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 Custom Appellate Tribunal dated 08.11.2012 ("Tribunal"), for adjudication of questions of law framed in the memo of reference, purportedly arising out of the judgment of the worthy Tribunal.
2. Brief facts of the case are that on 05.12.2009 a vehicle bearing Registration No. P-9295 was intercepted by the Inspector Customs ASU, Nowshera. Examination of the said vehicle led to recovery of black tea foreign origin 150 bags (weighing 10750 kg) etc. On demand, the occupant of the vehicle namely Chaman Khan son of Khan Khel, resident of Kandi Nasir Tehsil and District Nowshera (Driver) and Shahid Khan son of Ghulam Jilani, resident of Urmar Payan, Tehsil and District Peshawar on demand could not produce any proof of legal import/lawful possession of the goods. Therefore, the custom officer seized the alleged foreign smuggled black tea al9ng with vehicle under Section 168 of the Customs Act, 1969 ("The Act") for violation of Sections 2(s), 16, 157 and 178 of the Act read with Section 3(1) of Imports and Exports (Control) Act, 1950 punishable under Section 156(1)(8) and (89) of the Act read with Section 3(3) of the Imports and Exports (Control) Act of 1950. The case was accordingly assigned to the Adjudicating Officer (Deputy Collector) in terms of Section 179 of the Act.
3. The Adjudicating Officer issued a show-cause notice to the said driver and owner of the goods.
However, pursuant to the said notice, one Fakhr-e-Alam Paracha, the Managing Director, Khyber Tea and Food Company ("Company") appeared and submitted reply to the show-cause notice contending therein that the seized goods are duly paid and thus requested for release of the same.
The precise contentions in the written reply were that indeed blended black tea was illegally detained by the police officials at Police Station Chota Lahore Swabi which was later on handed over to the customs officials. The police had no authority to have seized the blended tea. However, the Company is a registered person deals in the business of blended tea and has paid the relevant taxes i.e. sales tax and income tax etc. at the time of its import/purchase. In support of the same,' the Company had placed on file the sales tax invoices under which the blended black tea was purchased.
4. The Adjudicating Officer/Deputy Collector being not satisfied with the said reply to the show- cause notice by the Company, through order dated 25.01.2010 out-rightly confiscated the seized goods (blended tea) in terms of Section 156(1)(8)(89) of the Act read with Section 3(3) of the Imports and Exports (Control) Act, 1950 read with SRO No.499(I)/2009 dated 13.06.2009. However, the vehicle in question was released against payment of redemption fine equivalent to 20% of the value amounting to Rs.140,000/-.
5. The Company through Custom Appeal No.79/2010 challenged the said order-before the Collector Appeal. The learned Collector Appeal vide order dated 22.09.2010 dismissed the appeal of the respondents Company. The respondents Company had then further challenged the orders of both fora through Second Appeal No.Cus.361/PC/2010 before the Tribunal. The learned Tribunal vide impugned order dated 08.11.2012 has allowed the appeal.
6. Arguments heard and record of the case was perused.
7. It is the precise case of the present petitioner that the blended tea which was recovered by the Custom Officer through the recovery memo. would show that the said tea was smuggled into Pakistan without payment of taxes and duties and since on the back of bag containing the tea, it was mentioned (in transit to Afghanistan) therefore, the said blended tea was imported for Afghanistan under the Afghan trade agreement and thus its .sale/business in Pakistan amounts to smuggling in terms of Section 2(s) of the Act.
