keeping or concealing, or in any manner dealing with smuggled goods or any goods in respect to which there may be reasonable suspicion that they are smuggled goods". In the absence of any legal import documents, it is proved that the seized goods are non-duty paid/ smuggled into the country. The respondent could not produce any credible evidence in support of legitimate import/ lawful possession of the seized goods. In view of the foregoing deliberations and legal provisions of law, the charges levelled in the Show Cause Notice B stand established. I, therefore, order for outright confiscation o the seized goods under clause (89) of section 156(1) of the Customs Act, 1969 read with S.R.O.
499(1)/2009 dated 13.06.2009."
4. Being aggrieved and dissatisfied with the above order-in original, the Appellant has filed instant appeal before this Tribunal on the grounds which are reproduced as under:-- a) That prior to commenting upon the legal aspects of the case it is advantageous to state that indeed the respondent No, 1 is appointed and designated as "Officer of Customs" under section 3A of the Customs Act, 1969 and they derived power for functioning from Notification No, S'R.0 486(1)/2007 dated 09.06.2007 said to be within the Territory of Pakistan for thwarting the act of smuggling but this doesn't mean that they have unfettered powers to approach any workshop/premises situated in Karachi for inspection/ search. Their jurisdiction in principal is restricted to the territory not falling within the ambit of Sections 9 -and 10 of the Customs Act, 1969 and beyond 5 kilometer of the border of India and Iran in terms of section 177 of the Customs Act, 1969 to be read with Notification S.R.O. No, 188(1)/83 dated 12.12.1983. The workshop of the appellant does not at all falls within the ambit of section 2(s) and section 177 of the Customs Act, 1969. b) The officials of respondent No, 1 are even not empowered to ask from the appellant about the parked generator in his workshop and even from any other person about the legality of the generators used by him unless there exist any provision in the Act or notified through an S.R 0. That the person who had purchased the generators locally. In the absence of availability of any section in the Act and the notification demanding Goods Declaration/ sales tax invoice is nullity to law and hold no ground and the stance of the appellant stood validated from the reported/un-reported judgments K-719/02, H-720/02, H-686/03, Q-776/04, 2005 PTD (Trib.) 135 and PLD 1991 Supreme Court 630. c) That the case has been made on the basis of an alleged search under section 163 of the Customs Act, 1969 on the workshop of the appellant without recourse to mandated requirement of section 162 ibid, the search could only be carried out by the Deputy Collector if he believes that there a danger that before a search could be carried out in terms of section 162 after obtaining a search warrant from the Magistrate, the documents or things or goods liable for confiscation would be removed from the said place, he after preparing a statement in writing of the grounds of his belief and of the goods, documents or things for which search is to be made, search or cause search to be made for such goods, documents or things in that place. However no such details of search were provided to the appellants nor any due process of law was ever disclosed to the appellants and hence the search made by SIO on the basis of which the whole case has been made out was illegal as the same is in derogation of Sections 162 and 163 ibid rendering the entire acts of the respondents including the show-cause notice and the impugned order are liable to be set aside on this ground alone. It is now a well settled proposition of law that the search carried out in terms of section 163 of the Customs Act, 1969 without recourse to the mandatory provisions of section 162 of the Act ibid, the same is illegal and any case made out on the basis of goods and documents seized on the basis of such search cannot be used against the person from whose premises the same have been obtained. The following case law is reproduced in support of the above contention and therefore the whole case made out against the appellant is illegal, mala fide, tainted with colorful exercise of use of unfair discretion and hence liable to be set aside.
' That indeed the respondent has powers to detain the goods under section 186 of the Customs Act, 1969 under the vested power through Notification No, 486(1)/2007 dated 09.06.2007 but these powers can only be exercise in the vicinity of the port/terminal not in any part of the city and the said fact stood validated from section 186 of the Customs Act, 1969 which read as follows:-- 186: Detention of Goods pending payment of fine or penalty:---(1) When any Fine or penalty has been imposed, or while imposition of any fine or penalty is under consideration, or pending any inquiry or investigation, in respect of any goods such goods shall not be removed by the owner until such fine or penalty has been paid or such inquiry and investigation has been completed.
