ROZI KHAN BARRECH, J.---- This order disposes of Custom Reference No. 57 of 2017.
2. Relevant facts of the case are that on 27th August 2016, bus No.LRJ-2137 entered. into Pakistan from Iran against Carnet De Passage No. DES 0489838. Upon preliminary checking, the bus was found loaded with foreign origin goods in commercial quantities, while the number of pilgrims in the aforesaid bus were not more than 5 persons, therefore, the said bus was brought to the Custom House, Taftan and search of the bus resulted into recovery of goods of CIF value Rs.2.982,460/-, which were being smuggled into the country in the grab of pilgrim's baggage. The goods were seized for violation of section 2(s) read with SRO 566(1 )/2005 dated 6th June 2005 and section 16 of the Customs Act, 1969 further read with subsection (1) of section 3 of Import and Export (Control) Act, 1950, punishable under clauses (8) and (89) of section 156(1) and section 157(2) of the Customs Act, 1969. Notice under section 171 of the Customs Act, 1969 was issued to bus driver and copy was also displayed on the Notice Board of the Custom House, Quetta.
3. The following order-in-original dated 14th February , 2017 was passed by Additional Collector , Collectorate of Customs (Adjudication) Custom House, Quetta: "I have gone through the record of the case and considered oral as well as written submissions of the advocate by the claimants and or their counsel. It is notified that against several goods more than one claimant has approached this office. Such details are incorporated in columns 04 and 05 of table in para 12 above. In none of the case, the counsel or claimants have given plausible justification bringing huge quantities of goods and not paying leviable duties and taxes. Besides; multiple claim s of same goods also makes bona fide of the claimants doubtful and tantamount to an attempt to hoodwink the law. In view of above and in absence of any documentary evidence to support their contention, the stance of seizing agency stands vindicated that goods were being smuggled and thus fall under the ambit of section 2(s) of the Customs Act, 1969. I therefore, in terms of clause (8) of section 156 (1) of the Customs Act, 1969 order for confiscation of the seized goods in the instant case and also impose on each claimant a penalty equivalent to 10% value of claimed goods. However taking a lenient view an option under section 181 of the Custom Act, 1969 read with SRO 499(1)12009 dated 13.06.2009 is given to goods not included in SRO 566(1)/2005 dated 06.06.2005 against payment of duties and taxes leviable thereon in addition to fine equivalent to 20% of their Customs value. The option of redemption shall be available only to those claimants whose return entry into Pakistan is on date which is commensurate with the date of seizure. For the seized vehicle, the same has been used in smuggling of goods, therefore a penalty of Rs.200,000/- (Rupees Two Hundred Thousand only) under clause (8) of section 156(1) of the Customs Act, 1969 is imposed upon its owner . Moreover , under section 157(2) of the Customs Act, 1969 the bus is confiscated but an option under section 181 of the Customs Act, 1969 is given to the claiman t/owner of the seized vehicle to redeem the same against payment of fine equivalent to 30% of its custom value subject to the conditions that vehicle is lawfully registered in the country , in terms of Board's letter C.No. 10(17)L&P/05 dated 26.06.2006 has not previously been involved in smuggled goods and is also not required in any court case by the department "
4. The Respondents Nos. 1 and 2 assai led the above order by filing appeal before Customs Appellate Tribunal Bench-II, Karachi (hereinafter "the Appellate Tribunal "), who vide its judgment dated 24th July 2017 (hereinafter "impugned judgment ") set aside the, order-in-original dated 14th February 2017 passed by Additional Collector , Collectorate of Customs (Adjudication) Custom House, Quetta to the extent of penalty and redemption fine, operating portion whereof reads as follows: "8. My finings and conclusion in that for any passenger coming from abroad, the formalities of Immigration and Customs are mandatory . This is also point of fact that the same are located under one roof, as stated by the learned Departmental Representative. In view of aforestated position it was mandatory upon the Appellant and other passenger to appear before the customs officers and make declaration regarding their baggage. However the stance of the Departmental Representative justifying adjudication of this case by and officer of Adjudication Collector instead of adjudication by the Respondent Collectorate, is not tenable. The Departmental Representative admitted that the goods were brought by the Appellant along with them as their baggage while returning from Iran as pilgrim. As per para 3(c) of SRO 886(1)/2012 dated 18.07.2012, the cases pertaining to violation of baggage rules are or to be adjudicated by the seiziag Collectorate and cannot be referred to the Adjudication Collectorate. It is also observed that the Appellant and other persons have deposited the adjudged amount of duty and taxes which shows their bona fide intentions.
