SYED ARSHAD ALI, J.---This is a Custom Reference filed by the Collector Customs under section 196 of the Customs Act, 1969 ("Act") against the judgment/order passed by the learned Customs Appellate Tribunal, Peshawar Bench, accepting the appeal of the respondent Diyar Muhammad Khan thereby allowing him the release of confiscated gold against leviable duties and taxes.
2. A good number of questions of law have been framed for adjudication of this Court, which shall be dealt with in latter part of this judgment.
3. The brief facts of the case are that the respondent Diyar Muhammad Khan through Flight No. PA-675 on 22.03.2018 had arrived at Bacha Khan Airport, Peshawar from Riyadh (Kingdo m of Saudi Arabia). While his luggage/bag was passing through the scanning machine, it led to the recovery of Foreign Origin Fine Gold three
(03) Bullions Suisse (10 tolas each) ("Goods "). It is the case of the present petitioner (customs department) that the respondent-passenger , had failed to produce any legal document of importa tion of the Goods on demand, therefore, the same were taken into possession vide recovery memo dated 22.03.2018 and were seized under Section 168 of the Act for violation of Sections 2(s), 16, 139 of the Act and SRO 760(1)/2013 dated 02.09.2013 punishable under Sections 156(1)(8)(89) of the Act, read with Sections 3(1) and 3(3) of the Imports and Exports (Control) Act, 1950.
4. For the purpose of adjudication, the matter was entrusted to the Deputy Collector Custom (Adjudication), Peshawar , who issued a show-cause notice to the respondent Diyar Muhammad Khan on 06.07.2018, which was replied to by the said respondent. The learned Adjudicating Officer vide order-in-original dated 31.10.2018 ordered for the release of Goods on payment of taxes and duties, besides payment of redemption fine equal to 20% of the Customs value of the goods.
5. The aforesaid order of Adjudicating Officer was challenged by the present petitioner before the Collectorate of Customs (Appeals), Peshawar , through Appeal No. 39 of 2019. The appeal was accepted, vide order-in-appeal dated 18.02.2019, and it was ordered that the Goods be outrightly confiscated.
6. Being aggrieved and dissatisfied from the order of the learned Appellate Forum, respondent Diyar Muhammad Khan approached the learned Customs Appellate Tribunal, Peshawar Bench through second. appeal, who, while accepting appeal, allowed release of Goods on payment of leviable duties and taxes.
7. Learned counsel appearing on behal f of the petitioner/department has argue d that bringing the Goods into Pakistan is in violation of Section 139 of the Act and constitutes an offence, punis hable under Section 156 etc of the Act. Furthermore, the said importation is liable to outright confiscation and cannot be released even on payment of redemption fine, in view of the bar envisaged by SRO 566(1)/2005 dated 06.06.2005 and SRO 499(1)/2009 dated 13.06.2009.
8. Against that, the learned counsel representing the respondent has argued that there is no legal impediment on the import of goods on payment of leviable duties, the only restriction being one imposed by the State Bank in that the importer was required to arrange the foreign exchange for the said import from, his own kitty, and since the present respondent was working as labourer in the Kingdom of Saudi Arabia, therefore, the said foreign exchange was arranged by him from his own resources. Thus he has complied with the essential requirement of a legal import. He has further argued that the respondent has not concealed anything from the custom department and thus, the custom department was under legal obligation to have provided the present respondent an option to declare the same and thus the outright confiscation of the goods was not justified.
9. Arguments heard and record perused.
10. Before embarking upon the legal discourse, we deem it appropriate to refer to the applicable law, regulations and instructions of the competent authority relating to the import of gold etc. I. Customs Act, 1969.
"16. Power to prohibit or restrict importation and exportation of goods.---- The Federal Government may, from time to time, by Notification in the official Gazette, prohibit or restrict the bringing into or taking out of Pakistan of any goods of specified description by air , sea or land".
17. Detention, seizure and confiscation of goods imported in violation of section 15 or section 16.---- Where any goods are imported into, or attempted to be exported out of, Pakistan in violation of the provisions of section 15 or of a notification under section 16, such goods shall, without prejudice to any other penalty to which the offender may be liable under this Act or the rules made thereunder or any other law, be liable to detention, for seizure or confiscation subject to approval of an officer not below the rank of an Assistant Collector of Customs, and seizure for confiscation through adjudication, if required.
139. Declaration by passenger or crew of baggage .----The owner of any baggage whether a passenger or a member of the crew shall, for the purpos e of clearing it, make a verbal or written declaration of its contentions in such manner as may be prescribed by rules to the appropriate officer and shall answer such questions as the said officer may put to him with respect to his baggage and any article contained therein or carried with him and shall produce such baggage and any such article for examination.
Provided that where the Customs Compu terized System is operational, all declara tions and communications shall be electronic".
II. The Foreign Exchange Regulation Act, 1947 "S.8. Restriction on import and export of certain currency and bullion. (1) The Federal Government may, by notification in the official Gazette, order that, subject to such exemptions, if any, as may be contained in the notification, no person shall, except with the general or special permission of the State Bank and on payment of the fee, if any, prescribed bring or send into Pakistan any gold or silver or any curren cy notes or bank notes or coin whether Pakistani or foreign.
