SYED ARSHAD ALI, J.----This consolidated judgment shall decide the instant Custom Reference as well as connected Custom Reference No.06-P/2012 as adjudication of identical questions of law have been raised by the Collector Customs in both the References for the advice of this court.
2. Brief facts of the case as reported by the Deputy Superintendent, Customs TFS/NLC Amangarh are that in pursuance of Additional Collector-I Instructions dated 08.11.2010 and 09.11.2010 a consignment of polyester fabrics having Afghan Transit Trade invoic e No. 12738 ("ATTI"), Afghan Transit No. 12738 ("AT") dated 25.10.2010 and 26.10.2010 and ATTI No. 12030, AT No. 12030 dated 16.10.2010 and 22.10.2010 filed by the Border Agent Messrs Meezan Customs Agency , Peshawar on behalf of the Afghan importers New Shinwari Ltd. and Messrs Sallm Seruj Limited, the goods were thoroughly examined and found 127200 /132575 yards foreign original polyester fabrics instead of 102000/98555 yards as declared in the AT and thus found 25200/34020 yards of polyester fabrics in excess of the quantity as declared in AT and ATTI mentioned above. Therefore a contravention report was prepared alleging therein that the afore said act amounting to misusing the facility of Afghan Transit on the part of the importer as well as the border agents thereby attracting the violatio n of Section 129 and section 32 of the Customs Act, 1969 ("Act"). 'read with Pak-Afghan Transit Trade Agreement 1965, punishable under Section 156(1) (9) (43) (64) and (90) Act. Accordingly , a show-cause notice was issued to the respondents alleging therein violation of Sections 129, 32, 156(1) (9) (43) (64) and (90) of the Act. The respondents had contested the same, however , the learned Adjudicating Officer (Deputy Collector Customs) vide order-in-original dated 22.12.2010 had ordered for the outright confiscation of the excess quantity of Polyester Fabric i.e. over and above the quantity claimed in the goods declaration. The respondents challenged the said order before the Collector of Customs (Appeals), Rawalpindi Camp Office, Peshawar . The learned Appellate Forum has partially modified the impugned order-in-original in the following terms: "Keeping in view of the above facts, over all circumstances of the case and nature of consignment i. e. transit goods, a lenient view is taken and the appellant is given an option under Section 181 of the Customs Act, 1969 to redeem the seized/confiscated goods against payment of redemption fine of Rs.3,00,000/- (rupees three hundred thousand only) and personal penalty of Rs.2,00,000/- (rupees two hundred thousand only) is also imposed under section 156(1)(64) of the Customs Act, 1969. Moreover , the concerned Customs staff is directed to make necessary amendment in the transit documents by mentioning the correct yardage therein. The Deputy Collector , Customs Transit Station, NLC, Amangarh, Nowshera is also directed to process the case accordingly and get the consignment cross the border for its final destination properly . The impugned order is modified to the extent of the appellant".
3. The respondents-company have then further challenged both the orders before the worthy Customs Appellate Tribunal, Peshawar Bench ("Tribunal "). The worthy Tribunal was pleased to allow the appeal vide impugned judgment dated 27.12.201 1 by remitting the penalty as well as the redemption fine imposed on the goods.
4. The Collector of Customs has filed the present Customs References raising the following questions of law seeking advice of this Court.
(i) Whether as per facts and in the circumstances of the case, the seized Afghan Transit consignment based on misuse of facility of Afghan Transit with mis-declaration inspite of violation of sections 128 and 129 of Customs. Act, 1969, rules and notifications issued can be released?
(ii) Whether as per facts and in the circumstances of the case, the goods not declared and found in excess of the quantity of foreign origin attracts the provision of sections 2(s), 32, 129 clauses (9) (43) (64) and (90) of sub section
(1) of section 156 of the Customs Act, 1969?
(iii) Whether as per facts and in the circumstances of the case "The Tribunal " while exercising powers under section 194-B of the Customs Act, 1969 can legalize the goods in transit to Afghanistan contrary to the law applicable?
(iv) Whether as per facts and in the circumstances of the case, "the Tribunal " has taken in, consideration sections 2(s), 32, 128 and 129 and clauses (9) (43) (64) and (90) of subsection (1) of section 156 of the Customs Act, 1969?