(2) when any fine or penalty has been imposed in respect of any goods, the appropriate officer may detain any goods belonging to the same owner pending of such fine or penalty.
' Upon concentitious analysis of section 186 is that the said section comes into play during the course of imports, meaning thereby if any case has been adjudicated by the competent authority against an importer and through which the authority held the charges established as leveled in the show cause notice and imposed fine and penalty, and the importer has not paid the loveable duty and taxes and the imposed fine. The appropriate officer is empowered to detain the forthcoming goods of the same owner till the time fine and penalties is not paid. The case of appellant is that he is owner of workshop and he is engaged in purchased of old and used generators for selling after repair and refurbishing and repairing of generators of the other companies not of import, therefore parked generators in his premises stood ousted from section 186 by virtue of the fact no case has been adjudged against him for payment of fine and penalty. Rendering the detention without any lawful authority and in derogation of the expressed provision of section 186 of the Customs Act, 1969 and as such void and ab initio.
' That it is also amazing to note that the official of respondent No, 1 detained seized the generator of the appellant with malafide intention and ulterior design and this stood proved from the fact that search was made at his works shop situated at A-8, Eastern Film Studio, Habib Bank, S.I.T.E.
Karachi-,- and this stood validated from the letter of Mr. Qasim Ali Alvi dated 02.03.2015. Whereas, the premises shown in the seizure report is H.No, 2/10-D, Gali/Mohalla Survey 90, Rafa-e-Aam , Golden Town, Karachi which is of a 120 yards of double storeys in a very congested locality and generator of such heavy duty of commercial nature numbering to 13 cannot be parked for ready reference bill of KWSB and Photos of the said premises are annexed for confirmation that the whole exercise carried out by the subordinate of the respondent No, 1 is fictitious and having no sanction of law. This also proves that how the respondent No, 1 play havoc with the tax payer in fulfillment of their nefarious design of seizing the goods which otherwise cannot be seized under law only for the purpose of showing their performance and to earn reward, which is otherwise not payable on such type of dubious act.
(g) That despite narrating the events and name of the appellant in the seizure report the official of the respondent No, 1 also failed to serve seizure notice and notice under section 171 on the appellant. Non serving the notice render the whole pros eading infested from legal infirmity and as such of no legal effect as held by Superior Judicial Fora in umpteenth reported judgments e.g. PTCL 1994 CL 22(sic), 1983 PCr.LJ 620, 1983 PCr.LJ 623, 1983 CLC 786, PTCL 1983 CL 47, 1987 PCr.IJ 1413, 1987 PCr.LJ 1091 and 2004 PCr.LJ 1958.
(h) The provision of section 211 of the Customs Act, 1969 prescribes that the importer and exporter are bound to maintained record for a maximum period of 5 years and not beyond that the generators of the appellant parkek at his premises are between the years 1989 to 2006 and the triod of 05 years stood lapsed in the years 1994 and 2011, esultant irrespective of the fact that he had not imported tl e parked generators instead purchased from the local market no bound to keep the record of the generators beyond 1994 td 2011 rendering the demand in derogation of section 211 of the Customs Act, 1969 and Notification No, 486(1)/2007 under which they are not empowered to demand the import documents. Calling import documents after a period of more than 25 years is neither logical nor is covered under any provision of law. The respondents also fail to take into account the ratio settled by the. Hon'ble Supreme Court of Pakistan in the case of Collector v. Prof. Muhammad Khan Civil Petition No, 603-K of 2004 decided on 18.07.2006.
