DR. ZULFIQAR A. MALIK, MEMBER, (TECHNICAL-I).---- By this judgement, we intend to dispose of Appeals filed by appellants, against Order-in-Original Nos. 181, 183, 184, 185/2015-16 dated 29.06.2016 and Order-in-Original No. 182/2015-16 dated 28.06.2016 passed by the Collector of Customs (Adjudication-II), Karachi. All these appeals have identical issues of law and facts and are therefore being heard, dealt with and disposed of simultaneously through this common order in the light of judgment of the Hon'ble High Court of Sindh in Customs Reference No.157/2008 (S.M.
Naqi son of Syed Muhammad Hussain, Karachi v. Collector of Customs (Adjudication-I) and others, Karachi).
2. Since, these forty three (43) appeals are based on similar facts and question of law, therefore, it is needless to reproduce facts of each case separately, hence for reference the fact of Appeal No. K-420/2018, are taken into consideration for decision, wherein, facts of the case are that. the Model Customs Collectorate of Export-PMBQ, Karachi corrigendum vides C. No. SI/MISC/405/AFU/EXP/2015 dated 27.10.2015, the amendments are made to the Show-Cause Notice No. Adj-II/Coll/SCN-119 / Export-PMBQ / Cont-05/AFU/BD.Ent / 2015 dated 13.10.2015; Mr. Bilal Qamar Son of Qamar Hussain CNIC No. 42101-1798848-5 Proprietor of M/s B.D. Enterprises Shop No. 150, Serena Tower, Near Sakhi Hassan Chowrangi, Karachi (NTN No. 3131889-4) a. Res: Address: A-230, Block-T, North Nazimabad, Karachi and the actual beneficiaries of the crime as mentioned (i) Hanif Moosa son of Moosa Umar CNIC No. 42301-1585311-9, Address: Shop No.1-A, Raja Ghanzafar Ali Road, Saddar, Karachi (ii)
Humayun Moosa son of Hanif Moosa CNIC No. 422014831523-3, address: Shop No. 1-A, Raja Ghanzafar Ali Road, Saddar, Karachi (iii) Sajid Abdul Qadir son of Abdul Qadir, (Sajid Motiwala)
CNIC No. 42201-7465611-1, address: 40/N, Block 6, P.E.C.H.S, Karachi (iv) Kashan Iqbal son of Iqbal Moosa. CNIC No. 422013191035-5, Address: Room No.7, Dewdass Street, Opp Zaib-Un-Nisa Street, Saddar, Karachi (v) Wan son of Abdul Aziz CNIC No. 42301-1105544-5, Address: Flat No.201 Jillani Plaza, Garden Karachi (vi) Muhammad Shahid S/o Muhammad Yousuf CNIC No.42301-8872519-3 Address: Ground Floor Ghulam Hussain Qasim Road, Flat No.4/B, Garden West, Karachi (vii)) Tahir Ali son of Shaikh Ali Muhammad, CNIC No. 42101- 6619658-3, Address: House No. L-651, Naziya Square, Sector 5-M, North Karachi. Further investigation in the case revealed that the scheme of import/export of gold/jewelry notified under SRO 266(I)/2001, dated: 07.05.2001, was misused by Hanif Moosa, Zubair Langrial (Clearing Agent), Wajahat Minhas (Clearing Agent), associates of Hanif Moosa, namely Humayun Hanif, Kashan Iqbal, Sajid Abdul Qadir, Irfan Abdul Aziz, Muhammad Shahid, Tahir Ali son of Sheikh Ali Mohammad (Absconder), and facilitated by Muhammad Shakeel, Deputy Director, TDAP (under suspension and on bail), by way of registering five fake companies and obtaining export authorizations for those fake companies from TDAP in order to avoid bringing back foreign exchange remittances, avoid documentation for future taxation and to evade payment of withholding tax and Export surcharges on export of gold jewelry. While committing this crime, the intention of these accused persons was to avoid export documentations, bypass banking channels for foreign exchange remittances and to avoid payment of withholding taxes/export surcharges. The racket was run mainly by Hanif Moosa and his associates mentioned above, and actively assisted by Zubair Langrial (clearing agent), Wajahat Minhas (Clearing Agent), Muhammad Shakeel, Deputy Director, TDAP (under suspension), and jewelers from across the country who used the services of above named persons to send their gold/jewelry to Dubai through these fake companies and to avoid all legal liabilities. The roles of various individuals who connived with each other in this crime are given below: i) Hanif Moosa and his associates mentioned above, including Tahir Ali (Absconder), used to tamper the CNICs of irrelevant persons (not related to gold business) to obtain registration of various companies with All Pakistan Gem Merchants and Jewelers Association. These fake companies were registered by Saeed Mazhar, Ex-Chairman