(v) Whether as per facts in the circumstances of the case, order of "The Tribunal " impugned has any legal force deciding the appeal not filed by respondent No. 1 whereas apparently it is the appeal filed by some one else?
5. Arguments heard and record perused.
6. Admittedly , the respondents are trading companies dealing in the transportation of the goods from foreign countries through the territory of Islamic Republic of Pakistan for onward destination at the Islamic Republic of Afghanistan. During the said business when the present respondents were transporting the consignment of Polyester Fabrics to Afghanistan, the said goods were examined, which were found in excess of the declared quantity of fabrics. The excess quantity of polyester fabrics were dealt with under Section 32 read with enabling provision of Section 156 of the Act and was initially confiscated to the state and later was released on payment of redemption fine by the first Appellate Forum, which order was set-aside by the second appeal forum thereby remitting the redemption fine. Thus, the essential question arising out for adjudication of this Court is "whether; when in the circumstance, the goods in transit to Afghanistan are not subject to the incidence of local taxes under Afghan-Pakistan Transit Trade Agreem ent, 2010 read with Section 129 of the Customs Act, 1969, the transporter/trader if fails, to properly declare the quantity of permissible goods; can he be subjected to the penal provisions under the Customs Act, 1969".
7. In order to answer the aforesaid query , we deem it appropriate to examine the relevant clauses/articles of Afghan-Pakistan Transit Trade Agreement, 2010 ("APTTA") in light of the enabling provisions of the Customs Act, 1969.
8. The Government of Islamic Republic of Afghan and the Islamic Republic of Pakistan inked a bilateral trade agreement known as Afghan-Pakistan Transit Trade Agreement, 2010 APTT A, at Kabul. It would be pertinent to note that prior to this agreement there was a similar agreement between the two contracting States which was executed in the year, 1965. The preamble of APTT A clearly shows that keeping in view the economic position in both the countries and to strengthen the economic ties between the two neighbouring countries, the Government of Pakistan while recognizing the rights of Afghanistan a landlocked country to freedom of access to the sea; had executed the said agreement to facilitate the movement of goods between and through their respective territories and to provide all possible facilities in accordance with the provisions of APTT A.
9. Followings are certain salient features of the said agreement. i. Article 3 of the APTT A envisages freedo m of transit of goods through the territory of each contracting party via the pre-settled routes for traffic in transit or from territory of other contracting party . ii. Through Article 7 of the APTT A, the Government of Islamic Republic of Pakistan has guaranteed to the Islamic Republic of Afghanistan, the right to use the Port of Karachi, Port Qasim and Gawadar Port for the movement of goods in transit to and from Afghanistan in accordance with the official tariff rates and conditions applicable to other users of the Ports without any discrimination. iii. Article 7 of the Ann also deals with customs and other control, inter alia, including harmonization and simplication of the customs procedure. iv. Article 24 of the APTT A deals with the provision and transportation of dangerous goods whereas Article 25 deals with exclusion of arms, ammunitions and mtlitary goods unless otherwise aggrieved by the two contracting parties. v. Through Article 28 of the APTT A, both the contracting States have agreed to make efforts to minimize the number of documents, procedure and formalities required for traffic in transit and to harmonize as much as possible course and description of commodities commonly used in international trade. vi. Section IX (Articles 31 and 32) of the APTT A specifically deals with duties, taxes, charges and payment of arrangement, which clearly envisages that no custom duties and taxes shall be levied on goods in transit regardless of their destination and purpose. vii. Article 34 of the APTT A envisages for establishment .of Afghan-Pakistan Transit Trade Coordination Authority whereas Section -XI deals with the dispute settlement mechanism and establishment of arbitral T ribunal.
10. Section 129 of the Customs Act, 1969 deals with entrance of goods to Pakistan for its transit across Pakistan to a foreign territory , which reads as under:- "129. Transit of goods across Pakistan to a foreign territory .---Where any goods are entered for transit across Pakistan to a destination outside Pakistan , the appropriate officer may, subject to the provisions of the rules, allow the goods to be so transited without payment of the duties which would otherwise by chargeable on such goods: Provided that the Federal Government may, by notification in the official Gazette, prohibit the bringing into Pakistan by sea, land or air in transit to a foreign territory any goods or class of goods ".