(i) That irrespective of the referred in above illegality it is appropriate for the appellant to state that it was mandated upon the respondent No, 1 to act within the frame work of the definition of the word "smuggle" given in subsection 2(s) of the Customs Act, 1969.
' The goods parked in the workshop of the appellant were within the territory of Pakistan and those were not brought into Pakistan in breach of any prohibition or restriction for the time being inforce under the Import Policy Order, 2009 or while evading payment of customs duties leviable thereon as expressed in ciause (a) of section 2(s). Nor were brought into Pakistan by any other route then the routes expressed in section 9 or 10 of the Customs Act, 1969 or from any other place then a customs station as per clause (a)(iii) of section 2(s) instead were purchased from local market through proper documentation, gate passes/delivery orders and those cannot be considered as smuggled by any stretch of imagination. Hence the search, detention, seizure framing of contravention report issuance of show cause notice and passing order-in-original by the subordinate of respondent No, 1 an by respondent No, 2 are nullity to the definition of the word "Smuggle" rendering the entire act of the respondent No, 1 and the respondent No, 2 right from search to passing of order-in-original as ab-initio, null and void.
(k) That it is also imperative for the appellant to add that in the light of expressed provision of section 2(s) and section 177 of the Customs Act, 1969 and S.R.O. 118(1)/83 confirms that the parking of generators at A-8, Eastern Film Studio, Habib Bank, S.I.T.E. Karachi, they are outside the purview of notification S.R.0.118(1)/83 and so the subordinate of respondent No, 1 to detain the parked generators on the sham pleas of smu ggling. Reference is placed on the order of the Tribunal in Customs Appeals Nos. K-719/02, H-720/02, H-686/03, Q-776/04, 2005 PTD (Trib.) 135 and PLD 1991 Supreme Court 630.
(I) That the officials of the Customs including the officials of respondent No, 1 has also to look into the fact that whether the parked generators of the appellant are included in the list of smuggled goods defined in Clause (a) of subsection(s) of section 2 and subsection (2) of section 156 of the Customs Act, 1969 in the light of notification issued by the Board vide S.R.O. No, 566(1)/2005 dated 06.6.2005. If the goods intercepted, are not included in the said list, those cannot be detained/seized for any purpose including adjudication. The parked generators of the appellant are outside the list of the smuggled goods. Resultant, the customs official of respondent No, 1 are not empowered to detain and subsequently seize the generators of the appellant on even slightest presumption of smuggling. Reliance is placed on 1981 PCr.LJ 66, 1981 PCr.LJ 986, 1984 PCr.LJ 3096(2), 1987 PCr.LJ 325, 1988 PCr.LJ 435 and Customs Order-in-Appeal No, 26/2005 dated 09.01.2006. m) That the third aspect to be looked into, for determination of the act is that whether these are freely available in the local market without any curb or restriction, if available then such goods does not fall within the degree of smuggled as defined in section 2(s) of the Customs Act, 1969 and are presumed to have been tax and duty paid. The said opinion stood validated from the reported judgment of Apex Court 1995 SCMR 387 Sikandar A. Karim v. The State. The Double Bench of the Hon'ble Supreme Court comprised of Justice Saeed-uz-Zaman Siddiqui and Justice Mukhtiar Ahmed Junejo held in unambiguous term that "If the item alleged to be smuggled by the prosecution were freely available in the open market and the import of such goods were not banned in the country, presumption could arrive that the goods in question were lawfully brought in the country unless contrary was shown". As per dictum laid down by the Hon'ble Supreme Court the Appellate Tribunal in Customs Appeal No,339/2000 Mr. Muhammad Hanif v. The State and 301/2003 Nasser Ahmed v. Collector of Customs, Sales Tax and Excise, Quetta that held that "to produce legal import documents is nothing but to put undue pressure on the business community inspite of the fact that it has been observed number of time by the Supreme Court of Pakistan that the goods which are freely available in the market are presumed to be have been legally imported and duty paid. Even otherwise no reasonable ground has been given in the order-in-original that even for the sake of arguments, it is taken that the receipt produced by the appellant and issued by Saifullah Khan have no legal status then also it cannot be concluded that the said transaction was illegal, making way to call upon appellant to produce import documents.
