The above two Reference Applications have been filed against the combined judgment dated 23.05.2015 passed by the Customs Appellate Tribunal, Bench-I, Karachi in Customs Appeals Nos. K-1707/ 2014 and K-1708/2014, whereas, in both the References, initially four common questions were proposed, however , after having read out the proposed questions, learned counsel for applicant candidly conceded that (sic) questions have not been drafted properly , whereas, except Question No.3 in both the above References, which according to learned counsel, is question of law, arising from the combined impugned judgment passed by the Customs Appellate Tribunal, the applicant will not press the remaining questions, such question reads as under:- "Whether the Customs Appellate Tribunal was justified to decide the appeal against the department without considering that the seized HSD oil was smuggled as notified vide SRO 566(1)/2005 dated 06.06.2005. Therefore the, smuggled goods as defined under section 2(s) of the Customs Act, 1969 as well as the conveyance used for the transportation of the same were liable to outright confiscation under sections 156(1)89 and 157 of the Customs Act, 1969 read with clauses (a) and (b) of preamble to SRO 499(1)/2009 dated 13.06.2009."
2. Learned counsel for the applicant submits that the Customs Appellate Tribunal has erred in law and fact, while setting-aside the orders of adjudication in the instant matters, as according to learned counsel, the respondent failed to discharge the burden of proof, nor Could produce any authentic document to show that the HSD oil seized by the applicant department from the possession of the respondent was lawfully imported oil and not the smuggled oil. It has been further contended by the learned counsel that at the time of issuance of Notice under Section 171 of the Customs Act, 1969, due to inadvertence, lesser quantity of HSD oil has been shown, however , after proper examination, it was learnt that following quantity was found in the tanker:- i) Foreign origin POL Product 40,000 Liters along with Hino Oil Tanker bearing Registration No. TKM-729; and ii) Foreign origin POL Product 40,000 Liters along with Hino Oil Tanker bearing Registration No. TTC-909.
It has been prayed by the learned couns el, that the impugned order passed by the Customs Appellate Tribunal in the instant case may be set-aside and the above question as proposed through instant Reference Applications may be answered in 'Negative' in favour of the applicant and against the respondent.
3. Conversely , learned counsel for respondent has vehemently opposed the contention of the learned counsel for the applicant and submits that instant Reference Applications are misconceived and not maintainable as no question of law arise from the impugned judgment passed by the Customs Appellate Tribunal, which is based on finding of facts. It has been further contended by the learned counsel for respondent that question proposed hereinabove is also not a question of law, for the reasons that the Customs Appellate Tribunal, after having examined the entire facts and the relevant record adduced before the adjudicating authority , as well as the material placed before the Tribunal, at the time of hearing the appeal, the Customs Appellate Tribunal has been pleased to hold that the Customs Authorities have failed to discharge the burden of proof in terms of section 187 of the Customs Act, 1969, nor could establish the allegations of smuggling against respondent, who had produced all the relevant documents, including pay orders for payment of the auctioned diesel, auction receipts along with delivery orders and treasury challans in respect of HSD oil, Seized by the applicant. It has been further contended by the learned counsel for respondent that the Customs Appellate Tribunal has also been pleased to hold that the applicant department has not been able to prove that the quantity as mentioned in the documents produced by the applicant in both the oil tankers i.e. 2800 0 liters and 30000 liters, for which, abov e documents were produced by the respondent, was in access of the declared quantity . On the contrary , it has been held by the Tribunal that the quantity was enhanced by the Customs Authorities at the time of preparing the seizure report in order to justify the allegation of smuggling against respondent. Learned counsel for the respondent after having read out the impugned judgment of the Customs Appellate Tribunal in the instant case, while placing reliance upon the case law as cited by the Customs Appellate Tribunal in the impugned judgment, has submitted that impugned judgment does not suffer from any error or illegality , whereas, decision is based on finding on facts, therefore, instant Reference Applications liable to be dismissed in limine,
4. We have heard the learned counsel for the parties, perused the record with their assistance and have also gone through with the judgment passed by the Customs Appellate Tribunal in the instant matters. It will be advantageous to reproduce herein under the relevant findings of the Tribunal as contained in Paras. 24 to 29 of the impugned judgment, which reads as follows: "24. Under aforesaid observations the contents of the Show-Cause Notice mentioned thereon are not specific in nature nor the seizing agency comply the proper provisions of law to establish the charge against the respondent.