8. Against that, it is the claim of the respondents Company that it purchased blended black tea total 11200 kg, 7480 kg and 10000 kg against purchase sales tax invoice Nos.223, 224 and 225 all dated 01.12.2009 from M/s. SPATCO'S 215 Panorama Center-I Fatima Jinnah Road, Karachi. The entire payment of duty and taxes leviable thereon was made through National Bank payment challan. After purchasing the said black tea, the company booked the same through Munir Goods Transport Company, Karachi vide bilties Nos.2207, 2208 and 2209 for Peshawar. The Company maintains a proper record/book keeping in terms of Section 22 of the Sales Tax Act and in the said record the purchase of the aforesaid blended tea has been duly entered. The Company also sold out of the said tea, 50 bags to Gohar Ali Main Bazar Havelian against valid supply sales tax invoice No.27 dated 04.12.2009, blended black. tea 10 bags weighing 750 kg to Nasir Paracha Main Bazar Haripur against valid supply sales tax invoice No.28 dated 04.12.2009, blended black tea 30 bags weighing 2040 kg against valid supply sales tax invoice No.29 dated 04.12.2009 to Amir Khan Usman Market Havelian, blended black tea 30 bags weighing 2040 kg to Faheem Hassan of Havelian against valid supply sales tax invoices Nos.21, 22, 23, 24, 25 and 26 all dated 04.12.2009. The said tax invoices were duly issued in terms of Section .23 of the Sales Tax Act, 1990. Accordingly, the Company had paid input tax of Rs.1,143,680/- at the purchase stage and output tax Rs.1,196,454/- at supply stage.
9. The aforesaid documents by the Company could not be produced before the Adjudicating Officer, however, at the time of appeal, the aforesaid documents were produced before the first Appellate forum. The judgment of the Tribunal would show that the Collector Appeal during the hearing of the appeal on 01.03.2010, 11.03.2010, 27.03.2010, 09.04.2010, 23.04.2010, 06.05.2010, 19.05.2010 and 04.06.2010 directed the seizing agency department to verify all the documents produced by the appellant at appeal stage, however, the said documents could not be verified by the seizing officer. The perusal of para No.11 of the judgment of Collector Appeal would show that the learned Collector. Appeal was not satisfied that the documents produced by the Company in respect of the purchase of black tea relates to the seized blended tea. The learned Collector Appeal has also referred to the recovery memo. referring the inscribed words "Chaminar Indian Black Tea in transit to Afghanistan by Karachi". However, an unsuccessful attempt was made to erase the word of in transit to Afghanistan by Karachi.
10. The said finding of the Collector Appeal was set aside by the Tribunal in the impugned judgment. Relevant paras to the controversy of the judgment of the Appellate Tribunal are reproduced as under:- "21. On perusal of record, the appellant produced lawful import and purchase documents for the seized consignment. The import documents are not disputed and the respondent is roaming with the allegation of irrelevant documents produced. Reliance is placed on SAO No.175/2004 dated 11.10.2004, wherein his. Lordship Mr. Nasir-ul-Mulk has concluding as under:- The sales tax invoice has only mentioned the tea as black tea ?? distinguished from green tea: In the sales tax invoice the origin of the tea need not be mentioned. The tea imported had been repacked by the importer for distribution to the retailers and, therefore, it was quite un-necessary to mention the countries from which the tea was imported. It was on account of these facts that the Appellant Tribunal as well as the Collector Appeals had found that the tea seized had been lawfully imported and that the burden to prove its lawful import had been duly discharged by the owner on production of the relevant documents.
As is evident from the sales tax registration certificate of the appellant, the appellant's firm is also a manufacturer and can blend the tea by himself to, give it a better flavor and quality and repack the same in other bags. He repacked the tea in questions in other empty bags and in this connection, he produced a receipt dated 03.12.2009 issued by Haji Didar Gul Safi Bardana Merchant, which shows the purchase of the empty bags. There is no prohibition or restriction on manufacturing/blending and repacking the tea under any law of the country. A person who engages whether exclusively or not, in the production or manufacture of goods whether or not the raw material of which the goods are produced or manufactured are owned him and shall include a person who by any process or operation assembles mixes, cut, dilutes, bottles, packages, repackages or prepares good by any other manner etc. will be considered to have manufactured or produced identifiable goods which can either be consumed independently or can be incorporated in the finished product of any item. Reliance placed on (2001 SCM R 1376 = 2001 PTD 2097).