Explanation.-- The bringing or sending into any part or place in the territories of Pakistan of any such article as aforesaid, intended to be taken out of the territories of Pakistan without being removed from the ship or conveyance in which it is being carried, shall nonetheless be deemed to be bringing or as the case may be sending, into the territories of Pakistan of that article for the purposes of this section.
(2) No person shall, except with the gene ral or special permission of the State Bank or the written permission of a person authorized in this behalf by the State Bank, take or send out of Pakistan any gold, jewelry or precious stones, or Pakistani currency notes, bank notes or coin or foreign exchange.
(3) The restrictions imposed by subsections (1) and (2) shall be deemed to have been imposed under section 16 of the Customs Act, 1969, without prejudice to the provisions of section 23 of this Act, and all the provisions of that Act shall have effect accordingly".
III. Relevant pant of Chapter XVIII of the Import and Export of Currency Notes and Coins, Foreign Exchange, Jewellery , Gold and Silver issued by the Federal Government under Section 8 of the Foreign Exchange , Regulation Act, 1947.
16. Import of Cold and Silver .
(i) The Federal Government by their Notification No. 1(2) ECS/48 dated the 1st July, 1948 issued pursuant to subsection (1) of Section 8 of the Act have prohibited, except with the general or special permission of the State Bank, the import into Pakistan from any place outside Pakistan of:
(a) any gold coin, gold bullion, gold sheets or gold ingot whether refined or not, and any sliver bullion, any 'silver sheets or plates which have undergone no process of manufacture subsequent to rolling or any uncurrent silver coin.
Import of gold and silver into Pakistan is, therefore, subject to State Bank's authorisation.
(ii) Import of pure gold/silver and rough/uncut precious and semiprecious stones will be allowed against export of gold/silver jewellery and cut and polished precious/semi-precious stones in accordance with the procedure notified by the Government of Pakistan and the instructions issued by the State Bank from time to time.
(iii) The State Bank vide its Notification No. F.E.1/94- SB dated the 20th March, 1994 has granted general permission for import of gold into Pakistan from any. place outside Pakist an as accompanied baggage provided such imports are made in accordance with the existing import policy".
IV. Condition imposed for import of gold and silver under the Import Policy Order , 2018 appendix (b) part-II "importable subject to the condition that the importer shall arrange his own foreign exchange for the purpose".
V. SRO 566(1)12005 dated 06.06.2005 "Notification No. S.R.O. 566(1)12005, dated 6th June, 2005.---In exercise of the powers conferred by sub- clause (ii) of clause (s) of section 2 and subsection (2) of section 156 of the Customs Act, 1969 (IV of 1969), and in suppression of its Notificatio n No. S.R.O. 491(1)185, dated the 23rd May, 1985, the Federal Government is pleased to specify the following goods for the purpose of the aforesaid sub-clause (ii) of clause (s) of section 2 and subsection (2) of section 156, namely:- .................................................... ....................................................
(16) Gold bullion, silver bullion and manufactures of gold and silver".
SRO 499(1)2009 dated 13.06.2009 SRO 499(1)/2009.- In exercise of the powers conferred by section 181 Of the Customs Act, 1969 (IV of 1969), and in supersession of its Notification No. S.R.O. 487(1)/2007 dated 9th June, 2007, the Federal Board of Revenue is' pleased to direct that no option shall be given to pay fine in lieu of confiscation in respect of the following goods or classes of goods, namely:-
(a) smuggled goods filling under clause (s) of section 2 of the Customs Act, 1969 (IV of 1969)".
11. The following facts/legal position is evident from the perusal of the aforesaid legal instruments. i. The import of goods (other then for commercial purpose) is permissible into Pakistan through authorized routes on payment of duties and taxes. ii. The said goods have to be declared in terms of Section 139 of the. Customs Act, 1969. iii. In case of import of gold, the importer has to arrange foreign exchange by himself. iv. The import of goods through unauthorized routes or in violation of Custom Act or Foreign Exchange Regulation Act is liable to confiscation and cannot be released on payme nt of redemption fine under section 181 of the Customs Act, 1969, in view of the bar contained in SRO 566 (1)12005 dated 6.6.2005 and SRO 499(1)/2009 dated 13.06.2009.
12. In the context of the present case, the respondent Diyar Muhammad Khan is a citizen of Pakistan, who was working for gain in the Kingdom of Saudi Arabia. He had travelled to Pakistan on 22.3.2018 and while his luggage was checked, through the process of scanning in the airport, at "the notified customs area" the same led to the recovery of 30 tolas gold. Thus, the essen tial question for determination of this Court is whether the aforesaid act of the respondent is in violation of Section 139 of the Customs Act, 1969, read with section 8 of Foreign Exchange Regulation Act, 1947, albeit what is the effect of seizure of the goods without giving an option to the respondent to declare the aforesaid goods for payment of duties and taxes?