(n)That irrespective of the referred in above proposition of law, if it is considered for a while that the stance taken by the respondent No, 1 is correct, even then the onus to prove the allegation of smuggling rest on its shoulders under Articles 117 and 121 of Qanun-e-Shahadat (10 of 1984) as per laid down law by the Superior Courts of Pakistan namely S.M. Anwar Sethi v South British Insurance Company Ltd. PLD 1975 Kar.
458.
(m)That despite of the fact that the subordinate of respondents failed to discharge the onus of proof in regards to leveled allegation, the appellant despite not warranted under law voluntarily supplied the copies of the corresponding documents of the parked generators annexed as Exhibit "G to G12" for resolving the non-issue/created by the respondents. Which were completely discarded and ignored without any basis and lawful excuse beside in absence of availability of power of detaining/seizing of the generators.
(o) That irrespective of the referred in above factual aspect and discharge of burden of proof by the appellant despite not laid upon him, the appellant felt appropriate to rely upon judgment of the Hon'ble Supreme Court of Pakistan reported 2007 SCMR 10 Collector of Customs, Sales Tax and Central Excise v. Prof. Muhammad Khan and 6 others.
(p) It is therefore prayed that the Hon'ble Appellate Tribunal, may please order as: ' Setting aside the impugned order-in-original dated 17.03.2015 as unmindful, whimsical contrary to the provision of the Act and Rules instead passed on personal whims and wishes and on forced construction of law and being passed in derogation of section 179(3) ibid. Hence not maintainable.
' Direct the subordinate of respondent No, 1 not to create impediment for the appellant in conduction of his lawful business activities of buying and selling of old and used generators and repairing of those of the companies operating within Pakistan.
6. The respondent department has not submitted counter-objections/ para-wise comments.
6. We have perused the relevant record as well as heard the contesting panics. To our understanding, the central issue involved in this case is whether the Heavy Duty Generators seized by the detecting agency and subsequently confiscated by the learned adjudicating authority are "smuggled" ones in terms of section 2(s) (iii) of the Customs Act, 1969 read with section 16 ibid. As per given facts, the appellant deals in repair and maintenance of old and used heavy generators besides purchasing and letting them on hiring. The inventory prepared by the seizing agency i,e, Directorate of Intelligence and Investigation-FBR confirms that these generators (13 Nos.) were manufactured in the years 1989, 1990, 1991, 1992, 1994, 1996, 1996, 1999, 2001 and 2006. The Appellant has produced photocopies of gate out from some factory premises/business concerns (owners) and Debit Vouchers issued by the Appellant, also indicating repair charges. The Debit Vouchers are serially numbered and indicate name of the owner company with details of the Heavy Duty Generators like its Model, K.V. Etc. The mode of payment is also mentioned which is both in cash and through bank instruments. The aforementioned position unambiguously verifies Appellant's contention that he deals in repair and maintenance of Heavy Duty Generators besides letting them on hiring. For the sake of convenience, section 2(s) (iii) of the Customs Act, 1969, is hereby reproduced as under:- "2. Definitions.-(s) "smuggle"
(iii) any goods by any route other than a route declared under section 9 or 10 or from any place other than a customs-station.] and includes an attempt, abetment or connivance of so bringing in or taking out of such goods; and all cognate words and expressions shall be construed accordingly;] "
We do not find anywhere in the record, as to what were the "reasonable grounds" with the seizing agency to treat the old and used Generators with age ranging from 8 to 25 years as "smuggled" ones under above mentioned provisions of law and to suspect that these Generators were brought into the country from a route other than routes declared and authorized under sections 9 and 10 of the Customs Act, 1969. The seizing agency could have approached to industrial units/ business concerns owners of these Generators, in selective cases, to call from them import documents or sales tax invoices in case of local purchase. The said exercise has not been undertaken by the seizing agency. Furthermore, the seizing agency has not contested the fact that the Appellant has workshop wherein he is engaged in repair and maintenance of the Generators. Furthermore, a few documents as discussed above, do confirm aforesaid activity of the Appellant. In view of aforestated position, we are not reluctant to hold that the seizing agency has miserably failed to establish that the seized/ confiscated Generators were brought into the country from a route other than those prescribed/ declared under the law. They were not able even to bring forward any reasonable grounds leading to suspicion that the Generators were smuggled into Pakistan. We are, therefore, led to conclude that these Generators are not smuggled ones.