11. Similarly , under Section 16 of the Act, it is only the Federal Government which by Notification in the official Gazette, prohibit or restrict the brining into or taking out of Pakistan of any goods of specified description by air, sea or land.
12. The perusal of the aforesaid APTT A and Section 129 of the Act clearly reveals that the goods imported by any person from other country for use and consumption in Afghanistan could not be said to have been imported into Pakistan merely because the said goods has crossed the custom barrier and entered into Pakistan, though to be transited to their destination i.e. Afghanist an. Such goods, in fact, are goods in transit which shall be dealt with and transhipped to Afghanistan in accordance with APTT A and the Customs Law of Pakistan relating to the importation would not be, therefore, applicable to the said transaction. Federation of Pakistan Through Secretary , Ministry of Foreign Affairs,Government of Pakistan Islamabad and 5 others v. Jamalu ddin and others (1996 SCMR 727).
The Customs Authority has no jurisdiction to issue any notification or imposed ban on the transportation of any goods under the APTT A in view of the clear provision of Section 16 of the Act as the same power lies with the Federal. Government.
The Customs Authority has no jurisdictio n to deal with the goods which are in transit to Afghanistan in terms of APTT A as the same falls within the exclus ive jurisdiction/function of the commerce Ministries/Federal Government.
Federation of Pakistan through Secretary , Ministry of Foreign Affairs, Gover nment of Pakistan Islamabad and 5 others v . Jamaluddin and others ( 1996 SCMR 727 ).
The goods in transit in terms of APTT A are not subject to the incidence of any taxes (custom duties, sales tax, income tax). Chapter-XIII (Section 129 of the Customs Act, 1969 read with section IX of APTT A).
13. Once we have reached at the conclusion that the transportation of any goods in terms of APTT A is not subject to the incidence of taxation under the local laws of the country , then it is easy to answer the other essential question as to whether if the trader/transporter of the said goods has failed to mention the correct quantity of goods in transit; would it entail to penal conseq uences under the Customs Act, 1969 ? and the Custom Authority would have any jurisdiction to adjudicate the said issue?. In this regard, we would refer to the relevant provisions of the Customs Act, 1969 relied by the Customs-Department while confiscating the goods.
"32. False Statement, error , etc. (1) If any person, in connection with any matter of customs,
(a) makes or signs or causes to be made or signed, or delivers or causes to be delivered to an officer of customs any declaration, notice, certificate or other document whatsoever , or
(b) makes any statement in answer to any question put to him by an officer of customs which he is required by or under this Act to answer , or
(c) submits any false statement or document electronically through automated clearance system regarding any matter of Customs.
(knowing or having reason to believe that such document or statement is false] in any material particular , he shall be guilty of an offence under this section.
(2) Where, by reason of any such docum ent or statement as aforesaid or by reason of some, collusion, any duty [taxes] or charge has not been levied or has been short-levied or has been erroneously refunded, the person liable to pay any amount on that account shall be served with a notice within [five] years of the relevant date, requiring him to show-cause why he should not pay the amount specified in the notice.
(3) Where, by reason of any inadvertence, error or misconstruction, any duty [, taxes] or charge has not been levied or has been short-levied or has been erroneously refunded, the person liable to pay any amount on that account shall be served with a notice within [three years] of the relevant date requiring him to show-cause why he should not pay the amount specified in the notice: Provided that if the recoverable amount in a case is less than [twenty thousand] rupees, the Customs authorities shall not initiate the aforesaid action: Provided further that the aforesaid action shall also not be initiated in case full amount of short paid duty, taxes or other charges are paid voluntarily prior to initiation of audit, inquiry or investigation.
[(3A) Notwithstanding anything contained in subsection (3), where any duty [ taxes] or charge has not been levied or has been short-levied or has been erroneously refunded and this is discovered as a result of an audit or examination of an importer's [or exporter's ] accounts or by any means other than an examination of the documents provided by the importer [or exporter] at the time the goods were imported [or exported], the person liable to pay any amount on that account shall be served with a notice within [five] years of the relevant dates requiring him to show-cause why he should not pay the amount specified in the notice: Provided that if the recoverable amount in a case is less than one hundred rupees, the Customs authorities shall not initiate the aforesaid action.
(4) The appropriate office, after considerin g the representation, if any, of such person as is referred to in subsection
(2) or subsection (3) [or subsection (3A)] shall determine [any amount payable by him under this Act,] which shall in no case exceed the amount specified in the notice, and such person shall pay the amount it so determined.