By doing so, the seizing agency/responde nts did not discharge the burden cost on them and not shifted it on to the respondent. It is for the prosecution to establish through the independent iota of evidence that the goods were smuggled or brought in to the country through unauthorized route or otherwise. Unfortunately , the same aspect was never controverted in this particular case nor any efforts were made, all allegations allegedly raised by the department are afterthought and not been mentioned in the Show-Cause Notice. On the other side the appellant produced the iota of evidence along with the documents related with the said seize d HSD oil and submitted before the competent authority for showing their bona fide, this type of evidentiality as envisage, to be determined where the burden of prove and disprove the allegations levelled by the Customs authorities, where the Customs Authorities are under no obligation to lead evidence and discharge any onus to prove. This part of liability reflects the responsibility under section 187 of the Customs which in fact imposed the embargo on the parties to shift their burden of proves and as such appellant has done accordingly . It has been observ ed by the Hon'ble High Court in case reported in 2007 PTD 2265 , that vague, unspecific and too general Show-Cause Notice may not enable the reader or the notified person to make out or clearly identify the particular clause/sub-section or the reasons etc. applicable to the case. Also Articles 117 and 118 of Qanun-e-Shahadat appears to be contrary to the general principle of law, what-so-ever alleges must be proved. Supreme Court of Pakistan has settled this legal issue ruling that a void Show-Cause Notice shall result into an equally void order . "It is now a well settled law, that where the initial order or notice was void, all subse quent proceedings, or superstructures build on it were also void. Where any adverse finding was given in the adjudication order on allegations or contentions or findings which are not incorporated in the show-cause notice, the entire proceedings would be rendered as void for reason of breach of natural justice, which was breach of law as held by the [Supreme Court in Anisa Rehman v. P.I.A. 1994 SCMR 2234]". In this particular case for reasons better known to the department even having the knowledge Department fail to comply with the provisions of law which are mandatory to comply with. However , on close scrutiny of the evidences available on record as well as submissions and arguments extended by bath the parties, the department failed to perform the duty under such situation where it is the only initial evidence to prove the burden through documentary evidence.
25. It is the mandatory requirement under Section 180 of the Customs Act, 1969 that the Show-Cause Notice shall be issued for all proper , lawful and legal adjudication of any matter , when there is no charge allegedly made or constituted against the owner . The confisc ation of the goods or imposition of penalty on any person is barred under the law. Consequently , adjudicating officer could not pass order for confiscation of the goods. It is a legal lacuna which cannot be cured at all. In view of the pronouncements made by the august Supreme Court of Pakistan in the case of Haji Abdullah Jan and others (1994 SCMR 749).. It is well settled principle of law that, if the law had prescribed method for doing a thing in a particular manner such provision of law is to be followed in letter and spirit and achieving or attaining the objectives performing or doing of a thing in a manner other than provided by law not be permitted, same view also decided in the hall mark judgment of Director , General of Intelligence and Investigation and others v . Messrs Al-Faiz Industries (Pvt.) Ltd. and others reported as 2006 SCMR 129 .
26. Even otherwise, coming towards the aspect of charges attributed against the respondent through show-cause notice, Section 2(s) clearly depicts that smuggling means bringing into or take out of Pakistan in breach of any prohibition or restriction for time being in force (enroute pilferage of transit goods) or evading payment of customs duties and taxes leviable thereon. Scrut iny of document clearly reveals that neither the impugned goods were banned, nor brought from unauthorized route (verified documents are privy to it) nor any duty was evaded on this account, therefore, Section 2(s) of the Customs Act, 1969, is not attracted in this case and the respondent denies any violation. Similarly , Section 16 of the Customs Act, 1969, has not been violated. The penal clause which was invoked for violation of Section 2(s), Section 56(1)(89) is not relevant as the impugned goods are not smuggled by any standard as the relevant documents are on record. Similarly , no violation of Section 3(1) of Import and Export (Control) Act, 1950 (sic) the goods were lawfully imported complying all the dictates of law .