8. We are also inclined to subscribe to contention of the learned consultant of the Appellant that section 163 of the Customs Act, 1969 could not be invoked in the instant case as the goods were Heavy Duty Generators which could not be removed from the site/godown of the Appellant hurriedly. It was a fit case where section 162 ibid could have been conveniently invoked by the seizing agency. It would be quite relevant and useful to reproduce section 163(1) of the Customs Act, 1969:-- "163. Power to search and arrest without warrant.--- (1) Whenever any officer of customs not below the rank of an [Assistant Collector] of Customs or any other officer of like rank duly employed for the prevention of smuggling has reasonable grounds for believing that any goods liable to confiscation or any documents or things which in his opinion will be useful for or relevant to any proceeding under this Act are concealed or kept in any place and that there is a danger that they may be removed before a search can be effected under section 162, he may, after preparing a statement in writing of the grounds of his belief and of the goods, documents or things for which search is to be made, search or cause search to be made for such goods, documents or things in that place."
It is just matter of common sense that there was no danger that the Heavy Duty Generators could be removed before a search under section 162 of the Customs Act, 1969 could be carried out. This is more relevant when the goods were initially detained by the seizing agency through a proper notice dated 27.05.2014. Moreso, the seizing agency could not remove these Generators even after seizure and handed them over to the Appellant on superdari. In view of aforestated legal and factual position, we conclude that the search under section 163 of the Customs Act, 1969 was not required at all. The proper course of action with the agency was to seek search warrant from the concerned Judicial Magistrate having jurisdiction of the locality of the Appellant, in terms of section 162 ibid. We, therefore, hold that the search conducted by the seizing agency was unlawful. The Appellant has also agitated that notice under section 171 of the Customs Act, 1969 was not served upon him at the time of seizure. When specifically asked during the course of hearing, the D.R of the seizing/ detecting agency was not definite as to whether the said legal requirement was duly met or otherwise.
9. The Appellant has also pointed out that the address of seizure place in the Seizure Report has been shown as "H.No,2/10-D, Gali/ Muhalla Survey 90, Rafah-e-Aam, Golden Town, Karachi" whereas the search was in fact conducted and Generators seized at address "A-8, Eastern Film Studio, Habib Bank, S.I.T.E., Karachi. While we endorse a fore stated potation as the record categorically confirms the same, we feel at loss at the same time about the said situation as both the localities are at a distance of almost 8 to 10 K.Ms. As per Examination/ Verification Report dated 14.01.2016 submitted by the I.0 to his Additional Director, the relevant address where from goods were seized pertains to S.I.T.E., Karachi whereas the Seizure Report dated 17.06.2014 reflects the same at Reafah-e-Aam, Golden Town, Karachi.
10. In view of above, we have considered opinion that the instant seizure was illegal being riddled with a number of legal infirmities besides contradictions in facts. We would also like to observe that the learned Collector of Customs (Adjudication), Karachi has not been able to notice glaring acts of commission and omission on the part of the detecting/ seizing agency in this case, as discussed above. We, therefore, set aside the impugned order-in-original being a defective Order both on law and facts. We allow the appeal on merits.
11. Announced.