SYED SARDAR HUSSAIN SHAH, MEMBER (JUDICIAL)/CHAIRMAN.--(1). This judgment shall decide the above mentioned Customs appeal filed against Order-in-Original No. 65/2016 dated 31.10.2016 (the impugned order) passed by the Learned Collector of Customs (Adjudication), Lahore.
2. Brief facts of the case as per prosecution story are that the Customs staff was present in Customs International Departure Hall, Allama Iqbal, International Airport, Lahore and Customs examination of outgoing passengers of Gulf Air flight No. GF-767, bound for Bahrain, was going on. As reported, at about 19.40 hours on the same day, Mr. Murtaza Hussain, Inspector (US-3122), ASF, Lahore brought a passenger alongwith His trolley bag colour blue from International Departure Hall back to Customs examination area and informed that the said passenger was in possession of foreign currency (US Dollar and Bahrain Dinars) kept in his accompanied trolley bag which were detected at International search counter scanning machine of ASF installed before entry into final departure hall. The said ASF Officer handed over the said passenger alongwith his said trolley bag to Superintendent Customs in charge of the shift who referred the said passenger alongwith his said bag to Customs counter for through examination. On demand the said passenger produced his passport alongwith air ticket. A perusal of his Pakistani Passport No. AE-3122951 and air ticket No. 0722427896084 revealed his name and address as Tahir Bharwana son of Sikandar Hayat Bharwana, resident of (as stated by the passenger) Villa No. 1, Mobeen Villas, Defence Road, Lahore Cantt., Lahore (CNIC No. 903030-1072955) who was proceeding to Bahrain by the above flight. Thereafter tie was asked to open his accompanied trolley bag for examination of the goods lying therein. Upon opening US Dollar 7,135/= and Bahrain Dinar 8000/= were found in white paper envelope. The customs inspector also asked him whether he was carrying any other objectionable thing in his person to which he replied in the negative. However, the said passenger was looking puzzled. Moreover, he was wearing feather jacket over his shirt which was apparently looking abnormal, in this situation, there was reasonable belief that the said passenger had secreted some objectionable article in his possession/person. As required 159 of the Customs Act, 1969, the above passenger was asked whether he would like to be taken before a Magistrate or a Gazetted officer of Customs for his body search. He told in writing to be taken before an officer of Customs. Therefore, he was produced before the Assistant Collector Customs, who after satisfying himself, allowed conducting personal body search of the above passenger in accordance with law. The search of the above passenger was conducted in presence of the witnesses which resulted in recovery of more foreign currency.
3. Subsequently, after completion of the requisite formalities, the matter was placed before the Adjudication Officer, who issued a show cause notice C. No. 46/Collector/Adj/2016/256 dated 22.06.2016 and vide Order-in- Original No. 65 of 2016 dated 31.10.2016, the Collector of Customs (Adjudication), Lahore ordered outright confiscation of seized foreign currency. Hence the instant appeal.
4. We have heard the arguments and gone through the record with the able assistance of counsel for the appellant as well as the representative of the respondents.
5. According to the story put forward by the counsel for the appellant that appellant had brought the impugned currency from Bahrain to purchase a plot in DHA, Lahore and in this respect he Produced receipts from National Bank of Bahrain as well as certificate from the same bank which clarified that the appellant had withdrawn an amount of 18000 BHD and 6979 US $. The fundamental aspects of the controversy relate to (i) Declaration under section 139 of the Act and attending circumstances of detection of impugned currency; (ii) entitlements under. Protection of Economic. Reforms Act, 1992 and restrictive regime under the Foreign Exchange (Regulation) Act, 1947; (iii) invocation of provisions of Smuggling under section 2(s) of the Act ; and (iv) liability of confiscation. These areas have been dilated upon and appreciated in the ensuing paragraphs.
6. The appellant has controverted the claim of the detecting agency that the Appellant had made clandestine attempt of smuggling of impugned foreign currency by having failed to make declaration under Sections 139 of the Act. Had the passenger avoided search of baggage or had he concealed the impugned, currency through making cavities'in the baggage there would be an element of "attempt" to take out the said currency in clandestine manner. A disclosure on query is declaration stipulated under section 139 of the Customs Act, 1969.