(5) For the purposes of this section, the expression relevant date means--
(a) in any case where duty is not levied, the dates on which an order for the clearance of goods is made;
(b) in a case where duty is provisionally assessed under section 81, the date of adjustment of duty after its final assessment;
(c) in a case where duty has been erroneously refunded, the date of its refund;
(d) in any other case, the date of payment of duty or charge;
(e) in case of clearance of goods through the Customs Computerized System, on self assessment or electronic assessment the date of detection.
79. Declaration and assessment for home consumption or warehousing [or transshipment).- [(1)] The owner of any imported goods shall make entry of such goods for home consumption or warehousing [or transhipment] or for any other approved purposes, within [ten] days of the arrival of the goods, by, -
(a) filing a true declaration of goods, giving therein complete and correct particulars of such goods, duly supported by commercial invoice, bill of lading or airway bill, packing list or any other docume nt required for clearance of such goods in such form and manner as the Board may prescribe; and
(b) assessing and paying his liability of duty, taxes and other charges thereon, in case of a registered user of the Customs Computerized System: [Provided that if in case of used goods, before filing of goods declaration, the owner makes a request to an office of customs not below the rank of an Additi onal Collector that he is unable, for want of full information, to make a correct and complete declaration of the goods, then such officer subject to such conditions as he may deem fit, may permit the owner to examine the goods and thereafter make entry of such goods by filing a goods declaration after having assessed and paid his liability of duties, taxes and other charges:] Provided that no goods declaration shall be filed prior to ten days of the expected time of arrival of the vessel.] [Explanation.- For the purposes of this clause, the assessment and paying of duty, taxes and other charges in respect of transhipment shall be at the port of destination.]
(2) If an officer , not below the rank of Additional Collector of Customs, is satisfied that the rate of customs duty is not adversely affected and that there was no intention to defraud, he may, in exceptional circumstances and for reasons to be recorded in writing, permit, substitution of a goods declaration for home consumption for a goods declaration for warehousing or vice versa.
(2) An officer of Customs, not below the rank of Assistant Collector of Customs, may in case of goods requiring immediate release allow thereof prior to presentation of a goods declaration subject to such conditions and restrictions as may be prescribed by the Board.]
156. Punishment for of fences--(1)
S.No. Offence Penalties Section of this Act to which offence has reference 1 (1) (2) (3) (i) If any person contravenes any provision of this Act or any rule made thereunder , or abets any such contravention or fails to comply with any provision of this Act or any such rule with which it was his duty to comply where no express penalty has been provided elsewhere for such contravention or failure,
(ii) If any person contravenes the requirement of placement of invoice and packing list inside the import container or consignment.Such person shall be liable to a penalty not exceeding [[fifty thousand] rupees.
Such person shall be liable to a penalty not exceeding fifty thousand rupeesGeneral General]
9. (i) If any goods, not being goods referred to in clause 8, are imported into orSuch goods shall be liable to confiscation; and any person15 and 16 exported from Pakistan evading payment of leviable customs-duties or in violation of any prohibition or restriction on the importation or exportation of such goods imposed by or under this Act or any other law; or
(ii) If any attempt be made so to import or export any such goods; or
(iii) If any such goods be found in any package produced before any office of customs as containing no such goods; or
(iv) If any such goods be found either before or after landing or shipment to have been concealed in any manner on board any conveyance within the limits of any seaport, airport, railway station or other place where conveyances are ordinarily loaded or unloaded; or
(v) If any such goods, the exportation of which is prohibited or restricted as aforesaid be brought within a customs area or to a wharf, with the intention of loading them on a conveyance for exportation in violation of such prohibition or restriction.concerned in the offence shall also be liable to a penalty not exceeding two times the value of the goods.
43 If any goods, after having landed and before they have been processed and cleared by the Customs, are by the or any other person, fraudulently concealed in, or attempted to remove from the bonded area of any Port. Airport 1 and Dry port, or abstracted from any package or transferred from one package to another , or otherwise, for the purpose of illegal removal or concealment, with the intention of defrauding the revenue.If the goods cannot be recovered, the owner [or any other person having custody of the aforesaid goods] shall be liable, in addition to full duty, to a penalty not exceeding five times the amount of such duty, or if such goods are not dutiable or duty thereon cannot be ascertained, to a penalty not exceeding [one hundred] thousand rupees, for every missing or deficient package or separate article, and_ in the case of bulk goods to a penalty not exceeding [one hundred] thousand rupees or, three[79, [*] 80 [*] times of the value of the goods, whichever be higher .