of Ali Pakistan Gem Merchants and Jewelers Association on the basis of the recommendations given by Hanif Moosa and Associates in the name of fake persons/imposters. ii) On the basis of these fake registrations with the Jewelers Association, Muhammad Shakeel, Deputy Director, TDAP (under suspension) issued Jewelry Pass Books for obtaining authorizations of imports/exports of gold, gold jewelry and gemstones in the name of fake firms against forged CNICs without observing codal formalities to ascertain genuineness of the firms/owners in terms of SRO 266(1)/2001, dated: 07.05.2011. iii) Tahir Ali (absconder) used to approach Muhammad Shakeel for the registration of five fake firms on behalf of Hanif Moosa who was mastermind of the scam. iv) After obtaining import/export authorizations against fake firms, various fake Form-Es were typed/prepared by Zubair Langryal Son of Haji Muhammad Amir, proprietor of Messrs Amir and Sons, at the behest of Hanif Moosa and associates on the basis of details given in commercial invoices, and the same were handed over back to Hanif Moosa and associates to obtain export authorization from Muhammad Shakeel, Deputy Director TDAP. v) All the documentation, which included obtaining authorizations from TDAP, typing/preparation of fake Form-E, and preparation of invoices and goods Declaration was done by Zubair Langrial and Wajahat Minhas at the behest of Hanif Moosa and his associates including Tahir Ali (Absconder). vi) Trippers (carrier of gold jewelry) were arranged by Hanif Moosa and Zubair Langrial to whom goods were handed over after customs clearance for carriage. vii) In this way, the jewelers across the country obtained the following undue benefits: a) Due to fake Form-Es, no liability to bring Foreign Exchange remittance. b) Avoiding documentation for future taxation c) No withholding tax and Export Surcharge for exports d) Earned Foreign Exchange rate margin and price difference of gold in Pakistani/Dubai.
3. Accordingly, (i) Messrs B.D. Enterprise, (NTN No. 31318894), Shop No. 150, Serena Tower, Near Sakhi Hassan Chowrangi, Karachi (ii) Hanif Moosa son of Moosa Umar, CNIC No.423011585311- 9, Shop No. 1-A, Rajaghazanfar Ali Road, Saddar, Karachi, (iii) Humayun Moosa son of Hanif Moosa, CNIC No. 42201-4831523-3, Shop No. 1-A, Rajaghazanfar Ali Road, Saddar, Karachi, (iv) Sajid Abdul Qadir son of Abdul Qadir (Sajid Motiwaia) CNIC No.42201- 7465611-1, 40/N, Block 6, P.E.C.H.S, Karachi,
(v) Kashan Iqbal son of Iqbal Moosa, CNIC No. 42201-3191035-5, Room No. 7, Dewdass Street, Opp.
Zaib-un-Nisa Street, Saddar, Karachi, (vi) Irfan son of Abdul Aziz, CNIC No. 42301-1105544-5, Flat No. 201, Jilani Plaza, Garden West, Karachi, (vii) Muhammad Shahid son of Muhammad Yousuf, CNIC No. 42301-8872519-3, Ground Floor, Ghulam Hussain Qasim Road, Flat No. 4/8, Garden West, Karachi
(viii) Tahir Ali son of Shaikh Ali Muhammad CNIC No. 42101-6619658- 3, House No. L-651, Naziya Square, Sector S-M, North Karachi, Karachi and with their clearing agents namely i.e., Messrs Kashan Enterprises (NTN 35524537), Custom House Agent (CHAL No. 968), Room No.607, Hassan Chamber, Opposite Custom House, Karachi and Messrs Amir Sons (NTN No. 3131889-1) Custom House Agent (CHAL No. 1453) Suite No. 59, 1st Floor, Jeddah Gold Center, Raja Ghazanfar Ali Road, Saddar, Karachi are called upon to show-cause under provisions of Section 32(A) of the Customs Act, 1969 read with section 16 of the Customs Act, 1969, further read with section 3 of Import and Export (Control) Act, 1950, further read with SRO 266(I)/2001 dated: 07.05.2001 and relevant provisions of Foreign Exchange Regulations Act, 1947 and Section 192 of the Customs Act, 1969 read with Para 3 of the Export Policy Order-2013 as to why they involved in the export of gold and jewelry under the garb of fake, forged, fabricated Form "E" and deprived the Government (in 109 Consignments) from foreign remittances amounting to US$ 80,246,932/-(Pak Rs.7,466,397,031/-) and Export Development Surcharge chargeable at the rate of 0.25% amounting to Rs. 18,665,992/- and withholding tax chargeable at the rate of 1% amounting to Rs.74,663,970/- and as to why the same may not be recovered from them under clauses 9, 14A, 77 of Section 156(1) of the Custom Act, 1969.