9. In view of mitigating circumstances as above, I find strength in the argument of the learned counsel. His prayer is therefore, allowed. The impugned Order -In-Original is set aside to the extent of penalty and redemption fine. The appeal is allowed in the restated terms."
5. We have heard the learned counsel for the parties, perused the impugned judgment passed by the Customs Appellate Tribunal, Order of the authority below as well as the relevant SRO on the subject controversy with their assistance. Admittedly , the bus, which entered into Pakistan from Iran, was found loaded with foreign origin goods in commercial quantities while the number of pilgrims in the aforesaid bus were not more than five persons. The search of said bus resulted into recovery of goods of CIF value Rs.2,982,460/-, which were being smuggled into the country in the grab of pilgrim's bagga ge. Since the recovered goods are in commercial quantity , therefore, the relevant Rule would apply for the release of such consignments, whereas, in terms of Rule 17 of Customs Baggage Rules, 2016, the legal course has been provided for the release of such consignment, if imported in commercial quantity . It will be advantageous to reproduce the relevant provisions of Customs Baggage Rules, 2016 which reads as follows: "17. T reatment of goods brought in commercial quantity .
The goods brought in commercial quantity shall be allowed release only on payment of duty and taxes at the statutory rates and the redemption fine equal to thirty per cent of the value of goods in term of Notification No. SRO 574(1)/2005 dated the 6th June, 2005."
It will be equally advantageous to reproduce the S.R.Os. 574(1)/2005 dated 06.6.2005 and 499(1)/2009 dated 13.6.2009, as referred to hereinabove:-- "(i) Notification No.S.R.O. 574(1)/2005, dated 6th June, 2005 .
In exercise of the powers contested by section 181 of the Customs Act, 1969 (IV of 1969), and in supersession of the Notification SRO No.374(I)/2002 dated the 15th June, 2002, the Central Board of Revenue is pleased to order that:
(a) No option shall be given to pay fine in lieu of confiscation in respect of the following goods or classes of goods, namely:
(i) smuggled goods falling under clause(s) of section 2 of the Customs Act, 1969 (IV of 1969); or
(ii) conveyance including packages and containers found carrying offending goods of section 2(s) of the Customs Act, 1969; or
(iii) goods imported in violation of section 15 of the Customs Act, 1969 (IV of 1969); or
(iv) banned items goods of Israel origin and goods of India origin other than those importable from India in the Import Trade and Procedure Order; or
(v) job lot and stock lot goods; or
(vi) restricted and other items which are subject to procedural requirements under Import Trade and Procedure Order unless such condition and procedural requirements are fulfilled; or
(vii) vehicles imported in violation of Import Trade and Procedure Order and in violation of Import of Vehicles Rules under the Personal Baggage, Transfer of Residence and Gill Scheme; or
(viii) commodities which are not importable in used or second hand condition under the Import Trade and Procedure Order .
(b) Subject to the provisions of clause (1), where an option is given to pay fine in lieu of confiscation the quantum of fine in lieu of confiscation in respect of offences specified in column (2) of the Table below , shall not be at a rate less than that specified in column (3) of the Table below and shall be over and above the Customs Duties and other taxes and penalties imposed under the relevant law:-- TABLE S. No.Description Minimum redemption fine on customs value
(1) (2) (3)
(a) Offences related to misdeclaration of: 30%
(a) difference between ascertained and declared weight or quantity subject to the condition that the percentage difference is more than 5%.