And the owner or any person guilty of such removal, concealment, abstraction or Transferment and every person aiding or abetting him shall [including the custodian], upon conviction by a special judge, be liable to imprisonment for a term not exceeding five years.].
64 If any person contravenes any rule or condition relating to section 128 or section 129, or makes an untrue declaration relating to transit goods or illegally removes or conceals any transit goods,][such person including the custodian and inland carrier shall be liable to a penalty up to twice the value of the goods and upon conviction by a Special Judge be further liable to imprisonment for a term not exceeding five years, and the goods in respect of which such offence has been committed shall also be liable to confiscation.]128 and 129 90 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, harbouring, keeping or concealing or in any manner dealing with any goods, not being goods referred to in clause 89, which have been unlawfully removed from a warehouse, or which are chargeable with a duty which has not been paid, or with respect to the importation or exportation of which there is a reasonable suspicion that any prohibition or restriction for the time being in force under or by virtue of this Act has been contravened, or if any person is in relation to any such goods in any way, without lawful excuse, the proof of which shall be on such person, concerned in any fraudulent evasion or attempt at evasion of any duty chargeable thereon, or of any suchSuch goods shall be liable to confiscation, and any person concerned shall also be liable to a penalty not exceeding ten times the value of the goods.General prohibition or restriction as aforesaid or of any provision of this Act applicable to those goods.
14. The first allegation against the present respondents is that it has incorrectly declared quantity of the goods in the good declaration form.
The good declaration forms are governed under Section 79 of the Act, which clearly shows that the said is meant only for those goods, which on its import are assessed for home consumption or warehouses or transhipment. The essential purpose of filing good declaration form is to provide true particulars of the goods for assessing and payment of liability of duties, taxes and other charges. Even if for the sake of arguments that a trader transporting goods under the APTT A to Afghanistan is required to file a good declaration, the same could only be for the purpose of determining the nature of the goods as to whether the same is in accordance with the APTT A and the protocol or any other instructions of the Federation Government and not for the purpose of taxes and duties; as the same is not subject to impost of any local duties in view of the clear immunity from taxation as provided as provided under section 129 of the Act and APTT A.
15. Moving on to the Application of section 32 of the Act to the present case. The close perusal of this section clearly reveals that it deals with any purpo sely misdeclaration of any goods in order to avoid or evade a tax liability .
It does not trigger in the circumstances; when the imported goods are not meant for home consumption, involving the payment of taxes and duties. Since the goods in question was not subject to impost of any local taxes and duties in view of section 129 of the Act and APTT A, therefore the alleged misde claration of goods destined for Afghanistan is inconsequential. Even otherwise section 32 of the Act constitutes an offence and in the absence of mensrea on the part of the person transporting it to Afghanistan under , APTT A; it cannot be put in operation.
16. Moving on to the other penal provision contained in Section 156 of the Customs Act, 1969. Subsections (1) (9)
(43) (90) are the general allegations relating to the violation of the Customs Act, 1969 whereas subsection (64) deals with the contravention relating to Section 129 of the Customs Act, 1969. In our humble view, the provision of subsection (64) would be applicable only when the transporter of the goods in terms of APTT A or his agent clandestinely removes the goods from the Terminal/Port to any place for its use in Pakistan or make pilferage in the goods for consumption in Pakistan attracting the consequences under Section 2(s) of the Act. The incorrect declaration of the goods permissible under; and being transported under APTT A does not constitute any offence under Section 156(64) of the Customs Act, 1969 as essentially the said less declared goods are neither for the purpose of consumption in Pakistan in violation of the Act, nor does that contravene any provision of section 129 of the Customs Act, 1969 and APTT A.
17. In view of the above, we have reached at inescapable conclusion that the findings of the worthy Tribunal are legally and factually correct which are not open to any exception. Thus, both the Customs References are dismissed and the questions of law are answered in Negative . Copy of this judgment be sent to the worthy Tribunal in terms of Section 196(5) of the Act.