24. I have carefully examined the record of auction of the lot No.01/Misc/NR/01-111/2010 DA Nos.
83/2009 and 84/2009 and as per customs auction schedule No.03/2010 dated 28.01.2010 wherein no description of "in transit to Afghanistan" has been mentioned and subsequently verified by the department through DR shows that the Customs Authorities have auctioned 120 bags of black tea in question having C.I.F. value Rs.28,93,320/-, 150 bags black tea of seizure case No.140/2009 dated 05.12.2009 CIF. value Rs. 36,67,950/- total value of tea is Rs.65,61,270/- along with 280 bags of dry milk excluding its value. The delivery order dated 03.02.2010 and payment challan of Rs.32,55,000/- dated 03.02.2010 (which are available on pages 60, 61 and 62 of the appeal), wherein the said mark/description required under Auction Rule 72 of the Customs Rules, 2001, is also not mentioned in the delivery order proves the stance of appellant. According to the procedure of auction firstly; the auction schedule is punished in the newspaper wherein the date, time, place, terms and conditions are mentioned. Secondly the auction will be held openly, which the circumstances show that the auction was held secretly. Thirdly the successful bidder will make the payment of 1/4th of the total bid amount and the competent authority will approve the auction within seven days of the date of auction and the bidder will be bound to deposit the remaining 3/4th amount after such approval. The record shows that the so called auction held on 03.02.2010 on the same day approved by the collector customs Peshawar, full amount has been deposited and the goods also delivered on the same date. Thus, the mark on bags "In Transit to Afghanistan" is doubtful and the stance of the appellant that the bags did not carry the said mark and properly purchased from the lawful importer after due payment as discussed supra. The changing of the bags and subsequently, their auction without giving notice under section 201 of the Customs Act, 1969 and postponement of earlier auction of the goods mentioned in the said lot on the scheduled dated while later on processed in an unscheduled auction at the back of the appellant and thereby delivered the goods to their blue eyed bidder (goods having CIF value Rs.65,61,270/- excluding value of 280 bags of dry milk, against the low amount of Rs.32,55,000/-) meaning thereby that the tea having total CIF value 65,61,270 was disposed of through auction on a very low rate of 20 or 22 lacs approximately. Although, the tribunal has got no concern with the procedure adopted by the respondents regarding auctioning of the said goods but as the case of the respondent collectorate is totally based on packing of the said goods mentioning (Afghanistan Transit Goods) on each and every bag could not be established an absence of the said packing/bags which otherwise should have been kept as a sample to be drawn under section 199 of the Customs Act, 1969 and to be produced before the court when and were required, so the auction of the said goods through an unscheduled and hasry manner just after five days of the scheduled auction is based on mala fide to avoid the re-examination of the said goods and also to disturb the actual evidence."
11. The learned Tribunal has also held the Adjudication Officer i.e. Deputy Collector had no pecuniary jurisdiction in the matter to have adjudicating upon the case.
12. The petitioner has raised good number of questions in this reference, however, the following two questions are essential for determination of this reference; i. Whether the learned Tribunal has rightly held that the Deputy Collector had no pecuniary jurisdiction in the matter? ii. Whether the question that the recovered/disputed black tea was duty paid or otherwise? i. Whether the learned Tribunal has rightly held that the Deputy Collector had no pecuniary jurisdiction in the matter?
13. First we will address the issue of jurisdiction. In order to comprehend the issue of jurisdiction, we would refer to the relevant provision of the Customs Act specifying the pecuniary jurisdiction of different officers of the Customs Department for, the purpose of adjudication: - "15 1179. Power of adjudication.--"" [(I) Subject to subsection (2), in cases involving confiscation of goods or recovery of duty and other taxes not levied, short levied or erroneously refunded, imposition of penalty or any other contravention under this Act or the rules made thereunder, the jurisdiction and powers of the officers of customs in terms of amount of duties and other taxes involved, excluding the conveyance, shall be as follows, namely:- i)Collector: no limit ii)Additional collectornot exceeding three million rupees iii)Deputy Collectornot exceeding one million rupees. iv)45 [Omitted] v)Superintendent Not exceeding 46 [one hundred] thousand rupees. vi)Principal AppraiserNot exceeding 46 [one hundred] thousand rupees.