(b) origin 30%
(c) physical description 50%
(d) value with difference of more than 20% in declared viz. determined value.50%
(b) Other of fences related to:
(i) Offending goods imported in the bales of second hand clothing in violation of provisions of Imports and Exports (Control) Act, 1950 (XXXIX of 1950).50%
(ii) Goods not covered under clause (b) of rule 4 of sub- chapter (1) of Chapter II of the Customs Rules, 2001 brought by incoming passengers (accompanied or unaccompanied) in non-commercial quantities for actual use and not intended for sale in market.30%
(1) (2) (3)
(iii) Old and used machinery parts or components imported by the industrial importers for their plants, if not importable in terms of relevant Import T rade Procedure.30%
(iv) Old and used spare parts and accessories, if imported along with the second hand plant and machinery used in manufacturing of goods.30%
(v) imported scrap items which contain old and used or serviceable components such as auto parts compressors and re-rollable iron and steel etc., if the same are allowed release after cuttings, pressing, piercing, breaking or otherwise de-shaping to the satisfaction of the customs authorities on specific request of the importer subject to the condition that expenses incurred on such processes are paid by the importer .30%
(ii) S.R.O. 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. SRO 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 falling under clause (s) of section 2 of the Customs Act, 1969 (IV of 1969);
(b) lawfully registered conveyance including packages and containers found carrying smuggled goods in false cavities or being used exclusively or wholly for transportation of offending goods under clause (s) of section 2 of the Customs Act, 1969 (IV of 1969); or
(c) goods imported in violation of section 15 of the Customs Act, 1969 (IV of 1969);
(d) banned items, goods of Israeli original and goods of Indian origin other than those importable from India in accordance with the Import Policy Order , for the time being in farce; or
(e) job lot and stock lot goods;
(f) restricted and other items which are subject to procedural requirements under Import Policy Order , for the time being in force unless such condition and procedural requirements are fulfilled; or
(g) commodities which are not importable in used or second-hand condition under the Import Policy Order , for the time being in force: Provided that in respect of the following goods or classes of goods where an option is given to pay fine in lieu of confiscation, the quantum of fine in lieu of confiscation in respect of offences specified in column (2) of the Table below shall be at a rate specified in column (3) of that Table and shall be over and above the customs-duties and other taxes and penalties imposed under the relevant namely: TABLE S. No. Description Redemption fine on customs value
(1) (2) (3)
(a) Offences related to misdeclaration of:
(a) difference between ascertained and declared weight or quantity subject to the condition that the percentage difference is more than 5%.20%
(b) origin 20%
(c) physical description 35%
(d) value with difference of more than 30% in declared viz. ascertained value determined on the basis of direct evidence after due process of adjudication.35%
(e) Classification where ascertained PCT attracts higher rate of duty .20%
(f) Claim of any concession or exemption under an SRO or a notification whereby duty and taxes are evaded.20%
(g) units of measurement other than as specified in Pakistan Customs T ariff against the specific tariff heading where due to incorrect unit duty and taxes are evaded.20%
(2) Other offences related to:
(a) Offending goods imported in the bales of second hand clothing in violation of provisions of Imports and Exports (Control) Act, 1950 (XXX:X of 1950).35%
(b) Baggage imported in commercial quantities by incoming passengers.20%
(c) old and used machinery parts or components imported by the industrial importers for their plants, if not importable in terms of relevant Import Policy Order , for the time being in force.20% 2(d) Old and used spare parts and accessories for use in second hand plant and machinery used in manufacturing of goods.20%
(e) auto parts imported in used or second hand condition.20%
(f) lawfully registered conveyance including packages and containers, not covered under clause (b) of the preamble of this notification, found carrying offending goods under section 2(s) of the Customs Act, 1969 (IV of 1969).20% [Explanation : The provisions of serial number 1, clauses (e), (t) and (g), in the TABLE, of this: notification shall apply on the clearance from Model Customs Collectorate (PaCCS) only]
6. From perusal of hereinabove Rule 17 and the provisions of aforesaid S.R.Os., it is clear that the subject consignment, which was smuggled from Iran to Pakistan was in commercial quantity , therefore, it could only be released on payment of the duty and taxes subject to redemption of fine @ 30% in terms of S.R.O. 574(1)/2005 dated 06.6.2005 and thereafter @ 20% in terms of SRO 499(1)/2009 dated 13.6.2009.
7. In view of all the above, we are of the opinion that the Customs Appellate Tribunal Bench-II, Karachi, was not justified to remit the entire amount of fine and penally as SRO 886(1)/2012 dated 18.07.2012 was not attracted in the facts and circumstances of the case.
Since huge (commercial) quantity of goods was smuggled by the respondents Nos. 1 and 2 into Pakistan from Iran, therefore the respondent No. 3 has rightly exercised the vested jurisdiction under the provisions of the Customs Act, 1969.
For the above stated reasons, we are of the considered view that remitting the entire fine and penalty by the Appellate Tribunal is contrary to legal position emerged in the instant case. Therefore, Reference is accepted. The impugned judgment dated 24th July, 2017 passed by Customs Appellate Tribuna l Bench-II, Karachi is set aside.
The order-in-original dated 14th February , 2017 passed by Additional Collector , Collectorate of Customs (Adjudication) Custom House, Quetta shall hold the field.