7. Another facet of controversy is existence of two streams of treatment meted out to foreign currency. It is deemed appropriate to briefly dilate upon interplay of the restrictive regime under Foreign Exchange (Regulation) Act, 1947 (VII of 1947) and relatively a liberal regime under the Protection of Economic Reforms Act, 1992 (XII 1992). The appellant that Section 4 of the said Act of 1992, entitles citizens and all other persons to possession, acquisition, bringing into or taking out of Pakistan foreign currency and even declaration of the same is not required. On the other hand he department has contended that the appellant's case is hit by the restrictions of US $ 10,000/ (or equivalent thereof) imposed by the SBP, under notification "No. F.E.2 98-53 Dated the 21st July, 1998, issued in pursuance to section 8(2) of the Act VII of 1947 which reads as follows; "(2) No person shall, except with the general or special permission of the State Bank or the written permission of a person authorised in this behalf by the State Bank, take or send out of Pakistan any gold, jewellery or precious stones, or Pakistan currency notes, bank notes or coins or foreign exchange."
On the other hand subsection (1) of Section 4 of Act XII of 1992 reads as follows: "4. Freedom to bring, hold, sell and take out foreign currency:--(1) All citizens of Pakistan resident in Pakistan or outside Pakistan and all other persons shall be entitled and free to bring, hold; sell transfer and takeout foreign exchange within or out of Pakistan in any form and shall not be required to make a foreign currency declaration at any stage nor shall a one be questioned in regard to the same".
It is evident that a notification cannot overrule provisions of statute.
8. The department has attributed allegation of "smuggling" on recovery of foreign currency from the jacket and hand-carry of the appellant on the plea that he had opted for green channel at the D time of recovery. The appellant has denied this allegation. It is viewed that the term "smuggling" has a wide range of coverage. It covers not only actual doing of the act of smuggling but also attempt and abetment thereof under clause(s) of Section 2 of the Act, as follows: "smuggle" means to bring into or take out of Pakistan, in breach of any prohibition or restriction for the time being in force, or en route pilferage of transit goods or evading payment of customs-duties or taxes leviable thereon,-- gold bullion, silver bullion, platinum, palladium, radium, precious stones, antiques, currency, narcotics and narcotic and psychotropic substances; or
(ii) manufactures of gold or silver or platinum or palladium or radium or precious stones, and any other goods notified by the Federal Government in the official Gazette, which, in each case, exceed one hundred and fifty thousand rupees in value; or
(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 includs 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;".
9. The line of argument is further augmented by another case reported as 1987 MLD 1602 (Sindh High Court) where mere presence of gold in baggage of the accused without any attempt to conceal it from detection was held "not sufficient to hold that the accused was guilty of smuggling or attempting to smuggle gold into Pakistan". The honorable Supreme Court of Pakistan dilated upon diverse dimensions of "attempt to smuggle" in the case titled "Central Board of Revenue and Another Versus Khan Muhammad" reported as "PLD 1986 Supreme Court 192". It remarked that "Attempt to smuggle has not been defined in the Act but clause (8) of section 156 (1) makes the attempt to smuggle also punishable by virtue of the aforesaid definition of the word "smuggle" which is inclusive of an attempt to bring in or take out goods coming within the mischief of the main provisions." The conduct entails four distinct stages, namely, (i) intention; (ii) preparation; (iii) attempt; and (iv) completion. The honorable Court in the said case held that the Respondent's act of possessing foreign currency fell short of "attempt" when he had been arrested from Peshawar airport to board a plane bound for Karachi where from he was to travel to Dubai. The Collector Customs-Peshawar had confiscated the impugned foreign currency. The aggrieved passenger challenged the confiscation before the Peshawar High Court through a constitutional petition. The honorable Apex Court upheld the order of the Honorable Peshawar High Court setting aside confiscation of the impugned foreign currency. Keeping in view the foregoing "smuggling" is not attracted in the instant case.
10. Regarding "Confiscation" of property, It is viewed that it has to be in proportionate to the offence committed. For commission of offence mense reas form a necessary constituent. It is evident that the expression "liable to confiscation" cannot be equated with "shall be confiscated". The "liability" for confiscation has to be established. The Honorable High Court (at Lahore) in the case of Suleman v. the State (PLD 1962(W.P) held that. "The words "shall be liable to confiscation" do not mean the same thing as the words "shall be confiscated."
11. It is pertinent to mention that in civilized societies public functionaries do not have unrestrained power to arbitrarily trample on the rights of the people. There are safeguards against such misuse of authority under the Constitution of Pakistan too, particularly those under articles 4 and 24(1) which read as follows: "4. Right of individuals to be dealt with in accordance with law, etc. "24. Protection of property rights. (1) No person shall be deprived of his property save in accordance with law.".
12. Keeping in view the foregoing position, we hold that the learned Adjudicating authority failed to appreciate the matter objectively and in accordance with law while order the confiscation of the impugned currency without tenable basis. We hold that mere possession of foreign currency cannot be treated as "smuggling". We accordingly accept the instant appeal and set aside the impugned order, with no order to costs.