14. The Tribunal in para No.15 of the judgment has calculated the leviable taxes and duties in the following manner:- "15. So far as pecuniary jurisdiction of the Adjudicating Officer i.e. the Deputy Collector Customs is concerned according to subsection (1) of Section 179 of the Customs Act, 1969. The pecuniary jurisdiction of Deputy collector is not exceeding Eight Hundred Thousand Rupees. I have carefully examined the seizure report submitted by the Inspector Customs ASU Nowshera. In column .6 of the seizure report the said Inspector mentioned the CIF value of the seized goods as Rs.2893320/.
However, the total duty and taxes involved in the present case is:- CIF value: Rs.2893320/- 10% CD: Rs.289332/- 17% ST: Rs.541051/- 5% IT: Rs.186185/- 1% SED: Rs 39099/- Total Deputy and Taxes:Rs.1055667/- However, it is the case of department that the total duty involved in the matter is Rs.491,864.40/-. It is not understandable that on what basis the Tribunal has made the said calculation as in this regard no evidence is available wherein the issue of calculation of leviable tax has been finally determined, therefore, in this regard the assertion of the revenue would be considered according to which the total taxes and duties involved in this case is Rs.491,864.40/- which falls within the jurisdiction of Deputy Collector. Therefore, this question is answered in positive.
(ii) Whether the question that the recovered/disputed black tea was duty paid or otherwise?
15. In this regard, it is the claim of the respondent Company as stated in para No.10, that the said tea was purchased from M/s. SPATCO'S 215 Panorama Center-1 Fatima Jinnah Road, Karachi through proper invoices, the leviable duties and taxes were paid through invoices mentioned in aforesaid para and the stock was duly registered in the relevant register maintained by the Company under Section 22 of the Sales Tax Act, 1990. Against that, it is the case of the petitioner department that the said invoices are not relevant. Two fora i.e. the Adjudicating Officer and the Collector Appeal have held the said documents (GDs and tax invoices irrelevant) whereas the Tribunal after going through the said documents have held that the disputed seized tea was imported through the said documents. Thus, the fact that the seized tea was imported against the invoices have been determined by the learned Tribunal (as referred in para 10 above) being the final hierarchy under the Customs Act, 1969 for determination of questions of fact, therefore, this Court having very limited jurisdiction under Section 196 of the Customs Act, 1969 cannot interfere with the questions of fact determined by the Tribunal on the ground that on reappraisal of the available record, a different conclusion can be drawn. This Court under Section 196 of the Customs Act, 1969 is to answer and interpret of questions of law raised by any party to the proceedings from the judgment passed by the Tribunal. "Messrs Zarghoon Zarai Corporation v. Collector of Customs and another (2006 PTD 534), Pak Suzuki Motors Co. Ltd., Karachi v. Collector of Customs, Karachi (2006 PTD 2237), Collector of Customs v. Messrs Noman Chughtai (2007 PTD 153), Messrs Ittehad Textile Industries (Pvt.) Ltd. v. Collector of Sales Tax Collectorate of Sales Tax and Central Excise, Faisalabad (2007 PTD 663), Assistant Collector of Customs, Sambrial Dry Port, Sialkot_v. Messrs Al-Badar Poultry Farms, Wazirabad (2004 PTD 2683), Messrs B. P Industries, Karachi and others v. The Additional Collector of Customs, Sales Tax and Central Excise (Adjudication) and another (2008 PTD (Trib.) 36)." According, this question is answered in negative.
16. Copy of this judgment be sent to the learned Tribunal in terms of section 196(5) of the Act.