27. The principle of law that the state functionaries have no power and authority to conduct fishing and roving inquiries without possessing any definite and proper information, just in hope to unveil some concealment and illegality on the part of the tax payer/c itizen. In other words, before embarking upon any inquiry the state functionary must already possess some definite material so as to establish any illegal action having been taken by the citizen. It is imperative to place on record that equity is the soul of the law in dispensation of justice, in the instant matter , the respondent has furnished the substantial evidence in support of their case. The Honourable Supreme Court of Pakistan in a hallmark judgment namely Imitaz v. Ghulam Ali reported as PLD 1963 SC 382 laid down the rule that the proper place of procedure in any system of administration of justice is to help and not to thwart the grant to the people of their rights. All the technicalities have to be avoided unless it is essential to comply with them on ground of public policy . Any system which by giving effect to the form not to the substance defeats substantive rights is defective to the extent. The ideal must always be a system that gives to every person what is his right under the law .
28 Subsection (2) of Section 157 of the Customs Act, 1969, means that the term "shall also be liable to confiscation" does not mean liable to confiscation automatically . The Discretion given to the authority to confiscate the goods or vehicle must be exercised on sound judicial principles. If the word s 'liable to confiscation' give a discretion to the confiscating authority to deprive a person of his property , then it follows that this discretion must be exercised upon the principles of natural justice; that is to say, the persons sought to be deprived of the property must be given notice to show cause, they must be furnished with adequate opportunity of putting forward their point of view and the same must receive due consideration. In the instant matter no show-cause notice was issued to the owner of the vehicle and he was not given any opportunity to explain his point of view. Therefore, as per the dictum of law no one should be condemned unheard. Furthermore, according to one of principles now well accepted, no person should be deprived of his property by way of penalty unless it is clear that he is in some measure responsible for assisting or furthering the commission of the offence committed and no innocent persons should be unjustly punished or deprived of his property . In deed, there was no indication even that the owner of the vehicle was also involved. If that be so, then it is difficult to appreciate on what basis even a reasonable suspicion could arise as to the complicity of the appella nt. There is nothing on record which shows any collusion between the owner of the vehicle, and the owner of the goods. in the absence of any proof on the record, it is not in accordance with law to hold such vehicle as part of the act which is prohibited by the way. Therefore, it is established that the said vehicle is not deliberately part of the act which is forbidden by law .
29. Hence keeping in view, all such obse rvations made above and strength of judgments passed by the superior courts noted above in conformity of aforesaid observations made thereon, we are of the considered view that the proceedings in the subject case are infested with patent deficiencies and violations of statutory requirement, regarding issuance of show-cause notice, all subsequent proceedings and orders passed thereon tantamount to substantive illegalities, adequate breach of natural justice has been equated with breach of law and super structure built thereon are hereby declared illegal, void, ab-initio and accordingly set aside, both appeal are therefore allowed as prayed with no order as to cost."
5. From perusal of hereinabove findings as recorded by the Customs Appellate Tribunal, it has been observed that impugned judgment is based on finding on facts, wherein it has been categorically held that respondent has been able to discharge the burden of proof in terms of Section 187 of the Customs Act, 1969 by producing the relevant documents, relating to the seized HSD oil, which included, letter dated 01.07.2014 issued by the Assistant Director , Directorate of Intelligence and Investigation-FBR, Quetta for the release of both the oil tankers, delivery order dated 10.07.2014, Treasury Challan in the sum of Rs.23,10,000/- towards payment of auctioned HSD oil. Moreover , the learned counsel for the applicant, while confronted as to explain the reason for the different quantity of HSD oil as shown in the Show-Cause. Notice and seizure report, could not justify such different between the quantity of seized HSD oil in the Notice issued under Section 171 of the Customs Act, 1969, and enhanced quantity at the time of issuance of seizure report. Therefore, the entire process of seizure and the difference of quantity of HSD oil as reflected in Show-Cause Notice and the seizure report makes the proceedings dubious, whereas, the onus to prove the allegations of smuggling HSD oil against the ,respondent could not be discharged by Customs Authorities, particularly , when the Custom's own documents and the evidences relating to auction and delivery letters produced by the Customs Authorities could not be falsified or disproved.
6. Accordingly , we do not find any substance in the instant Reference Applications, as no substantial legal controversy has been agitated through instant References, therefore, the ques tion proposed hereinabove, is answered in 'AFFIRMA TIVE' against the applicant and in favour of the respondent. Consequently , the applicant is directed to release the seized HSD oil to the respondents Nos.2 and 3 within 15 (fifteen days' from the date of this order).
7. Both the aforesaid Reference Applications stand dismissed along with listed applications.