13. Admittedly , the respondent Diyar Muhammad Khan, as evident from the recovery memo. and seizure report, has not concealed the Goods from the petitioner-department. Similarly the Respo ndent has not taken the Goods out of the customs notified area without payment of taxes and duties. It is thus not evident from the record that the respondent had any intention to smuggl e the goods without payment of taxes and duties. From the facts and circumstances of the case, we cannot even assume that the case of the respondent falls within the ambit of attempt to smuggling. The plain reading of section 139 of the Customs Act clearly suggests that the passenger has the option to declare the contents/goods contained in his baggage, orally or in writing, followed by an application in the prescribed form. Therefore, the appropriate officer designated at the custom airport is duty bound to facilitate the passengers in this regard and not to trap them on technical grounds. Once the passenger himself has surrendered his luggage to the officer and has not concealed the same and it was the duty of the custom officer concerned to have facilitated the passenger by giving an option to declare the goods for payment of duties and taxes. It is not forth coming from record that the designated custom officer had inquired from the Respondents about the presence of any leviable goods in his baggage and the Respondent had failed to disclose the same to the said officer manifesting his intention to avoid the payment of taxes and leviable duties on the import of the Goods. In the case of Masood v. The State (1987 MLD 1602 ), the Hon'ble Karachi High Court as then it was in a similar circumstances has held that:{ "The learned trial Judge while convicting the appellant failed to note that mere presence of gold in the baggage of appellant was not sufficient to hold that he was guilty of offence of smuggling or an attempt to smuggle gold as in tke event of a true declaration of such contraband gold under section 139 of the Act the appropriate officer had the discretion to detain such article for the purpose s of being returned to him on his leaving Pakistan. The plea of the appellant that he had informed the Customs Officer Shakir Husain or in the alternative he was not afforded any opportunity to declare the same under section 139 of the Act, find support from the fact that in the F.I.R. which was lodged by the Customs Officer Shakir Husain immediately after seizure of gold, makes no mention about the declaration of appellant under section 139 of the Act. The fact that the Customs Officer Shakir Husain admitted in his cross-examination that the gold carried by appellant was not concealed in the false bottom of the hand bag as alleged in the F.I.R.- but was obviously lying with the clothes of the appellant goes to show that there was no attempt on the part of the appellant to keep the gold in a manne r which would have avoided its detection in the ordinary course of search. In these circumstances I am of the view that the prosecution failed to establish smuggling or attempt to smuggle gold by the appellant in Pakistan. The appeal is accordingly allowed and the conviction and sentence awarded by the Special Judge (Customs and Taxation) Karachi is set aside. The appellant is on bail his ball bonds are accordingly cancelled".
14. Similarly , the Apex Court in the case of Central Board of Revenue and another v. Khan Muhammad (PLD 1986 Supreme Court 192) has elaborately dealt with the matter where the respondent in that case was a citizen of Afghanistan, who arrived at Torkham land Custom Station from Afghanistan and was in transit to U.K. through Pakistan, was found in possession of huge foreign currency and was intercepted at the customs station. It was held by the apex Court in para-9 of the judgment that:- "Applying the aforesaid principles to the present case we are of the firm view that the acts done by the respondent before he was intercepted at Peshawar Airport did not const itute attempt to smuggle the alleged foreign currency out of Pakist an but at best the stage- reached was that of mere preparation to commit that offence. As already discussed even if there is undoubted evidence of intention to commit the offence on the part of the offender and of preparation to carry out that intention the law does not make the person entertaining such intention or doing such acts of preparation culpable, so far as the offence of smuggling is concerned. Because there is always in such cases a possibility of change of mind or locus poenitentia to give up the prosecution of the criminal intent beyond the stage of preparation. We, therefore, agree with the learned Judges of the High Court, that the mere act of boarding internal flight from Peshawar to Karachi was not an act of such an approximate nature as would amount to an attempt to smuggle, although it might constitute preparation to commit that offence. The act of boarding a flight at Peshawar which terminates at Karachi not an act of forming part of series of acts which could constitute actual commission of the crime of smuggling if it were not interrupted. If any further acts had been done by the respondent to board a plane which would have taken him out of the coun try along with the contraband goods, there might have been a case of an attempt. But before he could embark upon any such act, he was intercepted at Peshawar , so that the act attempted by him does not satisfy the test that the doing of the same cannot reasonably be regarded as having any other purpose than the commission of the specific crime".
15. Indeed, under Article 24 of the Constitution of Islamic Republic of Pakistan, 1973, no person can be deprived of his property save in accordance with law. In the circumstances, when the respondent Diyar Muhammad Khan has not concealed the Goods and the relevant officer of the customs department while noticing the Goods in the bag of the respondent as the said goods were not imported in violation of Section 8 of the Foreign Exchange Regulation Act, 1947 or the Import Policy/State Bank Regulation, then by not offering option to the respondent for declaration of the Goods and seizure in terms of Section 168 of the Customs Act, 1969 was not warranted under the law.
Therefore, the impugned order of the Tribunal, allowing the respondent release of goods, on payment of applicable duties and taxes seems to be in accordance with law .
16. In view of the above, the Custom Reference along with C.M. No. 156-P/2020 is dismissed and the questions of law are answered in the Negative . Copy of this judgment be sent to the learned Tribunal for information.