4. Accordingly, a show-cause notice was served upon the appellants and after due process and affording opportunities of defense the impugned order-in-original dated 29.06.2016 was passed.
5. Being aggrieved and dis-satisfied with the impugned order-in-original, appellants filed the instant appeals before this Appellate Tribunal on the grounds incorporated in the Memo. of Appeal.
Respondent department also filed parawise comments, which is taken on record.
6. Record of the case has been carefully examined and the argument put forth by the appellant and respondents have been duly considered. The case was being heard in Bench-II of this Tribunal and judgement was reserved on 06.11.2018. Later as per diary of 05.12.2018 it was recorded "while going through details of the cases, it transpired that these cases were initiated when Member Technical (Bench-II) was posted as Collector, MCC (Exports), Port Qasim. It will, therefore, be against the principals of natural justice that Member Technical sits on the Bench which decides these appeals." Accordingly these cases were transferred to this Bench. The cases were finally heard on 07.02.2019. Detailed order is as follows;
7. Perusal of record shows that vide show-cause notice dated 25.05.2015, contravention charges were framed against three persons, however later vide corrigendum to contravention report dated 27.10.2015, an addendum to show cause notice was issued on 04.11.2015, whereby names of most of these appellants were added as conspirators. This addendum was issued after twelve hearings of the main case had been conducted. It is not conceivable how the learned adjudicating authority could form an opinion that all these respondents had conspired with each other, while the main case was in advanced stage. Evidently, this order was passed is an arbitrary manner without application of mind.
8. Main Charges which have been levelled against the respondents are that they were involved in export of gold and jewelry against fake form-E, therefore, foreign remittances were not received and as such withholding tax and Export Development Surcharge was not collected. The respondents have invoked provisions of sections 16 and 32A of Customs. Act, 1969 read with Foreign Exchange Regulation Act, 1947. Export of gemstones and jewelry at that time was subject to special procedure provided under SRO 266(1)/2001. As it is apparent that export was made in accordance with the procedure and hundreds of consignments were cleared by the respondents after examination and weightment of goods, during the years 2011 to 2013. Now after four years the respondents woke up to claim that a conspiracy was hatched and goods were cleared against fake form-E and remittances were not received. If there was conspiracy, the respondents were part of it as no fraud of this magnitude as alleged could happen without their involvement. Apart from allegations of fake form-E the show-cause notice and orders are silent regarding the goods actually exported; whether the exported goods were real Gold Jewelry or it was fake too, only to balance out import of gold. The investigation is silent in this regard too. The respondents did not bother to tally imports with exports, and to find out actual timing of alleged fraud.
9. It is noted here that in order to issue notice for an offence under section 32A, a time limit of 180 days is fixed under subsections (2) of section 32A of the Customs Act, 1969. In this case after detection contravention was framed on 06.05.2015 initially and show-cause notice in final shape surfaced on 04.11.2015, as such the show cause notice is barred by limitation. The learned respondents were asked to justify their jurisdiction to take cognizance of the matter in the presence of special procedure governed by Trade Development Authority of Pakistan. The respondents were aware that at relevant point in time a procedure was in vogue whereby the export development surcharge was to be collected by State Bank of Pakistan or duly authorized banks at the time of realization of proceeds of export. Now in the presence of special procedure and the fact that Customs is not the relevant agency under Foreign Exchange Regulation Act, 1947, the actions by respondents clearly fall outside their jurisdiction. Similarly collection of withholding tax collectable on, legalization of exports proceeds is not respondent's baby(sic). Clearly the respondents tried to assume jurisdiction by making it a case of short realization of duty, taxes under section 32-A of Customs Act, 1969. The learned adjudicating authority is also not concerned about realization of export proceeds and only directed to recover EDS, and WHT. At best matter could be resolved by invoking section 32(3) of Customs Act, 1969 which is missing in the show cause notice as well as Original Orders. The learned authority opted an omnibus formula and levied penalty without identifying wrongdoing on the part of each appellant.
10. In view of the above deliberations, we are of the considered opinion that respondents acted in arbitrary manner, without jurisdiction and after efflux of time limit. Accordingly the Original Orders are set aside and all appeals are accepted.
11. Judgements passed and announced accordingly. revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.